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, 1998
--------------------------------------------------
/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, 1998 Commission File Number 033-89746
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
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
---- ----
The number of shares of Common Stock issued and outstanding was 100 shares as of
July, 31, 1998.
<PAGE>
WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
---------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net Sales $288,767 $87,878 $547,888 $166,892
- ---------
Operating Costs
Cost of goods sold 236,406 108,703 466,345 221,856
Depreciation 19,581 10,578 39,112 21,155
Selling, administrative and general expense 15,937 13,159 30,252 25,548
--------- -------- -------- --------
271,924 132,440 535,709 268,559
-------- -------- ------- --------
Operating Income (Loss) 16,843 (44,562) 12,179 (101,667)
- -----------------------
Interest expense on debt 8,743 6,518 18,143 12,517
Other income (expense) 1,824 (2,101) 2,100 (893)
--------- ----------- --------- ---------
Income (Loss) Before Taxes 9,924 (53,181) (3,864) (115,077)
- --------------------------
Tax provision (benefit) 3,832 (18,597) (1,005) (40,242)
--------- ---------- -------- ----------
Net Income (Loss) $6,092 $(34,584) $(2,859) $(74,835)
- ----------------- ====== ========= ======== =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
(Dollars and shares in thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ -- $ --
Trade receivables - net 65,529 44,569
Inventories:
Finished and semi-finished products 184,490 149,550
Raw materials 69,899 103,735
Other materials and supplies 17,848 19,811
Excess of LIFO over current cost (17,239) (17,239)
----------- -----------
254,998 255,857
Other current assets 6,652 24,938
------------ ----------
Total current assets 327,179 325,364
Investments in other companies 66,881 68,742
Property, plant and equipment at cost, less
accumulated depreciation and amortization 664,756 694,108
Deferred income taxes 167,137 196,966
Intangible asset-pensions -- 76,714
Due from affiliates 30,935 27,955
Deferred charges and other assets 34,471 34,719
------------- -----------
$1,291,359 $1,424,568
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade payables $ 123,606 $ 116,559
Short-term borrowings 54,694 89,800
Deferred income taxes - current 30,023 32,196
Other current liabilities 83,616 77,441
Long-term debt due in one year 212 199
-------------- -----------
Total current liabilities 292,151 316,195
Long-term debt 349,837 349,904
Pension liability -- 166,652
Other employee benefit liabilities 420,315 427,125
Other liabilities 54,130 49,980
------------ ------------
1,116,433 1,309,856
----------- ----------
Stockholders' Equity:
Common Stock - $.01 par value - 100
shares issued and outstanding -- --
Additional paid-in capital 335,138 272,065
Accumulated earnings (deficit) (160,212) (157,353)
Total stockholders' equity 174,926 114,712
------------ ------------
$1,291,359 $1,424,568
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
WHEELING-PITTSBURGH CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
---- ----
(Dollars in thousands)
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ (2,859) $ (74,835)
Non cash expenses:
Depreciation 39,112 21,155
Other postemployment benefits (2,150) (1,200)
Income taxes 3,307 (38,679)
Equity income in affiliated companies (3,138) 1,371
Pension expense 8,015 --
Decrease (increase) in working capital elements:
Trade receivables (45,960) 7,881
Trade receivables sold 25,000 --
Inventories 859 (39,143)
Other current assets 18,286 (1,268)
Trade payables 7,049 16,892
Other current liabilities 4,000 12,718
Other items - net (12,312) 25,210
----------- ---------
Net cash provided by (used in) operating activities 39,209 (69,898)
---------- ---------
Cash flows from investing activities:
Plant additions and improvements (9,869) (3,814)
Investment in affiliates -- (3,450)
Dividends from affiliates 5,000 2,500
Proceeds from sale of property -- 797
----------- ----------
Net cash provided by (used in)
investing activities (4,869) (3,967)
--------- ----------
Cash flows from financing activities:
Payments on long-term borrowings (54) (1,946)
Short term borrowings (payments) (35,106) 43,000
Letter of credit collateralization 820 3,199
--------- ---------
Net cash provided by (used in) financing activities (34,340) 44,253
--------- --------
Increase (Decrease) in cash and
cash equivalents -- (29,612)
Cash and cash equivalents
at beginning of period -- 35,950
Cash and cash equivalents
at end of period $ -- $ 6,338
=========== =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
WHEELING-PITTSBURGH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
General
- -------
The consolidated balance sheet as of June 30, 1998, the
consolidated statement of operations for the three and six month periods
ended and the consolidated statement of cash flows for the six month
periods ended June 30, 1998 and 1997, have been prepared by Wheeling-
Pittsburgh Corporation ("WPC" or "the Company") without audit. In the
opinion of management, all normal and recurring adjustments necessary to
present fairly the consolidated financial position at June 30, 1998 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. The results of
operations for the period ended June 30, 1998 are not necessarily
indicative of the operating results for the full year. Presentation of
earnings per share is not meaningful since the Company is a wholly-owned
subsidiary of WHX Corporation ("WHX").
