FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
-------------------------------------------------
/X/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ------------------- to --------------------------
For Quarter Ended June 30, 1995 Commission File Number 1-2394
WHX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3768097
(State of Incorporation) (I.R.S. Employer
Identification No.)
110 East 59th Street
New York, New York 10022
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 212-355-5200
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 /X/ No
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 /X/ No
The number of shares of Common Stock issued and outstanding as of July 17, 1995
was 25,780,434 which includes redeemable common shares.
<PAGE>
WHX CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1995 1994 1995 1994
---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
NET SALES $366,271 $300,427 $690,458 $554,230
OPERATING COSTS
Cost of goods sold 313,681 242,535 574,743 460,624
Depreciation 14,362 15,267 32,045 29,435
Selling and administration expense 16,341 16,271 33,123 30,604
Profit sharing 1,197 3,028 4,183 3,423
-------- -------- -------- --------
345,581 277,101 644,094 524,086
-------- -------- -------- --------
OPERATING INCOME 20,690 23,326 46,364 30,144
Interest expense 5,629 5,522 11,735 12,656
Other income 12,524 (421) 22,221 13,088
B. & L.E. settlement -- -- -- 36,091
-------- -------- -------- --------
INCOME BEFORE TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 27,585 17,383 56,850 66,667
Tax provision 6,069 4,520 12,507 17,334
-------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 21,516 12,863 44,343 49,333
Cumulative effect on prior years of
adoption of SFAS 112 -- -- -- 9,984
-------- -------- -------- --------
NET INCOME 21,516 12,863 44,343 39,349
Dividend requirement for Preferred Stock 5,719 2,438 11,438 4,875
-------- -------- -------- --------
NET INCOME APPLICABLE TO COMMON STOCK $ 15,797 $ 10,425 $ 32,905 $ 34,474
======== ======== ======== ========
Income (loss) per share of common stock:
Primary: Before cumulative effect
of accounting change $.60 $.36 $1.23 $1.54
Cumulative effect of
accounting change -- -- -- (.35)
-------- -------- -------- --------
Total $.60 $.36 $1.23 $1.19
======== ======== ======== ========
Fully Diluted: $.48 $.33 $ .98 $1.01
======== ======== ======== ========
</TABLE>
See notes to financial statements.
<PAGE>
WHX CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(Dollars and shares in thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 61,611 $ 13,424
Short term investments 309,776 388,182
Trade receivables - net 100,662 110,330
Inventories:
Finished and semi-finished products 194,638 170,595
Raw materials 74,782 68,302
Other materials and supplies 29,817 25,376
Excess of LIFO over current cost (3,109) (3,109)
---------- ----------
296,128 261,164
Other current assets 56,134 12,605
---------- ----------
Total current assets 824,311 785,705
Property, plant and equipment at cost, less
accumulated depreciation and amortization 802,914 768,284
Deferred income taxes 85,739 62,339
Other non-current assets 100,017 113,580
---------- ----------
$1,812,981 $1,729,908
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade payables $ 140,297 $ 111,645
Short-term borrowings 32,000 --
Deferred income taxes - current 37,389 36,189
Other current liabilities 94,213 109,567
Long-term debt due in one year 4,031 4,253
---------- ----------
Total current liabilities 307,930 261,654
Long-term debt 286,100 289,500
Employee benefit liabilities 424,532 429,221
Other liabilities 52,421 50,395
---------- ----------
1,070,983 1,030,770
---------- ----------
Redeemable Common Stock - 454 shares
and 473 shares 6,544 6,884
---------- ----------
Stockholders' Equity:
Preferred Stock $.10 par value
6,500 shares 650 650
Common Stock - $.01 par value - 25,318
shares and 27,229 shares 253 272
Unrealized gain on securities
available for sale 10,632 3,078
Additional paid-in capital 690,258 664,902
Accumulated earnings 56,255 23,352
---------- ----------
758,048 692,254
Less treasury stock - 2,025 shares (22,594) -
---------- ----------
Total stockholders equity 735,454 692,254
---------- ----------
$1,812,981 $1,729,908
========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
WHX CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 44,343 $ 39,349
Non cash expenses:
Depreciation 32,045 29,435
Other postemployment benefits 3,300 5,600
Deferred income tax 2,388 13,248
Cumulative effect of accounting change -- 9,984
Decrease (increase) in working capital elements:
Trade receivables (6,842) (23,012)
Inventories (11,593) (6,621)
Other current assets (27,844) (5,257)
Trade payables 16,664 (9,579)
Short term investments(trading) 119,993 (135,581)
Trading account borrowings -- 184,107
Other current liabilities (16,633) 2,347
Other items - net 6,197 (7,876)
-------- ---------
Net cash flow from operating activities 162,018 96,144
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Short term investments-available for sale (34,033) --
Plant additions and improvements (59,671) (24,463)
Unimast Incorporated investment (27,500) --
W-P Radio Corp. investment -- (10,442)
Sales of assets 6,521 --
Investment in joint ventures (6,053) --
-------- --------
Net cash used by
investing activities (120,736) (34,905)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from receivable securitization 30,000 --
Short term borrowings (repayments) 31,490 --
Long-term borrowings (repayments) (22,851) (56,349)
Treasury stock acquisition (22,594) --
Preferred stock dividends (11,438) --
Letter of credit collateralization 2,597 --
Redemption of common stock (299) (269)
-------- --------
Net cash from financing activities 6,905 (56,618)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 48,187 4,621
Cash and cash equivalents
at beginning of period 13,424 5,996
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 61,611 $ 10,617
======== ========
</TABLE>
See notes to financial statements.
