EXHIBIT 99.1
CONTACT: ROBERT K. HYNES
(212) 355-5200
RELEASE DATE: MAY 6, 2004
FOR IMMEDIATE RELEASE
WHX ANNOUNCES 2004 FIRST QUARTER RESULTS
NEW YORK - WHX CORPORATION (NYSE: WHX)
WHX today reported a net loss of $2.0 million, on sales of $97.5 million,
for the first quarter of 2004 compared to a net loss of $8.8 million, on sales
of $81.0 million, in the same period in 2003. After deducting the preferred
dividend requirement, basic and diluted loss per common share was $1.26 for the
first quarter of 2004 compared with basic and diluted loss per common share of
$2.57 for the first quarter of 2003.
Operating income for the first quarter of 2004 was $4.1 million compared to
an operating loss of $7.9 million in the first quarter of 2003. The 2004 results
include a loss on the retirement of debt of $1.2 million and the 2003 results
include a gain on the retirement of debt of $1.0 million. In addition, in 2004 a
tax provision of $0.5 million was recorded for foreign and state taxes compared
with a tax benefit of $4.6 million in the 2003 period. In 2004 the Company
recorded a valuation allowance for the Federal tax benefit associated with the
current period loss.
FIRST QUARTER OPERATING RESULTS
Sales in the first quarter of 2004 were $97.5 million, a 20.4 percent
increase over the first quarter of 2003. Sales increased by $6.3 million at the
Precious Metal Segment, $2.4 million at the Wire & Tubing Segment and $7.8
million at the Engineered Materials Segment. This growth in sales is primarily
the result of increased volumes reflecting a strengthening U.S. manufacturing
economy.
For the first quarter of 2004, operating income was $4.1 million, compared
to operating loss of $7.9 million in the first quarter of 2003. The 2004 results
include a pension credit of $0.7 million compared to pension expense of $4.0
million in the first quarter of 2003. The 2003 results include a charge of $3.5
million for employee separation and related expenses resulting from a reduction
in executive, administrative, and information technology personnel at the Handy
& Harman subsidiary.
Operating income from the Precious Metal segment increased by $3.7 million
to income of $2.5 million in the first quarter of 2004 from a loss of $1.2
million in the first quarter of 2003. The 2003 results included a $1.3 million
lower of cost or market charge for precious metal inventory and $1.1 million in
allocated employee separation expense. The balance of the improvement is related
to the aforementioned sales growth. Operating results at the Wire & Tubing
segment improved by $0.5 million to a $0.2 million operating loss in the first
quarter of 2004 from an operating loss of $0.7 million in the first quarter of
2003. The 2003 results include $1.5 million in allocated employee separation
expense. Operating income in 2004 was impacted by lower margins in the wire
group and production inefficiencies related to new products at the stainless
tubing group. The Engineered Materials segment reported operating income of $3.2
million in the first quarter of 2004 compared to $0.6 million of operating
income in the first quarter of 2003. The 2003 results include $0.9 million in
allocated employee separation expense. The balance of the improvement resulted
from stronger sales in the construction and home center markets. Unallocated
corporate expenses declined to $1.2 million in the first quarter of 2004 from
$6.6 million in the first quarter of 2003. This improvement is related to a
decrease in pension expense of $4.7 million, lower professional fees, and the
termination of the WPN management agreement in January 2004, partially offset by
higher insurance costs.
LIQUIDITY
As previously announced, on March 31, 2004 the Company's wholly-owned
subsidiary, Handy & Harman, successfully 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 $70 million and a term loan of $22.2 million. Ableco's facility consists
of a term loan of $71 million. At March 31, 2004 $32.8 million was drawn under
the revolving credit facility. Funds available under the revolving credit
agreement amounted to approximately $9.0 million at March 31, 2004. In
connection with the transaction, WHX also made a loan subordinated to the
Congress and Ableco facilities to Handy & Harman in the amount of $43.5 million.
The proceeds of the loans from Congress, Ableco and WHX were primarily used to
refinance Handy & Harman's previous credit facility with Citibank, N.A., and for
working capital purposes. At March 31, 2004 WHX had approximately $19.0 million
of unrestricted cash at the parent company level.
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.
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 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 first
quarter 2004 conference call scheduled for Thursday, May 6, 2004 at 10:30 A.M.
Eastern Time. Callers can listen in by dialing (800) 344-6783 and entering
access code 6301055. If you are unable to participate at this time, a replay
will be available through May 13, 2004, by dialing (888) 203-1112, Access Code:
155934.
