UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-K




ANNUAL
REPORT


PURSUANT
TO SECTIONS 13 OR 15(d)


OF
THE SECURITIES EXCHANGE ACT OF 1934




ý
              ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended December 31,
2008




OR





 ̈
              TRANSITION REPORT TO SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For
      the transition period from __________ to
  __________




Commission
file number 1-2394





WHX CORPORATION(Exact
      Name of Registrant as Specified in its Charter)  DELAWARE
                  
                  13-3768097(State
      or other jurisdiction of
                  
                  (I.R.S.
      Employerincorporation
      or organization)
                  
                  Identification
      No.)1133
      Westchester AvenueWhite Plains, New York
                  
                  10604(Address
      of principal executive offices)
                  
                  (Zip
      code)Registrant’s
      telephone number, including area code:  (914)
      461-1300





Securities
registered pursuant to Section 12(b) of the Act:





Name
      of each exchange onTitle of each class
                
                which registeredCommon
      Stock, $.01 par value
                
                NASDAQ
      Capital Market





Securities
registered pursuant to Section 12 (g) of the Act: None




Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.   Yes  ̈   No
ý




Indicate
by check mark if the Registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.   Yes  ̈   No
ý




Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes ý   No
 ̈




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ̈




Table of Contents




Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.  (Check one):




Large
      accelerated filer
             ̈
            
            Non-accelerated
      filer
             ̈Accelerated
      filer
             ̈
            
            Smaller
      Reporting Company
            ý





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   Yes  ̈   No
ý




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of registrant as of June 30, 2008 totaled approximately $7.5
million based on the then-closing stock price.




Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.   Yes ý   No
 ̈




On March
20, 2009, there were approximately 12,178,565 shares of common stock, par value
$0.01 per share.




DOCUMENTS
INCORPORATED BY REFERENCE




The information required by Items 10,
11, 12, 13 and 14 of Part III will be incorporated by reference to certain
portions of a definitive proxy statement, which is expected to be filed by the
Registrant within 120 days after the close of its fiscal year.




Table of Contents


TABLE OF CONTENTS




Item
                              
                              PagePART IItem 1.
                              Business
                              1Item 1A.
                              Risk Factors
                              9Item 2.
                              Properties
                              16Item 3.
                              Legal Proceedings
                              17Item 4.
                              Submission of Matters to a Vote of Security
      Holders
                              22PART
IIItem 5.
                              Market for the Registrant’s Common Stock, Related Security
      Holder Matters, and Issuer Purchases of Equity
    Securities
                              23Item 7.
                              Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                              24Item 8.
                              Financial Statements and Supplementary
    Data
                              48Item 9.
                              Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosures
                              99Item 9A(T).
                              Controls and Procedures
                              100PART IIIItem 10.
                              Directors and Executive Officers of the
      Company
                              101Item 11.
                              Executive Compensation.
                              101Item 12.
                              Security Ownership of Certain Beneficial Owners and
      Management
                              101Item 13.
                              Certain Relationships and Related
      Transactions
                              101Item 14.
                              Principal Accountant Fees and Services
                              101PART
    IVItem 15.
                              Exhibits and Financial Statement
    Schedules
                              102
  i
 Table of Contents


PART I




Item 1.
            Business




The
Company




WHX
Corporation




WHX
Corporation (“WHX”), the parent company, manages a group of businesses on a
decentralized basis.  WHX owns Handy & Harman (“H&H”), a
diversified holding company whose strategic business units encompass three
reportable segments: Precious Metal, Tubing, and Engineered
Materials.  In April 2007, WHX acquired Bairnco Corporation
(“Bairnco”).  Bairnco manages business units in three reportable
segments: Arlon Electronic Materials, Arlon Coated Materials, and Kasco
Replacement Products and Services.  The business units of H&H and
Bairnco principally operate in North America.  All references herein
to “we,” “our” or the “Company” shall refer to WHX, together with all of its
subsidiaries.


The WHX
Business System (the “System”) is at the heart of the operational improvement
methodologies for all WHX companies and employees. Strategy Deployment forms the
roof of the business system and serves to convert strategic plans into tangible
actions ensuring alignment of goals throughout each of our businesses. The
pillars of the System are the key performance indicators used to monitor and
drive improvement.  The steps of the System are the specific tool
areas that drive the key metrics and overall performance.  WHX
utilizes lean tools and philosophies to reduce and eliminate waste coupled with
the Six Sigma tools targeted at variation reduction.  The System is a
proven, holistic approach to increasing shareholder value and achieving long
term, sustainable, and profitable growth.




Products
and Product Mix




H&H
Precious Metal Segment




H&H’s
Precious Metal activities include the fabrication of precious metal and their
alloys into brazing alloys and the utilization of precious metal in precision
electroplating. H&H’s brazing alloys are used to join most common metals as
well as specialty metals with strong, hermetic joints.  H&H offers
a wide variety of these metal joining products, including gold, silver,
palladium, copper, nickel, and aluminum based materials.  These
brazing alloys are fabricated into a variety of engineered forms and are used in
many industries including automotive, air conditioning, general industrial and
other metal-joining industries.  H&H is also engaged in precision
electroplating (often using gold, silver, palladium and various base metals) of
electronic and electrical components primarily for use in the automotive
industry.  H&H’s profits from precious metal products are
principally derived from the “value added” of processing and fabricating and not
from the purchase and resale of precious metal.  In accordance with
general practice, prices to customers are principally a composite of two
factors: (1) the value of the precious metal content of the product and (2) the
“fabrication value,” which includes the cost of base metals, labor, overhead,
financing and profit.




H&H
Tubing Segment




H&H
manufactures a wide variety of steel tubing products.  The Stainless
Steel Seamless Tubing Group manufactures small-diameter precision-drawn seamless
tubing both in straight lengths and coils.  The Stainless Steel Tubing
Group’s capabilities in long continuous drawing of seamless stainless steel
coils allow this Group to serve the petrochemical infrastructure and
shipbuilding markets.   The Stainless Steel Tubing Group also
manufactures products for use in the medical, semiconductor fabrication,
aerospace and defense industries.   The Specialty Tubing Group
manufactures welded carbon steel coated and uncoated tubing in straight lengths
and coils with a primary focus on products for the refrigeration, HVAC and
automotive industries.  In addition to producing bulk tubing, the
Specialty Tubing Group also produces value added products for the appliance and
HVAC industries by fabricating tubing into sealed system
components.




1
 Table of Contents




H&H
Engineered Materials Segment




The
H&H Engineered Materials Segment supplies products to the construction and
building industries. H&H manufactures fasteners and fastening systems for
the U.S. commercial flat roofing industry.  Products are sold to
building and roofing material wholesalers. The products are also private labeled
to roofing system manufacturers. A line of specialty fasteners is produced for
the building products industry for fastening applications in log homes,
landscaping, masonry, and wood decks.  H&H also manufactures
plastic and steel fittings and connectors for natural gas and water distribution
service lines along with exothermic welding products for electrical grounding,
cathodic protection, and lightning protection.   In addition,
H&H manufactures electro-galvanized and painted cold rolled sheet steel
products primarily for the construction, entry door, container and appliance
industries.




Arlon
Electronic Materials Segment




Arlon
Electronic Materials’ (“Arlon EM”) principal products include high performance
materials for the printed circuit board industry and silicone rubber-based
insulation materials used in a broad range of industrial, military/aerospace,
consumer and commercial markets.




Arlon EM
supplies high technology materials to the printed circuit board (“PCB”)
industry.  Arlon EM products are marketed principally to original
equipment manufacturers (“OEMs”) and PCB manufacturers around the world by a
direct technical sales force in many cases in support of country and area
specific distributors and manufacturer’s representatives.  Arlon EM’s
conventional laminates product line includes a wide variety of specialty
polyimide and epoxy laminates and bonding films, as well as other high
performance thermoset laminates.  These materials are used in
demanding commercial and military market applications including high density
interconnect, surface mount technology, heat sink bonding, semiconductor
testing, wireless communications and microvia PCBs.  The microwave and
radio frequency product area offers fluoropolymers (i.e. polytetrafluorethylene
(“PTFE”)), ceramic-filled fluoropolymers, and other non-PTFE laminates that
deliver the electrical performance needed in frequency-dependent circuit
applications such as analog, digital and personal communication systems, high
frequency military electronics, microwave antennas and cellular base station
electronics.  These products are supplied as copper-clad laminates
with bonding plies or prepregs for production of multi-layer printed
circuits.




Arlon EM
also manufactures a line of silicone rubber materials used in a broad range of
military, consumer, industrial and commercial products.  Typical
applications and products include: silicone bagging materials for producing
composite parts; silicone insulating tapes for electric traction motor coil
windings; insulation materials for industrial and commercial flexible heaters;
silicone materials for high temperature hose and duct markets; insulating tape
for medium and high voltage electrical splices and self-fusing tapes for a
variety of industrial and commercial applications; as well as compliant,
thermally or electrically conductive silicone film adhesives known as
ThermabondTM for heat sink-bonding to printed circuit boards.




Arlon
Coated Materials Segment




Arlon
Coated Materials’ (“Arlon CM”) principal products include adhesive coated cast
and calendared vinyl films, cast vinyl fabric, custom-engineered laminates, and
coated and laminated films, foils, foams and papers used in a broad range of
industrial, consumer and commercial products.




Arlon CM
specialty graphic films are marketed under the Arlon and Calon® brand names and
include cast and calendared vinyl films that are manufactured in a wide variety
of colors, face stocks and adhesive systems.  These vinyl films are
used in commercial and electrical signage, point of purchase displays, highway
signage, fleet markings, and other commercial advertising
applications.  Arlon CM also manufactures laminated vinyl fabrics for
corporate identity programs.  These products are marketed under the
ArlonFlex® brand name and complement the Calon® specialty graphic
films.




Arlon CM
also manufactures and markets custom-engineered laminates and coated
products.  Typical applications include insulating foam tapes for
thermopane windows, electrical insulation materials for motors and transformers,
thermal insulation panels for appliances and cars, durable printing stock,
coated foil tapes and transfer adhesives used in industrial assembly, and single
and double-coated foam and film tapes and other custom engineered laminates for
specific industrial applications.




2
 Table of Contents




Kasco
Replacement Products and Services Segment




Kasco
Replacement Products and Services (“Kasco”) is a provider of meat-room products
and maintenance services for the meat and deli departments of supermarkets; for
restaurants; for meat and fish processing plants; and for distributors of
electrical saws and cutting equipment throughout North America, Europe, Asia and
South America.  These products and services include band saw blades
for cutting meat and fish, band saw blades for cutting wood and metal, grinder
plates and knives for grinding and cutting meat, repair and maintenance services
for food equipment in retail grocery and restaurant operations, electrical saws
and cutting machines, seasoning products, and other related butcher supply
products.




Kasco’s
products and services are sold under a number of brand names including Kasco
Corporation and Atlanta Sharptech in the United States and Canada, Atlantic
Service Company in the United Kingdom and Canada, Bertram & Graf in Germany,
and Biro France and EuroKasco in France.




Recent
Developments




Loan
Amendments




On March
12, 2009, Bairnco and certain of Bairnco’s subsidiaries amended their Credit
Agreement with Ableco Finance LLC (“Ableco”), as administrative agent thereunder
(the “Ableco Facility”), and their Credit Agreement with Wells Fargo Foothill,
Inc. (“Wells Fargo”), as arranger and administrative agent thereunder (the
“Wells Fargo Facility”).  Each of the Wells Fargo Facility and the
Ableco Facility were amended to, among other things, (i) increase the interest
rates and (ii) reset the levels of certain financial covenants.  The
Ableco Facility was also amended to provide for, among other things, an increase
in the existing limited guaranty by H&H, a wholly-owned subsidiary of the
Company and an affiliate of Bairnco, from up to $7 million to up to $12 million,
secured by a second lien on all of the assets of H&H pursuant to the terms
and conditions of that certain Security Agreement by H&H in favor of Ableco
(the “H&H Security Agreement”) and that certain Limited Continuing Guaranty
by H&H in favor of Ableco (the “H&H Guaranty”).  Bairnco’s
Credit Agreement with Steel Partners II, L.P. (“SP II”) (the “Subordinated Debt
Credit Agreement”) was also amended on March 12, 2009 to, among other things,
increase the interest rates.




On March
12, 2009, H&H and almost all of its subsidiaries amended their Loan and
Security Agreement with Wachovia Bank, National Association (“Wachovia”) as
agent (the “Wachovia Facilities”) and their Loan and Security Agreement with SP
II (the “Term B Loan”).  Each of the Wachovia Facilities and Term B
Loan were amended to, among other things, (i) extend the term of the loans for
two years until June 30, 2011, (ii) increase certain interest rates, (iii) reset
the levels of certain financial covenants, (iv) permit the disposition and/or
cessation of operations of certain of H&H’s direct and indirect subsidiaries
(v) provide for an increase in the aggregate amount of unsecured loans,
distributions or other advances from H&H to WHX for general business
purposes from up to $7.0 million to up to $12.0 million, subject to certain
limitations, and (vi) provide for an increase in the existing limited guaranty
by H&H from up to $7.0 million to up to $12.0 million.  In
addition, the Wachovia Facilities were also amended to, among other things,
reduce the amount of the credit facility from $125.3 million to $115.0 million
including decreasing the revolving credit facility from $83.0 million to $75.0
million.




NASDAQ
Listing




On
December 5, 2008, the Company’s common stock began trading on the NASDAQ Capital
Market under the new symbol “WXCO.”  The Company’s shares were
previously quoted on the over-the-counter “Pink Sheets” under the same symbol
from November 25, 2008 and under the symbol “WXCP.PK” prior to a reverse split
of the Company’s common stock effected on November 24, 2008, which is discussed
below.




3
 Table of Contents




Reverse
Stock Split




On
November 24, 2008, the Company consummated a 1-for-10 reverse stock split of its
outstanding common stock (the “Reverse Stock Split”).  Pursuant to the
Reverse Stock Split, every ten (10) shares of common stock issued and
outstanding at the time the split was effected were changed and reclassified
into one (1) share of common stock immediately following the Reverse Stock
Split.  The Reverse Stock Split affected all shares of common stock,
stock options and rights of the Company outstanding at the effective time of the
Reverse Stock Split.  The Reverse Stock Split did not change the
proportionate equity interests of the Company’s stockholders, nor were the
respective voting rights and other rights of stockholders altered, except due to
immaterial differences because fractional shares were not issued and the number
of shares of a holder was rounded up.  To enhance comparability, all
references to the Company’s common stock and per share amounts contained in this
Annual Report on Form 10-K and the accompanying financial statements and related
notes, unless otherwise noted, have been adjusted on a retroactive basis as if
the Reverse Stock Split had occurred on January 1, 2007.




Rights
Offering




On
September 25, 2008, WHX completed a rights offering (the “Rights
Offering”).  The Company sold 11,178,459 shares of common stock to
existing stockholders through the exercise of rights at a subscription price of
$14.00 per share, for an aggregate purchase price of approximately $156.5
million.  SP II, which beneficially owned approximately 50.3% of the
Company’s outstanding common stock immediately before the Rights Offering,
subscribed for 8,630,910 shares of the Company’s common stock, for an aggregate
purchase price of approximately $120.8 million, pursuant to its basic and
applicable oversubscription privileges.  After giving effect to the
Rights Offering, SP II owns 75% of the outstanding shares of common stock of the
Company.  The Company used the proceeds of the Rights Offering to (i)
redeem preferred stock issued by a wholly-owned subsidiary of the Company, which
was held by SP II, plus accumulated dividends, together totaling approximately
$6.0 million, (ii) repay Company indebtedness to SP II of approximately $18.9
million, and (iii) repay $117.6 million of indebtedness and accrued interest of
certain wholly-owned subsidiaries of the Company to SP
II.   After such payments, $14.0 million remained with the
Company as cash, of which $13.2 million was used to repay additional debt of the
Company on October 29, 2008 pursuant to the amendments to the Company’s credit
agreements of that same date.




Acquisition
of Bairnco




On April
12, 2007, WHX and SP II, which then beneficially owned approximately 50.3% of
WHX’s outstanding common stock, entered into a Stock Purchase Agreement whereby
WHX acquired SP II’s entire interest in BZ Acquisition Corp. (“BZA”), a wholly
owned subsidiary of SP II for $10.00.  BZA was the acquisition
subsidiary in a tender offer to acquire up to all of the outstanding stock of
Bairnco for $13.50 per share in cash.  WHX also agreed to reimburse
all reasonable fees and expenses incurred by SP II in connection with the Offer
and the Merger (each as defined below).




On
February 23, 2007, SP II, BZA and Bairnco entered into an Agreement and Plan of
Merger (the “Merger Agreement”), pursuant to which BZA amended its tender offer
to acquire all of the outstanding common shares of Bairnco at a price of $13.50
per share in cash (the “Offer”).  On April 13, 2007, upon the
expiration of the Offer pursuant to the Merger Agreement, BZA acquired
approximately 88.9% of the outstanding common stock of Bairnco.




Pursuant
to the Merger Agreement, on April 24, 2007, BZA merged with and into Bairnco
with Bairnco continuing as the surviving corporation as a wholly owned
subsidiary of WHX (the “Merger”).  At the effective time of the
Merger, each Bairnco common share then outstanding (other than shares owned by
BZA or its direct parent entity, shares owned by Bairnco as treasury stock and
shares held by stockholders who properly exercised their appraisal rights) was
automatically converted into the right to receive $13.50 per share in cash
without interest and subject to applicable withholding taxes.  The
proceeds required to fund the closing of the Offer and the resulting Merger and
to pay related fees and expenses were approximately $101.5
million.  In connection with the closing of the Offer, initial
financing was provided by SP II through two credit facilities.  One of
the initial financing facilities was refinanced on July 18, 2007 with a
third-party lender, and a significant portion of the remaining balance with SP
II was repaid with proceeds of the Rights Offering.  The second credit
facility initially provided by SP II was totally repaid with proceeds of the
Rights Offering.  We refer to the Offer and the Merger as the “Bairnco
Acquisition”.




4
 Table of Contents




Business
Strategy




Our
business strategy is to enhance the growth and profitability of the businesses
of H&H and Bairnco and to build upon the strengths of certain of H&H and
Bairnco’s businesses through internal growth and strategic
acquisitions.  We may also consummate opportunistic acquisitions from
time to time.




The WHX
Business System is at the heart of the operational improvement methodologies for
all WHX companies and employees. Strategy Deployment forms the roof of the
business system and serves to convert strategic plans into tangible actions
ensuring alignment of goals throughout each of our businesses. The pillars of
the System are the key performance indicators used to monitor and drive
improvement.  The steps of the System are the specific tool areas that
drive the key metrics and overall performance.  WHX utilizes lean
tools and philosophies to reduce and eliminate waste coupled with the Six Sigma
tools targeted at variation reduction.  The System is a proven,
holistic approach to increasing shareholder value and achieving long term,
sustainable, and profitable growth.




We expect
H&H to continue to focus on high margin products and innovative technology,
while limiting its exposure to low margin, capital-intensive
businesses.  In 2008, management decided to exit the welded specialty
tubing market in Europe and close its Indiana Tube Denmark subsidiary (“ITD”),
sell ITD’s assets, pay off ITD’s related debt and repatriate cash remaining
post-closing. The decision to exit this market was made after evaluating current
economic conditions and competition from lower cost manufacturers.  In
2008, the Company also evaluated its Sumco, Inc. (“Sumco”) subsidiary in light
of ongoing operating losses.  Sumco sells electroplating services
primarily to the automotive market.  Sumco has had declining cash
flows in 2008 and projected negative 2009 cash flows principally caused by the
decline in U.S. economic activity and Sumco’s reliance on the automotive market
for over 90% of its sales.  The Board of Directors of Sumco is
exploring strategic options for the Sumco business.




In 2007,
a subsidiary of the Company, Handy & Harman Electronic Materials
Corporation, formerly located in East Providence, Rhode Island, sold certain of
its assets as well as certain assets and inventory located in Malaysia
(collectively referred to as "HHEM").




We
continue to evaluate the sale of certain businesses and assets, as well as
strategic and opportunistic acquisitions.  WHX has provided, and may
provide from time to time in the future, information to interested parties
regarding portions of its assets and businesses for such purposes.




Customers




H&H
is diversified across industrial markets and customers.  H&H sells
to customers in the construction, electronics, telecommunications, home
appliance OEM, transportation, utility, medical, semiconductor, aerospace and
general manufacturing industries.  In 2008 and 2007, no customer
accounted for more than 5% of H&H’s sales.




Bairnco’s
Arlon EM and Arlon CM segments sell to customers in a broad range of industries
where material performance is critical to the success of the end application,
including military electronics, medical and aerospace technologies,
telecommunications, automotive and semiconductor markets, railroad and aviation
markets, and the signage industry.  Bairnco’s Kasco segment provides
meat-room products and maintenance services for the food industry.  No
customer of Bairnco accounted for more than 5% of its sales during 2008 or
2007.




No
customer accounted for more than 5% of consolidated sales for 2008 or
2007.


5
 Table of Contents




Foreign
Revenues
  The
following table presents revenue for the years ended December 31.


Revenue2008
                                                  
                                                  
                                                  2007
                                                  
                                                  
                                                  2006(in
      thousands)United
      States
                                                  
                                                  $
                                                  639,821
                                                  
                                                  
                                                  $
                                                  562,562
                                                  
                                                  
                                                  $
                                                  417,866Foreign
                                                  
                                                  
                                                  85,964
                                                  
                                                  
                                                  
                                                  75,304
                                                  
                                                  
                                                  
                                                  43,097$
                                                  725,785
                                                  
                                                  
                                                  $
                                                  637,866
                                                  
                                                  
                                                  $
                                                  460,963


Foreign
revenue is based on the country in which the legal subsidiary is
domiciled.




Raw
Materials




H&H




The raw
materials used by H&H in its Precious Metal segment consist principally of
silver, gold, copper, zinc, nickel, tin, and the platinum group metals in
various forms.  H&H purchases its precious metal at market prices
from primary producers, bullion dealers, or in the form of scrap.  The
prices of silver, gold, and palladium are subject to fluctuations and are
expected to continue to be affected by world market
conditions.  Nonetheless, H&H has not experienced any significant
problem in obtaining the necessary quantities of raw materials.  To
the extent that supplier or customer metals are used by H&H, the amount of
inventory that H&H owns is generally reduced.  Precious metal raw
materials are readily available from several sources.  Precious metals
are purchased in quantities commensurate with customer orders.




The raw
materials used by H&H in its non-precious metal segment consist principally
of stainless, galvanized, and carbon steel, nickel alloys, a variety of
high-performance alloys, and various plastic compositions.  H&H
purchases all such raw materials at open market prices from domestic and foreign
suppliers.  H&H has not experienced any significant problem in
obtaining the necessary quantities of raw materials.  Prices and
availability, particularly of raw materials purchased from foreign suppliers,
are affected by world market conditions and government policies.  The
raw materials used by H&H in its non-precious metal segment are generally
readily available from more than one source.




Bairnco




The
essential raw materials used in the Arlon EM and Arlon CM segments are silicone
rubber, fiberglass cloth, pigments, copper foil, aluminum and Alloy 600 foil,
polyethylene foam and various plastic films, special papers and release liners,
vinyl resins, various adhesives and solvents, TeflonTM or PTFE resin, polyimide
resin, epoxy resins, other thermoset resins, as well as various
chemicals.  Generally, these materials are each available from several
qualified suppliers.  There are, however, several raw materials used
in products that are purchased from chemical companies that are proprietary in
nature.  Other raw materials are purchased from a single approved
vendor on a “sole source” basis, although alternative sources could be developed
in the future if necessary.  However, the qualification procedure can
take several months or longer and could therefore interrupt production if the
primary raw material source became unexpectedly unavailable.  Current
suppliers are located in the United States, Asia, and Europe.




Regarding
the Kasco segment, high quality carbon steel and stainless steel are the
principal raw materials used in the manufacture of band saw blades; they are
purchased from multiple domestic and international suppliers.  Tool
steel is utilized in manufacturing meat grinder plates and knives and is
purchased from qualified suppliers located in the United States, Europe and
Japan.  Equipment, replacement parts, and supplies are purchased from
a number of manufacturers and distributors in Asia, the United States, and
Europe.  In France and Canada, certain specialty equipment and other
items used in the supermarket industry and in the food processing industry are
purchased and resold under exclusive distributorship agreements with the
equipment manufacturers.  All of the raw materials and purchased
products utilized by this segment have been readily available throughout this
last year.




6
 Table of Contents




Capital
Investments




The
Company believes that in order to be and remain competitive, its business
segments must continuously strive to improve productivity and product quality,
and control and/or reduce manufacturing costs.  Accordingly, H&H’s
business segments expect to continue to incur capital investments that reduce
overall manufacturing costs, improve the quality of products produced, and
broaden the array of products offered to the several industries H&H serves,
as well as replace equipment as necessary to maintain compliance with
environmental, health and safety laws and regulations.  H&H’s
capital expenditures for 2008, 2007, and 2006 for continuing operations were
$7.5 million, $7.1 million, and $7.7 million, respectively.  H&H
anticipates funding its capital expenditures in 2009 from funds generated by
operations and borrowed funds.  H&H anticipates its capital
expenditures will approximate depreciation, on average, and may approximate
between $10 to $15.5 million per year for the next several years.




Bairnco
made capital expenditures of $4.8 million in 2008, $3.1 million during the
period from the acquisition date, April 13, 2007, through December 31, 2007
($4.9 million for the full year 2007), and $8.7 million in 2006.  The
capital expenditures were principally related to equipment replacements in 2008,
and equipment replacements, expenditures associated with a new China
manufacturing facility, and the implementation of Bairnco’s new information
systems software in 2007 and 2006.  Total capital expenditures are
expected to approximate depreciation over the next several years, and may
approximate between $5.0 and $7.0 million per year.  These capital
expenditures are expected to be associated with ongoing cost reduction
initiatives and necessary equipment replacements.  Bairnco anticipates
funding its capital expenditures in 2009 from funds generated by operations and
borrowed funds.




Energy
Requirements




H&H
and Bairnco both require significant amounts of electricity and natural gas to
operate their facilities and are subject to price changes in these
commodities.  A shortage of electricity or natural gas, or a
government allocation of supplies resulting in a general reduction in supplies,
could increase costs of production and could cause some curtailment of
production.




Employment




As of
December 31, 2008, the Company employed 2,376 employees worldwide.  Of
these employees, 631 were office employees, 548 were covered by collective
bargaining agreements and 1,197 were non-union operating employees.




Competition




There are
many companies, both domestic and foreign, which manufacture tubing products,
and other specially engineered products of the type H&H
manufactures.  There are also a number of competitors in each of the
classes of precious metal products we sell.  Some of these competitors
are larger than we are and have financial resources greater than we
do.  Some of these competitors enjoy certain other competitive
advantages, including greater name recognition; greater financial, technical,
marketing and other resources; a larger installed base of customers; and
well-established relationships with current and potential
customers.  Competition is based on quality, technology, service, and
price and in some industries, new product introduction, each of which is
important.




There are
numerous competitors ranging in size from small, sole proprietorships to units
of very large, multinational corporations that in certain instances have far
greater market positions and financial resources than the Company’s Arlon EM
segment and Arlon CM segment.




Arlon
CM’s businesses operate in two distinct markets: graphics and engineered coated
products (“ECP”).  In the graphics business, several of its major
competitors are units of well known multinational business enterprises with
greater financial resources and greater name recognition.  Arlon CM’s
graphics segment competes effectively through product quality, price
positioning, service levels, flexibility, and segment focus.  In the
global graphics materials market, and in particular within North and South
America and Australia, Arlon CM enjoys a well known brand name associated with
quality and value and a wide distribution network.  Arlon CM’s ECP
business has a broad range of competitors, many of which are much larger, have
greater financial resources, and more well known brand names.  Arlon
CM’s ECP business does not attempt to compete on scale or brand
awareness.  It competes almost entirely through customization and
service to large tapes distributors and focuses on narrow sub-markets (such as
window glazing tapes and motor and transformer insulation), where it can acquire
an advantage through customized product and service solutions.




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Competition
for Arlon EM’s products varies by product line and type of
customer.  Competition for established lines is usually based on one
or more elements such as specification position, lead time, price, product
performance, or technical support and customer service.  It may also
be based on the ability to service emerging technologies through the custom
design of new products, or redesign of existing products, as well as the
development of materials for new applications.  As an example, for
some high performance materials sold to the printed circuit board industry, the
consistent technical performance of the materials supplied in excess of
specified standards can be the critical competitive element.  In
addition, Arlon EM sells a significant portion of its circuit board materials
into the Far East and European markets.  The large electronics market
that has developed in Asia is spawning high performance/specialty laminate
competitors who compete with Arlon EM on high performance materials for business
in those geographies.




The
market environment for Kasco remains difficult with many regional distributor
competitors and with flat market demand growth for meat bandsaw blades and
rental grinder plates and knives.  Kasco has responded by diversifying
into repair and maintenance services for the food service and retail grocery
industries.  Kasco also sources globally in high volumes, and
effectively distributes high quality and competitively priced butcher supplies
and equipment.  Kasco’s cost competitive manufacturing facility in
Matamoros, Mexico, combined with Kasco’s quality and cost productivity from the
implementation of Lean Manufacturing at the Atlanta, Matamoros, and United
Kingdom factories, allows Kasco to remain competitive against its domestic and
global competition.




Distribution




The
businesses comprising the Company’s Precious Metal segment distribute their
products directly to customers through Company sales personnel, although certain
products are distributed through independent distributors throughout the United
States and Canada.  The products manufactured by the Company’s Tubing
segment are principally sold directly to customers through Company sales
personnel and the remainder is sold through manufacturers’ representatives and
distributors.  Most of the Company’s products comprising the
Engineered Materials segment are sold directly to customers through Company
sales personnel and the remaining sales are made by agents and manufacturers’
representatives.




Arlon EM
and Arlon CM products are marketed by Company sales personnel, outside sales
representatives and distributors in North and South America, Europe, Australia,
the Far East and several other international markets.  Kasco has a
distribution network that reaches over 30,000 retail grocery stores,
restaurants, delis, equipment distributors, and processing plants in the US,
Canada, Europe, South America and Asia.  Kasco’s distribution network
is made up of corporate-direct salesmen, route salesmen, repair service
technicians, and distributors who have knowledge of the local markets and the
customer’s needs.




Patents
and Trademarks




The
Company owns patents and several registered trademarks under which certain of
its products are sold.  In addition, the Company owns a number of US
and foreign mechanical patents related to several of its products, as well as a
number of design patents and registered trademarks.  The Company does
not believe that the loss of any or all of these trademarks would have a
material adverse effect on its businesses.  The Company’s material
patents have durations ranging from 16 to 22 years, with expiration dates
occurring in 2009 through 2025.




Prior
Operations




WHX’s
other business through August 1, 2003, consisted of Wheeling-Pittsburgh
Corporation (“WPC”) and six of its subsidiaries including Wheeling-Pittsburgh
Steel Corporation (“WPSC”), a vertically integrated manufacturer of value-added
and flat rolled steel products.  WPSC, together with WPC and its other
subsidiaries shall be referred to herein as the “WPC Group.”  In 2000,
the WPC Group filed petitions for relief under Chapter 11 of the Bankruptcy
Code, and emerged from bankruptcy on August 1, 2003.  Pursuant to the
terms of the WPC Plan of Reorganization, the WPC Group ceased to be a subsidiary
of WHX effective August 1, 2003, and from that date forward has been an
independent company.  However, the Company continues to have certain
obligations related to WPC as it relates to the WHX Pension Plan.  See
“Item 7 - Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Obligations.”




8
 Table of Contents




Item 1A.
            Risk
      Factors




This
report includes “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended (the “Securities Act”), and Section
21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
including, in particular, forward-looking statements under the headings “Item 7
- Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and “Item 8 - Financial Statements and Supplementary
Data.”  These statements appear in a number of places in this report
and include statements regarding the Company’s intent, belief or current
expectations with respect to (i) its financing plans, (ii) trends affecting its
financial condition or results of operations, and (iii) the impact of
competition.  The words “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “estimate,” and similar expressions are intended to identify
such forward-looking statements; however, this report also contains other
forward-looking statements in addition to historical information.




Any
forward-looking statements made by the Company are not guarantees of future
performance and there are various important factors that could cause actual
results to differ materially from those indicated in the forward-looking
statements.  This means that indicated results may not be
realized.




Factors
that could cause the actual results of the Company in future periods to differ
materially include, but are not limited to, the following:




Risks
Relating to our Financial Condition and Recently Completed
Reorganization




We
Have a History of Losses and Substantial Indebtedness and Cash Flow
Obligations.  We Cannot Assure You that We Will Achieve Profitability
in 2009.




The
Company recorded net income of $3.0 million and generated $10.1 million of
positive cash flow from operating activities in 2008.  Nevertheless,
it has incurred significant losses and negative cash flows from operations in
recent years, and as of December 31, 2008 had an accumulated deficit of $431.1
million.  As of December 31, 2008, the Company’s current assets
totaled $177.2 million and its current liabilities totaled $129.4 million,
resulting in working capital of $47.8 million.  The Company’s
financial position has improved from 2007, when it incurred a net loss of $20.8
million, generated $2.4 million of negative cash flows from operating
activities, and had working capital of $15.0 million as of December 31,
2007.  The Company has reduced its level of debt substantially in
2008, from $359.4 million to $209.2 million, principally through the Rights
Offering completed on September 25, 2008.




The
Company sold in the Rights Offering 11,178,459 shares of common stock to
existing stockholders through the exercise of rights at a subscription price of
$14.00 per share, for an aggregate purchase price of approximately $156.5
million.  SP II subscribed for 8,630,910 shares of the Company’s
common stock, for an aggregate purchase price of approximately $120.8 million,
pursuant to its basic and applicable oversubscription
privileges.  After giving effect to the Rights Offering, SP II owns
75% of the outstanding shares of common stock of the Company.  The
Company used the proceeds of the Rights Offering to (i) redeem preferred stock
issued by a wholly-owned subsidiary of the Company, which was held by SP II,
plus accumulated dividends, together totaling approximately $6.0 million, (ii)
repay Company indebtedness to SP II of approximately $18.9 million, and (iii)
repay $117.6 million of indebtedness and accrued interest of certain
wholly-owned subsidiaries of the Company to SP II.   After such
payments, $14.0 million remained with the Company as cash, of which $13.2
million was used to repay additional debt of the Company on October 29, 2008
pursuant to the amendments to the Company’s credit agreements of that same
date.




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WHX Corporation, the parent
company




WHX has
as its sole source of cash flow, distributions from its operating subsidiaries,
H&H and Bairnco, or other discrete transactions.  H&H’s credit
facilities effectively do not permit it to transfer any cash or other assets to
WHX with the exception of (i) an unsecured loan for required payments to the WHX
Pension Plan, and (ii) an unsecured loan for other uses in the aggregate
principal amount not to exceed $12.0 million, $7.0 million of which has been
distributed.  H&H’s credit facilities are collateralized by
substantially all of the assets of H&H and its
subsidiaries.  Similarly, Bairnco’s credit facilities and term loan do
not permit it to make any distribution, pay any dividend or transfer any cash or
other assets to WHX other than common stock of Bairnco, and up to $0.6 million
annually for services performed by WHX on behalf of Bairnco, under certain
circumstances.  Bairnco’s credit facilities are secured by a first
priority lien on all of the assets of Bairnco and its U.S.
subsidiaries.




WHX’s
ongoing operating cash flow requirements consist of arranging for the funding of
the minimum requirements of the defined benefit pension plan sponsored by the
Company (the “WHX Pension Plan”) and paying WHX administrative
costs.  On September 12, 2007, WHX made a payment to the WHX Pension
Plan of $13.0 million, which exceeded the minimum required contribution under
the Employee Retirement Income and Security Act of 1974, as amended
(“ERISA”).  As a result of such accelerated contribution, there was no
required contribution to the WHX Pension Plan in 2008.  The recent
decline of stock prices across a significant cross-section of the United States
stock market has resulted in an unfunded pension liability of the WHX Pension
Plan of $134.0 million as of December 31, 2008.  The Company expects
to have required minimum contributions for 2009 and 2010 of $1.2 million and
$6.0 million, respectively.   Required future contributions are
determined based upon and subject to changes, and assumptions as to future
changes, in asset values on plan assets, discount rates on future obligations,
assumed rates of return on plan assets and legislative
changes.  Pension costs and required funding obligations will be
effected by changes in the factors and assumptions described in the previous
sentence, as well as other changes such as a plan
termination.




In recent
years, the Company experienced liquidity issues.  On March 7, 2005,
WHX filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy
Code.  WHX continued to operate its business and own and manage its
properties as a debtor in possession until it emerged from protection under
Chapter 11 of the Bankruptcy Code on July 29, 2005.




Since WHX
emerged from bankruptcy, there have been no dividends from H&H or Bairnco to
WHX (due to covenant restrictions in their respective credit facilities) and
WHX’s principal sources of cash flow have consisted of:




·
            The
      issuance of $5.1 million in preferred stock by a newly created subsidiary
      in October 2005, which was invested in the equity of a public company
      (CoSine Communications Inc.
(“CoSine”);




·
            Partial
      payment by H&H of a subordinated debt to WHX of $9.0 million, which
      required the approval of the banks participating in the H&H credit
      facilities.  Subsequent to this transaction in 2006, the
      remaining intercompany loan balance of the subordinated debt of $44.2
      million was converted to equity;




·
            As
      permitted by the March 29, 2007 amendment and waiver to the H&H credit
      facilities, unsecured loans from H&H for certain required payments to
      the WHX Pension Plan;




·
            As
      permitted by a March 12, 2009 amendment to the H&H credit facilities,
      an unsecured loan from H&H to WHX for other uses in the aggregate
      principal amount of up to approximately $12.0 million (initially amended
      on July 27, 2007 to be up to $7.0 million), subject to certain
      limitations, of which approximately $7.0 million has already been
      distributed;




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·
            A
      $15.0 million subordinated loan from SP II advanced on April 17, 2007
      pursuant to the Subordinated Loan Agreement, which WHX used to fund a
      capital contribution to BZA to finance in part the Bairnco
      Acquisition;




·
            As
      permitted by a September 10, 2007 amendment to the H&H credit
      facilities, an unsecured loan from H&H of $13.0 million which was used
      by WHX to make a payment to the WHX Pension Plan on September 12, 2007;
      and




·
            Proceeds
      from the settlement of a fire loss claim at a plant of a subsidiary of the
      Company in the amounts of $0.8 million, $6.5 million and $0.8 million in
      2006, 2007 and 2008, respectively.




As of
December 31, 2008, WHX and its subsidiaries that are not restricted by loan
agreements or otherwise from transferring funds to WHX had cash of approximately
$4.8 million and current liabilities of approximately $2.8 million. H&H is
permitted to advance up to $5 million to WHX pursuant to the most recent
amendment to H&H’s credit agreements, and Bairnco is permitted by its credit
agreements to transfer up to $600,000 per year to WHX in payment of services
rendered by WHX on its behalf.  Management expects that WHX will be
able to fund its operations in the ordinary course over at least the next twelve
months.




Handy & Harman and
Bairnco




Widely-documented
commercial credit market disruptions have resulted in a tightening of credit
markets worldwide.  Liquidity in the global credit market has been
severely contracted by these market disruptions, making it costly to obtain new
lines of credit or to refinance existing debt, when debt financing is available
at all.  The effects of these disruptions are widespread and difficult
to quantify, and it is impossible to predict when the global credit market will
improve or when the credit contraction will significantly
ease.  Furthermore, one or more of the financial institutions that
make available the Company’s revolving credit facilities may become unable to
fulfill their funding obligations, which could materially and adversely affect
liquidity.




The
ability of both H&H and Bairnco to draw on their respective revolving lines
of credit is limited by a borrowing base of eligible accounts receivable and
inventory.  As of December 31, 2008, H&H’s availability under its
credit facilities was $20.4 million, and Bairnco’s availability under its credit
facilities was $6.7 million.  However, there can be no assurances that
they will continue to have access to all or any of the credit lines if their
operating and financial performance do not satisfy relevant borrowing base
criteria and financial covenants within the financing agreements.  If
either H&H or Bairnco do not satisfy borrowing base criteria or financial
covenants, and if they are unable to secure necessary waivers or other
amendments from the lender, they will not have access to this credit, which
could adversely affect the Company’s liquidity.




The
Company




We do not
anticipate that the Company will have any additional sources of cash flow other
than (i) as described above, (ii) from operations, (iii) from the sale of assets
and/or businesses, and (iv) from other discrete transactions.




The
ability of the Company to meet its cash requirements for at least the next
twelve months is dependent, in part, on the Company’s continuing ability to meet
its business plans.  Management is utilizing the following strategies
to enhance liquidity: (1) continuing to implement and enhance systems and
processes to increase operating efficiencies at Company facilities, (2)
supporting profitable sales growth both internally and through acquisition, (3)
evaluating strategic alternatives with respect to all lines of business and/or
assets and (4) seeking financing alternatives that may lower its cost of capital
and/or enhance current cash flow.




The
Company continues to examine all of its options and strategies, including
acquisitions, divestitures, and other corporate transactions, to increase cash
flow and stockholder value, as well as considering the additional reduction of
certain discretionary expenses and sale of certain non-core
assets.  There can be no assurance that the funds available from
operations and under the Company’s credit facilities will be sufficient to fund
its debt service costs, working capital demands, pension plan contributions, and
environmental remediation costs.  The Company’s inability to generate
sufficient cash flows from its operations could impair its liquidity, and would
likely have a material adverse effect on its business, financial condition and
results of operations, and could raise substantial doubt that the Company will
be able to continue to operate.




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We
Sponsor a Defined Benefit Pension Plan Which Could Subject Us to Substantial
Cash Funding Requirements in the Future.




The
recent decline of stock prices across a significant cross-section of the United
States stock market and continued capital markets weakness have significantly
contributed to an unfunded pension liability of the WHX Pension Plan of $134.0
million as of December 31, 2008.  The Company expects to have required
minimum contributions for 2009 and 2010 of $1.2 million and $6.0 million,
respectively.   Required future contributions are determined
based upon and subject to changes, and assumptions as to future changes, in
asset values on plan assets, discount rates on future obligations, assumed rates
of return on plan assets and legislative changes.  Pension costs and
required funding obligations will be effected by changes in the factors and
assumptions described in the previous sentence, as well as other changes such as
a plan termination.




In addition, the Company
entered into an agreement with the PBGC on July 24, 2003 in which, among other
things, WHX agreed that it will not contest a future action by the PBGC to
terminate the WHX Pension Plan in connection with a future WPC Group facility
shutdown.  In the event that such a plan termination occurs, the PBGC
has agreed to release WHX from any claims relating to the
shutdown.  However, there may be PBGC claims related to unfunded
liabilities that may exist as a result of a termination of the WHX Pension
Plan.  Please see “Item 7.  Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity, Cash Flow
and Commitments—Obligations—Pension Plan.”




If
We Are Unable to Access Funds Generated by Our Subsidiaries We May Not Be Able
to Meet Our Financial Obligations.




Because
WHX is a holding company that conducts operations through its subsidiaries, it
depends on those entities for dividends, distributions and other payments to
generate the funds necessary to meet its financial
obligations.  Failure by one of those subsidiaries to generate
sufficient cash flow and meet the requirements of their respective credit
facilities could have a material adverse effect on WHX’s business, financial
condition and results of operations.  As previously described, due to
covenant restrictions in H&H and Bairnco’s respective credit facilities,
there have been no dividends from H&H or Bairnco to WHX, and WHX’s sources
of cash have been limited as described herein.




Risks
Relating to Our Business




The
Current Disruption in the Credit Markets, and its Effects on the Global and
Domestic Economies, Could Adversely Affect our Business.




Recent
substantial volatility in the global capital markets and widely-documented
commercial credit market disruptions have had a significant negative impact on
financial markets, as well as the global and domestic economies.  The
effects of these disruptions are widespread and difficult to quantify, and it is
impossible to predict when the global financial markets will improve or when the
credit contraction will significantly ease.  These conditions and the
accompanying uncertainty about current global economic conditions have had, and
may continue to have, a material adverse effect on demand for our customers’
products and, in turn, on demand for our products, resulting in a reduction in
sales and margins.  A significant portion of our revenues are received
from customers in automotive and construction related industries, which have
recently experienced significant financial downturns.  These
industries are cyclical and demand for their products tends to fluctuate due to
changes in national and global economic conditions, availability of credit and
other factors.  The continuation or worsening of consumer demand in
these industries would adversely affect our revenues, profitability, operating
results and cash flow.  We may also experience a slowdown as some
customers experience difficulty in obtaining adequate financing due to the
continuing disruption in the credit markets.  Furthermore, the
financial stability of our customers or suppliers may be compromised, which
could result in additional bad debts for us or non-performance by
suppliers.  Our assets may also be impaired or subject to write-down
or write-off as a result of the continuing instability in financial
markets.  These adverse effects would likely be exacerbated if current
global economic conditions persist or worsen, resulting in wide-ranging, adverse
and prolonged effects on general business conditions, and materially and
adversely affect our operations, financial results and liquidity.




12
 Table of Contents




In
Many Cases, Our Competitors Are Larger Than Us and Have Manufacturing and
Financial Resources Greater Than We Do, Which May Have a Negative Impact on Our
Business, Operating Results or Financial Condition.




There are
many companies, both domestic and foreign, which manufacture products of the
type we manufacture.  Some of these competitors are larger than we are
and have financial resources greater than we do.  Some of these
competitors enjoy certain other competitive advantages, including greater name
recognition, greater financial, technical, marketing and other resources, a
larger installed base of customers, and well-established relationships with
current and potential customers.  Competition is based on quality,
technology, service, and price and in some industries, new product introduction,
each of which is of equal importance.  We may not be able to compete
successfully and competition may have a negative impact on our business,
operating results or financial condition by reducing volume of products sold
and/or selling prices, and accordingly reducing our revenues and
profits.




In our
served markets, we compete against large private and public
companies.  This results in intense competition in a number of markets
in which we operate.  In addition, the ongoing move of our customer
base in the Arlon EM segment to low cost China manufacturing reduces pricing and
increases competition.  Significant competition could in turn lead to
lower prices, lower levels of shipments and/or higher costs in some markets that
could have a negative effect on our results of operations.




Our
Profitability May Be Adversely Affected by Fluctuations in the Cost of Raw
Materials.




We are
exposed to market risk and price fluctuation related to the purchase of natural
gas, electricity, precious metal, steel products and certain non-ferrous metals
used as raw materials.  Our results of operations may be adversely
affected during periods in which either the prices of such commodities are
unusually high or their availability is restricted.  In addition, we
hold precious metal positions that are subject to market
fluctuations.  Precious metal inventory is included in inventory using
the last-in, first-out method of inventory accounting.  We enter into
forward or future contracts with major financial institutions to reduce the
economic risk of price fluctuations.




Some
of Our Raw Materials Are Available From a Limited Number of
Suppliers.   There Can Be No Assurance that the Production of
These Raw Materials Will Be Readily Available.




Several
raw materials used in Bairnco’s products are purchased from chemical companies
that are proprietary in nature.  Other raw materials are purchased
from a single approved vendor on a “sole source” basis.  Although
alternative sources could be developed in the future if necessary, the
qualification procedure can take several months or longer and could therefore
interrupt the production of our products and services if the primary raw
material source became unexpectedly unavailable.




The
Loss of Any of Our Major Customers Could Adversely Affect Our Revenues and
Financial Health.




No single
customer accounted for more than 5% of net sales in 2008.  H&H’s
15 largest customers accounted for approximately 31% of H&H’s consolidated
net sales.  In 2008, Bairnco’s 15 largest customers accounted for
approximately 18% of Bairnco’s consolidated net sales. Together, the 15 largest
customers accounted for approximately 22% of consolidated WHX net sales. If we
were to lose any of our relationships with these customers, revenues and
profitability could fall significantly.




Our
Business Strategy Includes Selective Acquisitions and Acquisitions Entail
Numerous Risks.




Our
business strategy includes, among other things, strategic and selective
acquisitions as well as potential opportunistic acquisitions.  This
element of our strategy entails several risks, including the diversion of
management’s attention from other business concerns, whether or not we are
successful in finding acquisitions, and the need to finance such acquisitions
with additional equity and/or debt.




13
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In
addition, once found, acquisitions entail further risks, including:
unanticipated costs and liabilities of the acquired businesses, including
environmental liabilities that could materially adversely affect our results of
operations; difficulties in assimilating acquired businesses; negative effects
on existing business relationships with suppliers and customers and losing key
employees of the acquired businesses.




Our
Competitive Advantage Could Be Reduced if Our Intellectual Property or Related
Proprietary Manufacturing Processes Become Known by Our Competitors or if
Technological Changes Reduce Our Customers’ Need for Our Products.




We own a
number of trademarks and patents (in the United States and other jurisdictions)
on our products and related proprietary manufacturing processes.  In
addition to trademark and patent protection, we rely on trade secrets,
proprietary know-how and technological advances that we seek to
protect.  If our intellectual property is not properly protected by us
or is independently discovered by others or otherwise becomes known, our
protection against competitive products could be diminished.




We
Could Incur Significant Costs, Including Remediation Costs, as a Result of
Complying With Environmental Laws.




Our
facilities and operations are subject to extensive environmental laws and
regulations imposed by federal, state, foreign and local authorities relating to
the protection of the environment.  We could incur substantial costs,
including cleanup costs, fines or sanctions, and third-party claims for property
damage or personal injury, as a result of violations of or liabilities under
environmental laws.  We have incurred, and in the future may continue
to incur, liability under environmental statutes and regulations with respect to
the contamination detected at sites owned or operated by the Company (including
contamination caused by prior owners and operators of such sites, abutters or
other persons) and the sites at which we have disposed of hazardous
substances.  As of December 31, 2008, we have established a reserve
totaling $6.7 million with respect to certain presently estimated environmental
remediation costs.  This reserve may not be adequate to cover the
ultimate costs of remediation, including discovery of additional contaminants or
the imposition of additional cleanup obligations, which could result in
significant additional costs.  In addition, we expect that future
regulations, and changes in the text or interpretation of existing regulations,
may subject us to increasingly stringent standards.  Compliance with
such requirements may make it necessary for us to retrofit existing facilities
with additional pollution-control equipment, undertake new measures in
connection with the storage, transportation, treatment and disposal of
by-products and wastes or take other steps, which may be at a substantial cost
to us.




Our
Results of Operations May Be Negatively Affected by Variations in Interest
Rates.




Our
credit facilities are collateralized by accounts receivable, inventory, and
property, plant and equipment.  These credit facilities are variable
rate obligations, which expose us to interest rate risks.  A one
percent (1%) change in interest rates on our variable outstanding debt
obligations as of December 31, 2008 would increase or decrease interest expense
by approximately $2.0 million on an annual basis.




On March
12, 2009, H&H and Bairnco amended certain of their respective credit
facilities to, among other things, increase interest rates. See “Item 7-
Management’s Discussion and Analysis of Financial Condition and Results of
Operations - Debt” for a discussion of the amended interest
rates.




Our
Earnings Could Decrease if There Is A Decline in Governmental Funding for
Military Operations.




If, as a
result of a loss of funding or a significant cut in federal budgets, spending on
military projects were to be reduced significantly, our earnings and cash flows
related to the Arlon EM segment could be negatively affected.




Potential
Supply Constraints and Significant Price Fluctuations of Electricity, Natural
Gas and Other Petroleum Based Products Could Adversely Affect Our
Business.




In our
production and distribution processes, we consume significant amounts of
electricity, natural gas, fuel and other petroleum-based commodities, including
adhesives and other products.  The availability and pricing of these
commodities are subject to market forces that are beyond our
control.  Our suppliers contract separately for the purchase of such
commodities and our sources of supply could be interrupted should our suppliers
not be able to obtain these materials due to higher demand or other factors
interrupting their availability.  Variability in the supply and prices
of these commodities could materially affect our operating results from period
to period and rising costs could erode our profitability.




