<PAGE>   1
30

MANAGEMENT'S DISCUSSION AND ANALYSIS
_______________________________________________________________________________

The LTV Corporation ("LTV" or the "Company") is a fully integrated steel
producer that manufactures a diversified line of carbon steel products
consisting of hot rolled and cold rolled sheet, galvanized, tin mill and
tubular products. The Company operates two integrated steel mills (Cleveland
Works and Indiana Harbor Works) and various finishing, galvanizing and
processing facilities as well as tin mill and tubular operations. The Company
is a major supplier of flat rolled steel for the domestic automotive, appliance
and electrical equipment markets.

LTV adopted "fresh start" reporting in which the Company's assets and
liabilities were adjusted to reflect their estimated fair values and the
remaining accumulated deficit was eliminated, resulting in a new reporting
entity as of June 30, 1993 (refer to the Company Reorganization note on page
53). Accordingly, the results of operations, cash flows and financial condition
of the Company subsequent to the date of emergence are not necessarily
comparable with those prior to emergence, and comments on the major differences
are provided as necessary for an understanding of the financial results.

<TABLE>
<CAPTION>
                                                                       Year ended December 31,
RESULTS OF OPERATIONS                                          1995           1994           1993
______________________________________________________________________________________________________
(in millions)
<S>                                                     <C>            <C>            <C>
Sales                                                   $   4,283.2    $   4,233.3    $   3,868.2
Costs and expenses:
  Cost of products sold                                     3,620.9        3,668.6        3,578.5
  Depreciation and amortization                               251.9          241.8          236.8
  Selling, general and administrative                         142.2          133.2          129.3
  Net interest and other income                               (42.6)         (13.0)          (1.9)
  Special credits                                                --             --         (591.6)
                                                        -----------    -----------    -----------
    Total                                                   3,972.4        4,030.6        3,351.1
                                                        -----------    -----------    -----------

Income from continuing operations before items below          310.8          202.7          517.1
Reorganization items                                             --             --           30.7
                                                        -----------    -----------    -----------
Income from continuing operations before income taxes         310.8          202.7          547.8
Income tax provision:
  Taxes payable (refundable)                                    2.0           (1.5)           3.2
  Taxes not payable in cash                                   115.3           74.7          158.2
                                                        -----------    -----------    -----------
    Total                                                     117.3           73.2          161.4
                                                        -----------    -----------    -----------

Income from continuing operations                             193.5          129.5          386.4
Discontinued operations                                        (8.7)          (2.4)           0.5
Extraordinary item                                               --             --        3,928.0
                                                        -----------    -----------    -----------
    Net income                                          $     184.8    $     127.1    $   4,314.9
                                                        ===========    ===========    ===========



OPERATING DATA                                                                                                         
-----------------------------------------------------------------------------------------------------------------------
Raw steel production (thousands of tons)                      8,462          8,253              7,921
Steel shipments (thousands of tons)                           7,961          7,969              7,570
Active employees (thousands)                                   14.4           15.3               15.7
</TABLE>


<TABLE>
<CAPTION>
QUARTERLY INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
======================================================================================
(in millions)
                1st Quarter        2nd Quarter       3rd Quarter          4th Quarter
<S>             <C>                 <C>                <C>                  <C>
1995              82.1              105.2               70.2                $53.3

1994              18.4               62.9               55.3                 66.1

1993*           $(49.8)             (29.8)               0.2                  4.9
<FN>
*   Before special credits and reorganization items

</TABLE>


THE LTV CORPORATION
<PAGE>   2
31

RESULTS OF OPERATIONS
1995 COMPARED WITH 1994
_______________________________________________________________________________

SALES    Sales of $4.283 billion in 1995 increased by $50 million (1%) from
1994, and steel shipments of 7.96 million tons approximated the previous year's
total. The increase in sales during 1995 was primarily due to higher average
selling prices.

Hot and cold flat rolled product sales of $2.146 billion were 2% higher in 1995
versus 1994, reflecting an increase in shipments and selling prices, partially
offset by a change in the mix of products sold which reflected higher shipments
of lower-priced hot rolled steel to the export markets. Galvanized product
sales of $1.221 billion were 1% higher in 1995, reflecting a 5% decrease in
shipments which was more than offset by an increase in average selling prices.
Tin mill product sales of $449 million were 5% lower in 1995, reflecting a 7%
decrease in shipments, partially offset by an increase in average selling
prices. Tubular product sales of $314 million were 7% higher in 1995 than in
1994, reflecting a 2% increase in shipments and an increase in average selling
prices. Nonsteel and other sales in 1995 of $153 million were relatively
unchanged from 1994.

PRODUCTION AND COSTS      Raw steel production increased by 209,000 tons to
8.46 million tons in 1995 compared with 1994. The average operating rate at the
Company's steelmaking facilities during 1995 was 102%, compared with 99% in
1994. The 1994 production was impacted by the extremely cold weather conditions
experienced at the operating units in the first quarter of 1994 and the
start-up of the Direct Hot Charge Complex ("DHCC") at the Cleveland Works,
which became fully operational in the second quarter of 1994. The Company
follows industry standards in calculating its operating rate and such rate is
based on 95% of blast furnace capacity. The 5% adjustment recognizes the
average effect of blast furnace relines. Steel production is supplemented with
purchases of semifinished steel when demand for the Company's products exceeds
production capability.

Cost of products sold as a percentage of sales improved to 84.5% in 1995 from
86.7% in 1994, primarily due to higher average selling prices.  The 1995
results were also favorably impacted by productivity and operating performance
improvements, including those achieved through the Cleveland Works' DHCC,
partially offset by additional costs incurred in 1995 arising from the June
1994 labor agreement with the United Steelworkers of America ("USWA") and
higher purchased material prices.

The Company is continuing its comprehensive redesign of business processes 
to strengthen customer service, increase productivity and reduce costs. 
In 1995, LTV reached a long-term agreement with a large technology
service organization to manage LTV's information systems and data processing
functions. Also, during 1995, LTV began a reorganization and centralization of
certain sales and marketing functions. One-time transitional and personnel costs
related to these actions totaled $9.5 million in 1995, of which $1.7 million was
paid in 1995 and the remainder is expected to be paid in 1996. A portion of
these costs was included in selling, general and administrative expenses and was
the primary reason for the increase in these expenses in 1995 versus 1994.

1994 COMPARED WITH 1993
________________________________________________________________________________

SALES    Sales of $4.233 billion in 1994 increased by $365 million (9%) from
1993, and steel shipments of 7.97 million tons increased by 399,000 tons (5%)
from 1993. The increases in sales and shipments in 1994 were across most of the
markets the Company serves.

Hot and cold flat rolled product sales of $2.100 billion were approximately 11%
higher in 1994 than in 1993, reflecting a 4% increase in shipments and an
increase in average selling prices. Galvanized product sales of $1.212 billion
were 9% higher in 1994, reflecting an increase in shipments of 6% and an
increase in average selling prices. Tin mill product sales of $474 million were
8% higher in 1994, primarily reflecting increases in shipments. Tubular product
sales of $293 million were 16% higher in 1994 than in 1993, reflecting an
increase in shipments of 12% and an increase in average selling prices.
Nonsteel and other sales in 1994 of $154 million were $16 million less than in
1993, principally due to lower outside sales of iron ore.

<TABLE>
<CAPTION>
SALES
==============================================================
(in millions)
                                    1993       1994       1995
<S>                                 <C>        <C>         <C>
Hot and Cold Flat Rolled            49%        50%         50% 

Galvanized                          29%        29%         29%

Tin Mill                            11%        11%         11%

Tubular                              7%         7%          7%

All Other                            4%         3%          3%
                                 -----      -----       -----
                                $3,868     $4,233      $4,283              
</TABLE>
<PAGE>   3
32

PRODUCTION AND COSTS      The average operating rate at the Company's
steelmaking facilities during 1994 was 99%, versus 95% on a comparable basis in
1993. Raw steel production increased by 332,000 tons to 8.25 million tons in
1994 compared with 1993, primarily a result of the 1993 scheduled production
interruptions for a blast furnace reline and significant modifications
associated with the construction of the DHCC at the Cleveland Works. The 1994
production was unfavorably impacted by the extremely cold weather conditions
experienced at the operating units in the first quarter.

Cost of products sold as a percentage of sales improved to 86.7% in 1994 from
92.5% in 1993, primarily due to higher average selling prices, increased
shipments and lower costs. The 1994 results were favorably impacted by
operating performance improvements due to the Cleveland Works' DHCC, lower
postemployment expenses and gains related to various tax settlements and
divestitures. However, these benefits were partially offset by additional costs
related to higher purchased scrap prices, the 1994 labor agreement with the
USWA and the first quarter's extremely cold weather conditions.

The special credits in 1993 included a $370.6 million gain related to an
antitrust settlement, and a $221.0 million gain from the anticipated receipt of
assets held in trust and the collection of a note receivable related to a 1989
divestiture.


OTHER INCOME AND EXPENSE ITEMS 1995, 1994 AND 1993
________________________________________________________________________________

NET INTEREST AND OTHER INCOME     Net interest and other income of $42.6        
million in 1995 increased by $29.6 million from 1994, primarily due to increased
interest income on higher levels of investments coupled with a higher earnings
rate, as well as lower credit facilities' fees. The Company also recorded a $5.8
million gain in 1995 related to unclaimed bankruptcy distributions.

Net interest and other income of $13.0 million in 1994 increased by $11.1
million from 1993, primarily due to pre-reorganization interest income being
recorded in reorganization items.

REORGANIZATION ITEMS      Reorganization items of $30.7 million in 1993
consisted of a $1.002 billion increase to allowed claims for pension plans in
excess of recorded amounts, a $1.143 billion gain on fair value adjustments to
the Company's assets and liabilities, $132.6 million of professional fees and
expenses, and $22.3 million of interest earned on accumulated excess cash. The
reorganization items were related to the periods that the Company was operating
under the protection of Chapter 11; therefore, no reorganization items have
occurred after the first half of 1993 (refer to the Company Reorganization note
on page 53).

INCOME TAXES     The Company's federal and state income tax expense from
continuing operations was $117.3 million in 1995, $73.2 million in 1994 and
$160.0 million in the post-reorganization period in 1993, although $115.3
million, $74.7 million and $158.2 million of such expense amounts,
respectively, did not result in cash payments. This accounting treatment is
required under fresh start reporting in that the tax benefits associated with
the utilization of pre-reorganization net operating loss carryforwards ($2.6
billion at December 31, 1995) and net deductible temporary differences ($1.2
billion at December 31, 1995) do not increase net income, but rather such
benefits first eliminate the Company's intangible asset and then increase
shareholders' equity. Upon reorganization, the intangible asset, representing
reorganization value in excess of amounts allocable to identifiable assets,
amounted to $267.7 million and was reduced to zero in 1995 due to the
realization of these pre-reorganization tax benefits and amortization.
Subsequent utilization of pre-reorganization tax benefits totaling $84.9
million in 1995 increased the additional paid-in capital account of
shareholders' equity. The Company's cash payments for income taxes will
continue to be significantly less than the income tax expense amounts in the
financial statements until these tax attributes are fully utilized.
Consequently, income before income taxes represents an important indicator of
the Company's earnings capability.

The Company's effective tax rate was 37.7% in 1995, 36.1% in 1994 and 39.4% for
the post-reorganization period in 1993. The 1994 effective tax rate reflects
the Company reaching a settlement on certain state income tax issues and
recording a benefit of $5.0 million. Taxes payable in cash during the past
three years consist primarily of state and federal (for a less than 80% owned
subsidiary) taxes. The Company's ability to reduce its future income tax
payments through the use of net operating loss carryforwards could be
significantly limited on an annual basis if the Company were to undergo an
"ownership change" within the meaning of Section 382 of the Internal Revenue
Code of 1986. For the purpose of preserving LTV's ability to utilize its net
operating loss carryforwards, Article Ninth of LTV's Restated Certificate of
Incorporation prohibits, with certain limited exceptions, any unapproved
acquisition of Common Stock or Series A Warrants that would cause the ownership
interest percentage of the acquirer or any other person to increase to 4.5% or
above.
<PAGE>   4
33

DISCONTINUED OPERATIONS      On August 1, 1995, LTV sold its energy products
segment, Continental Emsco Company ("Continental Emsco"), for $74.6 million. A
portion of the proceeds was used to reduce LTV's long-term debt by $38.6
million. The loss on the sale of the segment was recorded in the second quarter
of 1995, and Continental Emsco is reflected as a discontinued operation in
LTV's financial statements for all periods presented. The applicable net assets
held for sale at December 31, 1994, totaling $85.2 million, are included in
current prepaid expenses, deposits and other assets.

The 1995 results from discontinued operations included income from the energy
products segment operations of $1.3 million, net of income tax expense of $1.1
million, and the loss on the sale of the business of $10.0 million, net of
income tax benefits of $6.0 million. The 1994 results from discontinued
operations included losses from the energy products segment of $2.4 million,
net of income tax benefits of $1.0 million. The 1993 results from discontinued
operations included income from the energy products segment of $0.5 million,
net of income tax expense of $1.7 million. The improvement in operating results
during 1995 versus 1994 was due to higher-margin sales and lower selling,
general and administrative expenses. The reduction in results during 1994
versus 1993 was due to a higher percentage of sales of lower-margin products,
lower international sales of drilling equipment parts and higher than expected
costs incurred in connection with the construction of cranes used on an
offshore drilling project.

