WHEELING PITTSBURGH CORP /DE/ - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2004


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-50300

WHEELING-PITTSBURGH CORPORATION

(Exact name of registrant as specified in its charter)


DELAWARE		55-0309927
(State of Incorporation)		(I.R.S. Employer Identification No.)
1134 Market Street, Wheeling, WV		26003
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (304) 234-2400

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

None

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

Common Stock, $0.01 per value per share
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

There was no market value for shares of the registrant’s Common Stock, par value $0.01 per share, as of the last business day of the registrant’s second fiscal quarter ended June 30, 2003.

Applicable only to registrants involved in bankruptcy proceedings during the preceding five years:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes þ No o

The registrant had 10,000,000 shares of its common stock, par value $0.01 per share, issued and outstanding as of April 30, 2004.

Documents Incorporated by Reference: None

PART I

Item 1 — Financial Statements

WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended March 31
(Unaudited)
(Dollars in Thousands except per share data)


	Reorganized Company			Predecessor Company
	2004			2003
Revenues:
Net sales, including sales to affiliates of $65,340 and $67,544	$	274,206		$	238,672
Cost and expenses:
Cost of products sold, excluding depreciation, including cost of products sold to affiliates of $52,279 and $58,537		256,069			247,253
Depreciation		7,689			17,445
Selling, administrative and general expense		14,946			13,864
Reorganization and professional fee expense		—			3,300

		278,704			281,862

Operating loss		(4,498	)		(43,190	)
Reorganization expense		—			(9	)
Interest expense on debt		(5,219	)		(3,651	)
Other income		3,012			1,234

Loss before taxes		(6,705	)		(45,616	)
Tax (benefit) provision		(79	)		9

Net loss	$	(6,626	)	$	(45,625	)

Basic and diluted loss per share
attributable to common stockholders	$	(0.70	)		*

Weighted average common shares outstanding basic and diluted		9,500,000			*

Prior to reorganization, the Company was a wholly-owned subsidiary of WHX Corporation

The accompanying notes are an integral part of the financial statements.

WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in Thousands)


	Reorganized Company
	March 31,			December 31,
	2004			2003
ASSETS
Current assets:
Cash and cash equivalents	$	3,346		$	4,767
Trade receivables, less allowance for doubtful accounts of $2,358, and $2,061		119,933			104,025
Inventories		129,974			146,895
Prepaid expenses and deferred charges		9,466			11,583

Total current assets		262,719			267,270
Investment in associated companies		42,154			42,857
Property, plant and equipment, at cost less accumulated depreciation of $17,529 and $10,051		405,210			387,765
Deferred income tax benefits		23,250			23,170
Restricted cash		71,176			87,138
Goodwill		30,000			30,000
Deferred charges and other assets		28,171			30,686

	$	862,680		$	868,886

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade payables	$	85,966		$	76,108
Short term debt		71,898			79,251
Payroll and employee benefits payable		60,034			57,862
Accrued federal, state and local taxes		11,151			10,744
Deferred income tax liabilities		23,170			23,170
Accrued interest and other liabilities		5,971			9,672
Long-term debt due in one year		1,916			2,698

Total current liabilities		260,106			259,505
Long-term debt		340,318			340,696
Other employee benefit liabilities		142,237			142,433
Other liabilities		21,408			21,639

Total liabilities		764,069			764,273

STOCKHOLDERS’ EQUITY:
Common stock — $.01 Par value; 10 million shares issued and outstanding		100			100
Additional paid-in capital		149,901			149,901
Deferred compensation		(5,833	)		(6,458	)
Accumulated deficit		(45,557	)		(38,930	)

		98,611			104,613

	$	862,680		$	868,886

The accompanying notes are an integral part of the financial statements.

WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarter Ended March 31
(Unaudited)
(Dollars in Thousands)


	Reorganized Company			Predecessor Company
	2004			2003
Cash flows from operating activities:
Net loss	$	(6,626	)	$	(45,625	)
Items not affecting cash from operating activities:
Depreciation		7,689			17,445
Other postretirement benefits		(222	)		301
Income taxes		(79	)		—
Equity income of affiliated companies		(2,122	)		(889	)
Loss on disposition of assets		1			—
Reorganization expense		—			9
Deferred compensation		625			—
Dividends from affiliated companies		2,500			2,500
Decrease (increase) from working capital elements:
Trade receivables		(15,908	)		(5,845	)
Inventories		16,921			3,443
Trade payables		9,348			14,196
Other current assets		2,118			2,784
Other current liabilities		(1,122	)		262
Other items—net		1,307			(1,975	)

Net cash provided by (used in) operating activities		14,430			(13,394	)

Cash flows from investing activities:
Plant additions and improvements		(24,135	)		(1,801	)
Payments from affiliates		325			600
Construction of equipment using restricted cash		15,962			—

Net cash provided by (used in) investing activities		(7,848	)		(1,201	)

Cash flows from financing activities:
Long-term debt payments		(1,160	)		(473	)
Short term debt payments		(7,353	)		—
Short term debt (DIP Facility) borrowings		—			11,811
Book overdraft		510			1,184

Net cash provided by financing activities		(8,003	)		12,522

Decrease in cash and cash equivalents		(1,421	)		(2,073	)
Cash and cash equivalents at beginning of period		4,767			8,543

Cash and cash equivalents at end of period	$	3,346		$	6,470

Supplemental Information
Interest paid in cash	$	3,877		$	2,933

The accompanying notes are an integral part of the financial statements.

WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
As of March 31, 2004
(Unaudited)
(Dollars in Thousands)


	Shares			Common		Additional			Deferred			Retained
	Outstanding			Stock		Paid-in-Capital			Compensation			Earnings			Total
Predecessor Company
Balance at December 31, 2001		100		$	0	$	335,138		$	0		$	(588,742	)	$	(253,604	)
Net loss		—			—		—			—			(57,567	)		(57,567	)
Balance at December 31, 2002		100			—		335,138			—			(646,309	)		(311,171	)
Net income		—			—		—			—			323,431			323,431
Fresh start adjustment		(100	)		—		(335,138	)		—			322,878			(12,260	)
Balance at July 31, 2003 (prior to issuance of stock at reorganization)		—			—		—			—			—			—

Reorganized Company
Issuance of stock at reorganization at July 31, 2003 (prior to restricted stock award)		9,500,000		$	95	$	142,405		$	0		$	0		$	142,500
Shares issued on July 31, 2003 for restricted stock award plans		500,000			5		7,495			(7,500	)		—			—
Compensation expense recognized		—			—		—			1,042			—			1,042
Stock option grants		—			—		1			—			—			1
Net loss		—			—		—			—			(38,930	)		(38,930	)

Balance at December 31, 2003		10,000,000		$	100	$	149,901		$	(6,458	)	$	(38,930	)	$	104,613
Compensation expense recognized		—			—		—			625			—			625
Net loss		—			—		—			—			(6,626	)		(6,626	)

Balance at March 31, 2004		10,000,000		$	100	$	149,901		$	(5,833	)	$	(45,556	)		98,612

The accompanying notes are an integral part of the financial statements.

WHEELING-PITTSBURGH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

General

The consolidated balance sheet as of March 31, 2004, the consolidated statement of operations for the quarters ended March 31, 2004 and 2003, respectively, and the consolidated statement of cash flows for the three months ended March 31, 2004 and 2003, respectively, have been prepared by Wheeling-Pittsburgh Corporation (“WPC” or “the Company”) without audit. In the opinion of management, all recurring adjustments necessary to present fairly the consolidated financial position at March 31, 2004 and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. This quarterly report on Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended December 31, 2003. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of the operating results for the full year.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassification

Certain reclassifications of prior year amounts have been made to conform to the current year presentation. Most significantly, amounts in the prior year Statement of Cash Flows for dividends from affiliated companies have been reclassified from investing activities to operating activities.

Business Segment

The Company is primarily engaged in one line of business and has one industry segment, which is the making, processing and fabricating of steel and steel products. The Company’s products include hot rolled and cold rolled sheet and coated products such as galvanized, pre-painted and tin mill sheet. The Company also manufactures a variety of fabricated steel products including roll formed corrugated roofing, roof deck, form deck, floor deck, bridgeform and other products used primarily by the construction, highway and agricultural markets.

Note 1 - Bankruptcy and Reorganization

On November 16, 2000, WPC and eight of our then existing wholly-owned subsidiaries, which represented substantially all of our business, filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio. We commenced the Chapter 11 proceedings in order to restructure our outstanding debts and to improve our access to the additional funding that we needed to continue our operations. Throughout the Chapter 11 proceedings, we remained in possession of our properties and assets and continued to operate and manage our businesses with the then existing directors and officers as debtors-in-possession subject to the supervision of the Bankruptcy Court.

