Wheeling-Pittsburgh Corporation Announces Fourth Quarter and Full Year 2006 Results

  
    
  
  
    
      Wheeling-Pittsburgh Corporation (NASDAQ:WPSC), the holding company of 
      Wheeling-Pittsburgh Steel Corporation, today reported its financial 
      results for the year ended December 31, 2006.
    
    
      For 2006, the Company reported a net income of $6.5 million, or $0.44 
      per basic and diluted share. This compares to a net loss of $33.8 
      million for 2005, or $(2.37) per basic share and diluted share. For the 
      fourth quarter of 2006, the Company reported a net loss of $18.1 
      million, or $(1.20) per basic and diluted share. This compares with a 
      net loss of $23.4 million in the fourth quarter of 2005, or $(1.61) per 
      basic share and diluted share.
    
    
      Net sales for 2006 totaled $1,770.8 million, as compared to net sales of 
      $1,560.5 million for 2005. Net sales of steel products for 2006 totaled 
      $1,700.4 million on steel shipments of 2,329,667 tons, or $730 per ton. 
      Net sales of steel products for 2005 totaled $1,484.7 million on steel 
      shipments of 2,164,404 tons, or $686 per ton. The increase in net sales 
      can be attributed to an increase in the volume of steel products sold 
      and an increase in the average selling price of steel products of $44 
      per ton, offset by a decrease in raw material sales.
    
    
      Cost of sales for 2006 totaled $1,621.8 million, as compared to cost of 
      sales of $1,479.5 million for 2005. Cost of sales for steel products 
      sold in 2006 totaled $1,575.3 million, or $676 per ton. Cost of sales 
      for steel products sold in 2005 totaled $1,434.3 million, or $663 per 
      ton. The increase in the cost of steel products sold of $141.0 million, 
      or $13 per ton, resulted principally from an increase in volume, an 
      increase in the cost of certain raw materials, largely zinc, and an 
      increase in payroll-related costs.
    
    
      Net sales for the fourth quarter of 2006 totaled $357.1 million, as 
      compared to net sales of $370.9 million for the fourth quarter of 2005. 
      Net sales of steel products for the fourth quarter of 2006 totaled 
      $332.3 million on steel shipments of 431,325 tons, or $770 per ton. Net 
      sales of steel products for the fourth quarter of 2005 totaled $356.0 
      million on steel shipments of 527,336, or $675 per ton.
    
    
      Cost of sales for the fourth quarter of 2006 totaled $340.9 million, as 
      compared to cost of sales of $365.6 million for the fourth quarter of 
      2005. Cost of sales for steel products sold in the fourth quarter of 
      2006 totaled $325.3 million, or $754 per ton. Cost of sales for steel 
      products sold in the fourth quarter of 2005 totaled $354.8 million, or 
      $673 per ton.
    
    
      Wheeling-Pittsburgh and Esmark Reach Merger Agreement;Company 
      Reaches Agreement to Amend Term Loan Financial Covenants;Commitment 
      to Raise $50 Million in Convertible Notes
    
    
      In a separate press release today, the Company’s 
      Board of Directors and Esmark Incorporated jointly announced that they 
      have executed a definitive merger agreement and will begin the process 
      of SEC S-4 proxy filings required to send the approved transaction to 
      shareholder approval.
    
    
      In recent weeks, Wheeling-Pittsburgh Steel has been in a discussion with 
      its short term lenders, long term lenders, and the Emergency Steel Loan 
      Guarantee Board (Loan Board) to approve the merger transaction, approve 
      a $50 million convertible note intended to provide Wheeling-Pitt with 
      the liquidity it requires to manage its business in the normal course 
      until the anticipated merger, and support the company with covenant 
      relief which allows the merger to happen. This effort has been 
      successful and the long term lenders and the Loan Board have agreed to a 
      series of covenant waivers and modifications, and approval of the merger 
      transaction.
    
    
      The above mentioned $50 million convertible note has been arranged with 
      a group of Wheeling-Pittsburgh and Esmark shareholders and investors, 
      including James P. Bouchard, Chairman and CEO and Craig T. Bouchard, 
      Vice Chairman and President of the Company, respectively. The notes will 
      be convertible into shares at the merger price upon completion of the 
      merger, or if no merger is consummated, at the election of the 
      investors, the notes may be converted or shall be payable in cash on 
      November 15, 2008, subject to certain limitations in our agreements with 
      our short term and long term lenders. Proceeds from the issuance of the 
      convertible notes not used to pay down the term loan will be used for 
      general corporate purposes.
    