14
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Adverse
Weather Could Materially Affect Our Results.




A
significant portion of our business in the Kasco segment involves on-site
delivery, service and repair.  In addition, a significant amount of
our business in the Arlon CM segment is to the outdoor sign
industry.  Inclement weather affects both our ability to produce and
distribute our products and affects our customers’ short-term demand since their
work also can be hampered by weather.  Therefore, our results can be
negatively affected by inclement weather.  Severe weather such as
hurricanes, tropical storms and earthquakes can damage our facilities, resulting
in increased repair costs and business disruption.




A
Failure to Manage Industry Consolidation Could Negatively Impact Our
Profitability.




The
industries within which we operate have experienced recent
consolidations.  This trend tends to put more purchasing power in the
hands of a few large customers who can dictate lower prices of our
products.  Failure to effectively negotiate pricing agreements and
implement on-going cost reduction projects can have a material negative impact
on our profitability.




Our
Future Success Depends Greatly Upon Attracting and Retaining Qualified
Personnel.




A
significant factor in our future profitability is our ability to attract,
develop and retain qualified personnel.  Our success in attracting
qualified personnel is affected by changing demographics of the available pool
of workers with the training and skills necessary to fill the available
positions, the impact on the labor supply due to general economic conditions,
and our ability to offer competitive compensation and benefit
packages.




Litigation
Could Affect Our Profitability.




The
nature of our businesses expose us to various litigation matters including
product liability claims, employment, health and safety matters, environmental
matters, regulatory and administrative proceedings.  We contest these
matters vigorously and make insurance claims where
appropriate.  However, litigation is inherently costly and
unpredictable, making it difficult to accurately estimate the outcome of any
litigation.  Although we make accruals as we believe warranted, the
amounts that we accrue could vary significantly from any amounts we actually pay
due to the inherent uncertainties in the estimation process. As of December 31,
2008, we have accrued approximately $6.7 million for environmental remediation
costs but have not made any accruals for other litigation matters.




Our
Internal Controls Over Financial Reporting May Not Be Effective and Our
Independent Auditors May Not Be Able to Certify as to Their Effectiveness, Which
Could Have a Significant and Adverse Effect on Our Business and
Reputation.




We are
subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and
the rules and regulations of the Securities and Exchange Commission (the “SEC”)
thereunder (which we refer to as Section 404) as of December 31,
2008.  Section 404 requires us to report on the design and
effectiveness of our internal controls over financial reporting.  In
the past, our management has identified ‘‘material weaknesses’’ in our internal
controls over financial reporting, which we believe have been
remediated.  However, any failure to maintain or implement new or
improved controls, or any difficulties we encounter in their implementation,
could result in significant deficiencies or material weaknesses, and cause us to
fail to meet our periodic reporting obligations or result in material
misstatements in our financial statements.




Section
404 also requires an independent registered public accounting firm to test the
internal controls over financial reporting and report on the effectiveness of
such controls.  In our case, our independent auditor, Grant Thornton
LLP (“GT”) is not required to issue a report attesting to our internal controls
over financial reporting until the year ended December 31,
2009.  There can be no assurance that GT will issue an unqualified
report attesting to our internal controls over financial reporting at such
time.  As a result, there could be a negative reaction in the
financial markets due to a loss of confidence in the reliability of our
financial statements or our financials statements could change.  We
may also be required to incur costs to improve our internal control system and
hire additional personnel.  This could negatively impact our results
of operations.




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Risk
Relating to Our Ownership Structure




Warren
G. Lichtenstein, Our Chairman, and Certain Other Officers and Directors, Through
Their Affiliation with Steel Partners, Has the Ability to Exert Significant
Influence Over Our Operations.




SP II is
the beneficial holder of 9,133,890 shares of the Company’s common stock,
representing approximately 75.0% of the outstanding shares.  Steel
Partners II Master Fund L.P. (“SP II Master”) is the owner of approximately 99%
of the limited partnership interests in WebFinancial L.P. (“Web
L.P.”).  Web L.P. is the sole limited partner of SP
II.  Steel Partners LLC (“Steel Partners”) is the manager of SP II
Master, Web L.P. and SP II.  Warren G. Lichtenstein, our Chairman, is
also the manager of Steel Partners.  Mr. Lichtenstein, as the manager
of Steel Partners, has sole investment and voting control over the shares
beneficially owned by SP II and thus has the ability to exert significant
influence over our policies and affairs, including the election of our Board of
Directors and the approval of any action requiring a stockholder vote, such as
amendments to our amended and restated certificate of incorporation and
approving mergers or sales of substantially all of our assets, as well as
matters where the interests of Mr.  Lichtenstein and Steel Partners
may differ from the interests of our other stockholders in some
respects.  In addition, employees and affiliates of Steel Partners
hold positions with WHX, including Glen M. Kassan as Chief Executive Officer and
John J. Quicke as Vice President, and as directors, and Jack L. Howard and John
H. McNamara Jr. as directors.




Factors
Affecting the Value of our Common Stock




Transfer Restrictions Contained in
our Charter and Other Factors Could Hinder the Development of an Active Market
for our Common Stock.




On
December 5, 2008, the Company’s common stock began trading on the NASDAQ Capital
Market under the new symbol “WXCO.”  The Company’s shares were
previously quoted on the over-the-counter “Pink Sheets” under the same symbol
from November 25, 2008 and under the symbol “WXCP.PK” prior to the Reverse Stock
Split effected on November 24, 2008. There can be no assurance as to the volume
of shares of our common stock or the degree of price volatility for our common
stock traded on the NASDAQ Capital Market.  The ownership by SP II of
75.0% of our outstanding common stock and transfer restrictions contained in our
charter to help preserve our net operating loss carryforwards (“NOLs”) that will
generally prevent any person from rapidly acquiring amounts of our common stock
such that such person would hold 5% or more of our common stock, in each case
for up to ten years after July 29, 2005, as specifically provided in our
charter, could hinder development of an active market for our common
stock.




We
Do Not Anticipate Paying Dividends on Our Common Stock in the Foreseeable Future
Which May Limit Investor Demand.




We do not
anticipate paying any dividends on our common stock in the foreseeable
future.  Such lack of dividend prospects may have an adverse impact on
the market demand for our common stock as certain institutional investors may
invest only in dividend-paying equity securities or may operate under other
restrictions that may prohibit or limit their ability to invest in our common
stock.




Item 2.
            Properties




As of
December 31, 2008, H&H had 16 active operating plants in the United States,
Canada, China, Denmark, France, and Mexico, with a total area of approximately
1,205,000 square feet, including warehouse, office and laboratory
space.  H&H also owns or leases sales, service and warehouse
facilities at 7 other locations in the United States (which, with H&H’s
general offices, have a total area of approximately 175,000 square feet) and
owns 4 non-operating locations with a total area of approximately 267,000 square
feet.  Manufacturing facilities of H&H are located in: Toronto,
Canada; Camden, Delaware; Kolding, Denmark; Evansville and Indianapolis,
Indiana; Agawam, Massachusetts; Middlesex, New Jersey; Danville, New Hampshire;
Canfield, Ohio; Suzhou, People’s Republic of China; Tulsa and Broken Arrow,
Oklahoma; Cudahy, Wisconsin; Itasca and Bloomingdale, Illinois; Coahuila, Mexico
and Riberac, France.  All H&H plants are owned except for the
Middlesex, Itasca, Danville, Suzhou, and Coahuila plants, which are
leased.




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As of
December 31, 2008, Bairnco had 19 active facilities in the United States,
Mexico, Canada, the United Kingdom, Germany, France and the People’s Republic of
China, as well as utilizing various field warehouses, with a total area of
approximately 1,052,000 square feet, including warehouse and office
space.  The operating facilities of Bairnco are located in: Bear,
Delaware; Rancho Cucamonga and Santa Ana, California; Dallas and San Antonio,
Texas; Atlanta, Georgia; St. Louis, Missouri; Matamoros, Mexico, Montreal,
Canada; Gwent, Wales, United Kingdom; Pansdorf, Germany; Paris, France; and
Suzhou New District, People’s Republic of China.  The facilities
located in Bear, Atlanta, St. Louis, Matamoras, Gwent, Pansdorf, and the Suzhou
New District are owned.  The facilities located in Santa Ana, Rancho
Cucamonga, Dallas, San Antonio, Montreal, and Paris, as well as various field
warehouses, are leased.




The
Company considers its manufacturing plants and service facilities to be well
maintained and efficiently equipped, and therefore suitable for the work being
done.  The productive capacity and extent of utilization of its
facilities is dependent in some cases on general business conditions and in
other cases on the seasonality of the utilization of its
products.  Capacity can be expanded at some locations.




Item 3.
            Legal
      Proceedings




2005
Bankruptcy Filing




On March
7, 2005, WHX filed a voluntary petition to reorganize under Chapter 11 of the
Bankruptcy Code with the Bankruptcy Court.  WHX continued to operate
its businesses and own and manage its properties as a debtor in possession under
the jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code until it emerged from protection on July 29,
2005.




On March
7, 2005, WHX also filed a proposed Plan of Reorganization (as amended, the
“Plan”) and a related proposed disclosure statement (as amended, the “Disclosure
Statement”) with the Bankruptcy Court. The Plan was confirmed on July 21, 2005
(the “Confirmation Order”) and became effective on July 29, 2005 (the “Effective
Date”).




The
Bankruptcy Filing created an event of default under the Indenture governing the
10 1/2% Senior Notes. Under the terms of the 10 1/2% Senior Notes, as a result
of the Bankruptcy Filing, the entire unpaid principal and accrued interest (and
any other additional amounts) became immediately due and payable without any
action on the part of the trustee or the note holders.  The principal
amount outstanding under the 10 1/2% Senior Notes at March 7, 2005 was
approximately $92.8 million.  Accrued interest to March 7, 2005 was
approximately $3.8 million.




Neither
H&H, the Company’s primary business at that time, nor any of WHX’s other
subsidiaries or affiliates, were included in its bankruptcy
filing.  All of H&H’s operating units conducted business in the
ordinary course during the bankruptcy.  WHX’s bankruptcy filing was
primarily intended to reduce its debt, simplify its capital structure, reduce
its overall cost of capital and provide it with better access to capital
markets.




The
following is a summary of certain material features of the Plan and the
Confirmation Order.  On the Effective Date (and with shares stated on
a pre-reverse split basis):




·
            All
      of WHX’s outstanding securities, including WHX’s pre-bankruptcy filing
      common stock, Series A preferred stock, Series B preferred stock and 10
      1/2% Senior Notes were deemed cancelled and annulled without further act
      or action.




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·
            In
      full and complete satisfaction of all such claims, holders of the 10 1/2%
      Senior Notes received 9,200,000 shares of common stock representing their
      prorated share of the reorganized company.  These shares
      represent 92% of the equity in the reorganized
  company.




·
            In
      full and complete satisfaction of all such interests, Series A preferred
      stockholders received 366,322 shares of common stock representing their
      prorated share of the reorganized company and 344,658 warrants to purchase
      common stock of the reorganized company, exercisable at $11.20 per
      share.  The warrants expired on February 28,
    2008.




·
            In
      full and complete satisfaction of all such interests, Series B preferred
      stockholders received 433,678 shares of common stock representing their
      prorated share of the reorganized company and 408,030 warrants to purchase
      common stock of the reorganized company, exercisable at $11.20 per
      share.  The warrants expired on February 28,
    2008.




·
            Holders
      of WHX’s pre-bankruptcy filing common stock received no distribution under
      the Plan.




The
common stock received by the Series A and Series B preferred stockholders,
collectively, represented 8% of the equity in the reorganized
company.




On the
Effective Date, all of the assets of WHX were vested in the reorganized company
free and clear of all liens, causes of actions, claims, encumbrances, equity
interests, and interests against, in, or on such assets, except as explicitly
provided in the Plan.




On
January 21, 2009, WHX filed a Motion for a Final Decree and a Closing Report
with the Bankruptcy Court.  On February 5, 2009, the Bankruptcy Court
granted WHX’s motion and issued a Final Decree closing WHX’s 2005 Chapter 11
bankruptcy case.




General




HH East Parcel,
LLC.  V. Handy & Harman




This
action arose out of a purchase and sale agreement entered into in 2003 whereby
H&H agreed to sell a portion of a commercial site in Connecticut (“Sold
Parcel”) to HH East Parcel, LLC (“HH East”).  On or about April 5,
2005, HH East filed a Demand for Arbitration with the American Arbitration
Association seeking legal and equitable relief including completion of the
remediation of environmental conditions at the site in accordance with the terms
of the agreement.  An arbitration hearing was held in October 2005,
pursuant to which HH East was awarded, among other things, an amount equal to
$5,000 per day from January 1, 2005 through the date on which remediation is
completed.  As of the completion date of the remediation, April 6,
2007, the award amounted to approximately $4.0 million.  H&H
applied to the Connecticut Superior Court to have the arbitration award
vacated.  On June 26, 2006, the court issued a decision denying
H&H’s application and granting HH East’s motion to confirm the arbitration
award.  H&H appealed that decision.  On May 23, 2008,
H&H was notified that the Connecticut Supreme Court affirmed the lower court
decision.  On September 2, 2008, the parties executed a settlement
agreement pursuant to which the parties exchanged full mutual releases in
exchange for a payment by H&H to HH East of $4.9 million.  In
addition, HH East agreed to cease immediately all collection efforts and agreed
to the release of all funds subject to orders of attachment.  On
December 2, 2008, pursuant to the settlement agreement, the parties jointly
filed a satisfaction of judgment with the Connecticut Superior
Court.




H&H
has been working cooperatively with the Connecticut Department of Environmental
Protection (“CTDEP”) with respect to its obligations under a consent order
entered into in 1989 that applies to the Sold Parcel and a remaining parcel that
together with the Sold Parcel comprises the commercial site discussed
above.  H&H has been conducting an investigation of the remaining
parcel, and is continuing the process of evaluating various options for its
remediation of the remaining parcel.  The sale of the Sold Parcel,
which was the subject of the above-referenced litigation, triggered statutory
obligations under Connecticut law to investigate and remediate pollution at or
emanating from the Sold Parcel.  Remediation of all soil conditions on
the Sold Parcel was completed on April 6, 2007, although H&H performed
limited additional work on that site, solely in furtherance of now concluded
settlement discussions between HH East and H&H.  Although no
groundwater remediation is required, there will be monitoring of the Sold Parcel
site for several years.  On September 11, 2008, the CTDEP advised
H&H that it had approved H&H’s Soil Action Remediation Action Report,
dated December 28, 2007 as amended by an addendum letter dated July 15, 2008,
thereby concluding the active remediation of the Sold Parcel. Approximately
$29.0 million was expended through December 31, 2008, and the remaining
remediation and monitoring costs are expected to approximate $0.3
million.  H&H received reimbursement of $2.0 million from an
insurance company under a cost-cap insurance policy and is pursuing its
potential entitlement to additional insurance coverage.




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Paul E. Dixon & Dennis
C. Kelly V. Handy & Harman




Paul
Dixon and Dennis Kelly, two former officers of H&H (the “Claimants”) filed a
Statement of Claim with the American Arbitration Association (the “Arbitration”)
on or about January 3, 2006.  The Claimants were employees of H&H
until September 2005 when their employment was terminated by
H&H.  Their claims included seeking payments allegedly due under
employment contracts and allegedly arising from their terminations, and seeking
recovery of benefits under what they allege was the H&H Supplemental
Executive Retirement Plan.




In the
Arbitration, Claimants sought an award in excess of $4.0 million each, plus
interest, costs and attorneys’ fees.  The Claimants also sought
indemnification for certain matters and an injunction against H&H with
regard to life insurance policies.  H&H brought a special
proceeding on February 15, 2006 in the Supreme Court of the State of New York,
County of Westchester, for a judgment staying the arbitration of three of the
four claims.  On March 10, 2006, all of the parties filed a
stipulation with the court, discontinuing the court proceeding and agreeing
therein, among other things, that all claims asserted by the Claimants in the
Arbitration (which was also discontinued at that time) would be asserted in
Supreme Court, Westchester County.




In April
2006, the Claimants served a request for benefits, severance and other amounts,
similar to those described above, on H&H and various plan administrators and
fiduciaries thereof.  The request was reviewed in accordance with the
procedures of the benefit plans at issue and by letter dated September 27, 2006,
claimants were notified that their request was largely denied.




In
January 2008, Mr. Kelly filed a lawsuit against WHX, H&H and various benefit
plans in the United States District Court for the Southern District of New
York.  Mr. Dixon did not join in this lawsuit, and his counsel has not
indicated whether Mr. Dixon intends to file his own lawsuit.  Mr.
Kelly’s claims in this lawsuit are essentially the same claims that he asserted
in the above-described arbitration and request for benefits.  Mr.
Kelly’s complaint seeks approximately $4.0 million in money damages plus
unspecified punitive damages.  The defendants are vigorously defending
this lawsuit, and believe that it is without merit.  Nevertheless,
there can be no assurance that the defendants will be successful in defending
against Mr. Kelly’s claims, or that the defendants will not have any liability
on account of Mr. Kelly’s claims.  Such liability, if any, cannot be
reasonably estimated at this time, and accordingly, there can be no assurance
that the resolution of this matter will not be material to the financial
position, results of operations and cash flow of the Company.




Arista Development LLC V.
Handy & Harman Electronic Materials Corporation




In 2004,
a subsidiary of H&H, HHEM, entered into an agreement to sell a
commercial/industrial property in Massachusetts.  Disputes between the
parties led to suit being brought in Bristol Superior Court in
Massachusetts.  The plaintiff alleges that HHEM is liable for breach
of contract relating to HHEM’s alleged breach of the agreement, unfair and
deceptive acts and practices, and certain consequential and treble damages as a
result of HHEM’s termination of the agreement in 2005, although HHEM
subsequently revoked its notice of termination.  HHEM has denied
liability and has been vigorously defending the case.  The court
entered a preliminary injunction enjoining HHEM from conveying the property to
anyone other than the plaintiff during the pendency of the
case.  Discovery on liability and damages has been in abeyance while
the parties are actively engaged in settlement discussions. Since discovery is
not completed, it cannot be known at this time whether it is foreseeable or
probable that plaintiff would prevail in the litigation or whether H&H would
have any liability to the plaintiff.




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Electroplating Technologies,
Ltd v. Sumco, Inc.




Electroplating
Technologies, Ltd. (“ETL”) filed a lawsuit against Sumco, a subsidiary of
H&H, in Lehigh, Pennsylvania County Court of Common Pleas.  ETL
contends that Sumco misappropriated trade secrets and breached contractual
obligations with respect to certain allegedly proprietary and confidential
information of ETL.  ETL is seeking damages in excess of $4.55
million.  In its pretrial filings, ETL also asserted a claim for $9.0
million in punitive damages.  Sumco is vigorously defending this
lawsuit, and believes that it is without merit.  Nevertheless, there
can be no assurance that Sumco will be successful in defending against ETL’s
claims, or that Sumco will not have any liability on account of ETL’s
claims.  Sumco’s liability, if any, cannot be reasonably estimated at
this time, and accordingly, there can be no assurance that the resolution of
this matter will not be material to the financial position, results of
operations and cash flow of Sumco.




World Properties, Inc. et.
al. v. Arlon, Inc.




In
December 2008, World Properties, Inc. and Rogers Corporation (collectively,
“Rogers”) filed a lawsuit against Arlon, Inc. (“Arlon”), a subsidiary of
Bairnco, in the United States District Court in Hartford, CT.  The
lawsuit alleges that Rogers is the exclusive licensee under U.S. Patent No.
5,552,210 (the “210 Patent”) and that Arlon’s TC600 circuit board infringes that
patent.  In the complaint, Rogers demanded that Arlon cease the
manufacture, sale and distribution of its TC600 circuit board and that the Court
award unspecified damages to compensate Rogers for the alleged
infringement.  Arlon has moved to dismiss the lawsuit, based upon a
covenant not to sue contained in an asset purchase agreement between Rogers and
Arlon, dated January 30, 1996 (the “APA”), that Arlon contends covers the TC600
and the 210 Patent.  Arlon has also requested that the Court stay
discovery on Rogers’ patent infringement claim pending resolution of the motion
to dismiss.  The Court has agreed to a stay of discovery on the patent
infringement claim, but directed the parties to conduct expedited discovery on
the issue of the applicability of the covenant not to sue in the APA to the
TC600 and the 210 Patent. There can be no assurance that Arlon will be
successful in defending against Rogers’ claims.  Arlon’s liability, if
any, cannot be reasonably estimated at this time, and accordingly, there can be
no assurance that the resolution of this matter will not be material to the
financial position, results of operations and cash flow of the
Company.




Environmental
Matters




In
connection with the Sold Parcel, H&H was responsible for demolition and
environmental remediation of the site, the estimated cost of which was included
in the loss on sale recorded in 2003.  In 2004, H&H determined
that an increase in the reserve for environmental remediation was needed in the
amount of $28.3 million.  This change in reserve was caused by the
discovery of underground debris and soil contaminants that had not been
anticipated.  These additional costs were included in environmental
remediation expense.  An additional $4.0 million was also recorded in
selling, general and administrative expenses in 2004 as a penalty related to the
Sold Parcel.  H&H retains title to a parcel of land adjacent to
the Sold Parcel.  This parcel is classified as other non-current
assets, in the amount of $2.0 million, on the consolidated balance sheets at
December 31, 2008.




H&H
entered into an administrative consent order (the “ACO”) in 1986 with the New
Jersey Department of Environmental Protection (“NJDEP”) with regard to certain
property that it purchased in 1984 in New Jersey.  The ACO involves
investigation and remediation activities to be performed with regard to soil and
groundwater contamination.  H&H settled a case brought by the
local municipality in regard to this site in 1998 and also settled with certain
of its insurance carriers.  H&H is actively remediating the
property and continuing to investigate the most effective methods for achieving
compliance with the ACO.  A remedial investigation report was filed
with the NJDEP in December of 2007.  By letter dated December 12,
2008, NJDEP issued its approval with respect to additional investigation and
remediation activities discussed in the December 2007 remedial investigation
report.  H&H anticipates entering into discussions with NJDEP to
address that agency’s natural resource damage claims, the ultimate scope and
cost of which cannot be estimated at this time.  The ongoing cost of
remediation is presently estimated at approximately $1.0
million.  Pursuant to a settlement agreement with the former
owner/operator of the site, the responsibility for site investigation and
remediation costs are allocated 75% to the former owner/operator and 25% to
H&H after the first $1.0 million.  The $1.0 million was paid
solely by the former owner/operator.  As of December 31, 2008, over
and above the $1.0 million, total investigation and remediation costs of
$977,721 and $326,242 have been expended by the former owner/operator and
H&H, respectively, in accordance with the settlement
agreement.  Additionally, H&H is currently being reimbursed
through insurance coverage for a portion of the investigation and remediation
costs for which the Company is responsible.  H&H believes that
there is additional excess insurance coverage, which it intends to pursue as
necessary.




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H&H
and Bairnco (and/or one or more of their respective subsidiaries) have also been
identified as potentially responsible parties (“PRPs”) under the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”) or similar
state statutes at several sites and are parties to ACOs in connection with
certain other properties.  H&H and Bairnco (and/or one or more of
their respective subsidiaries) may be subject to joint and several liabilities
imposed by CERCLA on PRPs.  Due to the technical and regulatory
complexity of remedial activities and the difficulties attendant in identifying
PRPs and allocating or determining liability among them, H&H and Bairnco are
unable to reasonably estimate the ultimate cost of compliance with such
laws.




H&H
received a notice letter from the EPA in August 2006 formally naming H&H as
a PRP at a superfund site in Massachusetts (the “Superfund
site”).  H&H then voluntarily joined a group of ten (10) other
PRPs (which group has since increased to thirteen (13)) to work cooperatively
regarding remediation of this site.  Investigative work is ongoing to
determine whether there are other parties that sent hazardous substances to the
Superfund site but that have not received notice letters or been named as PRPs
to date.  The PRP group submitted its good faith offer to the EPA in
late October 2006.  The offer was contingent on the group arriving at
an acceptable allocation amongst the PRPs.  All of the PRPs have
reached proposed allocations as to percentages of responsibility for
investigation and remediation costs at the Superfund site.  There is a
“shortfall” in the overall allocation that is being shared, on a pro rata basis,
among all of the participating PRPs.  The EPA has agreed to an orphan
share for the past costs incurred through April 1, 2008 and has agreed to cap
all future response and oversight costs at $2.9 million as further consideration
for the orphan share.  H&H executed a participation agreement,
consent decree and settlement trust on June 13, 2008 and all of the other PRP’s
have signed as well.  On December 9, 2008, the EPA lodged the consent
decree with the United States District Court for the District of
Massachusetts.  After the thirty-day comment period (during which no
comments were received), the EPA filed a motion for the entry of the consent
decree, which was granted on January 27, 2009.  With the filing and
entry of the consent decree, H&H is required to make two payments in
2009.  One payment relates to the “true-up” of monies previously
expended for remediation and is approximately $182,000.  The second
payment relates to H&H’s share of the early action items for the remediation
project and is approximately $308,380.  There are some parties who
have not participated to date in the consent decree negotiations and allocation
process.  Any such non-participating party may be sued later under
CERCLA.  That is a decision that will be made in the future by the
participating PRPs.  The remediation of a significant amount of the
contamination at the site is the responsibility of the Department of Energy
(“DOE”).  The DOE remediation is being accomplished by the U.S. Army
Corps of Engineers (the “ACOE”).  The DOE portion of the work has
begun but is not expected to be completed until August 2010, at which time the
remaining chemical PRP work will be more clearly defined and additional
financial contributions will be required by the chemical
PRPs.  H&H is a chemical PRP; not a radiological
PRP.  The ACOE has informed one of the radiological PRPs that it may
seek contribution from that PRP for the portion of the remediation performed by
the ACOE.  The radiological PRP in turn wishes to preserve its rights
to sue the chemical PRPs in the event any portion of the ACOE’s claim relates to
chemical waste.  The PRPs investigated the nature of the ACOE’s
potential claim and determined, based on information currently available, that
there is a minimal potential that the ACOE’s claim can legally or factually
result in a contribution claim against the chemical PRPs.  H&H has
recorded a significant reserve in connection with this matter.




H&H
is continuing to comply with a 1987 consent order from the Massachusetts
Department of Environmental Protection (“MADEP”) to investigate and remediate
the soil and groundwater conditions at the property that is the subject of the
Arista Development litigation discussed above.  H&H is in
discussions with the EPA, the MADEP and the plaintiff in the Arista case in
connection with the remedial activities.  In addition, H&H has
engaged in discussions or received comments regarding its remedial plans from
abutters.  H&H has successfully concluded settlement discussions
with  abutters and entered into settlement agreements with each of
them.  H&H does not expect that any claims from any additional
abutters will be asserted, but there can be no such assurances.




As
discussed above, H&H and Bairnco have existing and contingent liabilities
relating to environmental matters, including capital expenditures, costs of
remediation and potential fines and penalties relating to possible violations of
national and state environmental laws.  H&H and Bairnco have
substantial remediation expenses on an ongoing basis, although such costs are
continually being readjusted based upon the emergence of new techniques and
alternative methods.  In addition, the Company has insurance coverage
available for several of these matters.  The Company had $6.7 million
accrued related to estimated environmental remediation costs as of December 31,
2008.  Based upon information currently available, including H&H
and Bairnco’s prior capital expenditures, anticipated capital expenditures, and
information available to H&H and Bairnco on pending judicial and
administrative proceedings, H&H and Bairnco do not expect their respective
environmental compliance costs, including the incurrence of additional fines and
penalties, if any, relating to the operation of their respective facilities to
have a material adverse effect on their financial position, but there can be no
such assurances.  Such costs could be material to H&H and
Bairnco’s results of operations and cash flows.  We anticipate that
H&H and Bairnco will pay such amounts out of their respective working
capital, although there is no assurance that H&H and Bairnco will have
sufficient funds to pay such amounts.  In the event that H&H and
Bairnco are unable to fund these liabilities, claims could be made against WHX
for payment of such liabilities.  As further information comes into
the Company’s possession, it will continue to reassess such
evaluations.




21
 Table of Contents




Other
Litigation




Certain
of the Company’s subsidiaries are defendants (“Subsidiary Defendants”) in
numerous cases pending in a variety of jurisdictions relating to welding
emissions.  Generally, the factual underpinning of the plaintiffs’
claims is that the use of welding products for their ordinary and intended
purposes in the welding process causes emissions of fumes that contain
manganese, which is toxic to the human central nervous system.  The
plaintiffs assert that they were over-exposed to welding fumes emitted by
welding products manufactured and supplied by the Subsidiary Defendants and
other co-defendants.  The Subsidiary Defendants deny any liability and
are defending these actions.  It is not possible to reasonably
estimate the Subsidiary Defendants’ exposure or share, if any, of the liability
at this time.




In
addition to the foregoing cases, there are a number of other product liability,
exposure, accident, casualty and other claims against WHX or certain of its
subsidiaries in connection with a variety of products sold by such subsidiaries
over several years, as well as litigation related to employment matters,
contract matters, sales and purchase transactions and general liability claims,
many of which arise in the ordinary course of business.  There is also
one filed and served case in state court arising out of H&H’s sale of a used
piece of equipment which allegedly caused a fire resulting in property damage
and interruption of a third party’s business operations.  It is not
possible to reasonably estimate the Company’s exposure or share, if any, of the
liability at this time in any of these matters.




There is
insurance coverage available for many of the foregoing actions, which are being
litigated in a variety of jurisdictions.  To date, WHX and its
subsidiaries have not incurred and do not believe they will incur any
significant liability with respect to these claims, which they are contesting
vigorously in most cases.  However, it is possible that the ultimate
resolution of such litigation and claims could have a material adverse effect on
the Company’s results of operations, financial position and cash flows when they
are resolved in future periods.




Item 4.
            Submission
      of Matters to a Vote of Security
Holders




A special
meeting of stockholders was held on November 19, 2008, at which WHX’s
stockholders approved proposals to (i) authorize the Company’s Board, at its
discretion, to amend the Company’s Amended and Restated Certificate of
Incorporation to effect a reverse stock split of the Company’s issued and
outstanding shares of common stock, by a ratio of between 1-for-3 and 1-for-10,
inclusive, without further approval or authorization of the Company’s
stockholders, and to (ii) authorize the Company’s Board to amend the Company’s
Amended and Restated Certificate of Incorporation to allow the Company’s
stockholders to act by written consent of a majority of such
stockholders.  The following sets forth the results of the voting at
the meeting:




(i)           The
proposal to authorize the reverse split of the Company’s common stock by a ratio
of between 1-for-3 and 1-for-10:




For:
            116,736,117
            Against:
            534,755
            Abstain:
            158,836




(ii)           The
proposal to allow the Company’s stockholders to act by written consent of a
majority of such stockholders:




For:
            115,154,859
            Against:
            1,679,074
            Abstain:
            595,775




22
 Table of Contents


PART II




Item 5.
            Market
      for the Registrant’s Common Stock, Related Security Holder Matters, and
      Issuer Purchases of Equity
Securities




Market
Price of Our Common Stock




WHX
emerged from bankruptcy on July 29, 2005.  The Company’s common stock
issued upon its emergence from bankruptcy was traded on the “Pink Sheets”
over-the-counter market under the symbol “WXCP.PK” through November 24,
2008.  On November 24, 2008, the Company consummated the Reverse Stock
Split and its common stock began trading on the “Pink Sheets” over-the-counter
market on November 25, 2008 under the new symbol “WXCO.PK” after giving effect
to the split.  On December 5, 2008, the Company’s common stock was
listed on the NASDAQ Capital Market and began trading under the symbol
“WXCO.”  The number of shares of common stock issued and outstanding
as of March 20, 2009 was 12,178,565.  As of March 20, 2009, there were
approximately 35 holders of record of common stock.  As of March 20,
2009, the price per share of our common stock was $5.99.




The
prices set forth in the following table represent the high and low sales prices
of WHX’s common stock on the NASDAQ Capital Market and the “Pink Sheets”
over-the-counter market, as applicable, for 2008 and 2007.  The high
and low sales prices for periods prior to November 24, 2008 have been adjusted
to reflect the Reverse Stock Split:




2008
                  
                  HIGH
                  
                  LOWFirst
      Quarter
                  
                  $
                  47.00
                  
                  
                  $
                  19.50Second
      Quarter
                  
                  $
                  28.00
                  
                  
                  $
                  10.00Third
      Quarter
                  
                  $
                  32.00
                  
                  
                  $
                  12.00Fourth
      Quarter
                  
                  $
                  15.50
                  
                  
                  $
                  5.00





2007
                  
                  HIGH
                  
                  LOWFirst
      Quarter
                  
                  $
                  103.00
                  
                  
                  $
                  76.00Second
      Quarter
                  
                  $
                  100.00
                  
                  
                  $
                  80.00Third
      Quarter
                  
                  $
                  90.00
                  
                  
                  $
                  70.50Fourth
      Quarter
                  
                  $
                  75.00
                  
                  
                  $
                  38.00





As part
of the Plan of Reorganization of WHX, on July 29, 2005 all of WHX’s outstanding
securities, including WHX’s pre-bankruptcy filing common stock, Series A
preferred stock, Series B preferred stock and 10 1/2% Senior Notes due April 15,
2005, were cancelled and annulled.  In full and complete satisfaction
of all such claims, holders of the 10 1/2% Senior Notes received 9,200,000
shares of the new common stock, on a pre-split basis, representing their pro
rata share of the reorganized company.  These shares represented 92%
of the equity in the reorganized Company.  In full and complete
satisfaction of all such interests, preferred stockholders received 800,000
shares of the new common stock, on a pre-split basis, representing their pro
rata share of the reorganized company and 753,155 warrants to purchase common
stock of the reorganized company, exercisable at $11.20 per share, on a
pre-split basis.  The warrants expired on February 28,
2008.  The common stock received by the preferred stockholders,
collectively, represented 8% of the equity in the reorganized
company.  Holders of common stock received no distributions under the
Plan.




Dividend
Policy




The
Company has never declared or paid any cash dividend on its common
stock.  The Company intends to retain any future earnings and does not
expect to pay any dividends in the foreseeable future.  H&H and
Bairnco are restricted by the terms of their respective financing agreements
from making dividends to WHX.




23
 Table of Contents




Securities
Authorized for Issuance Under Equity Compensation Plans




The
following table details information regarding our existing equity compensation
plans as of December 31, 2008.




Equity
Compensation Plan Information




Plan
      category
                    
                    Number
      of securities to
                        be
      issued upon exercise of
                        outstanding
      options,
                        warrants
      and rights
                    
                    
                    Weighted-average
                        exercise
      price of
                        outstanding
      options,
                        warrants
      and rights
                    
                    
                    Number
      of securities
                        remaining
      available for
                        future
      issuance under
                        equitycompensation
      plans
                        (excludingsecurities
                        reflected
      in column (a))(a)(1)
                    
                    
                    (b)
      (1)
                    
                    
                    (c)
      (1)Equity
      compensation plans approved by security holders
                    
                    
                    64,400
                    
                    
                    $
                    90.00
                    
                    
                    
                    15,600Equity
      compensation plans not approved by security holders
                    
                    
                    --
                    
                    
                    
                    --
                    
                    
                    
                    --Total:
                    
                    
                    64,400
                    
                    
                    $
                    90.00
                    
                    
                    
                    15,600





______________




(1)
            Effective
      November 24, 2008, any unexercised options then outstanding to purchase
      shares of the Company’s common stock were adjusted pursuant to the terms
      of the 2007 Incentive Stock Plan to give effect to the Reverse Stock Split
      by reducing the number of share issuable thereunder to one-tenth (1/10)
      and increasing the exercise price to purchase one share of common stock
      under any such option by a multiple of ten (10).  All amounts
      reported in this table have been adjusted accordingly to reflect the
      Reverse Stock Split.




Item 7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations




Results
of Operations




WHX, the
parent company, manages a group of businesses on a decentralized
basis.  WHX owns H&H, a diversified holding company whose
strategic business units encompass three reportable segments: Precious Metal,
Tubing, and Engineered Materials. In April 2007, WHX acquired Bairnco. Bairnco
manages business units in three reportable segments:  Arlon EM, Arlon
CM and Kasco Replacement Products and Services.  The business units of
H&H and Bairnco principally operate in North America.




WHX
Business System




The WHX
Business System is at the heart of the operational improvement methodologies for
all WHX companies and employees. Strategy Deployment forms the roof of the
business system and serves to convert strategic plans into tangible actions
ensuring alignment of goals throughout each of our businesses. The pillars of
the System are the key performance indicators used to monitor and drive
improvement.  The steps of the System are the specific tool areas that
drive the key metrics and overall performance.  WHX utilizes lean
tools and philosophies to reduce and eliminate waste coupled with the Six Sigma
tools targeted at variation reduction.  The System is a proven,
holistic approach to increasing shareholder value and achieving long term,
sustainable, and profitable growth.




24
 Table of Contents




H&H’s
Precious Metal Segment




H&H’s
Precious Metal activities include the fabrication of precious metal and their
alloys into brazing alloys and the utilization of precious metal in precision
electroplating. H&H’s brazing alloys are used to join most common metals as
well as specialty metals with strong, hermetic joints.  H&H offers
a wide variety of these metal joining products, including gold, silver,
palladium, copper, nickel, and aluminum based materials.  These
brazing alloys are fabricated into a variety of engineered forms and are used in
many industries including automotive, air conditioning, general industrial and
other metal-joining industries.  H&H is also engaged in precision
electroplating (often using gold, silver, palladium and various base metals) of
electronic and electrical components primarily for use in the automotive
industry.  H&H’s profits from precious metal products are
principally derived from the “value added” of processing and fabricating and not
from the purchase and resale of precious metal.  In accordance with
general practice, prices to customers are principally a composite of two
factors: (1) the value of the precious metal content of the product and (2) the
“fabrication value,” which includes the cost of base metals, labor, overhead,
financing and profit.




H&H
Tubing Segment




H&H
manufactures a wide variety of steel tubing products.  The Stainless
Steel Seamless Tubing Group manufactures small-diameter precision-drawn seamless
tubing both in straight lengths and coils.  The Stainless Steel Tubing
Group’s capabilities in long continuous drawing of seamless stainless steel
coils allow this Group to serve the petrochemical infrastructure and
shipbuilding markets.  The Stainless Steel Tubing Group also
manufactures products for use in the medical, semiconductor fabrication,
aerospace and defense industries.   The Specialty Tubing Group
manufactures welded carbon steel coated and uncoated tubing in straight lengths
and coils with a primary focus on products for the refrigeration, HVAC and
automotive industries.  In addition to producing bulk tubing, the
Specialty Tubing Group also produces value added products for the appliance and
HVAC industries by fabricating tubing into sealed system
components.




H&H
Engineered Materials Segment




The
H&H Engineered Materials Segment supplies products to the construction and
building industries. H&H manufactures fasteners and fastening systems for
the U.S. commercial flat roofing industry.  Products are sold to
building and roofing material wholesalers. The products are also private labeled
to roofing system manufacturers. A line of specialty fasteners is produced for
the building products industry for fastening applications in log homes,
landscaping, masonry, and wood decks.  H&H also manufactures
plastic and steel fittings and connectors for natural gas and water distribution
service lines along with exothermic welding products for electrical grounding,
cathodic protection, and lightning protection.   In addition,
H&H manufactures electro-galvanized and painted cold rolled sheet steel
products primarily for the construction, entry door, container and appliance
industries.




Arlon
Electronic Materials Segment




Arlon
EM’s principal products include high performance materials for the printed
circuit board industry and silicone rubber-based insulation materials used in a
broad range of industrial, military/aerospace, consumer and commercial
markets.




Arlon EM
supplies high technology materials to the PCB industry.  Arlon EM
products are marketed principally to OEMs and PCB manufacturers around the world
by a direct technical sales force in many cases in support of country and area
specific distributors and manufacturer’s representatives.  Arlon EM’s
conventional laminates product line includes a wide variety of specialty
polyimide and epoxy laminates and bonding films, as well as other high
performance thermoset laminates.  These materials are used in
demanding commercial and military market applications including high density
interconnect, surface mount technology, heat sink bonding, semiconductor
testing, wireless communications and microvia PCBs.  The microwave and
radio frequency product area offers fluoropolymers (i.e. PTFE), ceramic-filled
fluoropolymers, and other non-PTFE laminates that deliver the electrical
performance needed in frequency-dependent circuit applications such as analog,
digital and personal communication systems, high frequency military electronics,
microwave antennas and cellular base station electronics.  These
products are supplied as copper-clad laminates with bonding plies or prepregs
for production of multi-layer printed circuits.




25
 Table of Contents




Arlon EM
also manufactures a line of silicone rubber materials used in a broad range of
military, consumer, industrial and commercial products.  Typical
applications and products include: silicone bagging materials for producing
composite parts; silicone insulating tapes for electric traction motor coil
windings; insulation materials for industrial and commercial flexible heaters;
silicone materials for high temperature hose and duct markets; insulating tape
for medium and high voltage electrical splices and self-fusing tapes for a
variety of industrial and commercial applications; as well as compliant,
thermally or electrically conductive silicone film adhesives known as
ThermabondTM for heat sink-bonding to printed circuit boards.




Arlon
Coated Materials Segment




Arlon
CM’s principal products include adhesive coated cast and calendared vinyl films,
cast vinyl fabric, custom-engineered laminates, and coated and laminated films,
foils, foams and papers used in a broad range of industrial, consumer and
commercial products.




Arlon CM
specialty graphic films are marketed under the Arlon and Calon® brand names and
include cast and calendared vinyl films that are manufactured in a wide variety
of colors, face stocks and adhesive systems.  These vinyl films are
used in commercial and electrical signage, point of purchase displays, highway
signage, fleet markings, and other commercial advertising
applications.  Arlon CM also manufactures laminated vinyl fabrics for
corporate identity programs.  These products are marketed under the
ArlonFlex® brand name and complement the Calon® specialty graphic
films.




Arlon CM
also manufactures and markets custom-engineered laminates and coated
products.  Typical applications include insulating foam tapes for
thermopane windows, electrical insulation materials for motors and transformers,
thermal insulation panels for appliances and cars, durable printing stock,
coated foil tapes and transfer adhesives used in industrial assembly, and single
and double-coated foam and film tapes and other custom engineered laminates for
specific industrial applications.




Kasco
Replacement Products and Services Segment




Kasco
Replacement Products and Services is a provider of meat-room products and
maintenance services for the meat and deli departments of supermarkets; for
restaurants; for meat and fish processing plants; and for distributors of
electrical saws and cutting equipment throughout North America, Europe, Asia and
South America.  These products and services include band saw blades
for cutting meat and fish, band saw blades for cutting wood and metal, grinder
plates and knives for grinding meat, repair and maintenance services for food
equipment in retail grocery and restaurant operations, electrical saws and
cutting machines, seasoning products, and other related butcher supply
products.




Kasco’s
products and services are sold under a number of brand names including Kasco
Corporation and Atlanta Sharptech in the United States and Canada, Atlantic
Service Co. in the United Kingdom and Canada, Bertram & Graf in Germany, and
Biro France and EuroKasco in France.




The
following table presents information about reportable segments. In addition to
the table below, please refer to the consolidated financial statements and
financial statement schedules of WHX as of and for the years ended December 31,
2008 and 2007 to which the following discussion and analysis
applies.  See “Item 8 - Financial Statements and Supplementary
Data” of this Annual Report on Form 10-K.  Information about
Bairnco’s segments in 2007 includes the period April 13, 2007 through December
31, 2007.




26
 Table of Contents




Statement
      of operations data:
                
                Twelve
      Months Ended(in
      thousands)
                
                December
      31,2008
                
                
                2007Net
      Sales:Precious
      Metal
                
                $
                156,847
                
                
                $
                150,484Tubing
                
                
                118,318
                
                
                
                117,627Engineered
      Materials
                
                
                246,815
                
                
                
                228,248Arlon
      Electronic Materials (a)
                
                
                64,208
                
                
                
                45,576Arlon
      Coated Materials (a)
                
                
                72,395
                
                
                
                47,647Kasco
      (a)
                
                
                67,202
                
                
                
                48,284Total
      net sales
                
                
                725,785
                
                
                
                637,866Operating
      income (loss) before corporate allocationsPrecious
      Metal (d)
                
                $
                16,461
                
                
                $
                14,128Tubing
                
                
                10,896
                
                
                
                4,799Engineered
      Materials
                
                
                22,553
                
                
                
                20,923Arlon
      Electronic Materials (a) (b)
                
                
                6,243
                
                
                
                496Arlon
      Coated Materials (a) (b)
                
                
                (1,199
                )
                
                
                (2,881
                )Kasco
      (a) (b)
                
                
                3,786
                
                
                
                1,657Total
                
                
                58,740
                
                
                
                39,122Corporate
      expenses allocation:Precious
      Metal
                
                
                4,192
                
                
                
                4,361Tubing
                
                
                3,926
                
                
                
                3,980Engineered
      Materials
                
                
                3,662
                
                
                
                3,707Arlon
      Electronic Materials (a)
                
                
                1,100
                
                
                
                876Arlon
      Coated Materials (a)
                
                
                1,240
                
                
                
                916Kasco
      (a)
                
                
                1,151
                
                
                
                928Total
                
                
                15,271
                
                
                
                14,768Impairments
      of long-lived assets:Precious
      Metal
                
                
                7,790
                
                
                
                -Tubing
                
                
                501
                
                
                
                -Total
                
                
                8,291
                
                
                
                -Segment
      operating income (loss):Precious
      Metal (d)
                
                
                4,479
                
                
                
                9,767Tubing
                
                
                6,469
                
                
                
                819Engineered
      Materials
                
                
                18,891
                
                
                
                17,216Arlon
      Electronic Materials (a) (b)
                
                
                5,143
                
                
                
                (380
                )Arlon
      Coated Materials (a) (b)
                
                
                (2,439
                )
                
                
                (3,797
                )Kasco
      (a) (b)
                
                
                2,635
                
                
                
                729Segment
      operating income
                
                
                35,178
                
                
                
                24,354Unallocated
      corporate expenses & non operating units
                
                
                6,698
                
                
                
                8,994Unallocated
      pension credit
                
                
                (8,335
                )
                
                
                (5,778
                )Proceeds
      from insurance claims, net
                
                
                (3,399
                )
                
                
                (6,538
                )Employee
      benefit plan curtailment
                
                
                (3,875
                )
                
                
                -Environmental
      remediation expense (c)
                
                
                -
                
                
                
                4,678Loss
      on disposal of assets
                
                
                212
                
                
                
                283Income
      from operations
                
                
                43,877
                
                
                
                22,715Interest
      expense
                
                
                36,787
                
                
                
                39,488Realized
      and unrealized loss on derivatives
                
                
                1,355
                
                
                
                1,888Other
      expense
                
                
                1,354
                
                
                
                272Income
      (loss) before taxes
                
                $
                4,381
                
                
                $
                (18,933
                )




27
 Table of Contents


(a)
            The
      results of the Bairnco Segments in 2007 reflect the period subsequent to
      its acquisition, April 13, through December 31,
  2007.




(b)
            The
      following non-recurring charges relating to the purchase accounting for
      the Bairnco Acquisition are included in the 2007 results
      above:  Arlon EM-$3.5 million, Arlon CM-$2.4 million, and
      Kasco-$1.5 million.  The operating loss in 2008 for the Arlon CM
      segment includes $1.7 million of move costs in 2008 to consolidate two
      plants in San Antonio, Texas into one.  In addition to the
      direct move costs, the results of the period were negatively impacted by a
      plant shutdown and related operating inefficiencies related to the
      move.




(c)
            Environmental
      remediation expenses in 2007 have not been allocated to the reporting
      segments since the related facilities have been closed for several years
      and are not indicative of current operating
  results.




(d)
            The
      Precious Metal segment operating income for 2008 and 2007 includes income
      of $3.9 million and $ 4.4 million, respectively, related to the
      liquidation of precious metal inventories valued at last in first out
      (“LIFO”) cost.




2008
Compared to 2007




Net sales
for 2008 increased by $88.0 million, or 13.8%, to $725.8 million, as compared to
$637.9 million in 2007.  Bairnco, which was acquired in April 2007,
contributed $203.8 million in net sales in 2008, and $141.5 million of net sales
in 2007.  The increase in Bairnco sales of $62.3 million is
principally due to the 2007 period reflecting 39 weeks of sales activity (for
the post-acquisition period April 13 through December 31, 2007), and the 2008
period reflecting 12 months of activity.  Net sales increased by $6.4
million at the Precious Metal segment, primarily driven by higher precious metal
prices and increased volumes in certain markets, partially offset by declines in
the domestic automotive market.  The Tubing segment sales increased by
$0.7 million as strong growth in petrochemical and shipbuilding markets serviced
by the Stainless Steel Tubing Group were partially offset by weakness in the
home appliance and domestic automotive markets serviced by the Specialty Tubing
Group.  The Engineered Materials segment sales increased by $18.6
million, or 8.1%.  This increase in sales includes higher prices
passed on to our customers to offset significantly higher steel costs, increased
demand for our commercial roofing fasteners, and new products and channel growth
for our “Fastenmaster” brand fastener products.




Gross
profit percentage increased to 24.3% in 2008 from 20.8% in
2007.  Bairnco contributed $64.5 million of gross profit in 2008, and
$28.0 million of the 2008 increase.  The increase in gross profit was
also due to higher sales experienced by all of our operating segments, improved
operating efficiencies, and price increases to offset higher precious metal,
steel and other costs.  In 2008 and 2007, the Company recognized gains
of $3.9 million and $4.7 million, respectively, from the liquidation of its
precious metal inventories valued at LIFO.  Management believes that
less precious metal inventory will be required for ongoing operations due to
operational efficiencies.  In 2008, all WHX segments benefited from
the continuing application of the WHX Business System.  In 2007, a
one-time charge to cost of goods sold was recognized for $5.5 million which
related to the acquisition of Bairnco’s inventory purchased at fair value and
subsequently sold in the third quarter.




SG&A
expenses increased $20.9 million to $131.6 million, or 18.1% of sales in 2008
from $110.7 million, or 17.3% of sales in 2007.  The increase in
SG&A expenses related principally to the inclusion of Bairnco expenses for
the entire year in 2008 as compared to 39 weeks in 2007 (an increase of $19.4
million).  In addition, there was an increase in employee-related
costs including $1.2 million generated by the termination of two executive
employment contracts, as well as $1.7 million of costs to consolidate two plants
in San Antonio, Texas into one.  These increases were partially offset
by lower audit and legal fees and a higher non-cash pension
credit.  Furthermore, in 2007, the Company recorded $2.3 million of
non-recurring charges for the write-off of acquired research and development and
acquired backlog associated with the purchase accounting related to the Bairnco
Acquisition.  In addition, the Company recorded $1.6 million of
non-cash stock-based compensation expense under SFAS No. 123R in 2007 as
compared to $0.6 million in the same period of 2008.




28
 Table of Contents




Non-cash
asset impairment charges in 2008 totaling $8.3 million include $7.8 million
related to the assets of Sumco, which is part of the Precious Metal reporting
segment, and $0.5 million related to the assets of ITD, included in the Tubing
reporting segment.




