-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/p8LBxWV9nB8Gk+jtMurw3zitLvk1T5SyFz/tgBSe/NG13wF27e88dnj7SPDg1K QVLUoCVViJ102XlN4BQ6GQ== 0000950152-04-004159.txt : 20040518 0000950152-04-004159.hdr.sgml : 20040518 20040518161250 ACCESSION NUMBER: 0000950152-04-004159 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEIRTON STEEL CORP CENTRAL INDEX KEY: 0000849979 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 061075442 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10244 FILM NUMBER: 04816349 BUSINESS ADDRESS: STREET 1: 400 THREE SPRINGS DR CITY: WEIRTON STATE: WV ZIP: 26062 BUSINESS PHONE: 3047972000 MAIL ADDRESS: STREET 1: 400 THREE SPRINGS DR CITY: WEIRTON STATE: WV ZIP: 26062 10-K/A 1 j0715801e10vkza.txt WEIRTON STEEL CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K/A (AMENDMENT NO. 1) (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . COMMISSION FILE NO. 1-10244 WEIRTON STEEL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 06-1075442 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 THREE SPRINGS DRIVE, WEIRTON, WEST VIRGINIA 26062 (Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 304-797-2000 SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT: None SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT: Common Stock, Par Value $0.01 Per Share OTC Bulletin Board Preferred Stock, Series C Convertible OTC Bulletin Board Redeemable, Par Value $0.10 Per Share 11 3/8% Notes due 2004 OTC Bulletin Board 10 3/4% Notes due 2005 OTC Bulletin Board 10% Senior Secured Notes due 2008 OTC Bulletin Board
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: Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X . Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No X . Based on the closing price as of June 30, 2003 the aggregate market value of the voting stock held by nonaffiliates of the Registrant was $2,524,640. (The foregoing calculation includes shares allocated under the Registrant's 1984 and 1989 Employee Stock Ownership Plans to the accounts of employees who are not otherwise affiliates.) The number of shares of Common Stock ($.01 par value) of the Registrant outstanding as of April 14, 2004 was 42,279,313. Documents Incorporated by Reference: None. 2 WEIRTON STEEL CORPORATION AMENDMENT NO. 1 TO ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2003 Pursuant to this Amendment No. 1, the undersigned Registrant hereby amends and restates Part III, Items 10, 11, 12, 13 and 14 of its Annual Report on Form 10-K for the year ended December 31, 2003 in their entirety as follows: PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT EXECUTIVE OFFICERS OF THE COMPANY The executive officers of the Company as of December 31, 2003 were as follows:
AGE AT NAME DECEMBER 31, 2003 OFFICE - ---- ----------------- ------ D. Leonard Wise ... 69 Chief Executive Officer Mark E. Kaplan .... 42 President and Chief Financial Officer Edward L. Scram ... 46 Vice President -- Manufacturing Michael J. Scott .. 41 Vice President -- Sales, Product Development And Marketing William R. Kiefer . 54 General Council and Secretary
D. Leonard Wise was named Chief Executive Officer effective August 1, 2003, replacing John H. Walker, who resigned July 31, 2003. Mr. Wise was also appointed to the Board of Directors at the same time. See "Directors" for additional biographical information concerning Mr. Wise. Mark E. Kaplan was appointed President and Chief Financial Officer effective August 1, 2003. From December 2001 to August 2003, he served as Senior Vice President-Finance and Administration and Chief Financial Officer. See "Directors" for additional biographical information concerning Mr. Kaplan. Edward L. Scram was appointed Vice President -- Manufacturing in December 2001. From April of 2000 to December 2001, he served as Vice President -- Operations. Mr. Scram served as General Manager of Operations from 1996 to December 2001. Michael J. Scott was appointed Vice President-Sales, Product Development and Marketing in January 2002. From March of 2000 to January 2002, he served as Vice President-Sales and Marketing. Mr. Scott was employed by National Steel Corporation from 1997 through 1999 as General Manager-Construction Sales Group. William R. Kiefer was appointed General Council in January 2002. He has been Secretary since May 1990. He had been Vice President - Law since May 1990. We depend, in large part, on the efforts, abilities and experience of our senior management and other key employees. 3 Executive compensation for our key employees has been restrained by our weakened financial position. Options and other stock-based incentive compensation currently have minimal or no value. In light of our current financial position and uncertain prospects, key employees, including members of senior management, have not had an incentive to remain employed with us. The loss of the services of such individuals could adversely affect our business, financial condition, results of operations or prospects. DIRECTORS As of March 30, 2004, the Company had nine directors: Edson R. Arneault (57) (3) President and Chief Executive Officer The Mountaineer Racetrack & Gaming Resort Mr. Arneault has been a member of our board of directors since August 2003. He has been President and Chief Executive Officer of The Mountaineer Racetrack & Gaming Resort since 1995; and he is President, CEO and Chairman of the Board of Directors of MTR Gaming Group, Inc., its parent company. A Certified Public Accountant, he served as a tax partner with Seidman & Seidman prior to 1995. He is also a director of the West Virginia Hospitality and Tourism Association , and the West Virginia Independent Colleges and Universities. Michael Bozic (63) (1) Private Investor Mr. Bozic