<PAGE>
WHX CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
GENERAL
THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30,1995, THE CONSOLIDATED
STATEMENT OF INCOME FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30,
1995 AND 1994, AND THE CONSOLIDATED STATEMENT OF CASH FLOW FOR THE SIX
MONTH PERIODS ENDED JUNE 30, 1995 AND 1994, HAVE BEEN PREPARED BY THE
COMPANY WITHOUT AUDIT. IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS
NECESSARY TO PRESENT FAIRLY THE CONSOLIDATED FINANCIAL POSITION AT JUNE
30, 1995 AND THE RESULTS OF OPERATIONS AND CHANGES IN CASH FLOW 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
AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31,
1994. THE RESULTS OF OPERATIONS FOR THE PERIOD ENDED JUNE 30, 1995 ARE NOT
NECESSARILY INDICATIVE OF THE OPERATING RESULTS FOR THE FULL YEAR.
NOTE 1 - EARNINGS PER SHARE
The computation of primary earnings per share of common stock is
based upon the average shares of common stock and common stock equivalents
outstanding. Common stock equivalents represent the dilutive effect of
assuming the exercise of outstanding stock options and warrants. Five-year
warrants issued pursuant to the Company's 1991 Plan of Reorganization
totaled 1.5 million at June 30, 1995. Outstanding stock options granted to
officers, directors and employees totaled 2.4 million at June 30, 1995.
The dilutive effect of common stock equivalents arising from the warrants
and stock options on the computation of net income per share is
approximately $.02 per share. The computation of fully diluted earnings
per share further assumes the sale of all redeemable common stock into the
public market and conversion of all convertible preferred stock. There
were 2,025,000 share of common stock held as treasury shares at June 30,
1995.
The shares used in the computations were as follows:
Quarter Ended June 30,
1995 1994
---- ----
Primary 26,315,189 28,915,533
Fully diluted 44,977,926 38,989,575
The Company intends to retain future earnings for working capital
needs and to finance capital improvements and presently does not intend to
pay cash dividends on its common stock for the foreseeable future. In
addition, the terms of the Company's long term debt place certain
limitations on the Company's ability to pay cash dividends.
REDEEMABLE COMMON STOCK
Holders have the right to sell their redeemable common stock to the
Company at prices of $15 or $20 per share depending on years of service,
age and retirement date.
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Holders can sell any or all of their redeemable common stock into the
public market, provided, however, that stock sales on any day cannot be
more than 20% of the number of shares publicly traded during the previous
day. As of June 30, 1995, redeemable common stock outstanding totaled
454,066 shares.
NOTE 2 - POSTEMPLOYMENT BENEFITS
The Company adopted Statement of Financial Accounting Standard No.
112, "Accounting for Postemployment Benefits" ("SFAS 112") as of January
1, 1994. This statement establishes accounting standards for employers who
provide benefits to former or inactive employees after employment but
before retirement. Those benefits include, among others, disability,
severance and workers' compensation. The Company recorded a charge of
$12.2 million ($10.0 million net of tax) in the 1994 first quarter as a
result of the cumulative effect on prior years of adoption of SFAS 112.
