First Quarter 1994
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D C 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
March 31, 1994.
Commission File Number 1-10244
WEIRTON STEEL CORPORATION
- - -------------------------
(Exact name of Registrant as specified in its charter)
Delaware 06-1075442
- - -------- ----------
(State or other jurisdiction (IRS employer
identification #)
of incorporation or organization)
400 Three Springs Drive, Weirton, West Virginia 26062
- - ----------------------------------------------- -----
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code:
(304)-797-2000
Indicate by checkmark 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[ ]
The number of shares of Common Stock ($.01 par value) of the
Registrant outstanding as of April 30, 1994 was 26,736,968.
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEIRTON STEEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME-Unaudited
(Dollars in thousands, except per share data)
<CAPTION>
Three Months Ended
March 31,
1994 1993
-------------------
<S> <C> <C>
NET SALES $325,164 $297,718
OPERATING COSTS:
Cost of Sales 288,445 279,873
Selling, General, Administrative 7,906 7,784
Depreciation 12,284 11,174
Restructuring Charge - 17,340
------- -------
Total Operating Costs 308,635 316,171
------- -------
INCOME (LOSS) FROM OPERATIONS 16,529 (18,453)
OTHER INCOME(EXPENSE):
Interest Expense (13,083) (12,982)
Interest Income 737 578
Net Other Income(Expense) (12,346) (12,404)
-------- --------
INCOME(LOSS) BEFORE ESIOP CONTRIB. 4,183 (30,857)
ESOP Contribution 653 653
INCOMEE(LOSS) BEFORE INCOME TAXES 3,530 (31,510)
Income Tax Benefit (Provision) (671) 5,987
-------- --------
INCOME(LOSS) BEFORE EXTRAORD.ITEM 2,859 (25,523)
Extraordinary item-loss on - (6,549)
early extinguishment of debt -------- --------
INCOME(LOSS) BEFORE CUMULATIVE EFF.OF 2,859 (32,072)
ACCOUNTING CHANGES
Cumulative effect on prior - (179803)
years of accounting changes
-------- --------
NET INCOME (LOSS) $ 2,859 (211875)
Less: Preferred stock dividend 781 781
requirement -------- --------
NET LOSS APPLICABLE TO COMMON SHARES $ 2,078 (212656)
======== ========
PER SHARE DATA:
Weighted average number of 28,461 26,492
common shares and equivalents
Loss per common share before $ 0.07 $(0.99)
extraordinary item
Extraordinary item - (0.25)
Loss per common share before ------ ------
cumulative effect of accounting 0.07 (1.24)
changes
Cumulative effect of accounting - (6.79)
changes -------- --------
NET LOSS PER COMMON SHARE $ 0.07 $(8.03)
======= ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
WEIRTON STEEL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS - Unaudited
(Dollars in thousands, except per share amount)
<CAPTION>
March 31, 1994 December 31, 1993
--------------- -----------------
ASSETS:
<S> <C> <C>
Cash and equivalents, $ 111,199 $ 89,002
includes restricted cash of
$612 and $602, respectively
Notes and Accounts Receivable, 139,083 129,004
less allowances of $6,833
and $5,719, respectively
Inventories 201,986 242,659
Other Current Assets 28,992 29,589
--------- ---------
Total Current Assets 481,260 490,254
Property, Plant, and 515,409 523,728
Equipment, net
Intangible Assets 91,289 91,289
Deferred Income Taxes 116,602 117,273
Other Assets and Deferred 17,321 18,170
Charges -------- -------
Total Assets $1,221,881 $1,240,714
========= =========
<CAPTION>
LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY:
<S> <C> <C>
Liabilities:
Current Liabilities 199,908 228,038
Long term Debt 495,285 495,252
Long term Pension Obligation 145,103 142,894
Postretirement Benefits Other 313,018 308,985
Than Pensions
Other Long-term Liabilities 30,481 30,188
------- -------
Total Liabilities 1,183,795 1,205,357
Redeemable Stock: 37,372 36,721
Stockholders' Equity:
Common Stock, $.01 par value; 270 267
30,000,000 shares authorized;
27,019,723 and 26,719,752
shares issued, respectively
Additional Paid-in Capital 336,785 335,776
Retained Earnings (334,458) (336,535)
Other Stockholders' Equity (1,883) (872)
-------- --------
Total Stockholders' Equity 714 (1,364)