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affected 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.
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, prepainted 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, bridge form and other products used primarily by the
construction, highway and agricultural markets.
Note 1 - Corporate Reorganization
- ---------------------------------
Formation of WHX Corporation
On July 26, 1994 the Company and its subsidiaries were reorganized
and a new holding company, WHX, was formed. Upon effectiveness of the
merger each share of then outstanding WPC Common Stock, WPC Series A
Preferred Stock and each WPC warrant was converted into a share of WHX
Common Stock, WHX Series A Preferred Stock and a WHX Warrant,
respectively. WHX also assumed the obligation to purchase the Redeemable
Common Stock of the ESOP and guaranteed substantially all of the Company's
then outstanding indebtedness.
The merger was accounted for as a reorganization of entities under
common control whereby the basis of assets and liabilities were unchanged.
Pursuant to their merger agreement the Company contributed the capital
stock of the following subsidiaries to WHX: WP Land Company,
Wheeling-Pittsburgh Radio Corporation (and its subsidiaries) and
Wheeling-Pittsburgh Capital Corporation. Additionally, the Company
contributed cash and marketable securities and certain real property and
leasehold interests to WHX. WPC retained the capital stock of the
remaining steel-related subsidiaries' equity investments.
At June 30, 1998 and December 31, 1997, amounts due from affiliates
totaled $30.9 million and $28.0 million, respectively. These amounts
reflect cash advances between affiliates, dividends paid by WPC on behalf
of WHX, intercompany tax allocations and working capital
<PAGE>
advances to Unimast, Inc., ("Unimast"), a wholly-owned subsidiary of WHX.
These amounts could be settled in cash or through the equity accounts.
Note 2 - Merger of Pension Plans
- --------------------------------
In May 1998 WHX completed the merger of WPC's defined benefit
pension plan with the pension plans of its wholly owned Handy & Harman
("H&H") subsidiary. Under the terms of the merged WHX Pension Plan there
will be a series of benefit structures, which will essentially continue
the various pension plans for employees of the Wheeling-Pittsburgh Steel
Corporation WPSC and H&H pension plans as they existed before the mergers.
At the time of the merger of the pension plans, the assets in the
H&H pension plans exceeded the plans' liabilities by approximately $155
million. At that time, the liabilities of the WPC pension plans exceeded
their assets by approximately $150 million. The pension plan merger thus
eliminates both the underfunding in the WPC Pension Plan and WPC's balance
sheet liability and will materially reduce WPC's net periodic pension
expense in future periods. Furthermore, based on current actuarial
assumptions, the merged pension plan is expected to be fully funded for
several years under the Internal Revenue Code guidelines. The merger
therefore substantially reduces future cash funding obligations of WPC
estimated to be approximately $135 million over the next four years. The
pension obligations will be accounted for on the WHX (parent company)
books. The pension liability on the WPC books at the time of the pension
merger, net of the deferred tax asset, was eliminated and credited to
paid-in-capital. After the merger of the pension plans, in accordance with
applicable rules WPC pension expense is allocated by WHX and charged
monthly.
Note 3 - Sales of Receivables
- -----------------------------
Accounts receivable at June 30, 1998 and 1997 exclude $94.0 million
and $45.0 million, respectively, representing uncollected accounts
receivable sold with recourse limited to the extent of uncollectible
balances. Fees paid by the Company under such agreement range from 6.1375%
to 8.5% of the outstanding amount of receivables sold. Based on the
Company's collection history, the Company believes that the credit risk
associated with the above arrangement is immaterial.
Note 4 - Revolving Credit Facility
- ----------------------------------
On December 28, 1995, WPSC entered into a Second Amended and
Restated Revolving Credit Facility ("RCF") with Citibank, N.A. as agent.
The RCF, as amended, provides for borrowings for general corporate
purposes up to $150 million and a $35 million sub-limit for Letters of
Credit. Borrowings outstanding against the RCF at June 30, 1998 totaled
$54.7 million. Letters of credit outstanding under the RCF were $10.6
million at June 30, 1998.
