WHITE PLAINS, N.Y.,
March 30 /PRNewswire-FirstCall/ --
WHX Corporation (Nasdaq: WXCO); ("WHX" or the "Company") today
reported financial results for the fourth quarter and year ended
December 31, 2009. The Company also
announced that it will hold an earnings call on Thursday, April 8, 2010 at 4:00 pm Eastern Time.
"For WHX Corporation, 2009 was a year of dealing with the
negative effects of a worldwide recession, while positioning the
Company to take advantage of new opportunities as market conditions
improve," said Glen Kassan, Vice
Chairman of the Board and Chief Executive Officer of WHX. "Net
sales declined 21.5% during 2009, reflecting the effects of the
worldwide recession. However, despite a difficult market
environment throughout 2009, with only modestly improving
conditions in the fourth quarter, the Company was successful at
maintaining gross margin, reducing operating costs, and improving
operating free cash flow."
WHX reported a net loss of $21.2
million on net sales of $534.4
million for the twelve months ended December 31, 2009, compared with net income of
$3.0 million on net sales of
$681.0 million for the twelve months
ended December 31, 2008. Basic
and diluted net loss per common share was $1.74 for the twelve months ended December 31, 2009, compared with net income of
$0.75 in the same period of 2008. For
the fourth quarter of 2009, WHX reported a net loss of $6.8 million on net sales of $127.6 million, compared with a net loss of
$5.6 million on net sales of
$140.3 million in the same period of
2008. Basic and diluted net loss per common share was $0.56 for the fourth quarter of 2009, compared
with a net loss of $0.46 in the same
period of 2008.
"Ongoing Company–wide implementation and expansion of the WHX
Business System resulted in lower costs, improved productivity, and
continued investment in new products and the development of
existing and new markets," Mr. Kassan added. "These actions, plus
discontinuing two businesses, and completing other restructuring
activities, we believe, will strengthen the Company's competitive
position over the long term."
On a segment basis, Precious Metal net sales decreased by 33.6%
in 2009 compared with 2008, Tubing sales decreased by 25.5% and
Engineered Materials sales decreased by 22.3%, reflecting lower
demand caused by the economic downturn. Comparatively stronger
segments in 2009 were Arlon Electronic Materials, with 6.3% less
sales compared to 2008, Kasco, with a 9.1% sales decline and Arlon
Coated Materials, with 16.7% less sales.
Financial Highlights:
Fourth Quarter Results
WHX reported a net loss of $6.8
million on net sales of $127.6
million in the fourth quarter of 2009, compared with a net
loss of $5.6 million on net sales of
$140.3 million for the fourth quarter
of 2008. Basic and diluted net loss per common share was
$0.56 for the fourth quarter of 2009,
compared with a net loss of $0.46 in
the same period of 2008.
The net loss from continuing operations in the fourth quarter of
2009 was $6.1 million, compared to
net income from continuing operations in 2008 of $3.2 million. The increase in loss in 2009 was
principally driven by a $5.5 million
higher non-cash pension expense, and a $3.9
million gain from the curtailment of an employee benefit
plan recorded in the fourth quarter of 2008. The net loss from
discontinued operations was $0.6
million in the fourth quarter of 2009, compared to a net
loss of $8.8 million in the same
period of 2008, which reflected non-cash asset impairment charges
of $1.1 million and $8.3
million, recorded in 2009 and 2008 respectively, at the Company's
discontinued operations.
The Company generated Adjusted EBITDA of $8.6 million for the fourth quarter of 2009, as
compared to $6.7 million for the same
period in 2008. The increase in fourth quarter Adjusted
EBITDA from continuing operations was principally due to lower
corporate expenses primarily from the consolidation of corporate
offices in 2009 and improvements in operating efficiencies.
Adjusted EBITDA excludes certain non-recurring and non-cash items.
See "Note Regarding Use of Non-GAAP Financial Measurements" below
for the definition of Adjusted EBITDA.
Revenue for the fourth quarter of 2009 was $127.6 million, a decrease of $12.7 million, or 9% from $140.3 million for the same period of 2008, amid
the general slow-down in the U.S. and world economies, especially
weakness in the U.S. housing and automotive markets. Operating
management effectively maintained gross profit margin of 25% in the
fourth quarter, in-line with last year, through operating
efficiencies and cost reductions.