EXTRAORDINARY ITEM           Upon reorganization, certain recorded claims and   
liabilities totaling $5.745 billion were discharged for consideration of $1.555
billion in cash, $52 million in other assets and the issuance of new LTV Common
Stock and Series A Warrants. A nontaxable extraordinary gain of $3.928 billion
was recorded on this debt discharge because the consideration was less than the
recorded liabilities (refer to the Company Reorganization note on page 53).

LIQUIDITY AND FINANCIAL RESOURCES
________________________________________________________________________________

The Company's sources of liquidity include cash and cash equivalents,
marketable securities, cash from operations, amounts available under credit
facilities and other external sources of funds. Management believes that these
sources are sufficient to fund the current requirements of working capital,
capital expenditures, investment in a joint venture, pensions and other
postemployment benefits.

<TABLE>
<CAPTION>
CASH FLOW                                                                                     1995           1994               
-----------------------------------------------------------------------------------------------------------------
(in millions)
<S>                                                                                   <C>             <C>
Cash and cash equivalents at beginning of year                                        $       335     $        406
                                                                                      -----------     ------------
Cash flow from operations                                                                     756              716
Issuance of Common Stock                                                                       --              257
Proceeds from dispositions of discontinued operations, 
  businesses and properties                                                                    94              184
Pension funding to restored plans                                                            (473)            (642)
Net purchases of marketable securities                                                      
(reflected in end of year balance-see below)                                                 (100)            (358)
Capital expenditures                                                                         (205)            (234)
Investment in Trico Steel Company                                                             (89)              (1)
Payments on long-term debt                                                                    (41)              (2)
Other                                                                                         (11)               9
                                                                                      -----------     ------------
Decrease in cash and cash equivalents                                                         (69)             (71)
                                                                                      -----------     ------------
Cash and cash equivalents at end of year                                                      266              335

Marketable securities at end of year                                                          457              358
                                                                                      -----------     ------------
Total cash, cash equivalents and marketable securities at end of year                 $       723     $        693
                                                                                      ===========     ============
</TABLE>
<PAGE>   5
34

Since December 31, 1994, total cash, cash equivalents and marketable securities
have increased by $30 million to $723 million at December 31, 1995. During
1995, cash provided by operating activities amounted to $756 million. The other
major source of cash during 1995 consisted of $94 million in proceeds from the
dispositions of discontinued operations, businesses and properties.  Major uses
of cash during 1995 included $473 million in funding to the restored pension
plans, the conversion of $100 million of cash equivalents to highly liquid
marketable securities to improve the return on those funds, $205 million in
capital expenditures, $89 million investment in the Trico Steel Company, L.L.C.
("Trico Steel Company") joint venture and $41 million of long-term debt
payments.

From December 31, 1993, total cash, cash equivalents and marketable securities
increased by $287 million to $693 million at December 31, 1994.  During 1994,
cash provided by operating activities, which included the remaining $171
million from the settlement of an antitrust lawsuit, amounted to $716 million.
Other major 1994 sources of cash consisted of $257 million from the Company's
equity offering and $184 million relating to dispositions of businesses and
properties. Major uses of cash during 1994 included $642 million in funding to
the restored pension plans, the conversion of $358 million of cash equivalents
to highly liquid marketable securities and $234 million in capital
expenditures.

Cash and cash equivalents increased to $406 million at December 31, 1993 from
$200 million at June 30, 1993. During the second six months of 1993, cash
provided by operating activities, which included $200 million from the
settlement of an antitrust lawsuit, amounted to $432 million.  Other major
sources of cash included $299 million from the Company's equity offering and
$123 million relating to the dispositions of businesses and properties. The
major uses of cash during this period included $512 million in contributions
and cash restricted for contributions to the restored pension plans and $127
million in capital expenditures.

During the first six months of 1993, cash usage, excluding the effects of
reorganization-related items, was $136 million, principally due to capital
expenditures of $196 million. As part of the Company's reorganization on June
28, 1993, Sumitomo Metal Industries, Ltd. made a cash investment and loan
totaling $200 million and the Pension Benefit Guaranty Corporation ("PBGC")
made a cash investment of $50 million. The Company paid out $1.555 billion of
cash, $52 million in other assets and issued Common Stock and Series A Warrants
to accomplish the reorganization.

In October 1994, the Company entered into two five-year credit facilities (the
"Receivables Facility" and the "Letter of Credit Facility") which provide the
Company with up to $470 million for working capital requirements. The
Receivables Facility permits borrowings of up to $320 million for working
capital requirements and general corporate purposes, $100 million of which may
be used to issue letters of credit. At December 31, 1995, $264 million was
permitted to be borrowed; however, no borrowings were outstanding and letters
of credit outstanding amounted to $25.8 million under this facility. The Letter
of Credit Facility is a separate credit facility that provides for the issuance
of up to $150 million in letters of credit. At December 31, 1995, letters of
credit totaling $89.8 million were outstanding under this facility.

The Company's long-term debt and Letter of Credit Facility agreements contain
various covenants which require the Company to maintain certain financial
ratios and amounts. These agreements as well as the Company's agreement with
the PBGC ("PBGC Agreement" as further discussed in the Company Reorganization
note on page 53) place certain restrictions on payments of dividends, capital
expenditures, investments in subsidiaries and borrowings. Under the terms of
the most restrictive covenant, $107 million of retained earnings are available
for Common Stock dividend payments at December 31, 1995. Substantially all of
the Company's receivables and inventories are pledged as collateral under
certain of these agreements. The Company does not believe that the restrictions
contained in these covenants will cause significant limitations on its
financial flexibility.

CAPITAL EXPENDITURES AND REQUIREMENTS
________________________________________________________________________________

The Company invested $205 million in capital expenditures during 1995,
including the rehabilitation of two blast furnaces at the Cleveland Works, a
rehabilitation of the Chicago coke facility and the initial development of new
information systems to be used throughout the Company.  LTV's capital
expenditures are directed toward market-driven requirements, customer service,
productivity improvements, cost-reduction programs, new technology, replacement
projects and environmental requirements. The Company anticipates capital
expenditures will approximate $277 million during 1996.
<PAGE>   6
35

INVESTMENT IN JOINT VENTURE
________________________________________________________________________________

In 1995, LTV formed a joint venture with Sumitomo Metal Industries, Ltd. and
British Steel plc to build and operate a new flat rolled steel minimill
company, known as Trico Steel Company. LTV has a 50% interest in the joint
venture with the other members having interests of 25% each. Trico Steel
Company is locating its new facility in Decatur, Alabama, which is in the
growing steel market of the southeastern United States. Construction began
during the second quarter of 1995 and operations are scheduled to begin in
early 1997. The mill will have an estimated annual production capacity of 2.2
million tons. The estimated construction cost of the project will approximate
$450 million, a portion of which will be financed by project debt without
recourse to the members of the joint venture. LTV's investment in Trico Steel
Company totaled $90 million at December 31, 1995, and LTV plans to make an
additional investment of approximately $60 million in 1996.

<TABLE>
<CAPTION>
PENSION PLAN ASSETS
====================================================================
(in millions)
At December 31,                     
                                            1993       1994      1995
<S>                                       <C>        <C>       <C>

Pension plan assets at end of year        $1,566     $2,003    $2,566

<FN>

Pension plan assets pricipally consist of equity securities listed on 
national exchanges, fixed income securities and cash equivalents.  The
actual return on plan assets in 1995 was $461 million, or 23.5%.
</TABLE>

PENSION AND OTHER POSTEMPLOYMENT BENEFITS
_______________________________________________________________________________

The expense for all pension plans was $172 million in 1995, increasing from
$163 million in 1994, primarily due to using a higher discount rate (an
accounting requirement) to determine the December 1994 value of the pension
obligation and the pension benefit enhancements under the Company's 1994 USWA
labor agreement, partially offset by the effects of the Company's significant
funding of the plans. The pension expense in 1994 was $24 million higher than
the 1993 pension expense of $139 million, primarily because of the
pre-reorganization accounting for the major defined benefit pension plans
during 1993.

Pension expense for all plans is expected to be reduced to approximately $121
million in 1996, which primarily reflects the benefit of the significant
pension plan contributions made by the Company and the required decrease in the
discount rate used to determine the December 31, 1995 value of the pension
obligation.

The Company's cash funding of its major defined benefit pension plans is based
on a flexible payment schedule as determined under the PBGC Agreement requiring
minimum annual fixed payments of $30 million in 1994 through 1997, and $50
million in subsequent years. Also, if cash flow exceeds certain levels, the
Company is obligated each year to make additional payments to these plans.
Under the PBGC Agreement, the pension contributions due in 1996 total $321
million, of which $278 million was prepaid in 1995 and the remainder was paid
in early 1996. The Company has also made other "advance payments" to the
pension plans totaling $365 million at December 31, 1995, which can be used at
the Company's option as credits against future required payments.

Other postemployment benefit expense, consisting primarily of health care and
life insurance benefits, decreased to $137 million in 1995 from $149 million in
1994, primarily due to more favorable claims experience, partially offset by a
higher discount rate used to determine the December 1994 value of the other
postemployment benefit obligation. Other postemployment benefit expense in 1994
was $64 million less than the 1993 expense of $213 million, which resulted from
fresh start reporting, whereby the Company recorded a reduction in the
liability for postemployment benefits of $503 million. Other postemployment
benefit expense is expected to approximate $136 million in 1996, which takes
into consideration the lower discount rate used to determine the December 31,
1995 value of the other postemployment obligation. Cash payments amounted to
$144 million in 1995, $130 million in 1994 and $143 million in 1993.

Movements in the rate of interest on long-term high-quality corporate bonds
necessitated a required change in the discount rate used to calculate the
actuarial present value of the benefit obligations for pensions and other
postemployment benefits from a 9.0% discount rate in 1994 to 7.25% at December
31, 1995. At December 31, 1995, this adjustment of the discount rate increased
the benefit obligation for pensions by $457 million and such adjustment was
also the primary reason for the increases in the minimum pension liability
adjustment account of $179 million and the intangible asset minimum pension
liability adjustment account of $45 million. The decreases in the discount rate
and related health care cost trend rate increased the benefit obligation for
other postemployment benefits by $178 million at December 31, 1995. However,
the application of these lower rates does not require an adjustment to the
related other postemployment benefits liability on the Company's consolidated
balance sheet. The changes have no impact on near-term cash flows, and their
impact on future operating results is included in the previously disclosed 1996
estimated expense amounts.

<PAGE>   7
36

The accounting requirement to reset annually the discount rate used to
calculate the actuarial present value of the pension and other postemployment
benefit obligations, consistent with movements in market interest rates,
results in volatility of the recorded amount of the Company's obligations. This
volatility is highlighted in the adjacent graph which displays LTV's unfunded
projected pension benefit obligation at each annual required discount rate and
at a constant 8.5% discount rate. An 8.5% rate has been used by LTV during the
prior three years in determining the assumed long-term rate of return on
pension plan assets.

<TABLE>
<CAPTION>
UNFUNDED PROJECTED PENSION BENEFIT OBLIGATION
====================================================================
(in millions)
At December 31,
                                       1993         1994        1995
<S>                                  <C>          <C>         <C>
Actual discount rate used
(7.0% in 1993, 9.0% in 1994                                  
and 7.25% in 1995)                   $2,107       $1,174      $1,042  

Constant discount rate of 8.5%        1,709        1,299         711
</TABLE>

As part of the 1994 USWA labor agreement, the Company began making      
contributions to a Voluntary Employee Beneficiary Association ("VEBA") Trust to
prefund other postemployment benefits for retirees covered under the agreement.
The Company is required to contribute to the VEBA Trust a minimum of $5 million
annually and additional amounts based on defined cash flow as set forth in the
labor agreement. The Company may also make additional discretionary
contributions. The initial required contribution made in 1995 was $19 million,
and the required 1996 contribution is expected to be $11 million.

A 1993 agreement with the USWA provided that a portion of the requirements with
respect to certain postemployment benefits would be secured by a junior lien of
$250 million on collateral with an unencumbered fair market value of at least
$500 million. The initial security was provided by the grant of a mortgage on
facilities having a carrying value of approximately $500 million.

COMPETITION AND STEEL PRICES
________________________________________________________________________________

LTV competes directly with domestic and foreign integrated flat rolled carbon
steel producers, minimills and indirectly with producers of plastics, aluminum
and other materials such as ceramics and wood, which sometimes can be
substituted for flat rolled carbon steel in manufacturing and construction.
Certain companies have announced plans or begun construction of additional
minimills to produce flat rolled products. Thin slab casting technologies have
allowed some minimills to enter certain flat rolled markets which have
traditionally been supplied by integrated producers. The primary factors which
affect competition include price, quality, delivery and customer service. LTV
targets quality-critical, value-added applications and believes it is able to
differentiate some of its products from those of competitors on the basis of
product quality, on-time delivery performance, and product and technical
support to customers.

