<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------

                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2001

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                          COMMISSION FILE NO. 0-14836

                             METAL MANAGEMENT, INC.
             (Exact name of Registrant as specified in its charter)

<Table>
<S>                                            <C>
                   DELAWARE                                      94-2835068
         (State or other jurisdiction                         (I.R.S. Employer
      of incorporation or organization)                    Identification Number)
</Table>

                        500 N. DEARBORN ST., SUITE 400,
                               CHICAGO, IL 60610
          (Address of principal executive offices including zip code)

       Registrant's telephone number, including area code: (312) 645-0700

    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 whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X  No  _

    As of December 31, 2001, the Registrant had 8,939,753 shares of common stock
outstanding.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                     INDEX

<Table>
<Caption>
                                                                            PAGE
                                                                            ----
<S>         <C>                                                             <C>
PART I:     FINANCIAL INFORMATION
ITEM 1:     Financial Statements
            Consolidated Balance Sheets -- December 31, 2001
            (Reorganized Company) and March 31, 2001 (Predecessor
            Company) (unaudited)                                              1
            Consolidated Statements of Operations -- three and six
            months ended December 31, 2001 (Reorganized Company), three
            months ended December 31, 2000 and June 30, 2001 and nine
            months ended December 31, 2000 (Predecessor Company)
            (unaudited)                                                       2
            Consolidated Statements of Cash Flows -- six months ended
            December 31, 2001 (Reorganized Company), three months ended
            June 30, 2001 and nine months ended December 31, 2000
            (Predecessor Company) (unaudited)                                 3
            Consolidated Statements of Stockholders' Equity -- six
            months ended December 31, 2001 (Reorganized Company) and
            three months ended June 30, 2001 (Predecessor Company)
            (unaudited)                                                       4
            Notes to Consolidated Financial Statements (unaudited)            5
ITEM 2:     Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                        15
ITEM 3:     Quantitative and Qualitative Disclosures about Market Risk       24
PART II:    OTHER INFORMATION
ITEM 2:     Changes in Securities                                            25
ITEM 5:     Other Information                                                25
ITEM 6:     Exhibits and Reports on Form 8-K                                 25
            Signatures                                                       26
            Exhibit Index                                                    27
</Table>
<PAGE>

PART I: FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

                             METAL MANAGEMENT, INC.
                          CONSOLIDATED BALANCE SHEETS
                           (unaudited, in thousands)

<Table>
<Caption>
                                                                   REORGANIZED    |   PREDECESSOR
                                                                     COMPANY      |     COMPANY
                                                                DECEMBER 31, 2001 |  MARCH 31, 2001
                                                                ----------------- |  --------------
<S>                                                             <C>               |  <C>
                           ASSETS                                                 |
Current assets:                                                                   |
     Cash and cash equivalents                                      $  1,058      |    $   1,428
     Accounts receivable, net                                         47,556      |       79,607
     Inventories (Note 6)                                             45,497      |       39,773
     Prepaid expenses and other assets                                10,907      |       11,394
                                                                    --------      |    ---------
       Total current assets                                          105,018      |      132,202
                                                                                  |
Property and equipment, net                                          132,575      |      148,083
Goodwill (Note 3)                                                     15,461      |            0
Deferred financing costs, net                                          1,236      |        2,204
Other assets                                                           1,506      |        2,303
                                                                    --------      |    ---------
                         TOTAL ASSETS                               $255,796      |    $ 284,792
                                                                    ========      |    =========
                                                                                  |
       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                             |
Current liabilities:                                                              |
     Current portion of long-term debt (Note 7)                     $  2,707      |    $   2,444
     Accounts payable                                                 33,903      |       37,927
     Accrued interest                                                    764      |        4,149
     Other accrued liabilities                                        13,853      |       10,610
                                                                    --------      |    ---------
       Total current liabilities                                      51,227      |       55,130
                                                                                  |
Long-term debt, less current portion (Note 7)                        142,924      |      150,533
Other liabilities                                                      4,001      |        2,152
                                                                    --------      |    ---------
                      TOTAL LONG-TERM LIABILITIES                    146,925      |      152,685
Liabilities subject to compromise                                          0      |      220,234
                                                                                  |
Stockholders' equity (deficit): (Note 9)                                          |
     Convertible Preferred Stock:                                                 |
          Series B                                                         0      |          815
          Series C                                                         0      |        5,100
     Common Stock                                                         89      |          542
     Warrants                                                            377      |       40,428
     New common equity -- issuable                                     7,969      |            0
     Additional paid-in-capital                                       57,605      |      271,319
     Accumulated deficit                                              (8,396)     |     (461,461)
                                                                    --------      |    ---------
                 TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                 57,644      |     (143,257)
                                                                    --------      |    ---------
                    TOTAL LIABILITIES AND STOCKHOLDERS'                           |
                      EQUITY                                        $255,796      |    $ 284,792
                                                                    ========      |    =========
</Table>

   The accompanying notes are an integral part of these financial statements

                                        1
<PAGE>

                             METAL MANAGEMENT, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              (unaudited, in thousands, except per share amounts)

<Table>
<Caption>
                                            REORGANIZED COMPANY     |            PREDECESSOR COMPANY
                                        --------------------------- | ------------------------------------------
                                        THREE MONTHS   SIX MONTHS   | THREE MONTHS   THREE MONTHS   NINE MONTHS
                                             ENDED          ENDED   |      ENDED          ENDED          ENDED
                                        DECEMBER 31,   DECEMBER 31, | DECEMBER 31,     JUNE 30,     DECEMBER 31,
                                              2001           2001   |       2000           2001           2000
                                          --------       --------   |  ---------       --------      ---------
<S>                                     <C>            <C>          | <C>            <C>            <C>
NET SALES                                 $141,265       $298,243   |  $ 154,780       $166,268      $ 610,463
Cost of sales                              125,921        265,285   |    149,103        149,216        563,269
                                          --------       --------   |  ---------       --------      ---------
Gross profit                                15,344         32,958   |      5,677         17,052         47,194
OPERATING EXPENSES:                                                 |
  General and administrative                10,860         22,272   |     13,440         11,686         43,682
  Depreciation and amortization              4,507          9,110   |      4,846          4,718         18,459
  Goodwill impairment charge (Note 4)            0              0   |    280,132              0        280,132
  Non-cash and non-recurring expense                                |
    (Note 5)                                 3,100          3,100   |       (211)         1,941          2,639
                                          --------       --------   |  ---------       --------      ---------
Total operating expenses                    18,467         34,482   |    298,207         18,345        344,912
                                          --------       --------   |  ---------       --------      ---------
Operating loss                              (3,123)        (1,524)  |   (292,530)        (1,293)      (297,718)
OTHER INCOME (EXPENSE):                                             |
  Interest expense                           3,002          6,391   |      7,850          5,169         28,853
  Other income (expense), net                  (78)           (24)  |       (873)            55         (1,320)
                                          --------       --------   |  ---------       --------      ---------
Loss before reorganization costs,                                   |
  income taxes, cumulative effect of                                |
  change in accounting principle and                                |
  extraordinary gain                        (6,203)        (7,939)  |   (301,253)        (6,407)      (327,891)
Reorganization costs (Note 2)                  202            457   |     10,670         10,347         10,670
                                          --------       --------   |  ---------       --------      ---------
Loss before income taxes, cumulative                                |
  effect of change in accounting                                    |
  principle and extraordinary gain          (6,405)        (8,396)  |   (311,923)       (16,754)      (338,561)
Provision for income taxes                       0              0   |          0              0          8,291
                                          --------       --------   |  ---------       --------      ---------
Loss before cumulative effect of                                    |
  change in accounting principle and                                |
  extraordinary gain                        (6,405)        (8,396)  |   (311,923)       (16,754)      (346,852)
Cumulative effect of change in                                      |
  accounting principle (Note 1)                  0              0   |          0           (358)             0
Extraordinary gain (Note 3)                      0              0   |          0        145,711              0
                                          --------       --------   |  ---------       --------      ---------
NET INCOME (LOSS)                           (6,405)        (8,396)  |   (311,923)       128,599       (346,852)
Preferred stock dividends                        0              0   |         62              0            295
                                          --------       --------   |  ---------       --------      ---------
NET INCOME (LOSS) APPLICABLE TO COMMON                              |
  STOCK                                   $ (6,405)      $ (8,396)  |  $(311,985)      $128,599      $(347,147)
                                          ========       ========   |  =========       ========      =========
NET INCOME (LOSS) PER SHARE, BASIC AND                              |
  DILUTED:                                                          |
  Loss before cumulative effect of                                  |
    change in accounting principle and                              |
    extraordinary gain                    $  (0.63)      $  (0.83)  |  $   (5.20)      $  (0.27)     $   (5.93)
  Cumulative effect of change in                                    |
    accounting principle                      0.00           0.00   |       0.00          (0.01)          0.00
  Extraordinary gain                          0.00           0.00   |       0.00           2.36           0.00
                                          --------       --------   |  ---------       --------      ---------
       Net income (loss) per share,                                 |
         basic and diluted                $  (0.63)      $  (0.83)  |  $   (5.20)      $   2.08      $   (5.93)
                                          ========       ========   |  =========       ========      =========
Shares used in computation of basic                                 |
  and diluted loss per share                10,161         10,099   |     60,021         61,731         58,569
                                          ========       ========   |  =========       ========      =========
</Table>

   The accompanying notes are an integral part of these financial statements

                                        2
<PAGE>

                             METAL MANAGEMENT, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (unaudited, in thousands)