has been a member of our board of directors since 1994. He served as vice chairman of Kmart Corporation from 1998 to 2000; Chairman, Chief Executive Officer and a director of Levitz Furniture Corporation from 1995 to 1998; and President and Chief Executive Officer of Hills Stores from 1991 to 1995. He is also a director of Morgan Stanley Advisors and a trustee of Hillsdale College. Richard R. Burt (57) (1) Chairman, Diligence, LLC Mr. Burt has been a member of our board of directors since 1996 and has been chairman of the board of the Company since April 1996. He is also a director of Hollinger International Inc., HCL Technologies, Ltd., UBS-Paine Webber, International Game Technology and Deutsche-Scudder Funds. Mark G. Glyptis (52) (3) President, ISU Mr. Glyptis has been a member of our board of directors since 1991. He has been president of the ISU since August 1991 and has been an employee of the Company since 1973. Mark E. Kaplan (42) (2) President and Chief Financial Officer Mr. Kaplan has been a member of our board of directors since December 2002. He was appointed President and 4 Chief Financial Officer in August 2003. He was Senior Vice President of Finance and Administration and Chief Financial Officer from November 2001 to August 2003; served as vice president and chief financial officer from June 2000 to November 2001; as vice president of information technology and controller from March 1999 to June 2000 and controller from September 1995 to March 1999. Thomas R. Sturges (59) (1) Private Investor Mr. Sturges has been a member of our board of directors since 1986. Until June 2001, he was Chief Financial Officer of Hawkeye Communication, LLC. From February 1990 to January 2000, he served as Executive Vice President of The Harding Group Inc.. Ronald C. Whitaker (56) (1) President & Chief Executive Officer Hyco International, Inc. Mr. Whitaker has been a member of our board of directors since 1995. He has been President and Chief Executive Officer of Hyco International, Inc. since 2002. From September 2000 to 2002, he served as President and Chief Executive Officer and as a member of the Board of Directors of Strategic Distribution Incorporated. He also served as President, Chief Executive Officer and a director of Johnson Worldwide Associates from October 1996 to March 1999. He is a director of Strategic Distribution Incorporated and Firearms Training Systems, Inc. and is a trustee of The College of Wooster. D. Leonard Wise (69) (2) Chief Executive Officer Mr. Wise has been a member of our board of directors since August 2003 at which time he was appointed Chief Executive Officer of the Company. He previously served on the Board from May 1998 to December 2002. Mr. Wise was President and Chief Executive Officer of Carolina Steel Corporation from October 1994 to March 1997. Wendell W. Wood (63) (1) President and Chairman, United Land Corporation Mr. Wood has been a member of our board of directors since December 2002. He has served as President and Chairman of United Land Corporation, a commercial real estate development company, since 1968. (1) Independent Director (2) Management Director (3) Union Director The Company's Restated Certificate of Incorporation, as amended, provides for a Board of Directors consisting of nine persons. It requires that five directors ("Independent Directors") be persons who are not current or former employees of the Company, or advisors or consultants to the Company or to the Independent Steelworkers Union (the "ISU"), or have been affiliated with such an advisor or consultant or have engaged in substantial financial 5 transactions with the Company, for a period of two years prior to election as an Independent Director. The Restated Certificate of Incorporation provides that two directors ("Management Directors") must consist of the Chief Executive Officer and one Company employee designated by the Chief Executive Officer. It also provides that two directors ("Union Directors") must consist of the President of the primary collective bargaining agent for the represented employees of the Company (currently the ISU) and one person designated by the primary collective bargaining agent. The Audit Committee of the Board is composed of three independent directors, Chairman Thomas R. Sturges ("Audit Committee Financial Expert"), Richard R. Burt, and Wendell W. Wood. REPORT OF THE AUDIT COMMITTEE The Audit Committee of the Board of Directors, composed of 3 independent directors, reviews, at least annually, the services performed and to be performed by the Company's independent public accountants and the fees charged for their services, and, in that connection, considers the effect of those fees on the independence of the accountants, in accordance with the Charter of the Audit Committee. Management of the Company has the primary responsibility for the financial statements and the reporting process including the system of internal controls. The Audit Committee is responsible for reviewing the Company's financial reporting process on behalf of the Board of Directors. The Audit Committee also discusses with the Company's independent public accountants and management the Company's accounting policies and reporting practices, including the impact of alternative accounting policies. The Audit Committee reviews with the Company's internal audit department the scope and results of internal auditing procedures and the adequacy of accounting and financial systems and internal controls. In this context, the Audit Committee has met and held discussions with management and the independent accountants. Management represented to the Audit Committee that the Company's financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee reviewed and