In
December 2008, management decided to exit the welded specialty tubing market in
Europe and close the Company’s ITD subsidiary, sell ITD’s assets, pay off ITD’s
related debt and repatriate cash remaining post-closing.  The decision
to exit this market was made after evaluating current economic conditions and
competition from lower cost manufacturers.  ITD represented 2.4% of
the sales and 1.7% of the operating income of WHX in 2008.  In
conjunction with the decision to close ITD, the Company reviewed the
recoverability of its long-lived assets in accordance with Statement of
Financial Accounting Standards No. 144, “Accounting for Impairment or Disposal
of Long-Lived Assets” (“SFAS No. 144”).  A review of future cash
flows, based on the expected closing date, indicated that cash flows would be
insufficient to support the carrying value of certain machinery and equipment at
ITD.  As a result, the Company recorded an asset impairment charge of
$0.5 million in its consolidated statement of operations for 2008.




Sumco
provides electroplating services primarily to the U.S. automotive market and is
included in the Precious Metal reporting segment, and represented 17.5% of its
2008 sales.  Sumco has had declining 2008 and projected 2009 negative
cash flows principally caused by the decline in U.S. economic activity and
Sumco’s reliance on the automotive market for over 90% of its
sales.  In accordance with SFAS No. 144, in 2008, the Company
evaluated Sumco’s long-lived assets in light of ongoing operating
losses.  As a result, an impairment loss of $7.8 million was
recognized in 2008 to write down the individual components of long-lived assets
to the lower of their carrying value or estimated fair value.  The
Board of Directors of Sumco is exploring strategic options for the Sumco
business.




Also in
2008, the Company recorded a $3.9 million non-cash curtailment gain resulting
from the discontinuance of certain H&H post-retirement medical benefit
plans, and a significant reduction in the number of individuals participating in
the executive life insurance plan as of December 31, 2008.




During
2008 and 2007, the Company received proceeds from the settlement of two discrete
insurance claims.  In 2008, a gain of $2.7 million was recorded in
connection with the settlement of a claim related to an environmental site where
the Company is a PRP and an additional $0.7 million related to a fire loss claim
from 2002 at a plant of a subsidiary.  The fire loss claim also
resulted in a gain of $6.5 million in 2007.




Environmental
remediation expenses of $4.7 million were recorded in
2007.  Specifically, during 2007 the Company revised its estimates of
future remediation costs for various locations and also increased its
environmental reserves based on the latest estimate of cleanup costs, together
with certain past oversight costs, and an expected increase in the Company’s
allocation percentage among the PRPs.




Income
from operations increased $21.2 million to $43.9 million in 2008 as compared to
$22.7 million in 2007.  The increase was principally driven by
increased sales and gross margin improvements in 2008 along with no remediation
expenses in 2008 versus $4.7 million in 2007, which was partially offset by
higher SG&A expenses, non-cash asset impairment charges of $8.3 million and
lower insurance proceeds in 2008 versus 2007.




Interest
expense was $36.8 million in 2008, representing a 6.8% decrease in comparison to
$39.5 million in 2007, as total borrowings and the related interest rates both
decreased.  In September of 2008, WHX completed the Rights Offering,
raising $156.5 million in equity and cash, of which approximately $13.2 million
was used to pay down its senior debt and $142.5 million was used to pay down
certain related party long-term debt of WHX, H&H and Bairnco.




29
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Realized
and unrealized losses on derivatives totaled $1.4 million in 2008, compared to
$1.9 million in 2007.  H&H enters into commodity futures and
forwards contracts on precious metals in order to economically hedge its
precious metals inventory against price fluctuations.  Although
precious metals prices increased in 2008, the realized and unrealized loss on
derivatives declined in 2008 principally because the volume of H&H’s
precious metal inventories substantially declined, resulting in hedged
quantities of precious metals declining in 2008.




In 2008,
a tax provision of $1.4 million was recorded, versus a tax provision of $1.8
million in 2007.  The Company’s tax provision in both years is
principally for state and foreign taxes.  However, in 2008, the
Company expects to have U.S. Federal taxable income and utilize a portion of its
NOLs.  Therefore, the Company will be liable for the alternative
federal minimum tax, and has recorded a federal tax provision of $0.1 million
accordingly.  The Company did not record any federal tax provision or
benefit from the NOLs in 2007.  Despite the Company’s taxable income
expected for 2008, the Company has recorded a valuation allowance against
deferred tax assets resulting from NOLs in accordance with Statement of
Financial Accounting Standards No. 109 (“SFAS No. 109”), since, based on the
weight of available evidence, it is more likely than not that some portion or
all of the tax benefits will not be realized in future periods.




Net
income in 2008 was $3.0 million, or $0.75 per share, compared to a loss of $20.8
million or ($20.77) per share in 2007.




The
comments that follow compare revenues and operating income by segment for 2008
and 2007:




Precious
Metal




Net sales
for the Precious Metal segment increased $6.4 million or 4.2%, to $156.8 million
in 2008 from $150.5 million in 2007.  The segment experienced higher
sales from higher precious metal prices, increased market share in the HVAC and
welding distribution markets, and stronger sales in the energy exploration and
electrical markets.  In addition, an acquisition completed in late
2007 contributed an additional $4.0 million to sales in 2008.  These
increases were partially offset by a reduction of $14.6 million of sales at
Sumco, our electroplating subsidiary that primarily services the U.S. automotive
markets.




Segment
operating income decreased by $5.3 million to $4.5 million in 2008, compared to
$9.8 million in 2007, principally due to the non-cash impairment charge of $7.8
million recorded in 2008 related to the long-lived assets of
Sumco.  In light of ongoing projected operating losses at Sumco,
principally caused by the decline in U.S. economic activity and Sumco’s reliance
on the U.S. automotive market for sales, the Company evaluated Sumco’s
long-lived assets and recorded a $7.8 million non-cash impairment
loss.  Offsetting this loss, improvements in operating income resulted
from the incremental gross profit from higher sales and favorable product mix
shifts to higher margin products.  The segment also benefited from
improved operating efficiencies at its principal operating precious metal
brazing alloy facility.  In addition, operating efficiencies have
resulted in a permanent reduction of our precious metal inventory, which H&H
records at LIFO cost subject to lower of cost or market, with any adjustments
recorded through cost of goods sold.  The Company recognized $3.9
million of profit in 2008 arising from the liquidation of a portion of the LIFO
inventory.  The decline in precious metal inventory is a trend that
continues from 2007, when such decline resulted in $4.7 million of profit from
liquidation of the LIFO inventory.




Tubing




In 2008,
net sales for the Tubing segment increased $0.7 million, or 0.6%, to $118.3
million from $117.6 million in 2007.  Strong demand for small diameter
precision-drawn long coil seamless tubing that principally services the
petrochemical and shipbuilding industries was the principal cause of a $10.3
million increase in net sales of the Stainless Steel Tubing
Group.  The Specialty Tubing Group experienced reduced sales of $9.6
million principally resulting from lower sales to its customers in the home
appliance industry.




Segment
operating income increased by $5.7 million to $6.5 million in 2008 as compared
operating income of $0.8 million in 2007.  The improvement in
operating income was the result of improved operating efficiencies within the
Specialty Tubing Group, which experienced losses in 2007.  Profit
contribution from strong sales of the Stainless Steel Tubing Group also resulted
in higher operating income for the segment.




30
 Table of Contents




In
December 2008, WHX management decided to exit the welded specialty tubing market
in Europe and close ITD, sell ITD’s assets, pay off ITD’s related debt and
repatriate cash remaining post closing. The decision to exit this market was
made after evaluating current economic conditions and competition from lower
cost manufacturers.  A non-cash impairment charge was recorded against
the machinery and equipment of this subsidiary for $0.5 million.




Engineered
Materials




Net sales
for the Engineered Materials segment increased $18.6 million, or 8.1%, to $246.8
million from $228.2 million in 2007. This increase in sales was primarily driven
by higher prices passed on to our customers to offset significantly higher steel
costs, as well as increased demand for our commercial roofing fasteners, and the
introduction of new products and channel growth for our “Fastenmaster” brand
fasteners.




Segment
operating income increased by $1.7 million from $17.2 million in 2007 to $18.9
million in 2008.  The improvement in operating income was the result
of the significantly higher sales and stable gross profit margin despite pricing
pressures and an increase in the market for lower margin private label products.
Selling prices were raised in 2008 in order to partially offset the effect of
higher steel prices.  Operating efficiencies have also generated a
significant reduction in segment inventory levels compared to prior year,
enhancing cash flow. The 2007 results include a postretirement welfare plan
curtailment charge of $0.7 million at one of the subsidiaries included in this
segment.




Bairnco
Segments




The table
below for the Bairnco segments reflects net sales and operating income for 2007
on a pro forma basis for the entire 2007, including the period prior to the
acquisition date of April 13, 2007.  Pro forma adjustments have been
made to the historical 2007 results of the Bairnco segments to: (i) eliminate
$7.4 million of non-recurring purchase accounting adjustments related to the
acquisition of Bairnco by WHX; (ii) add additional expense totaling $0.5 million
for amortization of intangible assets and depreciation of property, plant and
equipment based on the fair values that were assigned to such assets in the
acquisition, as if such acquisition occurred on January 1, 2007, and (iii)
eliminate $5.5 million of costs related to the tender offer for Bairnco’s shares
and other costs related to the change of control of Bairnco.  The
non-recurring purchase accounting adjustments referred to in (i) above related
to the $5.5 million inventory fair value write-up and subsequent recognition of
that higher value as product was sold, as well as $1.6 million of charges for
the write-off of acquired research and development and $0.2 million of acquired
backlog.




This pro
forma financial information has been included for comparative purposes only to
assist in better understanding the results of the Bairnco segments, and such
amounts have not been included in the Company's consolidated results for these
periods. The Bairnco segments’ pro forma financial information is not intended
to represent, or be indicative of, the results of operations that would have
been reported had the acquisition of Bairnco by WHX been completed as of January
2007, nor such segments’ future results of operations.




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20072008
                                                                
                                                                
                                                                Pro
      forma(in
      thousands)Net
      Sales:Arlon
      Electronic Materials
                                                                
                                                                $
                                                                64,208
                                                                
                                                                
                                                                $
                                                                64,630Arlon
      Coated Materials
                                                                
                                                                
                                                                72,395
                                                                
                                                                
                                                                
                                                                65,497Kasco
                                                                
                                                                
                                                                
                                                                67,202
                                                                
                                                                
                                                                
                                                                66,149Total
      net sales
                                                                
                                                                $
                                                                203,805
                                                                
                                                                
                                                                $
                                                                196,276Operating
      income/(loss)Arlon
      Electronic Materials
                                                                
                                                                $
                                                                6,243
                                                                
                                                                
                                                                $
                                                                5,792Arlon
      Coated Materials (a)
                                                                
                                                                
                                                                (1,199
                                                                )
                                                                
                                                                
                                                                (1,411
                                                                )Kasco
                                                                
                                                                
                                                                3,786
                                                                
                                                                
                                                                
                                                                2,267Corporate
                                                                
                                                                
                                                                (3,491
                                                                )
                                                                
                                                                
                                                                (4,085
                                                                )Total
      operating income
                                                                
                                                                $
                                                                5,339
                                                                
                                                                
                                                                $
                                                                2,563





(a)
            The
      operating loss for the Arlon CM segment for 2008 includes $1.7 million of
      costs to consolidate two plants in San Antonio, Texas into
      one.  In addition to the direct move costs, the results of the
      period were negatively impacted by a plant shutdown and related operating
      inefficiencies during the move.




Year
Ended December 31, 2008 versus Pro-forma December 31, 2007




Net sales
for the Bairnco Segments on a combined basis for the year ended December 31,
2008 increased 3.8% to $203.8 million from $196.3 million in 2007. Arlon EM
sales of $64.2 million were down slightly from $64.6 million due primarily to a
slow first half of 2008 in military programs but mostly offset by improved sales
during the second half. Arlon CM sales of $65.5 million in 2007 increased 10.5%
to $72.4 million in 2008, driven by strong sales to global digital print media
markets but partially offset by softness in the Asia container market. Kasco's
sales of $67.2 million were up 1.6% from $66.1 million due primarily to the
impact of exchange rates of a weakened US dollar on European sales during the
first nine months of 2008. Kasco’s domestic route sales showed improvement
during the third and fourth quarters of 2008.




Operating
income of $5.3 million in 2008 for the Bairnco segments reflects a $2.8 million
increase from $2.6 million of pro forma operating income in 2007.  The
improvement was principally due to higher gross profit.  In the Arlon
EM segment, gross profit improved as a result of sales mix and increased
production volumes for the wireless telecommunications markets during the second
half of 2008, and in the Kasco segment, from higher sales and improved
efficiencies from the consolidation of manufacturing plants completed in 2007.
Gross profit for the Arlon CM segment increased on higher sales in the digital
print media markets and related production volumes. However, Arlon CM gross
profit in its graphics businesses was negatively impacted in the fourth quarter
as the corporate re-imaging and Asia container markets softened.  In
2008, all three Bairnco segments benefited from the lean manufacturing
implementation currently in process.
 The
improvement in gross margin was partially offset by higher SG&A
expenses.  Included in the 2008 expenses is $1.7 million of move
related costs to consolidate two Arlon CM plants in San Antonio, Texas into one
plant. Excluding the move related costs from the 2008 SG&A expenses, the
overall remaining increase in 2008 is primarily due to higher compensation
expenses and freight costs related to increased sales and higher gasoline
prices.




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Unallocated Corporate
Expenses




Unallocated
WHX corporate expenses decreased from $9.0 million in 2007 to $6.7 million in
2008.  There were decreases in the costs for audit, legal and
consulting fees and non-cash expenses associated with stock-based compensation
for certain executives.




General
Outlook




Demand
for most of our products is cyclical in nature and sensitive to general economic
conditions. Our businesses sell to cyclical industries such as the commercial
and residential construction, energy, appliance and automotive industries and
consumer markets. As a result, downturns in the United States economy, like the
one currently taking place, or in any of those markets could materially
adversely affect our results of operations and cash flows.  In
response to the current economic downturn, in addition to accelerating the
implementation of the WHX Business System, the Company has executed specific
plans of action to reduce costs by rationalizing our workforce and consolidating
operations. We continue to introduce new products and gain market share where
possible. On January 4, 2009, the Company implemented a 5% salary reduction to
annual salaries over $40,000 for all salaried employees, including all of the
Company’s executive officers, in furtherance of the Company’s ongoing efforts to
lower its operating costs. The Company also suspended its employer contributions
to 401(k) savings plans for all employees not covered by a collective bargaining
agreement.




Management
has taken these precautionary steps to lessen the impact of the downturn in the
U.S. and global economy. While changes in market demand are not within our
control, we are focused on the areas we can impact.  We expect the
continuing application of the WHX Business System and other cost improvement
initiatives to continue to positively impact our productivity and profitability
and result in a more efficient infrastructure that we can leverage when demand
growth returns. Additionally, we continue to seek opportunities to gain market
share in markets we currently serve, expand into new markets and develop new
product features in order to mitigate the impact of reduced demand as well as
broaden our sales base.




In
addition to challenges with overall demand, volatility in the cost of raw
materials is ongoing.  While the cost of commodity raw materials
declined in the second half of 2008, we currently expect these costs to continue
to be volatile in 2009.  If raw material prices increase, we may not
be able to fully recover the cost (other than our cost for precious metals) by
passing them on to our customers through price increases due to the competitive
nature of the markets we serve and the depressed economic
conditions.




Liquidity




The
Company recorded net income of $3.0 million and generated $10.1 million of
positive cash flow from operating activities in 2008.  Nevertheless,
it has incurred significant losses and negative cash flows from operations in
recent years, and as of December 31, 2008 had an accumulated deficit of $431.1
million.  As of December 31, 2008, the Company’s current assets
totaled $177.2 million and its current liabilities totaled $129.4 million,
resulting in working capital of $47.8 million.  The Company’s
financial position has improved from 2007, when it incurred a net loss of $20.8
million, generated $2.4 million of negative cash flows from operating
activities, and had working capital of $15.0 million as of December 31,
2007.  The Company has reduced its level of debt substantially in
2008, from $359.4 million to $209.2 million, principally through the Rights
Offering completed on September 25, 2008.  See the discussions below
regarding the separate liquidity of WHX the parent company, H&H and
Bairnco.




Rights
Offering




As a
result of the Rights Offering, the Company sold 11,178,459 shares of common
stock, to existing stockholders through the exercise of rights at a subscription
price of $14.00 per share, for an aggregate purchase price of approximately
$156.5 million.  SP II subscribed for 8,630,910 shares of the
Company’s common stock, for an aggregate purchase price of approximately $120.8
million, pursuant to its basic and applicable oversubscription
privileges.  After giving effect to the Rights Offering, SP II owns
75% of the outstanding shares of common stock of the Company.  The
Company used the proceeds of the Rights Offering to (i) redeem preferred stock
issued by a wholly-owned subsidiary of the Company, which was held by SP II,
plus accumulated dividends, together totaling approximately $6.0 million, (ii)
repay Company indebtedness to SP II of approximately $18.9 million, and (iii)
repay $117.6 million of indebtedness and accrued interest of certain
wholly-owned subsidiaries of the Company to SP II.   After such
payments, $14.0 million remained with the Company as cash, of which $13.2
million was used to repay additional debt of the Company on October 29, 2008
pursuant to the amendments to the Company’s credit agreements of that same date
as described below.




33
 Table of Contents




WHX Corporation, the parent
company




WHX has
as its sole source of cash flow, distributions from its principal subsidiaries,
H&H and Bairnco, or other discrete transactions.  H&H’s credit
facilities effectively do not permit it to transfer any cash or other assets to
WHX with the exception of (i) an unsecured loan for required payments to the WHX
Pension Plan, and (ii) an unsecured loan for other uses in the aggregate
principal amount not to exceed $12.0 million (see below for a description of
this loan provision), $7.0 million of which has been
distributed.  H&H’s credit facilities are collateralized by
substantially all of the assets of H&H and its
subsidiaries.  Similarly, Bairnco’s credit facilities and term loan do
not permit it to make any distribution, pay any dividend or transfer any cash or
other assets to WHX other than common stock of Bairnco and up to $0.6 million
annually for services performed by WHX on behalf of Bairnco, under certain
circumstances.  Bairnco’s credit facilities are secured by a first
priority lien on all of the assets of Bairnco and of its U.S.
subsidiaries.




WHX’s
ongoing operating cash flow requirements consist of arranging for the funding of
the minimum requirements of the WHX Pension Plan and paying WHX’s administrative
costs.  On September 12, 2007, WHX made a payment to the WHX Pension
Plan of $13.0 million, which exceeded the minimum required contribution under
ERISA.  As a result of such accelerated contribution, there was no
required contribution to the WHX Pension Plan in 2008.  The recent
decline of stock prices across a significant cross-section of the United States
stock market has resulted in an unfunded pension liability of the WHX Pension
Plan of $134.0 million as of December 31, 2008.  The Company expects
to have required minimum contributions for 2009 and 2010 of $1.2 million and
$6.0 million, respectively.   Required future contributions are
determined based upon and subject to changes, and assumptions as to future
changes, in asset values on plan assets, discount rates on future obligations,
assumed rates of return on plan assets and legislative
changes.  Pension costs and required funding obligations will be
effected by changes in the factors and assumptions described in the previous
sentence, as well as other changes such as a plan
termination.




In recent
years, the Company experienced liquidity issues.  On March 7, 2005,
WHX filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy
Code.  WHX continued to operate its business and own and manage its
properties as a debtor in possession until it emerged from protection under
Chapter 11 of the Bankruptcy Code on July 29, 2005.




Since WHX
emerged from bankruptcy, there have been no dividends from H&H or Bairnco to
WHX (due to covenant restrictions in their respective credit facilities) and
WHX’s principal sources of cash flow have consisted of:




·
            The
      issuance of $5.1 million in preferred stock by a newly created subsidiary
      in October 2005, which was invested in the equity of a public company
      (CoSine);




·
            Partial
      payment by H&H of a subordinated debt to WHX of $9.0 million, which
      required the approval of the banks participating in the H&H credit
      facilities.  Subsequent to this transaction in 2006, the
      remaining intercompany loan balance of the subordinated debt of $44.2
      million was converted to equity;




34
 Table of Contents




·
            As
      permitted by the March 29, 2007 amendment and waiver to the H&H credit
      facilities, unsecured loans from H&H for certain required payments to
      the WHX Pension Plan;




·
            As
      permitted by a March 12, 2009 amendment to the H&H credit facilities,
      an unsecured loan from H&H to WHX for other uses in the aggregate
      principal amount of up to approximately $12.0 million (initially amended
      on July 27, 2007 to be up to $7.0 million), subject to certain
      limitations, of which approximately $7.0 million has already been
      distributed;




·
            A
      $15.0 million subordinated loan from SP II advanced on April 17, 2007
      pursuant to the Subordinated Loan Agreement, which WHX used to fund a
      capital contribution to BZA to finance in part the Bairnco
      Acquisition;




·
            As
      permitted by a September 10, 2007 amendment to the H&H credit
      facilities, an unsecured loan from H&H of $13.0 million which was used
      by WHX to make a payment to the WHX Pension Plan on September 12, 2007;
      and




·
            Proceeds
      from the settlement of a fire loss claim at a plant of a subsidiary of the
      Company in the amounts of $0.8 million, $6.5 million and $0.8 million in
      2006, 2007 and 2008, respectively.




As of
December 31, 2008, WHX and its subsidiaries that are not restricted by loan
agreements or otherwise from transferring funds to WHX had cash of approximately
$4.8 million and current liabilities of approximately $2.8 million. H&H is
permitted to advance up to $5 million to WHX pursuant to the most recent
amendment to H&H’s credit agreements, and Bairnco is permitted by its credit
agreements to transfer up to $600,000 per year to WHX in payment of services
rendered by WHX on its behalf.  Management expects that WHX will be
able to fund its operations in the ordinary course over at least the next twelve
months.




Handy & Harman and
Bairnco




Widely-documented
commercial credit market disruptions have resulted in a tightening of credit
markets worldwide.  Liquidity in the global credit market has been
severely contracted by these market disruptions, making it costly to obtain new
lines of credit or to refinance existing debt, when debt financing is available
at all.  The effects of these disruptions are widespread and difficult
to quantify, and it is impossible to predict when the global credit market will
improve or when the credit contraction will significantly ease.  As a
result of the ongoing credit market turmoil, the Company may not be able to
obtain additional debt or equity financing if necessary or
desired.  Furthermore, one or more of the financial institutions that
make available the Company’s revolving credit facilities may become unable to
fulfill their funding obligations, which could materially and adversely affect
liquidity.




The
ability of both H&H and Bairnco to draw on their respective revolving lines
of credit is limited by a borrowing base of accounts receivable and
inventory.  As of December 31, 2008, H&H’s availability under its
credit facilities was $20.4 million, and Bairnco’s availability under its credit
facilities was $6.7 million.  However, there can be no assurances that
they will continue to have access to all or any of the credit lines if their
operating and financial performance do not satisfy relevant borrowing base
criteria and financial covenants within the financing agreements.  If
either H&H or Bairnco do not satisfy borrowing base criteria or financial
covenants, and if they are unable to secure necessary waivers or other
amendments from the lender, they will not have access to their credit
facilities, which could adversely affect the Company’s liquidity.




The
Company




We do not
anticipate that the Company will have any additional sources of cash flow other
than (i) as described above, (ii) from operations, (iii) from the sale of assets
and/or businesses, and (iv) from other discrete transactions.




The
ability of the Company to meet its cash requirements for at least the next
twelve months is dependent, in part, on the Company’s continuing ability to meet
its business plans. The Company continues to examine all of its options and
strategies, including acquisitions, divestitures, and other corporate
transactions, to increase cash flow and stockholder value. If the Company’s
planned cash flow projections are not met, management could consider the
additional reduction of certain discretionary expenses and sale of certain
assets.  There can be no assurance that the funds available from
operations and under the Company’s credit facilities will be sufficient to fund
its debt service costs, working capital demands, pension plan contributions, and
environmental remediation costs.  The Company’s inability to generate
sufficient cash flows from its operations could impair its liquidity, and would
likely have a material adverse effect on its businesses, financial condition and
results of operations, and could raise substantial doubt that the Company will
be able to continue to operate.




35
 Table of Contents




Management
is utilizing the following strategies to enhance liquidity: (1) continuing to
implement the WHX Business System throughout all of the Company’s operations to
enhance systems and processes to increase operating efficiencies at Company
facilities, (2) supporting profitable sales growth both internally and through
acquisition, (3) evaluating strategic alternatives with respect to all lines of
business and/or assets and (4) seeking financing alternatives that may lower its
cost of capital and/or enhance current cash flow.




Discussion
of Consolidated Statement of Cash Flows




Operating
Activities




Net cash
provided by operating activities for 2008 totaled $10.1 million. Net income
adjusted for non-cash income and expense items provided approximately $36.9
million of net cash. Working capital accounts used $26.8 million of cash, as
follows: accrued interest paid to SP II with the proceeds of the Rights Offering
resulted in a net repayment, or use of cash, of $17.6 million, accounts
receivable provided $6.7 million, inventories provided $7.5 million, and net
other current assets and liabilities used $23.4 million.




Net cash
used by operating activities for 2007 totaled $2.4 million.  Net loss
adjusted for non-cash income and expense items provided $10.1 million of cash.
Working capital accounts used $12.4 million of cash, as follows: accounts
receivable provided $2.1 million, inventories provided $13.8 million, interest
accrued but not paid to SP II provided $9.4 million, and net other current
assets and liabilities used $39.5 million.




A $21.2
million improvement in operating income was the major reason for the $12.4
million increase in operating cash flow in 2008 as compared to
2007.  In addition, there were higher payments in 2007 for
environmental remediation costs, legal costs, and pension plan contributions.
This was partially offset by the repayment of accrued interest to SP II in
2008.




Although
2008 sales were $87.9 million higher than 2007 sales, accounts receivable
provided cash of $6.7 million in 2008 instead of using cash. This was
principally caused by a lower accounts receivable balance at year-end, driven by
slow sales in the fourth quarter of 2008 versus 2007. Such sales were negatively
impacted by recessionary trends affecting many of the markets that the Company’s
subsidiaries operate in.  Accounts receivable provided $2.1 million of
cash in 2007.




Inventory
decreased by $8.4 million, or 10.0%, as of December 31, 2008, as compared to
December 31, 2007, principally due to improved inventory management at various
subsidiaries, including a reduction in the quantity of precious metal inventory
owned, resulting in net cash of $7.5 million being provided in
2008.  The Company improved its operating efficiencies and
successfully reduced inventory levels by employing the WHX Business System,
which includes lean manufacturing and other managerial processes and
procedures.  In 2007, inventory provided $13.8 million of cash,
principally as a result of a subsidiary of H&H receiving 400,000 ounces of
silver from a customer under an unallocated pool agreement.  In the
normal course of business, such subsidiaries of H&H accept precious metal
from suppliers and customers, which quantities are returnable in fabricated or
commercial bar form under agreed-upon terms. To the extent such metals are used
by its subsidiaries to meet their operating requirements, the amount of
inventory which H&H must own is reduced.  As a result of this
customer agreement, H&H was able to reduce its owned quantity of silver by
over 400,000 troy ounces in 2007, providing over $5.0 million in cash. For the
entire year of 2007, the Company reduced the quantity of its owned precious
metal inventory by 1,184 troy ounces of gold and 690,200 troy ounces of silver,
which approximated $10 million at average market value.  In addition,
as the Company sold the inventory that it had acquired in the Bairnco
Acquisition in April 2007, it recovered the manufacturing profit of $5.6 million
that was paid for the inventory at that date.




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Net other
current assets and liabilities (including accrued interest payable to
SP II) used $45.8 million of cash flow in 2008 and used $28.4 million in
2007. Cash used in 2008 period was primarily due to the payment to SP II of
accrued interest of $28.1 million from proceeds of the Company’s Rights
Offering, and a reduction in accounts payable of $12.5 million.  The
lower accounts payable balance was principally due to reduced sales and
purchases of raw materials during the fourth quarter of 2008 as compared to the
fourth quarter of 2007.  This was partially offset by the collection
of an income tax refund of $1.8 million in 2008.  The 2007 use of cash
was principally driven by $21.6 million of payments made to fund the WHX Pension
Plan, and approximately $6.3 million of payments for environmental remediation
costs, but was partially offset by the accrual of $9.4 million of interest
payable to SP II (net of payments), higher accounts payable, and additional
environmental remediation accruals totaling $4.7 million.




Investing
Activities




Investing
activities used $5.8 million in 2008 and $110.5 million in 2007 with 2007
principally driven by the 2007 Bairnco Acquisition, which used $99.5 million,
net of cash acquired, and the acquisition by H&H of Omni Technologies
Corporation in November 2007 for $3.1 million.  Capital spending in
2008 was $12.3 million, as compared to $10.2 million spent in 2007. Cash paid
out for precious metal derivative contracts in 2008 was $1.7 million as compared
to $2.0 million in 2007.  In 2008, net proceeds from the sale of
assets totaled $8.3 million, principally from the sale of the Rancho Cucamonga,
California land and plant building utilized by Arlon, Inc., a subsidiary of
Bairnco.  Arlon, Inc. has leased the facility from the buyer under a
15-year lease, with two 5-year renewal options.  In 2007, $4.3 million
was received principally from the sale of assets of two closed facilities of
H&H.




Financing
Activities




Financing
activities used a net amount of $1.6 million in 2008. The completion of the
Rights Offering resulted in cash proceeds, net of expenses, of $155.6 million,
$120.8 million of which represented SP II’s participation.  Of the
total proceeds, $111.2 million was used to repay debt to SP II, and $28.1
million was used to pay SP II accrued interest, which was reflected in operating
cash flows as mentioned above.  In addition to the debt repaid to SP
II, there were $30.9 million of repayments of term loans in 2008.  In
addition to the scheduled principal repayments, Bairnco used the proceeds of its
sale of the Rancho Cucamonga property described above to repay $7.8 million of
the term loan under its Wells Fargo Facility.  Bairnco also repaid
$1.8 million of principal on its term loan upon receipt of an income tax refund
of the same amount during the 2008 period.  H&H borrowed an
additional $4.0 million under its Wachovia term loan facility on February 14,
2008. There was a net repayment on the Company’s revolving credit facilities of
$17.1 million, and the payment of $1.6 million of financing fees during
2008.




In
2007, financing activities provided $114.0 million, $101.4 million of which was
due to the financing of the Bairnco Acquisition, which was initially financed
fully by SP II.  In July 2007, Bairnco completed a refinancing of its
debt which resulted in new term loan borrowings of $76.0 million and payments of
approximately $55.5 million to SP II and $14.8 million of term loan payments to
its former credit bank.  H&H borrowed a total of $14.5 million
from SP II; $5.7 million in July, $8.0 million in September, and $0.8 million in
December 2007. There were additional net drawdowns of $3.4 million on the
revolving credit facilities of both H&H and Bairnco (post–acquisition),
partially offset by $8.3 million of additional principal repaid on term loans
and $3.7 million related to financing fees principally in connection with the
extension of the maturity of the H&H credit facilities and the refinancing
of Bairnco’s debt.




Debt




The
following terms and conditions of the Company’s various credit facilities
reflect the March 12, 2009 amendments to such agreements.




Handy &
Harman




H&H’s
financing agreements include the Wachovia Facilities, which provide for
revolving credit and term loan facilities, and the Term B Loan with SP
II.




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The
Wachovia Facilities currently provide for maximum borrowings of $115 million,
consisting of a revolving credit facility of up to $75 million of borrowings
dependent on the levels of and collateralized by eligible accounts receivable
and inventory, and reduced by the amount of certain term and supplemental term
loans outstanding to Wachovia. In addition, the Wachovia Facilities also include
term loans funded by Ableco ($43.3 million as of December 31, 2008 and $40.0
million currently). The term loans are collateralized by eligible machinery and
equipment and real estate. The revolving credit facility and the term and
supplemental loans payable under the Wachovia Facilities bear interest at LIBOR,
which shall at no time be less than 1.00%, plus applicable margins of between
2.75% and 3.75%, or the U.S. Base rate (Prime rate, which shall at no time be
less than 3.00%) plus 1.00% to 2.00%. The applicable margin for the revolving
credit facility and the term loans payable under the  Wachovia
Facilities is dependent on H&H’s Quarterly Average Excess Availability for
the prior quarter, as that term is defined in the agreement. The term loans
payable to Ableco bear interest at LIBOR, which shall at no time be less than
3.25%, plus an applicable margin of 11.75%, or the U.S. Base rate (Prime rate,
which shall at no time be less than 5.00%) plus 10.00%. Borrowings under the
Wachovia Facilities are collateralized by first priority security interests in
and liens upon all present and future stock and assets of H&H and its
subsidiaries, including all contract rights, deposit accounts, investment
property, inventory, equipment, real property, and all products and proceeds
thereof.  Principal payments for the term loans under the Wachovia
Facilities are due in monthly installments of $0.3 million. The Wachovia
Facilities contain affirmative, negative, and financial covenants (including,
EBITDA (as defined) shall not be less than $32.0 million increasing at a rate of
$0.5 million per month from May 2009 through December 2009 and $36.0 million
thereafter, the Senior Leverage Ratio shall not be greater than 3.00:1.0,
Capital Expenditures shall not be made in excess of $12.5 million in any 12
month period, as such terms are defined therein), and cash distributions that
can be made to WHX are restricted.  The Wachovia Facilities mature on
June 30, 2011.




The Term
B Loan with SP II also matures on June 30, 2011 and provides for annual payments
based on 40% of excess cash flow as defined in the agreement (no principal
payments are currently payable).  Interest accrues monthly at the
Prime Rate plus 14%, and at no time shall the Prime Rate (as that term is
defined in the agreement) be below 4.0%. Pursuant to the terms of a
subordination agreement between SP II and the participants in the Wachovia
Facilities, H&H’s interest payable to Steel is accrued but not
paid.  The Term B Loan has a second priority security interest in and
lien on all assets of H&H, subject to the prior lien of the Wachovia
Facilities and H&H’s $12 million guaranty and security interest for the
benefit of Ableco as agent of the Bairnco indebtedness. In addition, H&H has
pledged a portion of all outstanding stock of Indiana Tube Danmark A/S, a Danish
corporation, and Protechno, S.A., a French corporation, both of which are
indirect wholly-owned subsidiaries of H&H. The Term B Loan contains
affirmative, negative, and financial covenants (including, EBITDA (as defined)
shall not be less than $32.0 million increasing at a rate of $0.5 million per
month from May 2009 through December 2009 and $36.0 million thereafter, the
Senior Leverage Ratio shall not be greater than 3.00:1.0, Capital Expenditures
shall not be made in excess of $12.5 million in any 12 month period, as such
terms are defined therein), and cash distributions that can be made to WHX are
restricted. The Term B Loan also contains cross-default provisions with the
Wachovia Facilities.




On
January 22, 2008, H&H and certain of its subsidiaries amended its credit
facilities to, effective January 11, 2008, among other things, (i) provide for a
temporary reduction in the reserves required under the Wachovia Facilities from
$2.5 million to $1.0 million until April 15, 2008, and (ii) revise the criteria
of Foreign Accounts, as that term is defined in the agreement, to be included in
the calculation of availability.




On
February 14, 2008, H&H and certain of its subsidiaries amended its credit
facilities to, among other things, (i) reset the levels of certain financial
covenants, (ii) allow for the prepayment of the Term B Loan with SP II in the
amount of and upon receipt by H&H of a capital or debt infusion from the
Company from proceeds of the Rights Offering, less $5.0 million which shall be
used to pay down the revolver under the Wachovia Facilities, (iii) extend the
maturity date to June 30, 2009, (iv) consent to the terms and conditions of the
H&H Security Agreement and the H&H Guaranty, both terms as defined below
in the description of the February 14, 2008 amendment by Bairnco to its credit
agreements, and (v) amend applicable interest rates.  In addition, the
Wachovia Facilities were also amended to provide for an additional term loan of
$4.0 million to H&H and its subsidiaries.




On
September 29, 2008, H&H and certain of H&H’s subsidiaries amended the
Wachovia Facilities, effective as of September 26, 2008.  The Wachovia
Facilities were amended to, among other things, eliminate the requirement that
the proceeds of WHX’s Rights Offering be paid to the lenders of the Wachovia
Facilities.  In connection with the amendment to the Wachovia
Facilities, WHX entered into a letter agreement with Ableco pursuant to which
WHX agreed that, within 10 days after the effective date of the amendment, an
additional $5,000,000 from the proceeds of WHX’s Rights Offering shall be either
(a) remitted to Bairnco, and simultaneously used by Bairnco to prepay its term
loans with either Wells Fargo Foothill, Inc. or Ableco or (b) remitted to
H&H and simultaneously used by H&H to permanently prepay term loans
under the Wachovia Facilities.




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On
October 29, 2008, H&H and certain of its subsidiaries amended each of the
Wachovia Facilities and the Term B Loan to, among other things, provide for a
reduction in the H&H Guaranty from up to $10 million to up to $7
million.




On March
12, 2009, H&H and almost all of its subsidiaries amended each of the
Wachovia Facilities and the Term B Loan to, among other things, (i) extend the
term of the loans for two years until June 30, 2011, (ii) increase certain
interest rates, (iii) reset the levels of certain financial covenants, (iv)
permit the disposition and/or cessation of operations of certain of H&H’s
direct and indirect subsidiaries (v) provide for an increase in the aggregate
amount of unsecured loans, distributions or other advances from H&H to WHX
for general business purposes from up to $7.0 million to up to $12.0 million,
subject to certain limitations, and (vi) provide for an increase in the existing
limited guaranty by H&H from up to $7.0 million to up to $12.0
million.  In addition, the Wachovia Facilities were also amended to,
among other things, reduce the amount of the credit facility from $125.3 million
to $115.0 million including decreasing the revolving credit facility from $83.0
million to $75.0 million.




Bairnco




Bairnco’s
financing agreements include the Wells Fargo Facility, which provides for
revolving credit and term loan facilities, the Ableco Facility and the
Subordinated Debt Credit Agreement with SP II, both of which are also term loan
facilities.




The Wells
Fargo Facility provides for a revolving credit facility in an aggregate
principal amount not to exceed $30.0 million and a term loan facility of $28.0
million.  Borrowings under the Wells Fargo Facility bear interest, (A)
in the case of base rate advances at 0.75% above the Wells Fargo Prime rate and
base rate term loans at 1.25% above the Wells Fargo Prime rate, and (B) in the
case of LIBOR rate loans, at rates of 3.00% for advances or 3.50% for term
loans, as applicable, above the LIBOR rate.  Obligations under the
Wells Fargo Facility are guaranteed by certain of Bairnco’s subsidiaries, and
secured by a first priority lien on all assets of Bairnco and such subsidiaries.
Principal payments for the term loans under the Wells Fargo Facility are due in
monthly installments of $0.2 million. The scheduled maturity date of the
indebtedness under the Wells Fargo Facility is July 17, 2012.




The
Ableco Facility provides for a term loan facility of $48.0
million.  Borrowings under the Ableco Facility bear interest, in the
case of base rate loans, at 6.50% above the rate of interest publicly announced
by JPMorgan Chase Bank in New York, New York as its reference rate, base rate or
prime rate, and, in the case of LIBOR rate loans, at 9.00 % above the LIBOR
rate. Obligations under the Ableco Facility are guaranteed by Bairnco and
certain of its subsidiaries, and secured by a second priority lien on all of
their assets. The Ableco Facility is also collateralized by a limited guaranty
by H&H of up to $12 million, secured by a second lien on all of the assets
of H&H pursuant to the terms and conditions of the H&H Security
Agreement and the H&H Guaranty.  Principal payments for the term
loans under the Ableco Facility are due on the maturity date, which is July 17,
2012.




The Wells
Fargo Facility and the Ableco Facility contain affirmative, negative, and
financial covenants (including, for the applicable periods set forth therein,
permitting TTM EBITDA to be less than $13.0 million to $14.0 million, having a
Leverage Ratio of more than 6.74:1.0 to 5.0:1.0, having a Fixed Charge Coverage
Ratio of less than 0.75:1.0 to 1.0:1.0 and making Capital Expenditures in excess
of $9.0 million in any fiscal year, as such terms are defined
therein).




The
Subordinated Debt Credit Agreement with SP II provides for a term loan
facility.  The original principal of approximately $31.8 million was
reduced to $10.0 million with proceeds from WHX’s Rights
Offering.  All borrowings under the Subordinated Debt Credit Agreement
bear interest at 9.50% above the rate of interest publicly announced by JPMorgan
Chase Bank in New York, New York as its reference rate, base rate or prime rate.
Principal, interest and all fees payable under the Subordinated Debt Credit
Agreement are due and payable on the scheduled maturity date, January 17, 2013.
Obligations under the Subordinated Debt Credit Agreement are guaranteed by
Bairnco and certain of its subsidiaries, and collateralized by a subordinated
priority lien on their assets.  The Subordinated Debt Credit Agreement
contains customary representations, warranties, affirmative and negative
covenants, events of default and indemnification provisions.




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On
February 14, 2008, Bairnco and certain of its subsidiaries amended the Wells
Fargo Facility and the Ableco Facility to, among other things, reset the levels
of certain financial covenants.  The Ableco Facility was also amended
to provide for, among other things, a limited guaranty by H&H of up to $10
million, secured by a second lien on all of the assets of H&H pursuant to
the terms and conditions of the H&H Security Agreement and the H&H
Guaranty.   In addition, each of the Wells Fargo Facility and the
Ableco Facility was also amended to, among other things, provide for either (i)
the Company to invest $10 million from the proceeds of the Rights Offering by
March 31, 2008 in Bairnco and for such  proceeds to be used to prepay
at least $10 million under the Wells Fargo term loan, (ii) SP II to issue a
limited $10 million guaranty, or (iii) a capital or debt infusion of $10 million
by either SP II or WHX into Bairnco, or any combination of the
foregoing.




On June
30, 2008, Arlon Inc., a wholly owned subsidiary of Bairnco, (i) sold certain
property in Rancho Cucamonga, California for $8.5 million and (ii) leased back
such property under a 15 year lease term with two 5 year renewal
options.  Bairnco agreed to guarantee the payment and performance
under the lease. The proceeds from the sale were applied to repay a portion of
the term loan under the Wells Fargo Facility. On June 30, 2008, Bairnco amended
the Wells Fargo Facility and its Ableco Facility to permit these transactions,
the sale of certain other real property and related amendments.




On
October 29, 2008, Bairnco and certain of its subsidiaries amended the Ableco
Facility and the Wells Fargo Facility.  Each of the Wells Fargo
Facility and Ableco Facility was amended to, among other things, (i) reset the
levels of certain financial covenants, (ii) provide for the payment from the
Company’s Rights Offering of $8.2 million to reduce the term loan pursuant to
the Wells Fargo Facility and terminate the limited guaranty issued by SP II in
favor of Ableco (the “Steel Partners Working Capital Guaranty”), (iii) provide
for the payment from the Company’s Rights Offering of $3.0 million to reduce the
outstanding term loan pursuant to the Ableco Facility and $2.0 million to reduce
the outstanding revolving loan pursuant to the Wells Fargo Facility, (iv) permit
cash interest payments under Bairnco’s Subordinated Debt Credit Agreement with
SP II subject to certain conditions, and (v) permit the assignment of Bairnco’s
obligations under the Subordinated Debt Credit Agreement to WHX.




The
Ableco Facility was also amended to provide for, among other things, a reduction
in the H&H Guaranty from up to $10 million to up to $7 million, secured by a
second lien on all of the assets of H&H pursuant to the terms and conditions
of the H&H Security Agreement and the H&H Guaranty.




On March
12, 2009, Bairnco and certain of its subsidiaries amended the Wells Fargo
Facility and the Ableco Facility to, among other things, (i) increase the
interest rates and (ii) reset the levels of certain financial
covenants.  The Ableco Facility was also amended to provide for, among
other things, an increase in the existing limited guaranty by H&H from up to
$7 million to up to $12 million, secured by a second lien on all of the assets
of H&H pursuant to the terms and conditions of the H&H Security
Agreement and the H&H Guaranty.  The Subordinated Debt Credit
Agreement with SP II was also amended to, among other things, increase the
interest rates.




The
Subordinated Loan Agreement provided for a subordinated term loan of $15 million
from SP II to WHX in connection with the Bairnco Acquisition, and was unsecured
at the WHX level.  Borrowings under the Subordinated Loan Agreement
bore pay-in-kind interest at a rate per annum equal to the prime rate of JP
Morgan Chase plus 7.75%, with a minimum interest rate of 16% per annum and a
maximum interest rate of 19% per annum.  Obligations under the
Subordinated Loan Agreement were guaranteed by Bairnco and certain of its
subsidiaries and secured by a junior lien on the assets of Bairnco and certain
of its subsidiaries and capital stock of certain of Bairnco’s subsidiaries. The
Subordinated Loan Agreement was fully paid in September 2008 with proceeds from
WHX’s Rights Offering.




Prior to
the March 12, 2009 amendments to the Company’s credit agreements, the Company’s
weighted average interest rate for 2008 was 9.88%.  In 2007, the
Company’s weighted average interest rate was 11.86%.




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Other
Obligations




Pension
Plan




On July
24, 2003, the Company entered into an agreement among the PBGC, WPC, WPSC, and
the United Steelworkers of America, AFL-CIO-CLC (“USWA”) in settlement of
matters relating to the PBGC V. WHX Corporation (“Termination Litigation”), in
which the PBGC was seeking to terminate the WHX Pension Plan.  Under
the settlement, WHX agreed, among other things, (a) to certain administrative
facts and legal conclusions about the Pension Plan, as well as certain ongoing
agreements, as set forth in the settlement agreement, and (b)  that
WHX will not contest a future action by the PBGC to terminate the WHX Pension
Plan in connection with a future WPC Group facility shutdown.  The WPC
Group was a wholly-owned subsidiary of WHX until August 1, 2003.  In
the event that such a plan termination occurs, the PBGC has agreed to release
WHX from any claims relating to the shutdown. However, there may be PBGC claims
related to unfunded liabilities that may exist as a result of a termination of
the WHX Pension Plan.




On
December 20, 2006, the Internal Revenue Service (“IRS”) granted a conditional
waiver of the minimum funding requirements for the WHX Pension Plan for the 2005
plan year in accordance with section 412 (d) of the Internal Revenue Code and
section 303 of ERISA, which had not been paid by the Company due to liquidity
issues.  On December 28, 2006, WHX, H&H, and the PBGC entered into
a settlement agreement (the “PBGC Settlement Agreement”) in connection with the
conditional waiver granted by the IRS of the minimum funding requirement for the
2005 plan year (the “IRS Waiver”) and certain other matters.  Payments
made during 2006 and 2007 were $13.1 million and $21.6 million,
respectively.  On September 12, 2007, the Company made a payment to
the WHX Pension Plan of $13.0 million, which exceeded the minimum required
contributions under ERISA.  As a result of such accelerated
contribution, there was no required minimum contribution to the WHX Pension Plan
in 2008, and the Company believes that the full amount of the IRS Waiver has
been repaid.




The
recent decline of stock prices across a significant cross-section of the United
States stock market has resulted in an unfunded pension liability of $134.0
million as of December 31, 2008.  The Company expects to have required
minimum contributions for 2009 and 2010 of $1.2 million and $6.0 million,
respectively.   Required future contributions are determined
based upon and subject to changes, and assumptions as to future changes, in
asset values on plan assets, discount rates on future obligations, assumed rates
of return on plan assets and legislative changes.  Pension costs and
required funding obligations will be effected by changes in the factors and
assumptions described in the previous sentence, as well as other changes such as
a plan termination.




On
February 28, 2008, the Company adopted an amendment to the WHX Pension Plan
allowing certain WPSC participants to elect to receive, between March 1, 2008
and December 31, 2008, a single lump sum payment in lieu of all benefits
otherwise payable under the WHX Pension Plan. The election was made available to
more than 2,300 participants of the WHX Pension Plan, and was elected by almost
1,900 participants.  As a result, $125.4 million has been distributed
to date and the program is now substantially complete.  There has been
no material effect on the funded status of the WHX Pension Plan or on the
estimated minimum funding requirements as a result of this program.




Environmental
Issues




H&H’s
facilities and operations are subject to extensive environmental laws and
regulations imposed by federal, state, foreign and local authorities relating to
the protection of the environment.  H&H could incur substantial
costs, including cleanup costs, fines or sanctions, and third-party claims for
property damage or personal injury, as a result of violations of or liabilities
under environmental laws.  H&H has incurred, and in the future may
continue to incur, liability under environmental statutes and regulations with
respect to the contamination detected at sites owned or operated by it
(including contamination caused by prior owners and operators of such sites,
abutters or other persons) and the sites at which H&H disposed of hazardous
substances.  As of December 31, 2008, H&H has established a
reserve totaling $6.7 million with respect to certain presently estimated
environmental remediation costs at certain of its facilities.  This
reserve may not be adequate to cover the ultimate costs of remediation,
including discovery of additional contaminants or the imposition of additional
cleanup obligations, which could result in significant additional
costs.  In addition, H&H expects that future regulations, and
changes in the text or interpretation of existing regulations, may subject it to
increasingly stringent standards.  Compliance with such requirements
may make it necessary for H&H to retrofit existing facilities with
additional pollution-control equipment, undertake new measures in connection
with the storage, transportation, treatment and disposal of by-products and
wastes or take other steps, which may be at a substantial cost to
H&H.




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Off-Balance
Sheet Arrangements




It is not
the Company’s usual business practice to enter into off-balance sheet
arrangements such as guarantees on loans and financial commitments,
indemnification arrangements, and retained interests in assets transferred to an
unconsolidated entity for securitization purposes. Certain customers and
suppliers of the Precious Metal segment choose to do business on a “pool”
basis.  Such customers or suppliers furnish precious metal to
subsidiaries of H&H for return in fabricated form (“customer metal”) or for
purchase from or return to the supplier. When the customer’s precious metal is
returned in fabricated form, the customer is charged a fabrication charge. The
value of consigned precious metal is not included in the Company’s balance
sheet.  As of December 31, 2008, H&H subsidiaries held customer
metal comprised of 741,046 ounces of silver, 1,492 ounces of gold, and 1,391
ounces of palladium.  The market value per ounce of silver, gold, and
palladium as of December 31, 2008 was $11.30, $883.00, and $185.00,
respectively.




Summary




The
Company continues to examine all of its options and strategies, including
acquisitions, divestitures, and other corporate transactions, to increase cash
flow and stockholder value, as well as considering the additional reduction of
certain discretionary expenses and sale of certain non-core
assets.  There can be no assurance that the funds available from
operations and under the Company’s credit facilities will be sufficient to fund
its debt service costs, working capital demands, pension plan contributions, and
environmental remediation costs.  The Company’s inability to generate
sufficient cash flows from its operations could impair its liquidity, and would
likely have a material adverse effect on its business, financial condition and
results of operations, and could raise substantial doubt that the Company will
be able to continue to operate.




The
Company believes that recent amendments to its financing arrangements and
continuing improvements in its core operations will permit the Company to
generate sufficient working capital to meet its obligations as they
mature.  The ability of the Company to meet its cash requirements for
at least the next twelve months is dependent, in part, on the Company’s ability
to meet its business plan.  Management believes that existing capital
resources and sources of credit, including the H&H credit facilities and the
Bairnco credit facilities, will be adequate to meet its current and anticipated
cash requirements.  However, if the Company’s cash needs are greater
than anticipated or the Company does not materially satisfy its business plan,
the Company may be required to seek additional or alternative financing
sources.  There can be no assurance that such financing will be
available or available on terms acceptable to the Company.