<Table>
<Caption>
                                                        REORGANIZED    |
                                                          COMPANY      |         PREDECESSOR COMPANY
                                                     ----------------- |  ----------------------------------
                                                        SIX MONTHS     |  THREE MONTHS        NINE MONTHS
                                                           ENDED       |      ENDED              ENDED
                                                     DECEMBER 31, 2001 |  JUNE 30, 2001    DECEMBER 31, 2000
                                                     ----------------- |  -------------    -----------------
<S>                                                  <C>               |  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                  |
Net income (loss)                                        $  (8,396)    |    $128,599           $(346,852)
Adjustments to reconcile net income (loss) to                          |
  cash flows from operating activities:                                |
     Depreciation and amortization                           9,110     |       4,718              18,459
     Deferred income taxes                                       0     |           0               8,291
     Amortization of debt issuance costs and bond                      |
       discount                                                352     |       1,359               2,402
     Goodwill impairment charge                                  0     |           0             280,132
     Non-cash and non-recurring expense                      3,100     |       1,941               2,639
     Non-cash reorganization expenses                            0     |       3,469               9,044
     Extraordinary gain                                          0     |    (145,711)                  0
     Cumulative effect of change in accounting                         |
       principle                                                 0     |         358                   0
     Provision for bad debt                                    718     |       1,058               5,006
     Other                                                     253     |        (237)              1,854
Changes in assets and liabilities:                                     |
     Accounts and notes receivable                          24,393     |       5,141              74,134
     Inventories                                            (3,975)    |      (1,749)             30,782
     Accounts payable                                      (16,947)    |       9,200             (16,278)
     Other                                                  (2,056)    |       3,856              (1,646)
                                                         ---------     |    --------           ---------
Net cash provided by operating activities                    6,552     |      12,002              67,967
CASH FLOWS USED IN INVESTING ACTIVITIES:                               |
  Purchases of property and equipment                       (2,074)    |      (1,392)             (8,812)
  Proceeds from sale of property and equipment                 452     |       1,141               1,111
  Other                                                       (100)    |        (128)               (124)
                                                         ---------     |    --------           ---------
Net cash used in investing activities                       (1,722)    |        (379)             (7,825)
CASH FLOWS USED IN FINANCING ACTIVITIES:                               |
  Issuances of long-term debt                              323,245     |     111,627             638,492
  Repayments of long-term debt                            (327,618)    |        (615)           (808,631)
  Borrowings (repayments) on DIP Agreement, net                  0     |    (121,666)            115,094
  Fees paid to issue long-term debt                           (457)    |      (1,339)             (4,148)
  Repurchase of common stock                                     0     |           0                 (67)
                                                         ---------     |    --------           ---------
Net cash used in financing activities                       (4,830)    |     (11,993)            (59,260)
                                                         ---------     |    --------           ---------
Net increase (decrease) in cash and cash                               |
  equivalents                                                    0     |        (370)                882
Cash and cash equivalents at beginning of period             1,058     |       1,428               1,396
                                                         ---------     |    --------           ---------
Cash and cash equivalents at end of period               $   1,058     |    $  1,058           $   2,278
                                                         =========     |    ========           =========
SUPPLEMENTAL CASH FLOW INFORMATION:                                    |
Interest paid                                            $   5,321     |    $  3,905           $  23,066
</Table>

   The accompanying notes are an integral part of these financial statements

                                        3
<PAGE>

                             METAL MANAGEMENT, INC.
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                           (unaudited, in thousands)

<Table>
<Caption>
                                                                                 NEW
                                  PREFERRED STOCK                              COMMON      ADDITIONAL
                                --------------------    COMMON                EQUITY --     PAID-IN-     ACCUMULATED
                                SERIES B    SERIES C    STOCK     WARRANTS    ISSUABLE      CAPITAL        DEFICIT        TOTAL
                                --------    --------    ------    --------    ---------    ----------    -----------      -----
<S>                             <C>         <C>         <C>       <C>         <C>          <C>           <C>            <C>
BALANCE AT MARCH 31, 2001
  (PREDECESSOR COMPANY)          $ 815      $ 5,100     $ 542     $ 40,428    $      0     $ 271,319      $(461,461)    $(143,257)

Net issuances of common
  stock                              0            0        17            0           0           (17)             0             0

Net loss before
  reorganization adjustments
  and fresh start
  adjustments                        0            0         0            0           0             0        (16,193)      (16,193)

Reorganization adjustments        (815)      (5,100)     (559)     (40,428)     65,000      (270,999)       477,654       224,753

Fresh start adjustments              0            0         0            0           0          (303)             0          (303)
                                 -----      -------     -----     --------    --------     ---------      ---------     ---------
---------------------------------------------------------------------------------------------------------------------------------

BALANCE AT JUNE 30, 2001
  (REORGANIZED COMPANY)              0            0         0            0      65,000             0              0        65,000

Distribution of Common Stock
  in accordance with the
  Plan                               0            0        87          377     (57,031)       56,567              0             0

Conversion of payable into
  Common Stock                       0            0         2            0           0         1,047              0         1,049

Other                                0            0         0            0           0            (9)             0            (9)

Net loss                             0            0         0            0           0             0         (8,396)       (8,396)
                                 -----      -------     -----     --------    --------     ---------      ---------     ---------

BALANCE AT DECEMBER 31, 2001
  (REORGANIZED COMPANY)          $   0      $     0     $  89     $    377    $  7,969     $  57,605      $  (8,396)    $  57,644
                                 =====      =======     =====     ========    ========     =========      =========     =========
</Table>

   The accompanying notes are an integral part of these financial statements

                                        4
<PAGE>

                             METAL MANAGEMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION

Interim Financial Statements

     The unaudited consolidated financial statements include the accounts of
Metal Management, Inc., a Delaware corporation, and its subsidiaries (herein
referred to as the "Company") and have been prepared by the Company pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC").
Certain amounts have been reclassified from the previously reported financial
statements in order to conform to the financial statement presentation of the
current period.

     As discussed in Note 2 -- Reorganization Under Chapter 11, on November 20,
2000 (the "Petition Date"), the Company filed voluntary petitions (Case Nos.
00-4303 -- 00-4331 (SLR)) commencing cases under Chapter 11 of the U.S.
Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). On June 29, 2001, the
Company emerged from Chapter 11 bankruptcy.

     As a result of the Company's emergence from Chapter 11 bankruptcy and the
application of fresh-start reporting (see Note 3 -- Fresh-Start Reporting),
consolidated financial statements for the Company for the periods subsequent to
June 30, 2001 are referred to as the "Reorganized Company" and are not
comparable to those for the periods prior to June 30, 2001, which are referred
to as the "Predecessor Company." A black line has been drawn in the unaudited
consolidated financial statements to distinguish, for accounting purposes, the
periods associated with the Reorganized Company and the Predecessor Company.

     The March 31, 2001 balance sheet information has been derived from the
Predecessor Company's audited financial statements. All significant intercompany
accounts, transactions and profits have been eliminated. Certain information
related to the Company's organization, significant accounting policies and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. Aside from the effects of fresh-start reporting, the Reorganized
Company follows the same accounting policies as the Predecessor Company. These
unaudited consolidated financial statements reflect, in the opinion of
management, all material adjustments (which include only normal recurring
adjustments) necessary to fairly state the financial position and the results of
operations for the periods presented. Operating results for interim periods are
not necessarily indicative of the results that can be expected for a full year.
These interim financial statements should be read in conjunction with the
Predecessor Company's audited consolidated financial statements and notes
thereto included in the Predecessor Company's Annual Report on Form 10-K for the
year ended March 31, 2001.

New Accounting Pronouncements

     Effective April 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivatives and Hedges"
(as amended). SFAS No. 133 requires that an entity recognize all derivatives as
either assets or liabilities measured at fair value. The Company utilizes
futures and forward contracts to hedge its net position in certain non-ferrous
metals and does not use futures and forward contracts for trading purposes. The
Company has classified its investment in these contracts as speculative under
the provisions of SFAS No. 133. As a result, the Company marked its open futures
and forwards contracts to market at April 1, 2001. The cumulative effect of
adopting SFAS No. 133 resulted in an after-tax decrease in net earnings of $0.4
million at April 1, 2001. Management believes that the changes in fair value of
these instruments will not significantly impact the results of operations or
financial position of the Company.

     In July 2001, the Financial Accounting Standards Board ("FASB") issued two
new pronouncements: SFAS No. 141, "Business Combinations," and SFAS No. 142,
"Goodwill and Other Intangible Assets." SFAS No. 141 addresses financial
accounting and reporting for business combinations and requires all business
combinations within the scope of this Statement to be accounted for using the
purchase method. Use

                                        5
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION -- (CONTINUED)

of the pooling-of-interest method is prohibited for business combinations
initiated after June 30, 2001. SFAS No. 142 requires that, upon adoption,
amortization of goodwill and indefinite lived intangible assets will cease and
instead, the carrying value of such assets will be evaluated for impairment on
an annual basis. Identifiable intangible assets will continue to be amortized
over their useful lives and reviewed periodically for impairment.

     In accordance with Statement of Position 90-7 "Financial Reporting by
Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7") and the
application of fresh-start reporting, the Company adopted SFAS No. 141 and SFAS
No. 142 as of June 30, 2001. The adoption of SFAS No. 141 had no impact on the
consolidated financial statements as the Company had no recorded goodwill or
intangible assets at adoption. The adoption of SFAS No. 142 results in the
classification of the reorganization intangible recognized in fresh-start
reporting (see Note 3 -- Fresh-Start Reporting) as goodwill with an indefinite
life. As a result, goodwill of $15.5 million will not be amortized, but will be
reviewed annually for impairment.

     The following unaudited pro forma information presents a summary of the
consolidated statements of operations for the nine months ended December 31,
2000 assuming that SFAS No. 142 was adopted on April 1, 2000. The adoption of
SFAS No. 142 did not impact the Company's consolidated statement of operations
for the three months ended June 30, 2001, the three months ended December 31,
2000 and the three and six months ended December 31, 2001 as no goodwill
amortization expense was recognized (in thousands, except per share amounts):

<Table>
<Caption>
                                                                   NINE MONTHS ENDED
                                                                   DECEMBER 31, 2000
                                                                ------------------------
                                                                   AS
                                                                REPORTED       PRO FORMA
                                                                --------       ---------
<S>                                                             <C>            <C>
Loss before cumulative effect of change in accounting
  principle and extraordinary gain                              $(346,852)     $(343,205)
Net loss applicable to common stock                             $(347,147)     $(343,500)
Loss per share, basic and diluted:
Loss before cumulative effect of change in accounting
  principle and extraordinary gain                              $   (5.93)     $   (5.86)
                                                                =========      =========
Net loss applicable to common stock                             $   (5.93)     $   (5.86)
                                                                =========      =========
</Table>

     In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144, which supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," provides a single accounting model for
long-lived assets to be disposed of. SFAS No. 144 significantly changes the
criteria that would have to be met to classify an asset as held-for-sale,
although it retains many of the fundamental recognition and measurement
provisions of SFAS No. 121. The Company is analyzing the effect of this
Statement and does not expect it to have a material effect on its consolidated
financial position, results of operations or cash flows.

NOTE 2 -- REORGANIZATION UNDER CHAPTER 11

     On the Petition Date, the Company filed voluntary petitions commencing
cases under Chapter 11 of the Bankruptcy Code with the Bankruptcy Court. From
November 20, 2000 until June 30, 2001, the Company operated its business as a
debtor-in-possession. These bankruptcy proceedings are referred to as the
"Chapter 11 proceedings" herein.