NOTE 3 - SHORT TERM INVESTMENTS
Effective January 1, 1994 the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"). This statement
addresses the accounting and reporting for investments in equity
securities that have readily determinable fair values and for all
investments in debt securities. The cumulative effect on prior years was
immaterial.
The Company recognized gains and losses based on specific
identification of the securities which comprise the investment balance. At
June 30, 1995 unrealized holding gains on available-for-sale securities of
$10.6 million have been reported as a separate component of stockholder's
equity. Net unrealized holding losses on trading securities included in
the current period earnings are $4.5 million.
NOTE 4 - ACCOUNTS RECEIVABLE
On August 17, 1994, Wheeling-Pittsburgh Funding, Inc. a special
purpose wholly- owned subsidiary ("Funding") of Wheeling-Pittsburgh Steel
Corporation ("WPSC"), entered into an agreement to sell (up to $75 million
on a revolving basis) an undivided percentage ownership in a designated
pool of accounts receivable generated by WPSC, Wheeling Construction
Products, Inc. and Pittsburgh Canfield Corporation. The agreement expires
in August 1999. Accounts receivable at June 30, 1995 exclude $75 million,
representing uncollected accounts receivable sold with recourse limited to
the extent of uncollectible balances. Fees paid by the Company under this
agreement are based upon a fixed rate set on the date the receivables are
sold and range from 6.625% to 9.0% of the outstanding amount of
receivables sold. Based on the Company's collection history, the Company
believes that credit risk associated with the above arrangement is
immaterial.
NOTE 5 - SHORT TERM DEBT
In October 1994 WPSC entered into a new Revolving Credit Facility
("RCF") with Citibank, N.A. as agent. The RCF provides for borrowings for
general corporate purposes of up to $50 million. Interest is calculated at
a Citibank prime rate plus .5% and/or a Eurodollar rate plus 2.0%.
Borrowings under the RCF are secured primarily by 100% of WPSC's eligible
inventory and requires that WPSC maintain a specified level of tangible
net worth. The RCF has certain restrictions on indebtedness, liens and
dividends.
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Borrowings outstanding under the RCF at June 30, 1995 totaled $32.0
million. The RCF expires in October 1995.
NOTE 6 - SALE OF RADIO STATIONS
The Company received Federal Communication Commission preliminary
approval for the sale of all its radio stations in the second quarter in
two separate transactions. In the first transaction, the Company sold the
assets relating to WPXR-FM and WPXR-AM, its stations located in Quad
Cities, Illinois, to Segue Communications, Inc. The second transaction,
which is expected to close in the third quarter, involves assets related
to stations WCHY-AM and WCHY-FM (Savannah, Ga.), WODE-FM and WIPI-AM
(Allentown, Pa.), KRZR-FM and KTHT-FM (Fresno, Calif.), and KSSK-FM,
KSSK-AM and KUCD-FM (Honolulu, Hawaii) to Patterson Broadcasting, Inc. The
Company recognized a combined gain of $6.7 million on these transactions.
NOTE 7 - CONTINGENCIES
ENVIRONMENTAL MATTERS
The Company, as well as other steel companies, is subject to
demanding environmental standards imposed by federal, state and local
environmental laws and regulations. For the six months ended June 30, 1995
and years 1994 and 1993, aggregate capital expenditures for environmental
control projects totaled approximately $2.1 million, $8.7 million and $8.0
million, respectively.
The Company has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability
Act ("Superfund") or similar state statues at seven waste sites. The
Company is subject to joint and several liability imposed by Superfund on
potentially responsible parties. Due to the technical and regulatory
complexity of remedial activities and the difficulties attendant to
identifying potentially responsible parties and allocating or determining
liability among them, the Company is unable to reasonably estimate the
ultimate cost of compliance with superfund laws. The Company believes,
based upon information currently available, that the Company's liability
for clean up and remediation costs in connection with one of these sites
will be between $1 million and $4 million. At four other sites the costs
are estimated to aggregate between $25,000 and $250,000. The Company lacks
sufficient information regarding the remaining sites to form an estimate.