2009 Results
Net sales for the twelve months ended December 31, 2009 decreased by $146.6 million, or 21.5%, to $534.4 million, as compared to $681.0 million for the twelve months ended
December 31, 2008. The lower
sales volume across all the operating business segments was
primarily driven by lower demand as a result of the current
world-wide economic recession.
Gross profit in the twelve months ended December 31, 2009 declined to $131.7 million as compared to $171.3 million in 2008. Gross profit margin for
the twelve months of 2009 declined to 24.6% as compared to 25.2%
during the same period of 2008. The decline in gross profit margin
was primarily due to the effect of LIFO inventory liquidation
gains, which were higher in 2008. During the twelve months
ended December 31, 2009, gross profit
included a non-cash gain of $0.6
million from the liquidation of precious metal inventories
valued at LIFO, as compared to a non-cash LIFO liquidation gain of
$3.9 million in the same period of
2008. Significantly lower sales volume and reduced absorption of
certain manufacturing costs due to lower production levels in 2009
were mostly offset by improved operating efficiencies and other
cost reductions. Overall, we believe that operating
management effectively maintained gross profit margin in 2009 as
compared to 2008 despite challenging business conditions.
A non-cash pension expense related to the Company's pension
plans of $14.2 million was recorded
in the twelve months ended December 31,
2009. This non-cash pension expense primarily
represents actuarial loss amortization. Such actuarial loss
occurred principally because investment return on the assets of the
WHX Pension Plan during 2008 was significantly less than the
assumed investment return of 8.5%. In 2008, the Company
recorded a favorable non-cash pension credit (income) of
$8.3 million.
Selling, general and administrative ("SG&A") expenses
decreased $26.2 million to $107.1
million, and totaled 20.0% of sales in 2009 compared to
19.6% of sales in 2008. SG&A costs decreased in all
segments. Given the substantial drop in sales and the fixed nature
of certain SG&A costs, the positive result of the Company's
efforts to reduce costs are reflected in the small increase in
SG&A costs as a percentage of sales. On January 1, 2010, the Company reversed the 5%
salary reductions which had been implemented on January 4, 2009. The 5% salary reductions had
been implemented for annual salaries over $40,000 for all salaried employees, including all
of the Company's executive officers. The Company also reinstated in
early 2010 its employer contributions to 401(k) savings plans for
all employees not covered by a collective bargaining agreement that
had been suspended on January 4,
2009.
Restructuring costs of $1.9
million and $1.6 million were
recorded for 2009 and 2008, respectively. The 2009
restructuring activities included the consolidation of the former
Bairnco Corporate office into the WHX Corporate office, the closure
of facilities in New Hampshire and
Texas which were part of the
Precious Metal and Arlon Coated Materials segments, respectively,
and the relocation of the functions to existing Company facilities,
as well as restructuring activities in Europe within the Kasco segment. In 2008, the
restructuring charges of $1.6 million
represented move costs to consolidate two plants within the Arlon
Coated Materials segment into one.
Income from continuing operations decreased $43.5 million to $8.3 million in 2009 as compared
to $51.7 million in 2008.
The Company's Adjusted EBITDA of $43.1
million in 2009 decreased by $9.0
million from 2008 due principally to lower sales.
The discontinued operations segregated on the statement of
operations are the Company's Indiana Tube Denmark ("ITD") and Sumco
Inc. subsidiaries. The two discontinued operations had aggregate
operating losses of $5.4 million and
$8.5 million in 2009 and 2008,
respectively. The 2009 and 2008 operating losses include
$1.1 million and $8.3 million of asset impairment charges,
respectively, related to certain fixed assets of the discontinued
operations. In addition, in 2009, ITD sold certain machinery and
equipment and reported a gain of $1.8
million on the sale.
WHX had positive cash flow from operations of $39.5 million in 2009, as compared to
$10.1 million in 2008. After
considering capital expenditures in each year and excluding the
non-recurring payment of $31.3
million of interest to a related party in 2008, operating
free cash flow in 2009 was $31.8
million compared to $29.3
million in 2008. The improved cash flow resulted principally
from working capital reduction and reduced capital expenditures.
During 2009, WHX reduced its debt by $35.9 million including $4.7 million of debt from discontinued
operations.