(Deficit) -------- --------
Total Liabilities, Redeemable $1,221,881 $1,240,714
Stock and Stockholders' Equity ========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
WEIRTON STEEL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - Unaudited
(Dollars in thousands)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1994 1993
-----------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 21,351 $ 28,540
- - -----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
- - -----------------------------------------
EXPENDITURES FOR PROPERTY, PLANT AND (3,965) (347)
EQUIPMENT
CASH FLOWS FROM FINANCING ACTIVITIES
- - -----------------------------------------
INCREASE IN TERM DEBT - 140,000
REDUCTION IN TERM DEBT - (148,114)
DEBT ISSUANCE FEES - (4,411)
DIVIDENDS PAID (781) (781)
OTHER, principally net book overdrafts 5,592 (1,708)
------ ------
NET CASH PROVIDED (USED) BY FINANCING 4,811 (15,014)
ACTIVITIES ------ -------
NET CHANGE IN CASH AND EQUIVALENTS 22,197 13,179
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 89,002 61,195
------ ------
CASH AND EQUIVALENTS AT END OF PERIOD $111,199 $74,374
------- ------
SUPPLEMENTAL CASH FLOW INFORMATION:
INTEREST PAID,NET OF INTEREST CAPITALIZED $ 7,554 $ 3,369
INCOME TAXES PAID (Refunded) - -
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
[TEXT]
WEIRTON STEEL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(In thousands of dollars, or in millions
of dollars where indicated)
1. BASIS OF PRESENTATION
For the period ended March 31, 1994, the Consolidated
Financial Statements herein include the accounts of Weirton Steel
Corporation and its wholly-owned subsidiary, Weirton Receivables,
Inc. (on and after August 26, 1993). Prior to such date, the
Financial Statements include only the accounts of Weirton Steel
Corporation. Weirton Steel Corporation and/or Weirton Steel
Corporation together with its subsidiary are hereafter referred to
as the "Registrant."
The Consolidated Condensed Financial Statements
presented herein are unaudited. Certain information and footnote
disclosures normally prepared in accordance with generally accepted
accounting principles have been either condensed or omitted
pursuant to the rules and regulations of the Securities and
Exchange Commission. Although the Registrant believes that all
adjustments necessary for a fair presentation have been made,
interim periods are not necessarily indicative of the results of
operations for a full year. As such, these financial statements
should be read in conjunction with the financial statements and
notes thereto included in the Registrant's 1993 Annual Report on
Form 10-K.
Certain portions of the prior period's financial
statements have been reclassified where necessary to conform to the
presentation used in the current period.
2. INVENTORIES
Inventories consisted of the following at March 31, 1994
and December 31, 1993:
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- -----------
<S> <C> <C>
Raw Materials $ 44,466 $74,766
Work-in-process 56,409 74,109
Finished Goods 101,111 93,784
--------- ----------
$201,986 $242,659
</TABLE>
[TEXT]
3. ESOP ACCOUNTING
The contributions of $0.7 million for the three months
ended March 31, 1994 and 1993 represent a provision for contributions to
the 1989 Employee Stock Ownership Plan (the "1989 ESOP"), net of
any preferred stock dividends used to reduce debt service for the
1989 ESOP. The 1993 and 1992 contributions were required to be
increased because Series A preferred stock dividends normally
payable quarterly were omitted. The Series A preferred stock ranks
equally with the Registrant's common stock as to the payment of
dividends. Accordingly, unpaid dividends on the Series A preferred
are not cumulative.
4. EARNINGS (LOSS) PER SHARE
The weighted average number of common and equivalent shares
used in the computations of earnings (loss) per share were
28,460,993 and 26,491,572 for the three months ended March 31, 1994
and 1993, respectively. The shares of Series A convertible
preferred stock were excluded from the 1993 calculation due to
their antidilutive effect.