As part of our Chapter 11 proceedings, we filed our original Joint Plan of Reorganization on December 20, 2002, our First Amended Joint Plan of Reorganization on January 9, 2003, our Second Amended Joint Plan of Reorganization on May 5, 2003 and our Third Amended Joint Plan of Reorganization on May 19, 2003, reflecting the final negotiations with pre-petition note holders, pre-petition trade creditors and unionized employees. Our plan of reorganization was confirmed on June 18, 2003 and became effective on August 1, 2003. We realized approximately $558 million in cancellation of debt income as a result of our reorganization.

Following is a summary of some of the significant transactions consummated on or about the effective date of our plan of reorganization:

• WPC amended and restated its by-laws and filed a second amended and restated certificate of incorporation with the Delaware Secretary of State authorizing the issuance of up to an aggregate of 80 million shares of common stock, par value $0.01 per share, and 20 million shares of undesignated preferred stock, par value $0.001 per share.

• WPC exchanged, on a pro rata basis, $275 million in senior notes and $75 million in term notes that existed prior to its bankruptcy filing for an aggregate of $20 million in cash, $40 million in new Series A secured notes issued by Wheeling-Pittsburgh Steel Corp. (“WPSC”), which are collateralized by a second lien on our tangible and intangible assets (other than our accounts receivable and inventory) and our equity interests in our joint ventures and a third lien on our accounts receivable and inventory, $20 million in new Series B secured notes issued by WPSC, which are collateralized by a fifth lien on our tangible and intangible assets, our equity interests in our joint ventures, and our accounts receivable and inventory, and 3,410,000 shares of new common stock of WPC constituting 34.1% thereof.

• WPC cancelled its then-existing senior notes and related indenture and its then-existing term notes and the related term loan agreement.

• WPC cancelled all shares of its common stock that existed prior to the implementation of our plan of reorganization, at which point we ceased to be a subsidiary of WHX Corporation.

• WPSC entered into a new $250 million senior secured term loan facility, which is guaranteed in part by the Emergency Steel Loan Guarantee Board, the State of West Virginia, WPC and WPSC’s subsidiaries and is collateralized by a first lien on our tangible and intangible assets (other than accounts receivable and inventory) and our equity interests in our joint ventures and a second lien on our accounts receivable and inventory. We also entered into a new $225 million senior secured revolving credit facility, which is guaranteed by WPC and WPSC’s subsidiaries and is collateralized by a first lien on our accounts receivable and inventory and a third lien on our other tangible and intangible assets and our equity interests in our joint ventures.

• All of our obligations under our $195 million debtor-in-possession credit facility were satisfied in full and discharged.

• WPC and WPSC entered into an agreement with WHX Corporation providing for, among other things, a $10 million capital contribution by WHX Corporation, the cancellation of approximately $40 million in debt owed by us to WHX Corporation, a $10 million unsecured loan from WHX Corporation and an agreement with respect to our separation from WHX Corporation’s employee pension plan.

• WPC and WPSC entered into an agreement with our unionized employees represented by the United Steelworkers of America (USWA) which modified our existing labor agreement to provide for, among other things, future pension arrangements with the United Steelworkers of America and reductions in our employee-related costs.

• WPC issued 4 million shares of its new common stock constituting 40% thereof for the benefit of USWA retirees in satisfaction of certain claims under our labor agreement and an additional 1 million shares of its new common stock constituting 10% thereof to or for the benefit of our salaried employees.

• WPC issued 1,590,000 shares of its new common stock constituting 15.9% thereof to certain of our creditors in satisfaction of various unsecured claims, including claims relating to trade debt.

rata. To the extent that certain administrative and secured claims are allowed by the Bankruptcy Court, those claims will be paid in cash in an amount, which we expect will not exceed $100,000, and for which there are sufficient reserves held by the distribution agent. If and to the extent those claims are allowed as pre-petition unsecured claims, then those creditors will receive stock, which has been reserved as described above. In addition, we are the plaintiffs in a number of preference actions, where we are seeking to recover monies from creditors. We do not believe that any of these remaining bankruptcy proceedings, individually or in the aggregate, will have a material effect on us.

Note 2 — Fresh-Start Reporting

In accordance with Statement of Position (SOP) 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, the Company adopted the provisions of fresh-start reporting as of July 31, 2003. In adopting the requirements of fresh-start reporting, the Company engaged an independent financial advisor to assist in the determination of the enterprise value of the entity. This value was based upon various valuation methods, including discounted cash flow methodologies, analysis of comparable steel companies, and other applicable ratios and economic industry information relevant to the operations of the Company. The estimated total equity value of the Reorganized Company aggregating approximately $150 million was determined after taking into account the values of the obligations assumed in connection with the Joint Plan of Reorganization.

The consolidated financial statements from and after the effective date of our reorganization are those of a new reporting entity (the “Reorganized Company”) and are not comparable to the pre-confirmation periods of the old reporting entity (the “Predecessor Company”).

The following reconciliation of the Predecessor Company’s consolidated balance sheet as of July 31, 2003 to that of the Reorganized Company as of July 31, 2003 was prepared with the adjustments that give effect to the reorganization and fresh-start reporting. Since the financial statements for periods subsequent to July 31, 2003 have been prepared as if the Company is a new reporting entity, a black line has been shown on the financial statements to separate current results from prior-period information because they are not prepared on a comparable basis.

The adjustments entitled “Reorganization” reflect the consummation of the Joint Plan of Reorganization, including the elimination of existing liabilities subject to compromise, and consolidated shareholders’ deficit, and to reflect the aforementioned $150 million equity value.

The adjustments entitled “Fair Value Adjustments” reflect the adoption of fresh-start reporting, including the adjustments to record property and equipment at its fair value.

A reconciliation of fresh-start accounting recorded as of July 31, 2003 follows:

WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
REORGANIZED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)


	Pre-Reorganization			Reorganization			Fresh Start			Post-Reorganization
	7/31/2003			Adjustments			Adjustments			7/31/2003
ASSETS
Current Assets:
Cash and cash equivalents	$	7,382			—			—		$	7,382
Trade receivables, less allowance for doubtful accounts of $1,916		112,649			(233	)		—			112,416
Inventories		164,322			—			(9,658	) [d]		154,664
Prepaid expenses and deferred charges		6,559			12			—			6,571

Total current assets		290,912			(221	)		(9,658	)		281,033
Investment in associated company		59,982			—			(19,505	) [d]		40,477
Property, plant and equipment, at cost less accumulated depreciation		493,514			—			(133,301	) [d]		360,213
Deferred income tax benefits		27,342			(3,860	) [b]		—			23,482
Restricted cash — long term		—			112,000			—			112,000
Deferred charges and other assets		8,964			42,844	[g]		9756	[g]		61,564

	$	880,714		$	150,763		$	(152,708	)	$	878,769

LIABILITIES & STOCKHOLDERS’ EQUITY
(DEFICIT)
Current Liabilities:
Trade payables	$	81,275		$	(1,334	) [a]	$	—		$	79,941
Short term debt		137,214			(100,299	) [a]		—			36,915
Payroll and employee benefits payable		35,118			32,795	[c]		—			67,913
Accrued federal, state and local taxes		10,054			1,200	[a]		—			11,254
Deferred income tax liabilities		27,342			(3,860	) [a]		—			23,482
Accrued interest and other liabilities		8,026			2,647	[a]		—			10,673
Long term debt due in one year		43,433			(39,678	) [a], [c], [f]		—			3,755

Total current liabilities		342,462			(108,529	)		—			233,933
Long Term Debt		11,985			327,863	[a], [c]		—			339,848
Other employee benefit liabilities		17,317			124,981	[c]		—			142,298
Other liabilities		17,150			3,040	[a]		—			20,190
Liabilities subject to compromise		879,455			(879,455	) [c]		—			—

Total Liabilities		1,268,369			(532,100	)		—			736,269
STOCKHOLDERS EQUITY (DEFICIT)
Common Stock — $.01 Par Value; 10 million shares issued and outstanding		—			100	[c]		—			100
Additional paid-in capital		335,138			149,900	[c], [g]		(335,138	) [d]		149,900
Restricted stock		—			(7,500	) [e]		—			(7,500	)
Accumulated earnings (deficit)		(722,793	)		540,363	[b], [c], [f]		182,430	[d]		—

		(387,655	)		682,863			(152,708	)		142,500

	$	880,714		$	150,763		$	(152,708	)	$	878,769

Footnotes:

[a] Reflects the borrowing of the $250 million term loan proceeds and amounts under the post-petition revolver and the payments necessary to effect the Plan of Reorganization, such as the repayment of DIP facilities, cash distributions to creditors and the payment of fees and expenses associated with the exit financing.