     In furtherance of an agreement reached between the Company and the holders
of a significant percentage of its pre-petition debt prior to the initiation of
the Chapter 11 proceedings, the Company filed a Plan of

                                        6
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 2 -- REORGANIZATION UNDER CHAPTER 11 -- (CONTINUED)

Reorganization (the "Plan") pursuant to Chapter 11 of the Bankruptcy Code on May
4, 2001. The Bankruptcy Court confirmed the Plan which became effective on June
29, 2001 (the "Effective Date"). On the Effective Date, the Company entered into
a new two year, $150 million credit agreement with its lenders (see Note
7 -- Long-term Debt).

     The following is a summary of certain material provisions of the Plan. The
summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Plan, as filed with the SEC and the
Bankruptcy Court. The Plan provided for, among other things, the following:

     - Junior Secured Note Claims -- on the Effective Date, the holders of the
       Predecessor Company's $30 million par amount, 12 3/4% Junior Secured
       Notes, due June 2004 (the "Junior Secured Notes") received new junior
       secured notes (the "New Notes") aggregating $34.0 million. The New Notes
       bear interest at 12 3/4% and are due on June 2004. The par amount of the
       New Notes represent the par amount of the Junior Secured Notes plus
       accrued and unpaid interest through the Effective Date.

     - General Trade Claims ("Class 5 Claims") -- the holders of general trade
       claims of the Predecessor Company who elected not to receive common
       stock, par value $.01 per share ("Common Stock") of the Reorganized
       Company will receive cash payments totaling 30% of their allowed claim.
       Such payments will be made, without interest, in four equal annual
       installments, with the first installment payable on June 30, 2002. As of
       the Effective Date, a payable of $1.3 million was established
       representing the liability recorded in connection with the estimated fair
       value of the allowed Class 5 Claims.

     - Impaired Unsecured Claims ("Class 6 Claims") -- the holders of the
       Predecessor Company's $180 million par amount, 10% Senior Subordinated
       Notes due May 2008 (the "Subordinated Notes") and the holders of the
       Predecessor Company's general trade claims who elected (or are otherwise
       deemed under the Plan to have elected) on their ballot to be treated as
       an allowed Class 6 Claim, will receive a total of 9,900,000 shares of
       Common Stock. As of December 31, 2001, 8,692,009 shares of Common Stock
       has been issued to holders of allowed Class 6 Claims. The initial
       distribution of Common Stock on account of Class 6 Claims was based on an
       estimate of total Class 6 Claims. Class 6 Claims in the initial
       distribution was comprised of resolved claims and reserves for unresolved
       claims. The Company has filed objections with the Bankruptcy Court
       related to unresolved claims. Additional distributions of Common Stock
       will be made after the unresolved claims are either resolved through
       agreement of the parties or by a final order of the Bankruptcy Court.

     - Preferred Stockholder and Common Stockholder Claims ("Equity
       Claims") -- the holders of the Predecessor Company's convertible
       preferred stock and common stock on the Effective Date received their
       pro-rata share of 100,000 shares of Common Stock and warrants (designated
       as "Series A Warrants") to purchase 750,000 shares of Common Stock. The
       Series A Warrants are immediately exercisable at a price per share equal
       to the total amount of liabilities (allowed under Class 6 of the Plan)
       converted into Common Stock in accordance with the Plan divided by
       10,000,000.

     - Other Significant Provisions -- as of the Effective Date, the Board of
       Directors consists of the following non-employee directors: Daniel W.
       Dienst, John T. DiLacqua, Kevin P. McGuinness and Harold "Skip" Rouster.
       Albert A. Cozzi continues to serve as Chairman of the Board of Directors
       and Chief Executive Officer.

     - A Management Equity Incentive Plan was approved under the Plan and
       provides for the issuance of warrants to purchase 1,000,000 shares of
       Common Stock at an exercise price of $6.50 per share (designated as
       "Series B Warrants") and warrants to purchase 500,000 shares of Common
       Stock at an exercise price of $12.00 per share (designated as "Series C
       Warrants").
                                        7
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 2 -- REORGANIZATION UNDER CHAPTER 11 -- (CONTINUED)

     Reorganization costs directly associated with the Chapter 11 proceedings
for the six months ended December 31, 2001 and the three months ended June 30,
2001 are as follows (in thousands):

<Table>
<Caption>
                                                         REORGANIZED     |  PREDECESSOR
                                                           COMPANY       |    COMPANY
                                                         SIX MONTHS      | THREE MONTHS
                                                            ENDED        |     ENDED
                                                      DECEMBER 31, 2001  | JUNE 30, 2001
                                                      -----------------  | -------------
<S>                                                   <C>                | <C>
Professional fees                                           $151         |    $ 6,838
Liability for rejected contracts and settlements             154         |      2,445
Fresh-start adjustments                                        0         |        919
Other                                                        152         |        145
                                                            ----         |    -------
                                                            $457         |    $10,347
                                                            ====         |    =======
</Table>

     Professional fees recognized during the three months ended June 30, 2001
include restructuring success fees payable to two firms aggregating $4.7
million. The restructuring success fees were paid as follows: i) $2.05 million
in cash, ii) $1.60 million through the issuance of a 10% note payable due
December 31, 2002, convertible into Common Stock at $6.46 per share, and iii)
$1.05 million paid through the issuance of 161,538 shares of Common Stock (at
$6.50 per share).

     Rejected contracts and settlement charges represent amounts recorded for
additional allowable claims under rejected employment contracts and settlements
reached on existing claims. Fresh-start adjustments represent the net impact of
adjustments to state recorded assets and liabilities at their fair values.

     Although the Company has emerged from Chapter 11 bankruptcy, reorganization
costs are still being incurred for professional fees, U.S. Trustee fees and for
settlements related to resolving all claims filed against the Predecessor
Company.

NOTE 3 -- FRESH-START REPORTING

     As previously discussed, the unaudited consolidated financial statements
reflect the use of fresh-start reporting as required by SOP 90-7. Under
fresh-start reporting, the Company's assets and liabilities were adjusted to
fair values and a reorganization value for the entity was determined by the
Company based upon the estimated fair value of the enterprise before considering
values allocated to debt to be settled in the reorganization as determined by
the Company's investment advisors. The portion of the reorganization value which
could not be attributed to specific tangible or identified intangible assets of
the Reorganized Company, was $15.5 million. In accordance with SFAS No. 142,
this amount is reported as "Goodwill" in the unaudited consolidated financial
statements and is not being amortized. This amount will be evaluated annually
for potential impairment during the Company's fourth fiscal quarter and an
impairment charge could result if the fair value of the Company is determined to
be below the reorganization value.

     The reorganization value of $65 million for the equity of the Reorganized
Company was based on the consideration of many factors and various valuation
methods, including a discounted cash flow analysis using projected financial
information, selected publicly traded company market multiples of certain
companies operating businesses viewed to be similar to that of the Company, and
other applicable ratios and valuation techniques believed by the Company and its
financial advisor during the Chapter 11 proceedings, to be representative of the
Company's business and industry.

     The valuation was based upon a number of estimates and assumptions, which
are inherently subject to significant uncertainties and contingencies beyond the
control of the Company. Accordingly, there can be no assurance that the
valuation will be realized, and actual results could vary materially.

                                        8
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 3 -- FRESH-START REPORTING -- (CONTINUED)

     The results of operations in the unaudited consolidated statements of
operations of the Predecessor Company for the three months ended June 30, 2001
reflect fresh start reporting adjustments of $0.9 million and an extraordinary
gain of $145.7 million related to the discharge of indebtedness in accordance
with the Plan.

     The following summarizes the effects of fresh-start reporting on the
Company's consolidated balance sheet as of June 30, 2001 (in thousands):

<Table>
<Caption>
                                                PREDECESSOR                                                REORGANIZED
                 (UNAUDITED)                      COMPANY     REORGANIZATION   FRESH START                   COMPANY
                                                  6/30/01      ADJUSTMENTS     ADJUSTMENTS      NOTES        6/30/01
                                                -----------   --------------   -----------      -----      -----------
<S>                                             <C>           <C>              <C>           <C>           <C>
                    ASSETS
Current assets................................   $ 128,099                                                  $128,099
Property and equipment, net...................     142,883                                                   142,883
Deferred financing costs, net.................       1,175            (35)                   (a,b)             1,140
Goodwill......................................           0         15,148           313      (i)              15,461
Other assets..................................       2,038                         (103)     (g)               1,935
                                                 ---------      ---------         -----                     --------
      TOTAL ASSETS............................   $ 274,195      $  15,113         $ 210                     $289,518
                                                 =========      =========         =====                     ========
               LIABILITIES AND
             STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt...........   $   1,980                                                  $  1,980
  Accounts payable............................      50,442          1,339                    (c)              51,781
  Accrued interest............................       4,053         (3,963)                   (b)                  90
  Other accrued liabilities...................      19,554                                                    19,554
                                                 ---------      ---------         -----                     --------
      Total current liabilities...............      76,029         (2,624)                                    73,405
Long-term debt, less current portion:
  DIP Agreement...............................     110,455       (110,455)                   (a)                   0
  Junior Secured Notes........................      27,983        (27,983)                   (b)                   0
  Credit Agreement............................           0        111,595                    (a)             111,595
  New Notes...................................           0         33,963                    (b)              33,963
  Other debt..................................         897                                                       897
Other liabilities.............................       2,645          1,500           513      (e,g)             4,658
                                                 ---------      ---------         -----                     --------
      Total long-term liabilities.............     141,980          8,620           513                      151,113
Liabilities subject to compromise.............     215,636       (215,636)                   (c,d,e)               0
Stockholders' equity (deficit):
Series B convertible preferred stock..........         815           (815)                   (f)                   0
Series C convertible preferred stock..........       5,100         (5,100)                   (f)                   0
Common stock..................................         559           (559)                   (f)                   0
Warrants......................................      40,428        (40,428)                   (f)                   0
New common equity -- issuable.................           0         65,000                    (d,f)            65,000
Additional paid-in-capital....................     271,302       (270,999)         (303)     (f,g)                 0
Accumulated deficit...........................    (477,654)       477,654             0      (b,d,e,g,h)           0
                                                 ---------      ---------         -----                     --------
      TOTAL STOCKHOLDERS' EQUITY (DEFICIT)....    (159,450)       224,753          (303)                      65,000
                                                 ---------      ---------         -----                     --------
      TOTAL LIABILITIES AND STOCKHOLDERS'
         EQUITY...............................   $ 274,195      $  15,113         $ 210                     $289,518
                                                 =========      =========         =====                     ========
</Table>

---------------
NOTES:

(a) Reflects the proceeds of the Credit Agreement, the repayment of the
    Company's obligations under the DIP Agreement and the deferred financing
    costs paid with respect to the Credit Agreement.