discussed the Company's audited financial statements with management and the independent accountants. The Audit Committee discusses with the independent accountants matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with the Audit Committee). In addition, the Audit Committee has discussed with the independent accountants the accountant's independence from the Company and its management, including the matters in the written disclosures required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). The Audit Committee discussed with the Company's internal and independent accountants the overall scope and plan for their respective audits. The Audit Committee meets with the internal and independent accountants with and without management present, to discuss the results of their examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. In reliance on these reviews and discussions, the Audit Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K (as amended) for the year ended December 31, 2003, for filing with the Securities and Exchange Commission. On June 4, 2002, the Company engaged KPMG LLP as its independent public accountants and dismissed Arthur Andersen LLP. The Audit Committee and the Board have also appointed KPMG LLP as the Company's independent public accountants for the years ended December 31, 2002 (succeeding Arthur Andersen LLP in mid-year) and December 31, 2003, respectively. AUDIT COMMITTEE Thomas R. Sturges, Chairman Richard R. Burt 6 Wendell W. Wood D. Leonard Wise CODE OF ETHICS Weirton Steel has adopted a Code of Ethics (see exhibit 14.1 filed herewith) that applies to its principal Executive Officer Principal Financial Officer, Principal Accounting Officer or Controller, or persons performing similar functions. The Code of Ethics is available through the Company's website at www.weirton.com. If the Company makes any substantive amendments to the Code of Ethics or grants any waiver, including any implicit waiver, from a provision of the Code of Ethics to the Company's Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or Controller, the Company will disclose the nature of such amendment or waiver on that website. AUDIT COMMITTEE FINANCIAL EXPERT The Board has decided to name Thomas R. Sturges, the Audit Committee's chairman, as the audit committee financial expert within the Security and Exchange Commission's (the "SEC") definition. Mr. Sturges is independent as that term is defined by the New York Stock Exchange and the SEC. ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth information for each of the Company's last three fiscal years, summarizing the compensation paid to each person serving as the Company's Chief Executive Officer during the last completed fiscal year and each of the Company's next four most highly compensated executive officers (collectively, the "Named Executive Officers") who were serving as such at the end of the Company's last completed fiscal year.
ANNUAL COMPENSATION LONG-TERM COMPENSATION ------------------- ---------------------- SECURITIES OTHER ANNUAL UNDERLYING ALL OTHER NAME & PRINCIPAL SALARY BONUS COMPENSATION OPTIONS/(SARS) COMPENSATION POSITION YEAR ($) ($)(3) ($)(1) (#)(2) ($) - -------- ---- --- ------ ------ ------ --- D. Leonard Wise ...... 2003 $222,609 $300,000 $ -- -- -- Chief Executive 2002 n/a -- -- -- -- Officer 2001 n/a -- -- -- -- *John H. Walker ...... 2003 $243,427 -- $ 57,712 -- -- President 2002 395,004 -- 645,107 -- -- & CEO 2001 387,087 -- 209,007 200,000 -- Mark E. Kaplan ....... 2003 $300,398 $600,000 $ -- -- -- President and 2002 260,004 -- 7,024 -- -- CFO 2001 230,876 -- 16,629 -- -- *Edward L. Scram ..... 2003 $239,330 $ -- $ -- -- -- Vice President 2002 250,008 -- 14,396 -- -- Manufacturing 2001 192,964 -- 16,793 -- -- Michael J. Scott ..... 2003 $192,668 $ 24,000 $ -- -- -- Vice President 2002 201,264 -- -- -- -- Sales & Marketing 2001 175,008 -- -- -- -- *William R. Kiefer ... 2003 $189,980 $ 21,250 $ -- -- -- General 2002 198,456 -- 4,657 -- -- Counsel & Secretary 2001 198,456 -- 27,241 -- --
7 - ------------- *Mr. Walker resigned as President and Chief Executive Officer effective July 31, 2003. Mr. Scram has been on extended leave of absence since January 2004. Mr. Kiefer resigned as General Counsel and Secretary effective March 15, 2004. (1) Under the terms of the Company's two supplemental executive retirement plans, or "SERPs," the Company made annual contributions to trusts established under the SERPs on behalf of the named executive officers, and others, which contributions were subject to Federal and State Income taxes. The senior SERP was terminated effective December 31, 2001 and except in the case of Mr. Walker, no contributions were made to it thereafter, no contributions were made to the remaining SERP following December, 2002, except in the case of Mr. Walker whose employment agreement provided for his continued participation in the SERP which entitled him to a fully funded benefit in the year 2002. Amounts in the table and are: (a) $57,712 for Mr. Walker in 2003; (b) $645,107, $7,024, $14,396, and $4,657 for Messrs. Walker, Kaplan, Scram and Kiefer, respectively, in 2002; and (c) $209,007, $ 16,629, $16,793, and $27,241 for Messrs. Walker, Kaplan, Scram and Kiefer, respectively, in 2001. Aggregate amounts of perquisites and other personal benefits that are the lesser of $50,000 or 10% of each of the respective Named Executive Officer's combined salary and bonuses, have been omitted from the table in accordance with Securities and Exchange Commission rules. (2) For 2001, the figures reflect numbers of shares underlying options granted under the 1998 Stock Option Plan to Mr. Walker, which have since expired unexercised. (3) The amount shown for 2003 includes (i) for Mr. Wise a payment pursuant to the terms of his Employment Agreement with the Company deferred as of August 7, 2003; (ii) for Mr. Kaplan a payment pursuant to the terms of his Employment Agreement with the Company dated as of August 7, 2003; (iii) in the case of Mssrs. Scott and Kiefer payments pursuant to the Key Employee Retention Program (The "Retention Program") of $24,000.00 and $21,250.00, respectively. The Retention Program was approved by the Bankruptcy Court in August 2003, and was designed to incent a group of key executives to remain in the employ of the Company throughout the bankruptcy case. Effective February 23, 2003, salaries for the positions held by the Named Executive Officers were reduced by 5%, consistent with that of other non-union and union employees of the Company as part of a pre-bankruptcy restructuring effort to cut costs and remain competitive. EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVES The Company is party to an Employment Agreement with its Chief Executive Officer, Mr. Wise, dated as of August 1, 2003. The Agreement is from month to month. Pursuant to this agreement, Mr. Wise is entitled to a monthly base salary of $40,000.00. He also received a bonus of $300,000.00 payable in three installments in 2003; pursuant to the terms of the Agreement, he will also receive a contingent bonus in the amount of $550,000.00 to be paid within five business days of the closing or a transaction to sell substantially all the assets of the Company on the effective date of a plan of reorganization in the Company's Chapter 11 case; and a second contingent bonus not to exceed $550,000.00 to be paid only if the Company (i) closes a transaction with a gross sales price in excess of the then outstanding balance of the DIP Facility or (ii) receives a going concern valuation in excess of same. The Company is a party to an employment agreement dated as of August 1, 2003, with Mr. Kaplan, President and Chief Financial Officer, superseding prior employment agreements and providing for a rolling employment term of three years, unless earlier terminated. Pursuant to this agreement, Mr. Kaplan is entitled to an annual base salary of $350,000 (effective July 1, 2003), subject to adjustments. He is also entitled to a guaranteed bonus of $600,000, 8 payable August 1, 2003; a first contingent bonus of $500,000 to be paid within five business days of the closing of a transaction to sell substantially all the assets of the Company or the effective date of a plan of reorganization in the Company's Chapter 11 case; and a second contingent bonus not to exceed $300,000 to be paid only if the Company (i) closes a transaction with a gross sales price in excess of the then outstanding balance of the DIP Facility or (ii) receives a going concern valuation in excess of same. In addition thereto, in the event of a termination without cause, Mr. Kaplan is entitled to a severance payment of 12 months base pay. As of December 31, 2003, Messrs. Scram, Scott and Kiefer were parties to individual employment agreements that contained substantially similar terms and conditions. These agreements have no specific term of employment. Each executive agreed to serve as a salaried employee of the Company in the capacities and for the compensation as may be agreed upon from time to time by the executive and the Company. The executives assign to the Company certain intellectual property rights and agree not to disclose confidential information. If the executive is terminated for reasons other than cause (including a breach of the agreement by the Company), the executive is entitled to a contractual severance payment as a result of the Company's Chapter 11 Bankruptcy Case, these agreements are subject to rejection by the Company. In the event of such a rejection, the only payments to which the Named Executive Officers may be entitled upon termination would be those provided pursuant to the Retention Program. OPTION/SAR GRANTS There were no stock options or stock appreciation rights (SARs) granted during 2003 to the Named Executive Officers. OPTION/SAR EXERCISES/OUTSTANDING OPTIONS AND YEAR-END VALUES The following table sets forth information regarding the exercise of stock options and SARs during 2003 and the unexercised options/SARs held as of the end of the 2003 fiscal year by the Named Executive Officers. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES OPTIONS/SARS At Year End 2003
(#) ($) -------------------------------------------------------------------------- SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/ NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE (1) UNEXERCISABLE (2) - ---- ------------ ------------ ----------------- ----------------- D. Leonard Wise ... -- -- -- -- J.H. Walker ....... -- -- -- -- M.E. Kaplan ....... -- -- 14,000/189,000 -/- E.L. Scram ........ -- -- 12,000/175,000 -/- M.J. Scott ........ -- -- -0-/175,000 -/- W.R. Kiefer ....... -- -- 14,000/ 76,666 -/-
