<PAGE>



                                    FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

               |X|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2001

                                       OR

             |_|TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                For the transition period from _______ to _______

                       Commission file number 333-90709-04

                REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
                   (DEBTOR-IN-POSSESSION AS OF APRIL 2, 2001)

             (Exact name of registrant as specified in its charter)

         Delaware                                           34-1902647
         --------                                           ----------
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                           Identification No.)

                  3770 Embassy Parkway, Akron, Ohio 44333-8367
                  --------------------------------------------
                    (Address of Principal Executive Offices)

                                 (330) 670-3000
                                 --------------
               (Registrant's telephone number including area code)


        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X  No
                                      ---   ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-X is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
                            ---

The number of shares outstanding of each of the registrant's classes of common
stock as of March 29, 2002 was as follows: AS OF MARCH 29, 2002, THERE WERE 740
CLASS A UNITS OF MEMBERS' INTEREST, 1,000 CLASS B UNITS OF MEMBERS' INTEREST AND
30,000 CLASS C UNITS OF MEMBERS' INTEREST OUTSTANDING.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
                                      ----


<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM                                                                                                            PAGE
----                                                                                                            ----
<S>    <C>                                                                                                        <C>
1.     Business                                                                                                    3
2.     Properties                                                                                                 18
3.     Legal Proceedings                                                                                          19
4.     Submission of Matters to a Vote of Security Holders                                                        19
5.     Market for the Registrant's Common Equity and Related Stockholder Matters                                  19
6.     Selected Financial Data                                                                                    20
7.     Management's Discussion and Analysis of Financial Condition and Results of Operations                      20
7A.    Quantitative and Qualitative Disclosures about Market Risk                                                 28
8.     Financial Statements and Supplementary Data                                                                29
9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                       29
10.    Directors and Executive Officers of the Registrant                                                         30
11.    Executive Compensation                                                                                     32
12.    Security Ownership of Certain Beneficial Owners and Management                                             33
13.    Certain Relationships and Related Party Transactions                                                       36
14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K                                            40

                Independent Auditors' Report                                                                      49

                Consolidated/Combined Statements of Operations for the Years Ended December 31, 2001 and          51
                2000, and the Periods from August 13, 1999 to December 31, 1999 and January 1, 1999 to
                August 12, 1999

                Consolidated Balance Sheets as of December 31, 2001 and 2000                                      52

                Consolidated/Combined Statements of Members' Interest/Stockholders' Deficit for the               54
                Periods from January 1, 1999 to August 12, 1999 and August 13, 1999 to December 31, 1999,
                and the Years Ended December 31, 2000 and 2001

                Consolidated/Combined Statements of Cash Flows for the Years Ended December 31, 2001 and          55
                2000, and the Periods from August 13, 1999 to December 31, 1999 and January 1, 1999 to
                August 12, 1999

                Notes to Consolidated/Combined Financial Statements for the Years Ended December 31, 2001         56
                and 2000, and the Periods from August 13, 1999 to December 31, 1999 and January 1, 1999
                to August 12, 1999

                Schedule II- Valuation and Qualifying Accounts                                                    89
</TABLE>


                                       2
<PAGE>



                                     PART I

ITEM 1. BUSINESS

GENERAL

As used herein, "SBQ steel products" includes high quality engineered steel rod
products as well as special bar quality steel products.

Republic Technologies International Holdings, LLC, a Delaware limited liability
company, and its subsidiaries ("Republic Technologies", or the "Company"),
produce and market special bar quality ("SBQ") steel products. SBQ steel
products are high quality hot-rolled and cold-finished carbon and alloy steel
bars and rods used primarily in critical applications in the automotive and
industrial equipment industries. The Company supplies a diverse customer base
that includes leading automobile and industrial equipment manufacturers and
their first tier suppliers.

The Company was formed in a combination completed on August 13, 1999 (the
"Combination"). The Combination was completed through a series of mergers, asset
transfers and related steps as set forth in a Master Restructuring Agreement
among Bar Technologies Inc. ("BarTech"), Republic Engineered Steels, Inc.
("Republic"), USS/Kobe Steel Company ("USS/Kobe") and various of their
affiliates. Following the Combination, Republic Technologies International
Holdings, LLC, a newly formed legal entity, indirectly owns and operates all of
the assets of BarTech, RESI, and USS/Kobe Steel Company's SBQ steel products
business.

BarTech was formed in September 1994 with the assistance of affiliates of The
Veritas Capital Fund L.P. ("Veritas") to acquire and restart specific melt shop
and hot-rolling assets of the former Bar, Rod and Wire Division of Bethlehem
Steel Corporation. In April 1996, Blackstone Capital Partners II Merchant
Banking Fund L.P. ("Blackstone") acquired control of BarTech concurrently with
BarTech's acquisition of Bliss and Laughlin Industries, Inc. ("BLI"), one of the
largest processors of cold-finished SBQ steel in North America. Republic was a
leading U.S. manufacturer of SBQ steel products, which was formed in 1989 to own
and operate the former assets of the Bar Division of LTV Steel Company, Inc. In
September 1998, Blackstone and other investors acquired control of Republic
through RES Holding Corporation with the intention of combining it with BarTech.
USS/Kobe was the SBQ steel production facilities and related operations division
of USS/Kobe Steel Company, a 50/50 joint venture formed in July 1989 between
subsidiaries of USX Corporation ("USX"), and Kobe Steel, Ltd. ("Kobe"). The
aforementioned companies joined to become Republic after the Combination on
August 13, 1999.

On April 2, 2001 ("Petition Date"), Republic Technologies International, LLC and
its immediate parent, Republic Technologies International Holdings, LLC, and its
subsidiaries, Bliss & Laughlin LLC, and RTI Capital Corp. (collectively,
"Debtors"), filed voluntary petitions for reorganization under Chapter 11
("Chapter 11") of the Federal Bankruptcy Code ("Bankruptcy Code") in the United
States Bankruptcy Court in the Northern District of Ohio, Eastern Division
("Court"). The Company is managing its business subsequent to the Petition Date
as debtor-in-possession subject to Court approval. The Debtors attributed the
need to reorganize to extremely difficult market conditions that have made it
impossible for them to meet their financial obligations. The industry-wide
market conditions, the Company's high level of indebtedness following the
Combination, and an overall softening of the U. S. economy had substantially
diminished the Company's liquidity, adversely impacted operations, and
undermined its ability to implement strategic business initiatives in the short
term.

Under Chapter 11 proceedings, actions by creditors to collect claims in
existence at the filing date ("prepetition") are stayed ("deferred"), absent
specific Court authorization to pay such claims, while the Company continues to
manage the business as debtor-in-possession. The Company received approval from
the Court to pay or otherwise honor certain of its prepetition obligations,
including employee wages, certain employee benefits, and certain critical
vendors. The Court established October 31, 2001 as the bar date for all persons,
entities, and creditors to file proofs of claims against the Company. The
Company is currently reconciling the amount of the proofs of claims filed by the
creditors and has not recorded any additional



                                       3
<PAGE>


liabilities as a result of these claims. The Company also has many executory
contracts and other agreements that could be rejected during the Chapter 11
proceedings. When a contract or agreement is rejected, the Company is relieved
from their obligations to perform further under the contract or agreement, but
is subject to a claim for damages for the breach thereof. The Company cannot
presently determine or reasonably estimate the ultimate liability that may
result from rejecting contracts or leases or from the filing of claims for any
rejected contracts or leases, and no provisions have yet been made for these
items.

Under Chapter 11, the rights of and ultimate payments by the Company to
prepetition creditors and to equity investors may be substantially altered. This
could result in claims being liquidated in the Chapter 11 proceedings at less
(and possibly substantially less) than 100% of their face value and the equity
of the Company's equity investors being diluted or cancelled. The Company's
prepetition creditors and its equity investors will each have votes in the plan
of reorganization. The Company has not yet proposed a plan of reorganization.
Due to material uncertainties, it is not possible to determine the additional
amount of claims that may arise or ultimately be filed, or to predict the length
of time the Company will operate under the protection of Chapter 11, the outcome
of the Chapter 11 proceedings in general, whether the Company will continue to
operate under its current organizational structure, or the effect of the
proceedings on the business of the Company or its subsidiaries or on the
interests of the various creditors and security holders.

As a result of the Chapter 11 filings, Events of Default, as defined in the
related debt agreements, have occurred with respect to all of the Company's
secured and undersecured debt. Subsequent to the Petition Date, the secured debt
has been classified as a current liability and the undersecured debt has been
classified as liabilities subject to compromise.

On January 24, 2002 the USWA ratified a Modified Labor Agreement ("MLA")
modifying the Master Collective Bargaining Agreement. The MLA provides interim
support designed to permit the Company to continue operating at its current
level while working to secure the financing necessary to emerge from Bankruptcy.

Under the terms of the MLA all employee wages will be reduced 15% for the period
of January 1, 2002 to May 31, 2002. Other modifications include immediate
elimination of 125 jobs and modifications to the employment security plan
allowing the Company to layoff employees as business conditions and operational
requirements dictate.

The MLA also includes certain long-term revisions which will become effective
only if prior to May 31, 2002 a plan of reorganization has been consummated
which includes receipt by the Company of a $250 million loan in addition to the
Company's current lending arrangements, pursuant to the Emergency Steel Loan
Guarantee Program, approval by the Pension Benefit Guaranty Corporation of new
pension funding arrangements that will allow the Company to reduce its annual
pension funding obligations between 2002 and 2007 to a level that can be
supported by the Company's future cash flows, and the use of primarily equity
and/or interest-bearing debt to satisfy the claims of the senior-secured
noteholders.

The long-term revisions include agreement on more effective management of health
care costs for active employees and retirees, profit sharing, employee stock
ownership and enhancements to pension benefits.

The Company has filed a motion with the Bankruptcy Court to extend the deadline
for filing its reorganization plan to June 28, 2002. The motion was heard on
March 20, 2002 with no objections, however the Company is awaiting the final
ruling from the Bankruptcy Court.

On April 3, 2001, the Company entered into a Debtor-in-Possession Revolving
Credit Agreement ("DIP Credit Agreement") with Fleet Capital Corporation ("Fleet
Capital") and other lenders who are parties thereto to provide secured
debtor-in-possession financing to the Company through December 15,2002. The
maximum borrowings under the DIP Credit Agreement initially were $420 million in
the aggregate and included a sub-facility of $50 million for the issuance of
letters of credit. The proceeds of the DIP Credit Agreement were used to repay
the amounts outstanding under the senior revolving credit facility entered into
on August 13, 1999 and restructured on July 17, 2000. Advances under the DIP
Credit Agreement bear interest at a base rate used by Fleet Capital, plus the
applicable margin; or a Eurodollar rate on



                                       4
<PAGE>

deposits for a given period, plus the applicable margin. The applicable margin
on base rate loans is 1.5% and on Eurodollar loans is 3.5%. The applicable
margin on base rate and Eurodollar loans may be increased by 2% under specified
circumstances. A borrowing base limits the amount available at any time. There
were $326.0 million of borrowings under the DIP Credit Agreement outstanding at
December 31, 2001. The weighted average interest rate for the year 2001 was
8.1%. Amounts available under the DIP Credit Agreement at March 22, 2002 and
December 31, 2001 were approximately $12.8 million and $7.3 million,
respectively.

The DIP Credit Agreement grants a security interest in accounts receivable,
inventory, intellectual property and related assets of the Company, and the real
estate and fixed assets comprising the Canton CR, including the related melt
shop. The DIP Credit Agreement also contains certain restrictive covenants
which, among other things, restrict the Company's ability to incur additional
indebtedness or guarantee the obligations of others, change its line of
business, merge, consolidate and acquire or sell assets or stock, pay dividends,
or prepay or amend the notes or any of its subordinated indebtedness. The
Company is also required to maintain minimum cumulative EBITDA, as defined, in
the DIP Credit Agreement and limit its net capital expenditures.

The Company violated the minimum cumulative EBITDA, as defined, covenant in the
DIP Credit Agreement during 2001. On September 28, 2001, the Company was granted
an amendment and limited waiver. The amendment further limited maximum
borrowings, and a weekly minimum liquidity covenant was added.

During November, the Company notified the lenders that they were in violation of
the weekly minimum liquidity covenant. On November 30, 2001, the Company entered
into a forbearance agreement with the lenders under an amendment to the DIP
Credit Agreement. The forbearance agreement restricted the lender's ability to
exercise their remedies under the DIP Credit Agreement for certain defaults
through January 11, 2002. As a result of this amendment, the Company was granted
temporary increases in maximum borrowing limits, amendments to the minimum
liquidity amount and weekly liquidity covenants, and a 2% interest penalty
applied to all borrowings.