                                        9
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 3 -- FRESH-START REPORTING -- (CONTINUED)

(b) Reflects the exchange of the Junior Secured Notes for the New Notes in an
    amount equal to the par amount of the Junior Secured Notes plus unpaid and
    accrued interest, the write-off of $2.0 million of unamortized discount on
    the Junior Secured Notes and the write-off of $1.2 million of unamortized
    deferred financing costs on the Junior Secured Notes.
(c) Reflects the reclassification of cure payments and convenience class
    payments to be paid in cash under the Plan.
(d) Reflects the conversion of all of the Company's obligations under its
    Subordinated Notes and other unsecured debt into 9,900,000 shares of Common
    Stock. The $145.4 million excess of obligations eliminated over the fair
    value of Common Stock issued to Class 6 creditors is included in the
    extraordinary gain of $145.7 million recognized in the three months ended
    June 30, 2001.
(e) Reflects the conversion of $5.0 million of unsecured claims into a 4 year,
    non-interest bearing payable for those creditors who have elected not to
    receive Common Stock. In accordance with the Plan, the non-interest bearing
    payable represents 30% of the original claim and is recorded at its present
    value. The $3.5 million excess of the obligations eliminated over the fair
    value of the non-interest bearing payable is included in the extraordinary
    gain of $145.7 million recognized in the three months ended June 30, 2001.
(f) Reflects the cancellation of the Predecessor Company's convertible preferred
    stock, common stock and warrants to purchase common stock and the issuance
    of 100,000 shares of Common Stock and warrants to purchase 750,000 shares of
    Common Stock to the shareholders of the Predecessor Company.
(g) Reflects the adjustment of pension assets and liabilities to fair value.
(h) Reflects the elimination of the accumulated deficit as of June 30, 2001.
(i) Reflects the establishment of Goodwill representing the excess of the
    reorganization value over the aggregate fair value of the Company's tangible
    and identifiable intangible assets.

NOTE 4 -- CHANGE IN ACCOUNTING POLICY

     During the third quarter of fiscal 2001, the Company changed its method of
accounting for assessing whether an impairment exists in the recorded amount of
acquired business unit goodwill and other intangible assets, from an
undiscounted cash flow method to a fair value method. Under its previous
accounting method, this determination was made whenever events or circumstances
indicated that expected undiscounted future cash flows were less than the
recorded investment amounts of acquired businesses, including business unit
goodwill and other intangible assets. Under the fair value method, the
determination of whether an impairment exists will be made whenever events or
circumstances indicate that the fair value of investments in acquired
businesses, including business unit goodwill and other intangibles, are less
than the recorded amount. Any impairment will be measured by comparing the
recorded amount of investments in acquired businesses, including business unit
goodwill and other intangibles, to the fair value. Fair value is determined on
the basis of appraised market values, or in the absence of appraised market
values, on the basis of discounted cash flows.

     The change in method of accounting for assessing whether an impairment
exists in the recorded amount of acquired business unit goodwill and other
intangible assets is considered a change in accounting inseparable from a change
in estimate. The effects of the change in accounting are applied on a
prospective basis as of October 1, 2000. As a result of applying the new
accounting policy, the Company recorded a goodwill impairment charge of $280.1
million in the quarter ended December 31, 2000 representing the entire amount of
unamortized business unit goodwill and other intangibles at October 1, 2000.

NOTE 5 -- NON-CASH AND NON-RECURRING EXPENSES

     During the three months ended December 31, 2001, the Company completed an
evaluation of the economic viability of certain of its operations considering
the current adverse market conditions and the outlook for a return to historical
operating levels. As a result, management has implemented a plan to dispose of a
facility and has begun a wind-down of its operations. Non-cash and non-recurring
expense includes a $3.1 million asset impairment charge related to this decision
recorded in the three month period ended December 31, 2001. During the three
months ended June 30, 2001, the Company recognized a $1.9 million asset
impairment charge related to excess equipment to be disposed of or otherwise
abandoned.

     At December 31, 2001, $5.5 million of property and equipment is classified
as "held for sale" and is reported in prepaid expenses and other assets.

                                        10
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 5 -- NON-CASH AND NON-RECURRING EXPENSES -- (CONTINUED)

     During the nine months ended December 31, 2000, the Company recognized a
$2.6 million asset impairment charge related to a promissory note, including
accrued interest, received by the Company in conjunction with the sale of its
former Superior Forge, Inc. subsidiary.

NOTE 6 -- INVENTORIES

     Inventories are stated at average cost which approximates market value.
Inventories consisted of the following categories (in thousands):

<Table>
<Caption>
                                                        REORGANIZED    |   PREDECESSOR
                                                          COMPANY      |     COMPANY
                                                     DECEMBER 31, 2001 |  MARCH 31, 2001
                                                     ----------------- |  --------------
<S>                                                  <C>               |  <C>
Ferrous metals                                            $24,416      |     $20,685
Non-ferrous metals                                         19,356      |      18,050
Other                                                       1,725      |       1,038
                                                          -------      |     -------
                                                          $45,497      |     $39,773
                                                          =======      |     =======
</Table>

NOTE 7 -- LONG-TERM DEBT

     Long-term debt consisted of the following (in thousands):

<Table>
<Caption>
                                                        REORGANIZED    |   PREDECESSOR
                                                          COMPANY      |     COMPANY
                                                     DECEMBER 31, 2001 |  MARCH 31, 2001
                                                     ----------------- |  --------------
<S>                                                  <C>               |  <C>
Credit Agreement                                         $108,296      |     $      0
DIP Agreement                                                   0      |      121,666
12 3/4% New Notes                                          33,963      |            0
12 3/4% Junior Secured Notes                                    0      |       27,851
10% convertible note payable                                1,568      |            0
Other debt                                                  1,804      |        3,460
                                                         --------      |     --------
                                                          145,631      |      152,977
Less: current portion                                      (2,707)     |       (2,444)
                                                         --------      |     --------
                                                         $142,924      |     $150,533
                                                         ========      |     ========
</Table>

Credit Facilities

     In connection with the Chapter 11 proceedings, the Company entered into a
$200 million debtor-in-possession credit facility (the "DIP Agreement") which
established a lending arrangement for the Company under certain conditions while
in bankruptcy. The DIP Agreement was replaced on June 29, 2001 by a $150 million
revolving loan and letter of credit facility (the "Credit Agreement"). The
Credit Agreement was entered into by the Company and BT Commercial Corporation,
as agent for the lenders thereunder and the lenders a party thereto and expires
on June 29, 2003. The Credit Agreement is available to fund working capital
needs and for general corporate purposes.

     Borrowings under the Credit Agreement are subject to certain borrowing base
limitations based upon a formula equal to 85% of eligible accounts receivable,
the lesser of $65 million or 70% of eligible inventory, and a fixed asset
sublimit as of December 31, 2001 of $36.3 million, which amortizes on a
quarterly basis and under certain other conditions. In addition, as of December
31, 2001, supplemental availability of approximately $12.8 million is provided,
subject to periodic amortization and other reductions. A security interest in
                                        11
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 7 -- LONG-TERM DEBT -- (CONTINUED)

substantially all of the assets and properties of the Company, including pledges
of the capital stock of the Company's subsidiaries, has been granted to the
lenders as collateral against the obligations of the Company under the Credit
Agreement. The Credit Agreement provides the Company with the option of
borrowing based either on the prime rate (as specified by Deutsche Bank AG, New
York Branch) or at the London Interbank Offered Rate ("LIBOR") plus a margin.
Pursuant to the Credit Agreement, the Company pays a fee of .375% on the undrawn
portion of the facility. In consideration for the Credit Agreement, the Company
paid a closing fee of $1 million to the lenders under the Credit Agreement and
may be required to pay a $2 million facility fee on June 30, 2002, unless the
Company is able to satisfy certain financial objectives.

     The Credit Agreement requires the Company to meet certain financial tests,
including an interest coverage ratio and a leverage ratio (each as defined in
the Credit Agreement). The Credit Agreement also contains covenants which, among
other things, limit the amount of capital expenditures, the incurrence of
additional indebtedness, the payment of dividends, transactions with affiliates,
asset sales, acquisitions, investments, mergers and consolidations, prepayments
of certain other indebtedness, liens and encumbrances and other matters
customarily restricted in such agreements.

     The Company's ability to meet financial ratios and tests in the future may
be affected by events beyond its control, including fluctuations in operating
cash flows and working capital, and the timing of asset sales. While the Company
currently expects to be in compliance with the covenants and satisfy the
financial ratios and tests in the future, there can be no assurance that the
Company will meet such financial ratios and tests or that it will be able to
obtain future amendments or waivers to the Credit Agreement, if so needed, to
avoid a default. In the event of a default, the lenders could elect to declare
all amounts borrowed under the Credit Agreement to be due and payable.

Secured Notes

     On May 7, 1999, the Company issued $30 million par amount of Junior Secured
Notes. The December 15, 2000 and June 15, 2001 semi-annual interest payments,
totaling approximately $3.8 million, were not made in respect of the Junior
Secured Notes as a result of the Chapter 11 proceedings. On the Effective Date,
pursuant to the Plan, the Junior Secured Notes were exchanged for New Notes in a
principal amount equal to the par amount of the Junior Secured Notes, plus
approximately $4.0 million of accrued and unpaid interest up to the Effective
Date. A second priority lien on substantially all of the Company's personal
property, plant (to the extent it constitutes fixtures) and equipment has been
pledged as collateral against the New Notes.

     Interest on the New Notes is payable semi-annually during June and December
of each year. The New Notes are redeemable at the Company's option (in multiples
of $10.0 million) at a redemption price of 100% of the principal amount thereof,
plus accrued and unpaid interest. The New Notes are redeemable at the option of
the holders of such notes at a repurchase price of 101% of the principal amount
thereof, plus accrued and unpaid interest, in the event the Company experiences
a change of control (as such term is defined in the Indenture governing the New
Notes). The Company is required to redeem all or a pro-rata portion of the New
Notes at a repurchase price of 100% of the principal amount thereof, plus
accrued and unpaid interest, in the event that the Company makes certain asset
sales.

     The Indenture governing the Junior Secured Notes was amended and restated
in accordance with the Plan in order to reflect, among other things, the
increase in the principal amount of the New Notes. The Indenture, as amended,
contains restrictions including limits on, among other things, the Company's
ability to: (i) incur additional indebtedness; (ii) pay dividends or
distributions on its capital stock or repurchase its capital stock; (iii) issue
stock of subsidiaries; (iv) make certain investments; (v) create liens on its
assets;

                                        12
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 7 -- LONG-TERM DEBT -- (CONTINUED)

(vi) enter into transactions with affiliates; (vii) merge or consolidate with
another company; and (viii) transfer and sell assets or enter into sale and
leaseback transactions.