The Company is currently funding its share of remediation costs. The
Company believes that these remediation costs are not significant and will
not be significant in the forseeable future. Non-current accrued
environmental liabilities totaled $7.3 million and $7.6 million, at June
30, 1995 and June 30, 1994, respectively. These liabilities were
determined by the Company when the Company reorganized under the federal
bankruptcy laws in January 1991, based on all available information,
including information provided by third parties, and existing laws and
regulations then in effect, and are reviewed and adjusted quarterly as new
information becomes available. Based upon all available information, the
Company does not anticipate that assessment and remediation costs
resulting from the Company being a potentially responsible party will have
a material adverse effect on the financial condition or results of
operations of the Company. However, as further information comes into the
Company's possession, it will continue to reassess such evaluations.
Based upon the Company's prior capital expenditures, anticipated
capital expenditures, consent agreements negotiated with federal and state
agencies and
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information available to the Company on pending judicial and
administrative proceedings, the Company does not expect its environmental
compliance costs, including the incurrence of any additional fines and
penalties, relating to the operation of its facilities, to have a material
adverse effect on its consolidated financial condition or results of
operations.
<PAGE>
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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net sales for the second quarter of 1995 increased 21.9% to $366.3 million
on shipments of steel products totaling 659,361 tons, compared to net sales of
$300.4 million on shipments of steel products totaling 602,043 tons in the
second quarter of the prior year. The increase in net sales reflects the
inclusion of Unimast, Inc., acquired at the end of the 1995 first quarter, and a
10.6% increase in net sales of the pre-acquisition business. The increase in net
sales of the pre-acquisition business is due to a 2.2% increase in volume of
steel products shipped, a 5.9% increase in steel sales prices and shipment of a
higher value- added product mix. Average product prices of the base business
increased by 8.2% from $499 to $540 per ton shipped.
Second quarter 1995 operating costs totaled $345.6 million, compared to
$277.1 million in the 1994 second quarter. The increase in operating costs
reflects $33.7 million of Unimast operating costs and a 12.5% increase in
pre-acquisition business operating costs. The increase in operating costs
principally reflects the increase in volume of steel products shipped, an
increase in the consumption and price of purchased steel slabs due to the
planned outage of a blast furnace to be relined, and a higher cost mix of
products shipped, partially offset by an adjustment to certain benefit costs.
The Company purchased semi finished steel to supplement its raw steel production
to make up for production lost during the planned blast furnace outage, which
was completed in June, to meet customer commitments during a period of strong
product demand and to more fully utilize hot strip mill capacity. The 1995
second quarter operating rate (raw steel production as a percentage of capacity)
was 74.0% compared to 94.8% in the 1994 second quarter. Steel production was
100% continuous cast.
Depreciation was $.9 million lower in the 1995 second quarter, compared to
the 1994 second quarter, primarily due to the lower production levels, but
partially offset by higher amounts of depreciable assets and the inclusion of
Unimast depreciation.
Other income increased to $12.5 million in the 1995 second quarter from a
$.4 million loss in the second quarter of the prior year. The increase is due
principally to a $6.7 million gain on the announced sale of the Company's radio
stations. Interest and investment income on short-term investments increased to
$3.3 million from a $3.6 million loss in the 1994 second quarter. Equity income
increased to $2.0 million from $1.3 million in the 1994 second quarter.
Unrealized losses on available-for-sale securities of $4.3 million have been
reported as a separate component of stockholders equity in the 1995 second
quarter.
The 1995 second quarter tax provision reflects the estimated annual
effective tax rate. The provision includes the effect of recognizing certain
deferred tax assets, but excludes the benefit of applying pre-reorganization tax
benefits. Pre-reorganization tax benefits are direct additions to paid-in
capital and totaled $13.2 million and $3.4 million in the second quarters of
1995 and 1994, respectively.
Net income for the 1995 second quarter totaled $21.5 million, or 60 cents
per common share, compared to net income of $12.9 million, or 36 cents per
common share, in the 1994 second quarter.
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Net sales for the first half of 1995 totaled $690.5 million on shipments
of steel products of 1,270,174 tons, compared to net sales of $554.2 million on
shipments of steel products of 1,129,920 tons in the 1994 first half. The
increase in net sales reflects the inclusion of Unimast, Inc., and an 18.4%
increase in net sales of the pre-acquisition business. The increase in net sales
of the pre-acquisition business reflects an 8.5% increase in volume of steel
products shipped, a 6.1% increase in steel sales prices and shipment of a
higher-valued product mix. Average product prices (excluding Unimast) increased
from $491 to $535 per net ton shipped. The increase in volume of products
shipped and movement toward a higher- valued product mix partially reflects the
effect of acquisitions of downstream manufacturing operations by Wheeling
Corrugating Company in recent years.