Subsequent event - On January 11, 2002, the Company continued to be in default
of the minimum cumulative EBITDA, as defined, covenant and the minimum liquidity
covenants. Accordingly, the Company entered into a second forbearance agreement
with the lenders under a third amendment to the DIP Credit Agreement. The second
forbearance agreement restricts the lender's ability to exercise their remedies
under the DIP Credit Agreement for certain defaults through May 31, 2002. As a
result of this amendment, the Company was granted temporary increases in maximum
borrowing limits, an amendment to the minimum liquidity covenant, a new minimum
sales covenant, and continuation of the 2% interest penalty applied to all
borrowings. Current maximum borrowings under the DIP Credit Agreement are as
follows: $340 million from January 11, 2002 to January 31, 2002; $345 million
from February 1, 2002 to March 28, 2002; $342.5 million from March 29, 2002 to
April 30, 2002; and $337 million thereafter.

BUSINESS

The production of SBQ steel products is a segment of the overall steel market.
The SBQ bar products segment is further divided into three categories which are
delineated by the quality and the end use of the bar product: (1) reinforcing
bar, (2) merchant quality bar and, (3) hot-rolled engineered bar. Hot-rolled
engineered bar is the highest quality segment of the bar product market. The
Company produces various grades and sizes of finished hot-rolled engineered bar
and rod products and intends to operate in the higher quality end of the
hot-rolled engineered bar and rod market. SBQ steel products sell for higher
prices per net ton than merchant or commodity grade steel products as they
generally contain more alloys than merchant and commodity grade products and are
sold to customers who require precise metallurgical content and compliance with
rigorous quality specifications.

The Company reports its operations in three segments: hot-rolled products,
cold-finished products, and specialty steel products. Seamless tube rounds and
semi-finished steel products are included in the hot-rolled segment. The
following table sets forth the Company's net tons shipped from our principle
product


                                       5
<PAGE>


lines, on an actual basis for the years ended December 31, 2001 and 2000, and on
a proforma basis for the year ended December 31, 1999 (in 000s):

<TABLE>
<CAPTION>
                                                              Year ended December 31,
                                             -------------------------------------------------------
                                                    1999                2000               2001
                                             ------------------ ------------------- ----------------
<S>                                             <C>     <C>         <C>        <C>     <C>     <C>
        Net tons shipped:
             SBQ hot-rolled products            1,674     65%       1,501       59%    1,253    63%
             SBQ cold-finished products           439     17          373       15       290    15
             Seamless rounds                      362     14          596       24       414    21
             Semi-finished steel products         103      4           56        2        23     1
                                              -------  -----      -------  -------    ------  ----
                Total net tons shipped          2,578    100%       2,526      100%    1,980   100%
                                              =======  =====      =======  =======    ======  ====
</TABLE>


THE STEEL MANUFACTURING PROCESS

The manufacturing process for the Company's hot-rolled and cold-finished SBQ
steel products involves a number of steps that are outlined below.

Melting. The Company's production of steel begins at its electric furnace melt
shop in Canton, Ohio and its blast furnaces in Lorain, Ohio. The Canton melt
shop operates electric arc furnaces, which consume ferrous scrap as the primary
raw material. Premium grade steel scrap is transported from a scrap yard to the
facility's melt shop, where it is melted in two 220-ton electric arc furnaces at
the Canton, Ohio facility. After the scrap reaches a molten state, it is poured
from the furnace into ladles and further processed in a ladle refining furnace,
where alloys, carbon and other materials are added to create the desired
chemical, metallurgical and physical properties. During the scrap melting and
refining process, impurities are removed from the molten steel. In addition, as
part of the refining process, the molten steel is further processed in a vacuum
degasser, which removes oxygen, hydrogen and nitrogen to produce a clean,
high-quality steel.

At the Company's Canton, Ohio facility, the molten steel is introduced to its
continuous rolling process in which molten steel is poured into a four-strand
continuous bloom caster, solidified in molds and cut into blooms and billets in
a single continuous process. These semi-finished blooms and billets, having been
produced to a specified chemical composition, size and quality, are then cooled
and sent to the Company's rolling mills for further processing into finished
products or sold as semi-finished products.

Unlike the Company's electric furnace melt shop that relies on steel scrap, its
Lorain, Ohio facility produces iron in a blast furnace, and later converts the
iron to steel in a basic oxygen furnace by adding scrap. The primary raw
materials used in the Company's blast furnace are (1) taconite pellets, which
are a concentrated form of iron ore, (2) coke, which is a product produced by
baking specific types of coal at high temperature, and (3) limestone or other
cleansing materials, which are necessary to remove impurities in the material.
In addition, scrap material is often used in place of iron ore and pulverized
coal is often used in place of coke. The Company purchases the taconite pellets
and coke from USX Corporation pursuant to long-term supply agreements and the
other materials are either produced at the facility or purchased from third
parties. See Item 13 -- Certain Relationships and Related Party
Transactions-Agreements with USX Corporation and Kobe Steel, Ltd. and their
Affiliates.

The Company operates two blast furnaces at its Lorain facility. Within the
refractory brick-lined blast furnace chamber, the iron material consisting of
taconite or other ores, the carbon material consisting of coke and pulverized
coal and the cleansing or "flux" material are heated to temperatures in excess
of 2,500 degrees Fahrenheit. The high temperature causes a chemical reaction
between the iron and carbon creating pig iron or hot metal. The flux material
combines with impurities to create a by-product called slag.

Special rail vehicles then transfer the pig iron in liquid form to the Lorain
melt shop, which operates two 220-ton basic oxygen furnaces. Sulfur is removed
from the hot metal and the hot metal is mixed with high quality scrap. This
mixture is injected with oxygen that causes another chemical reaction that
converts the pig iron or hot metal into molten steel, which is then poured into
ladles. The ladles are transported to a ladle



                                       6
<PAGE>


metallurgy facility where alloying agents and other refining materials may be
added and blended into the steel. In addition, for some applications, the molten
steel may be processed in a vacuum degasser to reduce oxygen, hydrogen and
nitrogen.

The molten steel is then poured into a five-strand continuous bloom caster
through which the steel flows and cools. The cooled material solidifies and then
is cut into blooms. The caster produces large diameter round blooms that are
feedstock for hot-rolled large diameter seamless tube products or rectangular
blooms that are transported to a mill that converts the blooms into billets to
be used as feedstock for hot-rolled bar and rod, or into smaller diameter
semi-finished rounds to be used as feedstock for hot-rolled smaller diameter
seamless tube products.

Hot-Rolled Products. The Company's hot-rolled products are manufactured from
steel or iron melted in its steel production facilities, which is cast into
blooms or direct cast into billets. Blooms and billets are processed into
hot-rolled products by changing the internal physical properties, size, and
shape of the steel. As a direct cast billet or bloom cast billet is reduced in
size, the strength and integrity of the resulting bar or rod product is
increased. The completed hot-rolled products are coiled or are placed on a
cooling bed and then cut into required lengths. Then the items are stacked into
coils or bundles and placed in warehouses from which they are shipped directly
to the customer or to one of the Company's cold-finishing mills for further
processing.

Since blooms have a larger cross-sectional area than billets, a greater
reduction to size occurs. Accordingly, a hot-rolled product rolled from a bloom
cast billet is generally stronger than a direct cast billet hot-rolled product
of the same size and metallurgical content. Typically customers concerned about
product quality and strength as related to reduction of area require bloom-based
hot-rolled bar products.

Direct cast billet products are generally used for smaller SBQ product sizes and
for less demanding end-use applications. The Company's Canton, Ohio Caster and
Continuous Rolling Facility ("CR") and Lorain, Ohio melt shop facilities cast
bloom-based products in a 10" by 13" or 12.5" by 14" size and have approximately
2.4 million tons of aggregate annual bloom capacity.

The following table displays the major end-market applications of the Company's
hot-rolled products by size and shape:

            MAJOR END-MARKET APPLICATIONS BY PRODUCT SIZES AND SHAPES

<TABLE>
<CAPTION>
                         ------------------------------ -------------------------- --------------------------
                                      Rounds                      Squares                    Hexagons
                         ------------------------------ -------------------------- --------------------------
------------------------
<S>                      <C>                            <C>                        <C>
      7/32"-3/4"
                         Auto fasteners                 Not Applicable             Hose couplings
                         Tire cord                                                 Converters
                         Specialty springs
------------------------ ------------------------------ -------------------------- --------------------------
       3/4"-3 1/4"
                         Bearings                       Not Applicable             Hose couplings
                         Spindles                                                  Converters
                         Steering columns
                         Gears
                         Constant velocity joints
                         Hubs
                         Axles
------------------------ ------------------------------ -------------------------- --------------------------
         3 1/4"+
                         Crankshafts                    Off-highway equipment      Not Applicable
                         Axles                          Agricultural equipment
                         Hydraulic cylinders            Converters
                         Machine parts
                         Converters
------------------------ ------------------------------ -------------------------- --------------------------
</TABLE>

Cold-Finished Products. The Company produces its cold-finished SBQ steel
products by improving the physical properties of hot-rolled products through
value-added processes at its cold-finishing plants.



                                       7
<PAGE>


Cold-finishing processes produce products with more precise size and
straightness tolerances as well as a surface finish that provide customers with
a more efficient means of producing a number of end products by often
eliminating the first processing step in the customer's process. The four basic
cold-finishing processes are the following:


Process                    Description
-------                    -----------
Cold Drawing               Hot-rolled products that have been descaled by
                           blasting the surface with hardened steel shot or
                           pickling with acid are (1) drawn or pulled through a
                           tungsten carbide die, which compresses the surface,
                           elongates the product and makes it smooth and shiny
                           and (2) straightened.

Turning and Polishing      Removing the surface of hot-rolled products with a
                           revolving cutting tool, which is the turning process,
                           then rotating the turned product through rollers that
                           polish the surface and straighten the product.

Turning, Grinding and      The same processes as turning and polishing products,
Polishing                  with the addition of a grinding process that yields
                           very fine tolerances.

Drawing, Turning,          The same processes as turning, grinding and polishing
Grinding and Polishing     products, with the addition of a drawing process to
                           add physical strength.

After the cold-finished products are cut to length, they are stacked in bundles
and transported to warehouses from which they are shipped to customers.

The following table displays the major end market applications of the Company's
cold-finished products by shape without references to product size, which is
less important for determining the end use of cold-finished steel products:

                     MAJOR END MARKET APPLICATIONS BY SHAPES

<TABLE>
<CAPTION>
----------------------------------------- ---------------------- ----------------- --------------------------
                 ROUNDS                         HEXAGONS             SQUARES                 FLATS
----------------------------------------- ---------------------- ----------------- --------------------------
<S>                                       <C>                    <C>               <C>
Constant velocity joints                  Hose fittings          Agricultural      Machine tool fixtures
Hydraulic hose couplings                  Spark plug shells          equipment     Office furniture
Steering rack gears                       Nuts                                     Exercise equipment
Fractional horsepower motor shafts                                                 Agricultural equipment
Engine valves and fuel injector parts
Hydraulic cylinders for off-highway
     and agricultural equipment
Shafts and gears for appliance
     industry
----------------------------------------- ---------------------- ----------------- --------------------------
</TABLE>

Seamless Tube Rounds. In connection with a supply agreement with USX and the
Lorain Tubular Company ("Lorain Tubular"), the Company produces semi-finished
rounds at its Lorain, Ohio facility for purchase by Lorain Tubular and by USX's
Fairfield, Alabama facility under specified circumstances. Depending on the
desired end-use application for Lorain Tubular, these products are either cast
to sizes of 10.5", 12.25" or 13.5" or cast to size and then rolled at the
Company's primary rolling mill to sizes of 6" or 10.5". For the Fairfield
facility, the Company produces semi-finished product in rounds at 11.6".
Seamless tubes are used in oil and gas drilling and exploration applications.
For a description of the rounds supply agreement see Item 13 - "Certain
Relationships and Related Party Transactions".

Semi-Finished Steel Products. In addition to the Company's hot-rolled and
cold-finished products and seamless tube rounds, the Company sells semi-finished
products produced by its melt shop casters that have not been processed further
at its rolling mill facilities. These products are typically sold to rolling
mills operated by competitors that do not have melt shop facilities or to steel
service centers or distributors, for further processing before they reach the
ultimate end user. These products are sold in sizes ranging from 5"-14".


                                       8
<PAGE>


SEASONALITY

The Company's business is subject to some degree of seasonality. The primary end
markets for the Company's products are the automotive and industrial equipment
industries. Consequently, the SBQ industry, including the Company, typically
experiences higher shipment volumes and revenues in the first and second
quarters due to seasonality of the automotive and industrial equipment
industries.