Other Debt

     As indicated in Note 2 -- Reorganization under Chapter 11, the Company
issued a promissory note to one of the investment advisors involved in the
Chapter 11 proceedings. The promissory note was issued in an amount of $1.6
million and bears interest at 10% per annum. The promissory note matures on
December 31, 2002 and the Company is required to make interest payments each
quarter. The holder of the promissory note has the option of converting a
minimum of $500,000 of the principal amount of the promissory note into Common
Stock at $6.46 per share at any time prior to maturity.

     In accordance with SOP 90-7, the Company did not accrue interest of
approximately $4.6 million on debt subject to compromise from the period April
1, 2001 through June 29, 2001, as such amounts were not permitted to be paid
under the Plan.

NOTE 8 -- INCOME TAXES

     As indicated in Note 3 -- Fresh-Start Reporting, a net extraordinary gain
of $145.7 million was recognized. Included in this net gain is $148.9 million of
gains on the settlement of debt in the reorganization which, for tax purposes,
is referred to as cancellation of indebtedness income ("COD").

     The Company has reduced its net deferred tax assets by a valuation
allowance as management does not believe it is "more likely than not" that the
asset ultimately will be realizable. If all or a portion of the deferred tax
asset (recorded as of June 30, 2001) is realized in the future, or considered to
"more likely than not" be realizable by management, the goodwill recorded in
connection with fresh-start reporting will be reduced accordingly. If goodwill
is eliminated in full, the excess will be treated as an increase to additional
paid-in-capital.

NOTE 9 -- STOCKHOLDERS' EQUITY

     Pursuant to the Plan, the Company filed a Second Amended and Restated
Certificate of Incorporation with the Delaware Secretary of State under which
the authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, par value $.01 per share and 2,000,000 shares of preferred stock,
par value $.01 per share.

     In accordance with the Plan, all outstanding shares of the Predecessor
Company's common stock, convertible preferred stock, and warrants and options to
purchase common stock were cancelled as of the Effective Date. The Company has
an application pending for its Common Stock and Series A Warrants to be listed
on the National Market System (or Small Cap System) of the Nasdaq Stock Market,
Inc. ("Nasdaq"). The Company's Common Stock and Series A Warrants currently
trade on the Bulletin Board of Nasdaq's Over-the-Counter Market. No assurance
can be made that the Company's Common Stock will qualify for listing on the
National Market System or the Small Cap System. In particular, unless the
Company's Common Stock begins to trade at $4.00 per share or higher, the Company
will be unable to satisfy a key listing condition of Nasdaq (Small Cap). In such
event, the Company may be required to suspend the listing application until a
later date.

     As indicated in Note 2 -- Reorganization Under Chapter 11, the Company has
not yet issued all 10,000,000 shares required to be distributed in accordance
with the Plan. However, for purposes of these financial statements, all
10,000,000 shares are deemed to be issued and outstanding.

                                        13
<PAGE>
                             METAL MANAGEMENT, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                  (UNAUDITED)

NOTE 10 -- INCOME (LOSS) PER COMMON SHARE

     Basic and diluted earnings per common share are based upon the weighted
average number of common shares outstanding during the respective periods. Basic
EPS is calculated based on earnings available to common shareholders and the
weighted average number of common shares outstanding during the reported period.
Diluted EPS includes additional dilution from potential common stock, such as
stock issuable pursuant to conversion of preferred stock, convertible debt or
the exercise of stock options and warrants outstanding. The incremental shares
from the conversion of preferred stock, convertible debt and exercise of stock
options and warrants were not included in computing diluted EPS for all periods
presented since the effect of such is antidilutive during periods when a loss
before cumulative effect of change in accounting principle and extraordinary
gain is reported.

                                        14
<PAGE>

     This Form 10-Q includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements in this Form 10-Q which address
activities, events or developments that Metal Management, Inc. (herein, "Metal
Management," the "Company," "we," "us" or other similar terms) expects or
anticipates will or may occur in the future, including such things as future
acquisitions (including the amount and nature thereof), business strategy,
expansion and growth of our business and operations and other such matters are
forward-looking statements. Although we believe the expectations expressed in
such forward-looking statements are based on reasonable assumptions within the
bounds of our knowledge of our business, a number of factors could cause actual
results to differ materially from those expressed in any forward-looking
statements. These and other risks, uncertainties and other factors are discussed
under "Investment Considerations" appearing in our Annual Report on Form 10-K
for the year ended March 31, 2001, as the same may be amended from time to time.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included under Item 1. In
addition, although our financial statements have substantially changed as a
result of the implementation of fresh-start reporting on June 29, 2001, the
following should also be read in conjunction with the audited consolidated
financial statements and notes thereto and related Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our Annual
Report on Form 10-K for the year ended March 31, 2001.

GENERAL

     We are one of the largest full-service metals recyclers in the United
States, with approximately 40 recycling facilities in 14 states. We enjoy
important market positions in many major metropolitan markets, including
Birmingham, Chicago, Cleveland, Denver, Hartford, Houston, Memphis, Newark,
Phoenix, Salt Lake City, Toledo and Tucson. We have a 28.5% equity ownership
position in Southern Recycling, L.L.C. ("Southern Recycling"), the largest scrap
metals recycler in the Gulf Coast region. We also hold important market
positions in several product segments, including stainless steel, copper and
aluminum generated from utilities and telecommunication providers and titanium
and other high-temperature nickel alloys generated for the aerospace industry.

     We have achieved a leading position in the metals recycling industry
primarily by implementing a national strategy of completing and integrating
regional acquisitions. In making acquisitions, we have focused on major
metropolitan markets where prime industrial and obsolete scrap
metal(automobiles, appliances and industrial equipment) is readily available and
from where we believe we can better serve our customer base. In pursuing this
strategy, we sought to acquire regional platform companies with strong
operational management and a history of successful performance to serve as
platforms into which subsequent acquisitions could be integrated. We believe
that through the continued integration of our acquired businesses, we will be
able to enhance our competitive position and profitability of the operations
because of broader distribution channels, improved managerial and financial
resources, greater purchasing power and increased economies of scale.

     Our operations consist primarily of the collection and processing of
ferrous and non-ferrous metals for resale to metals brokers, steel producers,
and producers and processors of other metals. We collect industrial scrap and
obsolete scrap, process it into reusable forms and supply the recycled metals to
our customers, including electric arc furnace mills, integrated steel mills,
foundries, secondary smelters and metals brokers. We believe that we provide one
of the most comprehensive offerings of both ferrous and non-ferrous scrap metals
in the industry. Our ferrous products primarily include shredded, sheared, cold
briquetted and bundled scrap and other purchased scrap, such as turnings, cast
and broken furnace iron. We also process non-ferrous metals, including aluminum,
copper, stainless steel, brass, titanium and high temperature alloys, using
similar techniques and through application of our proprietary technologies.

     On December 28, 2000, our common stock, par value $.01 per share ("Old
Common Stock") was delisted from The Nasdaq Small Cap System for failing to meet
listing standards as required by Nasdaq rules.

                                        15
<PAGE>

From December 28, 2000 to June 29, 2001, our Old Common Stock traded on the
Bulletin Board of Nasdaq's Over-the-Counter Market. Our new common stock is
traded on the Bulletin Board of Nasdaq's Over-the-Counter Market.

CHAPTER 11 BANKRUPTCY AND PLAN OF REORGANIZATION

     On November 20, 2000 (the "Petition Date"), we filed voluntary petitions
(Case Nos. 00-4303 -- 00-4331 (SLR)) under Chapter 11 of the U.S. Bankruptcy
Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). During the course of the
bankruptcy proceedings, we operated our business as a debtor-in-possession.
These bankruptcy proceedings are referred to as the "Chapter 11 proceedings"
herein. The bankruptcy filing resulted from a sequence of events stemming
primarily from significant operating losses and decreased liquidity experienced
during the year ended March 31, 2001 ("Fiscal 2001"), which culminated in our
inability to make a $9 million interest payment on our 10% Senior Subordinated
Notes due May 2008 (the "Subordinated Notes") on November 15, 2000. Our
operating results and the resulting decrease in liquidity were primarily due to
unprecedented cycles of declines in prices and demand for scrap metals
exacerbated by high levels of fixed costs associated with our leveraged capital
structure.

     In furtherance of an agreement we had reached with holders of a significant
percentage of our pre-petition debt prior to the initiation of our Chapter 11
proceedings, we filed a Plan of Reorganization (the "Plan") pursuant to Chapter
11 of the Bankruptcy Code, on May 4, 2001. The Bankruptcy Court confirmed the
Plan which became effective on June 29, 2001 (the "Effective Date").

     The following is a summary of certain material provisions of the Plan. The
summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Plan, as filed with the SEC and the
Bankruptcy Court. The Plan provided for, among other things, the following:

     - Junior Secured Note Claims -- on the Effective Date, the holders of the
       Predecessor Company's $30 million par amount, 12  3/4% Junior Secured
       Notes, due June 2004 (the "Junior Secured Notes") received new junior
       secured notes (the "New Notes") aggregating $34.0 million. The New Notes
       bear interest at 12 3/4% and are due on June 2004. The par amount of the
       New Notes represent the par amount of the Junior Secured Notes plus
       accrued and unpaid interest through the Effective Date.

     - General Trade Claims ("Class 5 Claims") -- the holders of general trade
       claims of the Predecessor Company who elected not to receive common
       stock, par value $.01 per share ("Common Stock") of the Reorganized
       Company will receive cash payments totaling 30% of their allowed claim.
       Such payments will be made, without interest, in four equal annual
       installments, with the first installment payable on June 30, 2002. As of
       the Effective Date, a payable of $1.3 million was established
       representing the liability recorded in connection with the estimated fair
       value of the allowed Class 5 Claims.

     - Impaired Unsecured Claims ("Class 6 Claims") -- the holders of the
       Subordinated Notes and the holders of the Predecessor Company's general
       trade claims who elected (or are otherwise deemed under the Plan to have
       elected) on their ballot to be treated as an allowed Class 6 Claim, will
       receive a total of 9,900,000 shares of Common Stock. As of December 31,
       2001, we have issued 8,692,009 shares of Common Stock to holders of
       allowed Class 6 Claims. The initial distribution of Common Stock on
       account of Class 6 Claims was based on an estimate of Class 6 Claims. The
       estimate of total Class 6 Claims in the initial distribution was
       comprised of resolved claims and reserves for unresolved claims. We have
       filed objections with the Bankruptcy Court related to unresolved claims.
       Additional distributions of Common Stock will be made after the
       unresolved claims are either resolved through agreement of the parties or
       by a final order of the Bankruptcy Court.