Operating costs for the first half of 1995 totaled $644.1 million,
compared to $524.1 million in the 1994 first half. The increase in operating
costs reflects the inclusion of Unimast, the increase in volume of steel
products shipped, an increase in the consumption and price of purchased steel
slabs due to the planned blast furnace outage, which was completed in June, and
the higher cost mix of products shipped, partially offset by an adjustment to
certain benefit costs. Raw steel production declined 3.8% compared to the first
half of 1994. Cost of sales per ton shipped (excluding Unimast) increased 8.6%
to $443 from $408 per ton shipped. Depreciation increased 8.9% due to increased
amounts of depreciable assets, inclusion of Unimast depreciation, partially
offset by lower production levels.
Selling, administrative and general expense increased 8.2% to $33.1
million in the 1995 first half due to the addition of Unimast, Inc. and higher
consulting services, partially offset by lower general tax expense.
Profit sharing increased by $.8 million to $4.2 million in the first half
of 1995 due to higher levels of pre-tax income. Interest expense decreased $.9
million to $11.7 million in the 1995 first half due to lower levels of long term
debt, partially offset by lower amounts of capitalized interest.
Other income in the 1995 first half increased $9.1 million, compared to
the 1994 first half, due to a $6.7 million gain on the sale of the radio
stations, an increase of $3.6 million to $11.0 million of interest and
investment income on short term investments, and a $1.2 million increase to $4.0
million equity income. In the first half of 1994 the Company also received and
recorded a $36.1 million ($26.7 million net of tax) legal settlement as a result
of a favorable decision in antitrust litigation against the Bessemer and Lake
Erie Railroad.
The Company adopted SFAS 112 as of January 1, 1994, resulting in a first
quarter charge of $12.2 million ($10.0 million net of tax). SFAS 112 established
accounting standards for employers who provide benefits to former or inactive
employees after employment but before retirement.
Net income for the 1995 first half totaled $44.3 million, or $1.23 per
common share, compared to net income of $39.3 million, or $1.19 per common share
in the 1994 first half. Excluding the 1994 after-tax charge of $10.0 million due
to adopting SFAS 112 and the after- tax income of $26.7 million on the legal
settlement, resultant first half 1994 income totaled $22.6 million, or 61 cents
per common share.
FINANCIAL POSITION
Net cash flow from operating activities for the first six months of 1995
totaled $162.0 million. Short term trading investments are reported as cash flow
from operating activities and
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provided $120.0 million of funds in the 1995 first half. Working capital
accounts (excluding cash, short term investments and current maturities of long
term debt) used $46.2 million of funds, excluding $22.8 million of working
capital requirements for Unimast, Inc., acquired on March 31, 1995. Accounts
receivable increased by $6.8 million, trade payables increased $16.7 million and
other current liabilities decreased $16.6 million. Inventories, valued
principally by the LIFO method for financial reporting purposes, totaled $296.1
million at June 30, 1995, an increase of $11.6 million from December 31, 1994
(excluding effect of Unimast purchase). Other current assets increased $27.8
million due primarily to increased notes receivable. The decrease in other
current liabilities is due primarily to payment of certain accrued taxes and
employee benefits.
In the first six months of 1995, $59.7 million was spent on capital
improvements including $2.1 million on environmental control projects. The
Company completed the acquisition of Unimast Inc. during the first quarter for
cash consideration of $27.5 million and the assumption of liabilities totaling
$35.0 million, including long term debt of $19.7 million. Continuous and
substantial capital and maintenance expenditures will be required to maintain
operating facilities, modernize finishing facilities to remain competitive, and
to comply with environmental control requirements. It is anticipated that
necessary capital expenditures, including required environmental expenditures in
future years will continue to exceed depreciation expense and represent a
material use of operating funds.
Non-current accrued environmental liabilities totaled $7.3 million at June
30, 1995 and $7.6 million at June 30, 1994. These liabilities were determined by
the Company when the Company reorganized under the federal bankruptcy laws in
January 1991, based on all available information, including information provided
by third parties, and existing laws and regulations then in effect, and are
reviewed and adjusted quarterly as new information becomes available. Based upon
all available information, the Company does not anticipate that assessment and
remediation costs resulting from the Company being a potentially responsible
party will have a material adverse effect on the financial condition or results
of operations of the Company. However, as further information comes into the
Company's possession, it will continue to reassess such evaluations.