WHX CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
2004 2003
(IN THOUSANDS)
- -------------------------------------------------------------------------------------
Net sales $97,494 $81,000
Cost of goods sold 79,463 66,949
------- -------
Gross profit 18,031 14,051
Selling, general and administrative expenses 13,847 21,973
Loss on disposal of fixed assets 42 13
------- -------
Income (loss) from operations 4,142 (7,935)
------- -------
Other:
Interest expense 4,709 5,017
(Loss) gain on early retirement of debt (1,161) 1,033
Other income (expense) 255 (1,508)
------- -------
Loss before taxes (1,473) (13,427)
Tax expense (benefit) 512 (4,579)
------- -------
Net loss $(1,985) $(8,848)
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Dividend requirement for preferred stock $4,856 $4,856
Net loss applicable to common stockholders $(6,841) $(13,704)
------- -------
BASIC AND DILUTED PER SHARE OF COMMON STOCK
Net loss per share $(1.26) $(2.57)
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WHX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, DECEMBER 31,
2004 2003
(Unaudited)
- ----------------------------------------------------------------------------------------
(Dollars and shares in thousands)
ASSETS
Current Assets:
Cash and cash equivalents 2,987 $ 41,990
Restricted cash 12,668 --
Trade receivables - net 57,759 42,054
Inventories 57,693 41,782
Other current assets
9,478 30,174
Total current assets 160,585 156,000
Property, plant and equipment at cost, less
accumulated depreciation and amortization 102,618 104,223
Goodwill and other intangibles 125,994 126,089
Intangibles - pension asset 758 758
Assets held for sale 2,000 2,000
Other non-current assets
18,432 17,076
--------- ---------
$ 410,387 $ 406,146
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade payables $ 37,591 $ 27,300
Accrued liabilities 28,367 29,395
Current portion of long-term debt 6,549 40,056
Short-term debt 32,779 --
--------- ---------
Total current liabilities 105,286 96,751
Long-term debt 188,100 189,344
Accrued pension liability 26,692 27,367
Other employee benefit liabilities 7,639 7,840
Additional minimum pension liability 24,912 24,912
Other liabilities
1,176 1,047
--------- ---------
353,805 347,261
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 (21,976) (21,642)
Additional paid-in capital
556,206 556,206
Unearned compensation - restricted stock awards (83) (99)
Accumulated deficit (478,172) (476,187)
--------- ---------
Total stockholders' equity 56,582 58,885
--------- ---------
$ 410,387 $ 406,146
========= =========
WHX CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
2004 2003
- -----------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,985) $ (8,848)
Items not affecting cash from operating activities:
Depreciation and amortization 3,726 3,723
Amortization of debt related costs 515 495
Other postretirement benefits 113 63
Loss (gain) on early retirement of debt 1,161 (1,033)
Deferred income taxes -- (4,855)
Loss on asset dispositions 42 13
Pension (income) expense (675) 4,030
Equity loss in affiliated companies 5 16
Other 65 --
Decrease (increase) in working capital elements,
net of effect of acquisitions:
Trade receivables (15,705) (6,119)
Inventories (15,911) (249)
Short term investments-trading -- 201,615
Investment account borrowings -- (107,857)
Other current assets 1,396 6,248
Other current liabilities 9,384 (4,123)
Other items-net 550 991
--------- ---------
Net cash (used in) provided by operating activities (17,319) 84,110
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts from WPC -- 500
Purchase of aircraft -- (19,106)
Proceeds from sale of aircraft 19,301 --
Plant additions and improvements (2,432) (3,439)
Proceeds from sales of assets 9 457
--------- ---------
Net cash (used in) provided by investing activities 16,878 (21,588)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from Handy & Harman term loans 99,329 --
Net borrowings from revolving credit facilities 32,779 --
Restricted cash placed on deposit (12,668) --
Repayment of H&H Senior Secured Credit Facility (149,684) --
Net borrowings from H&H Senior Secured Credit Facility 20,604 23,475
Repayment of H&H Industrial Revenue Bond (5,000) --
Debt issuance fees (3,922) --
Cash paid on early extinguishment of debt -- (4,542)
--------- ---------
Net cash (used in) provided by financing activities (18,562) 18,933
--------- ---------
NET CASH (USED IN) PROVIDED BY OPERATIONS (19,003) 81,455
Cash and cash equivalents at beginning of period 41,990 18,396
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 22,987 $ 99,851
========= =========
WHX CORPORATION
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(in thousands) THREE MONTHS ENDED
MARCH 31,
2004 2003
- --------------------------------------------------------------------------------
Revenue
Precious Metal $ 28,622 $ 22,354
Wire & Tubing 34,562 32,148
Engineered Materials 34,310 26,498
-------- --------
Consolidated revenue $ 97,494 $ 81,000
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Segment operating income
Precious Metal $ 2,477 $ (1,199)
Wire & Tubing (203) (725)
Engineered Materials 3,151 613
-------- --------
5,425 (1,311)
-------- --------
Loss on disposal of fixed assets 42 13
Unallocated corporate expenses 1,241 6,611
-------- --------
Operating income (loss) 4,142 (7,935)
Interest expense 4,709 5,017
(Loss) gain on early retirement of debt (1,161) 1,033
Other income (expense) 255 (1,508)
-------- --------
Income (loss) before taxes (1,473) (13,427)
Income tax benefit 512 (4,579)
-------- --------
Net loss $ (1,985) $ (8,848)
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