5. ACCOUNTING CHANGES
Effective January 1, 1993, the Registrant adopted Statement
of Financial Accounting Standards ("SFAS") No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", SFAS
No. 109, "Accounting for Income Taxes", and SFAS No. 112,
"Employers' Accounting for Postemployment Benefits". Previously,
postretirement and postemployment benefits were accounted for by
the Registrant on the cash basis and the Registrant followed the
provisions of Accounting Principles Board Opinion No. 11 in
accounting for income taxes. The cumulative effect of these
accounting changes was recognized during the first quarter of 1993,
as reflected in the Registrant's statement of income for the three
month period ended March 31, 1993.
6. SUBSEQUENT EVENT
On April 6, 1994, the Registrant experienced an accidental
fire which caused extensive damage to its No. 9 Tandem Mill, a cold
rolling facility which supplies steel coils to its tin mill for
further processing. The Registrant does not believe this unit can
be restored to operation prior to the fourth quarter of 1994. The
Registrant is adjusting its production on other units and seeking
alternate sourcing for certain products in an attempt to minimize
the effect of the tandem mill outage. The outage has caused a need
for reduced manpower which has resulted in temporary force
reductions at the Registrant's cold rolling and tin mill
operations. The Registrant intends to review the situation on a
weekly basis and make adjustments to its production and manpower
situation accordingly. Efforts to repair the tandem mill and to
assess the financial effects of the outage are underway. The
Registrant maintains insurance coverage for both property damage
and business interruption. Advances have been collected from the
insurance carrier; however, as a result of the length of time
anticipated to restore the tandem mill to full operations, total
anticipated recoveries and unrecoverable costs have not yet been
determined.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of the Registrant's financial
condition and results of operations should be read together with
the consolidated condensed financial statements and notes thereto.
For the periods ended March 31, 1994, the consolidated financial
statements of Weirton Steel Corporation include the accounts of its
wholly-owned subsidiary Weirton Receivables, Inc. (on and after
August 26, 1993). Prior to such date, the financial statements
include only the accounts of Weirton Steel Corporation. Weirton
Steel Corporation and/or Weirton Steel Corporation together with
its subsidiary are hereafter referred to as the "Registrant."
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1994 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 1993
In the first quarter of 1994, the Registrant continued to
show improvement in its operating results. The Registrant earned an
operating profit of $16.5 million for the quarter ending March 31,
1994, which marked the fifth consecutive quarter of improved
operating performance and compares to an operating loss of $1.1
million, exclusive of a $17.4 million restructuring charge, in the
same quarter of 1993.
The continued improvement in the Registrant's operating
results was attributable to increased performance of its primary
operations stemming from its capital improvement program and its
continuing cost reduction program combined with strong demand for
sheet products, particularly hot rolled, that has increased
steadily throughout the current period of economic recovery. First
quarter net sales in 1994 for tin mill and sheet products combined
increased by 9.2% to $325.2 million compared to $297.7 million in
1993 on first quarter shipments that increased in 1994 by 7.9%
(impacted by an increase in sheet products and a decrease in tin
products) to 656,100 tons from 608,100 tons in 1993.
The 20% increase in volume of sheet product shipments was a
significant improvement in the 1994 first quarter, increasing
compared to 1993's first quarter. This contributed $26.0 million
in higher revenues in the first quarter 1994 compared to the same
quarter in 1993. Average selling prices for sheet products in the
first quarter of 1994 also improved from 1993's first quarter,
adding $16.8 million in higher revenues, while improved product mix
added $3.5 million. As a result of the foregoing, the total
increase in sheet product revenues of $46.3 million.
Tin product on-time delivery performance that was less than
anticipated and unusually harsh winter weather conditions lowered
shipment volume by 12.7% in the first quarter of 1994 compared to
the first quarter of 1993. As a result of slightly lower selling
prices and lower volume, tin mill product revenues decreased during
the 1994 first quarter by approximately $19.0 million. The gradual
downward trend in average selling prices for the Registrant's tin
mill products that occurred throughout 1993 and caused by changes
in its customer and product mix, showed some improvement in the
first quarter of 1994. However, average prices remained at a level
below that realized in the first quarter of 1993. The shift in
customer mix resulted in a decrease in revenues of approximately
$0.2 million for the 1994 first quarter.