Significant competition from foreign producers has adversely affected product
prices in the United States and tonnage sold by domestic producers. The
intensity of foreign competition is affected by fluctuations in the value of
the U.S. dollar against foreign currencies and demand within the domestic steel
market. Many foreign steel producers are owned, controlled or subsidized by
their governments, and decisions with respect to production and sales may be
influenced to a greater degree by political and economic policy considerations
than by prevailing market conditions. In 1992, the Company and certain domestic
steel producers filed unfair trade petitions against foreign producers of
certain steel products. During 1993, the International Trade Commission ("ITC")
upheld final subsidy and dumping margins on approximately 26% of the volume of
all 1993 flat rolled carbon steel imports under investigation. The U.S. Court
of International Trade has affirmed these decisions.  Appeals on selected
issues have been filed in the U.S. Court of Appeals for the Federal Circuit.
These decisions are also subject to review annually at an administrative level
with respect to the amount of the margins and review periodically by the ITC
with regard to the existence of material injury. Based on American Iron and
Steel Institute reports, steel imports of flat rolled products (including tin
mill products) during the first 11 months of 1995 totaled 10.6 million tons, a
decrease of 2.5 million tons, or 19%, from the year-ago period. The outcome of
the trade cases, as well as the 1995 legislation implementing the Uruguay Round
agreements under the General Agreement on Tariffs and Trade, may result in
increased imports of steel products into the United States.

The Company's results of operations are substantially affected by small
variations in the realized prices of its products, which are significantly
influenced by prevailing prices for steel and demand for particular products.
The Company's steel operations shipped 7.96 million tons of steel products and
recorded sales of $4.283 billion during 1995. A 1% increase or decrease in the
average realized price during 1995 would, on a pro forma basis, have resulted
in an increase or decrease in pretax income of approximately $37 million. While
the Company and the steel industry in general realized price increases in 1994
and the first six months of 1995, the Company's average realized steel selling
price per ton during the second six months of 1995 was lower than the average
price realized during the first six months of 1995. Competitive pressures in
the steel industry could limit the Company's ability to maintain or increase
current prices.

<PAGE>   8
37

LABOR MATTERS
________________________________________________________________________________

Effective June 1, 1994, the USWA entered into a five-year and two-month labor
agreement with the Company on terms consistent with those negotiated with other
major integrated steel producers. The agreement provides for a reopening of
wage provisions, which is subject to binding arbitration and becomes effective
August 1, 1996.

ENVIRONMENTAL LIABILITIES AND RELATED COSTS
________________________________________________________________________________

LTV is subject to changing and increasingly stringent environmental laws and
regulations concerning air emissions, water discharges and waste disposal, as
well as remediation activities that involve the clean-up of environmental media
such as soils and groundwater ("remediation liabilities"). As a consequence,
the Company has incurred, and will continue to incur, substantial capital
expenditures and operating and maintenance expenses in order to comply with
such requirements. Additionally, if any of the Company's facilities are unable
to meet required environmental standards or laws, those operations could be
temporarily or permanently closed.

Important examples of laws referred to above are the 1990 Clean Air Act
Amendments ("CAA Amendments"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), and related state and local laws. The CAA Amendments
and its state and local counterparts require progressively more stringent air
emission quality standards in the future. RCRA and related state laws include
so-called "corrective action" provisions that grant the environmental agencies
authority to require the Company to clean up environmental media, such as soils
and groundwater, under certain prescribed conditions. These corrective action
provisions, in most instances, are not self-implementing and, in the Company's
view, create no current legal obligation. If, in the future, the Company were
required to implement corrective actions, the Company could be required to
record additional liabilities which cannot be estimated at this time, but could
be substantial.

In 1993, as part of the Company's reorganization, LTV entered into an agreement
with the U.S. Environmental Protection Agency ("EPA") and several state
environmental agencies, which settled a significant portion of the Company's
pending remediation liabilities and certain other environmental-related
liabilities. The agreement also established a mechanism to resolve specified
environmental claims subsequently identified (if any).

During 1995, the Company spent approximately $17 million for environmental
clean-up and related matters at operating and idled facilities, and at December
31, 1995, has a recorded liability of $98 million for known and identifiable
environmental and related matters. As the Company becomes aware of additional
matters or obtains more information, it may be required to record additional
liabilities for environmental remediation. The Company also spent approximately
$19 million in 1995 for environmental compliance-related capital expenditures
and expects it will be required to spend an average of approximately $30
million annually in capital expenditures during the next five years to meet
environmental standards.

NEW ACCOUNTING PRONOUNCEMENT
________________________________________________________________________________

In 1995, the Financial Accounting Standards Board issued Statement No. 121,     
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present, and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. The Company will adopt Statement No. 121 in the
first quarter of 1996 and, based on current circumstances, it does not believe
the effect of adoption will be material.
<PAGE>   9
 38


CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
(in millions, except per share data)
                                                                     Year Ended                     Six Months Ended
                                                                    December 31,            December 31,           June 30,
                                                              1995               1994               1993               1993
-----------------------------------------------------------------------------------------------------------------------------

<S>                                                     <C>                <C>                 <C>                <C>
Sales                                                   $    4,283.2       $    4,233.3        $   2,010.5        $   1,857.7
                                                        ------------       ------------        -----------        -----------
Costs and expenses
     Cost of products sold                                   3,620.9            3,668.6            1,817.4            1,761.1
     Depreciation and amortization                             251.9              241.8              124.4              112.4
     Selling, general and administrative                       142.2              133.2               63.5               65.8
     Net interest and other income                             (42.6)             (13.0)               0.1               (2.0)
     Special credits                                              --                 --             (400.6)            (191.0)
                                                        ------------       ------------        -----------        -----------
       Total                                                 3,972.4            4,030.6            1,604.8            1,746.3
                                                        ------------       ------------        -----------        -----------
Income from continuing operations
     before items below                                        310.8              202.7              405.7              111.4

Reorganization items                                              --                 --                 --               30.7
                                                        ------------       ------------        -----------        -----------
Income from continuing operations
     before income taxes                                       310.8              202.7              405.7              142.1    
Income tax provision                                           
     Taxes payable (refundable)                                  2.0               (1.5)               1.8                1.4
     Taxes not payable in cash                                 115.3               74.7              158.2                 --
                                                        ------------       ------------        -----------        -----------
       Total                                                   117.3               73.2              160.0                1.4
                                                        ------------       ------------        -----------        -----------

Income from continuing operations                              193.5              129.5              245.7              140.7

Discontinued operations                                         (8.7)              (2.4)               1.5               (1.0)
Extraordinary item                                                --                 --                 --            3,928.0
                                                        ------------       ------------        -----------        -----------
Net income                                              $      184.8       $      127.1        $     247.2        $   4,067.7
Earnings per share                                      ============       ============        ===========        ===========
     Primary:
       Continuing operations                            $       1.79      $        1.31       $       3.19
       Discontinued operations                                 (0.08)             (0.02)              0.02
                                                        ------------      -------------       ------------
         Net income                                     $       1.71      $        1.29       $       3.21               *
                                                        =============      =============       ============
     Fully diluted:
       Continuing operations                            $       1.76      $        1.29       $       3.01
       Discontinued operations                                 (0.08)             (0.02)              0.02
                                                        -------------      -------------       ------------
         Net income                                     $       1.68      $        1.27       $       3.03               *
                                                        =============      =============       ============
</TABLE>







*  Per share amounts are not meaningful due to reorganization.
See notes to consolidated financial statements.


THE LTV CORPORATION
<PAGE>   10
39

CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
(in millions)
                                                                     Year Ended                        Six Months Ended
                                                                    December 31,                December 31,         June 30,
                                                              1995               1994               1993               1993
-----------------------------------------------------------------------------------------------------------------------------

<S>                                                     <C>                <C>                 <C>                <C>
Operating activities
     Income from continuing operations                  $      193.5       $      129.5        $     245.7        $     140.7
     Adjustments to reconcile income to net cash
       provided by (used in) operating activities:
       Special credits                                            --              171.0             (200.6)            (191.0)
       Depreciation and amortization                           251.9              241.8              124.4              112.4
       Income tax provision not payable in cash                115.3               74.7              158.2                 --
       Defined benefit pension expense                         124.0              119.8               84.9               13.0
       Postemployment benefit payments (more) less
         than related expense                                   (7.6)              18.5                9.1               61.5
       VEBA Trust (contributions) payments                     (19.1)                --                 --               22.3
       Changes in assets and liabilities                       104.0              (31.0)               6.7               (8.4)
       Other                                                    (5.8)              (8.2)               3.5              (11.7)
       Cash used to discharge prepetition liabilities             --                 --                 --             (774.7)
                                                        ------------       ------------        -----------        -----------

         Net cash provided by (used in)
           operating activities                                756.2              716.1              431.9             (635.9)
                                                        ------------       ------------        -----------        -----------

Investing activities
     Capital expenditures                                     (204.8)            (234.0)            (127.2)            (195.9)
     Investment in Trico Steel Company                         (89.2)              (0.9)                --                 --
     Net purchases of marketable securities                    (99.7)            (357.5)                --                 --
     Proceeds from dispositions of discontinued
       operations, businesses and properties                    94.4              184.2              123.5               10.2
     Other                                                      (9.5)             (13.6)              (4.0)              (4.5)
                                                        ------------       ------------        -----------        -----------

         Net cash used in investing activities                (308.8)            (421.8)              (7.7)            (190.2)
                                                        ------------       ------------        -----------        -----------

Financing activities
     Issuance of Common Stock                                     --              257.2              298.5                 --
     Pension funding to restored plans                        (472.6)            (642.2)            (512.4)            (862.1)
     Receipt of escrowed funds                                    --               25.8                 --                 --
     Payments on long-term debt                                (41.1)              (2.5)              (2.5)                --
     Issuance of long-term debt                                   --                 --                 --                7.1  
     Preferred dividends paid                                   (2.2)              (2.3)              (1.1)                --
     Other                                                      (1.0)              (1.2)              (0.8)              (0.7)
     Other reorganization-related items                           --                 --                 --              250.0
                                                        ------------       ------------        -----------        -----------

         Net cash used in financing activities                (516.9)            (365.2)            (218.3)            (605.7)
                                                        ------------       ------------        -----------        -----------

Net (decrease) increase in cash and
     cash equivalents                                          (69.5)             (70.9)             205.9           (1,431.8)
Cash and cash equivalents at beginning of period               335.4              406.3              200.4            1,632.2
                                                        ------------       ------------        -----------        -----------
Cash and cash equivalents at end of period              $      265.9       $      335.4        $     406.3        $     200.4
                                                        ============       ============        ===========        ===========

</TABLE>


See notes to consolidated financial statements.

THE LTV CORPORATION
<PAGE>   11
 40

<TABLE>
CONSOLIDATED BALANCE SHEET
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
(in millions, except per share data)
                                                                                                        December 31,
ASSETS                                                                                          1995                   1994
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                     <C>
Current assets
     Cash and cash equivalents                                                            $      265.9            $     335.4
     Marketable securities                                                                       457.2                  357.5
                                                                                          ------------             ----------
                                                                                                 723.1                  692.9
     Receivables, less allowance for doubtful accounts of $17.1 in 1995
       and $17.8 in 1994                                                                         396.1                  464.5
     Inventories:
       Products                                                                                  512.6                  512.6
       Materials, purchased parts and supplies                                                   229.9                  239.0
                                                                                          ------------             ----------
         Total inventories                                                                       742.5                  751.6
     Prepaid expenses, deposits and other                                                          8.7                  118.5
                                                                                          ------------             ----------
         Total current assets                                                                  1,870.4                2,027.5
                                                                                          ------------             ----------
Investments and other noncurrent assets                                                          369.5                  308.6

Property, plant and equipment

     Land and land improvements                                                                   69.5                   71.2
     Buildings                                                                                   144.9                  142.9
     Machinery and equipment                                                                   3,322.2                3,164.8
     Construction in progress                                                                    121.6                  106.1
                                                                                          ------------             ----------
                                                                                               3,658.2                3,485.0
     Less allowance for depreciation                                                            (518.0)                (296.0)
                                                                                          ------------             ----------
         Total property, plant and equipment                                                   3,140.2                3,189.0
                                                                                          ------------             ----------
                                                                                          $    5,380.1            $   5,525.1
                                                                                          ============            ===========   
</TABLE>


See notes to consolidated financial statements.