RAW MATERIALS

Scrap Metal. The major raw material for the Company's electric arc furnace melt
shops is ferrous scrap metal, which is generated principally from industrial,
automotive, demolition and railroad sources. The long-term demand for scrap
metal and the importance of scrap metal to the domestic steel industry is
expected to increase as steelmakers continue to expand scrap metal-based
electric furnace capacity, with additions to, or replacements of, existing
integrated steel manufacturing facilities that use iron ore, coke and limestone
as their principal raw materials. The high quality of the Company's products
requires the use of premium grades of scrap metal, the supply of which is more
limited. Prices for scrap metals vary based on numerous factors including
quality, availability, freight costs, speculation by scrap brokers and other
conditions beyond the Company's control. However, the Company generally has not
had difficulty purchasing adequate scrap metal of the required quality. The
Company believes that adequate supplies of scrap metal will continue to be
available in sufficient quantities for the foreseeable future.
The Company seeks to reduce its exposure to fluctuations in the price of scrap
metal by charging where possible scrap metal surcharges based on the increase in
the price of scrap metal above specified levels. For other customers,
adjustments are made in selling prices if the price of scrap exceeds or drops
below specified levels. These surcharges and price adjustments are determined on
a monthly or quarterly basis.

Coke and Iron Ore Pellets. Iron ore pellets and coke are the principal raw
materials used in the Company's blast furnaces. The Company has entered into
long term sourcing agreements with USX who will supply the iron ore pellets and
coke that are the raw material inputs for the blast furnace/ basic oxygen
process route at its Lorain, Ohio facility. The Company expects that these
agreements will provide it, during the term of the contracts, with a consistent
supply of quality materials the Company at prices that will be favorable as
compared to market prices due to the "most favorable nations" pricing terms in
the agreement, which guarantees the Company a price matching the lowest price
offered by USX. For additional information on the iron ore pellets and coke
supply agreement, see Item 13 - "Certain Relationships and Related Party
Transactions".

Coal. The Lorain, Ohio blast furnace injects pulverized coal into the blast
furnace to offset its use of higher priced metallurgical coke and reduce the
material cost for hot-metal production. This coal is pulverized and delivered to
the Lorain facility under a long-term tolling agreement with Ohio Edison Power
Company (a wholly owned subsidiary of FirstEnergy). The price over the life of
the agreement is fixed. For additional information see Item 13 - "Certain
Relationships and Related Party Transactions".

Alloys and Fluxes. Additionally, the Company purchases various materials such as
nickel, chrome, molybdenum, vanadium, manganese, silicon, aluminum, titanium,
sulphur, lead, lime and fluorspar for use as alloying agents and fluxing, or
cleansing, materials. Historically, prices of many of these materials have
fluctuated dramatically.

Semi-Finished Billets and Hot-Rolled Bars. Historically, the Company has
purchased semi-finished billets from other steelmakers for use in production at
its hot-rolling mills. The Company purchases from several suppliers and expects
that grades of semi-finished billets that it chooses not to produce will be
available for purchase.

In addition, the Company has previously purchased a portion of its hot-rolled
bar requirements for its cold-finishing operations from third-party suppliers.
During the years ended December 31, 2001, 2000 and 1999, approximately 84%, 76%,
and 70%, respectively, of it's cold-finished bar and rod production used
internally produced hot-rolled products.


                                       9
<PAGE>


ENERGY SOURCES

The Company's manufacturing facilities consume large amounts of electricity and
natural gas. Republic Technologies has not had difficulty in obtaining adequate
sources of electricity and natural gas in the past and does not foresee any
significant difficulties in the future.

The Company's primary use of electricity is at its electric arc furnace melt
shop in Canton, Ohio and at its blast furnace melt shop facility in Lorain,
Ohio, which uses less electric power than the electric arc furnaces. Republic
Technologies currently has a long-term electricity contract in place for the
Lorain facility that expires in 2004. The electric contract for the Canton
facility is currently being re-negotiated and is expected to be renewed by May
1, 2002 with improved terms to match anticipated operating requirements. The
rest of its facilities purchase their electricity from local utilities under
various contracts and terms. The Company believes that its electricity costs are
competitive with other steel manufacturers.

In connection with the Combination, the Company entered into an agreement with
FirstEnergy Services Corp. ("FirstEnergy") under which it appointed FirstEnergy
as its exclusive representative for the procurement of energy supply and
services. As a result of this arrangement, the Company expects that it is likely
that FirstEnergy will eventually fill much of its energy purchasing
requirements. For additional information on this arrangement, see Item 13 -
"Certain Relationships and Related Party Transactions".

The principal use of natural gas in the Company's operations is for the billet
reheating operations at its Lorain, Ohio; Lackawanna, New York and Massillon,
Ohio hot-rolling mills and at the blast furnace and primary mill at its Lorain,
Ohio melt shop facility. The Company has negotiated distribution contracts,
storage contracts, primary firm transportation contracts and secondary firm
transportation contracts where necessary for cost effective, reliable natural
gas deliveries. The Company has also negotiated gas purchase contracts with
dependable supplies that are NYMEX based. Each facility's delivery arrangement
is negotiated separately for the specific needs of that facility.

CUSTOMERS

The Company primarily markets its products to consumers of higher quality,
critical application SBQ steel products. Customers in these targeted market
segments require higher quality SBQ steel products for use in hot and cold
metal-forming operations such as cold forge/extrusion, warm forge, hot forge and
hot/cold heading processes, rather than traditional machining processes.
Penetration of these targeted market segments is dependent upon various factors,
including the ability to achieve precise chemistry and manufacturing tolerances.
Additionally, producers must meet pre-qualification requirements to become
approved suppliers for potential customers.

For customers in the automobile manufacturing industry and their suppliers, the
most important form of certification is the Quality System Requirement standard,
or "QS-9000" certification, which is a quality system standard established by
the Chrysler, Ford and General Motors Quality Requirement Task Force, which sets
forth a standard set of quality requirements for components and materials
suppliers to the automotive industry. Certification requirements vary in scope
and generally take between three and twelve months for a supplier to achieve.
Frequently, the qualification process requires a producer to supply one or more
trial heats of SBQ steel products for customer evaluation, although some
customers have longer pre-qualification requirements. Because of the high costs
incurred by suppliers and customers and significant time that may be required to
obtain qualifications, the qualification processes can create strong bonds and
commitments between suppliers and customers.

Most of the Company's facilities have satisfied all major pre-qualification
requirements, including QS-9000. All of its facilities have received QS-9000
certifications.

The Company's five largest customers accounted for 30.5%, 29.1% and 25.2% of its
total net sales in 2001, 2000, and 1999, respectively. Lorain Tubular Company
LLC was the only customer that accounted for 10% or more of the Company's total
sales in 2001 (10.7%) and 2000 (14.6%), and no customer accounted for greater
than 10% in 1999.



                                       10
<PAGE>

DISTRIBUTION

The Company markets its SBQ steel products through a staff of professional sales
representatives and sales technicians located in the major manufacturing centers
of the Midwest, Great Lakes, and Southeast regions of the United States and
Canada, as well as utilizing independent sales agents to cover some areas in
states in the South and on the West Coast of the United States.

The Company's facilities are strategically located to serve the majority of
consumers of SBQ steel products in the United States and Canada. The Company
ships products between its mills and finished products to its customers by rail
and truck. Customer needs and location dictates the type of transportation
utilized by the Company for deliveries. The proximity of the Company's rolling
mills and cold-finishing plants to its customers allows it to provide
competitive rail and truck freight rates and flexible deliveries in order to
satisfy just-in-time and other customer manufacturing requirements. The Company
believes that the ability to meet the product delivery requirements of its
customers in a timely and flexible fashion is a key to attracting and retaining
customers as more and more SBQ steel product consumers reduce their in-plant raw
material inventory. The Company optimizes freight costs by using its
significantly greater scale of operations to maintain favorable transportation
arrangements, continuing to combine orders in shipments whenever possible and
utilizing "backhauling" of scrap and other raw materials.

COMPETITION

The domestic steel industry is highly competitive. The Company competes with
other SBQ steel producers including the following:

        -   integrated mills, which make steel by processing iron ore and other
            raw materials in a blast furnace;
        -   mini-mills, which make steel by melting scrap metals in an electric
            arc furnace; and
        -   merchant bar quality producers.

The Company's primary competition for hot-rolled bar products is both large
domestic steelmakers and specialized mini-mills. Many of the large steelmakers
have greater financial resources and utilize modern technologies similar to some
of the equipment and processes currently in place at the Company. Numerous
competitors exist in the domestic cold-finishing market. There are over 20
cold-finishers in the domestic market at present. In addition, foreign
competition can be significant in segments of the SBQ steel market, particularly
where certifications are not required, and during periods when the U.S. dollar
is strong as compared with foreign currencies. This competition is exerting
significant downward pressure on the price level of some of the Company's
products.

The principal areas of competition in the Company's markets are product quality
and range, delivery reliability, service and price. Special chemistry and
precise processing requirements characterize SBQ steel products. Maintaining
high standards of product quality while keeping production costs competitive is
essential to the Company's ability to compete in its markets. Management
believes that the Company has the widest selection of product grades and sizes
in the industry. The ability of a manufacturer to respond quickly to customer
orders currently is, and is expected to remain, important as customers continue
to reduce their in-plant raw material inventory.

BACKLOG

The Company calculates backlog as those orders received but not yet shipped. Its
backlog as of December 31, 2001 was $442 million, and its combined backlog as of
December 31, 2000 was $361 million. Orders are generally filled within 3 to 14
weeks of the order depending on the product, customer needs and other production
requirements. Customer orders are generally cancelable without penalty prior to
finish size rolling, and depend on customers' changing production schedules.
Accordingly, the Company does not believe that the amount of backlog orders is a
reliable indication of future sales.


                                       11
<PAGE>


PATENTS, TRADEMARKS AND TRADE NAMES

The Company has the patents, trademarks and trade names necessary for the
operation of its business as now conducted. The loss of any or all of these
patents, trademarks and trade names would not have a material adverse effect on
the Company's business. However, in recognition of these trademarks in the
marketplace, the Company considers these intellectual property rights important
to its business and intends to actively defend and enforce them as necessary.

EMPLOYEES

In connection with the acquisition of Republic by RES Holding Corporation in
September 1998, the Company entered into a new Master Collective Bargaining
Agreement covering all former Republic and BarTech facilities with employees
represented by the United Steelworkers of America ("USWA") and replaced the
existing collective bargaining agreements with the USWA, other than selected
plant-specific agreements. In connection with the Combination, the scope of the
same Master Collective Bargaining Agreement was extended to cover the former
USS/Kobe Lorain, Ohio facility. This labor agreement expires on October 31,
2003.

The vast majority of the Company's production workers are covered by the
collective bargaining agreement with the USWA. A union does not represent
production employees at the Company's Cartersville, Georgia facility. The
Company had 3,512 hourly employees at December 31, 2001, and 742 salaried
employees. The general terms of the agreement in place at the Petition Date
are discussed below.

The labor agreement provides for formalized workplace flexibility and
consolidation of job classifications at the Company's facilities. Under the
labor agreement, the USWA has agreed to eliminate many practices, which in the
past restricted workplace flexibility and led to inefficiencies. The Company and
the USWA have also agreed to reduce the number of job classifications at all
covered facilities to five from over thirty-four. This reduction will enable
the Company to assign a greater number of responsibilities to individual
employees.

Republic Technologies and the USWA have agreed under the labor agreement that
the USWA will be granted "partnership" rights in the management of the Company.
These "partnership" rights afford access to the Company's decision-making
processes through the formation of leadership and advisory committees containing
members of management and USWA representatives. Additionally, the USWA has the
right to appoint one director to the Board of Directors of Republic Technologies
International, Inc. ("Republic Technologies, Inc."), the Company's ultimate
parent company, as agreed to by the USWA and Republic.

The labor agreement provides for voluntary early retirement buyouts and a
voluntary severance plan applicable to all former Republic facilities with
employees represented by the USWA and the former USS/Kobe facilities, for the
purpose of permanently reducing the net number of hourly employees represented
by the USWA at these facilities by over 1,700 from the date of the new labor
agreement. In the event that the required headcount reductions are not achieved
through the early retirement buyout program and a voluntary severance plan, the
Company may layoff up to 300 employees. For additional information regarding the
expected cash costs associated with the early retirement buyout program and the
voluntary severance plan, see "Management's Discussion and Analysis of Financial
Condition and Results of Operation - Liquidity and Capital Resources".

Wage and benefit provisions under this collective bargaining agreement are
specified until expiration of the agreement and will be subject to negotiations
at that time.

The labor agreement also provides for improvements in the existing defined
benefit pension plans covering employees at former Republic facilities, former
USS/Kobe facilities and the former BLI Harvey, Illinois facility, and the
creation of defined benefit plan obligations covering employees at former
BarTech facilities. The existing defined benefit pension plans may be
consolidated into one defined benefit pension plan in the future, which will
contain terms found in traditional steel industry defined benefit pension plans.
For additional information regarding the anticipated pension costs associated
with the labor agreement, see



                                       12
<PAGE>


"Management's Discussion and Analysis of Financial Condition and Results of
Operation - Liquidity and Capital Resources".