The
Company has taken the following actions, which it believes has and will continue
to improve liquidity over time and help provide for adequate liquidity to fund
the Company’s capital needs:




·
            On
      various dates in 2007, 2008, and 2009 to-date, H&H and certain of its
      subsidiaries amended the Wachovia Facilities and the Term B
      Loan.  These agreements were each amended to, among other
      things, (i) extend the maturity date to June 30, 2011, (ii) reset the
      levels of certain financial covenants, (iii) grant a waiver to the events
      of default arising as a result of the attachment and garnishment of $3.5
      million in connection with certain litigation, (iv) permit additional
      loans by SP II to H&H, (v) permit certain loans or advances from
      H&H to WHX, subject to certain conditions, (vi) allow for the
      acquisition of Omni Technologies Corporation, (vii) allow for the
      prepayment of the Term B Loan in the amount of and upon receipt by H&H
      of a capital or debt infusion from the Company from proceeds of the Rights
      Offering, (viii) consent to the terms of the H&H Security Agreement
      and the H&H Guaranty which were granted in connection with amendments
      to Bairnco’s debt agreements, (ix) amend applicable interest rates and (x)
      permit the disposition and/or cessation of operations of certain of
      H&H’s direct and indirect subsidiaries. The Wachovia Facilities were
      also amended to permit an additional term loan to H&H of $4.0 million,
      funded by Ableco.  Bairnco also amended its Wells Fargo Facility
      and Ableco Facility to, among other things, reset the levels of certain
      financial covenants, to permit Bairnco to sell and leaseback one of its
      operating facilities, and to allow Bairnco to prepay a portion of its debt
      using certain proceeds of the Rights Offering.  (Please see
      “Debt” section of this “Item 7 - Management’s Discussion and Analysis of
      Financial Condition and Results of Operations” for additional information
      about these amendments).




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·
            On
      September 25, 2008, WHX completed the Rights Offering.  The
      Company sold 11,178,459 shares of common stock to existing stockholders
      through the exercise of rights at a subscription price of $14.00 per
      share, for an aggregate purchase price of approximately $156.5
      million.  SP II subscribed for 8,630,910 shares of the Company’s
      common stock, for an aggregate purchase price of approximately $120.8
      million, pursuant to its basic and applicable oversubscription
      privileges.  After giving effect to the Rights Offering, SP II
      owns 75% of the outstanding shares of common stock of the
      Company.  The Company used the proceeds of the Rights Offering
      to (i) redeem preferred stock issued by a wholly-owned subsidiary of the
      Company, which was held by SP II, plus accumulated dividends, together
      totaling $6.0 million, (ii) repay Company indebtedness to SP II of $18.9
      million, and (iii) repay $117.6 million of indebtedness and accrued
      interest of certain wholly-owned subsidiaries of the Company to SP
      II.   After such payments, $14.0 million remained with the
      Company as cash, of which $13.2 million was used to repay additional debt
      of the Company on October 29, 2008 pursuant to the amendments to the
      Company’s credit agreements of that same
date.




·
            The
      Company continues to apply the WHX Business System at all of its business
      units.  The System is at the heart of the operational
      improvement methodologies for all WHX companies and employees. Strategy
      Deployment forms the roof of the business system and serves to convert
      strategic plans into tangible actions ensuring alignment of goals
      throughout each of our businesses. The pillars of the System are the key
      performance indicators used to monitor and drive
      improvement.  The steps of the System are the specific tool
      areas that drive the key metrics and overall performance.  WHX
      utilizes lean tools and philosophies to reduce and eliminate waste coupled
      with the Six Sigma tools targeted at variation reduction.  The
      System is a proven, holistic approach to increasing shareholder value and
      achieving long term, sustainable, and profitable
  growth.




·
            On
      January 4, 2009, the Company implemented a 5% salary reduction to annual
      salaries over $40,000 for all salaried employees, including all of the
      Company’s executive officers, in furtherance of the Company’s ongoing
      efforts to lower its operating costs. The Company also suspended its
      employer contributions to 401(k) savings plans for all employees not
      covered by a collective bargaining
agreement.




·
            The
      Company has developed contingency plans to further reduce fixed and
      variable expenses at its various locations if sales and/or operating
      income fall below pre-determined levels.  Some of these plans
      have already been implemented in the first quarter of
  2009.




·
            In
      2008, management decided to exit the welded specialty tubing market in
      Europe and close its ITD subsidiary, sell ITD’s assets, pay off ITD’s
      related debt and repatriate cash remaining post-closing. The decision to
      exit this market was made after evaluating current economic conditions and
      competition from lower cost manufacturers.  In 2008, the Company
      also evaluated its Sumco subsidiary in light of ongoing operating
      losses.  Sumco sells electroplating services primarily to the
      automotive market.  Sumco has had declining cash flows in 2008
      and projected negative 2009 cash flows principally caused by the decline
      in U.S. economic activity and by Sumco’s reliance on the automotive market
      for over 90% of its sales.  The Board of Directors of Sumco is
      exploring strategic options for the Sumco
  business.




43
 Table of Contents




In view
of the matters described in the preceding paragraphs, management believes that
the Company has the ability to meet its capital requirements on a continuing
basis for at least the next twelve months.  However, if the Company’s
planned cash flow projections are not met and/or credit is not available in
sufficient amounts, management could consider the additional reduction of
certain discretionary expenses and sale of certain assets.  In the
event that these plans are not sufficient and/or the Company’s credit facilities
are not adequate, the Company’s ability to operate could be materially adversely
affected.




*******




When used
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, the words “anticipate”, “estimate” and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), which are intended to be covered by the
safe harbors created thereby.  Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, general economic conditions, the ability of the Company to develop
markets and sell its products, and the effects of competition and
pricing.  Although the Company believes that the assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could be inaccurate, and therefore, there can be no assurance that the
forward-looking statements included herein will prove to be
accurate.




Critical
Accounting Policies and Estimates




The
Company’s discussion and analysis of its financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. Preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities.  On an on-going basis, the Company evaluates
its estimates, including those related to bad debts, inventories, long-lived
assets, intangibles, accrued expenses, income taxes, pensions and other
post-retirement benefits, and contingencies and litigation.  Estimates
are based on historical experience, future cash flows and various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other
sources.  Actual results may differ from these estimates.




Financial
Reporting Release No. 60 requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements.  Note 2 to the consolidated financial statements, included
elsewhere in this Form 10-K, includes a summary of the significant accounting
policies and methods used in the preparation of the Company’s financial
statements.  The following is a brief discussion of the critical
accounting policies and methods used by the Company.




44
 Table of Contents




Inventories




H&H
holds precious metal positions that are subject to market fluctuations. The
precious metal inventory is included in inventory using the LIFO method of
inventory valuation, which is equal to the lower of cost or market, with any
adjustments recorded through cost of goods sold. For precious metals
inventories, no segregation among raw materials, work in process and finished
goods is practicable.




Non
precious metal inventories are stated at the lower of cost or
market.  Non-precious metal inventory is evaluated for estimated
excess and obsolescence based upon assumptions about future demand and market
conditions and is adjusted accordingly.  If actual market conditions
are less favorable than those projected by H&H, write-downs may be
required.




Derivatives




H&H
enters into commodity futures and forwards contracts on precious metals that are
subject to market fluctuations in order to economically hedge its precious
metals inventory against price fluctuations.  Future and forward
contracts to sell or buy precious metal are the derivatives used for this
objective.   The Company also economically hedges its exposure on
variable interest rate debt at one of its foreign
subsidiaries.   As these derivatives are not designated as
accounting hedges under SFAS No. 133, they are accounted for as derivatives with
no hedge designation.  These derivatives are marked to market and both
realized and unrealized gains and losses on these derivatives are recorded in
current period earnings as other income (loss) in the case of the precious metal
contracts and in interest expense with respect to the interest rate
derivative.  The unrealized gain or loss (open trade equity) on the
derivatives is included in other current assets or other current liabilities,
respectively.




As of
December 31, 2008 and 2007, the Company had contracted for $4.6 million and
$11.6 million, respectively, of forward contracts with a counter party rated A
by Standard & Poors, and the future contracts are exchange traded contracts
through a third party broker.  Accordingly, the Company has determined
that there is minimal credit risk of default.  The Company estimates
the fair value of its derivative contracts through use of market quotes or
broker valuations when market information is not available.




Goodwill,
Other Intangibles and Long-Lived Assets




Goodwill
is reviewed annually for impairment in accordance with the provisions of SFAS
No. 142, “Goodwill and Other Intangible Assets”. The evaluation of the
recoverability of the unamortized balance of goodwill is based on a comparison
of the respective reporting unit’s fair value to its carrying value, including
allocated goodwill. Fair values are determined by discounting estimated future
cash flows. The recoverability of goodwill may be impacted if estimated future
operating cash flows are not achieved.  Other intangible assets with
indefinite lives are subjected to an annual lower of cost or fair value
impairment test.  Intangible assets with finite lives are amortized
over their estimated useful lives.  We also estimate the depreciable
lives of property, plant and equipment, and review the assets for impairment if
events, or changes in circumstances, indicate that we may not recover the
carrying amount of an asset. Long-lived assets consisting of land and buildings
used in previously operating businesses are carried at the lower of cost or fair
value, and are included in Other Non-Current Assets in the consolidated balance
sheets.




Pension
and Postretirement Benefit Costs




H&H,
Bairnco and certain of their respective subsidiaries maintain qualified and
several non-qualified pension plans and other postretirement benefit plans.
Pension benefits for the participants of the WHX Pension Plan are based on years
of service and the amount of compensation at the time of retirement. However,
the qualified pension benefits were frozen for most participants as of December
31, 2005 and April 30, 2006 for hourly and salaried non-bargaining participants,
respectively, with the exception of a single subsidiary.




The
Company’s pension and postretirement benefit costs are developed from actuarial
valuations.  Inherent in these valuations are key assumptions
including discount rates and expected long-term rates of return on plan
assets.  Material changes in the Company’s pension and postretirement
benefit costs may occur in the future due to changes in these assumptions,
changes in the number of plan participants, changes in the level of benefits
provided, changes to the level of contributions to these plans and other
factors.




45
 Table of Contents




The
Company determines its actuarial assumptions for its pension and postretirement
plans on December 31 of each year to calculate liability information as of that
date and pension and postretirement expense for the following
year.  The discount rate assumption is derived from the rate of return
on high quality bonds as of December 31 of each year.




The
Plan’s assets are diversified as to type of assets, investment strategies
employed, and number of investment managers used.  Investments may
include equities, fixed income, cash equivalents, convertible securities, and
private investment funds.  Derivatives may be used as part of the
investment strategy.  The Company may direct the transfer of assets
between investment managers in order to rebalance the portfolio in accordance
with asset allocation guidelines established by the Company.




Management
uses judgment to make assumptions on which our employee benefit liabilities and
expenses are based. The effect of a 1% change in two key assumptions for the WHX
Pension Plan is summarized as follows:




Assumptions
                                                      
                                                      Statement
      of
                                                        Operations
      (1)
                                                      
                                                      
                                                      Balance
      Sheet
                                                        Impact
      (2)(in
      millions)Discount
      rate+1%
      increase
                                                      
                                                      $
                                                      1.3
                                                      
                                                      
                                                      $
                                                      (38.7
                                                      )-1%
      decrease
                                                      
                                                      
                                                      (0.4
                                                      )
                                                      
                                                      
                                                      42.4Expected
      return on assets+1%
      increase
                                                      
                                                      
                                                      (3.2
                                                      )-1%
      decrease
                                                      
                                                      
                                                      3.2
 (1)
      Estimated impact on 2008 net periodic benefit costs.(2)
      Estimated impact on 2008 pension
liability.





Environmental
Remediation




The
Company provides for remediation costs and penalties when the responsibility to
remediate is probable and the amount of associated costs is reasonably
determinable. Remediation liabilities are accrued based on estimates of known
environmental exposures.  The Company regularly monitors the progress
of environmental remediation. Should studies indicate that the cost of
remediation is to be more than previously estimated, an additional accrual would
be recorded in the period in which such determination was made. As of December
31, 2008, total accruals for environmental remediation were $6.7
million.




Legal
Contingencies




The
Company provides for legal contingencies when the liability is probable and the
amount of the associated costs is reasonably determinable. The Company regularly
monitors the progress of legal contingencies and revises the amounts recorded in
the period in which changes in estimate occur.




Purchase
Price Allocation




The
Company records assets and liabilities of acquired companies at their fair value
in accordance with SFAS No. 141 “Business Combinations.”  In April
2007, the Company acquired Bairnco.  The fair value of inventory was
determined using the cost method for raw materials and the comparative sales
method for work in process and finished goods.  Fixed assets were
valued using the cost method.  The fair value of intangible assets was
determined using discounted cash flow methodologies.




46
 Table of Contents




New
Accounting Standards




In
December 2008, the Financial Accounting Standards Board (“FASB”) issued FASB
Staff Position FAS 132R-1, “Employer’s Disclosures about Postretirement Benefit
Plan Assets” (“FSP FAS 132R-1”). The FSP amends FASB Statement No. 132 (Revised
2003) “Employers’ Disclosures about Pensions and Other Postretirement Benefits”
(“SFAS No. 132R”), to provide guidance on an employer’s disclosures about plan
assets of a defined benefit pension or other postretirement plan. FSP FAS 132R-1
changes the disclosure requirements for benefit plan assets, but does not change
the accounting for such assets or plans, and therefore, the Company believes
that the adoption of FSP FAS 132R-1 will not have an effect on its consolidated
financial position and results of operations.  FSP FAS 132R-1 will
become effective for financial statements issued for fiscal years and interim
periods ending after December 15, 2009.




In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No.
161”).  This Statement changes the disclosure requirements for
derivative instruments and hedging activities, but does not change the
accounting for such instruments, and therefore, the Company believes that the
adoption of SFAS No. 161 will not have an effect on its consolidated financial
position and results of operations.  SFAS No. 161 will become
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008.




In
February 2008, the FASB issued FASB Staff Position 157-2 (“FSP 157-2”), which
delayed the implementation of Statement of Financial Accounting Standards No.
157, “Fair Value Measurements” (“SFAS No. 157”) until January 1, 2009 for
non-financial assets and liabilities that are not required to be measured at
fair value on a recurring basis.  Pursuant to FSP 157-2, the Company
did not adopt SFAS No. 157 for such non-financial assets and liabilities that
include goodwill and identifiable intangible assets.  The Company is
currently evaluating the impact that adoption of SFAS No. 157 for such
non-financial assets and liabilities will have on its consolidated financial
position and results of operations.




In
September 2006, the FASB issued SFAS No. 157, which defines fair value,
establishes a framework for measuring fair value in accordance with accounting
principles generally accepted in the United States, and expands disclosures
about fair value measurements.  This statement does not require any
new fair value measurements; rather, it applies under other accounting
pronouncements that require or permit fair value measurements. The provisions of
SFAS No. 157 are effective for fiscal years beginning after November 15, 2007
with respect to certain other assets and liabilities that do not fall within the
scope of FSP 157-2 discussed above. On January 1, 2008, the Company adopted SFAS
No. 157 for such assets and liabilities, and the adoption of SFAS No. 157 did
not have a significant effect on its consolidated financial position and results
of operations.




In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS No.
160”).  SFAS No. 160 amends Accounting Research Bulletin No. 51 to
establish accounting and reporting standards for the noncontrolling interest in
a subsidiary and for the deconsolidation of a subsidiary.  SFAS No.
160 will become effective for fiscal years beginning after December 15,
2008.  The Company believes that the adoption of SFAS No. 160 will not
have an effect on its consolidated financial position and results of
operations.




In
December 2007, the FASB also issued Statement of Financial Accounting Standards
No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”). SFAS No. 141R
requires an entity to recognize assets acquired, liabilities assumed,
contractual contingencies and contingent consideration at their fair value on
the acquisition date. SFAS No. 141R also requires that (1) acquisition-related
costs be expensed as incurred; (2) restructuring costs generally be recognized
as a post-acquisition expense; and (3) changes in deferred tax asset valuation
allowances and income tax uncertainties after the measurement period impact
income tax expense. The Company will adopt SFAS No. 141R on January 1, 2009 and
is currently evaluating this statement to determine its effect, if any, on its
results of operations and financial position.




47
 Table of Contents




Item 8.
            Financial
      Statements and Supplementary Data




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
  Board of
Directors and Shareholders
  WHX
Corporation
  We have
audited the accompanying consolidated balance sheets of WHX Corporation (a
Delaware corporation) and Subsidiaries as of December 31, 2008 and 2007, and the
related consolidated statements of operations, cash flows and changes in
stockholders’ deficit and comprehensive loss for each of the two years in the
period ended December 31, 2008. Our audits of the basic financial statements
included the financial statement schedules listed in the index appearing under
Item 15(b).  These consolidated financial statements and financial
statement schedules are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of WHX Corporation and
Subsidiaries as of December 31, 2008 and 2007, and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
2008 in conformity with accounting principles generally accepted in the United
States of America.  Also in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
  
  /s/ GRANT
THORNTON LLP
  Edison,
New Jersey
  March 31,
2009




48
 Table of Contents




WHX
CORPORATION




Consolidated
Statements of Operations




Year
      ended December 31,2008
              
              
              2007(in
      thousands except per share)Net
      sales
              
              $
              725,785
              
              
              $
              637,866Cost
      of goods sold
              
              
              549,105
              
              
              
              505,341Gross
      profit
              
              
              176,680
              
              
              
              132,525Selling,
      general and administrative expenses
              
              
              131,574
              
              
              
              110,660Asset
      impairment charges
              
              
              8,291
              
              
              
              -Proceeds
      from insurance claims
              
              
              (3,399
              )
              
              
              (6,538
              )Benefit
      plan curtailment
              
              
              (3,875
              )
              
              
              727Environmental
      remediation expense
              
              
              -
              
              
              
              4,678Loss  on
      disposal of assets
              
              
              212
              
              
              
              283Income
      from operations
              
              
              43,877
              
              
              
              22,715Other:Interest
      expense
              
              
              36,787
              
              
              
              39,488Realized
      and unrealized loss on derivatives
              
              
              1,355
              
              
              
              1,888Other
      expense
              
              
              1,354
              
              
              
              272Income
      (loss) before income taxes
              
              
              4,381
              
              
              
              (18,933
              )Tax
      provision
              
              
              1,370
              
              
              
              1,838Net
      income (loss)
              
              $
              3,011
              
              
              $
              (20,771
              )Basic
      and diluted per share of common stockNet
      income (loss)
              
              $
              0.75
              
              
              $
              (20.77
              )Weighted
      average number of common shares outstanding
              
              
              4,001
              
              
              
              1,000







































































SEE NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




49
 Table of Contents




WHX
CORPORATION




Consolidated
Balance Sheets




December
      31, 2008
              
              
              December
      31, 2007(Dollars
      and shares in thousands)ASSETSCurrent
      Assets:Cash
      and cash equivalents
              
              $
              8,656
              
              
              $
              6,090Trade
      receivables - less allowance for doubtful accounts
                of  $3,178
      and $2,776
              
              
              81,610
              
              
              
              89,546Inventories
              
              
              75,270
              
              
              
              83,709Deferred
      income taxes
              
              
              1,310
              
              
              
              3,339Other
      current assets
              
              
              10,378
              
              
              
              12,023Total
      current assets
              
              
              177,224
              
              
              
              194,707Property,
      plant and equipment at cost, less
                accumulated depreciation and amortization
              
              
              102,508
              
              
              
              124,336Goodwill
              
              
              65,070
              
              
              
              64,317Other
      intangibles, net
              
              
              36,965
              
              
              
              39,892Other
      non-current assets
              
              
              17,717
              
              
              
              18,337$
              399,484
              
              
              $
              441,589LIABILITIES
      AND STOCKHOLDERS’ (DEFICIT) EQUITYCurrent
      Liabilities:Trade
      payables
              
              $
              36,599
              
              
              $
              49,053Accrued
      environmental liability
              
              
              6,722
              
              
              
              7,805Accrued
      liabilities
              
              
              37,382
              
              
              
              40,308Accrued
      interest expense - related party
              
              
              2,499
              
              
              
              19,615Current
      portion of long-term debt
              
              
              12,956
              
              
              
              7,513Short-term
      debt - related party
              
              
              -
              
              
              
              5,100Short-term
      debt
              
              
              32,970
              
              
              
              50,180Deferred
      income taxes
              
              
              257
              
              
              
              142Total
      current liabilities
              
              
              129,385
              
              
              
              179,716Long-term
      debt
              
              
              109,174
              
              
              
              141,678Long-term
      debt - related party
              
              
              54,098
              
              
              
              154,901Accrued
      pension liability
              
              
              133,990
              
              
              
              15,653Other
      employee benefit liabilities
              
              
              4,233
              
              
              
              7,595Deferred
      income taxes
              
              
              5,413
              
              
              
              8,217Other
      liabilities
              
              
              5,098
              
              
              
              3,374441,391
              
              
              
              511,134Stockholders’
      (Deficit) Equity:Preferred
      stock- $.01 par value; authorized 5,000 shares; issued and outstanding -0-
      shares
              
              
              -
              
              
              
              -Common
      stock -  $.01 par value; authorized 180,000 and 50,000 shares;
      issued and outstanding 12,179 and 1,000 shares in 2008 and 2007,
      respectively
              
              
              122
              
              
              
              10Warrants
              
              
              -
              
              
              
              1,287Accumulated
      other comprehensive loss
              
              
              (163,502
              )
              
              
              (32,559
              )Additional
      paid-in capital
              
              
              552,583
              
              
              
              395,838Accumulated
      deficit
              
              
              (431,110
              )
              
              
              (434,121
              )Total
      stockholders’ deficit
              
              
              (41,907
              )
              
              
              (69,545
              )$
              399,484
              
              
              $
              441,589





SEE NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




50
 Table of Contents




WHX
CORPORATION




Consolidated
Statements of Cash Flows




Year
      Ended December 31,2008
              
              
              2007(in
      thousands)Cash
      flows from operating activities:Net
      income (loss)
              
              $
              3,011
              
              
              $
              (20,771
              )Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Depreciation
      and amortization
              
              
              20,927
              
              
              
              18,242Non-cash
      stock based compensation
              
              
              553
              
              
              
              1,612Acquired
      in-process research and development
              
              
              -
              
              
              
              1,851Amortization
      of debt related costs
              
              
              1,806
              
              
              
              2,111Payment
      in kind interest on related party debt
              
              
              5,285
              
              
              
              4,721Curtailment
      of employee benefit obligations
              
              
              (3,875
              )
              
              
              727Deferred
      income taxes
              
              
              (643
              )
              
              
              (531
              )Loss
      on asset dispositions
              
              
              212
              
              
              
              282Asset
      impairment charges
              
              
              8,291
              
              
              
              -Equity
      in after-tax income of affiliated companies
              
              
              (27
              )
              
              
              (66
              )Unrealized
      gain on derivatives
              
              
              (384
              )
              
              
              (103
              )Reclassification
      of net cash settlements on derivative instruments
              
              
              1,739
              
              
              
              1,991Decrease
      (increase) in operating assets and liabilities, net of effect of
      acquisitions:Trade
      and other receivables
              
              
              6,744
              
              
              
              2,114Inventories
              
              
              7,498
              
              
              
              13,826Other
      current assets
              
              
              1,449
              
              
              
              1,699Accrued
      interest-related party
              
              
              (17,643
              )
              
              
              9,424Other
      current liabilities
              
              
              (22,434
              )
              
              
              (39,440
              )Other
      items-net
              
              
              (2,430
              )
              
              
              (42
              )Net
      cash used in operating activities
              
              
              10,079
              
              
              
              (2,353
              )Cash
      flows from investing activities:Acquisitions
              
              
              -
              
              
              
              (102,595
              )Plant
      additions and improvements
              
              
              (12,314
              )
              
              
              (10,226
              )Net
      cash settlements on derivative instruments
              
              
              (1,739
              )
              
              
              (1,991
              )Proceeds
      from sales of assets
              
              
              8,253
              
              
              
              4,314Net
      cash used in investing activities
              
              
              (5,800
              )
              
              
              (110,498
              )Cash
      flows from financing activities:Proceeds
      of stock-rights offering
              
              
              155,561
              
              
              
              -Proceeds
      from term loans - related party
              
              
              -
              
              
              
              115,929Proceeds
      from term loans - domestic
              
              
              4,000
              
              
              
              76,000Net
      revolver borrowings (repayments)
              
              
              (17,084
              )
              
              
              3,368Repayments
      of term loans - foreign
              
              
              (517
              )
              
              
              (495
              )Repayments
      of term loans - domestic
              
              
              (30,367
              )
              
              
              (22,127
              )Repayments
      of term loans - related party
              
              
              (111,188
              )
              
              
              (55,376
              )Deferred
      finance charges
              
              
              (1,562
              )
              
              
              (3,671
              )Net
      change in overdrafts
              
              
              (1,107
              )
              
              
              (102
              )Other
              
              
              618
              
              
              
              453Net
      cash provided by (used in) financing activities
              
              
              (1,647
              )
              
              
              113,979Net
      change for the period
              
              
              2,633
              
              
              
              1,128Effect
      of exchange rate changes on net cash
              
              
              (67
              )
              
              
              186Cash
      and cash equivalents at beginning of period
              
              
              6,090
              
              
              
              4,776Cash
      and cash equivalents at end of period
              
              $
              8,656
              
              
              $
              6,090





SEE NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




51
 Table of Contents




WHX
Corporation




Consolidated
Statements of Changes in Stockholders’ (Deficit) Equity and Comprehensive Income
(Loss)


(Dollars
and shares in thousands)




Common
      Stock
                
                
                
                
                
                Accumulated
      Other Comprehensive
                
                
                Accumulated
                
                
                Capital
      in Excess of
                
                
                Total
      Stockholders’Shares
                
                
                Amount
                
                
                Warrants
                
                
                Income
      (Loss)
                
                
                Deficit
                
                
                Par
      Value
                
                
                (Deficit)
      EquityBalance,
      January 1, 2007
                
                
                1,000
                
                
                $
                10
                
                
                $
                1,287
                
                
                $
                (47,335
                )
                
                $
                (412,123
                )
                
                $
                394,398
                
                
                $
                (63,763
                )Current
      period change
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                14,776
                
                
                
                -
                
                
                
                -
                
                
                
                14,776Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (20,771
                )
                
                
                -
                
                
                
                (20,771
                )Total
      comprehensive loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (5,995
                )Adoption
      of FIN 48
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,227
                )
                
                
                -
                
                
                
                (1,227
                )Amortization
      of stock options
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,440
                
                
                
                1,440Balance,
      December 31, 2007
                
                
                1,000
                
                
                
                10
                
                
                
                1,287
                
                
                
                (32,559
                )
                
                
                (434,121
                )
                
                
                395,838
                
                
                
                (69,545
                )Current
      period change
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (130,943
                )
                
                
                -
                
                
                
                -
                
                
                
                (130,943
                )Net
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,011
                
                
                
                -
                
                
                
                3,011Total
      comprehensive loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (127,932
                )Expiration
      of warrants
                
                
                -
                
                
                
                -
                
                
                
                (1,287
                )
                
                
                -
                
                
                
                -
                
                
                
                1,287
                
                
                
                -Stock
      rights offering
                
                
                11,179
                
                
                
                112
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                154,846
                
                
                
                154,958Amortization
      of stock options
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                612
                
                
                
                612Balance,
      December 31, 2008
                
                
                12,179
                
                
                $
                122
                
                
                $
                -
                
                
                $
                (163,502
                )
                
                $
                (431,110
                )
                
                $
                552,583
                
                
                $
                (41,907
                )





Year
      Ended
                      December
      31,2008
                    
                    
                    2007Comprehensive
      Income (Loss)Net
      income (loss)
                    
                    $
                    3,011
                    
                    
                    $
                    (20,771
                    )Changes
      in pension plan assets and other benefit obligations:Curtailment/settlement
      gain/(loss)
                    
                    
                    (517
                    )
                    
                    
                    1,346Current
      year actuarial gain/(loss)
                    
                    
                    (127,252
                    )
                    
                    
                    9,884Amortization
      of actuarial (gain)/loss
                    
                    
                    497
                    
                    
                    
                    1,082Amortization
      prior service (credit)/cost
                    
                    
                    (202
                    )
                    
                    
                    (165
                    )Foreign
      currency translation adjustment
                    
                    
                    (3,305
                    )
                    
                    
                    2,629Valuation
      of marketable equity securities
                    
                    
                    (164
                    )
                    
                    
                    -Comprehensive
      loss
                    
                    $
                    (127,932
                    )
                    
                    $
                    (5,995
                    )





SEE NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




52
 Table of Contents





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




Note
1 – Nature of the Business




Organization




WHX, the
parent company, manages a group of businesses on a decentralized
basis.  WHX owns H&H, a diversified holding company whose
strategic business units encompass three reportable segments: Precious Metal,
Tubing, and Engineered Materials.  In April 2007, WHX acquired
Bairnco.  Bairnco manages business units in three reportable segments:
Arlon EM segment, Arlon CM segment, and Kasco Replacement Products and
Services.  See Note 18 for a description of the business and products
of each of the Company’s segments.  The business units of H&H and
Bairnco principally operate in North America.  The results of
operations of Bairnco are included in the financial results of WHX beginning
April 13, 2007.  All references herein to “we,” “our” or the “Company”
shall refer to WHX, together with all of its subsidiaries.


Note
1a – Management’s Plans and Liquidity




Liquidity




The
Company recorded net income of $3.0 million and generated $10.1 million of
positive cash flow from operating activities in 2008.  Nevertheless,
it has incurred significant losses and negative cash flows from operations in
recent years, and as of December 31, 2008 had an accumulated deficit of $431.1
million.  As of December 31, 2008, the Company’s current assets
totaled $177.2 million and its current liabilities totaled $129.4 million;
working capital of $47.8 million.  The Company’s financial position
has improved from 2007, when it incurred a net loss of $20.8 million, generated
$2.4 million of negative cash flows from operating activities, and had working
capital of $15.0 million as of December 31, 2007.  The Company has
reduced its level of debt substantially in 2008, from $359.4 million to $209.2
million, principally through a rights offering completed on September 25, 2008,
as described below.




The
Company sold 11,178,459 shares of common stock to existing stockholders through
the exercise of rights at a subscription price of $14.00 per share, for an
aggregate purchase price of approximately $156.5 million, which we refer to as
the Rights Offering.  Steel Partners II, L.P., which we refer to as SP
II, subscribed for 8,630,910 shares of the Company’s common stock, for an
aggregate purchase price of approximately $120.8 million, pursuant to its basic
and applicable oversubscription privileges.  After giving effect to
the Rights Offering, SP II owns 75% of the outstanding shares of common stock of
the Company.  The Company used the proceeds of the Rights Offering to
(i) redeem preferred stock issued by a wholly-owned subsidiary of the Company,
which was held by SP II, plus accumulated dividends, together totaling $6.0
million, (ii) repay Company indebtedness to SP II of $18.9 million, and (iii)
repay $117.6 million of indebtedness and accrued interest of certain
wholly-owned subsidiaries of the Company to SP II.   After such
payments, $14.0 million remained with the Company as cash, of which $13.2
million was used to repay additional debt of the Company on October 29, 2008
pursuant to the amendments to the Company’s credit agreements of that same date
(described in Note 11).




WHX Corporation, the parent
company




WHX has
as its sole source of cash flow, distributions from its operating subsidiaries,
H&H and Bairnco, or other discrete transactions.  H&H’s credit
facilities effectively do not permit it to transfer any cash or other assets to
WHX with the exception of (i) an unsecured loan for required payments to the WHX
Pension Plan, and (ii) an unsecured loan for other uses in the aggregate
principal amount not to exceed $12.0 million, $7.0 million of which has been
distributed.  H&H’s credit facilities are collateralized by
substantially all of the assets of H&H and its
subsidiaries.  Similarly, Bairnco’s credit facilities and term loan do
not permit it to make any distribution, pay any dividend or transfer any cash or
other assets to WHX other than common stock of Bairnco, and up to $0.6 million
annually for services performed by WHX on behalf of Bairnco, under certain
circumstances.  Bairnco’s credit facilities are secured by a first
priority lien on all of the assets of Bairnco and certain of its
subsidiaries.




53
 Table of Contents




WHX’s
ongoing operating cash flow requirements consist of arranging for the
funding  of the minimum requirements of the WHX Pension Plan and
paying WHX’s administrative costs.  On September 12, 2007, WHX made a
payment to the WHX Pension Plan of $13.0 million, which exceeded the minimum
required contribution under ERISA.  As a result of such accelerated
contribution, there was no required contribution to the WHX Pension Plan in
2008.  The recent decline of stock prices across a significant
cross-section of the United States stock market has resulted in an unfunded
pension liability of the WHX Pension Plan of $134.0 million as of December 31,
2008.  The Company expects to have required minimum contributions for
2009 and 2010 of $1.2 million and $6.0 million,
respectively.   Required future contributions are determined
based upon and subject to changes, and assumptions as to future changes, in
asset values on plan assets, discount rates on future obligations, assumed rates
of return on plan assets and legislative changes.  Pension costs and
required funding obligations will be effected by changes in the factors and
assumptions described in the previous sentence, as well as other changes such as
a plan termination.




In recent
years, the Company experienced liquidity issues.  On March 7, 2005,
WHX filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy
Code.  WHX continued to operate its business and own and manage its
properties as a debtor in possession until it emerged from protection under
Chapter 11 of the Bankruptcy Code on July 29, 2005.




Since WHX
emerged from bankruptcy, there have been no dividends from H&H or Bairnco to
WHX (due to covenant restrictions in their respective credit facilities) and
WHX’s principal sources of cash flow have consisted of:




·
            The
      issuance of $5.1 million in preferred stock by a newly created subsidiary
      in October 2005, which was invested in the equity of a public company
      (CoSine);




·
            Partial
      payment by H&H of a subordinated debt to WHX of $9.0 million, which
      required the approval of the banks participating in the H&H credit
      facilities.  Subsequent to this transaction in 2006, the
      remaining intercompany loan balance of the subordinated debt of $44.2
      million was converted to equity;




·
            As
      permitted by the March 29, 2007 amendment and waiver to the H&H credit
      facilities, unsecured loans from H&H for certain required payments to
      the WHX Pension Plan;




·
            As
      permitted by a March 12, 2009 amendment to the H&H credit facilities,
      an unsecured loan from H&H to WHX for other uses in the aggregate
      principal amount of up to approximately $12.0 million (initially amended
      on July 27, 2007 to be up to $7.0 million), subject to certain
      limitations, of which approximately $7.0 million has already been
      distributed;




·
            A
      $15.0 million subordinated loan from SP II advanced on April 17, 2007
      pursuant to the Subordinated Loan Agreement, which WHX used to fund a
      capital contribution to BZ Acquisition Corp., or BZA, to finance in part
      the Bairnco Acquisition;




·
            As
      permitted by a September 10, 2007 amendment to the H&H credit
      facilities, an unsecured loan from H&H of $13.0 million which was used
      by WHX to make a payment to the WHX Pension Plan on September 12, 2007;
      and




·
            Proceeds
      from the settlement of a fire loss claim at a plant of a subsidiary of the
      Company in the amounts of $0.8 million, $6.5 million and $0.8 million in
      2006, 2007 and 2008, respectively.




As of
December 31, 2008, WHX and its subsidiaries that are not restricted by loan
agreements or otherwise from transferring funds to WHX had cash of approximately
$4.8 million and current liabilities of approximately $2.8 million. H&H is
permitted to advance up to $5 million to WHX pursuant to the most recent
amendment to H&H’s credit agreements, and Bairnco is permitted by its credit
agreements to transfer up to $600,000 per year to WHX in payment of services
rendered by WHX on its behalf.  Management expects that WHX will be
able to fund its operations in the ordinary course over at least the next twelve
months.




54
 Table of Contents




Handy & Harman and
Bairnco




The
ability of both H&H and Bairnco to draw on their respective revolving lines
of credit is limited by a borrowing base of eligible accounts receivable and
inventory.  As of December 31, 2008, H&H’s availability under its
credit facilities was $20.4 million, and Bairnco’s availability under its credit
facilities was $6.7 million.  However, there can be no assurances that
they will continue to have access to all or any of the credit lines if their
operating and financial performance do not satisfy relevant borrowing base
criteria and financial covenants within the financing agreements.  If
either H&H or Bairnco do not satisfy borrowing base criteria or financial
covenants, and if they are unable to secure necessary waivers or other
amendments from the lender, they will not have access to this credit, which
could adversely affect the Company’s liquidity.




The
Company




We do not
anticipate that the Company will have any additional sources of cash flow other
than (i) as described above, (ii) from operations, (iii) from the sale of assets
and/or businesses, and (iv)  from other discrete
transactions.




The
ability of the Company to meet its cash requirements for at least the next
twelve months is dependent, in part, on the Company’s continuing ability to meet
its business plans.  Management is utilizing the following strategies
to enhance liquidity: (1) continuing to implement and enhance systems and
processes to increase operating efficiencies at Company facilities, (2)
supporting profitable sales growth both internally and through acquisition, (3)
evaluating strategic alternatives with respect to all lines of business and/or
assets and (4) seeking financing alternatives that may lower its cost of capital
and/or enhance current cash flow.




The
Company continues to examine all of its options and strategies, including
acquisitions, divestitures, and other corporate transactions, to increase cash
flow and stockholder value, as well as considering the additional reduction of
certain discretionary expenses and sale of certain non-core
assets.  There can be no assurance that the funds available from
operations and under the Company’s credit facilities will be sufficient to fund
its debt service costs, working capital demands, pension plan contributions, and
environmental remediation costs.  The Company’s inability to generate
sufficient cash flows from its operations could impair its liquidity, and would
likely have a material adverse effect on its business, financial condition and
results of operations, and could raise substantial doubt that the Company will
be able to continue to operate.




The
Company believes that recent amendments to its financing arrangements and
continuing improvements in its core operations will permit the Company to
generate sufficient working capital to meet its obligations as they
mature.  Management believes that existing capital resources and
sources of credit, including the H&H credit facilities and the Bairnco
credit facilities, will be adequate to meet its current and anticipated cash
requirements.  However, if the Company’s cash needs are greater than
anticipated or the Company does not materially satisfy its business plan, the
Company may be required to seek additional or alternative financing
sources.  There can be no assurance that such financing will be
available or available on terms acceptable to the Company.




The
Company has taken the following actions, which it believes has and will continue
to improve liquidity over time and help provide for adequate liquidity to fund
the Company’s capital needs for the next twelve months:




·
            On
      various dates in 2007, 2008, and 2009 to-date, H&H and certain of its
      subsidiaries amended the Wachovia Facilities and the Term B
      Loan.  These agreements were each amended to, among other
      things, (i) extend the maturity date to June 30, 2011, (ii) reset the
      levels of certain financial covenants, (iii) grant a waiver to the events
      of default arising as a result of the attachment and garnishment of $3.5
      million in connection with certain litigation, (iv) permit certain
      additional loans by SP II to H&H, (v) permit loans or advances from
      H&H to WHX, subject to certain conditions, (vi) allow for the
      acquisition of Omni Technologies Corporation, (vii) allow for the
      prepayment of the Term B Loan in the amount of and upon receipt by H&H
      of a capital or debt infusion from the Company from proceeds of the Rights
      Offering, (viii) consent to the terms of the H&H Security Agreement
      and the H&H Guaranty which were granted in connection with amendments
      to Bairnco’s debt agreements, (ix) amend applicable interest rates and (x)
      permit the disposition and/or cessation of operations of certain of
      H&H’s direct and indirect subsidiaries. The Wachovia Facilities were
      also amended to permit an additional term loan to H&H of $4.0 million,
      funded by Ableco.  Bairnco also amended its Wells Fargo Facility
      and Ableco Facility to, among other things, reset the levels of certain
      financial covenants, to permit Bairnco to sell and leaseback one of its
      operating facilities, and to allow Bairnco to prepay a portion of its debt
      using certain proceeds of the Rights Offering.  (Please see Note
      11 - Debt for additional information about these
    amendments).




55
 Table of Contents




·
            On
      September 25, 2008, WHX completed the Rights Offering.  The
      Company sold 11,178,459 shares of common stock to existing stockholders
      through the exercise of rights at a subscription price of $14.00 per
      share, for an aggregate purchase price of approximately $156.5
      million.  SP II subscribed for 8,630,910 shares of the Company’s
      common stock, for an aggregate purchase price of approximately $120.8
      million, pursuant to its basic and applicable oversubscription
      privileges.  After giving effect to the Rights Offering, SP II
      owns 75% of the outstanding shares of common stock of the
      Company.  The Company used the proceeds of the Rights Offering
      to (i) redeem preferred stock issued by a wholly-owned subsidiary of the
      Company, which was held by SP II, plus accumulated dividends, together
      totaling $6.0 million, (ii) repay Company indebtedness to SP II of $18.9
      million, and (iii) repay $117.6 million of indebtedness and accrued
      interest of certain wholly-owned subsidiaries of the Company to SP
      II.   After such payments, $14.0 million remained with the
      Company as cash, of which $13.2 million was used to repay additional debt
      of the Company on October 29, 2008 pursuant to the amendments to the
      Company’s credit agreements of that same
date.




·
            On
      January 4, 2009, the Company implemented a 5% salary reduction to annual
      salaries over $40,000 for all salaried employees, including all of the
      Company’s executive officers, in furtherance of the Company’s ongoing
      efforts to lower its operating costs. The Company also suspended its
      employer contributions to 401(k) savings plans for all employees not
      covered by a collective bargaining
agreement.




·
            The
      Company has developed contingency plans to further reduce fixed and
      variable expenses at its various locations if sales and/or operating
      income fall below pre-determined levels.  Some of these plans
      have already been implemented in the first quarter of
  2009.




·
            In
      2008, management decided to exit the welded specialty tubing market in
      Europe and close its ITD subsidiary, sell ITD’s assets, pay off ITD’s
      related debt and repatriate cash remaining post-closing. The decision to
      exit this market was made after evaluating current economic conditions and
      competition from lower cost manufacturers.  In 2008, the Company
      also evaluated its Sumco subsidiary in light of ongoing operating
      losses.  Sumco sells electroplating services primarily to the
      automotive market.  Sumco has had declining cash flows in 2008
      and projected negative 2009 cash flows principally caused by the decline
      in U.S. economic activity and Sumco’s reliance on the automotive market
      for over 90% of its sales.  The Board of Directors of Sumco is
      exploring strategic options for the Sumco
  business.




In view
of the matters described in the preceding paragraphs, management believes that
the Company has the ability to meet its capital requirements on a continuing
basis for at least the next twelve months.  However, if the Company’s
planned cash flow projections are not met, and/or credit is not available in
sufficient amounts, management could consider the additional reduction of
certain discretionary expenses and sale of certain assets.  In the
event that these plans are not sufficient and/or the Company’s credit facilities
are not adequate, the Company’s ability to operate could be materially adversely
affected.




56
 Table of Contents




Note
2 – Summary of Accounting Policies




Basis
of Presentation




The
consolidated financial statements include the accounts of WHX and its
subsidiaries.  All material intercompany transactions and balances
have been eliminated.




On
November 24, 2008, the Company consummated a 1-for-10 Reverse Stock Split of its
outstanding common stock.  Pursuant to the Reverse Stock Split, every
ten (10) shares of common stock issued and outstanding at the time the split was
effected were changed and reclassified into one (1) share of common stock
immediately following the Reverse Stock Split.  The Reverse Stock
Split affected all shares of common stock, stock options and rights of the
Company outstanding at the effective time of the Reverse Stock
Split.  The Reverse Stock Split did not change the proportionate
equity interests of the Company’s stockholders, nor were the respective voting
rights and other rights of stockholders altered, except due to immaterial
differences because fractional shares were not issued and the number of shares
of a holder was rounded up.  To enhance comparability, unless
otherwise noted, all references to the Company’s common stock and per share
amounts have been adjusted on a retroactive basis as if the Reverse Stock Split
had occurred on January 1, 2007.




Use
of Estimates




The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial
statements.  Estimates also affect the reported amounts of revenues
and expenses during the reporting period.  Actual results could differ
from those estimates.  On an ongoing basis, the Company evaluates its
estimates, including those related to investments, accounts receivable,
inventories, property and equipment, assets held for sale, environmental
liabilities, accrued expenses, and income taxes.  The Company bases
its estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources.




Cash
and Cash Equivalents




Cash and
cash equivalents include cash on hand and on deposit and highly liquid debt
instruments with original maturities of three months or less.  As of
December 31, 2008 and 2007, the Company had cash held in foreign banks of $2.7
million and $2.8 million, respectively.




Revenue
Recognition




Revenues
are recognized when the title and risk of loss has passed to the customer. This
condition is normally met when product has been shipped or the service
performed. An allowance is provided for estimated returns and discounts based on
experience in accordance with SEC Staff Accounting Bulletin No. 104. Cash
received by the Company from customers prior to shipment of goods, or otherwise
not yet earned, is recorded as deferred revenue. Rental revenues are derived
from the rental of certain equipment to the food industry where customers prepay
for the rental period-usually 3 to 6 month periods.  For prepaid
rental contracts, sales revenue is recognized on a straight-line basis over the
term of the contract.  Service revenues consist of repair and
maintenance work performed on equipment used at mass merchants, supermarkets and
restaurants.




The
Company experiences a certain degree of sales returns that varies over time. In
accordance with Statement of Financial Accounting Standards No. 48 (“SFAS No.
48”), “Revenue Recognition When Right of Return Exists,” the Company is able to
make a reasonable estimation of expected sales returns based upon history and as
contemplated by the requirements of SFAS No. 48. The Company records all
shipping and handling fees billed to customers as revenue, in accordance with
Emerging Issues Task Force “EITF” Abstract 00-10, “Accounting for Shipping and
Handling Fees and Costs,” and related costs are charged principally to cost of
sales, when incurred. In limited circumstances, the Company is required to
collect and remit sales tax on certain of its sales.  The Company
accounts for sales taxes on a net basis, and such sales taxes are not included
in net sales on the consolidated statements of operations.




57
 Table of Contents




Accounts
Receivable and Allowance for Doubtful Accounts




The
Company extends credit to customers based on its evaluation of the customer’s
financial condition.  The Company has established an allowance for
accounts that may become uncollectible in the future. This estimated allowance
is based primarily on management’s evaluation of the financial condition of the
customer and historical experience. The Company monitors its accounts receivable
and charges to expense an amount equal to its estimate of potential credit
losses. Accounts outstanding longer than contractual payment terms are
considered past due.  The Company considers a number of factors in
determining its estimates, including the length of time its trade accounts
receivable are past due, the Company’s previous loss history and the customer’s
current ability to pay its obligation. Accounts receivable balances are charged
off against the allowance when it is determined that the receivable will not be
recovered, and payments subsequently received on such receivables are credited
to recovery of accounts written off.  The Company does not charge
interest on past due receivables.




Inventories




Inventories
are stated at the lower of cost or market. Cost is determined by the LIFO method
for precious metal inventories. Non precious metals inventories are stated at
the lower of cost (principally average cost) or market. For precious metals
inventories, no segregation among raw materials, work in process and finished
goods is practicable.




Derivatives
and Risks




Precious
Metal Risk




H&H
enters into commodity futures and forwards contracts on precious metals that are
subject to market fluctuations in order to economically hedge its precious
metals inventory against price fluctuations.  Future and forward
contracts to sell or buy precious metal are the derivatives used for this
objective.




As of
December 31, 2008 and 2007, the Company had contracted for $4.6 million and
$11.6 million, respectively, of forward contracts with a counter party rated A
by Standard & Poors, and the future contracts are exchange traded contracts
through a third party broker.  Accordingly, the Company has determined
that there is minimal credit risk of default.  The Company estimates
the fair value of its derivative contracts through use of market quotes or
broker valuations when market information is not available.




As these
derivatives are not designated as accounting hedges under Statement of Financial
Accounting Standards No. 133, they are accounted for as derivatives with no
hedge designation.  These derivatives are marked to market and both
realized and unrealized gains and losses on these derivatives are recorded in
current period earnings as other income (loss).  The unrealized gain
or loss (open trade equity) on the derivatives is included in other current
assets or other current liabilities, respectively.




Foreign
Currency Exchange Rate Risk




H&H
and Bairnco are subject to the risk of price fluctuations related to anticipated
revenues and operating costs, firm commitments for capital expenditures and
existing assets or liabilities denominated in currencies other than U.S.
dollars.  H&H and Bairnco have not generally used derivative
instruments to manage this risk.




Property,
Plant and Equipment




Depreciation
of property, plant and equipment is provided principally on the straight line
method over the estimated useful lives of the assets, which range as follows:
machinery & equipment 3 –15 years and buildings and improvements 10 – 30
years. Interest cost is capitalized for qualifying assets during the assets’
acquisition period.   Maintenance and repairs are charged to
expense and renewals and betterments are capitalized. Profit or loss on
dispositions is credited or charged to operating income.




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Goodwill,
Intangibles and Long-Lived Assets




Goodwill
is reviewed annually for impairment in accordance with the provisions of SFAS
No. 142, “Goodwill and Other Intangible Assets”. The evaluation of the
recoverability of the unamortized balance of goodwill is based on a comparison
of the respective reporting unit’s fair value to its carrying value, including
allocated goodwill. Fair values are determined by discounting estimated future
cash flows. The recoverability of goodwill may be impacted if estimated future
operating cash flows are not achieved.  Other intangible assets with
indefinite lives are subjected to an annual lower of cost or fair value
impairment test.  Intangible assets with finite lives are amortized
over their estimated useful lives. We also estimate the depreciable lives of
property, plant and equipment, and review the assets for impairment if events,
or changes in circumstances, indicate that we may not recover the carrying
amount of an asset.  Long-lived assets consisting of land and
buildings used in previously operating businesses are carried at the lower of
cost or fair value, and are included in Other Non-Current Assets in the
consolidated balance sheets.




Equity
Investments




Investments
are accounted for using the equity method of accounting if the investment
provides the Company the ability to exercise significant influence, but not
control, over an investee. Significant influence is generally deemed to exist if
the company has an ownership interest in the voting stock of the investee of
between 20% and 50%, although other factors, such as representation on the
investee’s Board of Directors, are considered in determining whether the equity
method of accounting is appropriate. The Company accounts for its investment in
CoSine using the equity method of accounting. See Note 16.




Stock
Based Compensation




In 2006,
revised SFAS No. 123R, “Share-Based Payment,” became effective for the
Company.  SFAS No. 123R eliminated the intrinsic value method as an
allowed method for valuing stock options granted to employees. Under the
intrinsic value method, compensation expense was generally not recognized for
the issuance of stock options. The revised statement requires compensation
expense to be recognized in exchange for the services received based on the fair
value of the equity instruments on the grant-date.




At the
Company’s Annual Meeting of Shareholders on June 21, 2007, the Company’s
shareholders approved a proposal to adopt WHX Corporation’s 2007 Incentive Stock
Plan (the “2007 Plan”), and reserved 80,000 shares of common stock under the
2007 Plan, as adjusted pursuant to the terms of the 2007 Plan to reflect the
Reverse Stock Split.   On July 6, 2007, stock options for an
aggregate of 62,000 shares of common stock, as adjusted pursuant to the terms of
the 2007 Plan to reflect the Reverse Stock Split, were granted under the 2007
Plan to employees and to two outside directors of the Company, and additional
options have periodically been granted under the 2007 Plan to other key
employees hired by the Company since that time.




Environmental
Liabilities




The
Company accrues for losses associated with environmental remediation obligations
when such losses are probable and reasonably estimable. Accruals for estimated
losses from environmental remediation obligations generally are recognized no
later than completion of the remedial feasibility study.




Such
accruals are adjusted as further information develops or circumstances change.
Costs of future expenditures for environmental remediation obligations are not
discounted to their present value. Recoveries of environmental remediation costs
from other parties are recorded as assets when their receipt is deemed
probable.




Income
Taxes




Income
taxes are provided using the asset and liability method presented by SFAS No.
109, “Accounting for Income Taxes.”  Under this method, income taxes
(i.e., deferred tax assets, deferred tax liabilities, taxes currently
payable/refunds receivable and tax expense) are recorded based on amounts
refundable or payable in the current year and include the results of any
differences between U.S. GAAP and tax reporting.  Deferred income
taxes reflect the tax effect of NOLs, capital loss carryforwards and the net tax
effects of temporary differences between the carrying amount of assets and
liabilities for financial reporting and income tax purposes, as determined under
enacted tax laws and rates.  Valuation allowances are established if,
based on the weight of available evidence, it is more likely than not that some
portion or the entire deferred tax asset will not be realized.  The
financial effect of changes in tax laws or rates is accounted for in the period
of enactment.