    
      “I am extremely pleased that Wheeling-Pitt and 
      Esmark have executed merger agreements and that we have reached an 
      agreement to amend the existing financial covenants of Wheeling-Pitt’s 
      term loan,” Craig Bouchard said. “The 
      $50 million in convertible notes was necessary to ensure the strength of 
      the company as well as to resolve potential financial covenant 
      compliance issues and receive a satisfactory 2006 audit result. Major 
      shareholders of Wheeling-Pitt and Esmark participated and Jim and I felt 
      that our participation in the purchase of these notes would send a 
      signal to the marketplace. We believe in the future of 
      Wheeling-Pittsburgh Steel. Together, these agreements mark significant 
      steps in the transformation of this Company into a financially stable 
      and consistently profitable enterprise.”
    
    
      “Clearly, the Company’s 
      2006 results were a disappointment. We began our jobs of turning this 
      Company around on December 4. We have reconstructed the management corps 
      at the Company and they are doing their jobs well,” 
      James Bouchard said. “We will convert this 
      Company into the most efficient downstream steel production and 
      distribution company in the United States.”
    
    
      Filing of 12b-25 with SEC
    
    
      Given the agreements reached today regarding the merger agreement of the 
      Company with Esmark Incorporated, the effectiveness of the amendments to 
      the Company’s term loan and revolver, and the 
      financing commitments, the Company expects to file a Form 12b-25 with 
      the Securities and Exchange Commission with respect to its Annual Report 
      on Form 10-K for the fiscal year ended December 31, 2006 on March 19, 
      2007.
    
    
      Management will conduct a live call today at 3 p.m. ET to review the 
      Company’s financial results and business 
      prospects. Individuals wishing to participate can join the conference 
      call by dialing 800-811-8845 or 913-981-4905. A replay will be available 
      until March 23, 2007 by dialing 888-203-1112 or 719-457-0820, and using 
      the pass code 3429091. The call can also be accessed via the Internet 
      live on our website at www.wpsc.com or 
      as a replay through http://www.investorcalendar.com.
    
    
      This release contains certain projections or other forward-looking 
      statements within the meaning of Section 27A of the Securities Act and 
      Section 21E of the Securities Exchange Act regarding future events or 
      the future financial performance of Wheeling-Pittsburgh Corporation that 
      involve risks and uncertainties. Forward-looking statements reflect the 
      current views of management and are subject to a number of risks and 
      uncertainties that could cause actual results to differ materially from 
      actual future events or results. These risks and uncertainties include, 
      among others, factors relating to (1) the Company’s 
      potential inability to generate sufficient operating cash flow to 
      service or refinance its indebtedness, (2) concerns relating to 
      financial covenants and other restrictions contained in its credit 
      agreements, (3) intense competition, dependence on suppliers of raw 
      materials and cyclical demand for steel products, (4) the risk that the 
      businesses the Company and Esmark will not be integrated successfully or 
      such integration may be more difficult, time-consuming or costly than 
      expected; (5) the ability of combined companies to realize the expected 
      benefits from the proposed combination, including expected operating 
      efficiencies, synergies, cost savings and increased productivity, and 
      the timing of realization of any such expected benefits; (6) lower than 
      expected operating results for the Company; (7) the risk of unexpected 
      consequences resulting from the combination of the Company and Esmark; 
      and (8) certain other risks identified “Item 
      1A – Risk Factors” 
      section of the Company’s Annual Report on 
      Form 10-K for the year ended December 31, 2005, and other reports and 
      filings with the SEC, which identify important risk factors that could 
      cause actual results to differ from those contained in the 
      forward-looking statements. In addition, any forward-looking statements 
      represent Wheeling-Pittsburgh Corporation’s 
      views only as of today and should not be relied upon as representing the 
      Company’s views as of any subsequent date. 
      While Wheeling-Pittsburgh Corporation may elect to update 
      forward-looking statements from time to time, the Company specifically 
      disclaims any obligation to do so.
    