In August 1994 WPSC entered into a separate facility for letters of
credit up to $50 million. At June 30, 1998 letters of credit totaling $8.5
million were outstanding under this facility. The letters of credit are
collateralized at 105% with 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.
Note 5 - Contingencies
- ----------------------
Environmental Matters
The Company has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability
Act ("Superfund") or similar
-2-
<PAGE>
state statutes at several 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 the Buckeye reclamation will be between $3.0 million and
$4.0 million. At six other sites (MIDC Glassport, United Scrap Lead,
Tex-Tin, Breslube Penn, Four County Landfill and Beazor) the Company
estimates costs to aggregate up to $700,000. The Company is currently
funding its share of remediation costs.
The Company, as are other industrial manufacturers, is subject to
increasingly stringent standards relating to the protection of the
environment. In order to facilitate compliance with these environmental
standards, the Company has incurred capital expenditures for environmental
control projects aggregating $6.8 million, $12.4 million and $5.0 million
for 1996, 1997 and the first half of 1998, respectively. The Company
anticipates spending approximately $41.3 million in the aggregate on major
environmental compliance projects through the year 2000, estimated to be
spent as follows: $13.4 million in 1998, $15.9 million in 1999 and $12.0
million in 2000. Due to the possibility of unanticipated factual or
regulatory developments, the amount of future expenditures may vary
substantially from such estimates.
Non-current accrued environmental liabilities totaled $10.6 million
at December 31, 1997 and $11.1 million at June 30, 1998. As new
information becomes available, including information provided by third
parties, and changing laws and regulations, the liabilities are reviewed
and the accruals adjusted quarterly. Management believes, based on its
best estimate, that the Company has adequately provided for remediation
costs that might be incurred or penalties that might be imposed under
present environmental laws and regulations.
Based upon information currently available, including the Company's
prior capital expenditures, anticipated capital expenditures, consent
agreements negotiated with Federal and state agencies and information
available to the Company on pending judicial and administrative
proceedings, the Company does not expect its environmental compliance and
liability costs, including the incurrence of additional fines and
penalties, if any, relating to the operation of its facilities, to 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.
Note 6 - Comprehensive Income
- -----------------------------
The Company adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS No. 130), effective January 1,
1998. This Statement establishes standards for reporting and display of
comprehensive income and its components in the financial statements.
Comprehensive income is defined as net income plus changes in equity
resulting from nonowner sources (e.g., foreign currency gains and losses,
unrealized gains and losses on certain securities, pension liability
adjustments). The Company does not have any items of comprehensive income
other than net income; accordingly, comprehensive income has not been
separately presented in the accompanying financial statements.
-3-
<PAGE>
PART I
Item 2. Management's Discussion and Analysis
General
- -------
WHX, the parent company of WPC, continues to pursue strategic alternatives
to maximize the value of its portfolio of businesses. Some of these alternatives
have included, and will continue to include selective acquisitions, divestitures
and sales of certain assets. The Company has provided, and may from time to time
in the future, provide information to interested parties regarding portions of
its businesses for such purposes.
Results of Operations
- ---------------------
Net sales for the second quarter of 1998 totaled $288.8 million on
shipments of steel products totaling 557,920 tons. Net sales for the second
quarter of 1997 totaled $87.9 million on shipments of 108,687 tons. The increase
in net sales and shipments of steel products primarily reflects the effect of a
strike by the United Steelworkers of America in the prior period. During the
strike, no products were being produced or shipped at eight facilities which
represented approximately 80% of the tons shipped by the Company on an annual
basis. The new labor agreement resulted in the elimination of 850 jobs, directly
affecting operating costs. The 1998 second quarter results reflect continued
progress toward achieving pre-strike production and shipping levels.
Second quarter 1998 operating costs increased to $271.9 million from
$132.4 million in 1997 second quarter. Operating cost per ton decreased to $487
per ton in the 1998 second quarter from $1,219 per ton in the 1997 second
quarter. The increase in operating costs primarily reflects the effects of
higher volumes of production and shipments in the 1998 second quarter compared
to the strike affected 1997 second quarter. The lower operating costs per ton
shipped reflects higher production levels and lower fixed cost per ton during
the second quarter of 1998. Also, the Company received approximately $9.8
million of insurance recoveries related to various environmental sites and
experienced lower pension expense due to the merged overfunded pension plans.
The Company produced 620,789 tons of raw steel in the 1998 second quarter. There
was no raw steel produced in the 1997 second quarter.
