WHX

WHX Announces 2004 Third Quarter Results NEW YORK, Nov. 15 /PRNewswire-FirstCall/ -- WHX Corporation (NYSE:WHX) WHX today reported a net loss of $2.1 million, on sales of $111.5 million, for the third quarter of 2004 compared to a net loss of $142.6 million, on sales of $83.3 million, in the same period in 2003. After deducting the preferred dividend requirement, basic and diluted loss per common share was $1.28 for the third quarter of 2004 compared with basic and diluted loss per common share of $27.38 for the third quarter of 2003. The 2003 third quarter results include a $48.1 million non-cash pension curtailment and special termination benefit charge related to the consummation of a Chapter 11 Plan of Reorganization for Wheeling-Pittsburgh Corporation and its debtor affiliates (collectively, the "WPC Group"), and a non-cash goodwill impairment charge of $89.0 million. Third Quarter Operating Results Sales in the third quarter of 2004 were $111.5 million, a 34% increase over the third quarter of 2003. Sales increased by $6.0 million at the Precious Metal Segment, $8.1 million at the Wire & Tubing Segment and $14.1 million at the Engineered Materials Segment. This growth in sales is the result of several factors, including an increased emphasis on sales and marketing which has led to market share gains, stronger demand across the Company's product lines, a strong commercial construction market, and increased selling prices. For the third quarter of 2004, operating income was $5.1 million, compared to an operating loss of $132.7 million in the third quarter of 2003. Operating income from the Precious Metal segment was $0.6 million in the third quarter 2004 compared to an operating loss of $46.5 million in the third quarter of 2003. The 2003 operating results for this segment include a $50.5 million non-cash goodwill impairment charge, a $3.0 million gain from the liquidation of certain precious metal inventory, a $3.0 million gain on insurance proceeds, and a $2.2 million write down of property held for sale. Improved operating income resulting from the aforementioned sales growth was partially offset by higher raw material costs. Operating loss at the Wire & Tubing segment amounted to $0.6 million in the third quarter of 2004 compared to an operating loss of $40.8 million in the third quarter of 2003. The 2003 operating results for this segment include a $38.5 million non-cash goodwill impairment charge relating to the Tubing business. Operating income in 2004 was negatively impacted by the continued poor performance of the wire group. The tubing businesses reported improved operating income in the 2004 period resulting primarily from sales growth. The Engineered Materials segment reported operating income of $6.2 million in the third quarter of 2004 compared to $4.0 million of operating income in the third quarter of 2003. This strong performance resulted from a 41% increase in sales over the 2003 period. The sales increase was primarily related to a strong construction market, market share gains, and increased selling prices. Unallocated corporate expenses declined to $1.1 million in the third quarter of 2004 from $1.6 million in the third quarter of 2003. This improvement is related the termination of the WPN management agreement in January of 2004 and lower professional fees. These items were partially offset by an increase in employee expenses and a decrease in pension credit of $0.8 million. Wire & Cable Group In November 2004 Handy & Harman signed a non-binding letter of intent to sell its wire business. Concurrently, the Company is negotiating the sale of its steel cable business. The Company expects to close on the sale of these businesses at or near year-end. If the Company is unable to complete these sales it will consider the closure of these operations. In connection with the disposal of these businesses the Company expects to incur a loss of between $5.0 million and $7.0 million. Such loss will be recognized upon disposal. There is no assurance that the Company will be able to close the sale of the wire business or sell its steel cable business. Liquidity As previously announced, on March 31, 2004 the Company's wholly-owned subsidiary, Handy & Harman, entered into new senior financing arrangements with each of Congress Financial Corporation ("Congress"), as agent, and Ableco Finance LLC ("Ableco"), as agent, with aggregate commitments of $163.2 million. Congress's facility consists of a revolving credit facility of up to $62.9 million and a term loan of $22.2 million. Ableco's facility consisted of a Tranche B term loan