THE LTV CORPORATION                                                         
                                         





<PAGE>   12
41

<TABLE>

<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------

                                                                                                        December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY                                                            1995                   1994
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                     <C>
Current liabilities
     Accounts payable                                                                     $      255.0            $     267.2
     Accrued employee compensation and benefits                                                  408.4                  394.0
     Other accrued liabilities                                                                   183.3                  175.9
                                                                                          ------------            -----------
         Total current liabilities                                                               846.7                  837.1
                                                                                          ------------            -----------

Noncurrent liabilities
     Long-term debt                                                                              150.4                  183.1
     Postemployment health care and other insurance benefits                                   1,598.4                1,633.4
     Pension benefits                                                                            988.7                1,138.7
     Other                                                                                       420.7                  450.0
                                                                                          ------------            -----------
         Total noncurrent liabilities                                                          3,158.2                3,405.2
                                                                                          ------------            -----------

Shareholders' equity
     Convertible preferred stock -- stated value $50.0                                             0.5                    0.5
     Common stock -- par value $0.50 per share; authorized 150.0 shares;
       issued and outstanding 105.5 shares in 1995 and 106.0 shares in 1994                       52.8                   53.0
     Additional paid-in capital                                                                  958.0                  872.8
     Retained earnings                                                                           549.3                  366.7
     Minimum pension liability adjustment                                                       (184.8)                  (5.8)
     Other                                                                                        (0.6)                  (4.4)
                                                                                          ------------            -----------
         Total shareholders' equity                                                            1,375.2                1,282.8
                                                                                          ------------            -----------
                                                                                          $    5,380.1            $   5,525.1
                                                                                          ============            ===========
</TABLE>
























<PAGE>   13
42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

-----------------------------------------------------------------------------
December 31, 1995

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------------------

DESCRIPTION OF BUSINESS   The LTV Corporation ("LTV" or the "Company") is a
fully integrated steel producer that manufactures a diversified line of carbon
steel products consisting of hot rolled and cold rolled sheet, galvanized, tin
mill and tubular products. The Company operates two integrated steel mills
(Cleveland Works and Indiana Harbor Works) and various finishing, galvanizing
and processing facilities as well as tin mill and tubular operations. The
Company is a major supplier of flat rolled steel for the domestic automotive,
appliance and electrical equipment markets.

BASIS OF PRESENTATION     LTV adopted "fresh start" reporting in which the
Company's assets and liabilities were adjusted to reflect their estimated fair
values and the remaining accumulated deficit was eliminated, resulting in a new
reporting entity as of June 30, 1993.  Accordingly, the Company's consolidated
financial statements prior to June 30, 1993 are not necessarily comparable to
consolidated financial statements presented subsequent to that date. A vertical
line has been placed on the consolidated financial statements to distinguish
between pre-reorganization and post-reorganization activity. Certain prior year
amounts have been reclassified to conform with the current year presentation.

PRINCIPLES OF CONSOLIDATION       The consolidated financial statements include
LTV and its majority-owned subsidiaries. Investments in joint ventures and
companies owned 20% to 50% are accounted for by the equity method.  The
Company's interest in the cumulative undistributed earnings of its
unconsolidated affiliates was $13.8 million at December 31, 1995, all of which
was available for dividend or other distribution to the Company.  

Cost of products sold has been reduced by the equity in earnings of raw
material and other affiliates of $17.2 million, $14.7 million, $1.7 million and
$9.5 million for the years ended December 31, 1995 and 1994, and the six months
ended December 31 and June 30, 1993, respectively.

MARKETABLE SECURITIES     The Company determines the appropriate classification
of marketable securities at the time of purchase and reevaluates such
designation at each balance sheet date. Marketable securities have been
classified as available-for-sale and are carried at fair value, with unrealized
holding gains and losses reported as a separate component of shareholders'
equity.

The cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization, interest income,
realized gains and losses and declines in value judged to be other than
temporary are included in net interest and other income. The cost of securities
sold is based on specific identification.

INVENTORIES      Inventories were recorded at their estimated fair values at
June 30, 1993. Inventories are valued at the lower of cost or market, with cost
determined primarily by the "last-in, first-out" ("LIFO") method. The amount by
which inventory is reduced to state inventory at LIFO value is $26.2 million at
December 31, 1995 and $20.8 million at December 31, 1994. Liquidation of LIFO
inventory quantities, carried at costs which prevailed in earlier years,
reduced cost of products sold by $4.2 million and $1.8 million during the years
ended December 31, 1995 and 1994, respectively, and increased cost of products
sold by $1.8 million and $2.5 million during the six months ended December 31
and June 30, 1993, respectively. The current replacement value of inventories
is $742.0 million and $745.6 million at December 31, 1995 and 1994,
respectively.

PROPERTY COSTS AND DEPRECIATION AND AMORTIZATION      Property costs were
recorded at their estimated fair values at June 30, 1993.  Property additions
after June 30, 1993 are recorded at cost. Depreciation is computed principally
using a modified straight-line method based upon estimated economic lives of
assets and the levels of production providing depreciation within a range of
80% to 120% of the straight-line amount on individual major production
facilities with decreased depreciation at lower and increased depreciation at
higher operating levels.  During each of the previous three years, depreciation
expense under this method has approximated the computed straight-line amounts.
In addition, a units-of-production method is used for blast furnaces.

When properties are retired or sold, their carrying value and the related
allowance for depreciation are eliminated from the property and allowance for
depreciation accounts, respectively. Generally, for normal retirements, gains
or losses are credited or charged to allowance for depreciation accounts; for
abnormal retirements, gains or losses are included in income in the year of
disposal.

THE LTV CORPORATION

<PAGE>   14

43

ENVIRONMENTAL REMEDIATION LIABILITIES      The Company's policy is to
accrue environmental remediation liabilities when it is probable a liability
exists and the costs can be reasonably estimated. The Company's estimates of
these costs are based on existing technology, current enacted laws and
regulations, its current legal obligations regarding remediation and
site-specific costs. The liabilities are adjusted when the effect of new facts
or changes in law or technology are determinable. The Company's liability for
environmental remediation totaled $98 million and $102 million at December 31,
1995 and 1994, respectively.

USE OF ESTIMATES       The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

NEW ACCOUNTING PRONOUNCEMENT      In 1995, the Financial Accounting Standards
Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," which requires impairment
losses to be recorded on long-lived assets used in operations when indicators
of impairment are present, and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. The
Company will adopt Statement No. 121 in the first quarter of 1996 and, based on
current circumstances, it does not believe the effect of adoption will be
material.


<TABLE>
MARKETABLE SECURITIES
-------------------------------------------------------------------------------------------
The following is a summary of marketable securities at December 31 (in millions):

<CAPTION>               

                                               Unrealized        Unrealized
                                     Cost   Holding Gains    Holding Losses      Fair Value
-------------------------------------------------------------------------------------------
<S>                              <C>             <C>                <C>          <C>
1995
   U. S. Government obligations   $ 291.3         $   1.6            $   --         $ 292.9 
   Corporate obligations            144.1             0.2                --           144.3 
   Other                             20.0              --                --            20.0
                                  -------         -------            ------         -------
                                  $ 455.4         $   1.8            $   --         $ 457.2 
                                  =======         =======            ======         =======
1994
   U. S. Government obligations   $ 158.9         $    --            $ (1.0)        $ 157.9 
   Corporate obligations            189.7              --              (0.2)          189.5 
   Other                             10.1              --                --            10.1
                                  -------         -------            ------         -------
                                  $ 358.7         $    --            $ (1.2)        $ 357.5
                                  =======         =======            ======         =======

</TABLE>

<TABLE>
The cost and estimated fair value of marketable securities by contractual
maturity at December 31, 1995 are as follows (in millions):
<CAPTION>
                                                                    Cost         Fair Value
-------------------------------------------------------------------------------------------
<S>                                                             <C>               <C>
Due in one year or less                                          $ 308.9            $ 310.0
Due after one year through two years                               119.4              119.9
Due after two years                                                 27.1               27.3
                                                                 -------            -------
                                                                 $ 455.4            $ 457.2
                                                                 =======            =======
</TABLE>

<TABLE>
OTHER LIABILITIES
-------------------------------------------------------------------------------------------
Current accrued employee compensation and benefits included the following at
December 31 (in millions):
<CAPTION>
                                                                1995                   1994     
-------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>
Pension benefits                                             $  59.3                $  58.5
Postemployment health care and other insurance benefits        137.6                  129.3                     
Compensated absences                                            49.6                   50.7 
Other                                                          161.9                  155.5
                                                             -------                -------
                                                             $ 408.4                $ 394.0
                                                             =======                =======

</TABLE>

<PAGE>   15
44


<TABLE>
Current other accrued liabilities included the following at December 31 (in millions):
<CAPTION>
                                                                1995              1994
--------------------------------------------------------------------------------------
<S>                                                            <C>            <C>
Accrued taxes other than income                               $ 83.7            $ 77.6
Accrued income taxes                                            13.1              12.8
Other                                                           86.5              85.5
                                                              ------            ------
                                                              $183.3            $175.9
                                                              ======            ======

</TABLE>

<TABLE>
Noncurrent other liabilities included the following at December 31 (in millions):
<CAPTION>
                                                                1995              1994
--------------------------------------------------------------------------------------
<S>                                                          <C>             <C>
Benefits under the Coal Industry Retiree Health Benefit 
  Act of 1992                                                $ 135.6           $ 130.2 
Other employee benefits                                        126.3             132.2 
Environmental and plant rationalization                        105.6             120.9 
Other                                                           53.2              66.7
                                                             -------           -------
                                                             $ 420.7           $ 450.0
                                                             =======           =======

</TABLE>


<TABLE>
DEBT AND CREDIT FACILITIES
--------------------------------------------------------------------------------------
<CAPTION>
Long-term debt consisted of the following at December 31 (in millions):
                                                                1995              1994
--------------------------------------------------------------------------------------
<S>                                                         <C>              <C>
Senior secured convertible notes due June 2003               $ 100.0           $ 100.0        
Notes due December 2020                                         50.4              83.1 
Note payable                                                      --               2.4
                                                             -------           -------
                                                               150.4             185.5 
Less current portion (included in accounts payable)               --              (2.4)
                                                             -------           -------
                                                             $ 150.4           $ 183.1
                                                             =======           =======

</TABLE>

The senior secured convertible notes bear interest at the rate of 8.5% if paid
in cash or 10.5% if paid with additional convertible notes. The holders of the
convertible notes have the right to convert such notes, in whole or in part,
into shares of LTV Common Stock at a conversion price of $19.50 per share
(potentially 5,128,205 shares).

The notes due December 2020 are required to be prepaid within 120 days after
the restored pension plans become fully funded. LTV also has the option to
partially or fully prepay the notes. The notes bear interest at 8.5%, which can
be paid in cash or in additional notes. During 1995, the Company prepaid $38.6
million of the notes.

The Company has no required long-term debt maturities occurring within the next
five years.

In October 1994, the Company entered into two five-year credit facilities (the
"Receivables Facility" and the "Letter of Credit Facility") which provide the
Company with up to $470 million of financing resources at prevailing market
rates.

The Receivables Facility permits borrowings of up to $320 million for working
capital requirements and general corporate purposes, $100 million of which may
be used to issue letters of credit. At December 31, 1995, $264.2 million was
permitted to be borrowed; however, no borrowings were outstanding and letters
of credit outstanding amounted to $25.8 million under this facility. The
borrower under the Receivables Facility is LTV Sales Finance Company, a
structured finance special purpose subsidiary wholly owned by LTV, which on a
daily basis purchases and pledges essentially all of the receivables generated
by LTV. The creditors of LTV Sales Finance Company have a claim on the assets
of that company prior to those assets becoming available to other creditors of
LTV or its affiliates.

The Letter of Credit Facility is a separate credit facility that provides for
the issuance of up to $150 million in letters of credit. At December 31, 1995,
letters of credit totaling $89.8 million were outstanding under this facility.

The long-term debt and Letter of Credit Facility agreements contain various
covenants that require the Company to maintain certain financial ratios and
amounts. These agreements, as well as an agreement with the Pension Benefit
Guaranty Corporation ("PBGC") regarding the restored pension plans ("PBGC
Agreement"), place certain restrictions on payments of dividends, capital
expenditures, investments in subsidiaries and borrowings. Under the terms of
the most restrictive covenant, $107 million of retained earnings are available
for Common Stock dividend payments at December 31, 1995. Substantially all of
the Company's receivables and inventories are pledged as collateral under the
convertible notes and credit facilities agreements.
<PAGE>   16
45

OPERATING LEASES
-------------------------------------------------------------------------------
The Company leases certain manufacturing facilities and equipment, office space
and computer equipment under cancelable and noncancelable leases which expire
at various dates. Minimum future operating lease obligations in effect at
December 31, 1995 are as follows (in millions):


<TABLE>
<S>                                                                    <C>
-------------------------------------------------------------------------------
1996                                                                    $ 35.8
1997                                                                      33.9
1998                                                                      33.8
1999                                                                      21.2
2000                                                                       9.0
Later years                                                               62.4
                                                                        ------
Total payments                                                          $196.1
                                                                        ======
</TABLE>

Rental expense on operating leases was $58.4 million, $59.0 million, $29.6
million and $30.1 million for the years ended December 31, 1995 and 1994, and
the six months ended December 31 and June 30, 1993, respectively.