Depreciation expense increased $9.0 million to $19.6 million in the second
quarter of 1998 from $10.6 million in the comparable period in 1997 due to the
effects of the strike on production in the second quarter of 1997 and the higher
levels of raw steel production in 1998 and its effect on the units of production
depreciation method.
Selling, administrative and general expense for the second quarter of 1998
increased $2.7 million to $15.9 million from $13.2 million in the comparable
period in 1997 due primarily to lower expenses incurred during the strike and
severance expense incurred in 1998 for the former CEO.
Interest expense for the second quarter 1998 increased $2.2 million to
$8.7 million from the comparable period in 1997 due to higher levels of
long-term debt and increased borrowing under the revolving credit facility.
Other income increased $3.9 million to $1.8 million in the second quarter
of 1998, compared to an expense of $2.1 million in the 1997 second quarter. The
increase in other income reflects increased equity income from joint venture
operations, which were also adversely impacted in the prior period by the
strike.
The 1998 second quarter tax provision reflects an estimated annual
effective tax rate of 26% plus an adjustment to reflect a change in annual
effective tax rate. The change in annual effective tax rate
-4-
<PAGE>
is due to changes in estimates for annual pre tax income and permanent tax
adjustments. The 1997 second quarter tax benefit reflects an estimated
annual effective tax rate of 35%.
Net income for the 1998 second quarter totaled $6.1 million compared to
the 1997 second quarter net loss which totaled $34.6 million.
Net sales for the first half of 1998 totaled $547.9 million on shipments
of steel products totaling 1,088,313 tons. Net sales for the first half of 1997
totaled $166.9 million on shipments of 214,890 tons. The increase in net sales
and shipments of steel products primarily reflects the effect of the strike. The
first half 1998 results reflect continued progress toward achieving pre-strike
production and shipping levels.
Operating costs for the first half of 1998 increased to $535.7 million
from $268.6 million in the 1997 first half. Operating cost per ton decreased to
$492 per ton in the 1998 first half from $1,250 per ton in the 1997 first half.
The increase in operating costs reflects the effects of higher volumes of steel
products produced and shipped in the 1998 first half, compared to the first half
of 1997. The lower operating costs per ton shipped reflects higher production
levels and lower fixed cost per ton during the first half of 1998. Also, the
Company received approximately $9.8 million of insurance recoveries related to
various environmental obligations and experienced lower pension expense due to
the merged overfunded pension plans. The Company produced 1,244,503 tons of raw
steel in the 1998 first half, setting a new production record at its
Steubenville complex. There was no raw steel produced in the 1997 first half.
Depreciation expense increased $18.0 million to $39.1 million in the first
half of 1998 from $21.2 million in the comparable period in 1997 due to the
effects of the strike on production in the first half of 1997 and the higher
levels of raw steel production in 1998 and its effect on the units of production
depreciation method.
Selling, administrative and general expense for the first half of 1998
increased $4.8 million to $30.3 million from $25.5 million in the comparable
period in 1997 due primarily to lower expenses incurred during the strike and
severance expense incurred for the former CEO.
Interest expense for the first half 1998 increased $5.6 million to $18.1
million from the comparable period in 1997 due to higher levels of long-term
debt and increased borrowing under the revolving credit facility.
Other income increased $3.0 million to $2.1 million in the first half of
1998, compared to an expense of $.9 million in the 1997 first half. The increase
in other income reflects increased equity income from joint venture operations,
which were also adversely impacted by the strike.
The 1998 first half tax provisions reflects an estimated annual effective
tax rate of 26%, while the 1997 first half tax benefit reflects an estimated
annual effective tax rate of 35%. The decrease in effective tax rate reflects
changes in estimated annual pretax income and in the amount of permanent tax
adjustments.
Net loss for the first six months of 1998 totaled $2.9 million compared to
the 1997 first six months of 1997 net loss which totaled $74.8 million.
Financial Position
Net cash flow provided by operating activities for the first half of 1998
totaled $39.2 million. Working capital accounts (excluding cash, short-term
borrowings and current maturities of long term debt) provided $9.2 million of
funds. Accounts receivable increased by $46.0 million (excluding a $25.0 million
sale of trade receivables under the Receivables Facility), trade payables
increased $7.0 million and other current liabilities increased $4.0 million.
Inventories, valued principally by the LIFO
-5-
<PAGE>
method for financial reporting purposes, totaled $255.0 million at June 30,
1998, a decrease of $.9 million from December 31, 1997. The increase in accounts
receivable is due to increased shipments. Other current assets decreased $12.3
million primarily due to the receipt of a loss carryback tax refund.