     - Preferred Stockholder and Common Stockholder Claims ("Equity
       Claims") -- the holders of the Predecessor Company's convertible
       preferred stock and common stock on the Effective Date received their
       pro-rata share of 100,000 shares of Common Stock and warrants (designated
       as "Series A Warrants") to purchase 750,000 shares of Common Stock. The
       Series A Warrants are immediately

                                        16
<PAGE>

       exercisable at a price per share equal to the total amount of liabilities
       (allowed under Class 6 of the Plan) converted into Common Stock in
       accordance with the Plan divided by 10,000,000.

     - Other Significant Provisions -- as of the Effective Date, the Board of
       Directors consists of the following non-employee directors: Daniel W.
       Dienst, John T. DiLacqua, Kevin P. McGuinness and Harold "Skip" Rouster.
       Albert A. Cozzi continues to serve as Chairman of the Board of Directors
       and Chief Executive Officer.

     - A Management Equity Incentive Plan was approved under the Plan and
       provides for the issuance of warrants to purchase 1,000,000 shares of
       Common Stock at an exercise price of $6.50 per share (designated as
       "Series B Warrants") and warrants to purchase 500,000 shares of Common
       Stock at an exercise price of $12.00 per share (designated as "Series C
       Warrants").

     As of June 30, 2001, we adopted fresh-start reporting in accordance with
Statement of Position 90-7 "Financial Reporting by Entities in Reorganization
under the Bankruptcy Code" ("SOP 90-7"). Under fresh-start reporting, the
reorganization fair value was allocated to our assets; our accumulated deficit
was eliminated; our Series B and Series C convertible preferred stock, Old
Common Stock, warrants and options, and Subordinated Notes were eliminated; and
equity in the Reorganized Company was recorded.

     The reorganization value of $65 million for the equity of the Reorganized
Company was based on the consideration of many factors and various valuation
methods, including a discounted cash flow analysis using projected financial
information, selected publicly traded company market multiples of certain
companies operating businesses viewed to be similar to us, and other applicable
ratios and valuation techniques that we, and our financial advisors during the
Chapter 11 proceedings, believe to be representative of our business and
industry.

     The valuation was based upon a number of estimates and assumptions, which
are inherently subject to significant uncertainties and contingencies beyond our
control. Accordingly, there can be no assurance that the valuation will be
realized, and actual results could vary materially. Moreover, the value of our
Common Stock may differ materially from the share value implied in the
reorganization value.

     As a result of adopting SFAS No. 142 (see "Recent Accounting
Pronouncements"), the goodwill recognized in fresh-start reporting of $15.5
million will not be amortized, but will be reviewed annually for impairment.
This amount will be evaluated annually for potential impairment and an
impairment charge could result if the fair value of the Reorganized Company is
determined to be below the reorganization value.

RESULTS OF OPERATIONS

     The unaudited consolidated financial statements after the Effective Date
are those of a new reporting entity (the "Reorganized Company") and are not
comparable to the pre-confirmation periods of the old reporting entity (the
"Predecessor Company"). However, for purposes of this discussion, the
Reorganized Company's results for the three months ended December 31, 2001 are
compared to the Predecessor Company's results for the three months ended
December 31, 2000. In addition, the Reorganized Company's results for the six
months ended December 31, 2001 have been combined with the Predecessor Company's
results for the three months ended June 30, 2001 (as summarized in the following
table) and are compared to

                                        17
<PAGE>

the Predecessor Company's results for the nine months ended December 31, 2000.
Differences between periods due to fresh start accounting are explained when
necessary.

<Table>
<Caption>
      NINE MONTHS ENDED DECEMBER 31 (IN THOUSANDS)            2001        2000
      --------------------------------------------            ----        ----
<S>                                                         <C>         <C>
Net sales                                                   $464,511    $ 610,463
Gross profit                                                  50,010       47,194
Operating expenses:
  General and administrative                                  33,958       43,682
  Depreciation and amortization                               13,828       18,459
  Non-cash and non-recurring expense                           5,041      282,771
Operating loss                                                (2,817)    (297,718)
Interest expense                                              11,560       28,853
Reorganization costs                                          10,804       10,670
Income taxes                                                       0        8,291
Cumulative effect of change in accounting principle             (358)           0
Extraordinary gain                                           145,711            0
Net income (loss) applicable to common stock                $120,203    $(347,147)
</Table>

     Our consolidated net sales consist primarily of revenues derived from the
sale and brokerage of scrap metals. We recognize revenues from processed
products when title passes to the customer. Revenues related to brokerage sales
are recognized upon receipt of the material by the customer. Sales adjustments
related to price and weight differences and allowances for uncollectible
receivables are recorded against revenues.

     Cost of sales consists primarily of the cost of metals sold, direct and
indirect labor and related taxes and benefits, realized and unrealized gains and
losses from hedging activities, repairs and maintenance, utilities and freight.

     General and administrative expenses include management salaries, clerical
and administrative costs, professional services, facility rentals and related
insurance and utility costs, as well as costs related to our marketing and
business development activities.

     Non-cash and non-recurring expenses represent impairments of long-lived
assets to be disposed of, sold, or otherwise abandoned and the write-off of a
promissory note received in connection with a business disposition.

     Other income and expense consists principally of interest expense, interest
income, gains or losses on the sale of fixed assets, and income and losses from
joint ventures which represent an allocation of income and losses attributable
to investments made by us in joint ventures. The joint ventures are accounted
for under the equity method of accounting.

     Reorganization costs consist of expenses incurred as a result of the
Chapter 11 proceedings including professional fees, fees paid to the United
States Trustee's office, fresh-start accounting adjustments, and liabilities
resulting from the rejection of executory contracts and unexpired leases.

                                        18
<PAGE>

     Consolidated net sales for the three months ended December 31, 2001 and
2000 in broad product categories were as follows (in thousands):

<Table>
<Caption>
                                                   THREE MONTHS ENDED              THREE MONTHS ENDED
                                                        12/31/01                        12/31/00
                                              ----------------------------    ----------------------------
                COMMODITY                     WEIGHT     NET SALES     %      WEIGHT     NET SALES     %
                ---------                     ------     ---------     -      ------     ---------     -
<S>                                           <C>        <C>          <C>     <C>        <C>          <C>
Ferrous metals (tons)                             922    $ 87,332     61.8        923    $ 85,589     55.3
Non-ferrous metals (lbs)                      100,404      43,482     30.8    110,154      57,213     37.0
Brokerage -- ferrous (tons)                        62       6,277      4.5         46       4,510      2.9
Brokerage -- non-ferrous (lbs)                  4,789         907      0.6      7,400       3,482      2.2
Other                                                       3,267      2.3                  3,986      2.6
                                                         --------     ----               --------     ----
                                                         $141,265     100%               $154,780     100%
                                                         ========     ====               ========     ====
</Table>

     Consolidated net sales for the nine months ended December 31, 2001 and 2000
in broad product categories were as follows (in thousands):

<Table>
<Caption>
                                                   NINE MONTHS ENDED               NINE MONTHS ENDED
                                                        12/31/01                        12/31/00
                                              ----------------------------    ----------------------------
                COMMODITY                     WEIGHT     NET SALES     %      WEIGHT     NET SALES     %
                ---------                     ------     ---------     -      ------     ---------     -
<S>                                           <C>        <C>          <C>     <C>        <C>          <C>
Ferrous metals (tons)                           2,839    $269,261     58.0      3,197    $335,396     54.9
Non-ferrous metals (lbs)                      337,689     154,507     33.3    406,956     218,944     35.9
Brokerage -- ferrous (tons)                       257      25,622      5.5        260      27,899      4.6
Brokerage -- non-ferrous (lbs)                 14,555       5,002      1.1     31,914      14,700      2.4
Other                                                      10,119      2.1                 13,524      2.2
                                                         --------     ----               --------     ----
                                                         $464,511     100%               $610,463     100%
                                                         ========     ====               ========     ====
</Table>

     Consolidated net sales decreased by $13.5 million (8.7%) and $146.0 million
(23.9%) to $141.3 million and $464.5 million during the three and nine months
ended December 31, 2001, respectively, compared to consolidated net sales of
$154.8 million and $610.5 million during the three and nine months ended
December 31, 2000, respectively. The decrease in consolidated net sales during
the three months ended December 31, 2001 was due to lower non-ferrous sales. The
decrease in consolidated net sales during the nine months ended December 31,
2001 was primarily due to lower volumes of products sold coupled with lower
average selling prices. Scrap metals prices continue to be impacted by the
weakening economy contributing to lower industrial output that has negatively
impacted both supply and demand for scrap metals.

     Ferrous sales increased by $1.7 million (2.0%) to $87.3 million during
three months ended December 31, 2001 compared to ferrous sales of $85.6 million
during the three months ended December 31, 2000. The increase was a result of
higher average realized sales prices. Our ferrous business in the three months
ended December 31, 2001 benefited from the shipment of five cargoes of ferrous
scrap to export markets. Ferrous sales decreased by $66.1 million (19.7%) to
$269.3 million during the nine months ended December 31, 2001 compared to
ferrous sales of $335.4 million during the nine months ended December 31, 2000.
The decrease is mainly a result of lower demand and average sales prices
realized during the six months ended September 30, 2001. Unit sales have been
impacted by lower demand from our domestic steel customers, who have reduced
production due to weakness in their markets. In Fiscal 2001, our ferrous sales
were significantly impacted by the bankruptcy filings of three steel companies.
The high number of bankruptcies filed by steel companies over the last few years
has led us to tighten our credit terms with certain domestic customers, which
tends to reduce the units of ferrous metals sold. The increase in our export
sales in the three months ended December 31, 2001 was able to offset much of the
decrease in domestic demand for ferrous scrap metals.

     Non-ferrous sales decreased by $13.7 million (24.0%) and $64.4 million
(29.4%) to $43.5 million and $154.5 million during the three and nine months
ended December 31, 2001, respectively, compared to non-ferrous sales of $57.2
million and $218.9 million during the three and nine months ended December 31,
2000, respectively. The decrease is primarily due to lower unit sales and
average selling prices. During the three months ended December 31, 2001, demand
from the aerospace industry declined substantially which resulted

                                        19
<PAGE>

in lower average selling prices and units sales for non-ferrous metals including
titanium and high-temperature alloys.