Segment Operating Results
Precious Metal Segment
For the fourth quarter of 2009, the Precious Metal segment net
sales increased by $0.6 million
compared to the fourth quarter of 2008. Operating income
decreased by $2.0 million or 51.5% to
$1.9 million compared to $3.9 million in the same period of 2008,
principally the result of liquidations of precious metal
inventories which it accounts for under the LIFO cost method that
resulted in favorable gross margin impacts of $0.3 million and $1.9
million in the fourth quarter of 2009 and 2008,
respectively.
For full year 2009, the Precious Metal segment net sales
decreased by $43.5 million, or 33.6%,
to $86.0 million in 2009. The
decreased sales were primarily driven by lower volume in all of its
markets, particularly sales to the automotive industry, appliance
markets, electrical, and commercial construction in 2009 compared
to 2008. The brazing alloys made by this segment are
fabricated into a variety of engineered forms and are used in many
industries including electrical, appliance, transportation,
construction, general industrial, and other metal-joining
industries. Therefore, the broad-based recession significantly
reduced the sales of the Precious Metal segment.
Segment operating income decreased by $11.8 million to $5.5 million in 2009, compared
to operating income of $17.3 million
in 2008. The decrease was primarily driven by the sales
decline. In addition, during 2009, gross profit included a non-cash
gain of $0.6 million from the
liquidation of precious metal inventories valued at LIFO, as
compared to a non-cash LIFO liquidation gain of $3.9 million in the same period of 2008.
Furthermore, the Precious Metal segment operating income includes
restructuring charges of $0.4 million
in 2009.
Tubing Segment
For the fourth quarter of 2009, the Tubing segment's operating
income decreased by $0.9 million to $1.1
million, or 43.2%, compared to $2.0
million in the fourth quarter of 2008. The decrease
was principally driven by the sales decline and the related
inability to fully absorb fixed manufacturing costs due to reduced
production volume. Net sales were down in the Stainless Steel
Tubing Group, and essentially flat in the Specialty Tubing
Group
For full year 2009, the Tubing segment sales decreased by
$25.8 million, or 25.5%, driven by
lower sales to the home appliance markets serviced by the Specialty
Tubing Group. There was also a reduction in sales to the
petrochemical and shipbuilding markets serviced by the Stainless
Steel Tubing Group, which was partially offset by strength in sales
to the defense, aerospace and medical markets.
Segment operating income decreased by $4.8 million on the lower sales, to $4.7 million in 2009 compared to $9.6 million in 2008, including a non-cash asset
impairment charge of $0.9 million in
2009. The asset impairment charge related to equipment
utilized exclusively in connection with a discontinued product line
that has no other viable use to the Company and limited scrap
value. Operating income as a percentage of sales for 2009
versus 2008 declined more than the sales decline because fixed
costs could not be reduced in the same proportion as the sales
decline, partially offset by manufacturing efficiency and cost
saving effort.
Engineered Materials Segment
For the fourth quarter of 2009, the Engineered Materials segment
sales declined by $9.7 million, or
20.0%. Due to a significant improvement in gross profit
margin, operating income increased by $0.5
million, or 23.5%, to $2.6
million, compared to the fourth quarter of 2008.
For full year 2009, the Engineered Materials segment sales
decreased by $55.1 million, or 22.3%,
as compared to 2008, with continued weakness experienced in the
commercial flat roofing fasteners market, natural gas and other
utility connectors used in residential construction, as well as a
drop in electrical connector sales to international markets.
Segment operating income was $16.9
million in 2009, compared to $22.6
million in 2008. The decline in operating income was
principally the result of the lower sales volume, partially offset
by pricing increases and cost saving efforts from manufacturing and
selling, general and administrative functions.
Arlon Electronic Materials Segment
Fourth quarter 2009 net sales for the Arlon Electronic Materials
("Arlon EM") segment rose by $0.3
million, or 2.0%, to $16.1
million, as compared to the fourth quarter of 2008. Arlon
EM's operating income also improved by $0.8
million, to $2.0 million, on
the higher sales and improved gross profit margins.
For full year 2009, Arlon EM segment sales declined by
$4.1 million, or 6.3%, compared to
2008. The sales reduction was primarily due to lower sales of
flexible heater and coil insulation products, which was partially
offset by improved sales, related to military programs and
increased sales of PCB materials related to infrastructure in
China and India.
