EXHIBIT 99.1
CONTACT: ROBERT K. HYNES
(212) 355-5200
RELEASE DATE: AUGUST 12, 2004
FOR IMMEDIATE RELEASE
WHX ANNOUNCES 2004 SECOND QUARTER RESULTS
NEW YORK - WHX CORPORATION (NYSE: WHX)
WHX today reported a net loss of $1.0 million, on sales of $107.8
million, for the second quarter of 2004 compared to a net loss of $4.1 million,
on sales of $83.5 million, in the same period in 2003. After deducting the
preferred dividend requirement, basic and diluted loss per common share was
$1.07 for the second quarter of 2004 compared with basic and diluted loss per
common share of $1.67 for the second quarter of 2003.
The 2004 second quarter results include a non-cash $9.0 million
asset impairment charge related to the Company's wire & cable business, a $5.6
million gain relating to the recovery of a note receivable which was carried at
zero value, a $1.7 million cash gain from the sale of an aircraft, and the
reversal of a $1.3 million reserve for a legal proceeding that was resolved in
the Company's favor. The 2003 results include a gain on the retirement of debt
of $2.0 million.
SECOND QUARTER OPERATING RESULTS
Sales in the second quarter of 2004 were $107.8 million, a 29%
increase over the second quarter of 2003. Sales increased by $6.6 million at the
Precious Metal Segment, $4.9 million at the Wire & Tubing Segment and $12.8
million at the Engineered Materials Segment. This growth in sales is the result
of several factors, including a renewed emphasis on sales and marketing which
has led to market share gains, stronger commercial construction and electrical
markets, and increased selling prices.
For the second quarter of 2004, operating loss was $0.5 million,
compared to an operating loss of $4.4 million in the second quarter of 2003.
Operating income from the Precious Metal segment increased by $1.4 million to
income of $1.2 million in the second quarter of 2004 from a loss of $0.2 million
in the second quarter of 2003. The 2003 period included $1.4 million of costs
related to the closure of facilities. Improvements in operating income resulting
from the aforementioned sales growth were offset by higher raw material costs
and start up costs relating to a new facility in Malaysia. Operating results at
the Wire & Tubing segment declined by $9.2 million to a loss of $9.0 million
(including the aforementioned non-cash asset impairment charge) in the second
quarter of 2004 when compared to the second quarter of 2003. Operating income in
2004 was also negatively impacted by the poor performance of the wire group and
production inefficiencies related to new products at a stainless tubing
facility. The remaining tubing facilities reported improved operating income in
the 2004 period resulting from higher sales. The 2003 period included $1.2
million of incremental costs related to the closure of certain specialty wire
facilities. The Engineered Materials segment reported operating income of $6.0
million in the second quarter of 2004 compared to $2.9 million of operating
income in the second quarter of 2003. This strong performance resulted from a
41% increase in sales over the 2003 period. The sales increase was primarily in
the construction market. Unallocated corporate expenses declined to $0.4 million
in the second quarter of 2004 from $7.3 million in the second quarter of 2003.
This improvement is related to a decrease in pension expense of $4.6 million,
lower professional fees, the termination of the WPN management agreement in
January of 2004, and the reversal of a $1.3 million reserve for a legal
proceeding that was resolved in the Company's favor. These items were partially
offset by an increase in employee expenses and 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 $70.0 million and a term loan of $22.2 million.
Ableco's facility consists of a Tranche B term loan of $71.0 million. At June
30, 2004 $37.8 million was drawn under the revolving credit facility. Funds
available under the revolving credit facility amounted to approximately $14.0
million at June 30, 2004. At June 30, 2004 WHX had approximately $20.7 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.
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
second quarter 2004 conference call scheduled for Thursday, August 12, 2004 at
10:00 A.M. Eastern Time. Callers can listen in by dialing (800) 817-8874 and
entering access code 376799. If you are unable to participate at this time, a
replay will be available through August 19, 2004, by dialing (888) 203-1112,
Access Code: 376799
WHX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2004 2003 2004 2003
- ---------------------------------------------------------------------------------------------------------------
(in thousands - except per-share)
Net sales $ 107,840 $ 83,519 $ 205,334 $ 164,519
Cost of goods sold 87,511 67,131 166,974 134,080
--------- --------- --------- ---------
Gross profit 20,329 16,388 38,360 30,439
Selling, general and administrative expenses 13,524 20,759 27,371 42,842
Asset impairment charge 9,000 -- 9,000 --
Gain (loss) on disposal of fixed assets 1,707 (13) 1,665 84
--------- --------- --------- ---------
Income (loss) from operations (488) (4,384) 3,654 (12,319)
--------- --------- --------- ---------
Other:
Interest expense 6,107 4,903 10,816 9,920
(Loss) gain on early retirement of debt -- 1,966 (1,161) 2,999
Other income (expense) 6,016 1,696 6,271 188
--------- --------- --------- ---------
Loss before taxes (579) (5,625) (2,052) (19,052)
Tax expense (benefit) 375 (1,567) 887 (6,146)
--------- --------- --------- ---------