[b] Reflects the impact on retained earnings of reorganization expenses net of tax benefit.

[c] Reflects the settlement of liabilities subject to compromise, including the distribution of cash, notes and equity to the pre-petition creditors, the assumption of OPEB and other pre-petition liabilities (capital leases, employee benefits, taxes). Also, reflects the cancellation of debt income.

[d] Reflects the adjustments to reflect “Fresh Start” accounting. These entries include the write-down of property, plant and equipment and joint venture interests to their appraised values, elimination of retained earnings and additional paid-in capital.

[e] Reflects restricted stock awards for the distribution of employee equity into trust.

[f] Reflects the cancellation of debt as a result of WHX Corporation forgiving its portion of the DIP term loan.

[g] Reflects the pre-funding of VEBA obligations with 4,000,000 shares of the Company’s common stock, intangible asset related to joint venture supply agreements, and goodwill.

Note 3 – Inventories

Inventories are valued at the lower of cost or market value. Cost is determined by the last-in first-out (LIFO) method for substantially all inventories. Approximately 98% of inventories are valued using the LIFO method.


	March 31, 2004			December 31, 2003
Finished Products	$	29,154		$	31,227
In-Process		84,161			90,170
Raw Materials		18,322			26,808
Other Materials and Supplies		25			378

		131,662			148,583

LIFO Reserve		(1,688	)		(1,688	)

	$	129,974		$	146,895

Note 4 — Loss Per Share

Basic loss per share is calculated by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is calculated by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding adjusted for potentially dilutive securities.

Pursuant to the plan of reorganization, WPC cancelled all shares of its common stock that existed prior to the reorganization, at which point we ceased to be a subsidiary of WHX Corporation. WPC issued ten million shares of its new common stock in satisfaction of certain claims. The ten million shares issued included 500,000 shares issued as restricted stock awards, which vest over three years, one-third on each anniversary date. The restricted stock awards are excluded from the basic weighted average shares outstanding until such time as the restrictions lapse. Outstanding stock options and restricted stock grants are anti-dilutive and excluded from the calculation. There were 22,187 shares of outstanding stock options as of March 31, 2004.


				Loss Per Share
	Three Months Ended March 31, 2004
	Loss			Shares		Per Share
	(Numerator)			(Denominator)		Amount
Basic EPS and diluted EPS loss
Available to common shareholders	$	(6,626	)		9,500,000	$	(0.70	)

Note 5 — Contingencies

Environmental Matters

Prior to confirmation of our plan of reorganization effective August 1, 2003, we settled all pre-petition environmental liability claims made by state (Ohio, West Virginia, Pennsylvania) and federal (USEPA) environmental regulatory agencies. Consequently, we believe we have settled and/or discharged environmental liability for any CERCLA (Superfund) sites, pre-petition stipulated penalties related to active consent decrees, or other pre-petition regulatory enforcement actions.

Currently, we estimate that stipulated penalties and fines for post-petition events and activities through March 31, 2004 total $2.1 million. These claims arise from instances in which we exceeded post-petition consent decree terms, including: (a) $0.2 million related to a July 1991 USEPA consent decree for water discharges to the Ohio River; (b) $0.1 million related to a September 20, 1999 Ohio EPA consent decree for our coke oven gas desulfurization facility; and (c) $1.8 million related to a January 30, 1996 USEPA consent decree for our coke oven gas desulfurization facility.

In September 2000, we entered into a consent order with the West Virginia Department of Environmental Protection wherein we agreed to remove contaminated sediments from the bed of the Ohio River. We spent approximately $1.4 million on these activities in 2002 and an additional $0.4 million in 2003. During removal activities in 2003, we discovered a broader area of contaminated sediments. We identified the spatial limits of these contaminated sediments and estimate their removal costs at $4.0 million.

We are under a final administrative order issued by the USEPA in June 1998 to conduct a Resource Conservation and Recovery Act Facility Investigation to determine the nature and extent of soil and groundwater contamination at our Coke Plant in Follansbee, West Virginia. USEPA has approved our investigation Workplan, and field activities are scheduled for 2004. Following our investigation we will perform a Corrective Measures Study to determine possible remedial measures. We expect some remediation measures will be necessary and could commence within the next three to five years. We have reserved approximately $5.2 million for such remediation measures. However, the field investigation is not completed and our remediation plan has yet to be submitted to the USEPA; therefore, the full extent and cost of remediation could be different from our current estimates.

The USEPA conducted a multimedia inspection of our Steubenville, Mingo Junction, Yorkville and Martins Ferry, Ohio and Follansbee, West Virginia facilities in March and June 1999. The inspection covered environmental regulations applicable to these plants including RCRA and the CAA. Many of the issues have been resolved and settled prior to emergence from Chapter 11 bankruptcy. We have reserved $1.4 million for resolution of outstanding issues.

Capital expenditures for environmental projects totaled $0.3 million for the three months ended March 31, 2004 and $1.0 in 2003. We estimate capital expenditures for environmental projects to be $4.0 million for 2004, $10.1 million for 2005 and 7.0 million for 2006. However, due to the possibility of unanticipated factual or regulatory developments, the amount and timing of future capital expenditures may vary substantially from such estimates.

Accrued environmental liabilities totaled $14.8 million at March 31, 2004 and $14.7 million at December 31, 2003. These accruals were based on all information available to the Company. As new information becomes available, whether from third parties or otherwise, and as environmental regulations change, the liabilities are reviewed on a quarterly basis and the accruals are adjusted accordingly.

Note 6 – Common Stock Compensation

In accordance with our plan of reorganization, we established a restricted stock plan pursuant to which we have granted to selected key employees a total of 500,000 shares of our common stock, as of the effective date of our plan of reorganization. All of the grants made under the plan will vest in increments of one-third of the total grant to each individual pro rata over three years. Restricted stock expense related to the restricted stock awards totaled $0.6 million for the three months ended March 31, 2004.

On November 15, 2003, 17,793 stock options were granted at a price of $6.95 per share to Classes 1,2 and 3 Directors of the Board of Directors of the Company. On March 15, 2004, 4,394 stock options were granted at a price of $24.04 per share to the same directors.

Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation (“SFAS 123”) gives companies the option to adopt the fair market value method for expense recognition of employee stock options or to continue to account for employee stock options using the intrinsic value method, as outlined under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. The Company has elected to continue to apply the intrinsic value method to account for employee stock options and discloses the pro forma effect as if the fair value method had been applied. The following table illustrates the effect on net loss per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock based employee compensation.


	(Dollars in Thousands except Earnings per Share Amounts)
	Reorganized Company			Predecessor Company
	For the Quarter Ended			For the Quarter Ended
	March 31, 2004			March 31, 2003
Net loss	$	(6,626	)	$	(45,625	)
Add: Deferred compensation expense		625			—
Less: Total stock-based employee compensation expense determined under fair value method for all awards and deferred compensation expense		(717	)		—

Pro forma net loss	$	(6,718	)	$	(45,625	)

Loss per share:
Basic and diluted as reported	$	(0.70	)		*

Pro forma	$	(0.71	)		*

Prior to reorganization, the Company was a wholly-owned subsidiary of WHX Corporation.

Note 7 – Summarized combined financial information of the subsidiary guarantors of the $250 million senior secured term loan facility and $225 million senior secured revolving credit facility

WPSC entered into a $250 million senior secured term loan facility, which is guaranteed in part by the Emergency Steel Loan Guarantee Board, the West Virginia Housing Development Fund, WPC and WPSC’s subsidiaries and is collateralized by a first lien on the Company’s tangible and intangible assets (other than accounts receivable and inventory) and the Company’s equity interests in our joint ventures and a second lien on our accounts receivable and inventory. The Company also entered into a $225 million senior secured revolving credit facility, which is guaranteed by WPC and WPSC’s subsidiaries and is collateralized by a first lien on our accounts receivable and inventory and a third lien on our other tangible and intangible assets and our equity interests in our joint ventures. Each guarantor subsidiary is 100% owned by WPC or one of its 100% owned subsidiaries, and any subsidiary of WPC that is not a guarantor is a minor subsidiary individually and all such non –guarantor subsidiaries in the aggregate are minor. Condensed consolidating financial information for the Company and the subsidiary guarantors are as follows:

CONDENSED CONSOLIDATING BALANCE SHEETS
Reorganized Company


	March 31, 2004
	(Dollars in Thousands)
			Subsidiary		Consolidating and			WPC
	WPC		Guarantors		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	—	$	3,346	$	—		$	3,346
Trade accounts receivables		—		119,933		—			119,933
Inventories		—		129,974		—			129,974
Other current assets		12		9,454		—			9,466