Pursuant to the labor agreement, the employees covered by the agreement are
expected to be offered the opportunity to purchase up to $15.0 million worth of
common stock of Republic Technologies, Inc. at a price per share equal to the
effective price per share paid by the investors for new shares they acquired in
connection with the Combination transactions. Pursuant to an agreement with the
USWA, this offering is to be accomplished on the earliest of (1) January 1,
2001, (2) immediately preceding Republic proceeding with an initial public
offering or (3) a change of control. However, no activity related to this
agreement has occurred between January 1, 2001 and the filing date of this
report. The new labor agreements contemplate that any shares sold will be
subject to customary restrictions on transfer and will have the benefit of
customary "piggyback" registration rights.

Finally, the labor agreement also provides for management neutrality, employment
security for covered employees and various capital expenditures with respect to
the Company's new and existing facilities. The labor agreement also contemplates
one-time payments to various USS/Kobe covered employees expected to total
approximately $3 million relating to signing bonuses and employee equity
interest obligations.

On January 24, 2002 the USWA ratified a Modified Labor Agreement ("MLA")
modifying the Master Collective Bargaining Agreement. The MLA provides interim
support designed to permit the Company to continue operating at its current
level while working to secure the financing necessary to emerge from Bankruptcy.

Under the terms of the MLA all employee wages will be reduced 15% for the period
of January 1, 2002 to May 31, 2002. Other modifications include immediate
elimination of 125 jobs and modifications to the employment security plan
allowing the Company to layoff employees as business conditions and operational
requirements dictate.

The MLA also includes certain long-term revisions which will become effective
only if prior to May 31, 2002 a plan of reorganization has been consummated
which includes receipt by the Company of a $250 million loan in addition to the
Company's current lending arrangements, pursuant to the Emergency Steel Loan
Guarantee Program, approval by the Pension Benefit Guaranty Corporation of new
pension funding arrangements that will allow the Company to reduce its annual
pension funding obligations between 2002 and 2007 to a level that can be
supported by the Company's future cash flows, and the use of primarily equity
and/or interest-bearing debt to satisfy the claims of the senior-secured
noteholders.

The long-term revisions include agreement on more effective management of health
care costs for active employees and retirees, profit sharing, employee stock
ownership and enhancements to pension benefits.

ENVIRONMENTAL MATTERS

The domestic steel industry is subject to a broad range of environmental laws
and regulations, including those governing the following:

-    discharges into the air and water;

-    the handling and disposal of solid and hazardous wastes;

-    the remediation of soil and groundwater contamination by petroleum products
     or hazardous substances and wastes; and

-    the health and safety of its employees.

The Company continuously monitors its compliance with these environmental laws
and regulations and believes that it currently is in substantial compliance with
them. The Company anticipates that its expenditures for environmental control
measures during the next twenty-four months will be approximately $1.5 million.


                                       13
<PAGE>


As is the case with most steel producers, the Company could incur significant
costs related to environmental issues in the future, in particular those arising
from remediation costs for historical waste disposal practices at its
facilities. The Company currently believes that these costs are likely to be in
the range of $12.0 million to $23.6 million over the lives of the Company's
facilities although some third-party estimates are substantially higher. The
Company's reserve to cover probable environmental liabilities, including the
matters discussed below, was approximately $16.5 million as of December 31,
2001. In addition to the accrual amounts specifically discussed below, the $16.5
million also includes accruals of approximately $1.4 million relating to the
Company's voluntary program relating to the replacement of PCB-containing
transformers at its facilities and $2.0 million relating to several remaining
environmental matters which are not believed to be material and which are not
discussed below. The Company believes that it has no significant environmental
compliance and remediation costs with respect to the former BarTech operations
and, accordingly, only three non-material reserve items have been established.
As of December 31, 2001 the Company had a reserve of $0.9 relating to the U.S.
Environmental Protection Agency (the "U.S. EPA") "multimedia" audit that is
discussed below. Except as noted below, the Company is not otherwise aware of
any significant environmental compliance and remediation costs with respect to
the former USS/Kobe operations for which the establishment of a reserve would be
appropriate. To the extent the Company incurs any such remediation costs, these
costs will most likely be incurred over a number of years; however, future
regulatory action regarding historical disposal practices at its facilities, as
well as continued compliance with environmental requirements, may require the
Company to incur significant costs that may have a material adverse effect on
its future financial performance.

The U.S. EPA has identified a number of solid waste management units, or
"SWMUs," at the Eighth Street facility in Canton, Ohio. On June 16, 1999, the
Company entered into an Administrative Consent Order with the U.S. EPA to
investigate these SWMUs and propose appropriate remedial measures. The "Berger
Triangle," a seven acre parcel of land the Company owns in Canton that is listed
on the U.S. EPA's Comprehensive Environmental Response, Compensation and
Liability Information System list of contaminated or potentially contaminated
sites, is also included within the scope of the Administrative Consent Order.
The Company anticipates that through the year 2002, it will spend approximately
$0.1 million to investigate the SWMUs and the Berger Triangle. The Company has
accrued approximately $4.0 million regarding these matters. However, the Company
is currently unable to predict precisely the amount or timing of the costs it
may be required to incur to remediate these sites, but the cost could be greater
than the amount currently accrued.

The electric arc furnace dust waste pile located at the Canton facility has been
exempted from the scope of the Administrative Consent Order discussed above.
However, on April 26, 1999, the Company entered into a Consent Decree with the
Ohio Environmental Protection Agency (the "Ohio EPA") providing for the closure
in-place of that waste pile. The Company submitted a draft closure plan to the
Ohio EPA on July 2, 1999 that was approved on October 22, 1999. The Company
originally anticipated initiating closure construction in the spring of the year
2000, but negotiated with the Ohio EPA to defer this until 2001. The Company
anticipated that the construction would involve the placement of a 54- inch
thick liner on top of the existing pile, and would involve expenditures of
approximately $1 million. The Company estimated that the cost of 30 years of
post-closure monitoring and maintenance of the closed waste pile would be an
additional $1.1 million. Republic Technologies had accrued approximately $2.1
million regarding the closure and post-closure care of the waste pile as of
December 31, 2001. In January of 2001, the Company placed the $2.1 million
related to these costs on reserve with an insurance company. During 2001, the
Company substantially completed closure of the waste pile and expects to
conclude closure activities in the spring of 2002. As of December 31, 2001, the
balance remaining in this reserve was $0.3 million.

Notices of historical waste disposal activities at one of the two Massillon,
Ohio facilities and the two Canton facilities were filed by LTV Steel and its
predecessors with the U.S. EPA, under Section 103(c) of the federal
Comprehensive Environmental Response, Compensation and Liability Act. In 1985,
the Ohio EPA recommended the Massillon hot roll bar facility as a medium
priority for further state investigation. The Ohio EPA also recommended the
Harrison Avenue facility in Canton as a medium priority for further state
investigation and a low priority for further federal investigation. No further
investigation of historical waste disposal activities has been performed at
these facilities since 1986 by any environmental authority. The Company could be
required, in the future, to incur significant costs to investigate such
historical waste



                                       14
<PAGE>


disposal activities and remediate any contamination found to exist at these
facilities. Republic Technologies has accrued approximately $5.4 million
regarding the Massillon hot roll bar facility. However, the Company is currently
unable to predict precisely the amount or timing of such costs.

In 1996, the Company closed certain hazardous waste areas at the Massillon cold
finished bar facility. These actions were taken under State law following
earlier inspections and assessments by the Ohio EPA and U.S. EPA regarding these
areas. In October 2001, the U.S. EPA visited the site and requested an update on
the nature of the closure, as part of an internal review on potential
applicability of Resource Conservation and Recovery Act corrective action. The
U.S. EPA continues to review this matter.

Through contractual agreements with Bethlehem Steel Corporation ("Bethlehem"),
the Company has sought to reduce the impact of costs arising from or related to
actual or potential environmental conditions at BarTech's facilities caused or
created by Bethlehem or BarTech's predecessors in title and attributable to the
period in which the Bethlehem Bar Rod and Wire Division or BarTech's
predecessors operated such facilities. Pursuant to such arrangements, Bethlehem
agreed to indemnify BarTech for such costs by limiting BarTech's potential
exposure to any such damages incurred (1) through December 1996, to 50% of the
first $2 million in damages, or $1 million, and (2) thereafter, to 50% of the
first $10 million of damages in the aggregate, or $5 million in total exposure.
Although several investigations of past or present environmental conditions at
the former BarTech facilities have been conducted by or on behalf of Bethlehem
and regulatory agencies, the reports and results of which have been made
available to the Company, an in-depth, environmental review of the former
BarTech facilities to determine the potential scope, if any, of required
remediation at such facilities has not been conducted by or on the behalf of
BarTech or the Company. During 2001 Bethlehem filed for protection under Chapter
11 of the United States Bankruptcy Code, therefore, there can be no assurance
that Bethlehem will meet its obligations under the indemnification arrangements
or that there will not be future contamination for which the Company might be
fully liable and that may require it to incur significant costs that could have
a material adverse effect on its business, results of operations or financial
condition.

Bethlehem is conducting remedial activities on a small portion of the
Lackawanna, New York facility historically used for mill scale storage, which
was identified as requiring corrective action by the U.S. EPA pursuant to an
Administrative Order on Consent issued to Bethlehem in 1990. Bethlehem is
currently awaiting approval of the Remedial Work Plan for the former mill scale
storage area submitted to the U.S. EPA in September 1994. Bethlehem is
ultimately liable for compliance with the Administrative Order on Consent,
however, due to Bethlehem's Chapter 11 filing there can be no assurance that
Bethlehem will meet its obligations

Some of the steel processing operations presently conducted by Bliss & Laughlin,
LLC ("Bliss & Laughlin") commenced over 100 years ago by predecessors of Bliss &
Laughlin and included properties which over the years were sold by Bliss &
Laughlin's predecessors. Given the nature and geographic diversity of its
current and its predecessors' former operations, it is possible that claims
would be asserted against Bliss & Laughlin in the future based upon the current
property ownership of Bliss & Laughlin and by operations of BarTech's
predecessors. Bliss & Laughlin has received an indemnification from the former
owner and operator of such properties for various environmental claims or
liabilities relating to activities at Bliss & Laughlin's Harvey and Batavia,
Illinois and Medina, Ohio properties prior to October 23, 1984, when Bliss &
Laughlin succeeded to ownership of such properties, and for various
environmental claims or liabilities relating to properties that were sold by
Bliss & Laughlin's predecessors. There can be no assurance that such former
owner and operator will meet its obligation under the indemnification agreements
or that there will not be future contamination for which the Company might be
fully liable and that may require it to incur significant costs that could have
a material adverse effect on its business, results of operations or financial
condition.

Canadian Drawn Steel Company, Inc. ("CDSC"), is also subject to Canadian
federal, provincial, regional and municipal environmental laws and regulations.
The Company believes that it is currently in substantial compliance with
applicable environmental laws and regulations and does not anticipate any
material capital expenditures for environmental control facilities in the
future. However, there can be no assurance that the



                                       15
<PAGE>


Company will not be required to incur significant costs that could have a
material adverse effect on its business, results of operations or financial
condition.

The Lorain, Ohio facility has been in continuous operation by the Company,
USS/Kobe, USX and its predecessors for over 100 years. Although the Company is
not aware of any material environmental issues at this facility other than those
described herein, it believes the long operational history of this facility
poses a significantly greater probability of some form of environmental
contamination than at its newer facilities. Costs or liabilities associated with
any contamination at this facility could be significant.

In connection with the formation of USS/Kobe Steel Company in 1989 by USX and
Kobe, USS/Kobe Steel Company obtained a limited indemnity from USX concerning
identified matters arising out of the past operation of the melt, bar and
tubular facilities at Lorain, Ohio by USX and its predecessors. The Company is
the beneficiary of a portion of this indemnity. The 1989 agreement relating to
the formation of USS/Kobe Steel Company divided environmental responsibility
into several different categories. The first category includes specific areas
and projects for which USX retained complete responsibility. USX retained all
responsibility relating to a hazardous waste landfill referred to as the D-2
Landfill, and for all disposals of waste materials prior to June 30, 1989 at
locations other than the Lorain property. The second category includes matters
that were split between USS/Kobe Steel Company and USX.