(1) The figures shown represent options granted under the 1987 Option Plan and the 1998 Option Plan. For Mr. Kaplan and Mr. Kiefer, 112,000 and 38,334 options, respectively, granted in March 1998 under the 1998 Option Plan lapsed unexercised in June 2002. The options granted in October 2000 under the 1998 Option Plan remain unexercisable. For Mr. Walker, all options granted under the 1998 Option Plan (602,500) lapsed unexercised in October 2003. 9 (2) The "Value of Unexercised In-the-Money Options/SARs at Fiscal Year-End" is zero or equal to the difference between the closing price ($0.04 per share) of the Company's Common Stock on the Over the Counter Bulletin Board on its last trading day in 2003 (December 31, 2003) and the exercise price ($5.56 and $6.69 for the options granted in 2000), times the number of shares underlying the options. PENSION PLAN The Company had funded and maintained a qualified defined benefit pension plan since it began business in 1984, covering all employees including the Named Executive Officers [with the exception of Mr. Wise]. In an effort to cut costs and guard liquidity, effective May 1, 2003, the qualified pension plan was "frozen"; as a result of which employees could no longer accrue additional pension service time, nor could their monthly retirement benefit payout increase regardless of future earnings. The Company subsequently filed bankruptcy under Chapter 11 of the Federal Bankruptcy Code on May 19, 2003. On October 21, 2003, the Pension Benefit Guaranty Corporation ("PBGC") filed an action to terminate the qualified pension plan as of that date; and on November 7, 2003, after the Company consented, the PBGC assumed all the assets and liabilities of that plan. As a result of the qualified pension plan termination, the Named Executive Officers and other participants in the plan will be entitled to collect benefits to the extent provided by plan assets or otherwise available under PBGC guaranty limitations. Prior to 2003, the Company maintained two non-qualified Supplemental Executive Retirement Plans ("SERPs") providing pension benefits for the Named Executive Officers and others in addition to the Company's qualified defined benefit pension plan. The SERPs were "target benefit" plans under which the Company contributed to a trust actuarially determined amounts which were calculated to produce for each participant the defined target annual benefit at age 62. Under both the qualified pension plan and the SERPs, the amount of pension was based upon the employee's average earnings of the highest five years of the final fifteen years of employment. For those participating in a SERP, expected benefits were based on earnings defined as annual cash compensation (as reported in the Salary and Bonus columns of the Summary Compensation Table) and pension service credited under the SERP. For the Named Executive Officers participating in a SERP, pension service as of December 31, 2003 for the purpose of calculating retirement benefits was as follows: Mr. Kaplan, 8.25 years; Mr. Kiefer, 18.92 years; Mr. Scram, 23.50 years; and Mr. Scott, 3.83 years. Even though the SERPs covering the Named Executive Officers were terminated, the Company had a continuing obligation under an employment agreement to provide SERP funding in 2002 and 2003 for Mr. Walker sufficient to produce a target benefit equivalent to 70% of final average earnings, subject to the Company's obligation to fully fund the described SERP benefit as of April 18, 2002 and any incremental amount required on January 1, 2003 to maintain full funding. Mr. Walker's annual base salary was $395,000, and his pension service under the Company's defined benefit plan at July 31, 2003 was 11.67 years. The amount of benefit the SERPs will produce is limited to the amounts contributed and, except in the case of Mr. Walker, no contributions were made to the SERPs in 2003. Termination of the qualified pension plan has no effect on the SERP benefits, although the amounts contributed to the SERPs were based on certain benefit levels assumed under the qualified plan which may not be attainable due to the termination and possible limitations on benefits discussed above. DIRECTORS' COMPENSATION Directors who are not officers or employees of the Company received an annual retainer of $20,000 beginning in March 2003. Previously the annual retainer was $25,000. Those directors also received a meeting fee of $640 for each meeting of the Board of Directors attended, together with a meeting fee of $560 for each meeting of a committee of the Board of Directors attended. The Chairman of each committee was paid an additional $200 for each meeting chaired. The Chairman of the Board of Directors serves as a non-executive Chairman, devoting 10 substantial time to this position. The Chairman of the Board of Directors received an annual retainer in 2003 of $60,000, (a reduction of 50% from 2002) payable quarterly, but did not receive additional fees for attending meetings of the Board or its committees. All directors who were not officers or other employees of the Company were eligible to participate in the Deferred Compensation Plan for Directors until May 15, 2003 at which time the Plan was suspended. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following tables set forth the beneficial ownership of our Common Stock, Series A Preferred Stock and Series C Preferred Stock as of March 30, 2004 by each person or group known by us to beneficially own more than five percent of the outstanding Common Stock, Series A Preferred Stock or Series C Preferred Stock, by each director and executive officer and by all directors and executive officers as a group. Included are those shares of Common Stock, if any, allocated under the 1984 ESOP. The table also sets forth the number of shares of Series A Preferred Stock, if any, allocated under the 1989 ESOP through the latest allocation date (December 31, 2003). The table also sets forth the number of shares of Series C Preferred Stock held by former holders of the Company's Senior Notes which were exchanged for new Senior Secured Notes and Series C Preferred Stock in a registered exchange offer that was completed on June 18, 2002. Unless otherwise indicated, and except for shares allocated to the accounts of employees under the terms of the 1984 ESOP and 1989 ESOP, the holders of all shares shown in the table have sole voting and investment power with respect to such shares. In determining the number and percentage of shares beneficially owned by each person, shares that may be acquired by such person pursuant to options or convertible stock exercisable or convertible by such person within 60 days of the date hereof are deemed outstanding for the purposes of determining the total number of outstanding shares for such person and are not deemed outstanding for such purpose for all other stockholders. Except as indicated in the footnotes, we believe that the persons named in the table have the sole voting and investment power with respect to all shares shown as beneficially owned by them. By its terms, the Series C Preferred Stock is non-voting except as required by applicable Delaware corporation law. COMMON STOCK