     Brokerage ferrous sales increased by $1.8 million (39.2%) to $6.3 million
during the three months ended December 31, 2001 compared to brokerage ferrous
sales of $4.5 million during the three months ended December 31, 2000. The
increase was a result of more tons brokered (35%) and a higher average selling
price (3%). Brokerage ferrous sales decreased by $2.3 million (8.2%) to $25.6
million during the nine months ended December 31, 2001 compared to brokerage
ferrous sales of $27.9 million during the nine months ended December 31, 2000.
The decrease was mainly due to a $7 per ton decrease in average selling price
for the nine months ended December 31, 2001. The average selling price for
brokered metals is significantly affected by the product mix, such as prompt
industrial grades versus obsolete grades, which can vary significantly between
periods. Prompt industrial grades of scrap are generally associated with higher
unit prices.

     Brokerage non-ferrous sales decreased by $2.6 million (74.0%) and $9.7
million (66.0%) to $0.9 million and $5.0 million during the three and nine
months ended December 31, 2001, respectively, compared to brokerage non-ferrous
sales of $3.5 million and $14.7 million during the three and nine months ended
December 31, 2000, respectively. Brokerage non-ferrous volume declined by 2.6
million pounds and 17.4 million pounds during the three and nine months ended
December 31, 2001, respectively, due to lower demand. Margins associated with
brokered non-ferrous metals are narrow so variations in this product category
are not as significant to us as variations in other product categories.

     Gross profit was $15.3 million (10.9% of sales) and $50.0 million (10.8% of
sales) during the three and nine months ended December 31, 2001, respectively,
compared to gross profit of $5.7 million (3.7% of sales) and $47.2 million (7.7%
of sales) during the three and nine months ended December 31, 2000,
respectively. Gross profit percentage during the three and nine months ended
December 31, 2001 shows significant improvement from the comparable prior year
periods as a result of better buying practices and reductions in operating
expenses. Gross profit in the nine months ended December 31, 2001 was adversely
impacted by $1.1 million of sales adjustments recorded with respect to sales
made to a steel customer that commenced liquidation during May 2001.

     General and administrative expenses were $10.9 million (7.7% of sales) and
$34.0 million (7.3% of sales) during the three and nine months ended December
31, 2001, respectively, compared to general and administrative expenses of $13.4
million (8.7% of sales) and $43.7 million (7.2% of sales) during the three and
nine months ended December 31, 2000, respectively. General and administrative
expenses have declined by over 20% from the comparable prior year periods due to
reductions in headcount and other cost containment initiatives implemented
during the current fiscal year.

     Depreciation and amortization expense was $4.5 million (3.2% of sales) and
$13.8 million (3.0% of sales) during the three and nine months ended December
31, 2001, respectively, compared to depreciation and amortization expense of
$4.8 million (3.1% of sales) and $18.5 million (3.0% of sales) during the three
and nine months ended December 31, 2000, respectively. The decrease in
depreciation and amortization expense is the result of the goodwill impairment
charge recorded as of October 1, 2000 which resulted in the elimination of
goodwill amortization expense for periods after October 1, 2000. Prior to the
goodwill impairment charge, goodwill amortization approximated $1.9 million each
quarter. Depreciation expense has remained steady as capital expenditures have
been carefully monitored during the current fiscal year.

     Non-cash and non-recurring expense was $5.0 million during the nine months
ended December 31, 2001. We recorded an impairment charge of $3.1 million
related to one of our operations which we plan to dispose of and an impairment
charge of $1.9 million related to fixed assets which are to be sold or otherwise
abandoned. Non-cash and non-recurring expense was $282.8 million during the nine
months ended December 31, 2000, which mainly represents an impairment charge
recorded with respect to a change in accounting policy related to goodwill (see
Notes 4 and 5 to the consolidated financial statements included in Part I, Item
1 of this Report).

     Interest expense was $3.0 million (2.1% of sales) and $11.6 million (2.5%
of sales) during the three and nine months ended December 31, 2001,
respectively, compared to interest expense of $7.9 million (5.1% of

                                        20
<PAGE>

sales) and $28.9 million (4.7% of sales) during the three and nine months ended
December 31, 2000, respectively. The decrease in interest expense is a result of
lower borrowings under credit facilities, lower interest rates on borrowings
under credit facilities, and the elimination of interest expense related to
unsecured debt after the Petition Date, including but not limited to interest on
the Subordinated Notes. Interest on the Subordinated Notes was $1.5 million per
month prior to the Petition Date. Borrowings on credit facilities are at
variable rates tied to the prime rate of interest, which has declined by 4.5%
per annum since the beginning of April of 2001.

     Reorganization costs recognized during the three months ended December 31,
2001 represent professional fees and U.S. Trustee fees related to the Chapter 11
proceedings. We will continue to incur these costs until all of the claims
arising from the Chapter 11 proceedings have been adjudicated. Reorganization
costs recognized during the nine months ended December 31, 2001 and 2000 mainly
represent professional fees, liabilities for rejected contracts and settlements,
fresh-start adjustments and other expenses associated with the Chapter 11
proceedings (see Note 2 to the consolidated financial statements included in
Part I, Item 1 of this Report).

     As a result of our past losses and uncertainties regarding our ability to
realize recorded tax benefits, we have fully reserved our net deferred tax
assets as of December 31, 2001.

     On April 1, 2001, we adopted Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivatives and Hedges" (as amended). The
cumulative effect of adopting SFAS No. 133 resulted in an after-tax decrease in
net earnings of $0.4 million.

     We recognized an extraordinary gain of $145.7 million related to the
cancellation of our Subordinated Notes and other unsecured claims in the Chapter
11 proceedings (see Note 3 to the consolidated financial statements included in
Part I, Item 1 of this Report).

     Net loss was $6.4 million during the three months ended December 31, 2001
compared to a net loss of $312.0 million during the three months ended December
31, 2000. The improvement is a result of lower interest and general and
administrative expenses, the elimination of goodwill amortization and improved
gross profit.

     Net income was $120.2 million during the nine months ended December 31,
2001 compared to a net loss of $347.1 million during the nine months ended
December 31, 2000. The improvement is a result of lower interest and general and
administrative expenses, the elimination of goodwill amortization, and the
extraordinary gain associated with cancellation of indebtedness.

LIQUIDITY AND CAPITAL RESOURCES

     As a result of the consummation of the Plan, we substantially reduced the
amount of our overall indebtedness. As of December 31, 2001, our total
indebtedness was approximately $146 million. Although the Plan resulted in a
reduction in debt, further improvements in our liquidity position will be
subject to the success of initiatives we are undertaking to reduce operating
expenses and the effects on our liquidity of changes in the market conditions in
the scrap metals industry. Our uses of capital are expected to include working
capital for operating expenses and satisfaction of current liabilities, capital
expenditures, payment of reorganization expenses, and interest payments on
outstanding borrowings.

     On the Effective Date, our $200 million debtor-in-possession credit
facility (the "DIP Agreement") was replaced by a $150 million revolving credit
and letter of credit facility (the "Credit Agreement"). The Credit Agreement was
entered into by BT Commercial Corporation, as agent for the lenders thereunder,
the lenders a party thereto and us and expires on June 29, 2003. The Credit
Agreement is available to fund working capital needs and for general corporate
purposes.

     Borrowings under the Credit Agreement are subject to certain borrowing base
limitations based upon a formula equal to 85% of eligible accounts receivable,
the lesser of $65 million or 70% of eligible inventory, and a fixed asset
sublimit as of December 31, 2001 of $36.3 million, which amortizes on a
quarterly basis and under certain other conditions. In addition, as of December
31, 2001, supplemental availability of approxi-

                                        21
<PAGE>

mately $12.8 million is provided under the Credit Agreement, and is also subject
to periodic amortization and other reductions. A security interest in
substantially all of our assets and properties, including pledges of the capital
stock of our subsidiaries, has been granted to the lenders under the new credit
facility to secure our obligations under the Credit Agreement. The Credit
Agreement provides us with the option of borrowing based either on the prime
rate (as specified by Deutsche Bank AG, New York Branch) or the London Interbank
Offered Rate ("LIBOR") plus a margin. Pursuant to the Credit Agreement, we pay a
fee of .375% on the undrawn portion of the facility. In consideration for the
Credit Agreement, we paid a closing fee of $1 million and may be required to pay
a $2 million facility fee on June 30, 2002, unless we are able to meet certain
financial objectives.

     The Credit Agreement requires us to meet certain financial tests, including
an interest coverage ratio and a leverage ratio (as defined in the Credit
Agreement). The Credit Agreement also contains covenants which, among other
things, limit the amount of capital expenditures, the incurrence of additional
indebtedness, the payment of dividends, transactions with affiliates, asset
sales, acquisitions, investments, mergers and consolidations, prepayments of
certain other indebtedness, liens and encumbrances and other matters customarily
restricted in such agreements. We were in compliance with all financial
covenants as of December 31, 2001.

     Our ability to meet financial ratios and tests in the future may be
affected by events beyond our control, including fluctuations in operating cash
flows and working capital, and the timing of fixed asset sales. While we
currently expect to be in compliance with the covenants and satisfy the
financial ratios and tests in the future, there can be no assurance that we will
meet such financial ratios and tests or that we will be able to obtain future
amendments or waivers to the Credit Agreement, if so needed, to avoid a default.
In the event of default, the lenders could elect to declare all amounts borrowed
under the Credit Agreement to be due and payable.

     Pursuant to the Plan, on the Effective Date, the Junior Secured Notes were
exchanged for New Notes, having an outstanding principal balance of $34.0
million. The New Notes mature on June 15, 2004 and bear interest at the rate of
12 3/4% per annum. Interest on the New Notes is payable semi-annually during
June and December of each year. The New Notes are our senior obligations and
will rank equally in right of payment with all of our unsubordinated debt,
including our indebtedness under the Credit Agreement, and senior in right of
payment to all of our subordinated debt. A second priority lien on substantially
all of our personal property, plant (to the extent it constitutes fixtures) and
equipment has been pledged as collateral against the New Notes.

     The New Notes are redeemable at our option (in multiples of $10.0 million)
at a redemption price of 100% of the principal amount thereof, plus accrued and
unpaid interest. The New Notes are redeemable at the option of the holders of
such notes at a repurchase price of 101% of the principal amount thereof, plus
accrued and unpaid interest, in the event we experience a change of control (as
defined in the Indenture governing the New Notes). We are required to redeem all
or a portion of the New Notes at a repurchase price of 100% of the principal
amount thereof, plus accrued and unpaid interest, in the event we make certain
asset sales.

     The Indenture governing the Junior Secured Notes was amended and restated
in accordance with the Plan in order to reflect, among other things, the
increase in the principal amount of the New Notes. The Indenture, as amended,
contains restrictions including limits on, among other things, our ability to:
(i) incur additional indebtedness; (ii) pay dividends or distributions on our
capital stock or repurchase our capital stock; (iii) issue stock of
subsidiaries; (iv) make certain investments; (v) create liens on our assets;
(vi) enter into transactions with affiliates; (vii) merge or consolidate with
another company; and (viii) transfer and sell assets or enter into sale and
leaseback transactions.