Segment operating income decreased $1.9
million to $4.3 million for 2009; principally due to a
non-cash goodwill impairment charge of $1.1
million during the third quarter of 2009 based on a
valuation of one of the segment's reporting units. The other
major factor contributing to reduced operating income was lower
sales volume, which was partially offset by favorable product mix
and increased volume in the low-cost China manufacturing facility, as well as
reduced staffing expense compared to 2008.
Arlon Coated Materials Segment
Fourth quarter sales for the Arlon Coated Materials ("Arlon CM")
segment also rose. Net sales increased by 5.0% for the fourth
quarter of 2009 to $16.4 million,
compared to $15.6 million in the same
quarter of 2008. Arlon CM segment operating loss was $0.2 million in both 2009 and 2008.
For full year 2009, Arlon CM segment sales declined by
$12.1 million, or 16.7%, compared to
2008. The world-wide economic recession adversely affected demand
in the Asian shipping container market and the North American and
European graphics market for corporate imaging. Arlon CM
sales were also adversely affected by lower demand from its
automotive, appliance and electronics customers.
Segment operating loss was $0.6
million in 2009 (including $0.3
million of restructuring charges) and $1.2 million in 2008 (including $1.6 million of restructuring charges). Although
the sales decline had a negative effect on operating loss, gross
profit margin remained constant, principally as a result of certain
efficiency improvements generated by the WHX Business System and
past restructuring activities.
Kasco Replacement Parts and Services Segment
Fourth quarter net sales for the Kasco segment decreased 6.2% to
$15.4 million and Kasco's operating
income decreased by $0.6 million as
compared to the fourth quarter of the prior year. Operating income
in the 2009 quarter included asset impairment charges of
$0.2 million as a result of a
valuation of Kasco's real properties.
For full year 2009, Kasco segment sales declined by $6.1 million, or 9.1%, compared to 2008.
Sales to U.S. grocery stores and other route sales softened
along with weakness in distributor sales in North America, and in European sales.
The decline in European sales was significantly affected by
the translation effect of a stronger U.S. dollar, but also
reflected global economic weakness.
Operating income from the Kasco segment was $2.8 million for 2009, which was $0.9 million lower than 2008. Primary factors
besides lower sales that reduced 2009 operating income included
restructuring charges of $0.5 million
and an asset impairment charge of $0.2
million as a result of a valuation of its real properties.
Gross profit margin was comparable between the years because lower
gross profit margin from sales mix was offset by more efficient
manufacturing operations and better labor and spending control.
WHX Business System
The Company continues to apply the WHX Business System at all of
its business units. The System is at the heart of the
operational and improvement methodologies for all WHX companies and
employees. Strategy Deployment forms the roof of the business
system and serves to convert strategic plans into tangible actions
ensuring alignment of goals throughout each of our businesses. The
pillars of the System are the key performance indicators used to
monitor and drive improvement. The steps of the System are
the specific tool areas that drive the key metrics and overall
performance. WHX utilizes lean tools and philosophies to
reduce and eliminate waste coupled with Six Sigma tools targeted at
variation reduction. The System is a proven, holistic
approach to increasing shareholder value and achieving long term,
sustainable, and profitable growth.
WHX Corporation 4th Quarter and Total Year 2009
Earnings Call, April 8, 2010 at
4:00 PM ET
WHX Corporation will hold a conference call to discuss the 2009
financial results on Thursday, April 8,
2010, at 4:00 pm ET. The
delay between the earnings announcement and the conference call is
in recognition of the Easter weekend holiday. The dial information
for the call is:
US/Canada Dial-in #: (866) 760-1884
Conference ID: 64962734
NOTE: In order to join this conference call, all speakers and
participants will be required to provide the Conference ID Number
listed above.
Note Regarding Presentation of Non-GAAP Financial
Measures:
The financial data contained in this press release includes
certain non-GAAP financial measures as defined by the Securities
and Exchange Commission ("SEC"), including "Adjusted EBITDA".