    
      About Wheeling-Pittsburgh
    
    
      Wheeling-Pittsburgh is a steel company engaged in the making, processing 
      and fabrication of steel and steel products using both integrated and 
      electric arc furnace technology. The Company manufactures and sells hot 
      rolled, cold rolled, galvanized, pre-painted and tin mill sheet 
      products. The Company also produces a variety of steel products 
      including roll formed corrugated roofing, roof deck, floor deck, 
      bridgeform and other products used primarily by the construction, 
      highway and agricultural markets.
    
    
      The Company's condensed consolidated statements of operations and 
      condensed consolidated balance sheets are attached.
    
    
      
        
          WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
        
      
      
        
          Consolidated Statements of Operations (Unaudited)
        
      
      
        
          (Dollars in thousands, except per share amounts)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Quarter Ended
        
        
        
        
          Year Ended
        
      
      
        
        
        
        
        
          December 31,
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          Revenues
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Net sales, including sales to affiliates of $54,780, $83,928, 
          $333,267, and $343,546
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          $ 357,131 
        
        
        
        
          $ 370,877 
        
        
        
        
          $ 1,770,765 
        
        
        
        
          $ 1,560,513 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cost and expenses
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cost of sales, including cost of sales to affiliates of $54,666, 
          $87,839, $319,179 and $346,057, excluding depreciation and 
          amortization expense
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          340,896 
        
        
        
        
          365,595 
        
        
        
        
          1,621,799 
        
        
        
        
          1,479,474 
        
      
      
        
          Depreciation and amortization expense
        
        
        
        
          13,044 
        
        
        
        
          8,363 
        
        
        
        
          39,496 
        
        
        
        
          33,984 
        
      
      
        
          Selling, general and administrative expense
        
        
          23,700 
        
        
        
        
          18,723 
        
        
        
        
          85,530 
        
        
        
        
          71,552 
        
      
      
        
          Total costs and expenses
        
        
        
        
          377,640 
        
        
        
        
          392,681 
        
        
        
        
          1,746,825 
        
        
        
        
          1,585,010 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating income (loss)
        
        
        
        
          (20,509)
        
        
        
        
          (21,804)
        
        
        
        
          23,940 
        
        
        
        
          (24,497)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest expense and other financing costs
        
        
        
        
          (6,786)
        
        
        
        
          (5,071)
        
        
        
        
          (26,749)
        
        
        
        
          (21,834)
        
      
      
        
          Other income
        
        
        
        
          1,929 
        
        
        
        
          2,940 
        
        
        
        
          13,332 
        
        
        
        
          11,843 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) before income taxes
        
        
        
        
          (25,366)
        
        
        
        
          (23,935)
        
        
        
        
          10,523 
        
        
        
        
          (34,488)
        
      
      
        
          Income tax provision (benefit)
        
        
        
        
          (7,330)
        
        
        
        
          - 
        
        
        
        
          4,244 
        
        
        
        
          (71)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) before minority interest
        
        
        
        
          (18,036)
        
        
        
        
          (23,935)
        
        
        
        
          6,279 
        
        
        
        
          (34,417)
        
      
      
        
          Minority interest
        
        
        
        
          (54)
        
        
        
        
          521 
        
        
        
        
          202 
        
        
        
        
          583 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $ (18,090)
        
        
        
        
          $ (23,414)
        
        
        
        
          $ 6,481 
        
        
        
        
          $ (33,834)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Earnings (loss) per share:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          $ (1.20)
        
        
        
        
          $ (1.61)
        
        
        
        
          $ 0.44 
        
        
        
        
          $ (2.37)
        
      
      
        
          Diluted
        
        
        
        
          $ (1.20)
        
        
        
        
          $ (1.61)
        
        
        
        
          $ 0.44 
        
        
        
        
          $ (2.37)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average shares (in thousands):
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          15,096 
        
        
        
        
          14,499 
        
        
        
        
          14,725 
        
        
        
        
          14,302 
        
      
      
        
          Diluted
        
        
        
        
          15,096 
        
        
        
        
          14,499 
        
        
        
        
          14,864 
        
        
        
        
          14,302 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Shipments - tons
        
        
        
        
          431,325 
        
        
        
        
          527,336 
        
        
        
        
          2,329,667 
        
        
        
        
          2,164,404 
        
      
      
        
          Production - tons
        
        
        
        
          475,042 
        
        
        
        
          632,022 
        
        
        
        
          2,502,315 
        
        
        
        
          2,452,131 
        
      
    
    
    
    
      
        
          WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES
        
      
      
        
          Consolidated Balance Sheets (Unaudited)
        