The Registrant continues to apply its strategic program to
reduce a broad range of production costs, lower spending and
improve yields. The program includes workforce reductions which
have approximated 8% from mid-1992 through year end 1993. The
Registrant's goal is to further reduce its workforce over the next
three years. The capital improvement program has lowered the
Registrant's operating costs by providing greater production yields
and generally improved performance at several operating units,
including its blast furnaces, continuous caster, hot mill and sheet
mill operations. Several of these units have achieved production
records since completion of the capital program. The cost
reduction and capital improvement programs have more than offset
higher energy, labor, and retiree healthcare costs. As a result,
the Registrant's cost of sales as a percent of sales improved to
88.7% in the first quarter 1994, despite severe weather conditions
experienced early in the quarter that hampered operations, compared
to 94.0% in the same period in 1993. This resulted in an
improvement of $21 per ton in operating costs, exclusive of a
restructuring charge recognized in the first quarter of 1993.
<TABLE>
<CAPTION>
(Dollars in thousands) First Quarter
1994 1993
<S> <C> <C>
Operating Costs $308,635 $316,171
Restructuring Charge - 17,340
------- -------
$308,635 $298,831
Shipments in tons 656,100 608,100
------- -------
Operating Cost per Ton $470 $491
before restructuring charge
</TABLE>
[TEXT]
In its continuing efforts to improve profit margins and
operating efficiency, the Registrant has focused its attention on
improving the performance of its finishing operations, specifically
that of its tin mill. However, on April 6, 1994, the Registrant
experienced an accidental fire which caused extensive damage to the
No.9 Tandem Mill, a cold rolling facility which supplies steel
coils to its tin mill for further processing. See "Recent
Developments" for a more complete discussion of the No. 9 Tandem
Mill outage.
Depreciation expense increased $1.1 million, or 10%, to $12.3
million in the first quarter of 1994 from $11.2 million in the
first quarter of 1993, primarily due to the increase in shipment
and production levels.
The Registrant's financing costs remained relatively high in
the first quarter 1994 and comparable to those experienced in the
first quarter of 1993 due to the costs associated with the
Registrant's refinancing and public sale of $140 million of 11-1/2%
Senior Notes in the first quarter of 1993.
The Registrant recognized a deferred income tax provision of
$1.3 million in the first quarter offset by a benefit of $0.7
million to adjust its deferred tax asset valuation reserve.
LIQUIDITY AND CAPITAL RESOURCES
The Registrant's cash and equivalents of $111.2 million at
March 31, 1994 was considerably higher than the $89.0 million on
hand at December 31, 1993. This increase was attributable
primarily to improved operating results exclusive of noncash
charges and lower inventories. Net investing activities totalled
almost $4.0 million, with an estimated $35 million in capital
expenditures set for 1994.
The Registrant's capitalization as shown below includes three
main elements: long-term debt obligations, redeemable stock, and
stockholders' equity from January 1, 1991 through March 31, 1994.
<TABLE>
<CAPTION>
March 31, % of Jan. 1, % of
(Dollars in millions) 1994 Total 1991 Total
________ _______ _______ _______
<S> <C> <C> <C> <C>
Long-term debt, $495.3 93% $ 398.9 55%
including current portion
Redeemable stock 37.4 7 3.9 1
Stockholders' equity 1.0 - 316.5 44
________ _______ _______ ______
Total Capitalization $533.7 100% $ 719.3 100%
</TABLE>
[TEXT]
The significant decline in the Registrant's stockholders'
equity from January 1, 1991 through the first quarter of 1994
resulted from its net losses over this period of $332.9 million
(which include a pretax restructuring charge of $17.4 million and
an after tax extraordinary charge of $6.5 million, both of which
were recognized in 1993) and the net after tax effect of required
changes in certain accounting principles primarily related to
retiree healthcare and income taxes that reduced stockholders'
equity by $175.4 million. The Registrant's financial flexibility
is severely restricted by its heavy debt load and lack of equity.