In October 1994 WPSC entered into a new Revolving Credit Facility ("RCF")
with Citibank, N.A. as agent. The RCF provides for borrowings for general
corporate purposes of up to $50 million. Interest is calculated at a Citibank
prime rate plus .5% and/or a Eurodollar rate plus 2.0%. Borrowings under the RCF
are secured primarily by 100% of WPSC's eligible inventory and requires that
WPSC maintain a specified level of tangible net worth. The RCF has certain
restrictions on indebtedness, liens and dividends. Borrowings outstanding at
June 30, 1995 under the RCF totaled $32.0 million. The RCF expires in October
1995. The Company intends to negotiate a new RCF.
In August 1994, WPSC entered into a separate facility for letters of
credit up to $50 million. At June 30, 1995 letters of credit totaling $24.5
million were issued under this facility. No amounts have been drawn down
pursuant to these letters of credit and no liabilities recorded. The letters of
credit are collateralized by U.S. government securities owned by the Company and
are subject to an administrative charge of .4% per annum on the amount of
outstanding letters of credit. The collateral is recorded as non-current other
assets.
As of June 30, 1995, the Company had repurchased on the open market
2,025,000 shares of its Common Stock for an aggregate purchase price of
approximately $22.6 million. The Board of Directors had previously authorized
the Company to repurchase up to 10% of
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the Company's outstanding Common Stock, and the Company may, from time to time,
continue to purchase additional shares of Common Stock.
WPC has outstanding approximately $270 million of its Senior Notes and
$9.5 million of its First Mortgage Notes. The indentures relating to both the
Senior Notes and the First Mortgage Notes contain covenants and restrictions
that limit the Company's operating flexibility.
WHX was successful in placing one of its nominees on the Teledyne, Inc.
board of directors at Teledyne's annual stockholders' meeting on April 26, 1995.
The WHX nominee elected to the Teledyne board is "committed to a sale of
Teledyne to the highest bidder and will attempt to influence the majority of the
Teledyne board to effect such a sale rather than remain independent."
LIQUIDITY
Short-term liquidity is dependent, in large part, on cash on hand,
investments, general economic conditions and their effect on steel demand and
prices. Long-term liquidity is dependent upon the Company's ability to sustain
profitable operations and control costs during periods of low demand or pricing
in order to sustain positive cash flow. The Company satisfies its working
capital requirements through cash on hand, investments, borrowing availability
under the RCF and funds generated from operations. The Company believes that
such sources will provide the Company for the next twelve months with the funds
required to satisfy working capital and capital expenditure requirements.
External factors, such as worldwide steel production and demand and currency
exchange rates, could materially affect the Company's results of operations.
During the six months of 1995, the Company had minimal activity with respect to
futures contracts, and the impact of such activity was not material on the
financial condition or results of operations of the Company.
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PART II OTHER INFORMATION
Item 6.(a) EXHIBITS
27 Financial Data Schedule
6.(b) REPORT ON FORM 8-K
None
<PAGE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHX CORPORATION
F.G. CHBOSKY
----------------------------------
F. G. Chbosky
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
August 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the WHX
Corporation Consolidated Financial Statements as of June 30, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 61,611
<SECURITIES> 309,776
<RECEIVABLES> 100,662
<ALLOWANCES> 1,330
<INVENTORY> 296,128
<CURRENT-ASSETS> 824,311
<PP&E> 1,048,663
<DEPRECIATION> 245,749
<TOTAL-ASSETS> 1,812,981
<CURRENT-LIABILITIES> 307,930
<BONDS> 286,100
<COMMON> 253
0
650
<OTHER-SE> 678,296
<TOTAL-LIABILITY-AND-EQUITY> 1,812,981
<SALES> 690,458
<TOTAL-REVENUES> 690,458
<CGS> 574,743
<TOTAL-COSTS> 644,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,735
<INCOME-PRETAX> 56,850
<INCOME-TAX> 12,507
<INCOME-CONTINUING> 44,343
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,343
<EPS-PRIMARY> 1.23
<EPS-DILUTED> .98
</TABLE>