POSTEMPLOYMENT HEALTH CARE AND OTHER INSURANCE BENEFITS
-------------------------------------------------------------------------------
The Company provides health care and other insurance benefits, primarily life,
for substantially all active, inactive and retired employees.  The health care
plans are contributory and contain other cost-sharing features such as
deductibles, lifetime maximums and copayment requirements. The components of
periodic expense and cash payments for postemployment benefits are as follows
(in millions):

<TABLE>
<CAPTION>
                                                          Year Ended          Six Months Ended
                                                          December 31,     December 31,   June 30,
                                                       1995        1994        1993         1993
<S>                                                   <C>        <C>         <C>         <C>
---------------------------------------------------------------------------------------------------
Service cost -- benefits earned during the period     $  14.7     $  18.7     $   7.9     $  13.6 
Interest cost on accumulated benefit obligation         131.9       130.2        70.5       106.3
Actual return on plan assets                             (0.1)         --          --          -- 
Net amortization and deferral                           (10.0)         --          --        15.1
                                                      -------     -------     -------     -------
   Total expense                                      $ 136.5     $ 148.9     $  78.4     $ 135.0
                                                      =======     =======     =======     =======
Total cash payments                                   $ 144.1     $ 130.4     $  69.3     $  73.5
                                                      =======     =======     =======     =======

</TABLE>

The actuarial and recorded liabilities for postemployment benefits are as
follows at December 31 (in millions):

<TABLE>
<CAPTION>
                                                             1995        1994
<S>                                                       <C>         <C>
-------------------------------------------------------------------------------
Accumulated benefit obligation:
   Retirees                                                $1,275.6    $1,331.8 
   Fully eligible active plan participants                    123.9       120.4 
   Other active plan participants                             323.4       246.1
                                                           --------    --------
     Total                                                  1,722.9     1,698.3
Unrecognized net actuarial gains (losses)                      32.3        64.4 
Plan assets at fair value                                     (19.2)         -- 
                                                           --------    --------
Total liability included in the consolidated balance sheet  1,736.0     1,762.7
Less current portion                                         (137.6)     (129.3) 
                                                           --------    --------
Noncurrent liability                                       $1,598.4    $1,633.4
                                                           ========    ========
</TABLE>

As part of the 1994 United Steelworkers of America ("USWA") labor agreement,
the Company began making contributions to a Voluntary Employee Beneficiary
Association ("VEBA") Trust to prefund postemployment health care and other
insurance benefits for covered retirees in addition to making cash payments for
such benefits on a current basis. The Company is required to contribute to the
VEBA Trust a minimum of $5 million annually and additional amounts based on
defined cash flow as set forth in the labor agreement. The initial required
contribution made in 1995 was $19.1 million, and the 1996 required contribution
is expected to be $11.3 million. Plan assets are invested in a mutual fund,
which primarily consists of equity securities listed on national exchanges, and
the assumed long-term rate of return on plan assets was 8.5% for 1995.

<PAGE>   17
46


The December 31, 1995 accumulated benefit obligation was determined under an
actuarial assumption using a health care cost trend rate of 8.0% in 1996,
gradually declining to 4.5% in the year 2002 and thereafter over the projected
payout period of the benefits. The effect on the present value of the
accumulated benefit obligation at December 31, 1995 of a 1% increase each year
in the health care cost trend rate used would result in an increase of $149
million in the accumulated benefit obligation, and a $14 million increase in
the total 1995 service and interest components of expense. At December 31,
1994, the accumulated benefit obligation was determined under an actuarial
assumption using a health care cost trend rate of 8.9% in 1995, gradually
declining to 5.5% in the year 2001 and thereafter over the projected payout
period of the benefits.

The accumulated benefit obligations were determined using an assumed discount
rate of 7.25% at December 31, 1995 and 9.0% at December 31, 1994.  The assumed
discount rate was adjusted at December 31, 1995 to recognize the decrease in
interest rates relating to high-quality debt instruments. The assumed discount
rate decrease and related health care cost trend rate decrease resulted in a
net increase in the accumulated benefit obligation of $178 million, partially
offset by more favorable claims experience, with the net offsetting amount
classified as an unrecognized net actuarial loss. The adjustment of these rates
will result in a decrease in 1996 annual expense of approximately $1 million.
However, the changes will have no impact on near-term cash flows.

Postemployment benefits were adjusted to their estimated fair values at June
30, 1993. The adjustment resulted in a reduction of the liability of $503
million due to using more current experience information, the recognition of
prior service costs and actuarial losses, and giving effect to changes in the
Company's health care plans.


PENSION BENEFITS
-------------------------------------------------------------------------------

The Company has various pension plans covering substantially all of its
employees. Current benefits for most employees are provided through defined
contribution plans with benefits based on age and compensation levels. Pension
costs for the defined contribution plans are accrued and funded on a current
basis.

The Company also has defined benefit plans, the benefits of which are primarily
for past service only, based on years of service and on average compensation
for certain years. The majority of these plans' obligations are required to be
funded by the year 2020 in accordance with the PBGC Agreement. The increase in
post-reorganization pension costs is due to the increase in the pension
liability required under the Company's reorganization.

The components of pension cost are as follows (in millions):

<TABLE>
<CAPTION>
                                                                Year Ended             Six Months Ended
                                                               December 31,        December 31,      June 30,
                                                             1995        1994              1993          1993
-------------------------------------------------------------------------------------------------------------
<S>                                                       <C>         <C>                <C>           <C>
Defined benefit plans:                                                                                
   Service cost -- benefits earned during the period      $   6.6     $   3.5            $  2.1        $  1.6
   Interest cost on projected benefit obligation            274.3       250.2             136.2          20.2
   Actual return on plan assets                            (461.0)      (14.8)            (64.2)        (15.4)
   Net amortization and deferral                            304.1      (119.1)             10.8           6.6
                                                          -------     -------            ------        ------
     Net pension cost of defined benefit plans              124.0       119.8              84.9          13.0
Defined contribution plans                                   48.4        42.8              20.5          20.5
                                                          -------     -------            ------        ------
     Total expense                                        $ 172.4     $ 162.6            $105.4        $ 33.5
                                                          =======     =======            ======        ======
</TABLE>

Plan assets consist substantially of equity securities listed on national
exchanges, fixed income securities and cash equivalents. The assumed long-term
rate of return on plan assets was 8.5% for 1995, 1994 and 1993.

<PAGE>   18
47

The following table sets forth the funded status of the Company's defined
benefit pension plans (in millions):

<TABLE>
<CAPTION>
                                                At December 31, 1995                At December 31, 1994
                                           Plans With        Plans With         Plans With         Plans With
                                     Assets In Excess    Obligations In   Assets In Excess     Obligations In
                                       of Obligations  Excess of Assets     of Obligations   Excess of Assets
<S>                                          <C>             <C>                 <C>             <C>
-------------------------------------------------------------------------------------------------------------
Actuarial present value:
  Vested benefit obligation                  $   16.5         $ 3,300.8           $  183.3          $ 2,743.0
  Nonvested benefit obligation                    0.5             275.9               33.1              210.8
                                             --------         ---------           --------          ---------
  Accumulated benefit obligation             $   17.0         $ 3,576.7           $  216.4          $ 2,953.8
                                             ========         =========           ========          =========
Projected benefit obligation                 $   19.2         $ 3,588.3           $  224.1          $ 2,953.8 
Plan assets at fair value                        26.9           2,538.7              238.6            1,764.9
                                             --------         ---------           --------          ---------
    Plan assets in excess of (less than)                                                       
      projected benefit obligation                7.7          (1,049.6)              14.5           (1,188.9) 
Unrecognized initial net asset existing 
 at transition                                   (1.0)               --               (1.1)                -- 
Unrecognized prior service cost                   0.4             156.3               14.9              162.2 
Unrecognized net actuarial (gains) losses        (1.7)            190.6               (1.5)             (49.2)
Adjustment required to recognize                              
   minimum liability -- shareholders' equity       --            (184.8)                --               (5.8)
                     -- intangible asset           --            (154.4)                --             (109.5)
                                             --------         ---------           --------          ---------
   Prepaid (accrued) pension costs included  
     in the consolidated balance sheet       $    5.4         $(1,041.9)          $   26.8          $(1,191.2)
                                             ========         =========           ========          =========
</TABLE>

Accumulated benefit obligations and projected benefit obligations for defined
benefit pension plans were determined using an assumed discount rate of 7.25%
at December 31, 1995 and 9.0% at December 31, 1994. The assumed discount rate
was adjusted at December 31, 1995 to recognize the decrease in interest rates
relating to high-quality debt instruments. The decrease in the assumed discount
rate increased the accumulated benefit obligation by $456.6 million, and such
adjustment was also the primary reason for the increases in the shareholders'
equity minimum pension liability adjustment account of $179.0 million and the
intangible asset minimum pension liability account of $44.9 million.

Pension expense for all defined benefit and defined contribution plans is
expected to approximate $121 million in 1996, primarily reflecting the benefit
of the significant pension contributions made by the Company and the required
decrease in the discount rate used to determine the December 31, 1995 value of
the pension obligation.

<TABLE>
<CAPTION>
T A X E S
-----------------------------------------------------------------------------------------------------
The provision for income taxes from continuing operations is as follows (in millions):

                                                  Year Ended                Six Months Ended 
                                                  December 31,       December 31,        June 30,
                                              1995           1994           1993            1993
<S>                                         <C>            <C>            <C>            <C>
-----------------------------------------------------------------------------------------------------
Current:
   Federal                                   $   0.4        $   0.8        $   0.5        $  (0.2) 
   State                                         2.0           (2.0)           1.9            1.6
Deferred                                        (0.4)          (0.3)          (0.6)            -- 
Amount not payable in cash                     115.3           74.7          158.2             --
                                             -------        -------        -------        -------
                                             $ 117.3        $  73.2        $ 160.0        $   1.4
                                             =======        =======        =======        =======
</TABLE>

The Company reports federal income tax expense before consideration of
pre-reorganization net deferred tax assets ($1.500 billion at December 31,
1995). As LTV realizes the benefits (through reduced cash tax payments) from
pre-reorganization net deferred tax assets, such benefit amounts first reduce
the intangible asset resulting from the reorganization; and when the intangible
asset was eliminated in 1995, subsequent tax benefits have increased additional
paid-in capital. The Company's actual income tax cash payments are, and will
continue to be, significantly less than the total financial statement expense
amounts as the benefits of pre-reorganization net deferred tax assets are
realized. During 1995, tax benefits of $115.3 million were realized, a portion
of which was used to reduce the intangible asset to zero, with $84.9 million
used to increase the additional paid-in capital account of shareholders'
equity.


<PAGE>   19
48

The income tax effects of the factors accounting for the differences between
federal income tax computed at the statutory rate and the recorded provision
are as follows (in millions):

<TABLE>
<CAPTION>
                                                  Year Ended               Six Months Ended
                                                  December 31,       December 31,        June 30,
                                               1995           1994           1993            1993
-------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>
Tax provision at statutory rates            $ 108.8        $  70.9        $ 142.0        $   48.3
Increases (decreases) resulting from:
   Deductible reorganization-related items       --             --             --           (95.4)
   Net operating loss for which no benefit
    was recognized                               --             --             --            44.3
   Alternative minimum tax                       --             --             --            (0.3)
   Nondeductible Chapter 11 administrative
    expenses                                     --             --             --             8.1
   Percentage depletion deduction              (7.0)          (6.4)          (5.2)           (5.2)
   State taxes                                 16.7            7.3           21.6             1.6
   Other                                       (1.2)           1.4            1.6              --
                                            -------        -------        -------        --------
     Tax provision                          $ 117.3        $  73.2        $ 160.0        $    1.4
                                            =======        =======        =======        ========
</TABLE>

Significant components of the Company's deferred tax assets and liabilities are
as follows at December 31 (in millions):

<TABLE>
<CAPTION>
                                                                             1995            1994
--------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>
Deferred tax assets:
  Postemployment health care facility                                   $   692.2       $   702.1
  Net operating loss carryforwards                                          935.0           870.0
  Pension liability                                                         356.6           423.0
  Other employee benefits                                                   175.0           163.9
  Plant rationalization                                                      70.2            60.4
  Safe harbor tax leases                                                    126.1           134.2
  Other                                                                      94.9            96.4
                                                                         --------       ---------
    Subtotal                                                              2,450.0         2,450.0

Deferred tax liabilities:
  Tax over book depreciation                                               (846.7)         (807.1)
  Inventory and other                                                      (103.3)          (92.9)
                                                                         --------       ---------
    Subtotal                                                               (950.0)         (900.0)

Valuation allowance                                                      (1,500.0)       (1,550.0)
                                                                        ---------       ---------
   Total deferred taxes -- net                                          $     0.0       $     0.0
                                                                        =========       =========
</TABLE>

The evaluation of the realizability of the Company's net deferred tax assets in
future periods is made based upon historical and projected operating
performance and other factors for generating future taxable income, such as
intent and ability to sell assets. At this time, the Company has established a
valuation reserve for all of its net deferred tax assets.

For income tax reporting purposes, LTV has a net operating loss carryforward of
$2.6 billion for regular income taxes, $2.5 billion of which is not restricted
as to use and will expire in the years 2000 through 2009. The balance of the
regular income tax net operating loss carryforward expires in 1996 through 1998
and is restricted to offsetting future taxable income of the respective
companies which generated the losses. LTV has a federal alternative minimum tax
net operating loss carryforward of $1.5 billion that is unrestricted as to its
use and will expire in the years 2000 through 2009. The Company's ability to
reduce future income tax payments through the use of net operating loss
carryforwards could be significantly limited on an annual basis if the Company
were to undergo an "ownership change" within the meaning of Section 382 of the
Internal Revenue Code of 1986.