In order to reduce its financial leverage and improve its
flexibility, the Registrant is seeking to implement various
financing strategies. These include, but are not limited to, one
or more sales of equity securities, particularly a public offering
of common stock in the near term, the proceeds of which are
expected to be used to reduce or defease long term liabilities and
other obligations. The Registrant currently does not have a
sufficient number of authorized or unreserved shares to permit a
substantial underwritten public offering of common stock. A
Special Meeting of Stockholders has been called for May 26, 1994 to
approve an increase in its authorized capital. Although the
Registrant believes that one or more public offerings of its common
stock is a viable financing strategy, no assurance can be given
that any such offering can be completed in the near term.
INVESTMENT IN FACILITIES
Capital expenditures for the first quarter of 1994 totalled
$4.0 million, with anticipated spending for the remainder of the
year estimated to approximate $31 million, excluding any additional
expenditures the Registrant considers appropriate associated with
the rebuilding of the No. 9 Tandem Mill. Spending included in the
1994 capital plan concentrates on the Registrant's finishing
operations.
BUSINESS STRATEGY
The Registrant has been implementing a 1992 program entitled
"Assuring Weirton's Future" which embodies the Registrant's current
business strategy. The major elements of this broad program
include: (i) achieving comprehensive, facility-wide and unit-
based productivity improvements derived from leading edge
technology, (ii) increasing revenues and margins by emphasizing
current and new marketing directions, especially for higher value-
added products, and (iii) attaining significant reductions in
conversion costs, primarily through manpower reductions, but also
in the production process. An enhanced early retirement program is
one element of the cost reduction phase of this comprehensive
program.
RECENT DEVELOPMENTS
The volume of sheet product shipments appears to be
continuing the improvement which began in 1993, reflecting a strengthening of
the economy. Sheet product pricing began to show some improvement
late in 1993, and has continued into the first quarter of 1994.
Tin mill product pricing is expected to remain stable; however,
shipment volume will be adversely affected by the No. 9 Tandem Mill
outage.
The Registrant has determined to rebuild its damaged No. 9
Tandem Mill as quickly as possible. The Registrant does not
believe this unit can be restored to operation prior to the fourth
quarter of 1994. The Registrant is adjusting its production on
other units and seeking alternate sourcing for certain products in
an attempt to minimize the effect of the tandem mill outage. The
Registrant expects that such adjustments will require it to reduce
its shipments of tin mill products and allow it to increase its
shipments of sheet products. The outage has caused a need for
reduced manpower which has resulted in temporary force reductions
at the Registrant's cold rolling and tin mill operations. The
Registrant intends to review the situation on a weekly basis and
make adjustments to its production and manpower situation
accordingly.
Efforts to repair the tandem mill and to assess the financial
effects of the outage are underway. The Registrant maintains
insurance coverage for both property damage and business
interruption. Advances for certain repairs made to date and
business interruption have been collected from the Company's
insurance carrier; however, as a result of the length of time
anticipated to restore the tandem mill to full operations, total
anticipated recoveries and unrecoverable costs have not yet been
determined. Although the Registrant cannot predict with certainty
the financial effects of the outage, based on its current
estimates, the Registrant believes that as a result of the outage
it may incur a net loss for the second quarter of 1994. The
Registrant does not believe the outage will have a material effect
on its customer base or profitability in the long term.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April 1994, plaintiffs in the action entitled Godich et
al.v Elish et al., originally filed in Hancock County Circuit Court
of West Virginia and previously reported by the Registrant,
voluntarily dismissed the action against five defendants, including
four former directors and one current director.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
In a letter dated April 12, 1994, Harvey L. Sperry, a
member of the Registrant's Board of Directors, announced he would not seek
reelection to the Board as a result of proposed amendments to the
Registrant's Certificate of Incorporation to be submitted to a
Special Meeting of Stockholders scheduled for May 26, 1994. A copy
of Mr. Sperry's letter is filed as Exhibit 1 to this Report.
In a letter dated May 2, 1994, Phillip H. Smith resigned as
a member of the Registrant's Board of Directors effective
immediately. Mr. Smith would not have been eligible to seek
reelection to the Board because of the above-mentioned proposed
amendments to the Certificate of Incorporation. A copy of Mr.
Smith's letter is filed as Exhibit 2 to this Report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 1. - Letter from Harvey L. Sperry dated April 12,
1994.
Exhibit 2. - Letter from Phillip H. Smith dated May 2,
1994.
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K on April 19,
1994, containing information pursuant to Item 5 thereof.