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Earnings
Per Share




Pursuant
to SFAS No. 128, “Earnings per Share,” basic earnings per share are based on the
weighted average number of shares of Common Stock outstanding during each year,
excluding redeemable common shares.  Diluted earnings per share gives
effect to dilutive potential common shares outstanding during the
period.




Foreign
Currency Translation




Assets
and liabilities of foreign subsidiaries have been translated at current exchange
rates, and related revenues and expenses have been translated at average rates
of exchange in effect during the year. Resulting cumulative translation
adjustments have been recorded as a separate component of accumulated other
comprehensive income.




Fair
Value of Financial Instruments




The
carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities approximate fair value due to the short-term
maturities of these assets and liabilities. Fair value of the Company’s long
term debt approximates its carrying cost due to variable interest
rates.




Legal
Contingencies




The
Company provides for legal contingencies when the liability is probable and the
amount of the associated costs is reasonably determinable. The Company regularly
monitors the progress of legal contingencies and revises the amounts recorded in
the period in which changes in estimate occur.




Purchase
Price Allocation




The
Company records assets and liabilities of acquired companies at their fair value
in accordance with SFAS No. 141 “Business Combinations.”  In April
2007, the Company acquired Bairnco.  The fair value of inventory was
determined using the cost method for raw materials and the comparative sales
method for work in process and finished goods.  Fixed assets were
valued using the cost method.  The fair value of intangible assets was
determined using discounted cash flow methodologies.




Advertising
Costs




Advertising
costs consist of sales promotion literature, samples, cost of trade shows, and
general advertising costs, and are included in Selling, general and
administrative expenses on the consolidated statements of
operations.  Advertising costs totaled approximately $3.1 million in
2008 and $3.3 million in 2007.




Reclassification




Certain
amounts for prior years have been reclassified to conform to the current year
presentation.




Note
3 – Recently Issued Accounting Pronouncements




In
December 2008, the FASB issued FSP FAS 132R-1, “Employer’s Disclosures about
Postretirement Benefit Plan Assets.”  FSP FAS 132R-1 amends SFAS No.
132R “Employers’ Disclosures about Pensions and Other Postretirement Benefits,”
to provide guidance on an employer’s disclosures about plan assets of a defined
benefit pension or other postretirement plan.  FSP FAS 132R-1 changes
the disclosure requirements for benefit plan assets, but does not change the
accounting for such assets or plans, and therefore, the Company believes that
the adoption of FSP FAS 132R-1 will not have an effect on its consolidated
financial position and results of operations.  FSP FAS 132R-1 will
become effective for financial statements issued for fiscal years and interim
periods ending after December 15, 2009.




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In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.”  This Statement changes the disclosure
requirements for derivative instruments and hedging activities, but does not
change the accounting for such instruments, and therefore, the Company believes
that the adoption of SFAS No. 161 will not have an effect on its consolidated
financial position and results of operations.  SFAS No. 161 will
become effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008.




In
February 2008, the FASB issued FSP 157-2, which delayed the implementation of
Statement of SFAS No. 157, “Fair Value Measurements,” until January 1, 2009 for
non-financial assets and liabilities that are not required to be measured at
fair value on a recurring basis.  Pursuant to FSP 157-2, the Company
did not adopt SFAS No. 157 for such non-financial assets and liabilities that
include goodwill and identifiable intangible assets.  The Company is
currently evaluating the impact that adoption of SFAS No. 157 for such
non-financial assets and liabilities will have on its consolidated financial
position and results of operations.




In
September 2006, the FASB issued SFAS No. 157, which defines fair value,
establishes a framework for measuring fair value in accordance with accounting
principles generally accepted in the United States, and expands disclosures
about fair value measurements.  This statement does not require any
new fair value measurements; rather, it applies under other accounting
pronouncements that require or permit fair value measurements. The provisions of
SFAS No. 157 are effective for fiscal years beginning after November 15, 2007
with respect to certain other assets and liabilities that do not fall within the
scope of FSP 157-2 discussed above. On January 1, 2008, the Company adopted SFAS
No. 157 for such assets and liabilities, and the adoption of SFAS No. 157 did
not have a significant effect on its consolidated financial position and results
of operations.




In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements.”  SFAS No. 160 amends Accounting
Research Bulletin No. 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.  SFAS No. 160 will become effective for fiscal years
beginning after December 15, 2008.  The Company believes that the
adoption of SFAS No. 160 will not have an effect on its consolidated financial
position and results of operations.




In
December 2007, the FASB also issued SFAS No. 141R, “Business Combinations.” SFAS
No. 141R requires an entity to recognize assets acquired, liabilities assumed,
contractual contingencies and contingent consideration at their fair value on
the acquisition date. SFAS No. 141R also requires that (1) acquisition-related
costs be expensed as incurred; (2) restructuring costs generally be recognized
as a post-acquisition expense; and (3) changes in deferred tax asset valuation
allowances and income tax uncertainties after the measurement period impact
income tax expense. The Company will adopt SFAS No. 141R on January 1, 2009 and
is currently evaluating this statement to determine its effect, if any, on its
results of operations and financial position.




Note
4 – Long-lived Asset Impairments




Indiana Tube
Denmark




In 2008,
management decided to exit the welded specialty tubing market in Europe and
close its ITD subsidiary, sell ITD’s  assets, pay off ITD’s related
debt and repatriate cash remaining post-closing. The decision to exit this
market was made after evaluating current economic conditions and competition
from lower cost manufacturers.  ITD represented 2.4% of the sales and
1.7% of the operating income of WHX in 2008.  In conjunction with the
decision to close ITD, the Company reviewed the recoverability of its long-lived
assets in accordance with SFAS No. 144, “Accounting for Impairment or Disposal
of Long-Lived Assets.”  A review of future cash flows, based on the
expected closing date, indicated that cash flows would be insufficient to
support the carrying value of certain machinery and equipment at
ITD.  As a result of the Company’s review, an impairment loss of $0.5
million was recognized in 2008 to write down the individual components of
long-lived assets to estimated fair value.




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Sumco
Inc.




In 2008,
the Company evaluated the long-lived assets of its Sumco subsidiary in light of
ongoing operating losses.  Sumco sells electroplating services
primarily to the automotive market and is included in the Precious Metal
reporting segment.  It represented 17.5% of such segment’s sales in
2008.  Sumco has had declining cash flows in 2008 and projected
negative cash flows for 2009, principally caused by the decline in U.S. economic
activity and Sumco’s reliance on the automotive market for over 90% of its
sales.  A review
of future cash flows indicated that such cash flows would be insufficient to
support the carrying value of certain of Sumco’s long-lived assets. 
As a result of the Company’s evaluation, an impairment loss of $7.8 million was
recognized in 2008 to write down the individual components of long-lived assets
to the lower of their carrying value or estimated fair value.  The
Board of Directors of Sumco is exploring strategic options for the Sumco
business.




Handy & Harman
Electronic Materials (HHEM)




On March
4, 2007, HHEM, a subsidiary of the Company, sold certain assets, including its
land and building, certain machinery and equipment, and inventory for net
proceeds of approximately $3.8 million. HHEM was part of the Company’s Precious
Metal segment.  The Company recorded an asset impairment charge in
2006 of $3.4 million relating to the long-lived assets offered for sale, in
accordance with SFAS No. 144. The amount of the impairment loss was based upon
the actual selling price of the long-lived assets in March 2007.  Upon
sale, the Company recognized a loss of $0.4 million relating to the sale of
inventory.  Under the terms of the sale agreement, the Company has
retained responsibility for any pre-existing environmental conditions requiring
remediation at the Rhode Island site.




Note
5 – Acquisitions




Acquisition
of  Bairnco Corporation




In April
2007, WHX acquired Bairnco’s outstanding common stock pursuant to a tender offer
for $13.50 per share.  The total purchase price of the stock was
$101.4 million, and, in addition, the acquisition included the assumption of
$31.1 million of Bairnco’s then-existing debt.




The
Company has made an allocation of the purchase price, as detailed below, to the
assets acquired and liabilities assumed at estimated fair market
values:




Amount(in
      thousands)Current
      assets
                          
                          $
                          79,701Property,
      plant & equipment
                          
                          
                          51,169Identifiable
      intangible assets
                          
                          
                          27,348Other
      non-current assets
                          
                          
                          468Goodwill
                          
                          
                          10,437Current
      liabilities
                          
                          
                          (29,916
                          )Debt
                          
                          
                          (31,078
                          )Other
      long term liabilities
                          
                          
                          (6,739
                          )Purchase
      price
                          
                          $
                          101,390






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The
components of the $27.3 million of estimated acquired Identifiable Intangible
Assets, listed in the above table, are as follows:




Amount
                            
                            Amortization(in
      thousands)
                            
                            PeriodCustomer
      relationships
                            
                            $
                            22,152
                            
                            12-15
      yearsTrade
      names
                            
                            
                            2,645
                            
                            10-20
      yearsEngineering
      drawings
                            
                            
                            220
                            
                            5
      yearsBacklog
                            
                            
                            211In-process
      research and development
                            
                            
                            1,640Other
                            
                            
                            480
                            
                            4-5
      yearsTotal
      Identifiable intangible assets
                            
                            $
                            27,348Weighted
      average amortization period
                            
                            
                            
                            
                            13
      years





Amortization
expenses on these intangible assets were $1.8 million in 2008 and $1.3 million
from acquisition through December 31, 2007 and were charged to SG&A expense.
The valuation of the acquired assets of Bairnco included $1.6 million of
acquired in-process research and development.  This asset related to
eight specific research and development projects that were considered by
management to be within 6 to 12 months of commercialization.  The
valuation method used was an income approach that valued projected future
operating profit from the projects less the costs to complete the projects, and
less a charge for the use of existing technology assets such as the Company’s
existing chemical formulations and processing know-how, as well as a charge for
the use of other contributory assets. The resulting projected cash flows were
then discounted using an 18.5% discount rate. The in-process research and
development, and the backlog were charged to selling, general and administrative
expense in 2007.




Goodwill
has an indefinite life and, accordingly, will not be amortized, but will be
subject to periodic impairment testing at future periods in accordance with SFAS
142.  As of December 31, 2008, approximately $3.5 million of goodwill
related to prior acquisitions made by Bairnco is expected to be amortizable for
income tax purposes.




Effective
April 13, 2007, the consolidated financial statements of the Company include the
actual results of operations of Bairnco. The following table summarizes
unaudited 2007 pro forma financial data for the combined companies as though the
Company had acquired Bairnco as of January 1, 2007:




Combined
      Financial InformationPro
      Forma(in
      thousands)
                                
                                2007Net
      sales
                                
                                $
                                692,635Loss
      before income taxes
                                
                                $
                                (21,760
                                )Net
      loss
                                
                                $
                                (22,948
                                )Net
      loss per common share
                                
                                $
                                (22.95
                                )





Included
in the above pro forma results for 2007 are non-recurring pre-tax charges of
$5.7 million incurred because of the change in control of Bairnco and costs of
$1.4 million relating to the tender offer for Bairnco shares. Other
non-recurring charges totaling $7.4 million that are included in the
consolidated statement of operations of WHX for 2007 have been excluded from the
above pro forma results of operations.  Such charges consist of
approximately $5.5 million of acquired manufacturing profit in inventory that
was charged to cost of sales, approximately $1.6 million of acquired in-process
research and development costs, and $0.2 million of acquired backlog, and all
are related directly to the acquisition.  Also included in the above
pro forma pretax results for 2007 is pre-tax income of $6.5 million resulting
from WHX’s settlement of a fire insurance claim from a prior year.




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Pro forma
adjustments to the historical results of operations for 2007 include additional
interest expense on the acquisition-related financing, additional depreciation
and amortization expense relating to the higher basis of fixed assets and
acquired amortizable intangibles, and the elimination of Federal income taxes on
Bairnco’s results of operations.  Since Bairnco will be included in
the consolidated federal income tax return of WHX, and due to the uncertainty of
realizing the benefit of WHX’s NOLs in the future, a deferred tax valuation
allowance has been established on a consolidated basis. Pro forma interest rates
reflect a refinancing of approximately $56 million of initial acquisition
financing three months after the pro forma acquisition date since Bairnco
actually refinanced the initial Bridge Loan Agreement approximately three months
(July 2007) after the actual acquisition date.




The pro
forma information noted above should be read in conjunction with the related
historical information and is not necessarily indicative of the results that
would have been attained had the transaction actually taken place as of January
1, 2007; nor is it indicative of any future operating results of the combined
entities.




Acquisition
of Omni Technologies Corporation




In
November 2007, H&H purchased all of the outstanding common stock of Omni
Technologies Corporation of Danville (“Omni”), a manufacturer of flux cored
brazing wire and metal powders used for brazing and soldering pastes, pursuant
to a stock purchase agreement dated as of September 19, 2007.  Omni is
part of the Precious Metal segment.  The purchase price of $3.2
million has been allocated as follows:  $0.5 million to tangible
assets, $1.5 million to identifiable intangible assets, and $1.2 million to
goodwill.




Note
6 – Pensions, Other Postretirement and Post-Employment Benefits




The
Company maintains several qualified and non-qualified pension plans and other
postretirement benefit plans covering substantially all of its
employees.  The Company’s pension, health care benefit and significant
defined contribution plans are discussed below.  The Company’s other
defined contribution plans are not significant individually or in the
aggregate.




Qualified Pension
Plans




WHX
Corporation sponsors a defined benefit pension plan, the WHX Pension Plan,
covering substantially all WHX and H&H employees and certain employees of
WHX’s former subsidiary, Wheeling-Pittsburgh Corporation, or WPC.  The
WHX Pension Plan was established in May 1998 as a result of the merger of the
former H&H plans, which covered substantially all H&H employees, and the
WPC plan.  The WPC plan, covering most USWA-represented employees of
WPC, was created pursuant to a collective bargaining agreement ratified on
August 12, 1997.  Prior to that date, benefits were provided through a
defined contribution plan, the Wheeling-Pittsburgh Steel Corporation Retirement
Security Plan (“RSP”).  The assets of the RSP were merged into the WPC
plan as of December 1, 1997.  Under the terms of the WHX Pension Plan,
the benefit formula and provisions for the WPC and H&H participants
continued as they were designed under each of the respective plans prior to the
merger.




The
qualified pension benefits under the WHX Pension Plan were frozen as of December
31, 2005 and April 30, 2006 for hourly and salaried non-bargaining participants,
respectively, with the exception of a single operating unit.




WPC Group
employees ceased to be active participants in the WHX Pension Plan effective
July 31, 2003 and as a result such employees no longer accrue benefits under the
WHX Pension Plan.




Bairnco
Corporation has several pension plans (“Bairnco Plans”), which cover
substantially all of its employees.  In 2006, Bairnco froze the
Bairnco Corporation Retirement Plan and initiated employer contributions to its
401(k) plan.  On June 2, 2008, two Bairnco plans (Salaried and Kasco)
were merged into the WHX Pension Plan.




Bairnco
Corporation’s Canadian subsidiary provides retirement benefits for its employees
through a defined contribution plan.  In addition, the Company’s
European subsidiaries provide retirement benefits for employees consistent with
local practices.  The foreign plans are not significant in the
aggregate and therefore are not included in the following
disclosures.




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Other
Comprehensive Income for 2008 and 2007 includes:




Defined
      Benefit Plans
                            
                            
                            Other
      Post-Retirement Benefit
      Plans(in
      thousands)
                            
                            2008
                            
                            
                            2007
                            
                            
                            2008
                            
                            
                            2007Amortization
      of actuarial gains (losses)
                            
                            $
                            (351
                            )
                            
                            $
                            (906
                            )
                            
                            $
                            (146
                            )
                            
                            $
                            (176
                            )Amortization
      of prior service credits (costs)
                            
                            
                            (63
                            )
                            
                            
                            (63
                            )
                            
                            
                            265
                            
                            
                            
                            229Net
      actuarial (gains) losses
                            
                            
                            127,081
                            
                            
                            
                            (9,733
                            )
                            
                            
                            171
                            
                            
                            
                            (151
                            )One-time
      adjustment-charge (credit)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            517
                            
                            
                            
                            (1,346
                            )




The
pretax amount of actuarial losses and prior service cost (credits) included in
Accumulated Other Comprehensive Income (Loss) at December 31, 2008 that is
expected to be recognized in net periodic benefit cost in 2009 is $12.8 million
and $0.1 million, respectively, for defined benefit pension plans and $(0.8)
million and -0-, respectively, for other post retirement benefit
plans.




Pension
benefits for the WHX and H&H participants included in the WHX Pension Plan
and the Bairnco participants included in the WHX and Bairnco Pension Plans are
based on years of service and the amount of compensation during their
employment.  However, as noted above, the qualified pension benefits
were frozen for most participants.




Pension
benefits for the WPC bargained participants include both defined benefit and
defined contribution features, since the plan includes the account balances from
the RSP.  The gross benefit, before offsets, is calculated based on
years of service and the benefit multiplier under the plan.  This
gross amount is then offset for the benefits payable from the RSP and benefits
payable by the Pension Benefit Guaranty Corporation from previously terminated
plans.  Individual employee accounts established under the RSP are
maintained until retirement.  Upon retirement, participants who are
eligible for the WHX Pension Plan and maintain RSP account balances will
normally receive benefits from the WHX Pension Plan.  When these
participants become eligible for benefits under the Plan, their vested balances
in the RSP Plan become assets of the WHX Pension Plan.  Aggregate
account balances held in trust in individual employees’ accounts totaled $28.1
million at December 31, 2008.  Such individual account balances can
only be utilized to fund all or a portion of the respective individual’s gross
pension benefit as determined by the defined benefit plan’s benefit
formula.  These assets cannot be utilized to fund any of the net
benefit that is the basis for determining the defined benefit plan’s benefit
obligation at December 31, 2008.  During 2008, a voluntary cashout
option was offered to deferred participants in this portion of the
plan.  This reduced the size of the RSP by approximately 1,900
participants and $125 million in assets.  The benefits payable under
the WHX Pension Plan for these participants were paid at the same time
(approximately $1.6 million in aggregate).




The
Company’s funding policy is to contribute annually an amount that satisfies the
minimum funding standards of ERISA.  Prior to 2004, the Company had
not been required to make any such contributions due to the plan’s fully funded
status.  On September 15, 2006, WHX was required to make a minimum
contribution to the WHX Pension Plan for the 2005 plan year in the amount of
$15.5 million.  However, the Company did not make that contribution
due to liquidity issues, and applied to the IRS for a funding waiver for the
2005 plan year.  On December 20, 2006, the IRS granted a conditional
waiver of the minimum funding requirements for the 2005 plan year in accordance
with section 412 (d) of the Internal Revenue Code and section 303 of
ERISA.  On December 28, 2006, WHX, H&H, and the PBGC entered into
the PBGC Settlement Agreement in connection with the IRS Waiver and certain
other matters.  The IRS Waiver is subject to certain conditions,
including a requirement that the Company meet the minimum funding requirements
for the WHX Pension Plan for the plan years ending December 31, 2006 through
2010, without applying for a waiver of such requirements.  The PBGC
Settlement Agreement and related agreements included the following: (i) the
amortization of the waived amount of $15.5 million (the “Waiver Amount”) over a
period of five years, (ii) the PBGC’s consent to increase borrowings under
H&H’s senior credit facility to $125 million in connection with the closing
of an acquisition (iii) the resolution of any potential issues under Section
4062(e) of ERISA, in connection with the cessation of operations at certain
facilities owned by WHX, H&H or their subsidiaries, and (iv) the granting to
the PBGC of subordinate liens on the assets of H&H and its subsidiaries, and
specified assets of WHX, to collateralize WHX’s obligation to pay the Waiver
Amount to the WHX Pension Plan and to make certain payments to the WHX Pension
Plan in the event of its termination.




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In 2007,
WHX contributed $21.6 million to the WHX Pension Plan including a $13.0 million
contribution on September 12, 2007.  This $13.0 million payment
exceeded the minimum required contribution under ERISA.  As a result
of such accelerated contribution, no minimum contribution was required in 2008
and the Company believes that the full amount of the IRS Waiver has been repaid,
and all liens granted to the PBGC pursuant to the PBGC Settlement Agreement have
been released.
  The
measurement date for plan obligations is December 31.  The discount
rate is the rate at which the plans’ obligations could be effectively settled
and is based on high quality bond yields as of the measurement
date.
  Summarized
information regarding the significant qualified defined benefit pension plans of
WHX Corporation and Bairnco is as follows:
  WHX
      Pension Plan(in
      thousands)
                                
                                2008
                                
                                
                                2007Components
      of net periodic benefit cost (credit):Service
      cost
                                
                                $
                                308
                                
                                
                                $
                                315Interest
      cost
                                
                                
                                23,657
                                
                                
                                
                                23,719Expected
      return on plan assets
                                
                                
                                (31,885
                                )
                                
                                
                                (29,966
                                )Amortization
      of prior service cost
                                
                                
                                63
                                
                                
                                
                                63Actuarial
      loss amortization
                                
                                
                                351
                                
                                
                                
                                906Total
                                
                                $
                                (7,506
                                )
                                
                                $
                                (4,963
                                )
  Bairnco
      Pension Plans(in
      thousands)
                                  
                                  2008
                                  
                                  
                                  2007Components
      of net periodic benefit cost (credit):Service
      cost
                                  
                                  $
                                  81
                                  
                                  
                                  $
                                  55Interest
      cost
                                  
                                  
                                  2,763
                                  
                                  
                                  
                                  1,916Expected
      return on plan assets
                                  
                                  
                                  (3,675
                                  )
                                  
                                  
                                  (2,753
                                  )Amortization
      of prior service cost
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Recognized
      actuarial loss
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Total
                                  
                                  $
                                  (829
                                  )
                                  
                                  $
                                  (782
                                  )
 66
 Table of Contents
  2008
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        2007WHX
                                        
                                        
                                        Bairnco
                                        
                                        
                                        
                                        
                                        
                                        WHX
                                        
                                        
                                        BairncoPlan
                                        
                                        
                                        Plans
                                        
                                        
                                        Total
                                        
                                        
                                        Plan
                                        
                                        
                                        Plans
                                        
                                        
                                        Total(in
      thousands)Change
      in benefit obligation:Benefit
      obligation at January 1
                                        
                                        $
                                        405,865
                                        
                                        
                                        $
                                        45,518
                                        
                                        
                                        $
                                        451,383
                                        
                                        
                                        $
                                        415,419
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        415,419Service
      cost
                                        
                                        
                                        308
                                        
                                        
                                        
                                        82
                                        
                                        
                                        
                                        390
                                        
                                        
                                        
                                        315
                                        
                                        
                                        
                                        55
                                        
                                        
                                        
                                        370Interest
      cost
                                        
                                        
                                        23,657
                                        
                                        
                                        
                                        2,763
                                        
                                        
                                        
                                        26,420
                                        
                                        
                                        
                                        23,719
                                        
                                        
                                        
                                        1,916
                                        
                                        
                                        
                                        25,635Actuarial
      (gain) loss
                                        
                                        
                                        5,890
                                        
                                        
                                        
                                        33
                                        
                                        
                                        
                                        5,923
                                        
                                        
                                        
                                        (1,402
                                        )
                                        
                                        
                                        (1,779
                                        )
                                        
                                        
                                        (3,181
                                        )Benefits
      paid
                                        
                                        
                                        (36,027
                                        )
                                        
                                        
                                        (1,039
                                        )
                                        
                                        
                                        (37,066
                                        )
                                        
                                        
                                        (33,773
                                        )
                                        
                                        
                                        (1,649
                                        )
                                        
                                        
                                        (35,422
                                        )Plan
      merger
                                        
                                        
                                        45,174
                                        
                                        
                                        
                                        (45,174
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        46,975
                                        
                                        
                                        
                                        46,975Curtailments
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Transfers
      from RSP
                                        
                                        
                                        221
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        221
                                        
                                        
                                        
                                        1,587
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1,587Benefit
      obligation at December 31
                                        
                                        $
                                        445,088
                                        
                                        
                                        $
                                        2,183
                                        
                                        
                                        $
                                        447,271
                                        
                                        
                                        $
                                        405,865
                                        
                                        
                                        $
                                        45,518
                                        
                                        
                                        $
                                        451,383Change
      in plan assets:Fair
      value of plan assets at January 1
                                        
                                        $
                                        391,470
                                        
                                        
                                        
                                        44,461
                                        
                                        
                                        $
                                        435,931
                                        
                                        
                                        $
                                        361,974
                                        
                                        
                                        
                                        -
                                        
                                        
                                        $
                                        361,974Plan
      merger
                                        
                                        
                                        41,725
                                        
                                        
                                        
                                        (41,725
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        46,939
                                        
                                        
                                        
                                        46,939Actual
      returns on plan assets
                                        
                                        
                                        (85,135
                                        )
                                        
                                        
                                        (428
                                        )
                                        
                                        
                                        (85,563
                                        )
                                        
                                        
                                        40,082
                                        
                                        
                                        
                                        (829
                                        )
                                        
                                        
                                        39,253Benefits
      paid
                                        
                                        
                                        (36,028
                                        )
                                        
                                        
                                        (1,039
                                        )
                                        
                                        
                                        (37,067
                                        )
                                        
                                        
                                        (33,773
                                        )
                                        
                                        
                                        (1,649
                                        )
                                        
                                        
                                        (35,422
                                        )Company
      contributions
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        21,600
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        21,600Transfers
      from RSP
                                        
                                        
                                        221
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        221
                                        
                                        
                                        
                                        1,587
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1,587Fair
      value of plan assets at December 31
                                        
                                        $
                                        312,253
                                        
                                        
                                        $
                                        1,269
                                        
                                        
                                        $
                                        313,522
                                        
                                        
                                        $
                                        391,470
                                        
                                        
                                        $
                                        44,461
                                        
                                        
                                        $
                                        435,931Funded
      status
                                        
                                        $
                                        (132,835
                                        )
                                        
                                        $
                                        (915
                                        )
                                        
                                        $
                                        (133,750
                                        )
                                        
                                        $
                                        (14,395
                                        )
                                        
                                        $
                                        (1,057
                                        )
                                        
                                        $
                                        (15,452
                                        )The
      pre tax amounts recognized inaccumulated other comprehensive
      income:Net
      actuarial loss
                                        
                                        $
                                        170,062
                                        
                                        
                                        $
                                        597
                                        
                                        
                                        $
                                        170,659
                                        
                                        
                                        $
                                        42,160
                                        
                                        
                                        $
                                        1,803
                                        
                                        
                                        $
                                        43,963Prior
      service cost (credit)
                                        
                                        
                                        263
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        263
                                        
                                        
                                        
                                        326
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        326$
                                        170,325
                                        
                                        
                                        $
                                        597
                                        
                                        
                                        $
                                        170,922
                                        
                                        
                                        $
                                        42,486
                                        
                                        
                                        $
                                        1,803
                                        
                                        
                                        $
                                        44,289Accumulated
      benefit obligation (ABO) for qualified
                                          defined
      benefit pension plans :ABO
      at January 1
                                        
                                        $
                                        405,865
                                        
                                        
                                        $
                                        45,518
                                        
                                        
                                        $
                                        451,383
                                        
                                        
                                        $
                                        415,419
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        415,419ABO
      at December 31
                                        
                                        
                                        445,088
                                        
                                        
                                        
                                        2,183
                                        
                                        
                                        $
                                        447,271
                                        
                                        
                                        
                                        405,865
                                        
                                        
                                        
                                        45,518
                                        
                                        
                                        
                                        451,383
   67
 Table of Contents
  The
weighted average assumptions used in the valuations of pension benefits were as
follows:
   WHX
      Plan
                              
                              
                              Bairnco
      Plans2008
                              
                              
                              2007
                              
                              
                              2008
                              
                              
                              2007Assumptions
      used to determine benefitobligations
      at December 31:Discount
      rate
                              
                              
                              6.00
                              %
                              
                              
                              6.05
                              %
                              
                              
                              6.00
                              %
                              
                              
                              6.20
                              %Rate
      of compensation increase
                              
                              
                              N/A
                              
                              
                              
                              N/A
                              
                              
                              
                              N/A
                              
                              
                              
                              N/AAssumptions
      used to determine net
                                periodic
      benefit cost for the period
                                ending
      December 31:Discount
      rate
                              
                              
                              6.05
                              %
                              
                              
                              5.80
                              %
                              
                              
                              6.20
                              %
                              
                              
                              5.90
                              %Expected
      return on assets
                              
                              
                              8.50
                              %
                              
                              
                              8.50
                              %
                              
                              
                              8.50
                              %
                              
                              
                              8.50
                              %Rate
      of compensation increase
                              
                              
                              N/A
                              
                              
                              
                              N/A
                              
                              
                              
                              N/A
                              
                              
                              
                              N/A
 
 In
determining the expected long-term rate of return on assets, the Company
evaluated input from various investment professionals.  In addition,
the Company considered its historical compound returns as well as the Company’s
forward-looking expectations for the plan.  The Company determines its
actuarial assumptions for its pension and postretirement plans on December 31 of
each year to calculate liability information as of that date and pension and
postretirement expense for the following year.  The discount rate
assumption is derived from the rate of return on high-quality bonds as of
December 31 of each year.
  The
Company’s investment policy is to maximize the total rate of return with a view
to long-term funding objectives of the pension plan to ensure that funds are
available to meet benefit obligations when due.  The three to five
year objective of the Plan is to achieve a rate of return that exceeds the
Company’s expected earnings rate by 150 basis points at prudent levels of
risk.  Therefore the pension plan assets are diversified to the extent
necessary to minimize risk and to achieve an optimal balance between risk and
return.  There are no target allocations.  The Plan’s assets
are diversified as to type of assets, investment strategies employed, and number
of investment managers used.  Investments may include equities, fixed
income, cash equivalents, convertible securities, and private
investment funds.  Derivatives may be used as part of the
investment strategy.  The Company may direct the transfer of assets
between investment managers in order to rebalance the portfolio in accordance
with asset allocation guidelines established by the Company.
  The
Company’s Pension Plans’ asset allocations at December 31, 2008 and 2007, by
asset category, are as follows:
  WHX
      Plan
                              
                              
                              Bairnco
      Plans2008
                              
                              
                              2007
                              
                              
                              2008
                              
                              
                              2007Asset
      CategoryEquity
      Securities
                              
                              
                              22
                              %
                              
                              
                              34
                              %
                              
                              
                              23
                              %
                              
                              
                              54
                              %United
      States Government Securities
                              
                              
                              8
                              %
                              
                              
                              -
                              
                              
                              
                              8
                              %
                              
                              
                              45
                              %Debt
      Securities
                              
                              
                              -
                              
                              
                              
                              5
                              %
                              
                              
                              -
                              
                              
                              
                              -Convertible
      Securities
                              
                              
                              8
                              %
                              
                              
                              7
                              %
                              
                              
                              8
                              %
                              
                              
                              -Cash
                              
                              
                              4
                              %
                              
                              
                              1
                              %
                              
                              
                              -
                              
                              
                              
                              1
                              %Other
      (Private Investment Funds)
                              
                              
                              58
                              %
                              
                              
                              53
                              %
                              
                              
                              61
                              %
                              
                              
                              -Total
                              
                              
                              100
                              %
                              
                              
                              100
                              %
                              
                              
                              100
                              %
                              
                              
                              100
                              %
 The
Private Investment Funds or the investment funds they are invested in, own
marketable and non-marketable securities and other investment
instruments.  Such investments are valued by the Private Investment
Funds, underlying investment managers or the investment funds, at fair value, as
described in their respective financial statements and offering
memorandums.  Because of the inherent uncertainty of valuation of some
of the WHX Pension Plan’s investment in Private Investment Funds and some of the
underlying investments held by the investment funds, the recorded value may
differ from the value that would have been used had a ready market existed for
some of these investments for which market quotations are not readily available
and are valued at their fair value as determined in good faith by the respective
Private Investment Funds, underlying investment managers, or the investment
funds.
  68
 Table of Contents
  Contributions
  Employer
contributions consist of funds paid from employer assets into a qualified
pension trust account.
  The
Company expects to have required minimum contributions for the WHX Pension Plan
for 2009 and 2010 of $1.2 million and $6.0 million,
respectively.   Required future contributions are determined
based upon and subject to changes, and assumptions as to future changes, in
asset values on plan assets, discount rates on future obligations, assumed rates
of return on plan assets and legislative changes.  Pension costs and
required funding obligations will be effected by changes in the factors and
assumptions described in the previous sentence, as well as other changes such as
a plan termination.
  Benefit
Payments
  Estimated
future benefit payments for the qualified defined benefit plans over the next
ten years are as follows (in thousands):
  Years
                                      
                                      WHX
      Plan
                                      
                                      
                                      Bairnco
      Plan
                                      
                                      
                                      Total2009
                                      
                                      $
                                      35,660
                                      
                                      
                                      $
                                      47
                                      
                                      
                                      $
                                      35,7072010
                                      
                                      
                                      35,524
                                      
                                      
                                      
                                      53
                                      
                                      
                                      
                                      35,5772011
                                      
                                      
                                      35,211
                                      
                                      
                                      
                                      58
                                      
                                      
                                      
                                      35,2692012
                                      
                                      
                                      35,012
                                      
                                      
                                      
                                      65
                                      
                                      
                                      
                                      35,0772013
                                      
                                      
                                      34,822
                                      
                                      
                                      
                                      73
                                      
                                      
                                      
                                      34,8952014
      - 2018
                                      
                                      
                                      169,280
                                      
                                      
                                      
                                      494
                                      
                                      
                                      
                                      169,774
 
 Non-Qualified Pension
Plans
  In
addition to the aforementioned benefit plans, H&H has a non-qualified
pension plan for certain current and retired employees.  Such plan
adopted an amendment effective January 1, 2006, to freeze benefits under the
plan.  On March 4, 2005, WHX adopted the WHX Corporation Supplemental
Executive Retirement Plan, effective as of February 1, 2004, which provided for
specified benefits to be paid to certain of its employees.  The WHX
Corporation Supplemental Executive Retirement Plan (SERP) benefits were settled
as of August 5, 2005, in accordance with SFAS 88 and this plan was terminated on
December 29, 2005.
  The
measurement date for plan obligations is December 31.
  69
 Table of Contents
  Summarized
information regarding the non qualified defined benefit pension plan of H&H
is as follows:
  2008
                            
                            
                            2007Components
      of net periodic benefit cost:
                            
                            (in
      thousands)Service
      cost
                            
                            $
                            -
                            
                            
                            $
                            -Interest
      cost
                            
                            
                            12
                            
                            
                            
                            12Amortization
      of prior service cost
                            
                            
                            -
                            
                            
                            
                            -Amortization
      of actuarial gain (loss)
                            
                            
                            -
                            
                            
                            
                            -Total
                            
                            $
                            12
                            
                            
                            $
                            12
  2008
                                      
                                      
                                      2007(in
      thousands)Change
      in benefit obligation:Benefit
      obligation at January 1
                                      
                                      $
                                      201
                                      
                                      
                                      $
                                      213Service
      cost
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Interest
      cost
                                      
                                      
                                      12
                                      
                                      
                                      
                                      12Actuarial
      (gain) loss
                                      
                                      
                                      35
                                      
                                      
                                      
                                      (19
                                      )Amendments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Benefits
      paid
                                      
                                      
                                      (6
                                      )
                                      
                                      
                                      (6
                                      )Curtailment
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Benefit
      obligation at December 31
                                      
                                      $
                                      242
                                      
                                      
                                      $
                                      200Funded
      status
                                      
                                      $
                                      242
                                      
                                      
                                      $
                                      (200
                                      )The
      pre tax amounts recognized in
                                          accumulated
      other comprehensive income:Net
      actuarial (gain) loss
                                      
                                      $
                                      14
                                      
                                      
                                      $
                                      (20
                                      )Accumulated
      benefit obligation for qualified
                                        defined
      benefit pension plans :Accumulated
      benefit obligation at January 1
                                      
                                      $
                                      201
                                      
                                      
                                      $
                                      213Accumulated
      benefit obligation at December 31
                                      
                                      
                                      242
                                      
                                      
                                      
                                      200
   70
 Table of Contents
    2008
                          
                          
                          2007Assumptions
      used to determine benefit obligations at December
      31:Discount
      rate
                          
                          
                          6.00
                          %
                          
                          
                          6.05
                          %H&H
      rate of compensation increase
                          
                          
                          N/A
                          
                          
                          
                          N/AWHX
      rate of compensation increase
                          
                          
                          N/A
                          
                          
                          
                          N/AAssumptions
      used to determine netperiodic
      benefit cost (credit) for the periodending
      December 31:Discount
      rate
                          
                          
                          6.05
                          %
                          
                          
                          5.80
                          %H&H
      rate of compensation increase
                          
                          
                          N/A
                          
                          
                          
                          N/AWHX
      rate of compensation increase
                          
                          
                          N/A
                          
                          
                          
                          N/A
  Contributions
  The
non-qualified plan is not funded.  Employer contributions are equal to
annual benefit payments.
  Benefit
Payments
  There are
no future benefits to be paid from the WHX non-qualified pension
plan.  Estimated future benefit payments for the H&H non-qualified
plan over the next ten years are as follows:
  Year
                                
                                Amount(in
      thousands)2009
                                
                                $
                                1082010
                                
                                
                                62011
                                
                                
                                52012
                                
                                
                                52013
                                
                                
                                52014
      - 2018
                                
                                
                                126
  401(k)
Plans
  Certain
H&H employees participate in an H&H sponsored savings plan, which
qualifies under Section 401(k) of the Internal Revenue Code.  This
savings plan allows eligible employees to contribute from 1% to 15% of their
income on a pretax basis.  In 2008 and 2007, H&H matched 50% of
the first 3% of the employee’s contribution.  The charge to operations
for the Company’s matching contribution amounted to $0.8 million in each of 2008
and 2007, respectively.  In addition, in 2008 and 2007, the Company
accrued an additional contribution to the 401(k) Plan of $0.5 million and $0.7
million, respectively, due to the freezing of benefits under the pension
plan.
  Certain
Bairnco employees participate in a Bairnco sponsored savings plan, which
qualifies under Section 401(k) of the Internal Revenue Code.  Bairnco
contributed 1% of pay to each participant’s account (total amount of $0.3
million), plus Bairnco matched 50% of the first 4% of the employee’s
contribution.  Employer matching contributions to this 401(k) plan
were $0.6 million for 2008 and $0.6 million for the period from April 13, 2007
to December 31, 2007.
  In
January 2009, the Company suspended its employer contributions to 401(k) savings
plans for all employees not covered by a collective bargaining
agreement.
  71
 Table of Contents
  Other Postretirement
Benefits
  Certain
current and retired employees of H&H are covered by postretirement medical
benefit plans.  The benefits provided are for medical expenses and
prescription drugs.  Contributions from a majority of the participants
are required, and for those retirees and spouses, the Company’s payments are
capped.
  The
measurement date for plan obligations is December 31.
  At
year-end 2008, benefits were discontinued under two of the Company’s
post-retirement benefit plans.  The accounting impact of these events
was recognized at year-end. The accumulated postretirement benefit obligation
decreased by $3.2 million and there was a one-time curtailment gain under SFAS
No. 106 of $3.7 million.
  Summarized
information regarding the postretirement medical benefit plans of H&H is as
follows:
   2008
                          
                          
                          2007Components
      of net periodic benefit cost:
                          
                          (in
      thousands)Service
      cost
                          
                          $
                          13
                          
                          
                          $
                          34Interest
      cost
                          
                          
                          366
                          
                          
                          
                          385Amortization
      of prior service cost (credit)
                          
                          
                          (265
                          )
                          
                          
                          (229
                          )Amortization
      of actuarial loss
                          
                          
                          146
                          
                          
                          
                          177Charge
      (credit) due to plan redesign
                          
                          
                          (3,710
                          )
                          
                          
                          727Total
                          
                          $
                          (3,450
                          )
                          
                          $
                          1,094
  2008
                                  
                                  
                                  2007Change
      in benefit obligation:
                                  
                                  (in
      thousands)Benefit
      obligation at January 1
                                  
                                  $
                                  6,411
                                  
                                  
                                  $
                                  7,342Service
      cost
                                  
                                  
                                  13
                                  
                                  
                                  
                                  35Interest
      cost
                                  
                                  
                                  366
                                  
                                  
                                  
                                  385Actuarial
      loss (gain)
                                  
                                  
                                  178
                                  
                                  
                                  
                                  (89
                                  )Participant
      contributions
                                  
                                  
                                  97
                                  
                                  
                                  
                                  115Benefits
      paid
                                  
                                  
                                  (769
                                  )
                                  
                                  
                                  (758
                                  )Curtailment/Settlement
                                  
                                  
                                  (3,175
                                  )
                                  
                                  
                                  (619
                                  )Benefit
      obligation at December 31
                                  
                                  $
                                  3,121
                                  
                                  
                                  $
                                  6,411Funded
      Status
                                  
                                  $
                                  (3,121
                                  )
                                  
                                  $
                                  (6,411
                                  )The
      pre tax amounts recognized inaccumulated
      other comprehensive income:Net
      actuarial loss
                                  
                                  $
                                  178
                                  
                                  
                                  $
                                  944Prior
      service cost (credit)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (1,598
                                  )Total
                                  
                                  $
                                  178
                                  
                                  
                                  $
                                  (654
                                  )
  72
 Table of Contents
  The
weighted average assumptions used in the valuations of these other
postretirement benefits were as follows:
  2008
                            
                            
                            2007Assumptions
      used to determine benefit obligations at December
      31:Discount
      rate
                            
                            
                            6.00
                            %
                            
                            
                            6.05
                            %Health
      care cost trend rate - initial
                            
                            
                            8.00
                            %
                            
                            
                            8.00
                            %Health
      care cost trend rate - ultimate
                            
                            
                            5.00
                            %
                            
                            
                            5.00
                            %Year
      ultimate is reached
                            
                            2015
                            
                            
                            2014Assumptions
      used to determine netperiodic
      benefit cost for the periodDiscount
      rate
                            
                            
                            6.05
                            %
                            
                            
                            5.80
                            %Health
      care cost trend rate - initial
                            
                            
                            8.00
                            %
                            
                            
                            9.00
                            %Health
      care cost trend rate - ultimate
                            
                            
                            5.00
                            %
                            
                            
                            5.00
                            %Year
      ultimate is reached
                            
                            2014
                            
                            
                            2011
 
 At
December 31, 2008, the health care cost trend rate was 8% decreasing to an
ultimate rate of 5% by the year 2015.  A one percentage point increase
in healthcare cost trend rates in each year would increase the accumulated
postretirement benefit obligation as of December 31, 2008 by $0.3 million and
the aggregate of the service cost and interest cost components of 2008 annual
expense by $0.  A one percentage point decrease in healthcare cost
trend rates in each year would decrease the accumulated postretirement benefit
obligation as of December 31, 2008 by $0.2 million and the aggregate of the
service cost and interest cost components of 2008 annual expense by
$0.
  Contributions
  Employer
contributions are expected to be $0.2 million for the 2009 plan
year.
  Benefit
Payments
  Expected
benefit payments over the next ten years are as follows:
  Year
                                            
                                            
                                            Amount(in
      thousands)2009
                                            
                                            
                                            $
                                            2172010
                                            
                                            
                                            
                                            2312011
                                            
                                            
                                            
                                            2452012
                                            
                                            
                                            
                                            2482013
                                            
                                            
                                            
                                            2502014
      - 2018
                                            
                                            
                                            
                                            1,241
 
 The
Company has an Executive Post-Retirement Life Insurance Program that provides
for life insurance benefits equal to three and one half times payroll, as
defined for certain Company executives upon their retirement.  Under
SFAS 106, the Company is required to recognize in its financial statements an
annual cost and benefit obligation related to estimated future benefit payments
to be made to its current and retired executives.  Funding for these
obligations is made by the Company.
  During
2008, two executives no longer participated in the program as a result of their
termination of employment with the Company.  This resulted in a
reduction of the accumulated post-retirement benefit obligation of $183,000 and
a one-time curtailment gain of $165,000.
  73
 Table of Contents
  Summarized
information regarding the Executive Post-Retirement Life Insurance Program is as
follows:
  2008
                          
                          
                          2007Components
      of net periodic benefit cost:
                          
                          (in
      thousands)Service
      Cost
                          
                          $
                          64
                          
                          
                          $
                          67Interest
      Cost
                          
                          
                          75
                          
                          
                          
                          68Amortization
      of Actuarial Loss
                          
                          
                          -
                          
                          
                          
                          -One-time
      gain
                          
                          
                          (165
                          )
                          
                          
                          -Total
                          
                          $
                          (26
                          )
                          
                          $
                          135
 2008
                                  
                                  
                                  2007Change
      in benefit obligation:
                                  
                                  (in
      thousands)Benefit
      obligation at January 1
                                  
                                  $
                                  1,184
                                  
                                  
                                  $
                                  1,111Service
      cost
                                  
                                  
                                  64
                                  
                                  
                                  
                                  67Interest
      cost
                                  
                                  
                                  75
                                  
                                  
                                  
                                  68Curtailment
                                  
                                  
                                  (183
                                  )
                                  
                                  
                                  -Actuarial  loss
      (gain)
                                  
                                  
                                  (7
                                  )
                                  
                                  
                                  (62
                                  )Benefit
      payments
                                  
                                  
                                  (21
                                  )
                                  
                                  
                                  -Benefit
      obligation at December 31
                                  
                                  $
                                  1,112
                                  
                                  
                                  $
                                  1,184Funded
      Status
                                  
                                  $
                                  (1,112
                                  )
                                  
                                  $
                                  (1,184
                                  )The
      pre tax amounts recognized inaccumulated
      other comprehensive income:Net
      actuarial (gain) loss
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  25
  The
weighted average assumptions used in the valuations of Executive Post-Retirement
Life Insurance Program were as follows:
  2008
                                  
                                  
                                  2007Assumptions
      used to determine
      benefitobligations at
      December 31:Discount
      rate
                                  
                                  
                                  6.00
                                  %
                                  
                                  
                                  6.05
                                  %Assumptions
      used to determine netperiodic
      benefit cost for the periodending
      December 31:Discount
      rate
                                  
                                  
                                  6.05
                                  %
                                  
                                  
                                  5.80
                                  %Rate
      of compensation increase
                                  
                                  
                                  4.00
                                  %
                                  
                                  
                                  4.00
                                  %
 
 Contributions
  Employer
contributions are expected to be $21,000 for the 2009 plan year.
  74
 Table of Contents
  Benefit
Payments
  Expected
benefit payments over the next ten years are as follows:
  Year
                              
                              Amount(in
      thousands)2009
                              
                              $           212010
                              
                              202011
                              
                              192012
                              
                              192013
                              
                              182014
      - 2018
                              
                              75
  Note
7 – Income Taxes
  2008
                              
                              
                              2007(in
      thousands)Income
      before income taxes:Domestic
                              
                              $
                              2,167
                              
                              
                              $
                              (20,544
                              )Foreign
                              
                              
                              2,214
                              
                              
                              
                              1,611Total
      income (loss) before income taxes
                              
                              $
                              4,381
                              
                              
                              $
                              (18,933
                              )
  The
provision for (benefit from) income taxes for the two years ended December 31 is
as follows:
  2008
                                    
                                    
                                    2007(in
      thousands)Income
      TaxesCurrentDomestic
                                    
                                    $
                                    1,361
                                    
                                    
                                    $
                                    1,028Foreign
                                    
                                    
                                    1,008
                                    
                                    
                                    
                                    1,276Total
      income taxes, current
                                    
                                    $
                                    2,369
                                    
                                    
                                    $
                                    2,304DeferredDomestic
                                    
                                    $
                                    (1,011
                                    )
                                    
                                    $
                                    (407
                                    )Foreign
                                    
                                    
                                    12
                                    
                                    
                                    
                                    (59
                                    )Total
      income taxes, deferred
                                    
                                    $
                                    (999
                                    )
                                    
                                    $
                                    (466
                                    )Income
      tax provision
                                    
                                    $
                                    1,370
                                    
                                    
                                    $
                                    1,838
  Deferred
income taxes result from temporary differences in the financial basis and tax
basis of assets and liabilities. The amounts shown on the following table
represent the tax effect of temporary differences between the Company’s
consolidated tax return basis of assets and liabilities and the corresponding
basis for financial reporting, as well as tax credit and loss
carryforwards.
  75
 Table of Contents
  Deferred
      Income Tax Sources2008
                            
                            
                            2007(in
      thousands)Current
      Deferred Tax Items:Inventory
                            
                            $
                            3,134
                            
                            
                            $
                            4,569Environmental
      Costs
                            
                            
                            2,467
                            
                            
                            
                            4,804Accrued
      Expenses
                            
                            
                            2,217
                            
                            
                            
                            1,182Miscellaneous
      Other
                            
                            
                            1,134
                            
                            
                            
                            601Current
      deferred income tax asset before valuation allowance
                            
                            
                            8,952
                            
                            
                            
                            11,156Valuation
      allowance
                            
                            
                            (7,642
                            )
                            
                            
                            (7,817
                            )Current
      deferred tax asset
                            
                            $
                            1,310
                            
                            
                            $
                            3,339Foreign
                            
                            $
                            (257
                            )
                            
                            $
                            (142
                            )Current
      deferred tax liability
                            
                            $
                            (257
                            )
                            
                            $
                            (142
                            )Non-Current
      Deferred Tax Items:Postretirement
      and postemployment employee benefits
                            
                            $
                            1,625
                            
                            
                            $
                            3,105Net
      operating loss carryforwards
                            
                            
                            70,757
                            
                            
                            
                            77,032Capital
      loss carryforward
                            
                            
                            829
                            
                            
                            
                            871Additional
      minimum pension liability
                            
                            
                            53,981
                            
                            
                            
                            21,920Impairment
      of long-lived assets
                            
                            
                            3,146
                            
                            
                            
                            -California
      tax credits
                            
                            
                            186
                            
                            
                            
                            350Foreign
      tax credits
                            
                            
                            443
                            
                            
                            
                            272Minimum
      tax credit carryforwards
                            
                            
                            1,996
                            
                            
                            
                            1,850Miscellaneous
      Other
                            
                            
                            476
                            
                            
                            
                            -Non
      current deferred tax asset before valuation allowance
                            
                            
                            133,439
                            
                            
                            
                            105,400Valuation
      allowance
                            
                            
                            (114,250
                            )
                            
                            
                            (73,851
                            )Non
      current deferred tax asset
                            
                            
                            19,189
                            
                            
                            
                            31,549Property
      plant and equipment
                            
                            
                            (12,119
                            )
                            
                            
                            (10,135
                            )Pension
                            
                            
                            -
                            
                            
                            
                            (15,701
                            )Intangible
      assets
                            
                            
                            (10,313
                            )
                            
                            
                            (11,736
                            )Undistributed
      foreign earnings
                            
                            
                            (1,617
                            )
                            
                            
                            (1,492
                            )Other-net
                            
                            
                            (553
                            )
                            
                            
                            (702
                            )Non
      current deferred tax liability
                            
                            
                            (24,602
                            )
                            
                            
                            (39,766
                            )Net
      non current deferred tax liability
                            
                            $
                            (5,413
                            )
                            
                            $
                            (8,217
                            )
 