SHARE NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT PERCENT OF CLASS(3) - ------------------------------------ ------ ------------------- United Bank, .......................... 6,979,568(1) 16.6% as Trustee under the 1984 ESOP 500 Virginia Street East Charleston, WV 25322 Edson R. Arneault ..................... -0- -- Michael Bozic ......................... 94,043(4) * Richard R. Burt ....................... 43,660(4) * Mark G. Glyptis ....................... 3,719(1) * Mark E. Kaplan ........................ 131,000(5) * William R. Kiefer ..................... 64,861(5) * Michael J. Scott ...................... -0- -- Edward L. Scram ....................... 13,837(5) * Thomas R. Sturges ..................... 47,733(4) * John H. Walker ........................ 1,231(1) * Ronald C. Whitaker .................... 119,852(4) * D. Leonard Wise ....................... -0-
11 Wendell W. Wood (2) ................... 4,996,564(2) 11.9% --------- -------- All directors and executives .......... 5,515,269(5) 13.1% as a group(12 persons)
(1) All shares have been allocated to the accounts of participants in the 1984 ESOP consisting of approximately 4,800 employees and former employees of the Company. Participants generally have full voting but limited dispositive power over securities allocated to their accounts. (2) Based on Schedules 13G and 13D/A filed by the named beneficial owners with the SEC. (3) An asterisk in this column indicates ownership of less than 1%. (4)Includes 94,043, 43,660, 40,349, and 117,852 shares credited to the accounts of Messrs. Bozic, Burt, Sturges, and Whitaker, respectively, under the Deferred Compensation Plan for Directors, over which shares the named individuals do not exercise voting and/or investment power until distribution. The Deferred Compensation Plan for Directors was suspended May 15, 2003. (5) Includes shares subject to options currently exercisable (or exercisable within 60 days): Mr. Kaplan 14,000, Mr. Kiefer 14,000, and Mr. Scram 12,000. SERIES A PREFERRED STOCK
SHARE NAME/ADDRESS OF BENEFICIAL OWNER AMOUNT PERCENT OF CLASS - -------------------------------- ------ ---------------- United Bank, .......................... 1,347,373(1) 93.6%(2) as Trustee under the 1989 ESOP 500 Virginia Street East Charleston, WV 25322 Edson R. Arneault ..................... -- -- Michael Bozic ......................... -- -- Richard R. Burt ....................... -- -- Mark G. Glyptis ....................... 421 * Mark E. Kaplan ........................ 284 * William R. Kiefer ..................... 767 * Michael J. Scott ...................... -- -- Edward L. Scram ....................... 401 * Thomas R. Sturges ..................... -- John H. Walker ........................ 518 * Ronald C. Whitaker .................... -- -- D.Leonard Wise ........................ -- -- Wendell W. Wood ....................... -- -- --------- -------- All directors and executives .......... 2,391 * as a group(12 persons)
(1) All shares have been allocated to the accounts of participants in the 1989 ESOP consisting of approximately 5,600 employees and former employees of the Company. Participants generally have full voting but limited dispositive power over securities allocated to their accounts. 12 (2) An asterisk in this column indicates ownership of less than 1%. Series C Preferred Stock(2)
SHARE NAME/ADDRESS OF BENEFICIAL OWNER AMOUNT PERCENT OF CLASS - -------------------------------- ------ ---------------- All directors and executive as a group . -0- * (12 persons)
(1) An asterisk in this column indicates ownership of less than 1%. (2) The Company is not aware of any person or group beneficially owning more than five percent of the outstanding Series C Preferred Stock. The following table summarizes the equity compensation plans under which Weirton common stock may be issued as of December 31, 2003:
(A) (B) (C) Weighted Avg. Number of Securities exercise price Number of Securities to be issued upon exercise of outstanding remaining available for of outstanding options, options, warrants future issuance under Plan Category warrants, and rights and rights equity compensation plans - ------------- -------------------- ---------- ------------------------- Equity Compensation Plans approved by security holders: 2000 Employee Stock Purchase Plan* .............. 799,910 n/a -0- Equity Compensation Plans not approved by security holders: 1987 Stock Option Plan ...... 323,500 $ 3.42 329,333 1998 Stock Option Plan ...... 615,666 $ 6.05 4,089,440 Directors' Deferred Compensation Plan** ......... 366,393 n/a -0- --------- ---------- --------- Total ....................... 2,105,469 4,418,773
** The Directors' Deferred Compensation Plan was suspended May 15, 2003. 13 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The Audit Committee has considered the following in regard to services performed by KPMG LLP, as the Company's independent public accounting firm for a portion of the calendar year ended December 31, 2002 and for the year ended December 31, 2003.