     Our future cash needs will be driven by working capital requirements
(including interest payments on the New Notes), planned capital expenditures and
acquisition objectives, should attractive acquisition opportunities present
themselves. Capital expenditures were approximately $11.1 million in Fiscal 2001
representing approximately 57% of depreciation expense in Fiscal 2001. Capital
expenditures are planned to be approximately $5 million in the current fiscal
year ending March 31, 2002 reflecting primarily replacement investments. On June
15, 2002, we are required to make a $2.2 million coupon payment on the New
Notes. We do not expect such capital expenditures nor interest payments to have
a material adverse effect on our
                                        22
<PAGE>
liquidity. We expect to fund our working capital needs, interest payments and
capital expenditures with cash generated from operations, supplemented by
undrawn borrowing availability under the Credit Agreement. We believe these
sources of capital will be sufficient to fund planned capital expenditures,
interest payments and working capital requirements for the foreseeable future,
although there can be no assurance that this will be the case. In addition, the
instruments governing the Credit Agreement and the New Notes will limit our
ability to incur additional debt to fund significant acquisition or expansion
opportunities unless and until our results of operations show significant
improvement for four consecutive quarters. As of February 7, 2002, we had
outstanding borrowings of approximately $100 million under the Credit Agreement
and undrawn availability of approximately $10 million.

Cash Flows from Operations

     During the six months ended December 31, 2001, we generated $6.6 million of
cash from operating activities. During the period, our operations generated $5.1
million of cash and accounts receivable decreased by $24.4 million. This was
offset by an increase in inventories of $4.0 million and a decrease in accounts
payable of $16.9 million.

Cash Flows from Investing Activities

     During the six months ended December 31, 2001, we used $1.7 million of cash
for investing activities. Purchases of property and equipment were $2.1 million,
while we generated $0.5 million of cash from the sale of redundant fixed assets.

Cash Flows from Financing Activities

     During the six months ended December 31, 2001, our financing activities
used $4.8 million of cash. Cash generated from operations were used to repay
borrowings under the Credit Agreement.

FINANCIAL CONDITION

Working Capital Availability and Requirements

     Our accounts receivable balances decreased from $79.6 million at March 31,
2001 to $47.6 million at December 31, 2001 principally due to improved
collections and lower sales.

     Our accounts payable balances decreased from $37.9 million at March 31,
2001 to $33.9 million at December 31, 2001. The decrease in accounts payable
resulted principally from lower scrap purchases in December 2001 compared to
March 2001.

     Inventory levels can vary significantly among our operations and with
changes in market conditions. Our inventories consist of the following
categories (in thousands):

<Table>
<Caption>
                                                        REORGANIZED    |   PREDECESSOR
                                                          COMPANY      |     COMPANY
                                                     DECEMBER 31, 2001 |  MARCH 31, 2001
                                                     ----------------- |  --------------
<S>                                                  <C>               |  <C>
Ferrous metals                                            $24,416      |     $20,685
Non-ferrous metals                                         19,356      |      18,050
Other                                                       1,725      |       1,038
                                                          -------      |     -------
                                                          $45,497      |     $39,773
                                                          =======      |     =======
</Table>

     Ferrous inventory dollars increased due to higher units of ferrous metals
on hand at December 31, 2001 compared to March 31, 2001. Non-ferrous inventory
slightly increased as a result of higher units of non-ferrous materials on hand
offset by lower average purchase prices at December 31, 2001 compared to March
31, 2001.

                                        23
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

     Effective April 1, 2001, we adopted SFAS No. 133, "Accounting for
Derivatives and Hedges" (as amended). SFAS No. 133 requires that an entity
recognize all derivatives as either assets or liabilities measured at fair
value. We utilize futures and forward contracts to hedge our net position in
certain non-ferrous metals and do not use futures and forward contracts for
trading purposes. We classified our investment in these contracts as speculative
under the provisions of SFAS No. 133. As a result, we marked our open contracts
to market at April 1, 2001. The cumulative effect of adopting SFAS No. 133
resulted in an after-tax decrease in net earnings of $0.4 million at April 1,
2001. We believe that the changes in fair value of these instruments will not
significantly impact our results of operations or financial position.

     In July 2001, the Financial Accounting Standards Board ("FASB") issued two
new pronouncements: SFAS No. 141, "Business Combinations," and SFAS No. 142,
"Goodwill and Other Intangible Assets." SFAS No. 141 addresses financial
accounting and reporting for business combinations and requires all business
combinations within the scope of this Statement to be accounted for using the
purchase method. Use of the pooling-of-interest method is prohibited for
business combinations initiated after June 30, 2001. SFAS No. 142 requires that,
upon adoption, amortization of goodwill and indefinite lived intangible assets
will cease and instead, the carrying value of such assets will be evaluated for
impairment on an annual basis. Identifiable intangible assets will continue to
be amortized over their useful lives and reviewed for impairment.

     In accordance with SOP 90-7 and the application of fresh-start reporting,
we adopted SFAS No. 141 and SFAS No. 142 as of June 30, 2001. The adoption of
SFAS No. 141 had no impact on our consolidated financial statements as we had no
recorded goodwill or intangible assets at adoption. The adoption of SFAS No. 142
results in the classification of the reorganization intangible recognized in
fresh-start reporting as goodwill with an indefinite life. As a result, goodwill
of $15.5 million will not be amortized, but will be reviewed annually for
impairment.

     In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144, which supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," provides a single accounting model for
long-lived assets to be disposed of. SFAS No. 144 significantly changes the
criteria that would have to be met to classify an asset as held-for-sale,
although it retains many of the fundamental recognition and measurement
provisions of SFAS No. 121. We are analyzing the effect of SFAS No. 144 and do
not expect it to have a material effect on our consolidated financial position,
results of operations or cash flows.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to financial risk resulting from fluctuations in interest
rates and commodity prices. We seek to minimize these risks through regular
operating and financing activities and, where appropriate, through use of
futures or forward contracts. Our use of these contracts is limited and relates
solely to hedges of certain of our non-ferrous inventory positions. Under the
provisions of SFAS No. 133, we have classified these contracts as speculative
and as a result, these contracts are marked to market in our consolidated
financial statements. The adoption of SFAS No. 133 on April 1, 2001 resulted in
an after-tax decrease in net earnings of $0.4 million.

     Reference is made to the quantitative disclosures about market risk as of
March 31, 2001 included under Item 7A of our most recent Annual Report on Form
10-K.

                                        24
<PAGE>

                          PART II -- OTHER INFORMATION

ITEM 2: CHANGES IN SECURITIES

     On June 29, 2001 (the "Effective Date"), the Company emerged from
bankruptcy pursuant to its Plan of Reorganization (the "Plan"). On such date,
the Company canceled all existing equity securities including warrants and
options. Pursuant to the Plan, the Company filed a Second Amended and Restated
Certificate of Incorporation with the Delaware Secretary of State under which
the authorized capital stock of the Company consists of 50,000,000 shares of
common stock, par value $.01 per share and 2,000,000 shares of preferred stock,
par value $.01 per share. Under the Plan, approximately 10,000,000 shares of
Common Stock and Series A Warrants to purchase 750,000 shares of Common Stock
will be issued. As of December 31, 2001, 8,778,215 shares of Common Stock had
been issued in accordance with the Plan.

     In connection with the Chapter 11 proceedings, on the Effective Date, the
Company paid restructuring success fees of $2.1 million to CIBC World Markets
Corp. ("CIBC"). CIBC was paid $1.05 million in cash and was paid $1.05 million
through the issuance of 161,538 shares of Common Stock (at $6.50 per share).

ITEM 5: OTHER INFORMATION

     The ferrous operations of the Company's subsidiary Proler Southwest Inc.
resolved a dispute with the landlord for the 47 acre facility (the "Facility")
upon which its principal ferrous operations are performed. The dispute was
resolved through the extension of the existing lease for the Facility and the
revocation of a purchase option that had previously been invoked by the
landlord. The amended terms of the lease provide for a purchase option for
Proler Southwest, Inc. beginning in November 2003.

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

     See Exhibit Index

(B) REPORTS ON FORM 8-K

     No reports were filed on Form 8-K during the quarter ended December 31,
2001.

                                        25
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          METAL MANAGEMENT, INC.

                                          By: /s/ ALBERT A. COZZI
                                            ------------------------------------
                                            Albert A. Cozzi
                                            Director, Chairman of the
                                            Board, and Chief
                                            Executive Officer
                                            (Principal Executive Officer)

                                          By: /s/ MICHAEL W. TRYON
                                            ------------------------------------
                                            Michael W. Tryon
                                            President and Chief
                                            Operating Officer

                                          By: /s/ ROBERT C. LARRY
                                            ------------------------------------
                                            Robert C. Larry
                                            Executive Vice President,
                                            Finance and Chief
                                            Financial Officer
                                            (Principal Financial Officer)

                                          By: /s/ AMIT N. PATEL
                                            ------------------------------------
                                            Amit N. Patel
                                            Vice President, Finance and
                                            Controller
                                            (Principal Accounting Officer)

                                          Date: February 14, 2002

                                        26
<PAGE>

                             METAL MANAGEMENT, INC.

                                 EXHIBIT INDEX

NUMBER AND DESCRIPTION OF EXHIBIT

<Table>
<C>    <S>
2.1    Disclosure Statement with respect to First Amended Joint
       Plan of Reorganization of Metal Management, Inc. and its
       Subsidiary Debtors, dated May 4, 2001 (incorporated by
       reference to Exhibit 2.1 of the Company's Annual Report on
       Form 10-K for the year ended March 31, 2001).
3.1    Second Amended and Restated Certificate of Incorporation of
       the Company, as filed with the Secretary of State of the
       State of Delaware on June 29, 2001 (incorporated by
       reference to Exhibit 3.1 of the Company's Annual Report on
       Form 10-K for the year ended March 31, 2001).
3.2    Amended and Restated By-Laws of the Company adopted as of
       June 29, 2001 (incorporated by reference to Exhibit 3.2 of
       the Company's Annual Report on Form 10-K for the year ended
       March 31, 2001).
3.3    Specimen certificate evidencing the Common Stock of the
       Company (incorporated by reference to Exhibit 3.3 of the
       Company's Report on Form 8-A filed on August 21, 2001).
3.4    Specimen certificate evidencing the Series A Warrants of the
       Company (incorporated by reference to Exhibit 3.4 of the
       Company's Report on Form 8-A filed on August 21, 2001).
10.1   Employment Agreement, dated September 1, 2001 between
       William T. Proler and the Company.
</Table>

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