The Company is presenting Adjusted EBITDA because it believes
that it provides useful information to investors about WHX, its
business and its financial condition. The Company defines Adjusted
EBITDA as net income from continuing operations before the effects
of realized and unrealized losses on derivatives, interest expense,
taxes, depreciation and amortization, LIFO liquidation gain, and
pension credit and excludes certain non-recurring and non-cash
items. The Company believes Adjusted EBITDA is useful to investors
because it is one of the measures used by the Company's Board of
Directors and management to evaluate its business, including in
internal management reporting, budgeting and forecasting processes,
in comparing operating results across the business, as an internal
profitability measure, as a component in evaluating the ability and
the desirability of making capital expenditures and significant
acquisitions, and as an element in determining executive
compensation. Further, the Company believes that Adjusted EBITDA is
a measure of leverage capacity and the Company's ability to service
its debt.
However, Adjusted EBITDA is not a measure of financial
performance under generally accepted accounting principles in
the United States of America
("GAAP"), and the items excluded from Adjusted EBITDA are
significant components in understanding and assessing financial
performance. Therefore, Adjusted EBITDA should not be considered a
substitute for net income (loss) or cash flows from operating,
investing, or financing activities. Because Adjusted EBITDA is
calculated before recurring cash charges including realized and
unrealized losses on derivatives, interest expense and taxes, and
is not adjusted for capital expenditures or other recurring cash
requirements of the business, it should not be considered as a
measure of discretionary cash available to invest in the growth of
the business. There are a number of material limitations to the use
of Adjusted EBITDA as an analytical tool, including the
following:
- Adjusted EBITDA does not reflect the Company's net realized and
unrealized losses and gains on derivatives and LIFO liquidations of
its precious metal inventory;
- Adjusted EBITDA does not reflect the Company's interest
expense;
- Adjusted EBITDA does not reflect the Company's tax expense or
the cash requirements to pay its taxes;
- Although depreciation and amortization are non-cash expenses in
the period recorded, the assets being depreciated and amortized may
have to be replaced in the future, and Adjusted EBITDA does not
reflect the cash requirements for such replacement;
- Adjusted EBITDA does not include pension expense or credit,
and
- Adjusted EBITDA does not include discontinued operations.
The Company compensates for these limitations by relying
primarily on its GAAP financial measures and by using Adjusted
EBITDA only supplementally. The Company believes that consideration
of Adjusted EBITDA, together with a careful review of its GAAP
financial measures, is the most informed method of analyzing
WHX.
The Company reconciles Adjusted EBITDA to Net income (loss) from
continuing operations, and that reconciliation is set forth below.
Because Adjusted EBITDA is not a measurement determined in
accordance with GAAP and is susceptible to varying calculations,
Adjusted EBITDA, as presented, may not be comparable to other
similarly titled measures of other companies. Revenues and expenses
are measured in accordance with the policies and procedures
described in the Company's Annual Report on Form 10-K for the year
ended December 31, 2009.
Our Company
WHX Corporation is a diversified global industrial company
delivering value through the WHX Business System which drives
innovation, operating excellence and superior customer service. WHX
and its affiliated companies employ over 1,700 people at 30
locations in eight countries.
Our companies are organized into six businesses: Precious
Metals, Tubing, Engineered Materials, Arlon Electronic Materials,
Arlon Coated Materials and Kasco.
We sell our products and services through direct sales forces,
distributors and manufacturer's representatives. We serve a diverse
customer base, including the construction, electronics,
telecommunications, home appliance, transportation, utility,
medical, semiconductor, and aerospace and aviation markets. Other
markets served include the signage industry and meat room products
and maintenance services for the food industry.
We are based in White Plains, New
York and our common stock is listed on the NASDAQ Capital
Market under the symbol WXCO.
Forward-Looking Statements
This press release contains certain "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 (the "Exchange Act"), that reflect WHX's current
expectations and projections about its future results, performance,
prospects and opportunities. WHX has tried to identify these
forward-looking statements by using words such as "may," "should,"
"expect," "hope," "anticipate," "believe," "intend," "plan,"
"estimate" and similar expressions. These forward-looking
statements are based on information currently available to the
Company and are subject to a number of risks, uncertainties and
other factors, that could cause its actual results, performance,
prospects or opportunities in 2008 and beyond to differ materially
from those expressed in, or implied by, these forward-looking
statements. These factors include, without limitation, WHX's
need for additional financing and the terms and conditions of any
financing that is consummated, customers' acceptance of its new and
existing products, the risk that the Company will not be able to
compete successfully, and the possible volatility of the Company's
stock price and the potential fluctuation in its operating results.