of $71.0 million. On October 29, 2004, the Company completed the assignment of its $71.0 million Tranche B term loan from Ableco and the existing lenders thereto, to Canpartners Investments IV, LLC ("Canpartners"), an entity affiliated with Canyon Capital Advisors LLC, as agent and lender. Substantially all of the terms and conditions of the term loan continue without amendment, with the principal exception that the interest rate for this loan has been reduced by 4.0% per annum, effective October 29, 2004. There were no closing fees nor prepayment fees or penalties associated with the assignment. In addition, of the $5 million cash collateral which WHX had deposited with Ableco at the time of the original loan as collateral for the Handy & Harman obligation, approximately $3.9 million, the remaining outstanding amount, was returned to WHX (approximately $1.1 million had previously been returned during the third quarter of 2004). At September 30, 2004, $42.7 million was drawn under the revolving credit facility. Funds available under the revolving credit facility amounted to approximately $11.5 million at September 30, 2004. At September 30, 2004 WHX had approximately $20.6 million of unrestricted cash. The WHX 10-1/2% Senior Notes in the amount of $92.8 million are due on April 15, 2005. It is the Company's intention to refinance this obligation prior to its scheduled maturity; however there can be no assurance that such refinancing will be obtained or as to the terms thereof. The Company's access to capital markets in the future to refinance such indebtedness may be limited. If the Company were unable to refinance this obligation, it would have a material adverse impact on the liquidity, financial position and capital resources of WHX and would impact the Company's ability to continue as a going concern. The Company has retained Jefferies & Company to assist in the evaluation of possible recapitalization options. A committee of preferred shareholders has been formed and has retained legal and financial advisors. The Company continues to negotiate with representatives of the preferred shareholders committee and other stakeholders to attempt to recapitalize the Company. There can be no assurance as to the outcome of such discussions or the timing thereof. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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, general economic conditions, the ability of the Company to undertake or complete a recapitalization, to market and sell its products, and the effects of competition and pricing. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate, and therefore, there cannot be assurance that any forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in any forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Conference Call WHX Corporation invites all interested parties to the Company's third quarter 2004 conference call scheduled for Thursday, November 18, 2004 at 10:00 A.M. Eastern Time. Callers can listen in by dialing (800) 381-2652 and entering access code 912070. If you are unable to participate at this time, a replay will be available through November 25, 2004, by dialing (888) 203-1112, Access Code: 912070. WHX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 (in thousands - except per-share) Net sales $ 111,483 $83,269 $ 316,817 $ 247,788 Cost of goods sold 91,882 66,440 258,856 200,520 Gross profit 19,601 16,829 57,961 47,268 Selling, general and administrative expenses 14,439 12,788 41,810 55,630 Pension - curtailment and special termination benefits - 48,102 - 48,102 Asset impairment charge - 89,000 9,000 89,000 Gain (loss) on disposal of fixed assets (43) 368 1,622 452 Income (loss) from operations 5,119 (132,693) 8,773 (145,012) Other: Interest expense 6,901 4,537 17,717 14,457 Gain on disposition of WPC - 534 - 534 (Loss) gain on early retirement of debt - - (1,161) 2,999 Other income 93 842 6,364 1,030 Loss before taxes (1,689) (135,854) (3,741) (154,906) Tax expense 384 6,711 1,271 565 Net loss $(2,073) $(142,565) $(5,012) $(155,471) Dividend requirement for preferred stock $4,856 $4,856 $14,568 $14,568 Net loss applicable to common stock $(6,929) $(147,421) $ (19,580) $(170,039) Basic and diluted per share of common stock Loss per share $(1.28) $(27.38) $(3.61) $(31.75) WHX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2004 2003 (Dollars and shares in thousands) ASSETS Current Assets: Cash and cash equivalents $25,484 $41,990 Trade receivables - net 62,920 42,054 Inventories 71,682 41,782 Other current assets 10,234 30,174 Total current assets 170,320 156,000 