 SFAS No.
109 requires that a net deferred tax asset be reduced by a valuation allowance
if, based on the weight of available evidence, it is more likely than not that
some portion or all of the net deferred tax asset will not be realized. Due to
the Company’s recurring tax losses and only recent history of generating limited
amounts of taxable income, a valuation allowance of $121.9 million has been
established.  Included in deferred tax assets at December 31, 2008 are
federal NOLs of $193.2 million ($70.8 million tax-effected).  These
NOLs expire between 2009 and 2028.  In 2008, NOLs of $2.9 million
expired.  Management performs a periodic evaluation of deferred tax
assets and will adjust the valuation allowance as circumstances warrant. Also,
included in deferred income tax assets is a capital loss carryforward of $2.2
million, and tax credit carryforwards of $2.6 million. The net current deferred
tax asset is expected to be realizable from the reversal of offsetting temporary
differences.
  Upon its
emergence from bankruptcy on July 29, 2005, the Company experienced an ownership
change as defined by Section 382 of the Internal Revenue Code, which imposes
annual limitations on the utilization of net operating carryforwards post
ownership change. The Company believes it qualifies for the bankruptcy exception
to the general Section 382 limitations.  Under this exception, the
annual limitation imposed by Section 382 resulting from an ownership change will
not apply; instead the NOLs must be reduced by certain interest expense paid to
creditors who became stockholders as a result of the bankruptcy reorganization.
Thus, the Company’s NOLs of $193.2 million as of December 31, 2008 include a
reduction of $31.0 million ($10.8 million tax-effect).
  76
 Table of Contents
  As of
December 31, 2008, the Company has provided deferred income taxes on $3.1
million of undistributed earnings of foreign subsidiaries.  In
addition, there were approximately $11.5 million of undistributed earnings of
foreign subsidiaries that are deemed to be permanently reinvested, and thus, no
deferred income taxes have been provided on these earnings.
  Total
federal, state and foreign income taxes paid in 2008 and 2007 were $4.2 million
and $3.2 million, respectively.
  The
provision for income taxes differs from the amount of income tax determined by
applying the applicable U.S. statutory federal income tax rate to pretax income
as follows:
  Year
      Ended December 312008
                        
                        
                        2007(in
      thousands)Income
      (loss) before income taxes
                        
                        $
                        4,381
                        
                        
                        $
                        (18,933
                        )Tax
      benefit at statutory rate
                        
                        $
                        1,533
                        
                        
                        $
                        (6,627
                        )Increase
      (decrease)  in tax due to:Foreign
      dividend income
                        
                        
                        2,485
                        
                        
                        
                        510Incentive
      stock options granted
                        
                        
                        174
                        
                        
                        
                        427State
      income tax, net of federal effect
                        
                        
                        712
                        
                        
                        
                        232Increase
      (decrease) in valuation allowance
                        
                        
                        (4,169
                        )
                        
                        
                        5,499Increase
      (decrease) in liability for uncertain tax positions
                        
                        
                        (830
                        )
                        
                        
                        33Expiration
      of net operating loss carryforward
                        
                        
                        1,026
                        
                        
                        
                        1,018Net
      effect of foreign tax rate
                        
                        
                        185
                        
                        
                        
                        144Other,
      net
                        
                        
                        254
                        
                        
                        
                        602Tax
      provision
                        
                        $
                        1,370
                        
                        
                        $
                        1,838
  In June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” an Interpretation of FASB Statement 109 (“FIN 48”), which
clarifies the accounting for uncertainty in tax positions.  FIN 48
provides that the tax effects from an uncertain tax position can be recognized
in the financial statements, only if the position is more likely than not of
being sustained on audit, based on the technical merits of the position. The
Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the
implementation of FIN 48, an increase in the liability for unrecognized income
tax benefits of $1.2 million was recognized, and accordingly, an adjustment to
opening retained earnings was recorded. At the adoption date of January 1, 2007,
the Company had $2.7 million of unrecognized tax benefits, all of which would
affect its effective tax rate if recognized. At December 31, 2008 and 2007, the
Company had $2.1 million and $3.1 million of unrecognized tax benefits,
respectively. The change in the amount of unrecognized tax benefits in 2008 and
2007 was as follows:
  77
 Table of Contents
  Year
      Ended December 31(in
      thousands)
                          
                          2008
                          
                          
                          2007Beginning
      balance/Adoption of FIN 48 in 2007
                          
                          $
                          3,082
                          
                          
                          $
                          2,735Acquisitions
                          
                          
                          -
                          
                          
                          
                          313Additions
      for tax positions related to current year
                          
                          
                          510
                          
                          
                          
                          366Additions
      due to interest accrued
                          
                          
                          119
                          
                          
                          
                          166Reductions
      for tax positions of prior years:Due
      to settlement of audit examinations
                          
                          
                          (986
                          )
                          
                          
                          -Due
      to lapsed statutes of limitations
                          
                          
                          (598
                          )
                          
                          
                          (498
                          )Ending
      balance
                          
                          $
                          2,127
                          
                          
                          $
                          3,082
 
 The
Company recognizes interest and penalties related to uncertain tax positions in
income tax expense. As of December 31, 2008, approximately $0.4 million of
interest related to uncertain tax positions is accrued. It is reasonably
possible that the total amount of unrecognized tax benefits will decrease by as
much as $0.3 million during the next twelve months as a result of the lapse of
the applicable statutes of limitations in certain taxing
jurisdictions.  For federal income tax purposes, the statute of
limitations for audit by the IRS is open for years 2005 through 2008. In
addition, NOLs generated in prior years are subject to examination and potential
adjustment by the IRS upon their utilization in future years’ tax
returns.
  Note
8 – Inventories
  December
      31,2008
                    
                    
                    2007(in
      thousands)Finished
      products
                    
                    $
                    35,780
                    
                    
                    $
                    38,468In-process
                    
                    
                    13,426
                    
                    
                    
                    15,547Raw
      materials
                    
                    
                    24,940
                    
                    
                    
                    25,257Fine
      and fabricated precious metal in various stages of
    completion
                    
                    
                    2,247
                    
                    
                    
                    9,48676,393
                    
                    
                    
                    88,758LIFO
      reserve
                    
                    
                    (1,123
                    )
                    
                    
                    (5,049
                    )$
                    75,270
                    
                    
                    $
                    83,709
 
 Fine and Fabricated Precious
Metal Inventory
  In order
to produce certain of its products, the Company purchases, maintains and
utilizes precious metal inventory. H&H enters into commodity futures and
forwards contracts on precious metal that are subject to market fluctuations in
order to economically hedge its precious metal inventory against price
fluctuations.  As these derivatives are not designated as accounting
hedges under SFAS No. 133, they are accounted for as derivatives with no hedge
designation.  Accordingly, the Company recognizes realized and
unrealized gains and losses on the derivative instruments related to precious
metal.  Such realized and unrealized gains and losses are recorded
incurrent period
earnings as other income or expense in the Company’s consolidated statement of
operations. Realized and unrealized gains and losses for derivatives in 2008 and
2007 were losses of $1.4 million and $1.9 million, respectively.  In
addition, the Company records its precious metal inventory at LIFO cost, subject
to lower of cost or market with any adjustments recorded through cost of goods
sold.  The market value of the precious metal inventory exceeded LIFO
value cost by $1.1 million and $5.0 million at December 31, 2008 and December
31, 2007, respectively.
  Certain
customers and suppliers of H&H choose to do business on a “toll” basis, and
furnish precious metal to H&H for return in fabricated form (customer metal)
or for purchase from or return to the supplier. When the customer metal is
returned in fabricated form, the customer is charged a fabrication charge. The
value of this customer metal is not included in the Company’s balance
sheet.  In 2007, a subsidiary of H&H received 500,000 troy ounces
of silver from a single customer under an unallocated pool account agreement.
Such agreement is cancelable by the customer upon six months
notice.  Because of a reduction in its operating needs as well as a
result of this agreement, the quantity of silver owned by the Company declined
by 690,186 troy ounces in 2007, and the Company recorded $4.7 million of profit
arising from the liquidation of LIFO inventory.
  78
 Table of Contents
  During
2008, the Company’s precious metal inventory declined primarily from higher
utilization of customer metal in its production processes, replacing the need to
purchase its own inventory, as well as a companywide emphasis on Lean
Manufacturing and inventory management.  Accordingly, the Company
experienced a liquidation of its precious metal inventory that is accounted for
under the LIFO method.  Operating income for 2008 includes a $3.9
million credit to cost of goods sold from the liquidation of precious metal
inventories valued at LIFO.  As of December 31, 2008, H&H held
customer metal in the following quantities:  741,046 ounces of silver,
1,492 ounces of gold, and 1,391 ounces of palladium.  As of December
31, 2008, the Company has a liability of $1.1 million recorded with respect to
its liability for customer metal subject to pool account
agreements.
  Supplemental
      inventory information:
                        
                        December
      31,2008
                        
                        
                        2007(in
      thousands, except per ounce)Precious
      metals stated at LIFO cost
                        
                        $
                        1,124
                        
                        
                        $
                        4,436Market
      value per ounce:Silver
                        
                        $
                        11.30
                        
                        
                        $
                        14.81Gold
                        
                        $
                        883.00
                        
                        
                        $
                        834.70Palladium
                        
                        $
                        185.00
                        
                        
                        $
                        364.00
  Note
9 – Property, Plant & Equipment
  December
      31,2008
                        
                        
                        2007(in
      thousands)Land
                        
                        $
                        9,949
                        
                        
                        $
                        14,209Buildings,
      machinery and equipment
                        
                        
                        183,219
                        
                        
                        
                        186,411Construction
      in progress
                        
                        
                        1,653
                        
                        
                        
                        3,189194,821
                        
                        
                        
                        203,809Accumulated
      depreciation and amortization
                        
                        
                        92,313
                        
                        
                        
                        79,473$
                        102,508
                        
                        
                        $
                        124,336
  The
decrease in the amount of Property, Plant and Equipment during 2008 was
principally due to the long-lived asset impairment charges totaling $8.3 million
discussed in Note 4 to the Consolidated Financial Statements, and a sale of one
of the Company’s operating facilities located in Rancho Cucamonga,
California.  Such facility was leased back under a 15 year lease
agreement.
  Depreciation
expense for the years 2008 and 2007 was $17.9 million and $15.9 million,
respectively.
  Note
10 – Goodwill and Other Intangibles
  The
changes in the carrying amount of goodwill by reportable segment for the years
ended December 31, 2007 and 2008 were as follows:
  79
 Table of Contents
  ArlonPrecious
                            
                            
                            
                            
                            
                            Engineered
                            
                            
                            ElectronicMetal
                            
                            
                            Tubing
                            
                            
                            Materials
                            
                            
                            Materials
                            
                            
                            Total(in
      thousands)Balance
      as of January 1, 2007
                            
                            $
                            -
                            
                            
                            $
                            1,895
                            
                            
                            $
                            51,135
                            
                            
                            $
                            -
                            
                            
                            $
                            53,030Acquisitions
                            
                            
                            1,005
                            
                            
                            
                            -
                            
                            
                            
                            97
                            
                            
                            
                            10,185
                            
                            
                            
                            11,287Balance
      at December 31, 2007
                            
                            
                            1,005
                            
                            
                            
                            1,895
                            
                            
                            
                            51,232
                            
                            
                            
                            10,185
                            
                            
                            
                            64,317Acquisitions/Adjustments
                            
                            
                            501
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            252
                            
                            
                            
                            753Balance
      at December 31, 2008
                            
                            $
                            1,506
                            
                            
                            $
                            1,895
                            
                            
                            $
                            51,232
                            
                            
                            $
                            10,437
                            
                            
                            $
                            65,070
  The
Company conducted the required annual goodwill impairment reviews in 2008 and
2007, and computed updated valuations for each reporting unit using a discounted
cash flow approach and market approach.  Based on the results of these
reviews, there was no goodwill impairment in 2008 or 2007.
  Other
intangible assets as of December 31, 2008 and 2007 consisted of:
  December
      31,2008
                            
                            
                            2007(in
      thousands)Products
      and customer relationships
                            
                            $
                            34,082
                            
                            
                            $
                            34,082Trademark/Brand
      name
                            
                            
                            3,958
                            
                            
                            
                            3,958Patents
      and patent applications
                            
                            
                            2,361
                            
                            
                            
                            2,296Non-compete
      agreements
                            
                            
                            756
                            
                            
                            
                            756Other
                            
                            
                            1,548
                            
                            
                            
                            1,54842,705
                            
                            
                            
                            42,640Accumulated
      amortization
                            
                            
                            5,740
                            
                            
                            
                            2,748Intangible
      assets, net
                            
                            $
                            36,965
                            
                            
                            $
                            39,892
  Amortization
expense in 2008 and 2007 totaled $3.0 million and $2.3 million, respectively,
excluding the $1.8 million of acquired research and development costs and
backlog written off in connection with the Bairnco Acquisition.The
estimated amortization expense for each of the five succeeding years and
thereafter is as follows:
  Products
      and
                                
                                
                                
                                
                                
                                Patents
      andCustomer
                                
                                
                                
                                
                                
                                Patent
                                
                                
                                Non-CompeteRelationships
                                
                                
                                Trademarks
                                
                                
                                Applications
                                
                                
                                Agreements
                                
                                
                                Other
                                
                                
                                Total(in
      thousands)2009
                                
                                $
                                2,168
                                
                                
                                $
                                254
                                
                                
                                $
                                183
                                
                                
                                $
                                114
                                
                                
                                $
                                232
                                
                                
                                $
                                2,9512010
                                
                                
                                2,168
                                
                                
                                
                                254
                                
                                
                                
                                183
                                
                                
                                
                                114
                                
                                
                                
                                232
                                
                                
                                
                                2,9512011
                                
                                
                                2,168
                                
                                
                                
                                254
                                
                                
                                
                                183
                                
                                
                                
                                107
                                
                                
                                
                                232
                                
                                
                                
                                2,9442012
                                
                                
                                2,168
                                
                                
                                
                                254
                                
                                
                                
                                167
                                
                                
                                
                                73
                                
                                
                                
                                102
                                
                                
                                
                                2,7642013
                                
                                
                                2,168
                                
                                
                                
                                254
                                
                                
                                
                                164
                                
                                
                                
                                43
                                
                                
                                
                                65
                                
                                
                                
                                2,694Thereafter
                                
                                
                                19,311
                                
                                
                                
                                2,218
                                
                                
                                
                                910
                                
                                
                                
                                57
                                
                                
                                
                                54
                                
                                
                                
                                22,55030,151
                                
                                
                                
                                3,488
                                
                                
                                
                                1,790
                                
                                
                                
                                508
                                
                                
                                
                                917
                                
                                
                                
                                36,854Indefinite
      life
                                
                                
                                
                                
                                
                                
                                111
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                111$
                                30,151
                                
                                
                                $
                                3,599
                                
                                
                                $
                                1,790
                                
                                
                                $
                                508
                                
                                
                                $
                                917
                                
                                
                                $
                                36,965
  80
 Table of Contents
  Note
11 – Debt
  Long-term
debt at December 31, 2008 and 2007 is as follows:
  Year
      Ended December 31,(in
      thousands)
                            
                            2008
                            
                            
                            2007Long-term Debt to Non Related
      Party:H&H
      Wachovia Facility term loans
                            
                            $
                            54,670
                            
                            
                            $
                            57,019Other
      H&H debt-domestic
                            
                            
                            6,580
                            
                            
                            
                            6,724Other
      H&H debt-foreign
                            
                            
                            4,661
                            
                            
                            
                            5,420Bairnco
      Wells Fargo Facility term loan
                            
                            
                            6,466
                            
                            
                            
                            27,067Bairnco
      Ableco Facility term loan
                            
                            
                            45,000
                            
                            
                            
                            48,000Bairnco
      foreign loan facilities
                            
                            
                            4,753
                            
                            
                            
                            4,961Total
      debt to non related party
                            
                            
                            122,130
                            
                            
                            
                            149,191Less
      portion due within one year
                            
                            
                            12,956
                            
                            
                            
                            7,513Long-term
      debt to non related party
                            
                            
                            109,174
                            
                            
                            
                            141,678Long-term Debt to Related
      Party:H&H
      Term B Loan
                            
                            
                            44,098
                            
                            
                            
                            104,165Bairnco
      Subordinated Debt Credit Agreement
                            
                            
                            10,000
                            
                            
                            
                            33,957WHX
      Subordinated Loan Agreement
                            
                            
                            -
                            
                            
                            
                            16,779Long-term
      debt to related party
                            
                            
                            54,098
                            
                            
                            
                            154,901Total
      long-term debt
                            
                            $
                            163,272
                            
                            
                            $
                            296,579
 
 Long term
debt as of December 31, 2008 matures in each of the next five years as
follows:
  Long-term Debt Maturity(in
      thousands)
                          
                          Total
                          
                          
                          2009
                          
                          
                          2010
                          
                          
                          2011
                          
                          
                          2012
                          
                          
                          2013Long-term
      debt to non-related party
                          
                          $
                          122,130
                          
                          
                          $
                          12,956
                          
                          
                          $
                          11,589
                          
                          
                          $
                          52,585
                          
                          
                          $
                          45,000
                          
                          
                          $
                          -Long
      term debt to related party
                          
                          
                          54,098
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          44,098
                          
                          
                          
                          -
                          
                          
                          
                          10,000Total
      Debt
                          
                          $
                          176,228
                          
                          
                          $
                          12,956
                          
                          
                          $
                          11,589
                          
                          
                          $
                          96,683
                          
                          
                          $
                          45,000
                          
                          
                          $
                          10,000
  Credit
Facilities
  Handy &
Harman
  H&H’s
financing agreements include the Wachovia Facilities, which provide for
revolving credit and term loan facilities, and the Term B Loan with SP
II.
  As of
December 31, 2008, the Wachovia Facilities provided for maximum borrowings
of $126.3 million, consisting of a revolving credit facility of up to $83
million of borrowings dependent on the levels of and collateralized by eligible
accounts receivable and inventory, and reduced by the amount of certain term and
supplemental term loans outstanding to Wachovia. In addition, the Wachovia
Facilities also include term loans funded by Ableco ($43.3 million as of
December 31, 2008 and $40.0 million as of March 20, 2009). The term loans
are collateralized by eligible equipment and real estate. The revolving credit
facility and the term loans payable to Wachovia bear interest at LIBOR, plus
applicable margins of between 2.00% and 2.50%, or the U.S. Base rate (Prime
rate) plus 0.25% to 0.75%. The Wachovia Facilities also include a provision for
Supplemental Term Loans, which bear interest at LIBOR plus applicable margins of
between 4.00% and 4.50%, or the U.S. Base rate (Prime rate) plus 2.25% to
2.75%.
  The term
loans payable to Ableco bear interest at LIBOR, plus applicable margins of
between 4.75% and 5.50%, or the U.S. Base rate (Prime rate) plus 2.00% to
2.75%.  The applicable margin for the revolving credit facility and
the term loans payable to Wachovia and Ableco are dependent on H&H’s
Quarterly Average Excess Availability for the prior quarter, as that term is
defined in the agreements.  Borrowings under the Wachovia Facilities
are collateralized by first priority security interests in and liens upon all
present and future stock and assets of H&H and its subsidiaries, including
all contract rights, deposit accounts, investment property, inventory,
equipment, real property, and all products and proceeds
thereof.  Principal payments for the term loans under the Wachovia
Facilities are due in monthly installments of $0.7 million. The Wachovia
Facilities contain affirmative, negative, and financial covenants (including,
EBITDA shall not be less than $30.0 million, the Senior Leverage Ratio shall not
be greater than 4.125:1.0, Capital Expenditures shall not be made in excess of
$12.0 million in any 12 month period, as such terms are defined therein), and
cash distributions that can be made to WHX are restricted.  As of
December 31, 2008, the Wachovia Facilities were scheduled to mature on June 30,
2009.  The revolving and term loans under the Wachovia Facilities bore
interest at rates ranging from 2.58% to 6.25% as of December 31,
2008.
  81
 Table of Contents
  As of
December 31, 2008, the Term B Loan with SP II was scheduled to mature on June
30, 2009 and provided for annual payments based on 40% of excess cash flow as
defined in the agreement (no principal payments are currently
payable).  Interest accrues monthly at the Prime Rate plus 6%, and at
no time shall the Prime Rate (as that term is defined in the agreement) be below
4.0%. Pursuant to the terms of a subordination agreement between SP II and
Wachovia, H&H’s interest payable to Steel is accrued but not
paid.  The Term B Loan has a second priority security interest in and
lien on all assets of H&H, subject to the prior lien of the Wachovia
Facilities and H&H’s $7.0 million guaranty and security interest for the
benefit of Ableco as agent of the Bairnco indebtedness. In addition, H&H has
pledged a portion of all outstanding stock of Indiana Tube Danmark A/S, a Danish
corporation, and Protechno, S.A., a French corporation, both of which are
indirect wholly-owned subsidiaries of H&H. The Term B Loan contains
affirmative, negative, and financial covenants (including, EBITDA shall not be
less than $30.0 million, the Senior Leverage Ratio shall not be greater than
4.125:1.0, Capital Expenditures shall not be made in excess of $12.0 million in
any 12 month period, as such terms are defined therein), and cash distributions
that can be made to WHX are restricted. The Term B Loan also contains
cross-default provisions with the Wachovia Facilities.  The Term B
Loan bore interest at 10.00% as of December 31, 2008.
  On
January 22, 2008, H&H and certain of its subsidiaries amended its credit
facilities to, effective January 11, 2008, among other things, (i) provide for a
temporary reduction in the reserves required under the Wachovia Facilities from
$2.5 million to $1.0 million until April 15, 2008, and (ii) revise the criteria
of Foreign Accounts, as that term is defined in the agreement, to be included in
the calculation of availability.
  On
February 14, 2008, H&H and certain of its subsidiaries amended its credit
facilities to, among other things, (i) reset the levels of certain financial
covenants, (ii) allow for the prepayment of the Term B Loan with SP II in the
amount of and upon receipt by H&H of a capital or debt infusion from the
Company from proceeds of the Rights Offering, less $5.0 million which shall be
used to pay down the revolver under the Wachovia Facilities, (iii) extend the
maturity date to June 30, 2009, (iv) consent to the terms and conditions of the
H&H Security Agreement and the H&H Guaranty, both terms as defined below
in the description of the February 14, 2008 amendment by Bairnco to its credit
agreements, and (v) amend applicable interest rates.  In addition, the
Wachovia Facilities were also amended to provide for an additional term loan of
$4.0 million to H&H and its subsidiaries.
  On
September 29, 2008, H&H and certain of H&H’s subsidiaries amended the
Wachovia Facilities, effective as of September 26, 2008.  The Wachovia
Facilities were amended to, among other things, eliminate the requirement that
the proceeds of WHX’s Rights Offering be paid to the lenders of the Wachovia
Facilities.  In connection with the amendment to the Wachovia
Facilities, WHX entered into a letter agreement with Ableco pursuant to which
WHX agreed that, within 10 days after the effective date of the amendment, an
additional $5,000,000 from the proceeds of WHX’s Rights Offering shall be either
(a) remitted to Bairnco, and simultaneously used by Bairnco to prepay its term
loans with either Wells Fargo Foothill, Inc. or Ableco or (b) remitted to
H&H and simultaneously used by H&H to permanently prepay term loans
under the Wachovia Facilities.
  On
October 29, 2008, H&H and certain of its subsidiaries amended each of the
Wachovia Facilities and the Term B Loan to, among other things, provide for a
reduction in the H&H Guaranty from up to $10 million to up to $7
million.
  82
 Table of Contents
  On March
12, 2009, H&H and almost all of its subsidiaries amended each of the
Wachovia Facilities and the Term B Loan to, among other things, (i) extend the
term of the loans for two years until June 30, 2011, (ii) increase certain
interest rates, (iii) reset the levels of certain financial covenants, (iv)
permit the disposition and/or cessation of operations of certain of H&H’s
direct and indirect subsidiaries (v) provide for an increase in the aggregate
amount of unsecured loans, distributions or other advances from H&H to WHX
for general business purposes from up to $7.0 million to up to $12.0 million,
subject to certain limitations, and (vi) provide for an increase in the existing
limited guaranty by H&H from up to $7.0 million to up to $12.0
million.  In addition, the Wachovia Facilities were also amended to,
among other things, reduce the amount of the credit facility from $125.3 million
to $115.0 million including decreasing the revolving credit facility from $83.0
million to $75.0 million.  The revolving credit facility and the term
loans payable to Wachovia now bear interest at LIBOR, which shall at no time be
less than 1.00%, plus applicable margins of between 2.75% and 3.75%, or the U.S.
Base rate (Prime rate, which shall at no time be less than 3.00%) plus 1.00% to
2.00%. The term loans payable to Ableco now bear interest at LIBOR, which shall
at no time be less than 3.25%, plus an applicable margin of 11.75%, or the U.S.
Base rate (Prime rate, which shall at no time be less than 5.00%) plus 10.00%.
The negative financial covenants in both the Wachovia Facilities and the Ableco
Facility were amended as follows: EBITDA shall not be less than $32.0 million
increasing at a rate of $0.5 million per month from May 2009 through December
2009 and $36.0 million thereafter, the Senior Leverage Ratio shall not be
greater than 3.00:1.0, Capital Expenditures shall not be made in excess of $12.5
million in any 12 month period, as such terms are defined therein, and cash
distributions that can be made to WHX are restricted.  The interest
rate under the Term B Loan with SP II is now equal to the Prime Rate plus 14%,
and at no time shall the Prime Rate (as that term is defined in the agreement)
be below 4.0%.
  Other Handy & Harman
Debt
  On
January 24, 2006, H&H’s wholly-owned subsidiary, OMG, Inc., entered into an
$8.0 million five-year loan and security agreement with Sovereign
Bank.  The loan is collateralized by a mortgage on OMG, Inc.’s real
property.  Principal is payable monthly in installments of
$12,000.  The loan bears interest at a variable rate equal to Libor
plus 2.25% (4.1% as of December 31, 2008).
  In March
2004, H&H’s wholly owned Danish subsidiary entered into a financing
agreement with a Danish bank that includes a revolving credit facility and term
loans.  At December 31, 2008 and 2007, there was approximately $4.7
million and $5.4 million, respectively, outstanding under the term loans. At
December 31, 2008 and 2007, there was no debt outstanding under the revolving
credit facility. The Danish subsidiary economically hedges its exposure on this
variable interest rate debt.
  Bairnco
  Bairnco’s
financing agreements include the Wells Fargo Facility, which provides for
revolving credit and term loan facilities, the Ableco Facility and the
Subordinated Debt Credit Agreement with SP II, both of which are also term loan
facilities.
  The Wells
Fargo Facility provides for a revolving credit facility in an aggregate
principal amount not to exceed $30.0 million and a term loan facility of $28.0
million.  As of December 31, 2008, borrowings under the Wells Fargo
Facility bore interest, (A) in the case of base rate loans, at 0.25% above the
Wells Fargo Prime rate, and (B) in the case of LIBOR rate loans, at 2.00% for
advances and 2.50% for term loans, as applicable, above the LIBOR rate. The
revolving and term loans under the Wells Fargo Facility bore interest at rates
ranging from 2.5% to 3.5% as of December 31, 2008. Obligations under the Wells
Fargo Facility are guaranteed by certain of Bairnco’s subsidiaries, and secured
by a first priority lien on all assets of Bairnco and such subsidiaries.
Principal payments for the term loans under the Wells Fargo Facility are due in
monthly installments of $0.2 million. The scheduled maturity date of the
indebtedness under the Wells Fargo Facility is July 17, 2012.
  The
Ableco Facility provides for a term loan facility of $48.0
million.  As of December 31, 2008, borrowings under the Ableco
Facility bore interest, in the case of base rate loans, at 3.50% above the rate
of interest publicly announced by JPMorgan Chase Bank in New York, New York as
its reference rate, base rate or prime rate, and, in the case of LIBOR rate
loans, at 6.00 % above the LIBOR rate. The Ableco Facility term loan bore
interest at 10.55% as of December 31, 2008. Obligations under the Ableco
Facility are guaranteed by Bairnco and certain of its subsidiaries, and secured
by a second priority lien on all of their assets. Principal payments for the
term loans under the Ableco Facility are due on the maturity date, which is July
17, 2012.
  83
 Table of Contents
  The Wells
Fargo Facility and the Ableco Facility contain affirmative, negative, and
financial covenants (including, as of December 31, 2008 and for the applicable
periods set forth therein, permitting TTM EBITDA to be less than $14.0 million
to $18.0 million, having a Leverage Ratio of more than 6.74:1.0 to 5.0:1.0,
having a Fixed Charge Coverage Ratio of less than 0.75:1.0 to 1.0:1.0 and making
Capital Expenditures in excess of $9.0 million in any fiscal year, as such terms
are defined therein).
  The
Subordinated Debt Credit Agreement with SP II provides for a term loan
facility.  The original principal of approximately $31.8 million was
reduced to $10.0 million with proceeds from WHX’s Rights
Offering.  All borrowings under the Subordinated Debt Credit Agreement
bear interest at 6.75% above the rate of interest publicly announced by JPMorgan
Chase Bank in New York, New York as its reference rate, base rate or prime rate.
The interest rate under the Subordinated Debt Credit Agreement as of December
31, 2008 was 10.37%. Principal, interest and all fees payable under the
Subordinated Debt Credit Agreement are due and payable on the scheduled maturity
date, January 17, 2013. Obligations under the Subordinated Debt Credit Agreement
are guaranteed by Bairnco and certain of its subsidiaries and collateralized by
a subordinated priority lien on their assets.  The Subordinated Debt
Credit Agreement contains customary representations, warranties, affirmative and
negative covenants, events of default and indemnification
provisions.
  On
February 14, 2008, Bairnco and certain of its subsidiaries amended the Wells
Fargo Facility and the Ableco Facility to, among other things, reset the levels
of certain financial covenants.  The Ableco Facility was also amended
to provide for, among other things, a limited guaranty by H&H of up to $10
million, secured by a second lien on all of the assets of H&H pursuant to
the terms and conditions of the H&H Security Agreement and the H&H
Guaranty.   In addition, each of the Wells Fargo Facility and the
Ableco Facility was also amended to, among other things, provide for either (i)
the Company to invest $10 million from the proceeds of the Rights Offering by
March 31, 2008 in Bairnco and for such  proceeds to be used to prepay
at least $10 million under the Wells Fargo term loan, (ii) SP II to issue a
limited $10 million guaranty, or (iii) a capital or debt infusion of $10 million
by either SP II or WHX into Bairnco, or any combination of the
foregoing.
  On June
30, 2008, Arlon Inc., a wholly owned subsidiary of Bairnco, (i) sold certain
property in Rancho Cucamonga, California for $8.5 million and (ii) leased back
such property under a 15 year lease term with two 5 year renewal
options.  Bairnco agreed to guarantee the payment and performance
under the lease. The proceeds from the sale were applied to repay a portion of
the term loan under the Wells Fargo Facility. On June 30, 2008, Bairnco amended
the Wells Fargo Facility and its Ableco Facility to permit these transactions,
the sale of certain other real property and related amendments.
  On
October 29, 2008, Bairnco and certain of its subsidiaries amended the Ableco
Facility and the Wells Fargo Facility.  Each of the Wells Fargo
Facility and Ableco Facility was amended to, among other things, (i) reset the
levels of certain financial covenants, (ii) provide for the payment from the
Rights Offering of $8.2 million to reduce the term loan pursuant to the Wells
Fargo Facility and terminate the Steel Partners Working Capital Guaranty, (iii)
provide for the payment from the Rights Offering of $3.0 million to reduce the
outstanding term loan pursuant to the Ableco Facility and $2.0 million to reduce
the outstanding revolving loan pursuant to the Wells Fargo Facility, (iv) permit
cash interest payments under Bairnco’s Subordinated Debt Credit Agreement with
SP II subject to certain conditions, and (v) permit the assignment of Bairnco’s
obligations under the Subordinated Debt Credit Agreement to WHX.
  The
Ableco Facility was also amended to provide for, among other things, a reduction
in the H&H Guaranty from up to $10 million to up to $7 million, secured by a
second lien on all of the assets of H&H pursuant to the terms and conditions
of the H&H Security Agreement and the H&H Guaranty.
  On March
12, 2009, Bairnco and certain of its subsidiaries amended the Wells Fargo
Facility and the Ableco Facility to, among other things, (i) increase the
interest rates and (ii) reset the levels of certain financial
covenants.  Subsequent to the March 12, 2009 amendments, borrowings
under the Wells Fargo Facility bear interest, (A) in the case of base rate
Advances at 0.75% above the Wells Fargo Prime rate and base rate Term loans at
1.25% above the Wells Fargo Prime rate, and (B) in the case of LIBOR rate loans,
at rates of 3.00% for Advances or 3.50% for Term loans, as applicable, above the
LIBOR rate.  Subsequent to the March 12, 2009 amendments, borrowings
under the Ableco Facility bear interest, in the case of base rate loans, at
6.50% above the rate of interest publicly announced by JPMorgan Chase Bank in
New York, New York as its reference rate, base rate or prime rate, and, in the
case of LIBOR rate loans, at 9.00 % above the LIBOR rate.  The
negative financial covenants under both the Wells Fargo Facility and the Ableco
Facility were amended for the applicable periods set forth therein as
follows:  permitting TTM EBITDA to be less than $13.0 million to $14.0
million, having a Leverage Ratio of more than 6.74:1.0 to 5.0:1.0, having a
Fixed Charge Coverage Ratio of less than 0.75:1.0 to 1.0:1.0 and making Capital
Expenditures in excess of $9.0 million in any fiscal year, as such terms are
defined therein. The Ableco Facility was also amended to provide for, among
other things, an increase in the existing limited guaranty by H&H from up to
$7 million to up to $12 million, secured by a second lien on all of the assets
of H&H pursuant to the terms and conditions of the H&H Security
Agreement and the H&H Guaranty.  The Subordinated Debt Credit
Agreement with SP II was also amended to, among other things, increase the
interest rate to an applicable interest margin of 9.50% above the rate of
interest publicly announced by JPMorgan Chase Bank in New York, New York as its
reference rate, base rate or prime rate.
  84
 Table of Contents
  The
Subordinated Loan Agreement provided for a subordinated term loan of $15 million
from SP II to WHX in connection with the Bairnco Acquisition, and was unsecured
at the WHX level.  Borrowings under the Subordinated Loan Agreement
bore pay-in-kind interest at a rate per annum equal to the prime rate of JP
Morgan Chase plus 7.75%, with a minimum interest rate of 16% per annum and a
maximum interest rate of 19% per annum.  Obligations under the
Subordinated Loan Agreement were guaranteed by Bairnco and certain of its
subsidiaries and secured by a junior lien on the assets of Bairnco and certain
of its subsidiaries and capital stock of certain of Bairnco’s subsidiaries. The
Subordinated Loan Agreement was fully paid in September 2008 with proceeds from
WHX’s Rights Offering.
  Approximately
$7.3 million of irrevocable standby letters of credit were outstanding under the
Wells Fargo Facility, which are not reflected in the accompanying consolidated
financial statements. $1.7 million of the letters of credit guarantee various
insurance activities and $5.6 million represents letters of credit securing
borrowings for the China foreign loan facility. These letters of credit mature
at various dates and have automatic renewal provisions subject to prior notice
of cancellation.
  The China
foreign loan facility reflects borrowing by Bairnco’s Chinese facilities through
Bank of America, Shanghai, China, which is secured by US dollar denominated
letters of credit. Interest rates on amounts borrowed under the China foreign
loan facility averaged 8.4% at December 31, 2008.
  Interest
Cost
  Cash
interest paid in 2008 was $54.6 million, including $9.3 million of “pay in kind”
interest and $28.1 million of other interest that had accrued to SP II through
the date of the Rights Offering and was paid with proceeds from the Rights
Offering.  Cash interest paid in 2007 was $23.2
million.  The Company has not capitalized any interest costs in 2008
or 2007.
  As of
December 31, 2008, the revolving and term loans under the Wachovia Facilities
bore interest at rates ranging from 2.58% to 6.25%; and the Term B Loan bore
interest at 10.0%.  The Wells Fargo Facility bore interest at rates
ranging from 2.5% to 3.5% as of December 31, 2008, and the Ableco Facility bore
interest at 10.55%.  The Subordinated Debt Credit Agreement bore
interest at 10.37% as of December 31, 2008.  Weighted average interest
rates for the years ended December 31, 2008 and 2007 were 9.88% and 11.86%,
respectively.  Such interest rates do not reflect the higher interest
margins that become effective with the March 12, 2009 amendments to the
Company’s credit agreements that are described above.
  Note
12 – Earnings Per Share
  The
computation of basic earnings or loss per common share is based upon the
weighted average number of shares of Common Stock
outstanding.  Diluted earnings per share gives effect to dilutive
potential common shares outstanding during the period.  The Company
has potentially dilutive common share equivalents including stock options and
other stock-based incentive compensation arrangements  (See Note
14-Stock-Based Compensation).
  85
 Table of Contents
  On
November 24, 2008, the Company effected a reverse split of its outstanding
common stock by a ratio of 1-for-10.  The earnings per share
calculations below and on the Consolidated Statements of Operations reflect the
reduction in the number of shares outstanding on a retroactive basis as if the
Reverse Stock Split had occurred on January 1, 2007.
  No common
share equivalents were dilutive in 2008 since the exercise price of the
Company’s warrants (prior to expiration) and its stock options and other
stock-based incentive compensation arrangements was in excess of the average
market price of the Company’s common stock.  No common share
equivalents were dilutive in 2007 because the Company reported a net loss and
therefore, any outstanding warrants and stock options would have had an
anti-dilutive effect.  As of December 31, 2008, stock options for an
aggregate of 64,400 shares of common stock are excluded from the calculation of
net income per share.
  A
reconciliation of the income and shares used in the earnings per share
computations follows:
 
 Year
      ended December 31, 2008Income
      (loss)(Numerator)
                                
                                
                                Shares
                                  (Denominator)
                                
                                
                                Pre-ShareAmount(Dollars
      and shares in thousands)Net
      income
                                
                                $
                                3,011Basic
      EPS and Diluted EPSIncome applicable to common stockholders
                                
                                $
                                3,011
                                
                                
                                
                                4,001
                                
                                
                                $
                                0.75
  Year
      ended December 31, 2007Income
      (loss)(Numerator)
                  
                  
                  Shares
                    (Denominator)
                  
                  
                  Pre-ShareAmount(Dollars
      and shares in thousands)
 Net
      loss
                        
                        $
                        (20,771
                        )Basic
      EPS and Diluted EPSLoss
      applicable to common stockholders
                        
                        $
                        (20,771
                        )
                        
                        
                        1,000
                        
                        
                        $
                        (20.77
                        )
  Note
13 – Stockholders’ (Deficit) Equity
  Rights
Offering
  On
September 25, 2008, the Company completed the Rights Offering to its existing
stockholders.  The Company sold 11,178,459 shares of common stock to
existing stockholders through the exercise of rights at a subscription price of
$14.00 per share, for an aggregate purchase price of approximately $156.5
million.  SP II, the Company’s largest stockholder, subscribed for
8,630,910 shares of the Company’s common stock, for an aggregate purchase price
of approximately $120.8 million, pursuant to its basic and applicable
oversubscription privileges.  After giving effect to the Rights
Offering, SP II owns 75% of the outstanding shares of common stock of the
Company.  The Company used the proceeds of the Rights Offering to (i)
redeem preferred stock issued by a wholly-owned subsidiary of the Company, which
was held by SP II, plus accumulated dividends, together totaling $6.0 million,
(ii) repay Company indebtedness to SP II of $18.9 million, and (iii) repay
$117.6 million of indebtedness and accrued interest of certain wholly-owned
subsidiaries of the Company to SP II.  After such payments, $14.0
million remained with the Company as cash, of which $13.2 million was used to
repay additional debt of the Company on October 29, 2008.
  86
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  Authorized
and Outstanding Shares
  On
December 31, 2006, the authorized capital stock of WHX consisted of 40,000,000
shares of Common Stock, $0.01 par value, and 5,000,000 shares of Preferred
Stock.  A proposal to increase authorized Common Stock from 40,000,000
shares to 50,000,000 shares was approved by the Company’s stockholders in June
2007.  On January 31, 2008, WHX’s stockholders approved a proposal to
further increase the Company’s authorized capital stock to a total of
100,000,000 shares, consisting of 95,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock.  On September 16, 2008, WHX’s
stockholders approved a proposal to further increase the Company’s authorized
capital stock to a total of 185,000,000 shares, consisting of 180,000,000 shares
of common stock and 5,000,000 shares of Preferred Stock.  On November
24, 2008, the Company effected the Reverse Stock Split, by a ratio of
1-for-10.  To enhance comparability, unless otherwise noted, all
references to the Company’s common stock and per share amounts have been
adjusted on a retroactive basis as if the Reverse Stock Split had occurred on
January 1, 2007.
  Of the
authorized shares, no shares of Preferred Stock have been issued, and 12,178,565
shares and 1,000,050 shares of Common Stock were issued and outstanding as of
December 31, 2008 and 2007, respectively.
  Although
the Board of Directors of WHX is expressly authorized to fix the designations,
preferences and rights, limitations or restrictions of the Preferred Stock by
adoption of a Preferred Stock Designation resolution, the Board of Directors has
not yet done so.  The Common Stock of WHX has voting power, is
entitled to receive dividends when and if declared by the Board of Directors and
subject to any preferential dividend rights of any then-outstanding Preferred
Stock, and in liquidation, after distribution of the preferential amount, if
any, due to the Preferred Stockholders, are entitled to receive all the
remaining assets of the corporation.
  Warrants
  As part
of the Plan of Reorganization, on July 29, 2005 in exchange for the
extinguishment and cancellation of their stock, the Series A preferred
stockholders and Series B preferred stockholders received their pro rata share
of 800,000 shares of the new common stock of the reorganized WHX and their pro
rata share of 752,688 warrants to purchase common stock of the reorganized
company, exercisable at $11.20 per share.  The warrants expired
February 28, 2008.  As of the Effective Date, the warrants were valued
at $1.3 million using the Black-Scholes valuation method at $1.71 per
warrant.
  Accumulated
Other Comprehensive Income (Loss)
  Accumulated
other comprehensive income (loss) balances as of December 31, 2008 and 2007 were
comprised as follows:
  2008
                          
                          
                          2007(in
      thousands)Net
      actuarial losses and prior service costs and
                            credits
      (net of tax)
                          
                          $
                          (165,851
                          )
                          
                          $
                          (38,378
                          )Foreign
      currency translation adjustment
                          
                          
                          2,513
                          
                          
                          
                          5,819Valuation
      of marketable equity securities
                          
                          
                          (164
                          )
                          
                          
                          -$
                          (163,502
                          )
                          
                          $
                          (32,559
                          )
  Note
14 – Stock-Based Compensation
  Stock-based
compensation expense is recorded based on the grant-date fair value estimated in
accordance with the provisions of SFAS 123(R), “Accounting for Stock-Based
Compensation.” The Company measures stock-based compensation cost at the grant
date, based on the fair value of the award, and recognizes the expense on a
straight-line basis over the employee’s requisite service (vesting)
period.  All of the share amounts and stock option prices in this note
reflect the Reverse Stock Split as if it had been effective on January 1,
2007.
  87
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  At the
Company’s Annual Meeting of Shareholders on June 21, 2007, the Company’s
shareholders approved a proposal to adopt WHX Corporation’s 2007 Plan, and
reserved 80,000 shares of common stock under the 2007 Plan. The 2007 Plan
permits options to be granted up to a maximum contractual term of 10
years.  On July 6, 2007, stock options for an aggregate of 62,000
shares of common stock were granted under the 2007 Plan to employees and to two
outside directors of the Company, at an exercise price of $90.00 per
share.  The options are exercisable in installments as follows: half
of the options granted were exercisable immediately, one-quarter of the options
granted became exercisable on July 6, 2008 and the balance of the options become
exercisable on July 6, 2009. The options will expire on July 6,
2015.  In 2008, the Company granted options for an aggregate of 18,000
shares to four employees at an exercise price of $90.00 per
share.  The options are exercisable in installments as follows:
one-third of the options granted were exercisable immediately, one-quarter of
the options granted will become exercisable one year from the date of grant, and
the balance of the options become exercisable two years from the date of
grant.  The options will expire in 2016.
  The
Company estimated the fair value of the stock options in accordance with SFAS
No. 123(R) using a Black-Scholes option-pricing model.  The expected
average risk-free rate is based on U.S. treasury yield curve. The expected
average life represents the period of time that options granted are expected to
be outstanding.  Expected volatility is based on historical
volatilities of WHX’s post-bankruptcy common stock. The expected dividend yield
is based on historical information and management’s plan.
  Assumptions
                          2008
                          2007Risk-free
      interest rate
                          2.62%-3.22%
                          5.08%Expected
      dividend yield
                          0.00%
                          0.00%Expected
      life (in years)
                          4.5
      years
                          4.5
      yearsVolatility
                          68.4%
      - 80.9%
                          49.1%Forfeiture
      rate
                          3.0%
                          3.0%
   The
Company has recorded $0.6 million and $1.4 million of non-cash stock-based
compensation expense related to its stock options in 2008 and 2007,
respectively.
  Activity
related to the Company’s 2007 Plan was as follows:
  Options
                                        
                                        Shares
      (000's)
                                        
                                        
                                        Weighted-Average
      Exercise Price
                                        
                                        
                                        Weighted-Average
      Remaining Contractual
                                          Term
      (Years)
                                        
                                        
                                        Aggregate
      Intrinsic Value (000)Outstanding
      at December 31, 2007
                                        
                                        
                                        59
                                        
                                        
                                        $
                                        90.00
                                        
                                        
                                        
                                        7.52
                                        
                                        
                                        
                                        -Granted
                                        
                                        
                                        18
                                        
                                        
                                        $
                                        90.00
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        -Exercised
                                        
                                        
                                        -Forfeited
      or expired
                                        
                                        
                                        (13
                                        )
                                        
                                        $
                                        90.00
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        -Outstanding
      at December 31, 2008
                                        
                                        
                                        64
                                        
                                        
                                        $
                                        90.00
                                        
                                        
                                        
                                        7.25
                                        
                                        
                                        
                                        -Exercisable
      at December 31, 2008
                                        
                                        
                                        41
                                        
                                        
                                        $
                                        90.00
                                        
                                        
                                        
                                        6.90
                                        
                                        
                                        
                                        -
   The
weighted average grant-date fair value of options granted during the year was
$10.79 per share.
  88
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  Nonvested
      Shares
                                    
                                    Shares
      (000's)
                                    
                                    
                                    Fair
      ValueNonvested
      at December 31, 2007
                                    
                                    
                                    30
                                    
                                    
                                    $
                                    37.80Granted
                                    
                                    
                                    12
                                    
                                    
                                    $
                                    10.79Vested
                                    
                                    
                                    (15
                                    )
                                    
                                    $
                                    29.79Forfeited
                                    
                                    
                                    (4
                                    )
                                    
                                    $
                                    37.80Nonvested
      at December 31, 2008
                                    
                                    
                                    23
 
 As of
December 31, 2008 there was approximately $0.3 million of total unrecognized
compensation cost related to non-vested share based compensation arrangements
granted under the 2007 Plan. That cost is expected to be recognized over a
weighted-average period of 0.6 years. The total fair value of shares vested in
2008 and 2007 was $0.6 million and $1.2 million, respectively.
  On July
6, 2007, the Compensation Committee of the Board of Directors of the Company
adopted incentive arrangements for two members of the Board of Directors who are
related parties to the Company. These arrangements provide, among other things,
for each to receive a bonus equal to 10,000 multiplied by the difference of the
fair market value of the Company’s stock price and $90.00 per share.  The
bonus is payable upon the sending of a notice by either board member,
respectively.  The notice can be sent with respect to 75% of the bonus
immediately, and with respect to the remainder, at any time after July 6,
2009.  The incentive arrangements terminate July 6, 2015, to the extent not
previously received. Under SFAS 123(R), the Company is required to adjust its
obligation for the fair value of such incentive arrangements from the date of
actual grant to the latest balance sheet date and to record such incentive
arrangements as liabilities in the consolidated balance sheet. The Company has
recorded ($0.1) million and $0.2 million of non-cash compensation expense
(income) related to these incentive arrangements in 2008 and 2007,
respectively.
  Note
15 – Commitments and Contingencies
  Operating
Lease Commitments:
  The
Company leases certain facilities under non-cancelable operating lease
arrangements.  Rent expense for the Company in 2008 and 2007 was $6.9
million and $5.9 million, respectively.  Future minimum operating
lease and rental commitments under non-cancelable operating leases are as
follows (in thousands):
  Year
                    