Alternative minimum taxes paid through 1995 of approximately $42 million are
available as a credit carryforward, and the period is not limited.  Investment
tax credit carryforwards of approximately $14 million at December 31, 1995 are
recognized using the "flow through" method and expire in 1996 through 2003.


<PAGE>   20
49
SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------

The shareholders' equity activity for the period from June 30, 1993 through
December 31, 1995 is presented below (in millions). Information for the period
prior to reorganization is not presented due to the general lack of
comparability and because the revised capital structure of the Company consists
of entirely new issues of Common and Preferred Stock.
<TABLE>
<CAPTION>

                                  Common       Common Stock                             Minimum
                  Convertible      Stock                        Additional              Pension                               Total
                    Preferred   Held for       Number              Paid-In  Retained  Liability  Restricted Marketable Shareholders'
                        Stock   Issuance    of Shares    Amount    Capital  Earnings Adjustment       Stock Securities       Equity
---------------------------------------------------------------------------------------------------------------------------
<S>                       <C>      <C>      <C>       <C>       <C>         <C>      <C>           <C>       <C>        <C>
Balance,
  June 30, 1993           $ 1.0 $  54.3         60.8   $   30.4  $   274.3                                              $    360.0
Net income                                                                  $ 247.2                                          247.2
Shares issued through
  public offering                               23.0       11.5      287.0                                                   298.5
Minimum pension
  liability adjustment                                                                 $(364.8)                             (364.8)
Preferred dividends paid                                                       (1.1)                                          (1.1)
                          ----- -------   ----------   --------  ---------  --------   --------      -------    ------  ----------
Balance,
  December 31, 1993         1.0    54.3         83.8       41.9      561.3    246.1     (364.8)                              539.8
Net income                                                                    127.1                                          127.1
Shares issued:
  Public offering                               13.6        6.8      250.4                                                   257.2
  Stock plans and other                          1.9        1.0        5.4                           $ (3.2)                   3.2
Conversion of stock        (0.5)  (54.3)         6.4        3.2       51.6                                                      --
Unrealized losses                                                                                               $  (1.2)      (1.2)
Minimum pension
  liability adjustment                                                                   359.0                               359.0
Preferred dividends paid                         0.3        0.1        4.1     (6.5)                                          (2.3)
                          ----- -------   ----------   --------  ---------  --------   --------      -------    ------  ----------
Balance,
  December 31, 1994         0.5      --        106.0       53.0      872.8    366.7       (5.8)        (3.2)       (1.2)   1,282.8
Net income                                                                    184.8                                          184.8
Benefits realized from
  pre-reorganization
  deferred tax assets                                                 84.9                                                    84.9
Shares issued through                                                    
  stock plans and other                                                0.1                              0.8                    0.9
Unrealized gains                                                                                                    3.0        3.0
Minimum pension
  liability adjustment                                                                  (179.0)                             (179.0)
Preferred dividends paid                                                       (2.2)                                          (2.2)
Other                                           (0.5)      (0.2)       0.2                                                      --
                          ----- -------   ----------   --------  ---------  --------   --------      -------    ------  ----------
Balance,                  
  December 31, 1995       $ 0.5 $    --        105.5   $   52.8  $   958.0  $  549.3   $(184.8)      $ (2.4)    $  1.8  $  1,375.2
                          ===== =======   ==========   ========  =========  ========   ========      =======    ======  ==========
</TABLE> 
LTV has authorized for issuance 20 million shares of Preferred Stock with a
$1.00 par value. At December 31, 1995, the Company has 500,000 outstanding
shares of Series B Convertible Preferred Stock ("Series B Preferred Stock").
This issue has a stated liquidation preference value of $50 million, is senior
to all Common Stock and has weighted voting rights equal to that number of
shares of Common Stock into which it can be converted. Dividends on the Series B
Preferred Stock are payable quarterly in either cash or Common Stock, at the
election of LTV, at the rate of 4.5% per annum on the stated value. Holders of
the Series B Preferred Stock have the right to convert the stated value of their
shares, in whole or in part, into Common Stock at a conversion price of $17.09
per share (potentially 2,925,688 shares). LTV has the right to redeem the Series
B Preferred Stock on and after June 28, 1996 at $52.3 million, declining to
$50.0 million at June 28, 2000.
    
On June 28, 1994, the Series A Convertible Preferred Stock, and accrued
dividends thereon, were mandatorily converted into 3.3 million shares of Common
Stock. The Common Stock held for issuance represented a $50.0 million cash
investment in LTV on June 28, 1993, which resulted in 3.3 million shares of
Common Stock being issued on June 28, 1994. 

During 1994, LTV issued 13.6 million shares of Common Stock pursuant to a public
offering. The Company's net proceeds of $257.2 million from the offering were
contributed to the Company's pension plans. During 1993, LTV issued 23.0 million
shares of Common Stock pursuant to a public offering. The net proceeds from the
offering were $298.5 million, of which $150.0 million was contributed   
to the Company's pension plans.


The Company has a nonleveraged Employee Stock Ownership Plan ("ESOP"), for
employees covered by the USWA labor agreement, that effectively holds 4.3
million shares of Common Stock at December 31, 1995.

<PAGE>   21
50



Common Stock reserved for potential future issuance includes the following
(refer to the Company Reorganization note on page 53):

a.   Conversion of the Series B Preferred Stock and the convertible notes as 
previously discussed.

b.   In accordance with a settlement agreement ("Federal Tax
Agreement") with the Internal Revenue Service ("IRS"), payments in six equal
annual installments of cash or shares of Common Stock with an aggregate value of
$6.5 million are required to be made to the IRS commencing on June 28, 1994. The
first of these payments was satisfied with the issuance of 65,183 shares of
Common Stock, and the 1995 payment was satisfied in cash.

c.   In accordance with an agreement with the U.S. Environmental
Protection Agency ("EPA"), certain (if any) future environmental claims can be
settled in cash or Common Stock. Also, through June 28, 1997, if and when shares
are actually issued under this agreement, the ESOP is to receive additional
shares approximating 7.5% of such issued shares.

d.   The Company's Joint Plan of Reorganization ("Joint Plan")
provided for the issuance of 8.5 million Series A Warrants. Each Series A
Warrant is exercisable for 0.5582 of a share of Common Stock at $16.28 per each
full share purchased. The Series A Warrants are exercisable through June 28,
1998. Through December 31, 1995, 30,265 warrants have been exercised.

The Company has also reserved for future issuance 3.5 million shares of LTV
Common Stock under incentive programs authorizing the granting of stock options
and restricted stock awards to directors, officers and other key employees. The
stock incentive programs are designed to encourage a personal investment in LTV
Common Stock from participating individuals. The options to purchase Common
Stock are primarily outstanding for terms of ten years from date of grant and 
are granted at prices not lower than market price at date of grant. The market
value of restricted stock awarded has been recorded as unearned compensation
and is shown as a separate component of shareholders' equity. Unearned
compensation is primarily being amortized to expense over the five-year vesting
period. Expense recognition under these programs has been and will continue to
be accounted for in accordance with Accounting Principles Board Opinion No. 25.
Transactions under these programs are summarized as follows:

<TABLE>
<CAPTION>



                                                Year Ended December 31,                                 Six Months Ended
                                        1995                               1994                         December 31, 1993
                              Shares            Price            Shares             Price           Shares            Price
---------------------------------------------------------------------------------------------------------------------------

<S>                      <C>        <C>         <C>           <C>          <C>    <C>             <C>              <C>
Stock options:
   Options outstanding at
     beginning of period  1,147,639   $   15.38 - $19.33        934,000          - $15.38               --               --
   Granted                  398,700       14.17 -  16.13        272,705    $16.53-  19.33          934,000           $15.38
   Exercised                 (5,000)               15.38        (22,066)            15.38               --               --
   Canceled                (121,389)      15.38 -  19.33        (37,000)            15.38               --               --
                          ---------   ------------------      ---------    --------------          -------           ------
   Options outstanding at
     end of period        1,419,950   $   14.17 - $19.33      1,147,639    $15.38- $19.33          934,000           $15.38
                          =========   ==================      =========    ==============          =======           ======
   Options exercisable at
     end of period          684,614   $   14.74 - $19.33        297,896    $15.38- $16.53               --               --
                          =========   ==================      =========    ==============          =======           ======
Restricted Stock:
   Shares outstanding at
     beginning of period    191,430   $   15.75 - $18.88             --        --      --
   Granted                   10,856       14.00 -  15.25        191,430    $15.75- $18.88
   Unrestricted             (16,100)               18.88             --                --
   Canceled                      --                   --             --                --
                          ---------   ------------------      ---------    --------------
   Shares outstanding at
     end of period          186,186   $   14.00 - $18.88        191,430    $15.75- $18.88
                          =========   ==================      =========    ==============
</TABLE>


EARNINGS PER SHARE
--------------------------------------------------------------------------------

Earnings per share data prior to emergence from Chapter 11 proceedings are not
presented due to the general lack of comparability and because the revised
capital structure of the Company consists of entirely new issues of Common and
Preferred Stock.

Primary earnings per share calculations for the years ended December 31, 1995
and 1994, and the six months ended December 31, 1993 are based on average common
and common equivalent shares outstanding of 108.3 million, 98.7 million and 77.0
million, respectively. Common equivalent shares principally included Common
Stock that is issuable in exchange for the Series B Preferred Stock and for
outstanding Series A Warrants.

Fully diluted earnings per share calculations for the years ended December 31,
1995 and 1994, and the six months ended December 31, 1993 are based on fully
diluted shares outstanding of 113.4 million, 103.8 million and 82.6 million,
respectively. Fully diluted shares were determined by increasing the primary
shares outstanding to reflect the Common Stock issuable upon conversion of the
convertible notes.



<PAGE>   22


51


COMMITMENTS AND CONTINGENCIES
-------------------------------------------------------------------------------

The Company is the subject of various threatened or pending legal actions,
contingencies and commitments in the normal course of conducting its business.
The Company provides for costs relating to these matters when a loss is probable
and the amount is reasonably estimable. The effect of the outcome of these
matters on the Company's future results of operations and liquidity cannot be
predicted because any such effect depends on future results of operations and
the amount and timing of the resolution of such matters. While it is not
possible to predict with certainty, management believes that the ultimate
resolution of such matters will not have a material adverse effect on the
consolidated financial position of the Company.

LTV is subject to changing and increasingly stringent environmental laws and
regulations concerning air emissions, water discharges, and waste disposal, as
well as remediation activities that involve the clean-up of environmental media
such as soils and groundwater ("remediation liabilities"). As a consequence, the
Company has incurred, and will continue to incur, substantial capital
expenditures and operating and maintenance expenses in order to comply with such
requirements. Additionally, if any of the Company's facilities are unable to
meet required environmental standards or laws, those operations could be
temporarily or permanently closed.

Important examples of laws referred to above are the 1990 Clean Air Act
Amendments ("CAA Amendments"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), and related state and local laws. The CAA Amendments
and its state and local counterparts require progressively more stringent air
emission quality standards in the future. RCRA and related state laws include
so-called "corrective action" provisions that grant the environmental agencies
authority to require the Company to clean up environmental media, such as soils
and groundwater, under certain prescribed conditions. These corrective action
provisions, in most instances, are not self-implementing and, in the Company's
view, create no current legal obligation. If, in the future, the Company were
required to implement corrective actions, the Company could be required to
record additional liabilities which cannot be estimated at this time, but could
be substantial.

As part of LTV's reorganization in 1993, an agreement ("Environmental Settlement
Agreement" or "ESA") with the EPA was reached. The ESA resolved or provided the
means to resolve a significant portion of the Company's environmental-related
liabilities and also provided a basis for settlement agreements concerning the
environmental claims of several states. The ESA settled certain Superfund Site
liabilities identified at the time of reorganization for $33 million as general
unsecured claims. Management believes that future prepetition environmental
claims, if any, that are not covered by the ESA will be subject to the
dischargeability provisions of the Federal Bankruptcy Code or to the provisions
of the Joint Plan, subject to judicially imposed due process requirements.
General liabilities from postpetition acts were not discharged or in any manner
affected by the reorganization. In addition, the Company retains responsibility
for environmental obligations for properties owned at confirmation of the Joint
Plan regardless of when the conduct that gives rise to the liability occurred.

A 1993 agreement with the USWA provided that a portion of the requirements with
respect to certain postemployment benefits would be secured by a junior lien of
$250 million on collateral with an unencumbered fair market value of at least
$500 million. The initial security was provided by the grant of a mortgage on
facilities having a carrying value of approximately $500 million.



FINANCIAL INSTRUMENTS

-------------------------------------------------------------------------------
Cash equivalents are investments in highly liquid, low-risk money market mutual
funds and commercial paper with maturities of three months or less and are
classified as held-to-maturity. The carrying amount of these assets approximates
fair value. The Company carries marketable securities at fair value. The
carrying amount of the Company's long-term debt approximates fair value at
December 31, 1995 and 1994, based on current market interest rates.