Net loss $ (954) $ (4,058) $ (2,939) $ (12,906)
========= ========= ========= =========
Dividend requirement for preferred stock $ 4,856 $ 4,856 $ 9,712 $ 9,712
========= ========= ========= =========
Net loss applicable to common stock $ (5,810) $ (8,914) $ (12,651) $ (22,618)
========= ========= ========= =========
BASIC AND DILUTED PER SHARE OF COMMON STOCK
Loss per share $ (1.07) $ (1.67) $ (2.33) $ (4.24)
========= ========= ========= =========
WHX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2004 2003
- -----------------------------------------------------------------------------------------
(Dollars and shares in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 26,295 $ 41,990
Trade receivables - net 63,999 42,054
Inventories 59,547 41,782
Other current assets 14,048 30,174
--------- ---------
Total current assets 163,889 156,000
Property, plant and equipment at cost 139,768 146,459
Less accumulated depreciation and amortization (53,072) (42,236)
--------- ---------
86,696 104,223
Goodwill and other intangibles 125,874 126,089
Intangibles - pension asset 758 758
Assets held for sale 2,000 2,000
Other non-current assets 23,809 17,076
--------- ---------
$ 403,026 $ 406,146
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade payables $ 37,235 $ 27,300
Accrued liabilities 21,454 29,395
Current portion of long-term debt 96,874 40,056
Short-term debt 37,840 --
--------- ---------
Total current liabilities 193,403 96,751
Long-term debt 94,370 189,344
Accrued pension liability 25,864 27,367
Other employee benefit liabilities 7,532 7,840
Additional minimum pension liability 24,912 24,912
Other liabilities 1,205 1,047
--------- ---------
Total liabilities 347,286 347,261
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 (21,881) (21,642)
Additional paid-in capital 556,206 556,206
Unearned compensation - restricted stock awards (66) (99)
Accumulated deficit (479,126) (476,187)
--------- ---------
Total stockholders' equity 55,740 58,885
--------- ---------
$ 403,026 $ 406,146
========= =========
WHX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
2004 2003
- --------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,939) $ (12,906)
Items not affecting cash from operating activities:
Depreciation and amortization 7,368 7,485
Amortization of debt related costs 1,131 829
Asset impairment charge 9,000 --
Other postretirement benefits 225 125
Loss (gain) on early retirement of debt 1,161 (2,999)
WPSC note recovery (5,596) --
Deferred income taxes -- (7,208)
(Gain) on asset dispositions (1,665) (490)
Pension expense (credit) (1,278) 8,060
Equity loss in affiliated companies 2 31
Other 34 --
Decrease (increase) in working capital elements,
net of effect of acquisitions:
Trade receivables (21,945) (5,199)
Inventories (17,765) (317)
Short term investments-trading -- 199,005
Investment account borrowings -- (107,857)
Other current assets 2,422 3,298
Other current liabilities 2,324 (4,487)
Pension contribution (226) --
Other items-net (4,789) (468)
--------- ---------
Net cash (used in) provided by operating activities (32,536) 76,902
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts from WPC -- 500
Purchase of aircraft -- (19,171)
Proceeds from sale of aircraft 19,301 --
Plant additions and improvements (4,357) (5,939)
Proceeds from sales of assets 7,049 3,704
--------- ---------
Net cash provided by (used in) investing activities 21,993 (20,906)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from Handy & Harman term loans 99,329 --
Net borrowings from revolving credit facilities 36,936 --
Repayment of H&H Senior Secured Credit Facility (149,684) --
Net borrowings from H&H Senior Secured Credit Facility 20,604 22,425
Repayment of H&H Industrial Revenue Bonds (7,500) --
Debt issuance fees (4,837) --
Cash paid on early extinguishment of debt -- (14,302)
Due from Unimast -- 3,204
--------- ---------
Net cash (used in)provided by financing activities (5,152) 11,327
--------- ---------
NET CASH (USED IN) PROVIDED BY OPERATIONS (15,695) 67,323
Cash and cash equivalents at beginning of period 41,990 18,396
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 26,295 $ 85,719
========= =========
WHX CORPORATION
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(in thousands) Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
---------- ---------- ---------- -----------
Revenue
Precious Metal $ 27,956 $ 21,365 $ 56,578 $ 43,719
Wire & Tubing 35,668 30,759 70,230 62,907
Engineered Materials 44,216 31,395 78,526 57,893
--------- --------- --------- ---------
Consolidated revenue $ 107,840 $ 83,519 $ 205,334 $ 164,519
========= ========= ========= =========
Segment operating income
Precious Metal $ 1,220 $ (177) $ 3,696 $ (1,376)
Wire & Tubing (9,002) 159 (9,205) (566)
Engineered Materials 6,011 2,906 9,162 3,521
--------- --------- --------- ---------
(1,771) 2,888 3,653 1,579
--------- --------- --------- ---------
Gain/(loss) on disposal of fixed assets 1,707 (13) 1,665 84
Unallocated corporate expenses 424 7,259 1,664 13,982
--------- --------- --------- ---------
Operating Income/(loss) (488) (4,384) 3,654 (12,319)
Interest expense 6,107 4,903 10,816 9,920
Gain on early retirement of debt -- 1,966 (1,161) 2,999
Other income (expense) 6,016 1,696 6,271 188
--------- --------- --------- ---------
Income (loss) before taxes (579) (5,625) (2,052) (19,052)
Income tax expense (benefit) 375 (1,567) 887 (6,146)
--------- --------- --------- ---------
Net income (loss) $ (954) $ (4,058) $ (2,939) $ (12,906)
========= ========= ========= =========