Property, plant and equipment at cost 142,081 146,459 Less accumulated depreciation and amortization (55,964) (42,236) 86,117 104,223 Goodwill and other intangibles 125,797 126,089 Intangibles - pension asset 758 758 Assets held for sale 2,000 2,000 Other non-current assets 21,883 17,076 $406,875 $406,146 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Trade payables $39,271 $27,300 Accrued liabilities 27,334 29,395 Current portion of long-term debt 96,877 40,056 Short-term debt 42,710 - Total current liabilities 206,192 96,751 Long-term debt 93,397 189,344 Accrued pension liability 19,638 27,367 Other employee benefit liabilities 7,407 7,840 Additional minimum pension liability 24,912 24,912 Other liabilities 1,306 1,047 Total liabilities 352,852 347,261 Stockholders' Equity: Preferred stock - $.10 par value; authorized 10,000 shares; issued and outstanding: 5,523 shares 552 552 Common stock - $.01 par value; authorized 60,000 shares; issued and outstanding: 5,486 shares 55 55 Accumulated other comprehensive loss (21,541) (21,642) Additional paid-in capital 556,206 556,206 Unearned compensation - restricted stock awards (50) (99) Accumulated deficit (481,199) (476,187) Total stockholders' equity 54,023 58,885 $406,875 $406,146 WHX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2004 2003 Cash flows from operating activities: Net loss $(5,012) $(155,471) Items not affecting cash from operating activities: Depreciation and amortization 10,620 11,110 Amortization of debt related costs 1,816 1,362 Asset impairment charge 9,000 89,000 Other postretirement benefits 338 175 Loss (gain) on early retirement of debt 1,161 (2,999) Gain on WPSC note recovery (5,596) - Deferred income taxes - (832) Gain on asset dispositions (1,622) (452) Pension expense (credit) (1,918) 6,586 Pension - Curtailment and special benefits - 48,102 Gain on disposition of WPC - (534) Equity gain in affiliated companies (112) - Other - 232 Decrease (increase) in working capital elements: Trade receivables (20,866) (4,562) Inventories (29,900) 25,265 Short term investments-trading - 205,275 Investment account borrowings - (107,857) Other current assets 640 296 Other current liabilities 10,311 (28,618) Pension contribution (5,810) - Other items-net (3,478) 2,245 Net cash (used in) provided by operating activities (40,428) 88,323 Cash flows from investing activities: Net payment to WPC - (19,500) Sale / (purchase) of aircraft 19,301 (19,171) Dividends from affiliates 77 58 Cash received on WPSC note sale 5,596 - Plant additions and improvements (6,975) (10,189) Receipt of escrow deposit 1,250 - Proceeds from sales of assets 7,057 3,709 Net cash provided by (used in) investing activities 26,306 (45,093) Cash flows from financing activities: Cash proceeds from Handy & Harman term loans 99,250 - Repayment of Handy & Harman Term loans (1,796) - Net borrowings from revolving credit facilities 42,710 - Repayment of H&H Senior Secured Credit Facility (149,684) - Net borrowings from H&H Senior Secured Credit Facility 20,604 402 Repayment of H&H Industrial Revenue Bonds (7,500) - Debt issuance fees (5,968) - Cash paid on early extinguishment of debt - (14,302) Due from Unimast - 3,204 Net cash used in financing activities (2,384) (10,696) Net cash (used in) provided by operations (16,506) 32,534 Cash and cash equivalents at beginning of period 41,990 18,396 Cash and cash equivalents at end of period $25,484 $50,930 WHX CORPORATION BUSINESS SEGMENT INFORMATION (Unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Revenue Precious Metal $25,568 $19,547 $82,146 $63,266 Wire & Tubing 37,452 29,371 107,682 92,278 Engineered Materials 48,463 34,351 126,989 92,244 Consolidated revenue $111,483 $83,269 $316,817 $247,788 Segment operating income Precious Metal $592 $(46,503) $4,288 $(47,879) Wire & Tubing (531) (40,823) (9,736) (41,389) Engineered Materials 6,173 3,967 15,335 7,488 6,234 (83,359) 9,887 (81,780) Gain/(loss) on disposal of fixed assets (43) 368 1,622 452 Pension - curtailment & special termination benefits - 48,102 - 48,102 Unallocated corporate expenses 1,072 1,600 2,736 15,582 Operating Income/(loss) 5,119 (132,693) 8,773 (145,012) Interest expense 6,901 4,537 17,717 14,457 Equity in Gain on WPC - 534 - 534 Gain (loss) on early retirement of debt - - (1,161) 2,999 Other income 93 842 6,364 1,030 Loss before taxes (1,689) (135,854) (3,741) (154,906) Income tax expense 384 6,711 1,271 565 Net loss $(2,073) $(142,565) $(5,012) $(155,471) DATASOURCE: WHX Corporation CONTACT: Robert K. Hynes, +1-212-355-5200, for WHX Corporation

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