In the first half of 1998, $9.9 million was spent on capital improvements
including $5.0 million on environmental control projects. Continuous and
substantial capital and maintenance expenditures will be required to maintain
and where necessary, upgrade operating 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 approximate depreciation expense and represent a material use of
operating funds.
On December 28, 1995, Wheeling-Pittsburgh Steel Corporation, ("WPSC")
entered into a new Revolving Credit Facility ("the Revolving Credit Facility")
with Citibank, N.A. as agent. The Revolving Credit Facility, as amended,
provides for borrowing for general corporate purposes of up to $150 million and
a $35 million sub-limit for letters of credit. The Revolving Credit Facility
expires May 3, 1999. Borrowings under the Revolving Credit Facility at June 30,
1998 totaled $54.7 million and letters of credit outstanding under the revolving
credit facility totaled $10.6 million.
In August 1994, WPSC entered into a separate facility for letters of
credit up to $50 million. At June 30, 1998 letters of credit totaling $8.5
million were outstanding under this facility. The letters of credit are
collateralized at 105% with 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.
Effective May 31, 1996, WHX merged WPC's defined benefit pension plan with
those of its wholly owned Handy & Harman ("H&H") subsidiary. The pension
obligations will be accounted for on the WHX books. As a result of the merger of
the pension plans and based on current actuarial assumptions, on a consolidated
basis WHX will report a net prepaid pension asset of $47.4 million. The merger
will also eliminate WPC cash funding obligations estimated in excess of $135.0
million over the next four years. The pension liability on the WPC books at the
time of the pension merger, net of the deferred tax asset, was eliminated and
credited to paid-in-capital. WPC pension expense will be allocated and charged
quarterly. Management expects the WPC allocated net periodic pension expense of
the merged plans to be significantly lower prospectively due to the overfunded
status of the plans.
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, the Receivables
Facility, borrowing availability under the Revolving Credit Facility 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 1998 second
quarter, the Company had minimal activity with respect to futures contracts, and
the impact of such activity was not material on its financial condition or
results of operations of the Company.
The Company began a Year 2000 compliance project in July 1995. This
project encompasses business systems, mainframe processor systems, plant
operating systems, end-user computing systems, wide-area and voice networks, and
building and plant environmental systems. Included in the project plan is a
review and Year 2000 compliance assurance program with customers, suppliers, and
other constituents. System inventories throughout the Company have been
completed and work
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<PAGE>
is in progress to ensure that such systems are Year 2000
compliant. Management believes, based on a current review and the ongoing
effort, that all relevant computer systems will be Year 2000 compliant by the
second quarter of 1999. Management believes that the cost of this project will
not be material to the Company's financial condition or results of operations.
-7-
New Accounting Standard
- -----------------------
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1
addresses costs incurred in connection with the implementation of internal-use
software, and specifies the circumstances under which such costs should be
capitalized or expensed. The Company will be required to adopt SOP 98-1 in the
first quarter of 1999. At this time, management has not determined the impact of
adoption of SOP 98-1 on the Company's results of operations or financial
position.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS133). This pronouncement requires all derivative
instruments to be reported at fair value on the balance sheet; depending on the
nature of the derivative instrument, changes in fair value will be recognized
either in net income or as an element of comprehensive income. SFAS 133 is
effective for fiscal years beginning after June 15, 1999. The Company has not
engaged in significant activity with respect to derivative instruments or
hedging activities in the past. Management of the Company has not yet determined
the impact, if any, of the adoption of SFAS 133 on the Company's financial
position or results of operations.
******
When used in the Management's Discussion and Analysis, the words
"anticipate", "estimate" and similar expressions are intended to identify
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act, which are intended to be covered by the
safe harbors created thereby. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation, the
ability of the Company to develop market and sell its products, the effects of
competition and pricing, and Company and industry shipment levels. Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that the forward-looking statements included herein will
prove to be accurate.
-8-
<PAGE>
PART II Other Information
-----------------
Item 6.(a) Exhibits
--------
27 Financial Data Schedule
6.(b) Report on Form 8-K
------------------
None
-9-
<PAGE>
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.
WHEELING-PITTSBURGH CORPORATION
/s/ P. J. Mooney
-----------------------------------
P. J. Mooney
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
-----------------------------
August 11, 1998
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Wheeling-Pittsburgh Corporation Consolidated Financial Statements as of June 30,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
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0
0
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