YEAR ENDING YEAR ENDING DEC. 31, 2002 DEC. 31,2003 ------------- ------------ Audit fees: .............. $ 336,138 $ 368,300 Audit Related fees (1): .. $ 83,178 $ 48,800 Tax Related Services: .... $ -0- $ -0- Other Fee Services (2): .. $ 19,527 $ -0-
(1) For annual audits of the Company's five ERISA plans. (2) Other fees included miscellaneous internal services commenced prior to KPMG's appointment as independent auditors for the company. The Audit Committee considers the amount paid in connection with non-audit services to KPMG LLP for the respective time periods not to have compromised the independence of its outside auditors. PRE-APPROVAL POLICIES AND PROCEDURES SEC rules require that all services provided to the Company by its independent accountants be subject to pre-approval by the Audit Committee or authorized members of the Committee. The Audit Committee has adopted policies and procedures for pre-approval of all audit services and non-audit services to be provided by the Company's independent accountants. Services necessary to conduct the annual audit must be pre-approved by the Audit Committee or by the authorized Audit Committee member. 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Weirton Steel Corporation has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 17th day of May 2004. WEIRTON STEEL CORPORATION By: /s/ MARK E. KAPLAN ------------------------------ Mark E. Kaplan President and Chief Financial Officer 15 EXHIBIT INDEX
EXHIBIT # DESCRIPTION - --------- ----------- 14.1 Code of Ethics 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
16 EX-14.1 2 j0715801exv14w1.txt EX-14.1 CODE OF ETHICS EXHIBIT 14.1 CODE OF ETHICS NOTE: This policy shall be read in conjunction with and subject to the provisions of Policy No. One. PREAMBLE The Code of Ethics reaffirms our basic policies of ethical conduct for all employees. The foundation of our Code consists of basic standards of conduct: (a) honesty and candor in our activities, including observance of the spirit, as well as the letter, of the law; (b) avoidance of conflicts or the appearance of conflicts between personal interests and the interests of the Corporation; (c) maintenance of our reputation and avoidance of activities which might reflect adversely on the Corporation; and (d) integrity in dealing with the Corporation's assets. I. HONESTY AND CANDOR AND OBSERVANCE OF LAWS A. PERSONAL BENEFITS No employee may accept gifts other than nominal, non-cash gifts or receive lavish entertainment from suppliers. An employee receiving any personal benefit shall immediately report it to the employee's Area Manager or Vice President, and, upon instructions from the Area Manager or Vice President, shall either return or dispose of the personal benefit accordingly. For purposes of this paragraph, the term "employee" shall include any of the following members of the family: spouse, minor children, other dependents, and parents, or any person or organization acting as agent or as a fiduciary for any of those named through which an employee or any one of those named may receive a personal benefit. "Personal benefit" shall mean any type of gift, gratuity, favor, service, loan, benefit, legacy, including cash, fee or compensation from any person or organization, including but not limited to a customer or supplier, seeking, or appearing to seek, to influence the employee in the performance of duties to the Corporation. Refer to the Corporate Policy, "Acceptance of Meals, Gifts, and Gratuities, from Suppliers," for further clarification and an explanation of exceptions to the policy. B. PERSONAL FEES AND COMMISSIONS No employee may accept personal fees or commissions in connection with any transactions on behalf of the Corporation. C. CANDOR AMONG EMPLOYEES AND IN DEALING WITH AUDITORS AND COUNSEL Senior management of the Corporation must be informed at all times of matters which might adversely affect the reputation of the Corporation. Concealment may be considered a signal that the Corporation's policies and rules can be ignored, and such conduct cannot be tolerated. Accordingly, there shall be full communication with senior management. Moreover, complete candor is essential in dealing with the Corporation's independent and internal auditors and attorneys. D. COMPLIANCE WITH LAWS AND REGULATIONS The Corporation strives to be in strict compliance with all laws and regulations that are applicable to its business. Although laws and regulations may sometimes be ambiguous and difficult to interpret, as a good citizen, the Corporation emphasizes good faith efforts to follow the spirit and intent of the law. If there is any question about any law or regulations, employees should seek advice from the Legal Department of the Corporation. E. DISCOVERY OF VIOLATIONS OF THE CODE OF ETHICS Discovery of events of questionable or fraudulent or illegal nature or which are in violation of the Code of Ethics should be reported to the President of the Corporation. If such instances are identified with persons at the highest levels within the Corporation, the matter should be reported to the President and the Chairman of the Audit Committee of the Board of Directors. F. REPORTING COMPLIANCE WITH THE CODE OF ETHICS Each recipient of the Code of Ethics shall prepare a written acknowledgment periodically for submission to the Corporation, affirming a knowledge and understanding of the Code, and shall report any transactions or events where it might appear that the policy of the Code has not been observed. II. CONFLICTS OF INTEREST A. CONFLICTS OF INTEREST No employee may act on behalf of the Corporation in any transaction involving persons or organizations with whom the employee or the family of the employee has any significant connection or financial interest in any closely held enterprise; even a modest financial interest held by the employee should be viewed as significant. In addition, employees must be particularly careful to avoid representing the Corporation in any transaction with others with whom the employee has any business affiliation or relationship. Employees desiring to engage in business transactions with the Corporation must do so within the limits outlined in the Corporation's Employee Owned or Managed Business Policy. B. DEALING WITH SUPPLIERS Employees must award orders, contracts, and commitments to suppliers strictly on the basis of merit. Merit means on the basis of price, performance, and other normal business factors relating to the product or service to be supplied. All