                    Amount2009
                    
                    $
                    6,4042010
                    
                    
                    5,1662011
                    
                    
                    4,5252012
                    
                    
                    3,7052013
                    
                    
                    1,7652014
      and thereafter
                    
                    
                    7,153$
                    28,718
 
 Legal
Matters:
  HH East Parcel,
LLC.  V. Handy & Harman
  This
action arose out of a purchase and sale agreement entered into in 2003 whereby
H&H agreed to sell a portion of a commercial site in Connecticut, or the
Sold Parcel, to HH East.  On or about April 5, 2005, HH East filed a
Demand for Arbitration with the American Arbitration Association seeking legal
and equitable relief including completion of the remediation of environmental
conditions at the site in accordance with the terms of the
agreement.  An arbitration hearing was held in October 2005, pursuant
to which HH East was awarded, among other things, an amount equal to $5,000 per
day from January 1, 2005 through the date on which remediation is
completed.  As of the completion date of the remediation, April 6,
2007, the award amounted to approximately $4.0 million.  H&H
applied to the Connecticut Superior Court to have the arbitration award
vacated.  On June 26, 2006, the court issued a decision denying
H&H’s application and granting HH East’s motion to confirm the arbitration
award.  H&H appealed that decision.  On May 23, 2008,
H&H was notified that the Connecticut Supreme Court affirmed the lower court
decision.  On September 2, 2008, the parties executed a settlement
agreement pursuant to which the parties exchanged full mutual releases in
exchange for a payment by H&H to HH East of $4.9 million.  In
addition, HH East agreed to cease immediately all collection efforts and agreed
to the release of all funds subject to orders of attachment.  On
December 2, 2008, pursuant to the settlement agreement, the parties jointly
filed a satisfaction of judgment with the Connecticut Superior
Court.
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  H&H
has been working cooperatively with the CTDEP with respect to its obligations
under a consent order entered into in 1989 that applies to the Sold Parcel and a
remaining parcel that together with the Sold Parcel comprises the commercial
site discussed above.  H&H has been conducting an investigation of
the remaining parcel, and is continuing the process of evaluating various
options for its remediation of the remaining parcel.  The sale of the
Sold Parcel, which was the subject of the above-referenced litigation, triggered
statutory obligations under Connecticut law to investigate and remediate
pollution at or emanating from the Sold Parcel.  Remediation of all
soil conditions on the Sold Parcel was completed on April 6, 2007, although
H&H performed limited additional work on that site, solely in furtherance of
now concluded settlement discussions between HH East and
H&H.  Although no groundwater remediation is required, there will
be monitoring of the Sold Parcel site for several years.  On September
11, 2008, the CTDEP advised H&H that it had approved H&H’s Soil Action
Remediation Action Report, dated December 28, 2007 as amended by an addendum
letter dated July 15, 2008, thereby concluding the active remediation of the
Sold Parcel. Approximately $29.0 million was expended through December 31, 2008,
and the remaining remediation and monitoring costs are expected to approximate
$0.3 million.  H&H received reimbursement of $2.0 million from an
insurance company under a cost-cap insurance policy and is pursuing its
potential entitlement to additional insurance coverage.
  Paul E. Dixon & Dennis
C. Kelly V. Handy & Harman
  Paul
Dixon and Dennis Kelly, two former officers of H&H, or the Claimants, filed
a Statement of Claim with the American Arbitration Association, or the
Arbitration, on or about January 3, 2006.  The Claimants were
employees of H&H until September 2005 when their employment was terminated
by H&H.  Their claims included seeking payments allegedly due
under employment contracts and allegedly arising from their terminations, and
seeking recovery of benefits under what they allege was the H&H Supplemental
Executive Retirement Plan.
  In the
Arbitration, Claimants sought an award in excess of $4.0 million each, plus
interest, costs and attorneys’ fees.  The Claimants also sought
indemnification for certain matters and an injunction against H&H with
regard to life insurance policies.  H&H brought a special
proceeding on February 15, 2006 in the Supreme Court of the State of New York,
County of Westchester, for a judgment staying the arbitration of three of the
four claims.  On March 10, 2006, all of the parties filed a
stipulation with the court, discontinuing the court proceeding and agreeing
therein, among other things, that all claims asserted by the Claimants in the
Arbitration (which was also discontinued at that time) would be asserted in
Supreme Court, Westchester County.
  In April
2006, the Claimants served a request for benefits, severance and other amounts,
similar to those described above, on H&H and various plan administrators and
fiduciaries thereof.  The request was reviewed in accordance with the
procedures of the benefit plans at issue and by letter dated September 27, 2006,
claimants were notified that their request was largely denied.
  In
January 2008, Mr. Kelly filed a lawsuit against WHX, H&H and various benefit
plans in the United States District Court for the Southern District of New
York.  Mr. Dixon did not join in this lawsuit, and his counsel has not
indicated whether Mr. Dixon intends to file his own lawsuit.  Mr.
Kelly’s claims in this lawsuit are essentially the same claims that he asserted
in the above-described arbitration and request for benefits.  Mr.
Kelly’s complaint seeks approximately $4.0 million in money damages plus
unspecified punitive damages.  The defendants are vigorously defending
this lawsuit, and believe that it is without merit.  Nevertheless,
there can be no assurance that the defendants will be successful in defending
against Mr. Kelly’s claims, or that the defendants will not have any liability
on account of Mr. Kelly’s claims.  Such liability, if any, cannot be
reasonably estimated at this time, and accordingly, there can be no assurance
that the resolution of this matter will not be material to the financial
position, results of operations and cash flow of the Company.
  90
 Table of Contents
  Arista Development LLC V.
Handy & Harman Electronic Materials Corporation
  In 2004,
a subsidiary of H&H, HHEM, entered into an agreement to sell a
commercial/industrial property in Massachusetts.  Disputes between the
parties led to suit being brought in Bristol Superior Court in
Massachusetts.  The plaintiff alleges that HHEM is liable for breach
of contract relating to HHEM’s alleged breach of the agreement, unfair and
deceptive acts and practices, and certain consequential and treble damages as a
result of HHEM’s termination of the agreement in 2005, although HHEM
subsequently revoked its notice of termination.  HHEM has denied
liability and has been vigorously defending the case.  The court
entered a preliminary injunction enjoining HHEM from conveying the property to
anyone other than the plaintiff during the pendency of the
case.  Discovery on liability and damages has been in abeyance while
the parties are actively engaged in settlement discussions. Since discovery is
not completed, it cannot be known at this time whether it is foreseeable or
probable that plaintiff would prevail in the litigation or whether H&H would
have any liability to the plaintiff.
  Electroplating Technologies,
Ltd v. Sumco, Inc.
  Electroplating
Technologies, Ltd., or ETL, filed a lawsuit against Sumco, a subsidiary of
H&H, in Lehigh, Pennsylvania County Court of Common Pleas.  ETL
contends that Sumco misappropriated trade secrets and breached contractual
obligations with respect to certain allegedly proprietary and confidential
information of ETL.  ETL is seeking damages in excess of $4.55
million.  In its pretrial filings, ETL also asserted a claim for $9.0
million in punitive damages.  Sumco is vigorously defending this
lawsuit, and believes that it is without merit.  Nevertheless, there
can be no assurance that Sumco will be successful in defending against ETL’s
claims, or that Sumco will not have any liability on account of ETL’s
claims.  Sumco’s liability, if any, cannot be reasonably estimated at
this time, and accordingly, there can be no assurance that the resolution of
this matter will not be material to the financial position, results of
operations and cash flow of Sumco.
  World Properties, Inc. et.
al. v. Arlon, Inc.
  In
December 2008, World Properties, Inc. and Rogers Corporation, collectively
referred to as Rogers, filed a lawsuit against Arlon, a subsidiary of Bairnco,
in the United States District Court in Hartford, CT.  The lawsuit
alleges that Rogers is the exclusive licensee under U.S. Patent No. 5,552,210,
or the 210 Patent, and that Arlon’s TC600 circuit board infringes that
patent.  In the complaint, Rogers demanded that Arlon cease the
manufacture, sale and distribution of its TC600 circuit board and that the Court
award unspecified damages to compensate Rogers for the alleged
infringement.  Arlon has moved to dismiss the lawsuit, based upon a
covenant not to sue contained in an asset purchase agreement between Rogers and
Arlon, dated January 30, 1996, or the APA, that Arlon contends covers the TC600
and the 210 Patent.  Arlon has also requested that the Court stay
discovery on Rogers’ patent infringement claim pending resolution of the motion
to dismiss.  The Court has agreed to a stay of discovery on the patent
infringement claim, but directed the parties to conduct expedited discovery on
the issue of the applicability of the covenant not to sue in the APA to the
TC600 and the 210 Patent. There can be no assurance that Arlon will be
successful in defending against Rogers’ claims.  Arlon’s liability, if
any, cannot be reasonably estimated at this time, and accordingly, there can be
no assurance that the resolution of this matter will not be material to the
financial position, results of operations and cash flow of the
Company.
  Environmental
Matters
  In
connection with the Sold Parcel, H&H was responsible for demolition and
environmental remediation of the site, the estimated cost of which was included
in the loss on sale recorded in 2003.  In 2004, H&H determined
that an increase in the reserve for environmental remediation was needed in the
amount of $28.3 million.  This change in reserve was caused by the
discovery of underground debris and soil contaminants that had not been
anticipated.  These additional costs were included in environmental
remediation expense.  An additional $4.0 million was also recorded in
selling, general and administrative expenses in 2004 as a penalty related to the
Sold Parcel.  H&H retains title to a parcel of land adjacent to
the Sold Parcel.  This parcel is classified as other non-current
assets, in the amount of $2.0 million, on the consolidated balance sheets at
December 31, 2008.
  91
 Table of Contents
  H&H
entered into an administrative consent order, or ACO, in 1986 with the NJDEP
with regard to certain property that it purchased in 1984 in New
Jersey.  The ACO involves investigation and remediation activities to
be performed with regard to soil and groundwater
contamination.  H&H settled a case brought by the local
municipality in regard to this site in 1998 and also settled with certain of its
insurance carriers.  H&H is actively remediating the property and
continuing to investigate the most effective methods for achieving compliance
with the ACO.  A remedial investigation report was filed with the
NJDEP in December of 2007.  By letter dated December 12, 2008, NJDEP
issued its approval with respect to additional investigation and remediation
activities discussed in the December 2007 remedial investigation
report.  H&H anticipates entering into discussions with NJDEP to
address that agency’s natural resource damage claims, the ultimate scope and
cost of which cannot be estimated at this time.  The ongoing cost of
remediation is presently estimated at approximately $1.0
million.  Pursuant to a settlement agreement with the former
owner/operator of the site, the responsibility for site investigation and
remediation costs are allocated 75% to the former owner/operator and 25% to
H&H after the first $1.0 million.  The $1.0 million was paid
solely by the former owner/operator.  As of December 31, 2008, over
and above the $1.0 million, total investigation and remediation costs of
$977,721 and $326,242 have been expended by the former owner/operator and
H&H, respectively, in accordance with the settlement
agreement.  Additionally, H&H is currently being reimbursed
through insurance coverage for a portion of the investigation and remediation
costs for which the Company is responsible.  H&H believes that
there is additional excess insurance coverage, which it intends to pursue as
necessary.
  H&H
and Bairnco (and/or one or more of their respective subsidiaries) have also been
identified as PRPs under CERCLA or similar state statutes at several sites and
are parties to ACOs in connection with certain other
properties.  H&H and Bairnco (and/or one or more of their
respective subsidiaries) may be subject to joint and several liabilities imposed
by CERCLA on PRPs.  Due to the technical and regulatory complexity of
remedial activities and the difficulties attendant in identifying PRPs and
allocating or determining liability among them, H&H and Bairnco are unable
to reasonably estimate the ultimate cost of compliance with such
laws.
  H&H
received a notice letter from the EPA in August 2006 formally naming H&H as
a PRP at the Superfund site in Massachusetts.  H&H then
voluntarily joined a group of ten (10) other PRPs (which group has since
increased to thirteen (13)) to work cooperatively regarding remediation of this
site.  Investigative work is ongoing to determine whether there are
other parties that sent hazardous substances to the Superfund site but that have
not received notice letters or been named as PRPs to date.  The PRP
group submitted its good faith offer to the EPA in late October
2006.  The offer was contingent on the group arriving at an acceptable
allocation amongst the PRPs.  All of the PRPs have reached proposed
allocations as to percentages of responsibility for investigation and
remediation costs at the Superfund site.  There is a “shortfall” in
the overall allocation that is being shared, on a pro rata basis, among all of
the participating PRPs.  The EPA has agreed to an orphan share for the
past costs incurred through April 1, 2008 and has agreed to cap all future
response and oversight costs at $2.9 million as further consideration for the
orphan share.  H&H executed a participation agreement, consent
decree and settlement trust on June 13, 2008 and all of the other PRP’s have
signed as well.  On December 9, 2008, the EPA lodged the consent
decree with the United States District Court for the District of
Massachusetts.  After the thirty-day comment period (during which no
comments were received), the EPA filed a motion for the entry of the consent
decree, which was granted on January 27, 2009.  With the filing and
entry of the consent decree, H&H is required to make two payments in
2009.  One payment relates to the “true-up” of monies previously
expended for remediation and is approximately $182,000.  The second
payment relates to H&H’s share of the early action items for the remediation
project and is approximately $308,380.  There are some parties who
have not participated to date in the consent decree negotiations and allocation
process.  Any such non-participating party may be sued later under
CERCLA.  That is a decision that will be made in the future by the
participating PRPs.  The remediation of a significant amount of the
contamination at the site is the responsibility of the DOE.  The DOE
remediation is being accomplished by the ACOE.  The DOE portion of the
work has begun but is not expected to be completed until August 2010, at which
time the remaining chemical PRP work will be more clearly defined and additional
financial contributions will be required by the chemical
PRPs.  H&H is a chemical PRP; not a radiological
PRP.  The ACOE has informed one of the radiological PRPs that it may
seek contribution from that PRP for the portion of the remediation performed by
the ACOE.  The radiological PRP in turn wishes to preserve its rights
to sue the chemical PRPs in the event any portion of the ACOE’s claim relates to
chemical waste.  The PRPs investigated the nature of the ACOE’s
potential claim and determined, based on information currently available, that
there is a minimal potential that the ACOE’s claim can legally or factually
result in a contribution claim against the chemical PRPs.  H&H has
recorded a significant reserve in connection with this matter.
  H&H
is continuing to comply with a 1987 consent order from the MADEP to investigate
and remediate the soil and groundwater conditions at the property that is the
subject of the Arista Development litigation discussed above.  H&H
is in discussions with the EPA, the MADEP and the plaintiff in the Arista case
in connection with the remedial activities.  In addition, H&H has
engaged in discussions or received comments regarding its remedial plans from
abutters.  H&H has successfully concluded settlement discussions
with  abutters and entered into settlement agreements with each of
them.  H&H does not expect that any claims from any additional
abutters will be asserted, but there can be no such assurances.
  92
 Table of Contents
  As
discussed above, H&H and Bairnco have existing and contingent liabilities
relating to environmental matters, including capital expenditures, costs of
remediation and potential fines and penalties relating to possible violations of
national and state environmental laws.  H&H and Bairnco have
substantial remediation expenses on an ongoing basis, although such costs are
continually being readjusted based upon the emergence of new techniques and
alternative methods.  In addition, the Company has insurance coverage
available for several of these matters.  The Company had $6.7 million
accrued related to estimated environmental remediation costs as of December 31,
2008, and $7.8 million accrued as of December 31, 2007.  Based upon
information currently available, including H&H and Bairnco’s prior capital
expenditures, anticipated capital expenditures, and information available to
H&H and Bairnco on pending judicial and administrative proceedings, H&H
and Bairnco do not expect their respective environmental compliance costs,
including the incurrence of additional fines and penalties, if any, relating to
the operation of their respective facilities to have a material adverse effect
on their financial position, but there can be no such
assurances.  Such costs could be material to H&H and Bairnco’s
results of operations and cash flows.  We anticipate that H&H and
Bairnco will pay such amounts out of their respective working capital, although
there is no assurance that H&H and Bairnco will have sufficient funds to pay
such amounts.  In the event that H&H and Bairnco are unable to
fund these liabilities, claims could be made against WHX for payment of such
liabilities.  As further information comes into the Company’s
possession, it will continue to reassess such evaluations.
  Other
Litigation
  Certain
of the Company’s subsidiaries are defendants, or the Subsidiary Defendants, in
numerous cases pending in a variety of jurisdictions relating to welding
emissions.  Generally, the factual underpinning of the plaintiffs’
claims is that the use of welding products for their ordinary and intended
purposes in the welding process causes emissions of fumes that contain
manganese, which is toxic to the human central nervous system.  The
plaintiffs assert that they were over-exposed to welding fumes emitted by
welding products manufactured and supplied by the Subsidiary Defendants and
other co-defendants.  The Subsidiary Defendants deny any liability and
are defending these actions.  It is not possible to reasonably
estimate the Subsidiary Defendants’ exposure or share, if any, of the liability
at this time.
  In
addition to the foregoing cases, there are a number of other product liability,
exposure, accident, casualty and other claims against WHX or certain of its
subsidiaries in connection with a variety of products sold by such subsidiaries
over several years, as well as litigation related to employment matters,
contract matters, sales and purchase transactions and general liability claims,
many of which arise in the ordinary course of business.  There is also
one filed and served case in state court arising out of H&H’s sale of a used
piece of equipment which allegedly caused a fire resulting in property damage
and interruption of a third party’s business operations.  It is not
possible to reasonably estimate the Company’s exposure or share, if any, of the
liability at this time in any of these matters.
  There is
insurance coverage available for many of the foregoing actions, which are being
litigated in a variety of jurisdictions.  To date, WHX and its
subsidiaries have not incurred and do not believe they will incur any
significant liability with respect to these claims, which they are contesting
vigorously in most cases.  However, it is possible that the ultimate
resolution of such litigation and claims could have a material adverse effect on
the Company’s results of operations, financial position and cash flows when they
are resolved in future periods.
  Pension
Plan Contingency Arising from the WPC Group Bankruptcy
  On July
24, 2003, the Company entered into an agreement among the PBGC, WPC, WPSC, and
the United Steelworkers of America, AFL-CIO-CLC, or the USWA, in settlement of
matters relating to the Termination Litigation, in which the PBGC was seeking to
terminate the WHX Pension Plan.  Under the settlement, WHX agreed,
among other things, (a) to certain administrative facts and legal conclusions
about the Pension Plan, as well as certain ongoing agreements, as set forth in
the settlement agreement, and (b)  that WHX will not contest a future
action by the PBGC to terminate the WHX Pension Plan in connection with a future
WPC Group facility shutdown.  The WPC Group was a wholly-owned
subsidiary of WHX until August 1, 2003.  In the event that such a plan
termination occurs, the PBGC has agreed to release WHX from any claims relating
to the shutdown. However, there may be PBGC claims related to unfunded
liabilities that may exist as a result of a termination of the WHX Pension
Plan.
  93
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  Note
16 – Related Party Transactions
  SP II is
the beneficial holder of 9,133,890 shares of the Company’s common stock,
representing approximately 75.0% of the outstanding shares.  SP II
Master is the owner of approximately 99% of the limited partnership interests in
Web L.P.  Web L.P. is the sole limited partner of SP
II.  Steel Partners is the manager of SP II Master, Web L.P. and SP
II.  Mr. Warren Lichtenstein, the manager of Steel Partners, is the
Chairman of the Board of the Company.  On September 8, 2005, H&H
completed the assignment of its approximately $70.6 million Term B Loan from
Canpartners, to SP II, as agent and lender. Substantially all of the terms and
conditions of the Term B Loan continued without amendment. During 2007, in
connection with the Bairnco Acquisition, SP II entered into the Subordinated
Loan Agreement with WHX and the Subordinated Debt Credit Agreement with
Bairnco.  (See Note 11).  On September 29, 2008, WHX repaid
all indebtedness and accrued interest under the Subordinated Loan Agreement,
using proceeds from the Rights Offering.  As of December 31, 2008,
$2.5 million of accrued interest was owed to SP II.  Interest is not
expected to be paid in cash to SP II pursuant to the terms of a Subordination
Agreement between Steel and Wachovia.
  Mr. Glen
Kassan, a Managing Director and operating partner of Steel Partners, was
appointed Chief Executive Officer of WHX on October 7, 2005.  In 2006,
the Compensation Committee approved a salary of $600,000 per annum for Mr.
Kassan, effective January 1, 2006.  On May 21, 2008, the Compensation
Committee of the Board of Directors approved the grant of a cash bonus to Mr.
Kassan in the amount of $100,000.  Mr. Kassan has voluntarily deferred
his annual salary (net of a 5% company-wide salary reduction), effective for the
fiscal year beginning January 1, 2009.
  On
October 26, 2005, WHX CS Corp. (“CS”), a wholly-owned subsidiary of the Company,
entered into a Stock Purchase Agreement with SP II.  Pursuant to that
agreement, CS sold 1,000 shares of Series A Preferred Stock, par value $0.01 per
share (the “WHX CS Preferred”) to SP II.  SP II paid a purchase price
of $5,100 per share or an aggregate purchase price of $5.1
million.  The proceeds of the sale were used by CS to purchase
1,898,337 shares of CoSine.  The WHX CS Preferred accrued dividends at
6.0% ($306,000) per annum. The WHX CS Preferred were redeemed, together with
accrued dividends, on September 29, 2008 from the proceeds of the Rights
Offering.
  The
Company had one investment accounted for under the equity method: 18.8%
ownership of the outstanding common stock of CoSine.  This investment
is presented in other non-current assets.  The Company accounts for
CoSine under the equity method because a related party (SP II) owns an
additional percentage of the outstanding common stock and as a result of the
combined ownership percentage, indirectly has the ability to exercise
control.  The recorded value of the Company’s investment in CoSine was
$4.3 million as of December 31, 2008 and 2007.  The market value of
the Company’s investment in CoSine as of December 31, 2008 was $3.3 million
($1.75 per share), approximately $1.0 million less than the Company’s $4.3
million carrying value.  However, in accordance with the provisions of
SFAS No. 141, the Company has not recorded an impairment, as it considers this
difference to be a temporary decline in the quoted market price and not
indicative of a permanent loss of value.  A key factor considered was
that CoSine’s assets are virtually all cash, cash equivalents and short-term
investments.  At December 31, 2008, CoSine had total assets of $23.3
million, including cash, cash equivalents, and short term investments of $23.2
million, current liabilities of $0.3 million and stockholders’ equity of $23.0
million.  CoSine reported a net loss of $15,000 for the year ended
December 31, 2008, and federal net operating loss carryforwards of approximately
$353.0 million, which will begin to expire in 2018.
  On July
6, 2007, the Compensation Committee of the Board of Directors of the Company
adopted incentive arrangements for Mr. Kassan and Mr. Lichtenstein. These
arrangements provide, among other things, for each to receive a bonus equal to
10,000 multiplied by the difference of the fair market value of the Company’s
stock price and $90.00, as adjusted pursuant to the terms of the 2007 Incentive
Stock Plan to reflect the Reverse Stock Split.  The bonus is payable
upon the sending of a notice by either Mr. Kassan or Mr. Lichtenstein,
respectively.  The notice can be sent with respect to 75% of the bonus
immediately, and with respect to the remainder, at any time after July 6,
2009.  The incentive arrangements terminate July 6, 2015, to the
extent not previously received. Under SFAS 123(R), the Company is required to
adjust its obligation for the fair value of such incentive arrangements from the
date of actual grant to the latest balance sheet date and to record such
incentive arrangements as liabilities in the consolidated balance sheet. The
Company has recorded $0.1 million of non-cash income related to these incentive
arrangements for 2008, and $0.2 million of non-cash compensation expense in
2007.
  94
 Table of Contents
  On
September 25, 2008, WHX completed the Rights Offering.  The Company
sold 11,178,459 shares of common stock to existing stockholders through the
exercise of rights at a subscription price of $14.00 per share, for an aggregate
purchase price of approximately $156.5 million.  SP II, which
beneficially owned approximately 50.3% of the Company’s outstanding common stock
immediately before the Rights Offering, subscribed for 8,630,910 shares of the
Company’s common stock, for an aggregate purchase price of approximately $120.8
million, pursuant to its basic and applicable oversubscription
privileges.  After giving effect to the Rights Offering, SP II owns
75% of the outstanding shares of common stock of the Company.  The
Company used the proceeds of the Rights Offering to (i) redeem preferred stock
issued by a wholly-owned subsidiary of the Company, which was held by SP II,
plus accumulated dividends, together totaling $6.0 million, (ii) repay Company
indebtedness to SP II of $18.9 million, and (iii) repay $117.6 million of
indebtedness and accrued interest of certain wholly-owned subsidiaries of the
Company to SP II.   After such payments, $14.0 million remained
with the Company as cash, of which $13.2 million was used to repay additional
debt of the Company on October 29, 2008 pursuant to the amendments to the
Company’s credit agreements of that same date.
  Note
17 – Other Income (Expense)
  Year
      Ended December 31,2008
                        
                        
                        2007(in
      thousands)Equity
      income in affiliated companies
                        
                        $
                        28
                        
                        
                        $
                        65Foreign
      currency transaction loss
                        
                        
                        (1,382
                        )
                        
                        
                        (392
                        )Other,
      net
                        
                        
                        -
                        
                        
                        
                        55$
                        (1,354
                        )
                        
                        $
                        (272
                        )
 
 Note
18 – Reportable Segments
  WHX
Corporation, the parent company, manages a group of businesses on a
decentralized basis.  WHX owns H&H, a diversified holding company
whose strategic business units encompass three reportable segments: Precious
Metal, Tubing, and Engineered Materials.  In April 2007, WHX acquired
Bairnco.  Bairnco manages business units in three reportable segments:
Arlon EM segment, Arlon CM segment, and Kasco Replacement Products and
Services.  The business units of H&H and Bairnco principally
operate in North America.  The Company’s six reportable segments are
as follows:
  (1)
              Precious
      Metal segment activities include the fabrication of precious metal and
      their alloys into brazing alloys and the utilization of precious metal in
      precision electroplating. H&H’s brazing alloys are used to join most
      common metals as well as specialty metals with strong, hermetic
      joints.  H&H offers a wide variety of these metal joining
      products, including gold, silver, palladium, copper, nickel, and aluminum
      based materials.  These brazing alloys are fabricated into a
      variety of engineered forms and are used in many industries including
      automotive, air conditioning, general industrial and other metal-joining
      industries.  H&H is also engaged in precision electroplating
      (often using gold, silver, palladium and various base metals) of
      electronic and electrical components primarily for use in the automotive
      industry.  H&H’s profits from precious metal products are
      principally derived from the “value added” of processing and fabricating
      and not from the purchase and resale of precious metal.  In
      accordance with general practice, prices to customers are principally a
      composite of two factors: (1) the value of the precious metal content of
      the product and (2) the “fabrication value,” which includes the cost of
      base metals, labor, overhead, financing and
  profit.
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   (2)
              Tubing
      segment manufactures a wide variety of steel tubing
      products.  The Stainless Steel Tubing Group manufactures
      small-diameter precision-drawn seamless tubing both in straight lengths
      and coils.  The Stainless Steel Tubing Group’s capabilities in
      long continuous drawing of seamless stainless steel coils allow this Group
      to serve the petrochemical infrastructure and shipbuilding markets. The
      Stainless Steel Tubing Group also manufactures products for use in the
      medical, semiconductor fabrication, aerospace and instrumentation
      industries.  The Specialty Tubing Group manufactures welded
      carbon steel tubing in straight lengths and coils with a primary focus on
      products for the refrigeration and automotive industries.  In
      addition to producing bulk tubing, the Specialty Tubing Group also
      produces value added products for the appliance market by fabricating
      tubing into condensers for refrigerators and
  freezers.
  (3)
              Engineered
      Materials segment supplies products to the construction and building
      industries. H&H manufactures fasteners and fastening systems for the
      U.S. commercial flat roofing industry.  Products are sold to
      building and roofing material wholesalers. The products are also private
      labeled to roofing system manufacturers. A line of specialty fasteners is
      produced for the building products industry for fastening applications in
      log homes, landscaping, masonry, and wood decks.  H&H also
      manufactures plastic and steel fittings and connectors for natural gas and
      water distribution service lines along with exothermic welding products
      for electrical grounding, cathodic protection, and lightning
      protection.   In addition, H&H manufactures
      electro-galvanized and painted cold rolled sheet steel products primarily
      for the construction, entry door, container and appliance
      industries.
  (4)
              Arlon
      EM segment designs, manufactures, markets and sells high performance
      laminate materials and bonding films utilized in the military/aerospace,
      wireless communications, automotive, oil drilling, and semiconductor
      markets.  Among the products included in the Arlon EM segment
      are high technology materials for the printed circuit board industry and
      silicone rubber products for insulating tapes and flexible
      heaters.
  (5)
              Arlon
      CM segment designs, manufactures, markets and sells laminated and coated
      products to the electronic, industrial and commercial markets under the
      Arlon and Calon brand names.  Among the products included in the
      Arlon CM segment are vinyl films for graphics art applications, foam tapes
      used in window glazing, and electrical and thermal insulation
      products.
  (6)
              Kasco
      Replacement Products and Services segment is a leading provider of
      meat-room products (principally replacement band saw blades) and on-site
      maintenance services principally to retail food stores, meat and deli
      operations, and meat, poultry and fish processing plants throughout the
      United States, Canada and Europe. In Canada and France, in addition to
      providing its replacement products, Kasco also sells equipment to the
      supermarket and food processing
industries.
  Management
has determined that certain operating companies should be aggregated and
presented within a single reporting segment on the basis that such operating
segments have similar economic characteristics and share other qualitative
characteristics. Management reviews sales, gross profit and operating income to
evaluate segment performance. Operating income for the reportable segments
includes the costs of shared corporate headquarters functions such as finance,
auditing, treasury, legal, benefits administration and certain executive
functions, but excludes other unallocated general corporate expenses. Other
income and expense, interest expense, and income taxes are not presented by
segment since they are excluded from the measure of segment profitability
reviewed by the Company’s management.
  96
 Table of Contents
  The
following table presents information about reportable segments for the years
ended December 31, 2008 and 2007.
  2008
                        
                        
                        2007(in
      thousands)Net
      Sales:Precious
      Metal
                        
                        $
                        156,847
                        
                        
                        $
                        150,484Tubing
                        
                        
                        
                        118,318
                        
                        
                        
                        117,627Engineered
      Materials
                        
                        
                        246,815
                        
                        
                        
                        228,248Arlon
      Electronic Materials (a)
                        
                        
                        64,208
                        
                        
                        
                        45,576Arlon
      Coated Materials (a)
                        
                        
                        72,395
                        
                        
                        
                        47,647Kasco
      (a)
                        
                        
                        
                        67,202
                        
                        
                        
                        48,284Total
      net sales
                        
                        
                        
                        725,785
                        
                        
                        
                        637,866Operating
      income (loss) before corporate allocations and
impairments:Precious
      Metal
                        
                        
                        16,461
                        
                        
                        
                        14,128Tubing
                        
                        
                        
                        10,896
                        
                        
                        
                        4,799Engineered
      Materials
                        
                        
                        22,553
                        
                        
                        
                        20,923Arlon
      Electronic Materials (a) (b)
                        
                        
                        6,243
                        
                        
                        
                        496Arlon
      Coated Materials (a) (b)
                        
                        
                        (1,199
                        )
                        
                        
                        (2,881
                        )Kasco
      (a) (b)
                        
                        
                        3,786
                        
                        
                        
                        1,657Total
                        
                        
                        
                        58,740
                        
                        
                        
                        39,122Corporate
      expenses allocation:Precious
      Metal
                        
                        
                        4,192
                        
                        
                        
                        4,361Tubing
                        
                        
                        
                        3,926
                        
                        
                        
                        3,980Engineered
      Materials
                        
                        
                        3,662
                        
                        
                        
                        3,707Arlon
      Electronic Materials (a)
                        
                        
                        1,100
                        
                        
                        
                        876Arlon
      Coated Materials (a)
                        
                        
                        1,240
                        
                        
                        
                        916Kasco
      (a)
                        
                        
                        
                        1,151
                        
                        
                        
                        928Total
                        
                        
                        
                        15,271
                        
                        
                        
                        14,768Impairments
      of long-lived assetsPrecious
      Metal (d)
                        
                        
                        7,790
                        
                        
                        
                        -Tubing
      (d)
                        
                        
                        
                        501
                        
                        
                        
                        -Total
                        
                        
                        
                        8,291
                        
                        
                        
                        -Segment
      operating income (loss):Precious
      Metal (d)
                        
                        
                        4,479
                        
                        
                        
                        9,767Tubing
      (d)
                        
                        
                        
                        6,469
                        
                        
                        
                        819Engineered
      Materials
                        
                        
                        18,891
                        
                        
                        
                        17,216Arlon
      Electronic Materials (a) (b)
                        
                        
                        5,143
                        
                        
                        
                        (380
                        )Arlon
      Coated Materials (a) (b)
                        
                        
                        (2,439
                        )
                        
                        
                        (3,797
                        )Kasco
      (a) (b)
                        
                        
                        2,635
                        
                        
                        
                        729Segment
      operating income
                        
                        
                        35,178
                        
                        
                        
                        24,354Unallocated
      corporate expenses & non operating units
                        
                        
                        6,698
                        
                        
                        
                        8,994Unallocated
      pension credit
                        
                        
                        (8,335
                        )
                        
                        
                        (5,778
                        )Proceeds
      from insurance claims, net
                        
                        
                        (3,399
                        )
                        
                        
                        (6,538
                        )Employee
      benefit curtailment
                        
                        
                        (3,875
                        )
                        
                        
                        -Environmental
      remediation expense (c)
                        
                        
                        -
                        
                        
                        
                        4,678Loss
      on disposal of assets
                        
                        
                        212
                        
                        
                        
                        283Income
      from operations
                        
                        
                        43,877
                        
                        
                        
                        22,715Interest
      expense
                        
                        
                        36,787
                        
                        
                        
                        39,488Realized
      and unrealized loss on derivatives
                        
                        
                        1,355
                        
                        
                        
                        1,888Other
      expense
                        
                        
                        1,354
                        
                        
                        
                        272Income
      (loss) before taxes
                        
                        $
                        4,381
                        
                        
                        $
                        (18,933
                        )
    97
 Table of Contents
   (a)
              The
      results of the Bairnco Segments in 2007 reflect the period subsequent to
      its acquisition, April 14 through December 31,
  2007.
  (b)
              The
      following non-recurring charges relating to the purchase accounting for
      the Bairnco Acquisition are included in the 2007 results
      above:  Arlon EM-$3,509, Arlon CM-$2,409, and Kasco-$1,460. The
      operating income (loss) for the Arlon CM segment includes $1,729 of move
      costs in the 2008 period to consolidate two plants in San Antonio, Texas
      into one.  In addition to the direct move costs, 2008 results
      were negatively impacted by a plant shutdown and related operating
      inefficiencies related to the move.
  (c)
              Environmental
      remediation expenses have not been allocated to the reporting segments
      since the related facilities have been closed for several years and are
      not indicative of current operating
results.
  (d)
              Segment
      operating income in 2008 for the Precious Metal segment and the Tubing
      segment has been reduced by fixed asset impairment charges of $7,790 and
      $501, respectively.  See Note 4 to Consolidated Financial
      Statements.
  2008
                              
                              
                              2007Capital
      Expenditures
                              
                              (in
      thousands)Precious
      Metal
                              
                              $
                              3,188
                              
                              
                              $
                              2,502Tubing
                              
                              
                              1,264
                              
                              
                              
                              1,569Engineered
      Materials
                              
                              
                              3,057
                              
                              
                              
                              2,700Arlon
      Electronic Materials
                              
                              
                              1,180
                              
                              
                              
                              802Arlon
      Coated Materials
                              
                              
                              1,676
                              
                              
                              
                              551Kasco
                              
                              
                              1,908
                              
                              
                              
                              1,656Corporate
      and other
                              
                              
                              41
                              
                              
                              
                              446$
                              12,314
                              
                              
                              $
                              10,226December
      31,2008
                              
                              
                              2007Total
      Assets
                              
                              
                              
                              
                              (in
      thousands)Precious
      Metal
                              
                              $
                              44,311
                              
                              
                              $
                              57,249Tubing
                              
                              
                              57,526
                              
                              
                              
                              66,232Engineered
      Materials
                              
                              
                              139,063
                              
                              
                              
                              142,177Arlon
      Electronic Materials
                              
                              
                              69,718
                              
                              
                              
                              78,029Arlon
      Coated Materials
                              
                              
                              27,839
                              
                              
                              
                              27,398Kasco
                              
                              
                              36,342
                              
                              
                              
                              41,440Corporate
      and other
                              
                              
                              24,685
                              
                              
                              
                              29,064Total
                              
                              $
                              399,484
                              
                              
                              $
                              441,589
  The
following table presents revenue and long lived asset information by geographic
area as of and for the years ended December 31. Long-lived assets in 2008 and
2007 consist of property, plant and equipment, plus approximately $8.4 million
and $7.8 million, respectively, of land and buildings from previously
operating businesses and other non-operating assets that are carried at the
lower of cost or fair value and are included in other non-current assets on the
consolidated balance sheets.
  98
 Table of Contents
  Geographic
      InformationRevenue
                        
                        
                        Long-Lived
      Assets2008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007(in
      thousands)
                        
                        
                        (in
      thousands)United
      States
                        
                        $
                        639,821
                        
                        
                        $
                        562,562
                        
                        
                        $
                        92,149
                        
                        
                        $
                        118,474Foreign
                        
                        
                        85,964
                        
                        
                        
                        75,304
                        
                        
                        
                        18,747
                        
                        
                        
                        13,143$
                        725,785
                        
                        
                        $
                        637,866
                        
                        
                        $
                        110,896
                        
                        
                        $
                        131,617
  Foreign
revenue is based on the country in which the legal subsidiary is domiciled.
Neither revenue nor long-lived assets from any single foreign country was
material to the consolidated revenues of the Company.
  In 2008
and 2007, no customer accounted for more than 5% of consolidated net
sales.  In 2008 and 2007, the 15 largest customers accounted for
approximately 22% and 25% of consolidated net sales, respectively.
  Item
      9.
              Changesin and Disagreements with Accountants on Accounting
      and Financial Disclosures
  On
January 17, 2007, WHX dismissed PricewaterhouseCoopers LLP (“PwC”) as its
independent registered public accounting firm, effective upon the completion by
PwC of its procedures regarding: (i) the Company’s 2004 Annual Report on Form
10-K; and (ii) the financial statements of the Company as of March 31, 2005 and
for the quarter then ended, the financial statements of the Company as of June
30, 2005 and for the quarter and six-month periods then ended and the financial
statements of the Company as of  September 30, 2005 and for the
quarter and nine-month periods then ended and the Forms 10-Q for 2005 in which
each of the above described financial statements will be included. The decision
to dismiss PwC was approved by the Company’s Audit Committee.
  The
reports of PwC on the financial statements of the Company for the fiscal years
ended December 31, 2005 and 2004, and the reports of PwC on the financial
statements did not contain any adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principle, except for an explanatory paragraph disclosing substantial doubt
about the Company’s ability to continue as a going concern.
  During
the fiscal years ended December 31, 2005, 2004 and 2003, and through the date of
this filing, there were no disagreements with PwC on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of PwC, would have caused
them to make reference thereto in their reports on the financial statements for
such years.
  During
the fiscal years ended December 31, 2005, 2004 and 2003, and through the date of
this filing, there were no “reportable events” as that term is described in Item
304(a)(1)(v) of Regulation S-K, other than as reported in Item 9A of its 2005
Annual Report on Form 10-K.
  On
January 22, 2007, the Company engaged Grant Thornton LLP (“GT”) as the Company’s
independent registered public accountant.  The engagement of GT was
approved by the Audit Committee of the Company’s Board of
Directors.  During the years ended December 31, 2005, 2004 and 2003
and through January 22, 2007, the Company did not consult with GT with respect
to either (i) the application of accounting principles to a specified
transaction, either completed or proposed; (ii) the type of audit opinion that
might be rendered on the Company’s financial statements; or (iii) any matter
that was either the subject of disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of
Regulation S-K).
  99
 Table of Contents
 Item
      9A(T).
                Controlsand
Procedures
  Disclosure
Controls and Procedures
  As
required by Rule 13a-15(b) under the Exchange Act we conducted an evaluation
under the supervision and with the participation of our management, including
the Chief Executive Officer and the Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based on that evaluation, the Chief Executive
Officer and the Chief Financial Officer concluded that as of December 31, 2008
our disclosure controls and procedures are effective in ensuring that all
information required to be disclosed in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC rules and forms and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, in a manner that allows timely decisions
regarding required disclosure.
  Management’s
Report on Internal Control Over Financial Reporting
  Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rule 13a-15(f)
under the Exchange Act. Our internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of the Company’s financial statements
for external reporting purposes in accordance with US generally accepted
accounting principles.
  Under the
supervision and with the participation of the Company’s management, including
the Company’s Chief Executive Officer and Chief Financial Officer, the Company
conducted an evaluation of the effectiveness of the internal control over
financial reporting of the Company as referred to above as of December 31, 2008
as required by Rule 13a-15(c) under the Exchange Act. In making this assessment,
the Company used the criteria set forth in the framework in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on its evaluation under the framework in Internal Control — Integrated
Framework, management concluded that the Company’s internal control over
financial reporting was effective as of December 31, 2008.
  This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management’s report
in this annual report.
  Changes
in Internal Control Over Financial Reporting
  No change
in internal control over financial reporting occurred during the quarter ended
December 31, 2008 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
  Inherent
Limitations Over Controls
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
  100
 Table of Contents
  PART III
  Item
      10.
              Directorsand Executive Officers of the
      Company
  The
Company’s definitive proxy statement which will be filed with the SEC pursuant
to Registration 14A within 120 days of the end of the Company's fiscal year is
incorporated herein by reference.
  Item
      11.
              ExecutiveCompensation.
  The
Company’s definitive proxy statement which will be filed with the SEC pursuant
to Registration 14A within 120 days of the end of the Company's fiscal year is
incorporated herein by reference.
  Item
      12.
              SecurityOwnership of Certain Beneficial Owners and
      Management
  The
Company’s definitive proxy statement which will be filed with the SEC pursuant
to Registration 14A within 120 days of the end of the Company's fiscal year is
incorporated herein by reference. Also incorporated by reference is the
information in the table under the heading “Equity Compensation Plan
Information” included in Item 5 of the Form 10-K.
  Item
      13.
              CertainRelationships and Related
    Transactions
  The
Company’s definitive proxy statement which will be filed with the SEC pursuant
to Registration 14A within 120 days of the end of the Company's fiscal year is
incorporated herein by reference.
  Item
      14.
              PrincipalAccountant Fees and
  Services
  The
Company’s definitive proxy statement which will be filed with the SEC pursuant
to Registration 14A within 120 days of the end of the Company's fiscal year is
incorporated herein by reference.
  101
 Table of Contents
  PART IV
  Item
      15.
                Exhibitsand Financial Statement
  Schedules
  (a)
3.           Exhibits
  Exhibit
      Number
                Description 2.1
                    
                    First
      Amended Chapter 11 Plan of Reorganization of the Company, dated June 8,
      2005 (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K
      filed July 28, 2005).2.2
                    
                    Third
      Amended Joint Plan of Reorganization of Wheeling-Pittsburgh Steel
      Corporation, dated May 19, 2003 (incorporated by reference to Exhibit 2.1
      to Wheeling-Pittsburgh Corporation’s Registration Statement on Form 10
      filed May 30, 2003).3.1
                    
                    Amended
      and Restated Certificate of Incorporation of WHX (incorporated by
      reference to Exhibit 3.1 to the Company’s Form 10-K, filed December 27,
      2006).3.2
                    
                    Amendment
      to Amended and Restated Certificate of Incorporation of WHX, dated
      September 17, 2008 (incorporated by reference to Exhibit 3.2 to the
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-154428, on October 17, 2008).*3.3
                    
                    Amendment
      to Amended and Restated Certificate of Incorporation of WHX, dated
      November 24, 2008.3.4
                    
                    Amended
      and Restated By Laws of WHX (incorporated by reference to Exhibit 3.2 to
      the Company’s Form 10-K, filed December 27, 2006).3.5
                    
                    Amendment
      to Article Four, Section 4.1 of the Amended and Restated Bylaws of WHX
      Corporation (incorporated by reference to Exhibit 3.4 to the Company’s
      current report on Form 8-K, filed November 10, 2008).4.1
                    
                    Loan
      and Security Agreement by and among Handy & Harman, certain of its
      affiliates and Congress Financial Corporation, dated March 31, 2004
      (incorporated by reference to Exhibit 4.2 to the Company’s Form 10-K filed
      April 14, 2004).4.2
                    
                    Consent
      and Amendment No. 1 to Loan and Security Agreement by and among Handy
      & Harman, certain of its affiliates and Congress Financial
      Corporation, dated as of August 31, 2004 (incorporated by reference to
      Exhibit 4.1 to the Company’s Form 10-Q filed November 15,
      2004).4.3
                    
                    Amendment
      No. 2 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Congress Financial Corporation, dated as of
      October 29, 2004 (incorporated by reference to Exhibit 4.2 to the
      Company’s Form 10-Q filed November 15, 2004).4.4
                    
                    Amendment
      No. 3 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Congress Financial Corporation, dated as of
      December 29, 2004 (incorporated by reference to Exhibit 4.4 to the
      Company’s Form 10-K filed December 27,
2006).
  102
 Table of Contents
  4.5
                    
                    Amendment
      No. 4 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of May 20, 2005 (incorporated by reference to
      Exhibit 4.5 to the Company’s Form 10-K filed December 27,
      2006).4.6
                    
                    Amendment
      No. 5 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of September 8, 2005 (incorporated by reference to
      Exhibit 4.6 to the Company’s Form 10-K filed December 27,
      2006).4.7
                    
                    Amendment
      No. 6 and Waiver to Loan and Security Agreement by and among Handy &
      Harman, certain of its affiliates and Wachovia Bank, National Association,
      a national banking association, successor by merger to Congress Financial
      Corporation, dated as of December 29, 2005 (incorporated by reference to
      Exhibit 4.7 to the Company’s Form 10-K filed December 27,
      2006).4.8
                    
                    Consent
      and Amendment No. 7 to Loan and Security Agreement by and among Handy
      & Harman, certain of its affiliates and Wachovia Bank, National
      Association, a national banking association, successor by merger to
      Congress Financial Corporation, dated as of January 24, 2006 (incorporated
      by reference to Exhibit 4.8 to the Company’s Form 10-K filed December 27,
      2006).4.9
                    
                    Amendment
      No. 8 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of March 31, 2006 (incorporated by reference to
      Exhibit 4.1 to the Company’s Form 8-K filed April 6,
  2006).4.10
                    
                    Amendment
      No. 9 to the Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of July 18, 2006 (incorporated by reference to
      Exhibit 99.1 to the Company’s Form 8-K filed July 24,
    2006).4.11
                    
                    Amendment
      No. 10 to the Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of October 30, 2006 (incorporated by reference to
      Exhibit 99.1 to the Company’s Form 8-K filed November 03,
      2006).4.12
                    
                    Amendment
      No. 11 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated December 28, 2006 (incorporated by reference to Exhibit 99.1.3 to
      the Company’s Form 8-K filed January 4, 2007).4.13
                    
                    Amendment
      No. 12 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated December 28, 2006 (incorporated by reference to Exhibit 99.1.4 to
      the Company’s Form 8-K filed January 4, 2007).4.14
                    
                    Amendment
      No. 13 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated March 29, 2007 (incorporated by reference to Exhibit 99.1 to the
      Company’s Form 8-K filed March 30,
2007).
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 Table of Contents
  4.15
                    
                    Amendment
      No. 14 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated July 20, 2007 (incorporated by reference to Exhibit 4.15 to
      Amendment No. 1 to Registration Statement on Form S-1 filed with the
      Securities and Exchange Commission, File No. 333-146803, on November 30,
      2008).4.16
                    
                    Amendment
      No. 15 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated September 20, 2007 (incorporated by reference to exhibit 4.16 to
      Amendment No. 1 to Registration Statement on Form S-1 filed with the
      Securities and Exchange Commission, File No. 333-146803, on November 30,
      2008).4.17
                    
                    Amendment
      No. 16 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated October 31, 2007 (incorporated by reference to Exhibit 4.17 to the
      Company’s Form 10-K filed March 31, 2008).4.18
                    
                    Amendment
      No. 17 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated January 11, 2008 (incorporated by reference to Exhibit 4.18 to the
      Company’s Form 10-K filed March 31, 2008).4.19
                    
                    Amendment
      No. 18 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated February 14, 2008 (incorporated by reference to Exhibit 4.19 to the
      Company’s Form 10-K filed March 31, 2008).4.20
                    
                    Amendment
      No. 19 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated February 14, 2008 (incorporated by reference to Exhibit 4.20 to the
      Company’s Form 10-K filed March 31, 2008).4.21
                    
                    Amendment
      No. 20 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated September 29, 2008 (incorporated by reference to Exhibit 4.21 to the
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-154428, on October 17, 2008).4.22
                    
                    Amendment
      No. 21 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated October 29, 2008 (incorporated by reference to Exhibit 4.56 to the
      Company’s Form 10-Q, filed November 7, 2008).*4.23
                    
                    Amendment
      No. 22 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated March 12, 2009.4.24
                    
                    Loan
      and Security Agreement by and among Handy & Harman, certain of its
      affiliates and Ableco Finance LLC, dated March 31, 2004 (incorporated by
      reference to Exhibit 4.3 to the Company’s Form 10-K filed April 14,
      2004).4.25
                    
                    Loan
      and Security Agreement Amendment by and among Handy & Harman, certain
      of its affiliates and Canpartners Investments IV, LLC, dated as of October
      29, 2004 (incorporated by reference to Exhibit 4.3 to the Company’s Form
      10-Q filed November 15,
2004).
  104
 Table of Contents
  4.26
                    
                    Amendment
      No. 2 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Canpartners Investments IV, LLC, dated as of
      December 29, 2004 (incorporated by reference to Exhibit 4.15 to the
      Company’s Form 10-K filed December 27, 2006).4.27
                    
                    Amendment
      No. 3 and Waiver to Loan and Security Agreement by and among Handy &
      Harman, certain of its affiliates and Steel Partners II, L.P., successor
      by assignment from Canpartners Investments IV, LLC, dated as of December
      29, 2005 (incorporated by reference to Exhibit 4.16 to the Company’s Form
      10-K filed December 27, 2006).4.28
                    
                    Consent
      and Amendment No. 4 to Loan and Security Agreement by and among Handy
      & Harman, certain of its affiliates and Steel Partners II, L.P.,
      successor by assignment from Canpartners Investments IV, LLC, dated as of
      January 24, 2006 (incorporated by reference to Exhibit 4.17 to the
      Company’s Form 10-K filed December 27, 2006).4.29
                    
                    Amendment
      No. 5 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Steel Partners II, L.P., successor by
      assignment from Canpartners Investments IV, LLC, dated as of March 31,
      2006 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K
      filed April 6, 2006).4.30
                    
                    Amendment
      No. 6 to the Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Steel Partners II, L.P., successor by
      assignment from Canpartners Investments IV, LLC, dated as of July 18, 2006
      (incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K filed
      July 24, 2006).4.31
                    
                    Amendment
      No. 7 to the Loan and Security Agreement by and Among Handy & Harman,
      certain of its affiliates and Steel Partners II, L.P., successor by
      assignment from Carpenters Investments IV, LLC, dated as of October 30,
      2006 (incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K
      filed November 3, 2006).4.32
                    
                    Amendment
      No. 8 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated December 28, 2006
      (incorporated by reference to Exhibit 99.1.5 to the Company’s Form 8-K
      filed January 4, 2007).4.33
                    
                    Amendment
      No. 9 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated December 28, 2006
      (incorporated by reference to Exhibit 99.1.6 to the Company’s Form 8-K
      filed January 4, 2007).4.34
                    
                    Amendment
      No. 10 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated March 29, 2007
      (incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K filed
      March 30, 2007).4.35
                    
                    Amendment
      No. 11 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated July 20, 2007
      (incorporated by reference to Exhibit 4.29 to Amendment No. 1 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on November 30, 2007).4.36
                    
                    Amendment
      No. 12 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated September 10, 2007
      (incorporated by reference to Exhibit 4.30 to Amendment No. 1 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on November 30,
  2007).
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 Table of Contents
 4.37
                    
                    Amendment
      No. 13 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated November 5, 2007
      (incorporated by reference to Exhibit 4.35 to the Company’s Form 10-K
      filed March 31, 2008).4.38
                    
                    Amendment
      No. 14 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated February 14, 2008
      (incorporated by reference to Exhibit 4.36 to the Company’s Form 10-K
      filed March 31, 2008).4.39
                    
                    Amendment
      No. 15 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated February 14, 2008
      (incorporated by reference to Exhibit 4.37 to the Company’s Form 10-K
      filed March 31, 2008).4.40
                    
                    Amendment
      No. 16 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated as of October 29,
      2008 (incorporated by reference to Exhibit 4.55 to the Company’s Form
      10-Q, filed November 7, 2008).*4.41
                    
                    Amendment
      No. 17 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated as of March 12,
      2009.4.42
                    
                    Credit
      Agreement, dated as of July 17, 2007, by and among Bairnco, Arlon, Inc.,
      Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern
      Saw Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc.,
      as the arranger and administrative agent for the lenders thereunder
      (incorporated by reference to Exhibit 4.36 to Amendment No. 1 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on November 30, 2007).4.43
                    
                    Amendment
      No. 1 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated
      February 14, 2008 (incorporated by reference to Exhibit 4.44 to the
      Company’s Form 10-K filed March 31, 2008).4.44
                    
                    Amendment
      No. 2 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated
      June 30, 2008 (incorporated by reference to Exhibit 4.45 to Amendment No.
      6 to Registration Statement on Form S-1 filed with the Securities and
      Exchange Commission, File No. 333-146803, on July 9,
  2008).4.45
                    
                    Amendment
      No. 3 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated as
      of October 29, 2008 (incorporated by reference to Exhibit 4.54 to the
      Company’s Form 10-Q, filed November 7, 2008).*4.46
                    
                    Amendment
      No. 4 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated
      March 12, 2009.4.47
                    
                    Credit
      Agreement, dated as of July 17, 2007, by and among Bairnco, Arlon, Inc.,
      Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern
      Saw Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder (incorporated by reference
      to Exhibit 4.37 to Amendment No. 1 to Registration Statement on Form S-1
      filed with the Securities and Exchange Commission, File No. 333-146803, on
      November 30, 2007).
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 Table of Contents
 4.48
                        
                        Amendment
      No. 1 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated February 14, 2008
      (incorporated by reference to Exhibit 4.46 to the Company’s Form 10-K
      filed March 31, 2008).4.49
                        
                        Amendment
      No. 2 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated June 30, 2008
      (incorporated by reference to Exhibit 4.48 to Amendment No. 6 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on July 9, 2008).4.50
                        