Although WHX believes that the expectations reflected in
these forward-looking statements are reasonable and achievable,
such statements involve significant risks and uncertainties and no
assurance can be given that the actual results will be consistent
with these forward-looking statements. Investors should read
carefully the factors described in the "Risk Factors" section of
the Company's filings with the SEC, including the Company's Form
10-K for the year ended December 31,
2009 for information regarding risk factors that could
affect the Company's results. Except as otherwise required by
Federal securities laws, WHX undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events, changed circumstances or
any other reason.
WHX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in thousands)
Net sales $127,599 $140,325 $534,420 $681,012
Cost of goods sold 95,739 104,659 402,753 509,725
------ ------- ------- -------
Gross profit 31,860 35,666 131,667 171,287
GP% 25.0% 25.4% 24.6% 25.2%
Selling, general and
administrative expenses 27,494 31,140 107,114 133,328
SG&A % 21.5% 22.2% 20.0% 19.6%
---- ---- ---- ----
Income from
operations before
unusual items 4,366 4,526 24,553 37,959
Pension expense (credit) 3,661 (1,830) 14,169 (8,335)
Non-cash asset
impairment charges 970 - 3,017 -
Non-cash goodwill
impairment charge - - 1,140 -
Income from proceeds
of insurance
claims, net (1,033) 48 (4,035) (3,399)
Income from benefit
plan curtailment - (3,875) - (3,875)
Restructuring charges 5 - 1,896 1,628
Other operating
expenses 39 80 98 201
--- --- --- ---
Income from continuing
operations 724 10,103 8,268 51,739
Other:
Interest expense 7,001 6,103 25,775 36,304
Realized and
unrealized loss on
derivatives 461 429 777 1,355
Other expense
(income) 23 606 (140) 1,262
--- --- ---- -----
Income (loss) from
continuing
operations before tax (6,761) 2,965 (18,144) 12,818
Tax provision (benefit) (622) (219) (494) 1,285
Income (loss) from ------ ----- ------- ------
continuing operations,
net of tax (6,139) 3,184 (17,650) 11,533
------ ----- ------- ------
Discontinued Operations:
Loss from discontinued
operations, net of
tax (772) (8,774) (5,389) (8,511)
Gain (loss) on
disposal of assets,
net of tax 127 - 1,798 (11)
--- --- ----- ---
Net loss from discontinued
operations (645) (8,774) (3,591) (8,522)
---- ------ ------ ------
Net income (loss) $(6,784) $(5,590) $(21,241) $3,011
======= ======= ======== ======
Basic and diluted
per share of common
stock
Income (loss) from
continuing operations,
net of tax $(0.51) $0.26 $(1.45) $2.88
Discontinued operations,
net of tax (0.05) (0.72) (0.29) (2.13)
----- ----- ----- -----
Net income (loss) $(0.56) $(0.46) $(1.74) $0.75
====== ====== ====== =====
Weighted average
number of common
shares outstanding 12,179 12,179 12,179 4,001
WHX CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(Dollars and shares in thousands) 2009 2008
---- ----
ASSETS
Current Assets:
Cash and cash equivalents 8,796 8,656
Trade and other receivables -net of
allowance for doubtful accounts of
$2,806 and $3,159, respectively 71,796 77,444
Inventories 60,122 70,560
Deferred income taxes 1,261 1,310
Other current assets 9,008 10,130
Current assets of discontinued operations 1,681 10,881
----- ------
Total current assets 152,664 178,981
Property, plant and equipment at cost,
less accumulated depreciation and
amortization 86,969 95,029
Goodwill 63,946 65,071
Other intangibles, net 34,035 36,965
Other non-current assets 11,801 18,716
Non-current assets of discontinued
operations 4,426 7,479
----- -----
353,841 402,241
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade payables $35,123 $34,932
Accrued liabilities 23,351 35,697
Accrued environmental liability 6,692 8,478
Accrued interest - related party 1,600 263
Short-term debt 19,087 32,970
Current portion of long-term debt 5,944 8,295
Deferred income taxes 300 151
Current portion of pension liability 9,700 1,800
Current liabilities of discontinued
operations 1,507 8,119
----- -----
Total current liabilities 103,304 130,705