Two cost sharing baskets and one cost sharing percentage was agreed to by USX
and USS/Kobe Steel Company as well. One of the cost sharing baskets provides
that USS/Kobe Steel Company will be responsible for the first $10 million of
costs and USX will be responsible for costs above that amount incurred relating
to the areas formerly occupied by a coke plant and related facilities, a
sintering plant, and a galvanizing plant. USX and USS/Kobe Steel Company
subsequently agreed that USS/Kobe Steel Company could treat $3 million of its
expenses in demolishing the coke batteries as expenditures against this $10
million basket. The second cost sharing basket provides that USS/Kobe Steel
Company will be responsible for the first $9 million of costs related to 13
identified SWMUs that are generally classified as disposal sites. The percentage
cost sharing agreement provides that in the event of any groundwater
remediation, USS/Kobe Steel Company will pay 65% of the cost and USX will pay
35% of the cost. In each case, USX's obligation to indemnify is limited to
cleanup actions specifically required by government agencies.

Except for these specific indemnities and for specific projects that USX agreed
to complete, USS/Kobe Steel Company assumed responsibility for all environmental
conditions at the Lorain facility, including additional SWMUs at the facility
that were not included within the scope of the environmental cost sharing
provisions of the 1989 agreement contributing the Lorain facilities to USS/Kobe
Steel Company. Although environmental regulators have not required action
regarding the SWMUs at the Lorain facility, the Company could incur significant
investigation and remediation costs in the future. However, the Company is
currently unable to predict precisely the amount or timing of the costs it may
be required to incur to investigate and remediate the SWMUs or other potential
areas of contamination.

Pursuant to the master restructuring agreement, which sets forth indemnification
and cost sharing arrangements regarding environmental liability at the Lorain,
Ohio facilities, the new tubular steel company owned by USX will be responsible
for environmental liabilities relating to its operations and to the portions of
the real property at the Lorain site that it owns. As a general matter, the
Company is responsible for environmental liabilities relating to its operations
and to the portions of the real property at the Lorain site that it owns. There
can be no assurance that USX will meet its obligations under the indemnification
and cost sharing arrangements in the master restructuring agreement or that
there will not be future identification of contamination at the facilities in
Lorain, Ohio for which the Company might be fully liable and that may require it
to incur significant costs that could have a material adverse effect on its
business, results of operations and financial condition.

The Company and the U.S. EPA are parties to an April 1992 consent decree and an
April 1999 amendment to this consent decree concerning the blast furnaces at the
Lorain facility. Pursuant to the original consent decree, USS/Kobe Steel Company
paid a $500 thousand penalty. The amended consent decree settled additional past
violations by payment of a $440 thousand penalty, required the installation of
new


                                       16
<PAGE>


continuous emission monitors, included a revised emission limit for carbon
monoxide and established interim emissions limits that will apply until a permit
modification establishing final emission limits is complete pursuant to the
amended consent decree.

USS/Kobe Steel Company was the subject of a "multimedia" audit by the U.S. EPA
beginning in 1997, which included an air, water and hazardous waste compliance
review. The final report and citations have not been issued, but a number of
citations and notices of violation have been issued as a result of the audit.
USS/Kobe Steel Company has already addressed many of the issues pointed out by
U.S. EPA. USS/Kobe Steel Company and the U.S. EPA have entered into a tolling
agreement concerning issuance of the final audit. On July 20, 1999, USS/Kobe
Steel Company had an initial meeting with the U.S. EPA regarding the multimedia
audit. At that time, the U.S. EPA proposed penalties related to alleged
violations of environmental laws addressing water, air and hazardous waste
issues and indicated that it would pursue the negotiation of a consent decree
with USS/Kobe Steel Company relating to the findings of the multimedia audit.
The Company has subsequently met with the U.S. EPA regarding these matters on
several occasions. It is possible that such a consent decree, if finalized, will
require penalties, further testing and mandatory and voluntary environmental
projects. At this time, the Company is unable to predict the final outcome of
the audit and the ongoing investigation, but it could result in litigation or
material penalties or other costs. Negotiations with the U.S. EPA have been
refocused subsequent to the Petition Date and due to the most recent proposal,
the Company has decreased its reserve from $1.5 million at December 31, 2000 to
$0.9 million at December 31, 2001. Although the multimedia audit is not
generally the subject of an environmental indemnity, the Company believes that
penalties resulting from the multimedia audit, to the extent relating to the
steel tube facilities at the Lorain facility, would be under the master
restructuring agreement the responsibility of the new tubular steel company
owned by USX. To the extent that any penalties relate to discharges of
wastewater from the D-2 Landfill, the Company believes those penalties would be
indemnified against by USX.

In August 1998, the U.S. EPA issued a notice of violation concerning emissions
from the Lorain, Ohio blast furnace casthouse and gas flare stack that allegedly
exceeded opacity limits. The U.S. EPA has stated that it will pursue these
matters as part of the multimedia enforcement action discussed above.

In July and November of 1998, the U.S. EPA issued Findings of Violation and
Order for Compliance alleging that USS/Kobe Steel Company violated its National
Pollutant Discharge Elimination System permit by exceeding permit limits and
allowing unauthorized discharges. The Company believes that there have been a
small number of permit limit exceedences since January 1996 and that these
events are isolated incidents. The U.S. EPA has indicated an intention to pursue
these matters as part of the multimedia enforcement action discussed above.

In September 1998, the Ohio EPA issued a notice of violation regarding an oil
discharge from a storm sewer. USS/Kobe Steel Company remediated this discharge
and in April 1999 submitted to the agency a study that was required by the
notice of violation. No response has been received from the Ohio EPA concerning
this matter.

In December 1992, the Ohio EPA issued a notice of potential violation alleging
that the storage of blast furnace flue dust constitutes unlawful disposal.
USS/Kobe Steel Company contests this characterization and in 1995 submitted to
Ohio EPA a revised waste management plan addressing this and other issues.
USS/Kobe Steel Company has not received a response from the agency. Based on
previous engineering estimates to conduct a self-directed closure of the area,
the Company has established a $2.5 million reserve.

The Bar and Pipe Mill Recycle System (the "BPMRS"), a component of the
wastewater treatment system at the Lorain, Ohio facility, is used by both the
Company's operations and the operations of the tubular steel company of USX.
Although the Company will be responsible for historical environmental
liabilities at the BPMRS, on an on-going basis the new tubular steel company and
the Company will share the cost of the continued operation of the BPMRS on a
basis proportionate to the amount of its respective discharges to that lagoon.
The Company is under no current obligation to upgrade or replace the BPMRS, and
it does not anticipate that it will do so within the next three years. However,
the Company does anticipate that a project to upgrade or replace the BPMRS will
occur after this period and the expense could be material to


                                       17
<PAGE>


its business, results of operation or financial condition. The new tubular steel
company has agreed that if it elects to continue to use the upgraded or replaced
BPMRS, it will bear a portion of the capital expense proportionate to the amount
of its discharge to the shared facility.

Various federal, state and local laws, regulations and ordinances govern the
removal, encapsulation or disturbance of asbestos containing materials, or
"ACMs." Such laws and regulations may impose liability for the release of ACMs
and may provide for third parties to seek recovery from owners or operators of
facilities at which ACMs were or are located for personal injury associated with
exposure to ACMs. The Company is aware of the presence of ACMs at its
facilities, but it believes that such materials are in acceptable condition at
this time. While no assurances can be given, the Company believes that any
future costs related to remediation of ACMs at these sites will not be material,
either on an individual basis or in the aggregate.

CONSOLIDATION PLAN

The Combination combined three businesses with a broad base of both
complementary and overlapping operations. The intention of the Company's
consolidation plan was to create a more efficient, higher quality network of
production facilities operated by a smaller and more flexible workforce. This
plan, as originally conceived, contemplated a capital investment of
approximately $322 million to expand capacity, maximize operating efficiency and
increase value-added product processing. The Company's consolidation plan is
currently under review and the plan may be revised, particularly in light of the
Company's petition for reorganization under Chapter 11 of the Federal Bankruptcy
Code, recent market developments, and cash flow constraints. All decisions
concerning future plant rationalization and productivity enhancements will be
determined as part of the Company's reorganization plan which is to expected to
be filed with the Court by June 28, 2002.

ITEM 2. PROPERTIES

The Company owns 17 manufacturing locations and leases its corporate offices.
The following table shows the locations, square footage and production capacity
as of December 31, 2001:

<TABLE>
<CAPTION>
                                                         APPROXIMATE SIZE IN          PRODUCTION CAPACITY (A)
                       LOCATION                        THOUSANDS OF SQUARE FEET         (TONS IN THOUSANDS)
                       --------                        ------------------------         -------------------
<S>                                                                    <C>                          <C>
         Melt Shops/Caster Facilities:
            Canton, Ohio                                                 852                          925
            Lorain, Ohio                                                 688                        1,300
            Johnstown, Pennsylvania (B)                                1,735                           --
         Hot-Rolling and Processing Mills:
            Lorain, Ohio (two mills)                                   1,247                        1,115
            Lackawanna, New York                                       1,020                          600
            Massillon, Ohio (Oberlin Road)                               667                          480
            Canton, Ohio (C)                                             743                           --
            Chicago, Illinois (D)                                        750                           --
         Cold-Finishing Facilities:
            Harvey, Illinois                                             346                          120
            Massillon, Ohio (Rose Avenue)                                553                          120
            Gary, Indiana (Dunes Highway)                                266                           90
            Cartersville, Georgia                                         92                           60
            Gary, Indiana (Seventh Avenue)                               196                           60
            Hamilton, Ontario, Canada                                    135                           60
            Beaver Falls, Pennsylvania                                   176                           55
            Willimantic, Connecticut (E)                                  89                           --
         Corporate Offices                                                33                           --
</TABLE>



                                       18
<PAGE>

(A) -    Stated tons represent the production capacity of the individual
         facility only and do not represent the Company's production capacity as
         a whole added together.
(B) -    Melt production at the Johnstown facility was shutdown in August 2000.
         Certain processing operations continued through April of 2001.
(C) -    The hot rolling facility (12" bar mill) was shutdown in October 2000.
(D) -    The hot-rolling operations at the Chicago mill were shutdown in
         November 1999. Certain processing operations are continuing in part of
         this facility.
(E) -    Cold finishing operations at the Willimantic location were shutdown in
         March 2001.

The Company owns all property relating to its manufacturing facilities. In
addition, the Company maintains operating leases for various sales offices. The
Company's corporate offices are located in Fairlawn, Ohio.

ITEM 3. LEGAL PROCEEDINGS

Bankruptcy Filings. On April 2, 2001, Republic Technologies International, LLC
and its immediate parent, Republic Technologies International Holdings, LLC, and
its subsidiaries, Bliss & Laughlin, LLC and RTI Capital Corp., filed voluntary
petitions for reorganization under Chapter 11 of the Federal Bankruptcy Code in
the United States Bankruptcy Court in the Northern District of Ohio, Eastern
Division.

The Chapter 11 cases have been assigned to Judge Marilyn Shea-Stonum and
designated as case Numbers 01-51117 (Republic Technologies International, LLC),
01-51118 (Republic Technologies International Holdings, LLC), 01-51119 (Bliss &
Laughlin, LLC), and 01-51120 (RTI Capital Corp.). The Chapter 11 cases will be
jointly administered for procedural purposes only, under case Number 01-51117.
Each of these entities will continue to operate its business and manage its
property as a debtor in possession pursuant to sections 1107 and 1108 of the
Bankruptcy Code. As a result of the Chapter 11 filings, litigation relating to
prepetition claims against the Debtors is stayed; however, certain prepetition
claims by the government or governmental agencies seeking equitable or other
non-monetary relief against the Debtors are not subject to the automatic stay.

Other. The Company is involved in various legal proceedings, including
environmental proceedings with governmental authorities, personal injury and
product liability litigation and claims by present and former employees under
federal and counterpart state anti-discrimination and other laws relating to
employment and pursuant to collective bargaining agreements. Except those
environmental proceedings described above under "Item 1.-Business-Environmental
Matters," the Company does not believe that any proceedings, either individually
or in the aggregate, will have a material adverse effect on its business,
results of operations or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

None



                                       19
<PAGE>


ITEM 6. SELECTED FINANCIAL DATA  (1)

<TABLE>
<CAPTION>
                                               (in thousands of dollars)
                                               The Company - Consolidated                The Predecessor - Combined
                                     --------------------------------------------  ---------------------------------------

                                        Year Ended    Year Ended     Period from    Period from
                                       December 31,  December 31,  August 13, 1999    January 1,   Year Ended   Year Ended
                                            2001          2000              to         1999 to    December 31,  December 31,
                                                                       December 31,   August 12,      1998         1997
                                                                           1999         1999
                                        ---------------------------------------------------------------------------------

<S>                                      <C>           <C>              <C>           <C>            <C>          <C>
Net sales                                 $993,707    $1,265,401        $ 527,580     $ 525,326    $ 484,864    $ 250,131

Operating loss                            (109,997)     (152,440)        (137,273)      (70,648)     (70,333)     (21,312)

Net loss from continuing operations       (182,098)     (270,403)        (183,024)     (114,913)    (113,558)     (44,823)

Net loss before extraordinary Item        (182,555)     (287,234)        (189,402)     (114,913)    (113,558)     (44,823)

Extraordinary item                              --            --          (23,874)            --           --           --

Net loss                                  (182,555)     (287,234)        (213,276)     (114,913)    (113,558)     (44,823)

Total assets (2)                         1,049,559     1,197,084        1,415,257     1,047,760      888,065      205,678

Long-term debt (2)                         512,377       502,254          481,062       589,228      422,483      130,741
Redeemable members'
    interest/preferred stock (2)             3,700         3,800            5,500         5,500        5,500        5,500
</TABLE>


(1)      In 1999, the Company changed its fiscal year to a calendar year ending
         on December 31 from a 4/4/5 week fiscal quarter basis ending the
         Saturday closest to December 31. For comparative purposes fiscal years
         1998 and 1997 are being presented as ending on December 31, 1998 and
         1997, respectively.