Total current assets		12		262,707		—			262,719
Intercompany receivables		—		758		(758	)		—
Property, plant and equipment — net				405,210		—			405,210
Investments and advances in affiliates		98,024		42,154		(98,024	)		42,154
Restricted cash		—		71,176					71,176
Other non-current assets		975		80,446		—			81,421

Total Assets	$	99,011	$	862,451	$	(98,782	)	$	862,680

Liabilities and Stockholders’ Equity
Accounts payable	$	—	$	85,966	$	—		$	85,966
Other current liabilities		22		174,118		—			174,140

Total current liabilities		22		260,084		—			260,106
Liabilities subject to compromise		—		—		—			—
Intercompany payable		758		—		(758	)		—
Long term debt		—		482,555		—			482,555
Other non-current liabilities		360		21,048		—			21,408
Stockholders’ equity		97,871		98,764		(98,024	)		98,611

Total Liabilities and Stockholders’ Equity	$	99,011	$	862,451	$	(98,782	)	$	862,680

Reorganized Company


	December 31, 2003
	(Dollars in Thousands)
			Subsidiary		Consolidating and			WPC
	WPC		Guarantors		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	—	$	4,767	$	—		$	4,767
Trade accounts receivables		—		104,025		—			104,025
Inventories		—		146,895		—			146,895
Other current assets		12		11,571		—			11,583

Total current assets		12		267,258		—			267,270
Intercompany receivables		—		495		(495	)		—
Property, plant and equipment — net		—		387,765		—			387,765
Investments and advances in affiliates		104,593		42,857		(104,593	)		42,857
Other non-current assets		896		170,098		—			170,994

Total Assets	$	105,501	$	868,473	$	(105,088	)	$	868,886

Liabilities and Stockholders’ Equity
Accounts payable	$	—	$	76,108	$	—		$	76,108
Other current liabilities		33		183,364		—			183,397

Total current liabilities		33		259,472		—			259,505
Intercompany payable		495		—		(495	)		—
Long term debt		—		340,696		—			340,696
Other non-current liabilities		360		163,712		—			164,072
Stockholders’ equity		104,613		104,593		(104,593	)		104,613

Total Liabilities and Stockholders’ Equity	$	105,501	$	868,473	$	(105,088	)	$	868,886

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Reorganized Company


	For the Quarter Ended March 31, 2004
	(Dollars in Thousands)
				Subsidiary			Consolidating and		WPC
	WPC			Guarantors			Eliminating Entries		Consolidated
Income Data
Net sales	$	—		$	274,206		$	—	$	274,206
Cost of products sold, excluding depreciation		—			256,069			—		256,069
Depreciation		—			7,689			—		7,689
Selling, administrative and general expense		253			14,693			—		14,946
Reorganization and professional fee expense		—			—			—		—

Operating loss		(253	)		(4,245	)		—		(4,498	)
Interest expense		—			(5,219	)				(5,219	)
Other income including equity earnings (losses) of affiliates		(7,193	)		3,012			7,193		3,012

Income (loss) before tax		(7,446	)		(6,452	)		7,193		(6,705	)
Tax provision (benefit)		(79	)		—			—		(79	)

Net income (loss)	$	(7,367	)	$	(6,452	)	$	7,193	$	(6,626	)

Predecessor Company


	For the Quarter Ended March 31, 2003
	(Dollars in Thousands)
				Subsidiary			Consolidating and		WPC
	WPC			Guarantors			Eliminating Entries		Consolidated
Income Data
Net sales	$	—		$	238,672		$	—	$	238,672
Cost of products sold, excluding depreciation		—			247,253			—		247,253
Depreciation		—			17,445			—		17,445
Selling, administrative and general expense		289			13,575			—		13,864
Reorganization and professional fee expense					3,300			—		3,300

Operating loss		(289	)		(42,901	)		—		(43,190	)
Reorganization income (expense)		—			(9	)		—		(9	)
Interest expense		—			(4,899	)		1,248		(3,651	)
Other income including equity earnings (losses) of affiliates		(44,778	)		600			45,412		1,234

Income (loss) before tax		(45,067	)		(47,209	)		46,660		(45,616	)
Tax provision (benefit)		558			(549	)		—		9

Net income (loss)	$	(45,625	)	$	(46,660	)	$	46,660	$	(45,625	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Reorganized Company


	For the Quarter Ended March 31, 2004
	(Dollars in Thousands)
			Subsidiary			Consolidating and
	WPC		Guarantors			Eliminating Entries		WPC Consolidated
Net cash provided by operating activities	$	—	$	14,430		$	—	$	14,430
Investing activities:
Capital expenditures		—		(24,135	)		—		(24,135	)
Construction of equipment using restricted cash		—		15,962			—		15,962
Other		—		325			—		325

Net cash used in investing activities		—		(7,848	)		—		(7,848	)
Financing activities:
Net repayments		—		(1,160	)		—		(1,160	)
Book overdraft		—		510			—		510
Other		—		(7,353	)		—		(7,353	)

Net cash used in financing activities		—		(8,003	)		—		(8,003	)
Net change in cash and cash equivalents		—		(1,421	)		—		(1,421	)
Cash and cash equivalents at beginning of period				4,767			—		4,767

Cash and cash equivalents at end of period	$	—	$	3,346		$	—	$	3,346

Predecessor Company


	For the Quarter Ended March 31, 2003
	(Dollars in Thousands)
				Subsidiary			Consolidating and
	WPC			Guarantors			Eliminating Entries		WPC Consolidated
Net cash used in operating activities	$	(5	)	$	(13,389	)	$	—	$	(13,394	)
Investing activities:
Capital expenditures		—			(1,801	)		—		(1,801	)
Other		—			600			—		600

Net cash used in investing activities		—			(1,201	)		—		(1,201	)
Financing activities:
Net borrowings		—			11,338			—		11,338
Book overdraft		—			1,184			—		1,184

Net cash provided by financing activities		—			12,522			—		12,522
Net change in cash and cash equivalents		(5	)		(2,068	)		—		(2,073	)
Cash and cash equivalents at beginning of period		37			8,506			—		8,543

Cash and cash equivalents at end of period	$	32		$	6,438		$	—	$	6,470

Note 8 – New Accounting Standards

As part of the provisions of SOP 90-7, we were required to adopt on July 31, 2003 all accounting guidance that was going to be effective within a twelve-month period.

In January 2004, the FASB issued FASB Staff Position (FSP) No. FAS 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”. The FSP addresses disclosure requirements which permit a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a one-time election to defer accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“the Act”). Signed into law on December 8, 2003, the Act introduces a prescription drug benefit under Medicare Part D as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. However, certain accounting issues raised by the Act, in particular, how to account for the federal subsidy, are not explicitly addressed by SFAS 106, “Employers’ Accounting for Postretirement Benefits Other Than Pension”. Therefore, a plan sponsor may elect to defer recognizing the effects of the Act in accounting for its plan under SFAS 106 until further guidance

is provided. The Company has elected to defer the recognition of the Act and is currently reviewing the financial statement impact of adopting the final provisions of the Act when issued.

The Company adopted (SFAS) 132-R (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits an amendment of FASB Statements No. 87, 88, and 106". SFAS 132-R revises employers’ disclosures about pension plans and other postretirement benefit plans. It requires additional disclosures about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. Additionally, under the SFAS 132-R, public companies are required to make certain disclosures in their interim financial statements with respect to net periodic pension expense and contributions paid. The Company has provided the required interim disclosures in Note 9 to the consolidated financial statements for their postretirement benefit plan. Due to the immaterial amounts related to the Company’s defined benefit pension plan, disclosure has not been provided.

Note 9 – Post Retirement Benefits Other Than Pensions

Net periodic costs for postretirement benefits other than pensions (principally health care and life insurance) for employees and covered dependents are shown in the table below.

Post Retirement Benefits
Other Than Pensions
(Dollars in Thousands)


	Reorganized		Predecessor
	Company		Company
	Quarter		Quarter
	Ended		Ended
	March 31, 2004		March 31, 2003
Components of net periodic cost:
Service cost	$	733	$	729
Interest cost		1,835		4,965
Amortization of prior service credit		—		(678	)
Recognized actuarial (gain)/loss		286		(159	)

Total	$	2,854	$	4,857

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain of the statements contained in this Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Because they discuss future events or conditions, forward-looking statements often include words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “project”, “target”, “can”, “could”, “may”, “should”, “will”, “would”, or similar expressions and the negative thereof. Readers are referred to Item 1 — Business under the heading “Risk Factors” in this Annual Report on Form 10-K, which identifies important risk factors that could cause actual results to differ from those contained in any such forward-looking statements. These risk factors include, among others, the Company’s potential inability to generate sufficient operating cash flow to service or refinance its indebtedness, concerns relating to financial covenants and other restrictions contained in its credit agreements, intense competition, dependence on suppliers of raw materials, an unscheduled outage of operating equipment, the difficulties involved in constructing an electric arc furnace, and cyclical demand for steel products. In addition, any forward-looking statements represent the Company’s views only as of the date of this filing and should not be relied upon as representing its views as of any subsequent date. While the Company may elect to update these forward-looking statements from time to time, it specifically disclaims any obligation to do so.