transactions with employee owned or managed companies shall be conducted subject to the provisions of the Corporation's Employee Owned or Managed Business Policy. III. CONFIDENTIALITY AND THE REPUTATION OF THE CORPORATION A. CONFIDENTIALITY Employees are required to maintain the confidentiality of the trade secrets and proprietary information of the Corporation, both during their employment by the Corporation and after the termination of employment. B. PERSONAL INVESTMENTS Employees are free to invest in stocks and other securities at their discretion, but speculation, borrowing, and gambling in excess are not consistent with employment with the Corporation. Employees must never make changes in their personal investment portfolios on the basis of confidential information relating to the Corporation or its customers. In the situation in which confidential information with regard to the Corporation or its customer is finally made public, an employee should wait for a minimum of at least two business days before investing on the basis of such information to ensure the public dissemination of such information. C. CORPORATE HOSPITALITY TO PUBLIC OFFICIALS Acts of hospitality toward public officials should never be on such a scale or of such a nature as might tend to compromise or give the impression of compromising the integrity or the reputation of either the public official or the Corporation. When such hospitality is extended, it should be with the expectation that it will become a matter of public knowledge. IV. DEALING WITH THE ASSETS OF THE CORPORATION A. BRIBES AND PREFERENTIAL TREATMENT No bribes, kickbacks, or other similar remuneration or consideration shall be given to any person or organization in order to attract business or for any other reason whatsoever. B. POLITICAL AND CHARITABLE CONTRIBUTIONS No contributions of funds of the Corporation can be made unless they have been approved by the President. Contributions include charitable and political contributions of any kind made by the Corporation or by its employees either on behalf of the Corporation or for the benefit of the Corporation. Funds of the Corporation include petty cash, funds derived from reimbursement of travel or other expenses or any other sources of funds of the Corporation. Employees of the Corporation, as individuals not representing the Corporation, are not hereby precluded from making charitable or political contributions with their own funds, which may, of course, include funds paid to them by the Corporation. C. GIFTS No cash gifts can be given to any person or organization. Non-cash gifts shall not exceed one hundred dollars ($100) in cost without approval of the President. D. PROPER ACCOUNTING The Corporation has established internal accounting controls and record keeping policies in order to meet both the requirements of law and the business requirements of the Corporation. Employees are expected to maintain and adhere to these controls and policies. The accounting records of the Corporation must be complete, accurate, and in reasonable detail. Such records include books of original entry and other financial information used for internal management decision-making and external reporting. The underlying transactions must be properly authorized and recorded on a timely basis in order to (1) permit preparation of financial statements in accordance with generally accepted accounting principles and (2) maintain accountability of assets. No fund or asset which is not fully and properly recorded on the Corporation's books is permitted. In addition, it is unlawful to falsify any book, record, or account which reflects transactions of the Corporation or dispositions of the Corporation's assets. Employees of the Corporation should be certain that all transactions with other persons are properly documented and recorded to avoid any possible allegation that the Corporation was assisting such persons in improperly recording or detailing the nature of the transactions involved. V. VIOLATIONS Employees are expected to act fairly and honestly in all transactions with the Corporation and with others to maintain the high ethical standards of the Corporation in accordance with this Code of Ethics. Violations of these rules of conduct constitute grounds for dismissal. ATTACHMENTS Forms used in conjunction with this procedure: EXA02.00 -- Acceptance of Meals, Gifts, and Gratuities, from Suppliers FORM EXA01.00.1 -- CODE OF ETHICS ACKNOWLEDGMENT EX-31.1 3 j0715801exv31w1.txt EX-31.1 SECTION 302 CERTIFICATION OF PEO EXHIBIT 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, D. Leonard Wise, certify that: 1. I have reviewed this report on Form 10-K/A of Weirton Steel Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. [text of this paragraph omitted in accordance with interim compliance procedures promulgated by the Securities and Exchange Commission in Release No. 34-47986]; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors: a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 17, 2004 /s/ D. Leonard Wise - ----------------------------------- D. Leonard Wise Chief Executive Officer EX-31.2 4 j0715801exv31w2.txt EX-31.2 SECTION 302 CERTIFICATION OF PFO EXHIBIT 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Mark E. Kaplan, certify that: 1. I have reviewed this report on Form 10-K/A of Weirton Steel Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. [text of this paragraph omitted in accordance with interim compliance procedures promulgated by the Securities and Exchange Commission in Release No. 34-47986]; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors: a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 17, 2004 /s/ Mark E. Kaplan - ----------------------------------- Mark E. Kaplan President and Chief Financial Officer EX-32.1 5 j0715801exv32w1.txt EX-32.1 SECTION 906 CERTIFICATION OF PEO & PFO EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Weirton Steel Corporation (the "Company") on Form 10-K/A for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ D. Leonard Wise ------------------------------------- D. Leonard Wise Chief Executive Officer May 17, 2004 /s/ Mark E. Kaplan ------------------------------------- Mark E. Kaplan President and Chief Financial Officer May 17, 2004 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities Exchange Commission or its staff upon request. This certification accompanies the Report and shall not be treated as having been filed as part of Report. -----END PRIVACY-ENHANCED MESSAGE-----