(2)      Balance sheet amounts at August 12, 1999 are unaudited.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

On April 2, 2001, Republic Technologies International, LLC and its immediate
parent, Republic Technologies International Holdings, LLC, and its subsidiaries,
Bliss & Laughlin, LLC and RTI Capital Corp., filed voluntary petitions for
reorganization under Chapter 11 of the Federal Bankruptcy Code in the United
States Bankruptcy Court in the Northern District of Ohio, Eastern Division.
Subsequent to the Petition Date, the Company is operating as a
debtor-in-possession.

GENERAL
The Company is the largest producer of SBQ steel products in the United States
with a market share of approximately 19%, based on 2001 calendar year shipments.
SBQ steel products are high quality hot-rolled and cold-finished carbon and
alloy steel bar and rod used primarily in critical applications in automotive
and industrial equipment. SBQ steel products are sold to customers who require
precise metallurgical content and quality characteristics. SBQ steel products
generally contain more alloys and sell for substantially higher prices than
merchant and commodity steel bar and rod products. The Company produces the
widest range of SBQ steel products in the United States and supplies a diverse
customer base that includes leading automobile and industrial equipment
manufacturers and their first tier suppliers.

RESULTS OF OPERATIONS
The consolidated/combined results of operations include BarTech and Republic for
all periods presented, and USS/Kobe since its acquisition date of August 13,
1999. Accordingly, 1999 results are not comparable with the current periods.



                                       20
<PAGE>

YEAR ENDED DECEMBER 31, 2001 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2000
Net sales for the year ended December 31, 2001 totaled $993.7 million on
shipments of approximately 1,979,629 net tons compared with net sales of
$1,265.4 million for the year ended December 31, 2000 on shipments of
approximately 2,525,194 net tons. Net sales for the year ended December 31, 2001
were comprised of $779.9 million for hot-rolled and $213.8 million for
cold-finished, compared with hot-rolled net sales of $984.8 million and
cold-finished net sales of $280.6 million for the year ended December 31, 2000.
Weak demand in the automotive and service center markets and reduced market
share negatively affected the 2001 results causing the decrease in net sales and
tons shipped.

Cost of sales totaled $985.6 million, or 99.2% of net sales, for the year ended
December 31, 2001 compared with cost of sales of $1,140.8 million, or 90.1% of
net sales, for the year ended December 31, 2000. Cost of sales for the year
ended December 31, 2001 consisted of $775.3 million on hot-rolled products and
$210.3 million on cold-finished products compared with $885.9 million on
hot-rolled products and $254.9 million on cold-finished products for the year
ended December 31, 2000. The loss of efficiencies due to the decrease in sales
volume from 2000 to 2001 caused cost of sales to increase as a percentage of net
sales in 2001.

Selling, general, and administrative expenses were $43.4 million, or 4.4% of net
sales, for the year ended December 31, 2001 compared with $54.7 million, or 4.3%
of net sales, for the year ended December 31, 2000. The reduction in selling,
general, and administrative expenses was due to continuing staff reductions
during the year ended December 31, 2001.

Depreciation and amortization expense was $56.8 million for the year ended
December 31, 2001 compared with $61.5 million for the year ended December 31,
2000. The decrease in the current period was primarily related to the reduction
of goodwill amortization following the impairment charge taken in the fourth
quarter of 2000.

Workforce reduction charges were $8.0 million for the year ended December 31,
2001 compared with $0.8 million for the year ended December 31, 2000. The
increase in workforce reduction charges resulted from pension and OPEB
curtailment charges related to Early Retirement Buyouts ("ERBs") during the year
ended December 31, 2001.

During the year ended December 31, 2001, the Company shutdown its Willimantic,
Connecticut cold-finishing facility as part of a continued attempt to reduce
costs and improve efficiency. As a result of this action, net of adjustments to
previously recorded reserves, the Company recorded restructuring charges of $3.7
million during 2001.

Net interest expense was $56.1 million for the year ended December 31, 2001
compared with $117.5 million for the year ended December 31, 2000. The decrease
is primarily due to the Chapter 11 filings suspending the accrual of interest
expense on all debt other than the DIP credit facility and the industrial
revenue bond held with the Development Authority of Cartersville, Georgia.

The provision for income taxes for the years ended December 31, 2001 and 2000
consisted of currently payable income taxes, primarily foreign income taxes owed
by CDSC.

As a result, the Company reported a net loss of $182.6 million for the year
ended December 31, 2001 compared with a net loss of $287.2 million for the year
ended December 31, 2000.

YEAR ENDED DECEMBER 31, 2000 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1999
Net sales for the year ended December 31, 2000 totaled $1,265.4 million on
shipments of approximately 2,525,194 net tons compared with net sales of
$1,052.9 million for the year ended December 31, 1999 on shipments of
approximately 1,878,000 net tons. Net sales for the year ended December 31, 2000
were comprised of $984.8 million for hot-rolled and $280.6 million for
cold-finished, compared with hot-rolled net sales of $727.8 million and
cold-finished net sales of $325.1 million for the year ended December 31, 1999.
After giving consideration to the timing of the Combination and the coincident
acquisition of USS/Kobe on August 13, 1999, on a comparable basis, weak demand
in the automotive and service center


                                       21
<PAGE>


markets during the third and fourth quarters of 2000 was responsible for the
lower hot roll and cold finish bar shipping levels. The less value-added
semi-finished sales increased in 2000. This change in product mix resulted in
lower average sales revenues per ton of shipments versus the prior year.

Cost of sales totaled $1,140.8 million, or 90.1% of net sales, for the year
ended December 31, 2000 compared with cost of sales of $1,048.8 million, or
99.6% of net sales, for the year ended December 31, 1999. Cost of sales for the
year ended December 31, 2000 consisted of $885.9 million on hot-rolled products
and $254.9 million on cold-finished products compared with $822.9 million on
hot-rolled products and $225.9 million on cold-finished products for the year
ended December 31, 1999. The decrease in cost of sales as a percentage of sales
was primarily due to the efficiencies of operating the combined operations for a
full year. Savings also resulted from idling the ingot process in Canton in the
latter part of 1999 and the Johnstown plant shutdown in August of 2000.

Selling, general and administrative expenses were $54.7 million, or 4.3% of net
sales, for the year ended December 31, 2000 compared with $82.5 million, or 7.8%
of net sales, for the year ended December 31, 1999. The reduction in selling,
general and administrative expenses as a percentage of net sales was due to
non-recurring costs related to the combination of companies and the elimination
of redundant positions in 2000.

Depreciation and amortization expense was $61.5 million for the year ended
December 31, 2000 compared with $42.4 million for the year ended December 31,
1999. This resulted from the fact that the depreciation for property and
equipment related to the Lorain plant was not included for the period from
January 1, 1999 to August 12, 1999, as this was prior to the date of the
Combination.

Workforce reduction charges were $0.8 million for the year ended December 31,
2000 compared with $77.2 million for the year ended December 31, 1999. The
decrease in workforce reduction charges resulted from fewer Early Retirement
Buyouts ("ERBs") during 2000.

During 2000, the Company shutdown two of its production facilities; the
Johnstown, Pennsylvania melt shop facility and the Canton, Ohio 12" rolling mill
facility, and announced the shutdown of its Willimantic, Connecticut
cold-finishing facility to occur during 2001. The Johnstown facility closed in
August 2000, and the Canton 12" facility closed in October of 2000. These
actions were undertaken in an attempt to reduce costs and improve efficiency. As
a result of these actions, the Company recorded restructuring charges of $74.6
million during the year.

During the fourth quarter of 2000, the Company recognized a non-cash impairment
charge of $79.6 million related to the write-off of its unamortized goodwill
balance. The industry-wide market conditions and the Company's high level of
indebtedness following the Combination adversely impacted operations and the
Company's ability to implement its consolidation plan. These factors lead to the
need to significantly revise the Company's operating plan and related financial
forecast. Based on the Company's capital structure, the revised operating plan
and corresponding anticipated future operating cash flows less anticipated
capital expenditures were expected to be insufficient to recover the unamortized
goodwill balance. Accordingly, the carrying value of the Company's goodwill
balance has been reduced to zero.

Net interest expense was $117.5 million for the year ended December 31, 2000
compared with $89.2 million for the year ended December 31, 1999. The increase
was primarily due to higher average borrowings outstanding following the
completion of the Combination.

The provision for income taxes for the years ended December 31, 2000 and 1999
consisted of currently payable income taxes, primarily foreign income taxes owed
by CDSC.

For the year ended December 31, 1999, the Company also recorded an extraordinary
loss of $23.9 million from the early extinguishment of debt. This loss arose
from the repayment of certain debt in connection with the completion of the
Combination.


                                       22
<PAGE>

As a result, the Company reported a net loss of $287.2 million for the year
ended December 31, 2000 compared with a net loss of $328.2 million for the year
ended December 31, 1999.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of liquidity include cash and cash equivalents, cash from
operations, and amounts available under its DIP credit facility.

The Company's primary liquidity needs subsequent to the Petition Date relate to
working capital needs, funding requirements relating to its agreement with the
Pension Benefit Guaranty Corporation (the "PBGC"), capital expenditures, and
other costs that may arise as the Company formulates its reorganization plan
which is expected to be filed by June 28, 2002.

PBGC Obligations
----------------

In connection with the Combination, Republic Technologies International, LLC
agreed with the PBGC to fund $178 million into the Republic Engineered Steels,
Inc. USWA Defined Benefit Plan, a defined benefit pension plan for employees
represented by the USWA in connection with the headcount reduction and related
early retirement benefits contemplated by the Company's consolidation plan. Of
the $178 million, $66.5 million has been funded through April 2001. Republic
Technologies International, LLC, under the terms of the current amended PBGC
agreement, was required to make quarterly contributions in accordance with the
following schedule: $2.0 million per quarter for the next two payments, $14.8
million per quarter for the next three payments, and $14.2 million per quarter
for the next four payments, and one final quarterly payment of $6.3 million.
These funding levels are subject to the outcome of the Chapter 11 proceedings.
In addition, pursuant to the Company's consolidation plan, Republic Technologies
International, LLC was to offer a combination of early retirement buyout
packages to its employees. The actual cost of the early retirement buyout
packages and voluntary retirement plans will depend on the outcome of the
Chapter 11 proceedings and the mix of such arrangements offered to and accepted
by the hourly employees represented by the USWA.

In addition, with respect to the USS/Kobe Union Eligible Pension Plan, a defined
benefit plan for union employees, the Company agreed with the PBGC to maintain a
specified level of funding based on statutory funding requirements. The
contributions were to be made as follows: for the year 2001, an amount necessary
to avoid an accumulated funding deficiency plus $6 million , an amount so that
the December 31, 2001 credit balance equals that of December 31, 2000 with
interest plus $2 million; for 2002, an amount so that the December 31, 2002
credit balance equals that of December 2001 with interest plus $2 million; for
2003, an amount so that the December 31, 2003 credit balance equals that of
December 31, 2002 with interest plus $2 million. Beginning with 2004, the
Company was to make contributions to maintain the December 31, 2003 credit
balance with interest. As security for such obligation, the Company has provided
the PBGC with a $5 million letter of credit. As a result of the Chapter 11
filings, the Company defaulted on the required pension funding. The PBGC
accordingly presented the letter of credit for payment. Funds from the $5.0
million of the letter of credit are currently being held by the PBGC and will be
held until the Company is current with all required pension contributions. The
Company is currently negotiating with the PBGC to amend the funding agreement
and is unable to determine the amount of funding that will be required in
connection with these obligations.

Capital Expenditures
--------------------

The Company invested $3.6 million in capital expenditures during the year 2001.
The Company's debtor-in-possession facility limits capital expenditures to $29.0
million in 2001 and $30.2 million in 2002. The Company's capital expenditure
program is currently under review and subject to the outcome of the Chapter 11
proceedings.