Critical Accounting Policies/Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make judgments, estimates and assumptions that affect reported amounts of assets and liabilities at the balance sheet date and the reported revenues and expenses for the period. Our judgments and estimates are based on both historical experience and our expectations for the future. As a result, actual results may differ materially from current expectations.

We believe that the following are the more significant judgments and estimates used in the preparation of the financial statements.

Fresh Start Reporting

In accordance with SOP 90-7, we adopted “Fresh Start Reporting’’ for our reorganized company and recorded assets and liabilities at their fair values. Equity value was determined with the assistance of independent advisors. Enterprise value was estimated using discounted cash flow methodologies and analysis of comparable steel companies.

Other Postemployment Benefits (OPEB)

The traditional medical and life insurance benefits that were provided to past retirees were terminated effective October 1, 2003. Pursuant to the new labor agreement, which we entered into in connection with our plan of reorganization, past retirees will receive medical and life insurance benefits under a VEBA trust. Future retirees under the new labor agreement will be covered by a medical and life insurance program similar to that of active employees. Eligible pensioners and surviving spouses shall be required to make monthly contributions for medical and prescription drug coverage. Because these benefits provided by us will be paid in the future over what could be many years, we use an independent actuary to help us estimate the accrued liability at each year-end balance sheet date. The two most significant assumptions used in determining the liability are the projected medical cost trend rate and the discount rate.

We estimate the escalation trend in medical costs based on historical rate experience in our plans and through consultation with health care specialists. We have assumed an initial escalation rate of 8.25% in 2003. This rate is assumed to decrease gradually to an ultimate rate of 4.75% in 2008 and remain at that level for all future years. The health care cost trend rate assumption has a significant effect on the costs and obligation reported. A 1% increase in the health care cost trend rate would result in approximate increases in the accumulated postretirement benefit obligation of $19.2 million. A 1% decrease in the health care cost trend rate would result in approximate decreases in the accumulated postretirement benefit obligation of $16.7 million. A 1 % increase in the health care costs trend rate would result in approximate increases in post-retirement benefit expenses of $1.8 million. A 1 % decrease in the health care costs trend rate would result in approximate decreases in post-retirement benefit expenses of $1.5 million.

The discount rate applied to our OPEB obligations is based on an estimate of the current interest rate at which our OPEB obligations could be settled at the balance sheet date. In estimating this rate, we consider high quality bond rates and the expected payout period of our OPEB obligations. The discount rate used to measure our OPEB obligation at December 31, 2003 was 6.0%.

Asset Impairments

Our company periodically evaluates property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Asset impairments are recognized when the carrying value of productive assets exceeds the net projected undiscounted cash flows from those assets. Given our integrated operations, asset impairment evaluations are generally done on a group basis. Undiscounted cash flows are based on longer-term projections that consider projected market conditions and the performance and ultimate use of the assets. If future demand and market conditions are less favorable than those projected by management, or if the probability of disposition of the assets differs from that previously estimated by management, asset impairments may be required.

Deferred Taxes

Full realization of net deferred tax assets is dependent on the ability of our company to generate future taxable income and maintain substantially our existing ownership. An “ownership change”, as defined in Section 382 of the Internal Revenue Code of 1986, could impose annual limits, or completely eliminate net operating loss carryovers. Our company records a valuation allowance to reduce deferred tax assets to an amount that is more likely than not to be realized. During 2000, our company recorded a full valuation allowance against our net deferred tax assets due to the uncertainties surrounding realization as a result of the bankruptcy proceedings. Deferred tax assets that have arisen since that time, which principally consist of net operating losses, have also been fully reserved. However, as our operations continue, we will be required to periodically reevaluate the tax treatment of these deferred tax assets in light of actual operating results.

Environmental and Legal Contingencies

Our company provides for remediation costs, environmental penalties and legal contingencies when the liability is probable and the amount of the associated costs is reasonably determinable. Our company regularly monitors the progress of environmental remediation and legal contingencies, and revises the amounts recorded in the period in which changes in estimate occur. Conclusions regarding exposure are developed in consultation with legal and environmental counsel.

New Accounting Standards

As part of the provisions of SOP 90-7, we were required to adopt on July 31, 2003 all accounting guidance that was going to be effective within a twelve-month period.

General

The steel industry is cyclical and highly competitive and is affected by excess world capacity, which has restricted price increases during periods of economic growth and led to price decreases during economic contraction. Beginning in 1998 and continuing through 2001, record high levels of foreign steel imports as well as a general overcapacity in worldwide steel production caused a marked deterioration of steel prices, resulting in huge losses and substantial harm to the domestic steel industry. This record high level of foreign steel imports over a four year period, coupled with the indebtedness we incurred as a result of a ten-month work stoppage which ended in August 1997, and approximately $200 million of capital expenditures used to modernize our facilities to increase quality, efficiency, safety and environmental conditions, resulted in substantial losses and the severe erosion of our

financial position and liquidity. These losses and erosion of liquidity continued to occur notwithstanding increases in operating efficiencies resulting from the modernization of our facilities, various cost saving measures and the elimination of 20% of our hourly workforce negotiated in 1997.

On November 16, 2000, WPC and eight of our then existing wholly-owned subsidiaries, which represented substantially all of our business, filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio, referred to as the Bankruptcy Court. We commenced the Chapter 11 proceedings in order to restructure our outstanding debts and to improve our access to the additional funding that we needed to continue our operations. Throughout the Chapter 11 proceedings, we remained in possession of our properties and assets and continued to operate and manage our businesses with the then existing directors and officers as debtors-in-possession subject to the supervision of the Bankruptcy Court.

As part of our Chapter 11 proceedings, we filed our original Joint Plan of Reorganization on December 20, 2002, our First Amended Joint Plan of Reorganization on January 9, 2003, our Second Amended Joint Plan of Reorganization on May 5, 2003 and our Third Amended Joint Plan of Reorganization on May 19, 2003, reflecting the final negotiations with pre-petition noteholders, pre-petition trade creditors and unionized employees. Our Third Amended Joint Plan of Reorganization was confirmed by order of the Bankruptcy Court on June 18, 2003, and became effective on August 1, 2003. We realized approximately $558 million in cancellation of debt income as a result of our reorganization.

Following is a summary of some of the significant transactions consummated on or about the effective date of our plan of reorganization.

• WPC cancelled its then-existing senior notes and related indenture and its then-existing term notes and the related term loan agreement.

• WPC cancelled all shares of its common stock that existed prior to the implementation of our plan of reorganization, at which point we ceased to be a subsidiary of WHX Corporation.

• WPSC entered into a new $250 million senior secured term loan facility, which is guaranteed in part by the Emergency Steel Loan Guarantee Board, the State of West Virginia, WPC and WPSC’s subsidiaries and is collateralized by a first lien on our tangible and intangible assets (other than accounts receivable and inventory) and our equity interests in our joint ventures and a second lien on our accounts receivable and inventory. We also entered into a new $225 million senior secured revolving credit facility, which is guaranteed by WPC and WPSC’s subsidiaries and is collateralized by a first lien on our accounts receivable and inventory and a third lien on our other tangible and intangible assets and our equity interests in our joint ventures.

• All of our obligations under our $195 million debtor-in-possession credit facility were satisfied in full and discharged.

• WPC and WPSC entered into an agreement with WHX Corporation providing for, among other things, a $10 million capital contribution by WHX Corporation, the cancellation of approximately $40 million in debt owed by us to WHX Corporation, a $10 million unsecured loan from WHX Corporation and an agreement with respect to our separation from WHX Corporation’s employee pension plan.

• WPC and WPSC entered into an agreement with our unionized employees represented by the United Steelworkers of America, or USWA, which modified our existing labor agreement to provide for, among other things, future pension arrangements with USWA and reductions in our employee-related costs.

• WPC issued 4,000,000 shares of its common stock constituting 40% thereof for the benefit of USWA retirees in satisfaction of certain claims under our labor agreement and an additional 1,000,000 shares of its common stock constituting 10% thereof for the benefit of our salaried employees.

• WPC issued 1,590,000 shares of its common stock constituting 15.9% thereof to certain of our creditors in satisfaction of various unsecured claims, including claims relating to trade debt.