The Company has entered into futures contracts to reduce its exposure to
fluctuations in costs caused by the price volatility of certain metal
commodities and natural gas supplies. The Company does not engage in speculation
and the results of these hedging transactions become part of the cost of the
commodity or supply being hedged. At December 31, 1995 and 1994, the purchase
value of these contracts totaled $10 million and $12 million, respectively. The
contracts extend for periods of up to two years. At December 31, 1995 and 1994,
the fair value of the contracts, which is based on quoted market prices,
approximated the carrying value of zero.

LTV owns a preferred stock asset related to the sale of its energy products
segment with an aggregate redemption price and liquidation preference of $14.3
million, plus accrued and unpaid dividends. The preferred stock is subject to
redemption at the option of LTV or the issuer beginning August 2000. The
estimated discounted cash flow value of the preferred stock asset approximates
its stated and carrying value at December 31, 1995.


<PAGE>   23

52




Outstanding letters of credit totaled $118.6 million and $124.7 million at
December 31, 1995 and 1994, respectively. The letters of credit guarantee
performance to third parties of various trade activities and tax benefit
transfer agreements. LTV has guaranteed approximately $13 million per year
through January 1999 for a joint venture's operating lease rental obligation.
The Company has guaranteed $2 million of debt of a company whose facilities are
leased by the Company. The Company does not believe it is practicable to
estimate the fair value of the guarantees and does not believe exposure to loss
is likely.



SPECIAL CREDITS

-------------------------------------------------------------------------------
The Company recorded special credits of $400.6 million and $191.0 million during
the six months ended December 31 and June 30, 1993, respectively. The $400.6
million included $370.6 million which is a gain from a settlement related to an
antitrust judgment against the Bessemer and Lake Erie Railroad Company. The
other special credits related to a note receivable and revertible trusts which
were established in connection with the sale of the bar division in 1989 and the
Warren, Ohio facility in 1988. Upon selling these steel facilities, the Company
placed assets in revertible trusts to provide funds under specific circumstances
to pay for certain former employees' benefits. The required specific
circumstances did not occur and the trusts reverted to the Company. Proceeds
from these items were contributed to the Company's pension plans.



DISCONTINUED OPERATIONS

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

On August 1, 1995, LTV sold its energy products segment, Continental Emsco
Company ("Continental Emsco"), for $74.6 million. A portion of the proceeds was
used to reduce LTV's long-term debt by $38.6 million. The loss on the sale of
the segment was recorded in the second quarter of 1995, and Continental Emsco is
reflected as a discontinued operation in LTV's financial statements for all
periods presented. The applicable net assets held for sale at December 31, 1994
are included in current prepaid expenses, deposits and other assets. Net assets
held for sale, which consist principally of receivables, inventories and
property, plant and equipment, less current liabilities, postemployment health
care liabilities and other liabilities, totaled $85.2 million at December 31,
1994. Sales by the energy products segment were $179.2 million through August 1,
1995, $299.2 million in 1994 and $296.9 million in 1993.

The 1995 results from discontinued operations included income from the energy
products segment operations of $1.3 million, net of income tax expense of $1.1
million, and the loss on the sale of the business of $10.0 million, net of
income tax benefits of $6.0 million. The 1994 results from discontinued
operations included losses from the energy products segment of $2.4 million, net
of income tax benefits of $1.0 million. The 1993 results from discontinued
operations included income from the energy products segment of $0.5 million, net
of income tax expense of $1.7 million.



OTHER FINANCIAL DATA

-------------------------------------------------------------------------------
Net interest and other income include the following (in millions):
<TABLE>
<CAPTION>
                                                       Year Ended                     Six Months Ended
                                                      December 31,             December 31,           June 30,
                                                   1995              1994             1993               1993
---------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>               <C>              <C>        
Interest and other income                     $    53.8        $     27.4        $     7.7        $       3.2
Interest expense                                  (11.2)            (14.4)            (7.8)              (1.2)
                                              ---------        ----------        ---------        -----------
   Total                                      $    42.6        $     13.0        $    (0.1)       $       2.0
                                              =========        ==========        =========        ===========
</TABLE>


Through the reorganization period, the Company followed the accounting practice
of accruing interest only on those debt issues that were believed to be fully
secured. Interest expense would have been $120 million for the six months ended
June 30, 1993 if interest had been accrued and recorded on all outstanding debt.
However, this greater amount is not representative of interest expense or
accruals for periods subsequent to the reorganization of the Company.

The Company's sales to the automotive market have approximated 30% of sales over
each of the last three years. The Company also sells to the steel service center
and converter markets which, in turn, sell to the automotive and other
industries. Management does not believe significant credit risk exists at
December 31, 1995. Sales for the years ended December 31, 1995 and 1994, and the
six months ended December 31 and June 30, 1993 to the Company's largest
customer, General Motors Corporation, represented approximately 12%, 11%, 11%
and 15%, respectively, of total sales.



<PAGE>   24

53


The Company has incurred research and development costs of $14.8 million, $15.1
million, $7.5 million and $7.5 million for the years ended December 31, 1995 and
1994, and the six months ended December 31 and June 30, 1993, respectively.

Supplemental cash flow information is presented as follows (in millions):


<TABLE>
<CAPTION>


                                                        Year Ended                        Six Months Ended
                                                       December 31,             December 31,            June 30,
                                                   1995              1994             1993                 1993
---------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>               <C>              <C>           
Changes in assets and liabilities which 
  provided (used) net cash:
     Receivables                              $    68.5        $    (38.8)       $   (53.9)       $       (11.8)
     Inventories                                    9.1              13.0             48.4                 37.1
     Other assets                                  39.4               0.5             18.5                  5.4
     Accounts payable                             (12.2)             27.3             31.7                 15.6
     Other liabilities                             (0.8)            (33.0)           (38.0)               (54.7)
                                              ---------        ----------        ---------        ------------- 
        Total                                 $   104.0        $    (31.0)       $     6.7        $        (8.4)
                                              =========        ==========        =========        =============
Interest Payments                             $    11.4        $     17.1        $     4.8        $         1.2
Income tax payments                                 2.2               0.6              1.0                  2.9
Capitalized interest                                7.6               7.7              4.6                  7.4
</TABLE>

Purchases of marketable securities totaled $8,734.8 million, and maturities and
sales totaled $8,636.9 million during 1995. Purchases of marketable securities
totaled $1,719.0 million, and maturities and sales totaled $1,360.3 million
during 1994. There was no 1993 activity in marketable securities.



COMPANY REORGANIZATION

-------------------------------------------------------------------------------
The Company filed petitions for bankruptcy under Chapter 11 of the Bankruptcy
Code in July 1986 and, until June 28, 1993, operated under the protection of the
Bankruptcy Court. While in Chapter 11 proceedings, the Company experienced
certain financial flexibility including a significant reduction in pension
contributions, relief from paying certain prepetition obligations, and the
earning of substantial interest income on cash balances. These benefits were
partially offset by higher professional fees and expenses.

The Company's emergence from Chapter 11 proceedings was accomplished through a
series of mutually dependent transactions and agreements. The Joint Plan
provided for, among other things, recoveries for certain creditors that included
cash, shares of newly issued LTV Common Stock, Series A Warrants and a variety
of other assets. Special agreements were negotiated in order to satisfy certain
claims, including, among others, the PBGC Agreement regarding the amount and the
timing of funding of LTV's restored pension plans, the Environmental Settlement
Agreement and the Federal Tax Agreement.

Claims and liabilities totaling $5.745 billion on June 28, 1993 were discharged
for consideration of $1.555 billion in cash, $52 million in other assets, and
the issuance of LTV Common Stock and Series A Warrants. A nontaxable
extraordinary gain of $3.928 billion was recorded on this debt discharge because
the consideration was less than the recorded liabilities. Certain prepetition
claims and liabilities, the most significant of which was the Company's
obligation for the restored pension plans, were not discharged as part of the
Joint Plan and were reclassified to their respective consolidated balance sheet
accounts.

Reorganization items recognized on the consolidated statement of income of $30.7
million in the six months ended June 30, 1993 consist of a $1.002 billion
increase to allowed claims for pension plans in excess of recorded amounts, a
$1.143 billion net gain on fair value adjustments to the Company's assets and
liabilities, $132.6 million of professional fees and expenses and $22.3 million
of interest earned on accumulated cash.

LTV's financial advisors assisted the Company and the Bankruptcy Court in
determining the reorganization value and the resulting beginning equity value.
In determining the overall reorganization value, the trading value of comparable
U.S. integrated steel companies (adjusted for long-term obligations) was the
major factor utilized. This method was used due to the highly cyclical nature of
the steel industry and was viewed as providing a more accurate estimate than
would have been provided through the use of a discounted cash flow analysis or
other methodologies. Adjustments to reflect the fair value of individual assets
and liabilities were based on independent reviews and valuations, discounted
cash flows, actuarial valuations and other studies.

The portion of reorganization value not attributable to specific tangible or
identified intangible assets had been reflected as an intangible asset which
totaled $267.7 million at June 30, 1993. The intangible asset was reduced to
zero during 1995 by the realization of pre-reorganization tax benefits and
amortization.


<PAGE>   25
54
  

REPORT OF MANAGEMENT
-------------------------------------------------------------------------------
January 25, 1996


The management of The LTV Corporation is responsible for the preparation of the
accompanying consolidated financial statements in conformity with generally
accepted accounting principles appropriate in the circumstances. Management is
also responsible for the determination of estimates and judgments used in the
financial statements, and the preparation of other financial information
included in this annual report to shareholders. The financial statements have
been audited by Ernst & Young LLP, independent auditors.

The management of the Company is responsible for and maintains an accounting
system and related internal controls that it believes are sufficient to provide
reasonable assurance that assets are safeguarded against unauthorized
acquisition, use or disposition, that transactions are executed and recorded in
accordance with management's authorization and that the financial records are
reliable for preparing financial statements. The concept of reasonable assurance
is based on the recognition that the cost of a system of internal control must
be related to the benefits derived and that the balancing of those factors
requires estimates and judgments. The system is tested and evaluated regularly
by the Company's internal auditors as well as by the independent auditors in
connection with their annual audit. Management responds to all significant
recommendations of the internal and independent auditors and makes changes to
the systems when appropriate.

The Board of Directors has an Audit Committee of Directors who are not members
of management. The Committee meets with management, the internal auditors and
the independent auditors in connection with its review of matters relating to
the Company's annual financial statements; the Company's internal audit program;
the Company's system of internal accounting controls; and the services of the
independent auditors. The Committee also periodically meets with internal
auditors as well as the independent auditors, without management present, to
discuss appropriate matters. In addition, the internal auditors and the
independent auditors have full and free access to meet with the Committee, with
or without management representatives present, to discuss the results of their
audits, the adequacy of internal accounting controls and the quality of
financial reporting.







/s/ David H. Hoag
-----------------
David H. Hoag
Chairman of the Board,
President and Chief Executive Officer




/s/ Arthur W. Huge
------------------
Arthur W. Huge
Senior Vice President and
Chief Financial Officer



<PAGE>   26
55



REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
-------------------------------------------------------------------------------
January 25, 1996


To the Shareholders and Board of Directors
The LTV Corporation

We have audited the accompanying consolidated balance sheet of The LTV
Corporation ("the Company") as of December 31, 1995 and 1994, and the related
consolidated statements of income and cash flows for the years ended December
31, 1995 and 1994, and the six months ended December 31 and June 30, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As more fully described in the Summary of Significant Accounting Policies and
Company Reorganization notes to consolidated financial statements, effective
June 28, 1993, the Company emerged from bankruptcy. In accordance with an
American Institute of Certified Public Accountants' Statement of Position, the
Company has adopted "fresh start" reporting whereby its assets, liabilities and
new capital structure have been adjusted to reflect estimated fair values as of
June 30, 1993. As a result, the consolidated financial statements for periods
subsequent to June 30, 1993, reflect this basis of reporting and are not
necessarily comparable to the Company's pre-reorganization consolidated
financial statements.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The LTV
Corporation at December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for the years ended December 31, 1995 and 1994,
and the six months ended December 31 and June 30, 1993, in conformity with
generally accepted accounting principles.