                                       23
<PAGE>


Debt Service Requirements
-------------------------

As discussed below, the Company has obtained a debtor-in-possession credit
facility, however, liquidity will be impacted by the uncertainty of the
bankruptcy proceedings, including restructuring and settlement of prepetition
obligations, the terms of the debtor-in-possession credit facility and the
ability to obtain other financing. As a result of these uncertainties, there can
be no assurance existing or future sources of liquidity will be adequate.

On April 3, 2001, the Company entered into a Debtor-in-Possession Revolving
Credit Agreement ("DIP Credit Agreement") with Fleet Capital Corporation ("Fleet
Capital") and other lenders who are parties thereto to provide secured
debtor-in-possession financing to the Company. The maximum borrowings under the
DIP Credit Agreement initially were $420 million in the aggregate and included a
sub-facility of $50 million for the issuance of letters of credit. The proceeds
of the DIP Credit Agreement were used to repay the amounts outstanding under the
senior revolving credit facility entered into on August 13, 1999 and
restructured on July 17, 2000. Advances under the DIP Credit Agreement bear
interest at a base rate used by Fleet Capital, plus the applicable margin; or a
Eurodollar rate on deposits for a given period, plus the applicable margin. The
applicable margin on base rate loans is 1.5% and on Eurodollar loans is 3.5%.
The applicable margin on base rate and Eurodollar loans may be increased by 2%
under specified circumstances. A borrowing base limits the amount available at
any time. There were $326.0 million of borrowings under the DIP Credit Agreement
outstanding at December 31, 2001. The weighted average interest rate for the
year 2001 was 8.1%. Amounts available under the DIP Credit Agreement at March
22, 2002 and December 31, 2001 were approximately $12.8 million and $7.3
million, respectively.

The DIP Credit Agreement grants a security interest in accounts receivable,
inventory, intellectual property and related assets of the Company, and the real
estate and fixed assets comprising the Canton CR, including the related melt
shop. The DIP Credit Agreement also contains certain restrictive covenants
which, among other things, restrict the Company's ability to incur additional
indebtedness or guarantee the obligations of others, change its line of
business, merge, consolidate and acquire or sell assets or stock, pay dividends,
or prepay or amend the notes or any of its subordinated indebtedness. The
Company is also required to maintain minimum cumulative EBITDA, as defined, in
the DIP Credit Agreement and limit its net capital expenditures.

The Company violated the minimum cumulative EBITDA, as defined, covenant in the
DIP Credit Agreement during 2001. On September 28, 2001, the Company was granted
an amendment and limited waiver. The amendment further limited maximum
borrowings, and a weekly minimum liquidity covenant was added.

During November, the Company notified the lenders that they were in violation of
the weekly minimum liquidity covenant. On November 30, 2001, the Company entered
into a forbearance agreement with the lenders under an amendment to the DIP
Credit Agreement. The forbearance agreement restricted the lenders ability to
exercise their remedies under the DIP Credit Agreement for certain defaults
through January 11, 2002. As a result of this amendment, the Company was granted
temporary increases in maximum borrowing limits, amendments to the minimum
liquidity amount and weekly liquidity covenants, and a 2% interest penalty
applied to all borrowings.

Subsequent event - On January 11, 2002, the Company continued to be in default
of the minimum cumulative EBITDA, as defined, covenant, and the minimum
liquidity covenants. Accordingly, the Company entered into a second forbearance
agreement with the lenders under a third amendment to the DIP Credit Agreement.
The second forbearance agreement restricts the lenders ability to exercise their
remedies under the DIP Credit Agreement for certain defaults through May 31,
2002. As a result of this amendment, the Company was granted temporary increases
in maximum borrowing limits, an amendment to the minimum liquidity covenant, a
new minimum sales covenant, and continuation of the 2% interest penalty applied
to all borrowings. Current maximum borrowings under the DIP Credit Agreement are
as follows: $340 million from January 11, 2002 to January 31, 2002; $345 million
from February 1, 2002 to March 28, 2002; $342.5 million from March 29, 2002 to
April 30, 2002; and $337 million thereafter.


                                       24
<PAGE>

The following are descriptions of the Company's debt service requirements prior
to the Petition Date. The accrual and payment of interest on debt facilities,
other than the debtor-in-possession facility, has been suspended subsequent to
the Petition Date. All such debt service requirements are subject to the outcome
of the Chapter 11 proceedings.

On July 17, 2000, the Company underwent a financial restructuring
("Restructuring") to improve its liquidity position and to assist in making the
semiannual interest payment on its senior secured notes. In connection with the
Restructuring, several equity investors made loans of approximately $30 million
in aggregate principal amounts to Republic Technologies. In exchange for these
loans, the lenders received notes of $30 million aggregate principal amount and
warrants to purchase an aggregate of 15 million shares of Class D common stock,
par value $0.001 per share, of the Parent Company. These notes mature on August
1, 2010, and may be prepaid in certain instances and must be prepaid upon a
change of control of the Company. The interest rate on the notes is 9.5% and is
payable in arrears on each February 1 and August 1, beginning in 2006 and
continuing thru 2010, or earlier if the lenders consent. The notes are secured
by a second mortgage on the Canton bloom and rolling facility.

In conjunction with the Combination, Republic Technologies completed a private
offering of $425 million of senior secured notes and warrants and entered into a
$425 million revolving credit facility. The proceeds of this private offering,
together with approximately $239 million of borrowings under the revolving
credit facility and the proceeds from new equity contributions, were applied to
refinance a substantial portion of the indebtedness of Republic, RES Holding,
BarTech and USS/Kobe at the time of the Combination. As part of the
Restructuring referred to above, commitments under the revolving credit facility
were reduced from $425 million to $395 million.

As a result of the Combination and the other transactions, the Company and
Republic Technologies have significant amounts of debt, with the interest
payments on the senior secured notes and interest and principal repayments under
the new credit facility representing significant obligations. The senior secured
notes require semi-annual interest payments on January 15 and July 15 every year
until they mature on July 15, 2009. The senior secured notes require that tender
offers be made for such securities with certain proceeds from asset sales in the
event that such proceeds are not applied to specified purposes within certain
time periods. The loans under the revolving credit facility require periodic
payments of interest and mature on August 13, 2004. The revolving credit
facility requires prepayment of loans and reductions of commitments with net
proceeds of specified asset dispositions, casualty and condemnation recovery
events, issues of equity and incurrence of permitted indebtedness. Additionally,
the amendment of the revolving credit facility, as discussed above, establishes
minimum requirements for EBITDA and liquidity.

The senior secured notes and the new credit facility each contain significant
affirmative and negative covenants including separate provisions imposing
restrictions on additional borrowings, certain investments, certain payments,
sale or disposal of assets, payment of dividends and change of control
provisions, in each case, subject to certain exceptions. The ability of Holdings
to receive distributions from Republic Technologies and its subsidiaries is
significantly restricted by the terms of the senior secured notes and the
revolving credit agreement. Under the terms of the senior secured notes, subject
to certain exceptions, generally neither Republic Technologies nor its
subsidiaries may declare or pay any dividend or make any other distribution or
payment on or in respect of capital stock, unless, at the time of and after
giving effect to the proposed payment, (1) no Default (as defined in the senior
secured note indenture) shall have occurred and be continuing, (2) immediately
after giving effect to such payment, the Consolidated Fixed Charge Coverage
Ratio (as defined in the senior secured note indenture) of Republic Technologies
would be equal to or greater than 2.5 to 1, and (3) the aggregate amount of all
restricted payments declared or made from and after the issue date would not
exceed the 50% of the Consolidated Net Income (as defined in the senior secured
note indenture) of Republic Technologies accrued on a cumulative basis during
the period, taken as one accounting period, beginning on October 1, 1999 and
ending on the last day of the fiscal quarter of Republic Technologies
immediately preceding the date of such proposed restricted payment or, if such
aggregate cumulative Consolidated Net Income of Republic Technologies for such
period shall be a deficit, minus 100% of such deficit, plus the cash proceeds
from certain equity offerings and value of certain investments. Under the terms
of the revolving credit facility, neither Republic Technologies nor its
subsidiaries may declare or pay any dividend to Holdings or make any other


                                       25
<PAGE>


distribution or payment to Holdings on or in respect of capital stock other than
distributions or payments for certain limited purposes and in limited amounts.

The senior secured notes are secured, subject to exceptions and limitations, by
(1) a first priority lien on, and security interest in, substantially all of the
existing assets of the issuers and the restricted subsidiaries, other than (a)
the Canton bloom and rolling facilities and Cartersville, Georgia cold-finishing
facilities, (b) inventory, (c) accounts receivable and (d) intellectual property
and related assets, and (2) a first priority lien, shared on an equal and
ratable basis with the lenders under the revolving credit facility, on the
equity interests of Republic Technologies and its restricted subsidiaries. This
collateral is subject to release without substitution under a limited number of
circumstances. Borrowings under the revolving credit facility are secured by a
first priority perfected security interest in (1) the equity interests of
Republic Technologies and its restricted subsidiaries, shared on an equal and
ratable basis with the senior secured notes and (2) all presently owned and
subsequently acquired accounts receivable, inventory, intellectual property and
related assets of Republic Technologies and guarantors and the real estate and
fixed assets comprising, and the intellectual property relating to, the bloom
and rolling facility, including the related melt shop.

The obligations under the senior secured notes are unconditionally and
irrevocably guaranteed jointly and severally by Holdings and each of its
subsidiaries other than Republic Technologies, RTI Capital Corp. (the co-issuer
of the senior secured notes) and Oberlin Insurance Company. The obligations
under the revolving credit facility are unconditionally and irrevocably
guaranteed jointly and severally by Holdings and each of its subsidiaries other
than Republic Technologies and Oberlin Insurance Company.

Tax Distributions
-----------------

The Company and Republic Technologies International, LLC are limited liability
companies that are treated as a partnership for income tax purposes and
accordingly are not an income taxpaying entity. However, pursuant to the limited
liability company agreement of the Company's parent, the Company's parent will
be required to make cash distributions to its members to the extent necessary to
satisfy tax obligations regarding members' investment in Republic Technologies,
Inc. To the extent the Company's parent is required to make these tax
distributions, Republic Technologies will be required to make equivalent cash
distributions to the Company. However, the Company believes that certain of its
parent's members have net operating loss carryforwards which may be available to
offset a significant portion of their taxable income attributable to their
investment in the Company's parent and reduce but not eliminate, the need for
tax distributions. Use of these net operating losses is subject to various
limitations and uncertainties and accordingly, the Company cannot make any
assurances that these net operating loss carryforwards will reduce the need for
tax distributions or that they will not be otherwise utilized.

Republic and USS/Kobe participated in Enterprise Zone Agreements granting
abatements from certain Ohio real and personal property taxes. USS/Kobe was
party to two 10 year agreements with a municipal subdivision (City of Lorain)
granting USS/Kobe a 50% abatement of taxes on specified investment in real
property, equipment and inventory, conditioned upon the company's best efforts
to maintain certain employment levels, subject to certain exceptions. The
reduction in taxes under these agreements amounted to approximately $1.4 and
$2.9 million in 2001 and 2000, respectively. Republic was party to a 10 year
agreement with a municipal subdivision (Canton Township) granting Republic a 75%
abatement of Ohio personal property taxes on certain investments in new
equipment. The reduction in taxes under the terms of this agreement amounted to
approximately $0.9 and $1.6 million in 2001 and 2000, respectively.

Liquidity Sources and Other Factors Affecting Liquidity
-------------------------------------------------------

The Company's lower than expected sales in 2001 caused its liquidity to be
negatively affected. The Company's liquidity position has also been negatively
impacted by the implementation of its consolidation plan as a result of the time
lag between the incurrence of certain costs and the receipt of the expected cash
flow benefits, such as in the case of headcount reductions requiring lump sum
payouts.



                                       26
<PAGE>

During 2001, management sought to improve the Company's liquidity position by
taking a number of actions including increasing spot prices, reducing
administrative staff, implementing cost cutting programs, reducing inventories,
and closing operations. The Company closed its Willimantic cold-finishing plant
in March of 2001. In addition, during 2000 the Company reduced its planned
capital expenditures from $48.0 million to $13.1 million for the year 2001,
obtained deferrals of approximately $46.0 million of certain quarterly 2000 and
2001 Pension Benefit Guaranty Corporation ("PBGC") funding requirements until
2002 and 2003, obtained a deferral from the Ohio Environmental Protection Agency
(the "Ohio EPA") of $1.2 million of committed environmental expenditures until
2001, restructured the Company`s revolving credit facility, and obtained a
deferral from Bethlehem Steel Company on the redemption of Cumulative Preferred
Stock issued by Bar Tech and currently an obligation of Republic Technologies.