There are still several matters pending in the Bankruptcy Court, including the resolution of disputed unsecured and administrative claims and certain preference actions and other litigation where we are seeking to recover monies. As of March 31, 2004, approximately 85,811 shares of common stock issued pursuant to the Plan of Reorganization were reserved for distribution to creditors pending resolution of certain disputed claims. If those claims are ultimately allowed in whole or in part by the Bankruptcy Court, the appropriate amount of stock will be distributed to those claimants; if the claims are disallowed, the stock will be distributed to other creditors of the same class, pro rata. To the extent that certain administrative and secured claims are allowed by the Bankruptcy Court, those claims will be paid in cash in an amount, which we expect will not exceed $100,000, and for which there are sufficient reserves held by the distribution agent. If and to the extent those claims are allowed as pre-petition unsecured claims, then those creditors will receive stock, which has been reserved as described above. In addition, we are the plaintiffs in a number of preference actions, where we are seeking to recover monies from creditors. We do not believe that any of these remaining bankruptcy proceedings, individually or in the aggregate, will have a material effect on us.

Results of Operations

The consolidated financial statements from and after the effective date of our plan of reorganization , August 1, 2003, are those of a new reporting entity (the “Reorganized Company”) and are not comparable to the pre-confirmation periods of the old reporting entity (the “Predecessor Company”).

Quarter Ended March 31, 2004 – “Reorganized Company”

Net sales for the quarter ended March 31, 2004 totaled $274.2 million on shipments of steel products totaling 538,701 tons. Steel prices averaged $509 per ton. Steel prices increased 16.1% over the prior quarter. Steel prices are up due to raw material shortages and low imports. The average steel price per ton reflects a mix of products that includes 28.2% hot rolled.

Cost of goods sold totaled $256.1 million for the period. Cost of goods sold averaged $475 per ton shipped. Raw material costs and fuel costs were impacted by market prices higher than in recent years. The raw steel production-operating rate during the period was 91.9%. The cost of purchased scrap increased 56.7% over the prior quarter. Cost of other raw materials increased 14.1%. The cost of natural gas increased 38.5% over the prior quarter.

Depreciation and amortization expense totaled $7.7 million for the period on fixed assets totaling $405.2 million. Fixed assets were recorded at fair value based on independent appraisals as part of the reorganization.

Selling, administrative and general expense totaled $14.9 million for the quarter.

Interest expense totaled $5.2 million for the period. Long-term debt totaled $340.3 million and borrowings under the revolving credit facility ranged between $71.9 million and $84.1 million. Interest expense also includes amortization of capitalized finance costs.

Miscellaneous income totaled $3.0 million for the period and primarily reflects equity earnings of our joint ventures.

Net loss for the quarter ended March 31, 2004 totaled $6.6 million, or a $0.70 loss per basic and diluted share.

Quarter Ended March 31, 2003 – “Predecessor Company”

Net sales for the quarter ended March 31, 2003 totaled $238.7 million on shipments of steel products totaling 548,857 tons. Steel prices averaged $435 per ton. The average steel price per ton reflects a mix of products that includes 26.1% hot rolled.

Cost of goods sold totaled $247.3 million for the period. Cost of goods sold averaged $450 per ton shipped. The raw steel production-operating rate during the period was 96.9%

Depreciation expense totaled $17.4 million for the period on fixed assets totaling $514.9 million.

Selling, administrative and general expense totaled $13.9 million for quarter.

Reorganization and professional fees related to the bankruptcy totaled $3.3 million.

Interest expense totaled $3.7 million for the period. Long-term debt totaled $340.7 million and the revolving credit facility ranged between $139.3 million and $152.4 million. Interest expense also includes amortization of capitalized finance costs.

Miscellaneous income totaled $1.2 million for the period and primarily reflects equity earnings of our joint ventures.

Net loss for the quarter ended March 31, 2003 totaled $45.6 million. Prior to reorganization, the Company was a wholly owned subsidiary of WHX Corporation.

Liquidity and Capital Resources

Since our emergence from Chapter 11 bankruptcy proceedings, our primary sources of liquidity have been term loans under our $250 million senior secured term loan facility, revolving credit loans under our $225 million senior secured revolving credit facility, and a $10 million unsecured loan from WHX Corporation. We have used approximately $199.7 million of the proceeds of the foregoing debt financings to pay our obligations under our plan of reorganization, including paying off our debtor-in-possession credit facility and paying other cash claims under our plan of reorganization. We expect to use the remainder of the proceeds to fund our ongoing operations, to service debt, to fund working capital, to make capital expenditures on our existing facilities and our planned construction of an electric arc furnace, and for general corporate purposes.

As of March 31, 2004, we had the following amounts available for our working capital and planned capital expenditures: cash and cash equivalents of approximately $3.3 million; $71.2 million of restricted cash from borrowings under our term loan facility for construction of the electric arc furnace; and $29.9 million of availability under our new revolving credit facility, after giving effect to the current $50 million minimum availability requirement discussed more fully below. We expect that the effects of a new labor agreement, cancellation of indebtedness pursuant to our plan of reorganization and improved business conditions will produce positive operating cash flows through 2004. Therefore, we currently anticipate that we should be able to fund our debt service obligations and satisfy our long-term cash requirements without the need for additional funding.

As of April 30, 2004, we had cash and cash equivalents of approximately $3.0 million; $65.2 million of restricted cash for construction of the electric arc furnace; and approximately $23.4 million of availability under our revolving credit facility, after giving effect to a $50 million minimum availability requirement.

Our credit agreements require us to maintain borrowing availability of at least $50 million under our revolving credit facility through December 31, 2004. After December 31, 2004, we will be required to maintain borrowing availability of at least $25 million. We currently expect that we should be able to maintain this level of borrowing availability through the end of the current fiscal year. This expectation is based on our present belief that, among other things, increased raw material costs will be recovered through increased sales prices for our products and that the demand for and market price of steel products will increase in the near future. However, if increased costs of raw materials cannot be recovered or if market prices for steel products or customer demand do not rise as anticipated, it is possible that our borrowing availability could fall below the current $50 million requirement.

The following table summarizes the categories of collateral that we have pledged to secure our current debt obligations and the ranking of our debt obligations with respect to all of the security interests that we have granted to date.


	Collateral Type
	Tangible and Intangible Assets and	Accounts Receivable and
	Joint Venture Equity Interest	Inventory

Debt obligation secured by first security interest	$250 Million Term Loan	$225 Million Revolving Credit Facility

Debt obligation secured by second security interest	$40 Million Series A Notes	$250 Million Term Loan
Debt obligation secured by third security interest	$225 $225 Million Revolving Credit Facility	$40 million Series A Notes Facility
Debt obligation secured by fourth security interest	Deferred payment obligations in respect of iron ore sales agreement with Itabira Rio Doce	Deferred payment obligations in respect of iron ore sales agreement with Itabira Rio Doce
Debt obligation secured by fifth security interest	$20 Million Series B Notes	$20 Million Series B Notes

In the event that we are unable to satisfy our payment and other obligations under our secured debt, the lenders of our secured debt have various rights and remedies, including the right to force the sale of our assets and to apply the proceeds thereof to repay amounts owed by us. If such a foreclosure were to occur, then we may be unable to maintain our operations, our business, financial condition and results of operations could materially suffer and our shareholders may lose all or part of their investment.

Off-Balance Sheet Arrangements

As of the date of this report we have no off-balance sheet transactions, arrangements, or other relationships with unconsolidated entities or persons that are reasonably likely to adversely affect liquidity, availability of capital resources, financial position or results of operations. We have investments in three joint ventures that are accounted for under the equity method. Pursuant to the joint venture agreements with OCC and Wheeling-Nisshin, we have an obligation to support their working capital requirements. However, we believe it is unlikely that those joint ventures will require our working capital support in the foreseeable future based upon the present financial condition, capital resource needs and/or operations of these entities.

Contractual Commitments

As of March 31, 2004, the total of our future contractual obligations, including the repayment of debt obligations, is summarized below.