      
      
        
          (Dollars in thousands)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          December 31,
        
      
      
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          Assets
        
        
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
          $ 21,842 
        
        
        
        
          $ 8,863 
        
      
      
        
          Accounts receivables, less allowance for doubtful accounts of $2,882 
          and $2,594
        
        
          138,513 
        
        
        
        
          132,643 
        
      
      
        
          Inventories
        
        
          212,221 
        
        
        
        
          166,566 
        
      
      
        
          Prepaid expenses and other current assets
        
        
          27,911 
        
        
        
        
          21,732 
        
      
      
        
          Total current assets
        
        
          400,487 
        
        
        
        
          329,804 
        
      
      
        
          Investment in and advances to affiliates
        
        
          53,585 
        
        
        
        
          55,100 
        
      
      
        
          Property, plant and equipment, less accumulated depreciation of 
          $114,813 and $75,977
        
        
        
        
        
        
        
      
      
        
          626,210 
        
        
        
        
          557,500 
        
      
      
        
          Deferred income tax benefits
        
        
          30,537 
        
        
        
        
          26,264 
        
      
      
        
          Restricted cash
        
        
          2,163 
        
        
        
        
          13,691 
        
      
      
        
          Intangible assets, less accumulated amortization of $2,136 and $1,795
        
        
          255 
        
        
        
        
          4,725 
        
      
      
        
          Other assets
        
        
          9,308 
        
        
        
        
          33,164 
        
      
      
        
          Total assets
        
        
          $ 1,122,545 
        
        
        
        
          $ 1,020,248 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Liabilities
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
      
      
        
          Accounts payable, including book overdrafts of $13,842 and $21,020
        
        
          $ 99,536 
        
        
        
        
          $ 117,821 
        
      
      
        
          Short-term debt
        
        
          110,000 
        
        
        
        
          17,300 
        
      
      
        
          Payroll and employee benefits payable
        
        
          34,766 
        
        
        
        
          41,125 
        
      
      
        
          Accrued income and other taxes
        
        
          10,333 
        
        
        
        
          11,735 
        
      
      
        
          Deferred income taxes payable
        
        
          30,537 
        
        
        
        
          26,264 
        
      
      
        
          Accrued interest and other current liabilities
        
        
          8,970 
        
        
        
        
          5,757 
        
      
      
        
          Deferred revenue
        
        
          1,287 
        
        
        
        
          8,523 
        
      
      
        
          Long-term debt due in one year
        
        
          32,119 
        
        
        
        
          31,357 
        
      
      
        
          Total current liabilities
        
        
          327,548 
        
        
        
        
          259,882 
        
      
      
        
          Long-term debt, less amount due in one year
        
        
          254,961 
        
        
        
        
          284,100 
        
      
      
        
          Employee benefits
        
        
          121,953 
        
        
        
        
          123,498 
        
      
      
        
          Other liabilities
        
        
          25,600 
        
        
        
        
          13,030 
        
      
      
        
          Total liabilities
        
        
          730,062 
        
        
        
        
          680,510 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Minority interest
        
        
          106,290 
        
        
        
        
          74,234 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders' equity
        
        
        
        
        
        
        
      
      
        
          Preferred stock - $.001 par value; 20,000,000 shares authorized; no 
          shares issued or outstanding
        
        
        
        
        
        
        
      
      
        
          - 
        
        
        
        
          - 
        
      
      
        
          Common stock - $.01 par value; 80,000,000 shares authorized; 
          15,274,796 and 14,686,354 shares issued; 15,268,130 and 14,679,688 
          shares outstanding
        
        
        
        
        
        
        
      
      
        
          153 
        
        
        
        
          147 
        
      
      
        
          Additional paid-in capital
        
        
          289,903 
        
        
        
        
          276,097 
        
      
      
        
          Accumulated deficit
        
        
          (4,159)
        
        
        
        
          (10,640)
        
      
      
        
          Treasury stock, 6,666 shares, at cost
        
        
          (100)
        
        
        
        
          (100)
        
      
      
        
          Accumulated other comprehensive income
        
        
          396 
        
        
        
        
          - 
        
      
      
        
          Total stockholders' equity
        
        
          286,193 
        
        
        
        
          265,504 
        
      
      
        
          Total liabilities and stockholders' equity
        
        
          $ 1,122,545 
        
        
        
        
          $ 1,020,248