SIGNATURE
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.
WEIRTON STEEL CORPORATION
Registrant
By /s/ Richard K. Riederer
Richard K. Riederer
Vice-President and Chief Financial Officer
May 16, 1994
WILLKIE FARR & GALLAGHER Exhibit 1.
Harvey L. Sperry
One Citicorp Center
153 East 53rd Street
New York, New York 10022
April 12, 1994
VIA TELECOPIER
Mr. Herbert Elish
Chairman of the Board
of Directors
Weirton Steel Corporation
Three Springs Drive
Weirton, WV 26062
Dear Herb:
The Board of directors of Weirton Steel Corporation
will shortly consider an amendment to the Certificate of Incorporation
which will define an "independent director" as one who has not been
a consultant or an advisor to Weirton Steel in the past two years.
I intend to vote for the adoption of the amendment and to urge the
stockholders to approve the amendment. As a result of the
amendment, I will not be eligible to be an independent director
because my firm, Willkie Farr & Gallagher, has provided legal
services to Weirton Steel since its incorporation in 1983.
Maintaining the confidence of the ESOP participants,
who are the Weirton Steel workforce and without whom there would be no
Weirton Steel, is essential and I believe that confidence is most
likely to be maintained if the directors who are defined as
independent are not only independent in fact but are perceived as
being independent. Because my firm is engaged in advising Weirton
Steel in a number of matters and because we may, in the future, be
requested to advise Weirton Steel on other matters, I am not, and
could not be, perceived by all the ESOP participants and public
stockholders as independent. For that reason I am informing the
Board of Directors that even if the amendment is neither adopted
nor approved, I will not accept another term as a member of the
Board of Directors of Weirton Steel.
Serving as a member of the Board of Directors during a
period which has included the creation of Weirton Steel, the public
sale of Weirton Steel common stock and debt, the initiation and
completion of the capital program and the "change" and cost
reduction programs, all which have contributed to the viability of
Weirton Steel, has been a high point in my career. I thank the
ESOP participants and the public stockholders for permitting me to
serve them as a member of the Board of Directors of Weirton Steel.
Sincerely,
/s/Harvey L. Sperry
Harvey L. Sperry
HLS/pjm
EXHIBIT 2.
Phillip H. Smith
102 Haverford Road
Pittsburgh, PA 15238
(412)-963-7910
Mr. Herbert Elish
Chairman and CEO
Weirton Steel Corporation
400 Three Springs Drive
Weirton, WV 26062-4989 May 2, 1994
Dear Herb:
This letter will confirm to you that I am resigning
from the Board of Weirton Steel Corporation, as stated to the full Board
at its special meeting on Wednesday, April 13, and again at our
meeting on April 18, effective immediately. As discussed at the
special Board meeting, there are two new criteria relating to the
qualifications for an independent director which screened me out
for re-nomination at the next annual meeting.
The first screen is that of not having a relative
working for Weirton; I do, my son Tom. I appreciated you warm compliments,
and Dick Riederer's, on Tom's performance at Weirton, and based on
those very positive comments, his career track is good, and, as his
father, I'm happy to have it continue. Naturally, I am pleased now
to step down to protect his career.
The second screen of 65 years of age cutoff for re-
nomination also precludes my candidacy. As I said at both
meetings, I firmly believe this to be adverse to Weirton's best
interests, and that the age limit should be 68 or 70. Otherwise,
Weirton's nominating committee will have an important group of new
director candidates denied to it. Therefore, I again urge the
Board to change the age requirement; my resignation clears the way
to make this change. In addition, my resignation can create a
vacancy to elect a new director immediately. Parenthetically, as
I have reviewed the proxy materials for about a dozen major
corporations in the past three weeks prior to voting my proxies,
I've found directors older than 65 in the range of 3 to 5 on each
board. At Copperweld Corporation, we had a retirement policy,
which required a director to be re-nominated for his last term in
his/her 68th birthday year.
In closing, I have enjoyed my eleven years on Weirton's
Board, and for the future I want only the best for the Corporation
and its multiple constituencies.
With best wishes,
/s/Phillip H. Smith
Phillip H. Smith
cc: William R. Kiefer, Vice President Law and Secretary