							Contractual Payments Due
	Total			From March 31, 2004			2005 to 2006			2007 to 2008			Thereafter
							(Dollars in Millions)
Long-Term Debt⁽¹⁾	$	411.7		$	17.8	⁽²⁾	$	85.3	⁽³⁾	$	225.2	⁽⁴⁾	$	83.4	⁽⁵⁾
Capital Leases		11.0			1.3			2.4			1.8			5.5
Operating Leases:
Long Term		10.2			1.3			3.6			3.6			1.7
Month to Month		49.0			6.4			17.0			17.0			8.5
Other Long Term Liabilities:
OPEB		100.1	⁽⁶⁾		4.3			7.6			9.4			475.7
Severance		27.7	⁽⁷⁾		12.3			12.6			2.3			.5
Coal Miner Retiree Medical		2.9			0.1			0.4			0.4			2.0
Worker’s Compensation		20.9	⁽⁸⁾		3.8			10.1			10.1			5.1
Purchase Commitments:
Oxygen Supply		76.8	⁽⁹⁾		5.4			14.4			14.4			42.6
Electricity		120.7	⁽¹⁰⁾		6.8			19.6			22.1			72.3
Coal		73.7	⁽¹¹⁾		14.3			39.6			19.8			—
Other		2.0			2.0			—			—			—
Capital Commitments		67.5	⁽¹²⁾		65.1			2.4			—			—

Total Contractual Obligations	$	974.2		$	140.9		$	215.0		$	326.1		$	697.3

(1)		The interest rate associated with the term loan is a floating rate. Interest payment projections in respect of the term loan assume that the interest rate for 2004 will be 4% per annum and will increase by 0.5% each year during the projection period.

(2)		Includes interest payment obligations for the remainder of 2004 of approximately: $7.5 million in respect of the term loan; $2.4 million in respect of the Series A notes and the Series B notes; $460,000 in respect of the WHX note; $305,000 in respect of the loan agreement with the State of West Virginia; $112,000 in respect of the loan modification agreement with the Ohio Department of Development; $73,000 in respect of the modification and assumption agreement with D anieli Corporation; and $3,000 in respect of the notes issued to Fata Hunter.

(3)		Includes aggregate interest payment obligations for years 2005 and 2006 of approximately: $21.0 million in respect of the term loan; $6.5 million in respect of the Series A notes and the Series B notes; $1.2 million in respect of the WHX note; $611,000 in respect of the loan agreement with the State of West Virginia; $100,000 in respect of the loan modification agreement with the Ohio Department of Development; and $107,000 in respect of the modification and assumption agreement with Danieli Corporation.

(4)		Includes aggregate interest payment obligations for years 2007 and 2008 of approximately: $15.9 million in respect of the term loan; $7.0 million in respect of the Series A notes and the Series B notes; $1.2 million in respect of the WHX note; $611,000 in respect of the loan agreement with the State of West Virginia; and $5,000 in respect of the modification and assumption agreement with Danieli Corporation.

(5)		Includes aggregate interest payment obligations of approximately: $10.5 million in respect of the Series A notes and the Series B notes; and $1.6 million in respect of the WHX note.

(6)		Represents the estimated present value of our liability as of March 31, 2004. Amounts included for 2004 through 2008 and thereafter reflect our current estimate of corporate cash outflows and include the impact of assumed mortality, medical inflation and the aging of the population.

(7)		Amount represents payments under buyout program. 650 Bargaining employees elected buyouts that extend through 2010.

(8)		Amount represents the present value of our liability as of March 31, 2004. Amounts included for 2004 through 2008 and thereafter reflect our current estimate of corporate cash outflows and exclude the impact of interest and mortality. The forecast of cash outflows is estimated based on historical cash payment information and anticipates payment of approximately $5.1 million per year.

(9)		The Company entered into a 15-year take-or-pay contract in 1999 that was amended in 2003. The contract requires the Company to purchase oxygen, nitrogen and argon each month with a minimum monthly charge of approximately $0.6 million, subject to escalation clauses. Payments for deliveries of oxygen totaled $9.3 million in 2003, $7.0 million in 2002 and $7.5 million in 2001.

(10)		The Company entered into a 20-year take-or-pay contract in 1999, which was amended in 2003. The contract requires the Company to purchase steam and electricity each month or pay a minimum monthly charge of approximately $0.4 million. A variable portion of the contract is calculated as $3.75 times the number of tons of iron produced each month with an agreed to minimum of 3,000 tons per day. Payments for deliveries of steam and electricity totaled $8.8 million in 2003, $13.8 million in 2002 and $14.6 million in 2001. If the Company elects to terminate the contract early, as of December 31, 2003, a maximum termination payment of $37.0 million would be required.

(11)		In 2004, the Company amended its take-or-pay contract to purchase coal each month to a minimum monthly charge of approximately $1.6 million. The term of the contract expires on December 31, 2007, while the Company has the sole option to terminate the contract on or after January 1, 2006. After such date, the pricing will be subject to market conditions with a cap collar. Payments for deliveries of coal totaled $11.8 million in 2003, $16.4 million in 2002 and $7.3 million in 2001. If the Company elects to terminate the contract, a maximum termination payment of $37.4 million would be required.

(12)		In June 2003, the Company entered into an agreement for the supply of equipment and services with Junction Industries, Inc., pursuant to which Junction Industries has agreed to provide equipment and services to design, engineer, procure, fabricate, and assist the Company in the installation, commissioning, start-up and testing of one 250-ton (tap weight) electric arc furnace, one Consteel scrap conveyor system, ladle metallurgy furnace, baghouse and certain other associated equipment for incorporation into the electric arc furnace melt shop. The total cost of the electric arc furnace is expected to be $114.9 million. As of March 31, 2004, capital commitments remaining under the project total $65.1 million.

Planned Capital Expenditures

Our planned capital expenditures for the three-year period 2004 through 2006 total approximately $272.3 million, and include, but are not limited to, the following capital expenditure projects:

• $88.0 million remaining for construction of the electric arc furnace, scheduled for completion in late 2004. At March 31, 2004, $71.2 million remained to be spent and is fully funded through a restricted cash account;

• $76.0 million toward substantial completion of a rebuild of the No. 8 coke battery, which is expected to extend the service life by 12 to 15 years, and is targeted for completion in 2007, at an aggregate cost estimated at approximately $85.0 million;

• $12.5 million for installation of hot strip mill automatic roll changers at our Mingo Junction facility, expected to occur in 2006; and

• $10.4 million for cold mill improvements at our Allenport facility, expected to occur in 2005 and 2006.

In addition to the planned capital expenditure amounts identified above, we are also contemplating, at our option, and subject to receipt of all necessary environmental permitting requirements, a rebuild of the Nos. 1, 2 and 3 coke batteries in 2008 and 2009, at an estimated aggregate cost of approximately $47.0 million. Our decision to rebuild these coke batteries will depend, in part, on whether we believe potential revenues from the sale of resulting excess coke production attributable to the continued operation of these three batteries justifies these expenditures.

Under our credit agreements, we are permitted to undertake the construction of the electric arc furnace, the installation of the hot strip mill automatic roll changers and the cold mill improvements projects identified above, subject to pre-established spending limits provided in our restrictive covenants. These covenants also limit the amounts that we can spend on any other capital expenditure projects undertaken in 2004, 2005, and 2006 to $33.9 million, $44.0 million, and $37.1 million, respectively, subject to adjustment for permitted carryover of a portion of any unexpended amounts in these years. Our planned capital expenditures for 2004 through 2006 exceed current limitations applicable to such spending under the existing terms of our credit agreements. Additionally, funding, if required, for these projects has not yet been determined.

In the quarter ended March 31, 2004, we incurred approximately $24.1 million of the planned capital expenditure amounts included in our business plan.

VEBA Trust

In connection with our plan of reorganization and our collective bargaining agreement with the USWA, we established a plan to provide health care and death benefits to certain retirees and their dependents. The trust created under the benefits plan, which we refer to as the VEBA trust, is designed to constitute a tax-exempt voluntary employee beneficiary association. Pursuant to our plan of reorganization, we issued 4 million shares of WPC common stock to the VEBA trust (“the “Initial Shares”). Due to certain restrictions on the VEBA trust’s ability to sell stock held by the trust to fund benefit payments (which are described below in more detail below), the agreement with the USWA provided monthly cash contributions by the Company of $1.5 million, beginning in October 2003 and continuing through March 2004, and $0.3 million from April 2004 through October 2004 (collectively, the “Initial Funding Obligation”. These contributions are to be creditable against variable contributions earned under (i), (ii), or (iii), below.

(i) 40% of operating cash flow, between $16 and $24 of operating cash flow per ton of steel products sold to third parties, payable in cash;

(ii) 12% of operating cash flow, between $24 and $65 of operating cash flow per ton of steel products sold to third parties, payable at our discretion in cash or common stock of WPC;

(iii) 25% of operating cash flow, above $65 of operating cash flow per ton of steel products sold to third parties, payable in cash; and

(iv) 15% of operating cash flow below $30 of operating cash flow per ton of steel products sold to third parties, payable at our discretion in cash or common stock of WPC, subject to compliance with dilution limitations.

Through the first quarter ended March 31, 2004, no Variable Contributions had been made or incurred.

“Operating cash flow” for purposes of determining such contribution amounts is defined as earnings before interest and taxes of the Company adjusted for certain amounts as set forth in the trust agreement.