                        Amendment
      No. 3 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated as of October 29,
      2008 (incorporated by reference to Exhibit 4.53 to the Company’s Form
      10-Q, filed November 7, 2008).*4.51
                        
                        Amendment
      No. 4 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated as of March 12,
      2009.4.52
                        
                        Amended
      and Restated Credit Agreement, dated as of July 17, 2007, by and among
      Bairnco, Arlon, Inc., Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco
      Corporation, and Southern Saw Acquisition Corporation, as borrowers, and
      Steel Partners II, L.P. as lender (incorporated by reference to Exhibit
      4.38 to Amendment No. 1 to Registration Statement on Form S-1 filed with
      the Securities and Exchange Commission, File No. 333-146803, on November
      30, 2008).*4.53
                        
                        First
      Amendment to Amended and Restated Credit Agreement, by and among Bairnco,
      Arlon, Inc., Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation,
      and Southern Saw Acquisition Corporation, as borrowers, and Steel Partners
      II, L.P. as lender, dated as of March 12, 2009.4.54
                        
                        Security
      Agreement, dated as of February 14, 2008, by and among H&H and certain
      of it subsidiaries and Ableco Finance LLC, as Agent (incorporated by
      reference to Exhibit 4.49 to the Company’s Form 10-K filed March 31,
      2008).10.1
                        
                        Settlement
      and Release Agreement by and among Wheeling-Pittsburgh Steel Corporation
      (“WPSC”) and Wheeling-Pittsburgh Corporation (“WPC”), the Company and
      certain affiliates of WPSC, WPC and the Company (incorporated by reference
      to Exhibit 99.1 to the Company’s Form 8-K filed May 30,
    2001).10.2
                        
                        Employment
      Agreement by and between H&H and Daniel P. Murphy, Jr., effective
      February 11, 2004 (incorporated by reference to Exhibit 10.1 to the
      Company’s Form 10-Q filed November 15, 2004).10.3
                        
                        Amendment
      to Employment Agreement by and among WHX, Handy & Harman and Daniel P.
      Murphy, dated as of February 20, 2008 (incorporated by reference to
      Exhibit 10.4 to the Company’s Form 10-K filed March 31,
    2008).
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 Table of Contents
 
 10.4
                    
                    Acknowledgement
      and Release dated November 10, 2005, by and between H&H and Daniel P.
      Murphy, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s
      Form 8-K filed April 6, 2006).10.5
                    
                    Supplemental
      Executive Retirement Plan (as Amended and Restated as of January 1, 1998)
      (incorporated by reference to Exhibit 10.9 to the Company’s Form 10-K
      filed December 27, 2006).10.6
                    
                    Agreement
      by and among the Pension Benefit Guaranty Corporation, WHX Corporation,
      Wheeling-Pittsburgh Corporation, Wheeling-Pittsburgh Steel Corporation and
      the United Steel Workers of America, AFL-CIO-CLC, dated as of July 31,
      2003 (incorporated by reference to Exhibit 10.10 to the Company’s Form
      10-K filed December 27, 2006).*10.7
                    
                    2008
      Bonus Plan of the Company.*10.8
                    
                    Amendment
      to 2008 Bonus Plan of the Company.10.9
                    
                    2007
      Incentive Stock Plan (incorporated by reference to Exhibit B to the
      Company’s Schedule 14A filed May 25, 2007).10.10
                    
                    Settlement
      Agreement by and among WHX Corporation, Handy & Harman, and Pension
      Benefit Guaranty Corporation dated December 28, 2006 (incorporated by
      reference to Exhibit 10.12 to the Company’s Form 8-K filed January 4,
      2007).10.11
                    
                    Asset
      Purchase Agreement by and among Illinois Tool Works Inc., ITW Canada, OMG
      Roofing, Inc., and OMG, Inc., dated December 28, 2006 (incorporated by
      reference to Exhibit 10.12 of the Company’s Form 10-K filed March 9,
      2007).10.12
                    
                    Employment
      Agreement by and among WHX Corporation, Handy & Harman, and James
      McCabe dated as of February 1, 2007 (incorporated by reference to exhibit
      10.14 to the Company’s Form 10-K filed May 21, 2007).*10.13
                    
                    Amendment
      to Employment Agreement by and among WHX Corporation, Handy & Harman,
      and James F. McCabe Jr., effective January 1, 2009.*10.14
                    
                    Second
      Amendment to Employment Agreement by and among WHX Corporation, Handy
      & Harman, and James F. McCabe Jr., effective January 4,
      2009.10.15
                    
                    Employment
      Agreement by and between Handy & Harman and Jeffrey A. Svoboda,
      effective January 28, 2008 (incorporated by reference to Exhibit 10.17 to
      the Company’s Form 10-K filed March 31, 2008).*10.16
                    
                    Amendment
      to Employment Agreement by and between Handy & Harman and Jeffrey A.
      Svoboda, effective January 1, 2009.*10.17
                    
                    Second
      Amendment to Employment Agreement by and between Handy & Harman and
      Jeffrey A. Svoboda, effective January 4, 2009.10.18
                    
                    Employment
      Agreement by and among WHX Corporation and Peter T. Gelfman, dated as of
      April 7, 2008 (incorporated by reference to Exhibit 10.18 to the Company’s
      Form 10-Q filed May 15, 2008).*10.19
                    
                    Amendment
      to Employment Agreement by and among WHX Corporation and Peter T. Gelfman,
      effective January 1,
2009.
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 Table of Contents
  *10.20
                    
                    Second
      Amendment to Employment Agreement by and among WHX Corporation and Peter
      T. Gelfman, effective January 4, 2009.*10.21
                    
                    Incentive
      Agreement, dated July 6, 2007, by and between WHX Corporation and Glen
      Kassan.*10.22
                    
                    Amendment
      to Incentive Agreement, dated as of January 1, 2009, by and between WHX
      Corporation and Glen Kassan.*10.23
                    
                    Incentive
      Agreement, dated July 6, 2007, by and between WHX Corporation and Warren
      G. Lichtenstein.*10.24
                    
                    Amendment
      to Incentive Agreement, dated as of January 1, 2009, by and between WHX
      Corporation and Warren G. Lichtenstein.16
                    
                    Letter
      from PricewaterhouseCoopers LLP, dated as of January 17, 2007
      (incorporated by reference to Exhibit 16 to the Company’s Form 8-K filed
      January 23, 2007).*21.1
                    
                    Subsidiaries
      of Registrant.*23.1
                    
                    Consent
      of Independent Registered Accounting Firm-Grant Thornton
    LLP.*31.1
                    
                    Certification
      by Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*31.2
                    
                    Certification
      by Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*32
                    
                    Certification
      by Principal Executive Officer and Principal Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002.
 * -
      filed herewith.
  (b)           Financial
Statements and Schedules:
  1.           Schedule
I – Audited Financial Statements of WHX Corporation (Parent
Only).   See pages F-1 to F-7.
  2.           Schedule
II – Valuation and Qualifying Accounts and Reserves.  See Page
F-8
  109
 Table of Contents
  SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on March
31, 2009.
   WHX
      CORPORATIONBy:
                /s/ Glen
      M. KassanName:
                Glen
      M. KassanTitle:
                Chief
      Executive Officer
 
  POWER OF
ATTORNEY
  WHX
Corporation and each of the undersigned do hereby appoint Glen M. Kassan and
James F. McCabe, Jr., and each of them severally, its or his true and lawful
attorney to execute on behalf of WHX Corporation and the undersigned any and all
amendments to this Annual Report on Form 10-K and to file the same with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission; each of such attorneys shall have the power
to act hereunder with or without the other.
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.
  By:
                /s/Warren
      G. Lichtenstein
                
                March
      31, 2009Warren
      G. Lichtenstein, Chairman of the Board
                
                DateBy:
                /s/
      Glen M. Kassan
                
                March
      31, 2009Glen
      M. Kassan, Director and Chief Executive
                
                DateOfficer
      (Principal Executive Officer)By:
                /s/
      James F. McCabe, Jr.
                
                March
      31, 2009James
      F. McCabe, Jr., Chief Financial Officer
                
                Date(Principal
      Accounting Officer)By:
                /s/
      John H. McNamara, Jr.
                
                March
      31, 2009John
      H. McNamara, Jr., Director
                
                DateBy:
                /s/
      John J. Quicke
                
                March
      31, 2009John
      J. Quicke, Director
                
                DateBy:
                /s/
      Louis Klein, Jr.
                
                March
      31, 2009Louis
      Klein, Jr., Director
                
                DateBy:
                /s/
      Jack L. Howard
                
                March
      31, 2009Jack
      L. Howard, Director
                
                DateBy:
                /s/
      Robert Frankfurt,
                
                March
      31, 2009Robert
      Frankfurt, Director
                
                DateBy:
                /s/
      Garen W. Smith
                
                March
      31, 2009Garen
      W. Smith, Director
                
                Date
 
 110
 Table of Contents
  Schedule
I
  WHX
      CORPORATION (PARENT ONLY)Statements
      of OperationsYear
      ended December 31,2008
                              
                              
                              2007(in
      thousands)Cost
      and expenses:Pension
      credit (expense)
                              
                              $
                              7,506
                              
                              
                              $
                              4,963Administrative
      and general expense
                              
                              
                              (5,846
                              )
                              
                              
                              (6,750
                              )Subtotal
                              
                              
                              1,660
                              
                              
                              
                              (1,787
                              )Interest
      expense - H&H subordinated notes
                              
                              
                              (1,124
                              )
                              
                              
                              (551
                              )Interest
      on long-term debt - related party
                              
                              
                              (2,108
                              )
                              
                              
                              (1,779
                              )Interest
      income
                              
                              
                              10
                              
                              
                              
                              18Equity
      in after tax earnings (losses) of subsidiaries
                              
                              
                              3,816
                              
                              
                              
                              (16,721
                              )Other
      income - net
                              
                              
                              757
                              
                              
                              
                              49Income
      (loss) before taxes
                              
                              
                              3,011
                              
                              
                              
                              (20,771
                              )Tax
      provision (benefit)
                              
                              
                              -
                              
                              
                              
                              -Net
      income (loss)
                              
                              $
                              3,011
                              
                              
                              $
                              (20,771
                              )
  SEE NOTES
TO PARENT ONLY FINANCIAL STATEMENTS
  F-1
 Table of Contents
  
 WHX
      CORPORATION(PARENT ONLY)Balance
      SheetsDecember
      31,ASSETS
                  
                  2008
                  
                  
                  2007(in
      thousands)Current
      assets:Cash
      and cash equivalents
                  
                  $
                  4,725
                  
                  
                  $
                  590Other
      current assets
                  
                  
                  110
                  
                  
                  
                  688Total
      current assets
                  
                  
                  4,835
                  
                  
                  
                  1,278Investment
      in and advances to subsidiaries - net
                  
                  
                  116,827
                  
                  
                  
                  (15,199
                  )$
                  121,662
                  
                  
                  $
                  (13,921
                  )LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      Payable
                  
                  $
                  720
                  
                  
                  $
                  758Accrued
      interest - Handy & Harman
                  
                  
                  1,676
                  
                  
                  
                  551Accrued
      expenses
                  
                  
                  2,096
                  
                  
                  
                  1,141Total
      current liabilities
                  
                  
                  4,492
                  
                  
                  
                  2,450Notes
      payable to Handy & Harman
                  
                  
                  25,600
                  
                  
                  
                  22,000Accrued
      pension liability
                  
                  
                  133,477
                  
                  
                  
                  14,395Subordinated
      note - related party
                  
                  
                  -
                  
                  
                  
                  16,779163,569
                  
                  
                  
                  55,624Commitments
      and contingenciesStockholders’
      (Deficit) Equity:Preferred
      stock- $.01 par value; authorized 5,000 shares; issued and outstanding -0-
      sharesCommon
      stock - $.01 par value; authorized 180,000 and 50,000 shares; issued and
      outstanding 12,179 and 1,000 shares in 2008 and 2007,
      respectively
                  
                  
                  122
                  
                  
                  
                  100Warrants
                  
                  
                  -
                  
                  
                  
                  1,287Accumulated
      other comprehensive loss
                  
                  
                  163,502
                  
                  
                  
                  (32,559
                  )Additional
      paid-in capital
                  
                  
                  552,583
                  
                  
                  
                  395,748Accumulated
      deficit
                  
                  
                  (431,110
                  )
                  
                  
                  (434,121
                  )Total
      stockholders’ deficit
                  
                  
                  (41,907
                  )
                  
                  
                  (69,545
                  )$
                  121,662
                  
                  
                  $
                  (13,921
                  )
 
 SEE NOTES
TO PARENT ONLY FINANCIAL STATEMENTS
  F-2
 Table of Contents
  WHX
      CORPORATION (PARENT ONLY)Statements
      of Cash Flows
                        
                        Year
      ended December 31,2008
                        
                        
                        2007(in
      thousands)Cash
      Flows From Operating ActivitiesNet
      income (loss)
                        
                        $
                        3,011
                        
                        
                        $
                        (20,771
                        )Non
      cash income and expensesPayment
      in kind interest - related party
                        
                        
                        -
                        
                        
                        
                        1,779Payment
      in kind interest - H&H
                        
                        
                        1,125
                        
                        
                        
                        551Equity
      in loss (income) of subsidiaries
                        
                        
                        (3,816
                        )
                        
                        
                        16,721Non
      cash stock-based compensation
                        
                        
                        553
                        
                        
                        
                        1,612Decrease/(increase)
      in working capital elementsAdvances
      from affiliates
                        
                        
                        4,323
                        
                        
                        
                        5,545Pension
      payments-WHX plan
                        
                        
                        -
                        
                        
                        
                        (21,600
                        )Other
      current
                        
                        
                        (6,600
                        )
                        
                        
                        (5,349
                        )Net
      cash provided/(used) by operating activities
                        
                        
                        (1,404
                        )
                        
                        
                        (21,512
                        )Cash
      Flows from Investing ActivitiesInvestments
      in subsidiaries
                        
                        
                        (136,843
                        )
                        
                        
                        (15,000
                        )Net
      cash provided/(used) by investing activities
                        
                        
                        (136,843
                        )
                        
                        
                        (15,000
                        )Cash
      flows from Financing ActivitiesNotes
      payable - Handy & Harman
                        
                        
                        3,600
                        
                        
                        
                        22,000Long
      term debt - related party
                        
                        
                        (16,779
                        )
                        
                        
                        15,000Proceeds
      from rights offering
                        
                        
                        155,561
                        
                        
                        
                        -Net
      cash provided/(used) by financing activities
                        
                        
                        142,382
                        
                        
                        
                        37,000Increase/(decrease)
      in cash and cash equivalents
                        
                        
                        4,135
                        
                        
                        
                        488Cash
      and cash equivalents at beginning of period
                        
                        
                        590
                        
                        
                        
                        102Cash
      and cash equivalents at end of period
                        
                        $
                        4,725
                        
                        
                        $
                        590
  SEE NOTES
TO PARENT ONLY FINANCIAL STATEMENTS
  F-3
 Table of Contents
 
 NOTES
TO WHX PARENT ONLY FINANCIAL STATEMENTS
  Note
1 – Background
  Basis of
Presentation:
  The WHX
Corporation (Parent Only) (“WHX”) financial statements include the accounts of
all subsidiary companies accounted for under the equity method of
accounting.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles (“GAAP”) have been condensed or omitted.  These
WHX parent only financial statements are prepared on the same basis of
accounting as the WHX consolidated financial statements, except that the WHX
subsidiaries are accounted for under the equity method of
accounting.  For a complete description of the accounting policies and
other required GAAP disclosures, refer to the Company’s audited consolidated
financial statements for the year ended December 31, 2008 contained in Item 8 of
this Form 10-K (the “consolidated financial statements”).
  WHX, the
parent company, manages a group of businesses on a decentralized
basis.  WHX owns Handy & Harman (“H&H”), a diversified holding
company whose strategic business units encompass three reportable segments:
Precious Metal, Tubing, and Engineered Materials.  In April 2007, WHX
acquired Bairnco Corporation (“Bairnco”).  Bairnco manages business
units in three reportable segments: Arlon Electronic Materials, Arlon Coated
Materials, and Kasco Replacement Products and Services.  The business
units of H&H and Bairnco principally operate in North
America.  WHX, together with all of its subsidiaries, shall be
referred to herein as the “Company”.
  On
November 24, 2008, the Company consummated a 1-for-10 Reverse Stock Split of its
outstanding common stock.  Pursuant to the Reverse Stock Split, every
ten (10) shares of common stock issued and outstanding at the time the split was
effected were changed and reclassified into one (1) share of common stock
immediately following the Reverse Stock Split.  The Reverse Stock
Split affected all shares of common stock, stock options and rights of the
Company outstanding at the effective time of the Reverse Stock
Split.  The Reverse Stock Split did not change the proportionate
equity interests of the Company’s stockholders, nor were the respective voting
rights and other rights of stockholders altered, except due to immaterial
differences because fractional shares were not issued and the number of shares
of a holder was rounded up.  To enhance comparability, unless
otherwise noted, all references to the Company’s common stock and per share
amounts have been adjusted on a retroactive basis as if the Reverse Stock Split
had occurred on January 1, 2007.
  Management’s Plans and
Liquidity:
  WHX Corporation, the parent
company
  WHX has
as its sole source of cash flow, distributions from its operating subsidiaries,
H&H and Bairnco, or other discrete transactions.  H&H’s credit
facilities effectively do not permit it to transfer any cash or other assets to
WHX with the exception of (i) an unsecured loan for required payments to the WHX
Pension Plan, and (ii) an unsecured loan for other uses in the aggregate
principal amount not to exceed $12.0 million, $7.0 million of which has been
distributed.  H&H’s credit facilities are collateralized by
substantially all of the assets of H&H and its
subsidiaries.  Similarly, Bairnco’s credit facilities and term loan do
not permit it to make any distribution, pay any dividend or transfer any cash or
other assets to WHX other than common stock of Bairnco, and up to $0.6 million
annually for services performed by WHX on behalf of Bairnco, under certain
circumstances.  Bairnco’s credit facilities are collateralized by a
first priority lien on all of the assets of Bairnco and its U.S.
subsidiaries.
  WHX’s
ongoing operating cash flow requirements consist of arranging for the funding of
the minimum requirements of the defined benefit pension plan sponsored by the
Company (the “WHX Pension Plan”) and paying WHX administrative
costs.  On September 12, 2007, WHX made a payment to the WHX Pension
Plan of $13.0 million, which exceeded the minimum required contribution under
ERISA.  As a result of such accelerated contribution, there was no
required contribution to the WHX Pension Plan in 2008.  The recent
decline of stock prices across a significant cross-section of the United States
stock market has resulted in an unfunded pension liability of the WHX Pension
Plan of $134.0 million as of December 31, 2008.  The Company expects
to have required minimum contributions for 2009 and 2010 of $1.2 million and
$6.0 million, respectively.   Required future contributions are
determined based upon and subject to changes, and assumptions as to future
changes, in asset values on plan assets, discount rates on future obligations,
assumed rates of return on plan assets and legislative
changes.  Pension costs and required funding obligations will be
effected by changes in the factors and assumptions described in the previous
sentence, as well as other changes such as a plan
termination.
  F-4
 Table of Contents
  In recent
years, the Company experienced liquidity issues.  On March 7, 2005,
WHX filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy
Code.  WHX continued to operate its business and own and manage its
properties as a debtor in possession until it emerged from protection under
Chapter 11 of the Bankruptcy Code on July 29, 2005.
  Since WHX
emerged from bankruptcy, there have been no dividends from H&H or Bairnco to
WHX (due to covenant restrictions in their respective credit facilities) and
WHX’s principal sources of cash flow have consisted of:
  ·
              The
      issuance of $5.1 million in preferred stock by a newly created subsidiary
      in October 2005, which was invested in the equity of a public company
      (CoSine Communications Inc.
(“CoSine”);
  ·
              Partial
      payment by H&H of a subordinated debt to WHX of $9.0 million, which
      required the approval of the banks participating in the H&H credit
      facilities.  Subsequent to this transaction in 2006, the
      remaining intercompany loan balance of the subordinated debt of $44.2
      million was converted to equity;
  ·
              As
      permitted by the March 29, 2007 amendment and waiver to the H&H credit
      facilities, unsecured loans from H&H for certain required payments to
      the WHX Pension Plan;
  ·
              As
      permitted by a March 12, 2009 amendment to the H&H credit facilities,
      an unsecured loan from H&H to WHX for other uses in the aggregate
      principal amount of up to approximately $12.0 million (initially amended
      on July 27, 2007 to be up to $7.0 million), subject to certain
      limitations, of which approximately $7.0 million has already been
      distributed;
  ·
              A
      $15.0 million subordinated loan from SP II advanced on April 17, 2007
      pursuant to the Subordinated Loan Agreement, which WHX used to fund a
      capital contribution to Bairnco to finance in part the Bairnco
      Acquisition;
  ·
              As
      permitted by a September 10, 2007 amendment to the H&H credit
      facilities, an unsecured loan from H&H of $13.0 million which was used
      by WHX to make a payment to the WHX Pension Plan on September 12, 2007;
      and
  ·
              Proceeds
      from the settlement of a fire loss claim at a plant of a subsidiary of the
      Company in the amounts of $0.8 million, $6.5 million and $0.8 million in
      2006, 2007 and 2008, respectively.
  As of
December 31, 2008, WHX and its subsidiaries that are not restricted by loan
agreements or otherwise from transferring funds to WHX had cash of approximately
$4.8 million and current liabilities of approximately $2.8 million (excluding
amounts owed to its subsidiaries). H&H is permitted to advance up to $5
million to WHX pursuant to the most recent amendment to H&H’s credit
agreements, and Bairnco is permitted by its credit agreements to transfer up to
$600,000 per year to WHX in payment of services rendered by WHX on its
behalf.  Management expects that WHX will be able to fund its
operations in the ordinary course over at least the next twelve
months.
  F-5
 Table of Contents
  Rights
Offering
  On
September 25, 2008, WHX completed a rights offering (the “Rights
Offering”).  As a result of the Rights Offering the Company sold
11,178,459 shares of common stock to existing stockholders through the exercise
of rights at a subscription price of $14.00 per share, for an aggregate purchase
price of approximately $156.5 million.  Steel Partners (“SP II”)
subscribed for 8,630,910 shares of the Company’s common stock for
an aggregate purchase price of approximately $120.8 million, pursuant to its
basic and applicable oversubscription privileges.  After giving effect
to the Rights Offering, SP II owns 75% of the outstanding shares of common stock
of the Company.  The Company used the proceeds of the Rights Offering
to (i) redeem preferred stock issued by a wholly-owned subsidiary of the
Company, which was held by SP II, plus accumulated dividends, together totaling
$6.0 million, (ii) repay Company indebtedness to SP II of $18.9 million, and
(iii) repay $117.6 million of indebtedness and accrued interest of certain
wholly-owned subsidiaries of the Company to SP II. After
such payments, $14.0 million remained with the Company as cash, of which $13.2
million was used to repay additional debt of certain wholly-owned subsidiaries
of the Company on October 29, 2008 pursuant to the amendments to the Company’s
credit agreements of that same date.
  Other
Obligations
  Pension
Plan
  On
December 20, 2006, the Internal Revenue Service (“IRS”) granted a conditional
waiver of the minimum funding requirements for the WHX Pension Plan for the 2005
plan year in accordance with section 412 (d) of the Internal Revenue Code and
section 303 of ERISA, which had not been paid by the Company due to liquidity
issues.  On December 28, 2006, WHX, H&H, and the Pension Benefit
Guaranty Corporation entered into a settlement agreement (the “PBGC Settlement
Agreement”) in connection with the conditional waiver granted by the IRS of the
minimum funding requirement for the 2005 plan year (the “IRS Waiver”) and
certain other matters.  Payments made during 2006 and 2007 were $13.1
million and $21.6 million, respectively.  On September 12, 2007, the
Company made a payment to the WHX Pension Plan of $13.0 million, which exceeded
the minimum required contributions under ERISA.  As a result of such
accelerated contribution, there was no required minimum contribution to the WHX
Pension Plan in 2008, and the Company believes that the full amount of the IRS
Waiver has been repaid.
  The
recent decline of stock prices across a significant cross-section of the United
States stock market has resulted in an unfunded pension liability of $134.0
million as of December 31, 2008.  The Company expects to have required
minimum contributions for 2009 and 2010 of $1.2 million and $6.0 million,
respectively.   Required future contributions are determined
based upon and subject to changes, and assumptions as to future changes, in
asset values on plan assets, discount rates on future obligations, assumed rates
of return on plan assets and legislative changes.  Pension costs and
required funding obligations will be effected by changes in the factors and
assumptions described in the previous sentence, as well as other changes such as
a plan termination.
  On
February 28, 2008, the Company adopted an amendment to the WHX Pension Plan
allowing certain Wheeling-Pittsburgh Steel Corporation participants to elect to
receive, between March 1, 2008 and December 31, 2008, a single lump sum payment
in lieu of all benefits otherwise payable under the WHX Pension Plan. The
election was made available to more than 2,300 participants of the WHX Pension
Plan, and was elected by almost 1,900 participants.  As a result,
$125.4 million has been distributed to date and the program is now substantially
complete.  There has been no material effect on the funded status of
the WHX Pension Plan or on the estimated minimum funding requirements as a
result of this program.
  Note
2 – Investment in and Advances to Subsidiaries – Net
  The
following table details the investments in and advances to associated companies,
accounted for under the equity method of accounting.
  F-6
 Table of Contents
  December
      31,2008
                                
                                
                                2007(in
      thousands)Investment
      in:Handy
      & Harman
                                
                                $
                                77,611
                                
                                
                                $
                                (15,080
                                )Bairnco
                                
                                
                                34,825
                                
                                
                                
                                1,288WHX
      Aviation
                                
                                
                                (5
                                )
                                
                                
                                (5
                                )WHX
      CS
                                
                                
                                4,396
                                
                                
                                
                                (1,402
                                )Investment
      in and advances to subsidiaries - net
                                
                                $
                                116,827
                                
                                
                                $
                                (15,199
                                )
 
 The
Company used the proceeds of the Rights Offering to (i) redeem preferred stock
issued by a
wholly-owned subsidiary of the Company, which was held by SP II, plus
accumulated dividends, together totaling approximately $6.0 million, (ii) repay
Company indebtedness to SP II of approximately $18.9 million, and (iii) repay
$117.6 million of indebtedness and accrued interest of certain wholly-owned
subsidiaries of the Company to SP II. After
such payments, $14.0 million remained with the Company as cash, of which $13.2
million was used to repay additional debt of certain wholly-owned subsidiaries
of the Company on October 29, 2008 pursuant to the amendments to the Company’s
credit agreements of that same date. Such debt repayments were accounted for as
additional investments by WHX in its subsidiaries.
  Note
3 – Equity in Earnings (Loss) of Subsidiaries
  Year
      ended December 31,2008
                            
                            
                            2007(in
      thousands)Handy
      & Harman
                            
                            $
                            9,449
                            
                            
                            $
                            (4,070
                            )Bairnco
                            
                            
                            (5,434
                            )
                            
                            
                            (12,419
                            )WHX
      CS
                            
                            
                            (199
                            )
                            
                            
                            (236
                            )Wheeling-Pittsburgh
      Capital Corporation
                            
                            
                            -
                            
                            
                            
                            4$
                            3,816
                            
                            
                            $
                            (16,721
                            )
 
 Note
4 – Related Party Transactions
  SP II is
the beneficial holder of 9,133,890 shares of the Company’s common stock,
representing approximately 75.0% of the outstanding shares.
  In April
of 2007, in connection with the Bairnco Acquisition, SP II extended to WHX a
$15.0 million subordinated loan, which was unsecured at the WHX level, pursuant
to a Subordinated Loan Agreement. Borrowings under the Subordinated Loan
Agreement bore pay-in-kind interest at a rate per annum equal to the prime rate
of JP Morgan Chase plus 7.75%, with a minimum interest rate of 16% per annum and
a maximum interest rate of 19% per annum.  Obligations under the
Subordinated Loan Agreement were guaranteed by Bairnco and certain of its
subsidiaries and secured by a junior lien on the assets of Bairnco and certain
of its subsidiaries and capital stock of certain of Bairnco’s subsidiaries. On
September 25, 2008 WHX repaid the Subordinated Loan Agreement of $18.9 million,
including pay-in-kind interest from the proceeds of the Rights
Offering.
  On
various dates during 2008 and 2007, H&H made unsecured loans totaling $25.6
million to WHX, as permitted under H&H’s loan and security agreements, to
make payments to the WHX Pension Plan and for other general business
purposes.  These notes payable accrue interest at 5%.  As of
December 31, 2008 and 2007, the outstanding balance of these notes payable was
$25.6 million and $22.0 million, respectively. Interest payable to H&H as of
December 31, 2008 and 2007 was $1.7 million and $0.6 million
respectively.
  F-7
 Table of Contents
  WHX
Corporation
 Schedule
II –Valuation and Qualifying Accounts and Reserves
   
  (in
      thousands)Balance
      at
                      
                      
                      Charged
      to
                      
                      
                      Additions/
                      
                      
                      Balance
      atBeginning
                      
                      
                      Costs
      and
                      
                      
                      (Deductions)
                      
                      
                      End
      ofDescription
                      
                      of
      Period
                      
                      
                      Expenses
                      
                      
                      Describe
                      
                      
                      of
      PeriodYear
      ended December 31, 2008Valuation
      allowance on state and local NOL's
                      
                      
                      5,198
                      
                      
                      
                      (1,485
                      )
                      
                      
                      (579
                      )(5)
                      
                      
                      3,134Valuation
      allowance on federal NOL's
                      
                      
                      71,834
                      
                      
                      
                      (3,185
                      )
                      
                      
                      (1,026
                      )(1)
                      
                      
                      67,623Valuation
      allowance on other net deferred tax assets
                      
                      
                      4,636
                      
                      
                      
                      501
                      
                      
                      
                      45,998
                      (2)
                      
                      
                      51,13581,668
                      
                      
                      
                      (4,169
                      )
                      
                      
                      44,393
                      
                      
                      
                      121,892Allowance
      for Doubtful Accounts Receivable
                      
                      
                      2,776
                      
                      
                      
                      1,182
                      
                      
                      
                      (781
                      )
                      
                      
                      3,177Total
                      
                      
                      84,444
                      
                      
                      
                      (2,987
                      )
                      
                      
                      43,612
                      
                      
                      
                      125,069Year
      ended December 31, 2007Valuation
      allowance on state and local NOL's
                      
                      
                      5,198
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      5,198
                      (3)Valuation
      allowance on federal NOL's
                      
                      
                      56,711
                      
                      
                      
                      16,142
                      
                      
                      
                      (1,019
                      )(1)
                      
                      
                      71,834Valuation
      allowance on other net deferred tax assets
                      
                      
                      34,764
                      
                      
                      
                      (20,872
                      )
                      
                      
                      (9,256
                      )(4)
                      
                      
                      4,63696,673
                      
                      
                      
                      (4,730
                      )
                      
                      
                      (10,275
                      )
                      
                      
                      81,668Allowance
      for Doubtful Accounts Receivable
                      
                      
                      1,090
                      
                      
                      
                      536
                      
                      
                      
                      1,150
                      
                      
                      
                      2,776Total
                      
                      
                      97,763
                      
                      
                      
                      (4,194
                      )
                      
                      
                      (9,125
                      )
                      
                      
                      84,444
  (1)
              Reduction
      of NOLs (and related valuation allowance) principally due to expiration of
      carryforward period.
  (2)
              Increase
      in valuation allowance relates principally to the change in deferred taxes
      associated with minimum pension liabilities recorded in other
      comprehensive income.
  (3)
              The
      increase in deferred tax assets for 2007 state and local NOLs was offset
      by write-offs of past NOLs related to operations closed or sold by the
      Company.
  (4)
              Decrease
      in valuation allowance relates principally to the change in deferred taxes
      associated with minimum pension liabilities recorded in other
      comprehensive income and acquisitions taking place during the
      year.
  (5)
              Write
      offs of past NOLs (and related valuation allowance) for states where the
      Company is no longer operating.
  
 F-8
 Table of Contents
  Indexto Exhibits and Financial Statement
Schedules
 Exhibit
      Number
                Description 2.1
                    
                    First
      Amended Chapter 11 Plan of Reorganization of the Company, dated June 8,
      2005 (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K
      filed July 28, 2005).2.2
                    
                    Third
      Amended Joint Plan of Reorganization of Wheeling-Pittsburgh Steel
      Corporation, dated May 19, 2003 (incorporated by reference to Exhibit 2.1
      to Wheeling-Pittsburgh Corporation’s Registration Statement on Form 10
      filed May 30, 2003).3.1
                    
                    Amended
      and Restated Certificate of Incorporation of WHX (incorporated by
      reference to Exhibit 3.1 to the Company’s Form 10-K, filed December 27,
      2006).3.2
                    
                    Amendment
      to Amended and Restated Certificate of Incorporation of WHX, dated
      September 17, 2008 (incorporated by reference to Exhibit 3.2 to the
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-154428, on October 17, 2008).*3.3
                    
                    Amendment
      to Amended and Restated Certificate of Incorporation of WHX, dated
      November 24, 2008.3.4
                    
                    Amended
      and Restated By Laws of WHX (incorporated by reference to Exhibit 3.2 to
      the Company’s Form 10-K, filed December 27, 2006).3.5
                    
                    Amendment
      to Article Four, Section 4.1 of the Amended and Restated Bylaws of WHX
      Corporation (incorporated by reference to Exhibit 3.4 to the Company’s
      current report on Form 8-K, filed November 10, 2008).4.1
                    
                    Loan
      and Security Agreement by and among Handy & Harman, certain of its
      affiliates and Congress Financial Corporation, dated March 31, 2004
      (incorporated by reference to Exhibit 4.2 to the Company’s Form 10-K filed
      April 14, 2004).4.2
                    
                    Consent
      and Amendment No. 1 to Loan and Security Agreement by and among Handy
      & Harman, certain of its affiliates and Congress Financial
      Corporation, dated as of August 31, 2004 (incorporated by reference to
      Exhibit 4.1 to the Company’s Form 10-Q filed November 15,
      2004).4.3
                    
                    Amendment
      No. 2 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Congress Financial Corporation, dated as of
      October 29, 2004 (incorporated by reference to Exhibit 4.2 to the
      Company’s Form 10-Q filed November 15, 2004).4.4
                    
                    Amendment
      No. 3 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Congress Financial Corporation, dated as of
      December 29, 2004 (incorporated by reference to Exhibit 4.4 to the
      Company’s Form 10-K filed December 27,
2006).
  Table of Contents
  4.5
                    
                    Amendment
      No. 4 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of May 20, 2005 (incorporated by reference to
      Exhibit 4.5 to the Company’s Form 10-K filed December 27,
      2006).4.6
                    
                    Amendment
      No. 5 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of September 8, 2005 (incorporated by reference to
      Exhibit 4.6 to the Company’s Form 10-K filed December 27,
      2006).4.7
                    
                    Amendment
      No. 6 and Waiver to Loan and Security Agreement by and among Handy &
      Harman, certain of its affiliates and Wachovia Bank, National Association,
      a national banking association, successor by merger to Congress Financial
      Corporation, dated as of December 29, 2005 (incorporated by reference to
      Exhibit 4.7 to the Company’s Form 10-K filed December 27,
      2006).4.8
                    
                    Consent
      and Amendment No. 7 to Loan and Security Agreement by and among Handy
      & Harman, certain of its affiliates and Wachovia Bank, National
      Association, a national banking association, successor by merger to
      Congress Financial Corporation, dated as of January 24, 2006 (incorporated
      by reference to Exhibit 4.8 to the Company’s Form 10-K filed December 27,
      2006).4.9
                    
                    Amendment
      No. 8 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of March 31, 2006 (incorporated by reference to
      Exhibit 4.1 to the Company’s Form 8-K filed April 6,
  2006).4.10
                    
                    Amendment
      No. 9 to the Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of July 18, 2006 (incorporated by reference to
      Exhibit 99.1 to the Company’s Form 8-K filed July 24,
    2006).4.11
                    
                    Amendment
      No. 10 to the Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Wachovia Bank, National Association, a
      national banking association, successor by merger to Congress Financial
      Corporation, dated as of October 30, 2006 (incorporated by reference to
      Exhibit 99.1 to the Company’s Form 8-K filed November 03,
      2006).4.12
                    
                    Amendment
      No. 11 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated December 28, 2006 (incorporated by reference to Exhibit 99.1.3 to
      the Company’s Form 8-K filed January 4, 2007).4.13
                    
                    Amendment
      No. 12 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated December 28, 2006 (incorporated by reference to Exhibit 99.1.4 to
      the Company’s Form 8-K filed January 4, 2007).4.14
                    
                    Amendment
      No. 13 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated March 29, 2007 (incorporated by reference to Exhibit 99.1 to the
      Company’s Form 8-K filed March 30,
2007).
  Table of Contents
  4.15
                    
                    Amendment
      No. 14 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated July 20, 2007 (incorporated by reference to Exhibit 4.15 to
      Amendment No. 1 to Registration Statement on Form S-1 filed with the
      Securities and Exchange Commission, File No. 333-146803, on November 30,
      2008).4.16
                    
                    Amendment
      No. 15 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated September 20, 2007 (incorporated by reference to exhibit 4.16 to
      Amendment No. 1 to Registration Statement on Form S-1 filed with the
      Securities and Exchange Commission, File No. 333-146803, on November 30,
      2008).4.17
                    
                    Amendment
      No. 16 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated October 31, 2007 (incorporated by reference to Exhibit 4.17 to the
      Company’s Form 10-K filed March 31, 2008).4.18
                    
                    Amendment
      No. 17 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated January 11, 2008 (incorporated by reference to Exhibit 4.18 to the
      Company’s Form 10-K filed March 31, 2008).4.19
                    
                    Amendment
      No. 18 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated February 14, 2008 (incorporated by reference to Exhibit 4.19 to the
      Company’s Form 10-K filed March 31, 2008).4.20
                    
                    Amendment
      No. 19 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated February 14, 2008 (incorporated by reference to Exhibit 4.20 to the
      Company’s Form 10-K filed March 31, 2008).4.21
                    
                    Amendment
      No. 20 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated September 29, 2008 (incorporated by reference to Exhibit 4.21 to the
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-154428, on October 17, 2008).4.22
                    
                    Amendment
      No. 21 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated October 29, 2008 (incorporated by reference to Exhibit 4.56 to the
      Company’s Form 10-Q, filed November 7, 2008).*4.23
                    
                    Amendment
      No. 22 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Wachovia Bank, National Association, as agent,
      dated March 12, 2009.4.24
                    
                    Loan
      and Security Agreement by and among Handy & Harman, certain of its
      affiliates and Ableco Finance LLC, dated March 31, 2004 (incorporated by
      reference to Exhibit 4.3 to the Company’s Form 10-K filed April 14,
      2004).4.25
                    
                    Loan
      and Security Agreement Amendment by and among Handy & Harman, certain
      of its affiliates and Canpartners Investments IV, LLC, dated as of October
      29, 2004 (incorporated by reference to Exhibit 4.3 to the Company’s Form
      10-Q filed November 15,
2004).
  Table of Contents
  4.26
                    
                    Amendment
      No. 2 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Canpartners Investments IV, LLC, dated as of
      December 29, 2004 (incorporated by reference to Exhibit 4.15 to the
      Company’s Form 10-K filed December 27, 2006).4.27
                    
                    Amendment
      No. 3 and Waiver to Loan and Security Agreement by and among Handy &
      Harman, certain of its affiliates and Steel Partners II, L.P., successor
      by assignment from Canpartners Investments IV, LLC, dated as of December
      29, 2005 (incorporated by reference to Exhibit 4.16 to the Company’s Form
      10-K filed December 27, 2006).4.28
                    
                    Consent
      and Amendment No. 4 to Loan and Security Agreement by and among Handy
      & Harman, certain of its affiliates and Steel Partners II, L.P.,
      successor by assignment from Canpartners Investments IV, LLC, dated as of
      January 24, 2006 (incorporated by reference to Exhibit 4.17 to the
      Company’s Form 10-K filed December 27, 2006).4.29
                    
                    Amendment
      No. 5 to Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Steel Partners II, L.P., successor by
      assignment from Canpartners Investments IV, LLC, dated as of March 31,
      2006 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K
      filed April 6, 2006).4.30
                    
                    Amendment
      No. 6 to the Loan and Security Agreement by and among Handy & Harman,
      certain of its affiliates and Steel Partners II, L.P., successor by
      assignment from Canpartners Investments IV, LLC, dated as of July 18, 2006
      (incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K filed
      July 24, 2006).4.31
                    
                    Amendment
      No. 7 to the Loan and Security Agreement by and Among Handy & Harman,
      certain of its affiliates and Steel Partners II, L.P., successor by
      assignment from Carpenters Investments IV, LLC, dated as of October 30,
      2006 (incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K
      filed November 3, 2006).4.32
                    
                    Amendment
      No. 8 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated December 28, 2006
      (incorporated by reference to Exhibit 99.1.5 to the Company’s Form 8-K
      filed January 4, 2007).4.33
                    
                    Amendment
      No. 9 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated December 28, 2006
      (incorporated by reference to Exhibit 99.1.6 to the Company’s Form 8-K
      filed January 4, 2007).4.34
                    
                    Amendment
      No. 10 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated March 29, 2007
      (incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K filed
      March 30, 2007).4.35
                    
                    Amendment
      No. 11 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated July 20, 2007
      (incorporated by reference to Exhibit 4.29 to Amendment No. 1 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on November 30, 2007).4.36
                    
                    Amendment
      No. 12 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P. dated September 10, 2007
      (incorporated by reference to Exhibit 4.30 to Amendment No. 1 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on November 30,
  2007).
  Table of Contents
 4.37
                    
                    Amendment
      No. 13 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated November 5, 2007
      (incorporated by reference to Exhibit 4.35 to the Company’s Form 10-K
      filed March 31, 2008).4.38
                    
                    Amendment
      No. 14 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated February 14, 2008
      (incorporated by reference to Exhibit 4.36 to the Company’s Form 10-K
      filed March 31, 2008).4.39
                    
                    Amendment
      No. 15 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated February 14, 2008
      (incorporated by reference to Exhibit 4.37 to the Company’s Form 10-K
      filed March 31, 2008).4.40
                    
                    Amendment
      No. 16 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated as of October 29,
      2008 (incorporated by reference to Exhibit 4.55 to the Company’s Form
      10-Q, filed November 7, 2008).*4.41
                    
                    Amendment
      No. 17 to the Loan and Security Agreement by and among Handy & Harman
      and its subsidiaries, and Steel Partners II, L.P., dated as of March 12,
      2009.4.42
                    
                    Credit
      Agreement, dated as of July 17, 2007, by and among Bairnco, Arlon, Inc.,
      Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern
      Saw Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc.,
      as the arranger and administrative agent for the lenders thereunder
      (incorporated by reference to Exhibit 4.36 to Amendment No. 1 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on November 30, 2007).4.43
                    
                    Amendment
      No. 1 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated
      February 14, 2008 (incorporated by reference to Exhibit 4.44 to the
      Company’s Form 10-K filed March 31, 2008).4.44
                    
                    Amendment
      No. 2 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated
      June 30, 2008 (incorporated by reference to Exhibit 4.45 to Amendment No.
      6 to Registration Statement on Form S-1 filed with the Securities and
      Exchange Commission, File No. 333-146803, on July 9,
  2008).4.45
                    
                    Amendment
      No. 3 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated as
      of October 29, 2008 (incorporated by reference to Exhibit 4.54 to the
      Company’s Form 10-Q, filed November 7, 2008).*4.46
                    
                    Amendment
      No. 4 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Wells Fargo Foothill, Inc., as
      the arranger and administrative agent for the lenders thereunder, dated
      March 12, 2009.4.47
                    
                    Credit
      Agreement, dated as of July 17, 2007, by and among Bairnco, Arlon, Inc.,
      Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern
      Saw Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder (incorporated by reference
      to Exhibit 4.37 to Amendment No. 1 to Registration Statement on Form S-1
      filed with the Securities and Exchange Commission, File No. 333-146803, on
      November 30, 2007).
  Table of Contents
 4.48
                      
                      Amendment
      No. 1 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated February 14, 2008
      (incorporated by reference to Exhibit 4.46 to the Company’s Form 10-K
      filed March 31, 2008).4.49
                      
                      Amendment
      No. 2 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated June 30, 2008
      (incorporated by reference to Exhibit 4.48 to Amendment No. 6 to
      Registration Statement on Form S-1 filed with the Securities and Exchange
      Commission, File No. 333-146803, on July 9, 2008).4.50
                      
                      Amendment
      No. 3 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated as of October 29,
      2008 (incorporated by reference to Exhibit 4.53 to the Company’s Form
      10-Q, filed November 7, 2008).*4.51
                      
                      Amendment
      No. 4 to the Credit Agreement by and among Bairnco, Arlon, Inc., Arlon
      Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation, and Southern Saw
      Acquisition Corporation, as borrowers, and Ableco Finance LLC, as
      administrative agent for the lenders thereunder, dated as of March 12,
      2009.4.52
                      
                      Amended
      and Restated Credit Agreement, dated as of July 17, 2007, by and among
      Bairnco, Arlon, Inc., Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco
      Corporation, and Southern Saw Acquisition Corporation, as borrowers, and
      Steel Partners II, L.P. as lender (incorporated by reference to Exhibit
      4.38 to Amendment No. 1 to Registration Statement on Form S-1 filed with
      the Securities and Exchange Commission, File No. 333-146803, on November
      30, 2008).*4.53
                      
                      First
      Amendment to Amended and Restated Credit Agreement, by and among Bairnco,
      Arlon, Inc., Arlon Viscor Ltd., Arlon Signtech, Ltd., Kasco Corporation,
      and Southern Saw Acquisition Corporation, as borrowers, and Steel Partners
      II, L.P. as lender, dated as of March 12, 2009.4.54
                      
                      Security
      Agreement, dated as of February 14, 2008, by and among H&H and certain
      of it subsidiaries and Ableco Finance LLC, as Agent (incorporated by
      reference to Exhibit 4.49 to the Company’s Form 10-K filed March 31,
      2008).10.1
                      
                      Settlement
      and Release Agreement by and among Wheeling-Pittsburgh Steel Corporation
      (“WPSC”) and Wheeling-Pittsburgh Corporation (“WPC”), the Company and
      certain affiliates of WPSC, WPC and the Company (incorporated by reference
      to Exhibit 99.1 to the Company’s Form 8-K filed May 30,
    2001).10.2
                      
                      Employment
      Agreement by and between H&H and Daniel P. Murphy, Jr., effective
      February 11, 2004 (incorporated by reference to Exhibit 10.1 to the
      Company’s Form 10-Q filed November 15, 2004).10.3
                      
                      Amendment
      to Employment Agreement by and among WHX, Handy & Harman and Daniel P.
      Murphy, dated as of February 20, 2008 (incorporated by reference to
      Exhibit 10.4 to the Company’s Form 10-K filed March 31,
    2008).
  Table of Contents
 
 10.4
                    
                    Acknowledgement
      and Release dated November 10, 2005, by and between H&H and Daniel P.
      Murphy, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s
      Form 8-K filed April 6, 2006).10.5
                    
                    Supplemental
      Executive Retirement Plan (as Amended and Restated as of January 1, 1998)
      (incorporated by reference to Exhibit 10.9 to the Company’s Form 10-K
      filed December 27, 2006).10.6
                    
                    Agreement
      by and among the Pension Benefit Guaranty Corporation, WHX Corporation,
      Wheeling-Pittsburgh Corporation, Wheeling-Pittsburgh Steel Corporation and
      the United Steel Workers of America, AFL-CIO-CLC, dated as of July 31,
      2003 (incorporated by reference to Exhibit 10.10 to the Company’s Form
      10-K filed December 27, 2006).*10.7
                    
                    2008
      Bonus Plan of the Company.*10.8
                    
                    Amendment
      to 2008 Bonus Plan of the Company.10.9
                    
                    2007
      Incentive Stock Plan (incorporated by reference to Exhibit B to the
      Company’s Schedule 14A filed May 25, 2007).10.10
                    
                    Settlement
      Agreement by and among WHX Corporation, Handy & Harman, and Pension
      Benefit Guaranty Corporation dated December 28, 2006 (incorporated by
      reference to Exhibit 10.12 to the Company’s Form 8-K filed January 4,
      2007).10.11
                    
                    Asset
      Purchase Agreement by and among Illinois Tool Works Inc., ITW Canada, OMG
      Roofing, Inc., and OMG, Inc., dated December 28, 2006 (incorporated by
      reference to Exhibit 10.12 of the Company’s Form 10-K filed March 9,
      2007).10.12
                    
                    Employment
      Agreement by and among WHX Corporation, Handy & Harman, and James
      McCabe dated as of February 1, 2007 (incorporated by reference to exhibit
      10.14 to the Company’s Form 10-K filed May 21, 2007).*10.13
                    
                    Amendment
      to Employment Agreement by and among WHX Corporation, Handy & Harman,
      and James F. McCabe Jr., effective January 1, 2009.*10.14
                    
                    Second
      Amendment to Employment Agreement by and among WHX Corporation, Handy
      & Harman, and James F. McCabe Jr., effective January 4,
      2009.10.15
                    
                    Employment
      Agreement by and between Handy & Harman and Jeffrey A. Svoboda,
      effective January 28, 2008 (incorporated by reference to Exhibit 10.17 to
      the Company’s Form 10-K filed March 31, 2008).*10.16
                    
                    Amendment
      to Employment Agreement by and between Handy & Harman and Jeffrey A.
      Svoboda, effective January 1, 2009.*10.17
                    
                    Second
      Amendment to Employment Agreement by and between Handy & Harman and
      Jeffrey A. Svoboda, effective January 4, 2009.10.18
                    
                    Employment
      Agreement by and among WHX Corporation and Peter T. Gelfman, dated as of
      April 7, 2008 (incorporated by reference to Exhibit 10.18 to the Company’s
      Form 10-Q filed May 15, 2008).*10.19
                    
                    Amendment
      to Employment Agreement by and among WHX Corporation and Peter T. Gelfman,
      effective January 1,
2009.
  Table of Contents
  *10.20
                    
                    Second
      Amendment to Employment Agreement by and among WHX Corporation and Peter
      T. Gelfman, effective January 4, 2009.*10.21
                    
                    Incentive
      Agreement, dated July 6, 2007, by and between WHX Corporation and Glen
      Kassan.*10.22
                    
                    Amendment
      to Incentive Agreement, dated as of January 1, 2009, by and between WHX
      Corporation and Glen Kassan.*10.23
                    
                    Incentive
      Agreement, dated July 6, 2007, by and between WHX Corporation and Warren
      G. Lichtenstein.*10.24
                    
                    Amendment
      to Incentive Agreement, dated as of January 1, 2009, by and between WHX
      Corporation and Warren G. Lichtenstein.16
                    
                    Letter
      from PricewaterhouseCoopers LLP, dated as of January 17, 2007
      (incorporated by reference to Exhibit 16 to the Company’s Form 8-K filed
      January 23, 2007).*21.1
                    
                    Subsidiaries
      of Registrant.*23.1
                    
                    Consent
      of Independent Registered Accounting Firm-Grant Thornton
    LLP.*31.1
                    
                    Certification
      by Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*31.2
                    
                    Certification
      by Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*32
                    
                    Certification
      by Principal Executive Officer and Principal Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002.
 
 * - filed
herewith.
 Financial
Statements and Schedules:
  1.           Schedule
I – Audited Financial Statements of WHX Corporation (Parent
Only).   See pages F-1 to F-7.
  2.           Schedule
II – Valuation and Qualifying Accounts and Reserves.  See Page
F-8