Long-term debt 95,106 110,174
Long-term debt - related party 54,098 54,098
Long-term interest accrual - related party 11,797 2,237
Accrued pension liability 92,655 132,190
Other employee benefit liabilities 4,840 4,233
Deferred income taxes 4,429 5,413
Other liabilities 5,409 5,098
------- -------
371,638 444,148
------- -------
Stockholders' Deficit:
Preferred stock- $.01 par value;
authorized 5,000 shares; issued and
outstanding -0 - shares - -
Common stock - $.01 par value;
authorized 180,000 shares;
issued and outstanding 12,1795 shares 122 122
Accumulated other comprehensive loss (118,402) (163,502)
Additional paid-in capital 552,834 552,583
Accumulated deficit (452,351) (431,110)
-------- --------
Total stockholders' deficit (17,797) (41,907)
------- -------
$353,841 $402,241
======== ========
WHX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
-----------------------
(in thousands) 2009 2008
---- ----
Cash flows from operating activities:
Net income (loss) $(21,241) $3,011
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 17,988 19,284
Non-cash stock based compensation 186 553
Amortization of debt related costs 1,429 1,806
Long-term interest on related party debt 9,560 5,285
Income from curtailment of employee benefit
obligations - (3,875)
Deferred income taxes (955) (643)
Loss on asset dispositions 98 201
Asset impairment charges 3,017 -
Goodwill impairment charge 1,140 -
Unrealized loss (gain) on derivatives 409 (384)
Reclassification of net cash settlements on
derivative instruments 368 1,739
Net cash provided by operating activities
of discontinued operations 7,282 13,219
Decrease (increase) in operating assets and
liabilities:
Trade and other receivables 5,090 3,957
Inventories 9,900 6,057
Other current assets 1,965 1,488
Accrued interest expense-related party 1,338 (17,643)
Other current liabilities (77) (19,642)
Other items-net 2,011 (4,334)
------ ------
Net cash provided by operating activities 39,508 10,079
------ ------
Cash flows from investing activities:
Plant additions and improvements (7,704) (12,111)
Net cash settlements on derivative
instruments (368) (1,739)
Proceeds from sales of assets 160 8,253
Proceeds from sale of investment 3,113 -
Net cash provided by investing activities
of discontinued operations 2,855 (203)
------ ------
Net cash used in investing activities (1,944) (5,800)
------ ------
Cash flows from financing activities:
Proceeds of stock-rights offering - 155,561
Proceeds of term loans 9,577 4,000
Net revolver repayments (14,164) (17,084)
Repayments of term loans - domestic (26,768) (30,367)
Repayments of term loans - related party - (111,188)
Deferred finance charges (1,191) (1,562)
Net change in overdrafts (231) (1,107)
Net cash used to repay debt of discontinued
operations (4,559) (517)
Other (274) 618
------- ------
Net cash used in financing activities (37,610) (1,646)
------- ------
Net change for the period (46) 2,633
Effect of exchange rate changes on net cash 186 (67)
Cash and cash equivalents at beginning of
period 8,656 6,090
----- -----
Cash and cash equivalents at end of period $8,796 $8,656
====== ======
WHX CORPORATION
CONSOLIDATED SEGMENT DATA
(unaudited)
Statement of operations data:
(in thousands) Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales:
Precious Metal 22,322 21,751 85,972 129,431
Tubing 18,827 22,554 75,198 100,961
Engineered Materials 38,528 48,179 191,709 246,815
Arlon Electronic
Materials 16,111 15,797 60,145 64,207
Arlon Coated Materials 16,408 15,633 60,329 72,395
Kasco 15,401 16,411 61,067 67,203
------ ------ ------ ------
Total net sales $127,597 $140,325 $534,420 $681,012
======== ======== ======== ========
Segment Depreciation and
Amortization Expense:
Precious Metal 431 326 1,635 1,429
Tubing 729 797 3,056 3,236
Engineered Materials 1,124 1,096 4,858 4,705
Arlon Electronic
Materials 961 1,860 3,971 4,539
Arlon Coated Materials 214 (451) 864 1,156
Kasco 630 738 2,734 2,859
--- --- ----- -----
Total depreciation and
amortization expense $4,089 $4,366 $17,118 $17,924
====== ====== ======= =======