/S/Ernst & Young LLP
--------------------
Ernst & Young LLP
Cleveland, Ohio

<PAGE>   27
 56




ELEVEN-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>



------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share data)


                                                 1995              1994            1993              1992             1991     
------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>               <C>              <C>              <C>              <C>
Summary of Operations for the Year
    Steel sales                                $4,283.2          $4,233.3         $3,868.2         $ 3,564.9        $ 3,392.5
    Income (loss) from continuing
      operations before income taxes              310.8             202.7            517.1             (97.7)          (165.0)
    Income tax provision:
      Taxes payable (refundable)                    2.0              (1.5)             3.2               4.9           (125.3)
      Taxes not payable in cash                   115.3              74.7            158.2                --               --
                                               --------          --------         --------         ---------        ---------
        Total                                     117.3              73.2            161.4               4.9           (125.3)
                                               --------          --------         --------         ---------        ---------
      Income (loss) from continuing
        operations                             $  193.5          $  129.5         $  355.7         $  (102.6)        $  (39.7)
                                               ========          ========         ========         =========         =========

    Net income (loss)                          $  184.8          $  127.1         $4,314.9         $   598.7         $   74.1
                                               ========          ========         ========         =========         =========

    Earnings per share (fully diluted):

      Continuing operations                    $   1.76         $    1.29               NM                NM               NM
      Net income                                   1.68              1.27               NM                NM               NM
    Cash dividends per common share                  --                --               --                --               --

Financial Position at Year End
    Working capital                            $1,023.7          $1,190.4         $  882.7         $ 2,048.4        $ 1,975.2
    Total assets                                5,380.1           5,525.1          5,795.1           6,223.1          6,685.2
    Property, net                               3,140.2           3,189.0          3,216.8           2,953.2          3,121.0
    Long-term debt                                150.4             183.1            186.3               7.7              9.0
    Other noncurrent obligations                3,007.8           3,222.1          3,668.6           9,487.0         10,307.8
    Shareholders' equity (deficit)              1,375.2           1,282.8            539.8          (4,129.3)        (4,731.6)

Other Financial Information
    Property additions                         $  204.8          $  234.0         $  323.1     $       311.0        $   333.5
    Depreciation                                  251.9             241.8            236.8             208.6            177.6

Other Operating Data

    Raw steel production (millions of tons)         8.5               8.3              7.9               8.3              7.7
    Continuous cast                                 100%              100%              86%               77%              80%
    Shipment  (millions of tons)                    8.0               8.0              7.6               7.2              6.6
    Operating rate                                  102%               99%              95%               85%              78%
    Employees                                    14,400            15,300           15,700            16,400           17,200


Note  Refer to "Company Reorganization" note to the consolidated financial statements for a discussion of the Company's emergence
from Chapter 11 proceedings. The fully diluted earnings per share totaled $3.01 on continuing operations and $3.03 on net income for
the six months ended December 31, 1993. Earnings per share data prior to the Company's mid-1993 emergence from Chapter 11
proceedings are not presented due to the general lack of comparability and because the revised capital structure of the Company
consists of entirely new issues of Common and Preferred Stock. Reorganization items have been excluded from income statement
information in the summary above other than the net income line as this presentation is more meaningful with respect to an
understanding of the post-reorganization operating results, since no reorganization items have occurred after June 1993.

Data presented above is restated to reflect the sale of Continental Emsco Company, which is accounted for as a discontinued
operation.

NM  Not meaningful.
</TABLE>

THE LTV CORPORATION

<PAGE>   28
57



<TABLE>
<CAPTION>



------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share data)


         1990                    1989                1988                  1987                    1986                1985
------------------------------------------------------------------------------------------------------------------------------
    <S>                     <C>                  <C>                   <C>               <C>                   <C>

        $3,860.4              $4,086.0             $ 4,874.4             $ 4,805.9         $    4,469.0          $    5,375.4

            87.8                 343.1                (847.3)                344.3             (3,197.0)               (903.5)

            16.6                  20.8                  20.3                  14.4                  8.2                   1.1
             --                     --                    --                    --                   --                    --
        --------              --------             ----------           ----------         -------------         -------------
            16.6                  20.8                  20.3                  14.4                  8.2                   1.1
        --------              --------             ----------           ----------         -------------         -------------

        $   71.2              $  322.3             $  (867.6)            $   329.9         $   (3,205.2)         $     (904.6)
        ========              ========             ==========            =========         =============         =============

        $   70.9              $  264.9             $(3,153.6)            $   502.6         $   (3,268.3)         $     (723.9)
        ========              ========             ==========            =========         =============         =============



              NM                    NM                    NM                    NM                   NM                    NM
              NM                    NM                    NM                    NM                   NM                    NM
              --                    --                    --                    --                   --                    --


        $1,922.1              $1,860.2             $ 1,794.8             $ 1,616.7         $    1,763.9          $      185.3
         6,511.2               6,336.2               6,163.0               5,706.1              5,498.7               6,306.7
         3,051.2               2,894.9               2,640.5               2,693.3              2,621.6               3,222.6
            12.6                  16.8                  18.5                  25.2                108.2               2,142.4
        10,191.6              10,009.4              10,097.6               6,537.6              7,023.7               1,171.3
        (4,845.3)             (4,919.8)             (5,183.4)             (2,041.5)            (2,575.6)                652.2


        $  336.5              $  355.5         $       351.8         $       286.6         $      102.1          $      112.1
           184.0                 182.6                 201.1                 216.1                207.1                 218.7



             8.2                   8.4                  10.5                  11.5                 11.1                  13.1
              76%                   74%                   60%                   54%                  54%                   45%
             7.3                   7.6                   9.0                   9.7                  9.2                  10.7
              84%                   86%                   91%                   91%                  61%                   62%
          16,800                17,800                18,400                26,700               26,800                33,600


</TABLE>

<PAGE>   29
58


<TABLE>
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
The following table presents quarterly financial information (in millions, except per share data):
                                                                                                                     
                                                  First                Second                Third                    Fourth
                                                Quarter               Quarter              Quarter                   Quarter
----------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                  <C>                 <C>                       <C>
Net sales
    1995                                       $1,084.9              $1,113.2             $1,040.2                  $1,044.9
    1994                                          995.1               1,056.1              1,051.7                   1,130.4
Gross margin
    1995                                          172.1                 193.7                150.4                     146.1
    1994                                          112.6                 159.0                144.5                     148.6
Income from continuing operations
    1995                                           82.1                 105.2                 70.2                      53.3
    1994                                           18.4                  62.9                 55.3                      66.1
Net income
    1995                                           51.2                  55.6                 43.2                      34.8
    1994                                           15.3                  37.5                 34.1                      40.2
Market price per share
    1995  -- High                                 17.88                 15.25                17.25                     15.25
             Low                                  12.63                 13.25                13.63                     13.25
    1994  -- High                                 18.25                 17.63                21.25                     21.00
             Low                                  14.38                 14.00                15.38                     15.38
Market price per Series A Warrant
    1995  -- High                                  4.13                  3.50                 3.88                      3.13
             Low                                   2.75                  2.63                 2.88                      2.25
    1994  -- High                                  6.25                  4.75                 5.75                      5.63
             Low                                   3.50                  3.50                 3.63                      3.50
Earnings per share (1)
    1995  -- Primary:                                                
      Continuing operations                    $   0.47              $   0.59             $   0.40                  $   0.32
      Discontinued operations                        --                 (0.08)                  --                        --
                                               --------              --------             --------                  --------
         Net income                            $   0.47              $   0.51             $   0.40                  $   0.32
                                               ========              ========             ========                  ========
    1995  -- Fully diluted:
      Continuing operations                    $   0.46              $   0.58             $   0.39                  $   0.32
      Discontinued operations                        --                 (0.08)                  --                        --
                                               --------              --------             --------                  --------
         Net income                            $   0.46              $   0.50             $   0.39                  $   0.32
                                               ========              ========             ========                  ========
    1994  -- Primary:
      Continuing operations                    $   0.17              $   0.41             $   0.35                  $   0.37
      Discontinued operations                     (0.01)                (0.01)                  --                        --
                                               --------              --------             --------                  --------
         Net income                            $   0.16              $   0.40             $   0.35                  $   0.37
                                               ========              ========             ========                  ========
    1994  -- Fully diluted:
      Continuing operations                    $   0.17              $   0.40             $   0.35                  $   0.36
      Discontinued operations                     (0.01)                (0.01)                  --                        --
                                               --------              --------             --------                  --------
         Net income                            $   0.16              $   0.39             $   0.35                  $   0.36
                                               ========              ========             ========                  ========

                                                (1)  Earnings per share are computed independently for each of the quarters based 
                                                on the weighted average number of shares outstanding for each period, and the sum 
                                                of the quarters may not necessarily be equal to the full year earnings per share 
                                                amount.
</TABLE>

THE LTV CORPORATION
<PAGE>   30

SHAREHOLDERS INFORMATION
----------------------------------------------------------------------------
ANNUAL MEETING  The LTV Corporation's 1996 annual meeting will be held on
Monday, April 15, 1996, from 9:00 a.m. to 10:00 a.m., in the auditorium of the
Forum Conference Center, One Cleveland Center, 1375 East 9th Street,
Cleveland, Ohio.

10-K REPORT AVAILABLE  A copy of LTV's 1995 Annual Report on Form 10-K, filed
with the Securities and Exchange Commission, is available without charge upon
request.

Address requests to: Secretary, The LTV Corporation, 
P.O. Box 6778, Cleveland, OH 44101.

SHAREHOLDER COMMUNICATIONS  Information is mailed to registered shareholders
from time to time to keep them informed of the Company's activities and
financial status. All such information is available to any person interested in
LTV.

Address requests to: Investor Relations, The LTV Corporation,
P.O. Box 6778, Cleveland, OH 44101.

COMPANY CONTACTS  The following individuals may be contacted in writing at The
LTV Corporation, P.O. Box 6778, Cleveland, OH 44101.

Financial Community Contacts
John C. Skurek, Vice President and Treasurer, or
Joel L. Hawthorne, Manager, Investor Relations

Media Contact
Mark R. Tomasch, Senior Director, Corporate Affairs

QUARTERLY REPORTING  LTV typically releases earnings announcements on the last
Friday of the month immediately following each quarter end. The Company does
not publish quarterly reports due to the expense and lack of timeliness of
traditional quarterly reports. Instead, LTV's quarterly earnings releases
contain all of the financial information typically found in quarterly reports.

LTV issues all of its corporate news releases through PR Newswire (PRN), which
can be accessed through PRN's site on the Internet's World Wide Web, or by
fax-on-demand. To access LTV news releases through the World Wide Web using
web-browser software, enter http://www.prnewswire.com/cnoc/exec/menu?516787.
PRN releases are also available through America Online, Compuserve, Prodigy,
Lexis/Nexis, Dialog, Dow Jones News/Retrieval and Bloomberg.

To obtain faxed copies of LTV news releases, call Company News On-Call at
1-800-758-5804. This electronic, menu-driven system will ask for a six-digit
code (516787) and allows you to request LTV releases to be sent to your fax
machine. LTV also maintains a supplemental mailing list of shareholders wishing
to receive copies of the Company's quarterly earnings releases.


COMMON STOCK AND SERIES A WARRANT INFORMATION

LTV's Common Stock and Series A Warrants are listed on the New York Stock
Exchange ("NYSE") under the stock symbols: LTV and LTVWS. The number of holders
of record of LTV's Common Stock and Series A Warrants as of December 31, 1995,
was 24,390 and 27,183, respectively.

A holder of Series A Warrants is entitled to purchase 0.5582 shares of LTV
Common Stock for each Series A Warrant held at an exercise price of $16.28 per
each full share of LTV Common Stock purchased. The Series A Warrants expire on
June 28, 1998.

REQUIRED APPROVAL FOR CERTAIN PURCHASES OF COMMON STOCK AND SERIES A WARRANTS 
For the purpose of preserving LTV's ability to utilize certain favorable tax
attributes, Article Ninth of LTV's Restated Certificate of Incorporation
prohibits, with certain limited exceptions, any unapproved acquisition of
Common Stock or Series A Warrants that would cause the ownership interest
percentage of the acquirer or any other person to increase to 4.5% or above. A
person's ownership interest percentage for purposes of Article Ninth is
determined by reference to specified federal income tax principles, including
attribution of shares from certain related parties, deemed exercise of rights
to acquire stock (such as the Company's Series A Warrants) and aggregation of
shares purchased by persons acting in concert. Purchases of Common Stock or
Series A Warrants from any other person other than the Company are subject to
the limitations imposed by Article Ninth, and any unapproved purchase in excess
of the amounts permitted by Article Ninth will be void ab initio. A prospective
purchaser of Common Stock or Series A Warrants who believes that they may be
subject to the limitations imposed by Article Ninth should consult with their
advisors or LTV in advance of acquiring such securities to determine if advance
approval must be obtained from LTV's Board of Directors.

NEW TRANSFER AGENT
------------------
Mail
Chemical Mellon Shareholder Services
Stock Transfer Department
P.O. Box 469, Washington Bridge Station, New York, NY 10033

Hand Deliver
Chemical Mellon Shareholder Services
Stock Transfer Department
85 Challenger Road, Overpeck Centre, Ridgefield Park, NJ 07660

DUPLICATE MAILINGS  Shareholders occasionally receive duplicate mailings,
usually because the shareholder owns more than one class of security or because
shares are held in slightly different names. Duplicate mailings may also result
when other members of a household own stock in their own names. The Company is
required by law to mail to each name on the shareholder list unless the
shareholder requests that duplicate mailings be eliminated. To eliminate
duplicate mailings, forward mailing labels indicating which name to retain on
the mailing list and which name(s) to delete. A request for deletion of name
from the mailing list will not affect proxy mailings.

Address requests: Secretary, The LTV Corporation,
P.O. Box 6778, Cleveland, OH 44101.