As of March 31, 2004, we had contributed $3.0 million in cash to the VEBA trust toward satisfaction of the Initial Funding Obligation. In March 2004, we agreed with the USWA to satisfy the Initial Funding Obligation as follows:

• the trustee was authorized to sell up to 400,000 shares of the Initial Shares, at its discretion

• the proceeds of the sale of 400,000 of the Initial Shares and the $3.0 million cash contribution previously made will be credited against future Variable Contributions, if any; and

• no later than February 14, 2008, we are required to contribute 400,000 additional shares of our common stock to the trust, minus any shares of our common stock contributed prior to that date under (ii) of the Variable Contribution formula described above.

To the extent that contributions become due under (ii) of the Variable Contribution formula described above, we have discretion to apply up to 1.6 million of the Initial Shares as a credit against such future contribution amounts to the trust. Shares of WPC common stock contributed to the trust in satisfaction of our obligations are valued based on the closing price of WPC common stock for the 10 trading days immediately preceding the date of contribution

Profit Sharing Plan

Pursuant to the collective bargaining agreement with the USWA, we have an obligation to make quarterly profit sharing payments to or for the benefit of our USWA employees in an amount equal to 15% of our profits for the quarter, if any, over $30 per ton of steel shipped to third parties. For this purpose, profits are defined as earnings before interest and taxes, calculated on a consolidated basis, excluding effects of certain amounts as set forth in the collective bargaining agreement. The profit sharing pool will be divided among all employees on the basis of hours attributed to each employee within each quarter. No profit sharing obligations have been incurred to date. We have the discretion to make future contributions, if any, in cash or in WPC common stock. All contributions will be to a qualified benefit plan. To the extent that contributions of stock under this plan, together with stock contributions to the VEBA trust, exceed certain percentages of our common stock, we may satisfy our contribution obligation in the form of profit sharing notes. All profit sharing payments that become due are considered 100% vested when made.

Item 3 — Quantitative and Qualitative Disclosures About Market Risk

Our company’s quantitative and qualitative disclosures about market risk include forward-looking statements with respect to management’s opinion about the risk associated with our financial instruments. These statements are based on certain assumptions with respect to market prices, interest rates and other industry-specific risk factors. To the extent these assumptions prove to be inaccurate, future outcomes may differ materially from those discussed herein.

Commodity Price Risk and Related Risks

In the normal course of business, our company is exposed to market risk or price fluctuation related to the purchase, production or sale of steel products. In addition, prices for our raw materials, natural gas and electricity requirements are subject to frequent market fluctuations. Our company’s market risk strategy generally has been to obtain competitive prices for our products and services and to allow operating results to reflect market price movements dictated by supply and demand. Additionally, we periodically enter into contracts for the advance purchase of natural gas in an effort to hedge against market fluctuations. Due to “mark to market” provisions in these contracts, as our market exposure decreases, we can be required to make advance payments that ultimately are recovered upon delivery of the commodity, but which can temporarily reduce our liquidity until that time.

Interest Rate Risk

The fair value of cash and cash equivalents, receivables and accounts payable approximate their carrying values and are relatively insensitive to changes in interest rates due to their short-term maturity.

Under the Bankruptcy Code, interest is generally not allowable on unsecured pre-petition obligations. Pursuant to our plan of reorganization, substantially all of our pre-reorganization debt was repaid or otherwise satisfied and we entered into new credit facilities. Under those new credit facilities, at March 31, 2004, we had outstanding $92.2 million aggregate principal amount of debt under fixed-rate instruments and $321.9 million aggregate principal amount of debt under variable-rate instruments. Since our portfolio of debt is comprised primarily of variable-rate instruments, the fair value of the debt is relatively insensitive to the effects of interest rate fluctuations. However, our interest expense is sensitive to changes in the general level of interest rates. A 100 basis point increase in the average rate for the variable rate debt would have increased our first quarter 2004 interest expense by approximately $0.8 million.

Credit Risk

Counter parties expose our company to credit risk in the event of non-performance. We continually review the creditworthiness of our counter-parties.

Foreign Currency Exchange Risk

Our company has limited exposure to foreign currency exchange risk as almost all of our transactions are denominated in U.S. dollars.

Item 4 — Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report pursuant to Exchange Act Rule 13A-15. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that material information relating to us (including our subsidiaries) required to be included in our reports we file with the Securities and Exchange Commission is processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

There have been no significant changes in internal control over financial reporting that occurred during the first fiscal quarter that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.


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


Exhibit No.		Description
31.1		Certificate of James G. Bradley, Chief Executive Officer of the Registrant, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
31.2		Certificate of Paul J. Mooney, Chief Financial Officer of the Registrant, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.1		Certificate of James G. Bradley, Chief Executive Officer of the Registrant, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2		Certificate of Paul J. Mooney, Chief Financial Officer of the Registrant, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).


	WHEELING-PITTSBURGH CORPORATION
	/s/ Paul J. Mooney
	Paul J. Mooney
	Chief Financial Officer (Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

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	•		WPC exchanged, on a pro rata basis, $275 million in senior notes and $75 million in term notes that existed prior to its bankruptcy filing for an aggregate of $20 million in cash, $40 million in new Series A secured notes issued by Wheeling-Pittsburgh Steel Corp. (“WPSC”), which are collateralized by a second lien on our tangible and intangible assets (other than our accounts receivable and inventory) and our equity interests in our joint ventures and a third lien on our accounts receivable and inventory, $20 million in new Series B secured notes issued by WPSC, which are collateralized by a fifth lien on our tangible and intangible assets, our equity interests in our joint ventures, and our accounts receivable and inventory, and 3,410,000 shares of new common stock of WPC constituting 34.1% thereof.

	•		WPC cancelled its then-existing senior notes and related indenture and its then-existing term notes and the related term loan agreement.

	•		WPC cancelled all shares of its common stock that existed prior to the implementation of our plan of reorganization, at which point we ceased to be a subsidiary of WHX Corporation.

	•		WPSC entered into a new $250 million senior secured term loan facility, which is guaranteed in part by the Emergency Steel Loan Guarantee Board, the State of West Virginia, WPC and WPSC’s subsidiaries and is collateralized by a first lien on our tangible and intangible assets (other than accounts receivable and inventory) and our equity interests in our joint ventures and a second lien on our accounts receivable and inventory. We also entered into a new $225 million senior secured revolving credit facility, which is guaranteed by WPC and WPSC’s subsidiaries and is collateralized by a first lien on our accounts receivable and inventory and a third lien on our other tangible and intangible assets and our equity interests in our joint ventures.

	•		All of our obligations under our $195 million debtor-in-possession credit facility were satisfied in full and discharged.

	•		WPC and WPSC entered into an agreement with WHX Corporation providing for, among other things, a $10 million capital contribution by WHX Corporation, the cancellation of approximately $40 million in debt owed by us to WHX Corporation, a $10 million unsecured loan from WHX Corporation and an agreement with respect to our separation from WHX Corporation’s employee pension plan.

	•		WPC and WPSC entered into an agreement with our unionized employees represented by the United Steelworkers of America (USWA) which modified our existing labor agreement to provide for, among other things, future pension arrangements with the United Steelworkers of America and reductions in our employee-related costs.

	•		WPC issued 4 million shares of its new common stock constituting 40% thereof for the benefit of USWA retirees in satisfaction of certain claims under our labor agreement and an additional 1 million shares of its new common stock constituting 10% thereof to or for the benefit of our salaried employees.

	•		WPC issued 1,590,000 shares of its new common stock constituting 15.9% thereof to certain of our creditors in satisfaction of various unsecured claims, including claims relating to trade debt.

	•		$88.0 million remaining for construction of the electric arc furnace, scheduled for completion in late 2004. At March 31, 2004, $71.2 million remained to be spent and is fully funded through a restricted cash account;

	•		$76.0 million toward substantial completion of a rebuild of the No. 8 coke battery, which is expected to extend the service life by 12 to 15 years, and is targeted for completion in 2007, at an aggregate cost estimated at approximately $85.0 million;

	•		$12.5 million for installation of hot strip mill automatic roll changers at our Mingo Junction facility, expected to occur in 2006; and

	•		$10.4 million for cold mill improvements at our Allenport facility, expected to occur in 2005 and 2006.

	(i)		40% of operating cash flow, between $16 and $24 of operating cash flow per ton of steel products sold to third parties, payable in cash;

	(ii)		12% of operating cash flow, between $24 and $65 of operating cash flow per ton of steel products sold to third parties, payable at our discretion in cash or common stock of WPC;

	(iii)		25% of operating cash flow, above $65 of operating cash flow per ton of steel products sold to third parties, payable in cash; and

	(iv)		15% of operating cash flow below $30 of operating cash flow per ton of steel products sold to third parties, payable at our discretion in cash or common stock of WPC, subject to compliance with dilution limitations.