Segment operating income
(loss)
Precious Metal 1,877 3,873 5,490(a) 17,335(a)
Tubing 1,150 2,023 4,746(b) 9,581
Engineered Materials 2,614 2,117 16,903 22,553
Arlon Electronic
Materials 2,033 1,213 4,338(c) 6,243
Arlon Coated Materials (209) (233) (643)(d) (1,199)(d)
Kasco 584 1,151 2,846(e) 3,786
--- ----- ----- -----
Total segment operating
income $8,049 $10,144 $33,680 $58,299
====== ======= ======= =======
Unallocated corporate
expenses & other (4,724) (5,618) (13,542) (21,957)
Income from proceeds of
insurance claims, net 1,033 (48) 4,035 3,399
Unallocated pension
credit (expense) (3,595) 1,830 (14,013) 8,335
Corporate restructuring
costs - - (636) -
Income from benefit plan
curtailment - 3,875 - 3,875
Asset impairment charges - - (1,158) -
Loss on disposal of
assets (39) (80) (98) (212)
--- --- --- ----
Income from continuing
operations $724 $10,103 $8,268 $51,739
==== ======= ====== =======
(a) Segment operating income for the Precious Metal segment for 2009
includes restructuring charges of $0.4 million relating to the
closure of a facility in New Hampshire. The results for the Precious
Metal segment for 2009 and 2008 also include gains of $0.6 million
and $3.9 million, respectively, resulting from the liquidation of
precious metal inventory valued at LIFO cost.
(b) Segment operating income for the Tubing segment for 2009
includes non-cash asset impairment charges of $0.9 million to
write-down to fair value certain equipment formerly used in the
manufacture of a discontinued product line.
(c) Segment operating results for the Arlon EM segment for 2009
include a $1.1 million goodwill impairment charge recorded to adjust
the carrying value of one of the Arlon EM segment's reporting units
to its estimated fair value.
(d) Segment operating results for the Arlon CM segment for 2009
include $0.3 million of restructuring costs, respectively, related
to the closure and relocation of an operation in Dallas, Texas. In
the segment operating results for 2008, $1.6 million of move costs
were incurred to consolidate two plants in San Antonio, Texas into
one.
(e) Segment operating income for the Kasco segment for 2009 includes
$0.5 million of costs related to restructuring activities incurred
by one of its European operations and $0.2 million asset impairment
charge associated with certain real property located in Atlanta
Georgia.
Supplemental Non-GAAP Disclosures
EBITDA and Adjusted EBITDA
(Unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec. 31, Dec. 31,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
(in thousands)
Income (loss) from
continuing operations,
net of tax $(6,139) $3,184 $(17,650) $11,533
Add (Deduct):
Tax provision (622) (219) (494) 1,285
Interest expense 7,001 6,103 25,775 36,304
Depreciation and
amortization expense 4,335 4,396 17,988 19,284
Non-cash pension
expense (credit) 3,661 (1,830) 14,169 (8,335)
Non-cash post
retirement benefit
obligation
(curtailment) - (3,875) - (3,875)
Non-cash goodwill
impairment charge - - 1,140 -
Non-cash asset
impairment charges 970 - 3,017 -
Non-cash effects of
precious metal
inventory (255) (1,872) (508) (5,087)
Realized and unrealized
loss on derivatives 461 429 777 1,355
Non-cash stock-based
compensation expense 22 141 186 553
Loss on disposal of
assets 39 80 98 201
--- --- --- ---
"EBITDA" from
continuing
operations 9,473 6,537 44,498 53,218
Adjusted EBITDA:
Proceeds from
insurance claims (1,033) 48 (4,035) (3,399)
Non-recurring
restructuring & plant
consolidation costs 5 - 1,896 1,628
Other 159 163 730 612
--- --- --- ---
Adjusted EBITDA $8,604 $6,748 $43,089 $52,059
====== ====== ======= =======
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CONTACT:
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WHX Corporation
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Glen Kassan, Vice Chairman of the Board and
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Chief Executive Officer
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914-461-1260
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SOURCE WHX Corporation