Notwithstanding these actions, on April 2, 2001, the Company and the majority of
its subsidiaries filed voluntary petitions for reorganization under Chapter 11
of the Federal Bankruptcy Code in the United States Bankruptcy Court.

Although the Company has obtained a debtor-in-possession credit facility, the
Company may need to obtain additional financing to meet its cash flow
requirements. Restrictive covenants included in the debtor-in-possession credit
facility and oversight by the Bankruptcy Court limit the Company's ability to
incur additional indebtedness, or sell assets (most of which are pledged), and
may otherwise limit the operational and financial flexibility of the Company.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our financial statements reflect the selection and application of accounting
policies that require management to make significant estimates and assumptions.
The Company's significant accounting policies are described in Note 3 to the
financial statements.

Accounting estimates are an integral part of the financial statements prepared
by management and are based on management's current judgments.  Those judgments
are normally based on knowledge and experience about past and current events
and on assumptions about future events.  Significant accounting estimates
reflected in the Company's 2001 financial statements include allowance for
doubtful accounts, claims reserves, inventory market and obsolescence reserves,
impairment of goodwill and other long-lived assets, workers' compensation
reserves, reserves for loss contracts, pension and other postretirement
benefits liabilities, accrued environmental liabilities, restructuring and
shut-down reserves, and loss from disposition of discontinued operations.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The Financial Accounting Standards Board (the "FASB") issued Statement of
Financial Accounting Standards No. 133 - "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133") in June 1998, and in June 2000, issued
Statement of Financial Accounting Standards No. 138 - "Accounting for Certain
Derivative Instruments and Certain Hedging Activities an amendment of FASB
Statement No. 133", which became effective for financial statements for all
quarters of all years beginning after June 15, 2000. The adoption of SFAS 133 as
of January 1, 2001 did not have a material effect on the Company's results of
operations or financial position.

In July 2001 the FASB issued SFAS No. 141 "Business Combinations" and SFAS No.
142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and redefines the criteria for recording
intangibles separate from goodwill. The Company's recorded intangible assets
will have to be evaluated against this new criteria and may result in certain
intangible assets being reclassified into goodwill. SFAS No. 142 eliminates the
amortization of goodwill and certain intangible assets upon adoption and also
requires an initial goodwill impairment assessment in the year of adoption and
annual impairment tests thereafter. The provisions of each statement that apply
to goodwill and intangible assets acquired prior to July 1, 2001 will be
adopted by the Company on January 1, 2002. Management expects the adoption of
these accounting standards will result in certain intangible assets being
reclassified to goodwill and nonamortizing intangible asset amounting to $10.9
million categories, which will have the impact of reducing amortization expense
annually by $1.6 million, impairment reviews may result in future write-downs.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", that requires recognition of the fair value of liabilities
associated with the retirement of long-lived assets when a legal obligation to
incur such costs arises as a result of the acquisition, construction,
development and/or the normal operation of a long-lived asset. Upon recognition
of the liability, a corresponding asset is recorded and depreciated over the
remaining life of the long-lived asset. The Statement defines a legal obligation
as one that a party is required to settle as a result of an existing or enacted
law, statute, ordinance, or written or oral contract or by legal construction of
a contract under the doctrine of promissory estoppel. SFAS No. 143 is effective
for fiscal years beginning after December 15, 2002. The Company has not
completed its evaluation of the impact, if any, of SFAS No. 143 on its financial
statements.


                                       27
<PAGE>


In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment or
Disposals of Long-Lived Assets". This statement establishes a single accounting
model for long-lived assets to be disposed of by sale and provides additional
implementation guidance for assets to be held and used and assets to be
disposed of other than by sale. This statement will become effective for the
Company on January 1, 2002, but early adoption is permitted. The Company has
not completed its evaluation of the impact, if any, of SFAS No. 144 on its
financial statements.

ENVIRONMENTAL MATTERS

As is the case with most steel producers, the Company could incur significant
costs related to environmental issues in the future, in particular those arising
from remediation costs for historical waste disposal practices at its current
and former facilities. The Company's operations are subject to federal, state
and local, and in the case of the CDSC facilities, foreign, environmental laws
and regulations that in the event of environmental contamination could result in
the Company incurring significant liabilities.

The Company continuously monitors its compliance with applicable environmental
laws and regulations and believes that it currently is in substantial compliance
with them. The Company anticipates that its expenditures for environmental
control measures during the next twenty-four months will be approximately $1.5
million. The Company believes that costs in relation to remediation related to
historical waste disposal practices are likely to be in the range of $12.0
million to $23.6 million over the lives of the Company's facilities although
some third-party estimates are substantially higher. The Company's reserve to
cover probable environmental liabilities, including the matters discussed in
Item 1 - "Business", was approximately $16.5 million as of December 31, 2001.
Except as noted in Item 1 - "Business", the Company is not otherwise aware of
any significant environmental compliance and remediation costs for which the
establishment of a reserve would be appropriate. To the extent the Company
incurs any such remediation costs, these costs will most likely be incurred over
a number of years; however, future regulatory action regarding historical
disposal practices at its facilities, as well as continued compliance with
environmental requirements, may require the Company to incur significant costs
that may have a material adverse effect on its future financial performance. For
further information on environmental matters see Item 1 - "Business".

FORWARD LOOKING STATEMENTS

Statements included in this filing with the SEC (including those portions of
Management's Discussion and Analysis that refer to the future) may contain
forward-looking statements that are not historical facts but refer to
management's intentions, beliefs, or expectations for the future. It is
important to note that the Company's actual results could differ materially from
those projected in such forward-looking statements. Certain factors that could
cause actual results to differ from those in such forward-looking statements
include, but are not limited to, the following:

     -   the Company's ability to increase sales to existing and new customers,
         particularly sales to automotive and industrial equipment
         manufacturers;

     -   the Company's ability to implement its consolidation plan and to
         realize the expected benefits of the Combination in the time frame and
         at the costs currently contemplated;

     -   market conditions and general risks associated with the steel industry;
         and

     -   the matters discussed under the caption "Risk Factors" in the Company's
         Registration Statement on Form S-4.

The reader should not place undue reliance on the forward-looking statements
contained in this report.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risks due to changes in interest rates with
respect to certain of its long-term debt. The table below presents principal
cash flows and weighted average interest rates of the Company's long-term debt
at December 31, 2001 by contractual maturity dates as well as the respective
fair value amounts.


                                       28
<PAGE>


The Company has a cold-finished facility in Canada and is, therefore, subject to
foreign currency exchange rate exposure. Historically, the exchange rate
volatility and related exposure to the Company has been minimal. At the present
time, the Company does not hedge foreign currency risks.

The fair value of the Company's Senior Notes was determined using quoted market
prices. The fair value of the Company's Solid Waste Revenue Bonds was determined
by the underwriter. Remaining long-term debt consists of the Company's economic
development financing, a subordinated note and an Industrial Revenue Bond (see
Note 7 to the Consolidated Financial Statements). The fair value of the
Company's Industrial Revenue Bond approximates book value.  Fair values for
the remaining economic development financing could not be determined and have
been reflected in the table as zero.


<TABLE>
<CAPTION>
(in millions)                  2002       2003        2004      2005      2006    Thereafter    Total    Fair Value
                             --------- ------------ --------- --------- --------- ----------- ---------- -----------
<S>                            <C>           <C>       <C>       <C>       <C>        <C>        <C>          <C>
Fixed:
  Senior Notes                                                                        $425.0     $425.0       $27.6
  Interest rate                                                                       13.75%
Revenue Bonds:
     Solid Waste
         Revenue Series 1996                                                          $ 53.7     $ 53.7       $ 0.0
     Interest rate                                                                      9.00%

     Solid Waste
         Revenue Series 1994                                                          $ 20.2     $ 20.2       $ 0.0
     Interest rate                                                                      8.25%

  All other                      $5.2         $6.4      $4.0      $1.2      $0.2       $30.0     $ 47.0       $ 0.0
  Average
     interest rates              3.00%        3.00%     3.00%     3.00%     3.00%       11.0%
Variable                       $ 12.6                                                  $ 4.8      $17.4       $ 3.6
  Average rates                   (1)          (1)       (1)       (1)       (1)         (1)        (1)         (1)
</TABLE>


(1) - At variable Prime, LIBOR or other money market rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is submitted in a separate section of this report
following the signature page.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

During the past two fiscal years, there were no disagreements with the Company's
accountants on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of the Company's accountants would have caused it
to make reference to such disagreement in connection with its report.



                                       29
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company's executive officers and directors as of March 31, 2002 are as
follows:

<TABLE>
<CAPTION>
Name:                             Age:         Position:
<S>                               <C>          <C>
Joseph F. Lapinsky                52           Chief Executive Officer, President, Chief Operating
                                               Officer and Director
John G. Asimou                    56           Executive Vice President, Operating Technology and
                                               Quality Assurance
James T. Thielens, Jr.            43           Vice President, Marketing
Charles T. Cochran                47           Vice President, Sales
Noel J. Huettich                  56           Vice President, Hot Rolled Bar Operations
Joseph Kaczka                     54           Vice President, Finance and Controller
John B. George                    55           Vice President, Finance and Treasurer
John Willoughby                   53           Vice President, Human Resources
Richard C. Lappin                 57           Chairman and Director
Robert Friedman                   58           Director
Lynn R. Williams                  77           Director
John Connelly                     55           Director
Albert E. Ferrara, Jr.            53           Director
David Blitzer                     32           Director
</TABLE>

JOSEPH F. LAPINSKY has over 28 years of experience in the steel industry and
became President and Chief Operating Officer of BarTech and Republic in October
1998. Mr. Lapinsky also became a director of Republic at that time. Mr. Lapinsky
became Chief Executive Officer and a director of Republic Technologies in
February 2000. Mr. Lapinsky served as a corporate Vice President and President
of Republic's Hot Rolled Bar Division from January 1997 to September 1998. Prior
to that time he served as General Manager of Republic's hot-rolled bar
operations from September 1995 to January 1997. Prior to that time he was
Executive Vice President of Autumn Industries, Inc. from September 1991 to
September 1995 and Executive Vice President of CSC Industries, Inc. from
December 1987 to September 1991.

JOHN G. ASIMOU has over 33 years of experience in the steel industry. Mr. Asimou
joined the Company in October 1996 and currently serves as Executive Vice
President, Operating Technology and Quality Assurance. Mr. Asimou served as
Executive Vice President and General Manager, Cold Finished Bar Division from
October 1998 to May 2001, and Executive Vice President of Technology and
Development of the Company from August 1996 until September 1998. From 1993 to
1996, Mr. Asimou was Vice President - Quality & Technology for Birmingham Steel
Corporation. From 1986 to 1993, Mr. Asimou served as General Manager - Quality
and Technology of American Steel & Wire Corporation. From 1984 to 1986, Mr.
Asimou was Metallurgical Service Engineer for Bethlehem Steel Corporation. From
1968 to 1984, Mr. Asimou served in various SBQ bar and rod assignments for
United States Steel Corporation, a fully integrated steel producer.

JAMES T. THIELENS, JR. has over 21 years of experience in the steel industry.
Mr. Thielens joined the Company in 1989 and currently serves as Vice President,
Marketing. Mr. Thielens served as Vice President, Commercial Hot Rolled Bar
Division from October 1998 to February 2001, and Vice President, Sales and
Marketing, of Republic's Hot Rolled Bar Division from March 1997 until September
1998. He served as General Manager of Marketing for Republic from March 1995 to
March 1997 and as a Regional Sales Manager of Republic's Bar Products Division
from April 1994 to March 1995. Prior to that time he held various sales and
marketing positions at Republic since its formation in 1989.

CHARLES T. COCHRAN has over 25 years of experience in the steel industry. Mr.
Cochran joined the Company in 1989 and currently serves as Vice President,
Sales. He served as Vice President, Commercial, Cold Finished Bar Division for
BarTech and Republic from October 1998 to February 2001. Mr. Cochran


                                       30
<PAGE>


served as Vice President, Sales and Marketing, of Republic's Cold Finished Bar
Division from January 1997 to September 1998. He served as Vice President, Sales
and Marketing of Republic's Bar Products Division from January 1995 to January
1997. From May 1994 to January 1995 he was Republic's General Manager, Cold
Finished Bar Division. Prior to that time he held various regional sales
positions at Republic since its formation in 1989.

NOEL J. HUETTICH has over 31 years of experience in the steel industry and
became Vice President, Hot Rolled Bar Operations for Republic Technologies
International in November 2000. Prior to this appointment, Mr. Huettich was the
general manager for the Lorain plant, after having served as manager for both
the Canton and Massillon facilities. In his 29 years at Republic, Huettich has
held positions of increasing responsibility including manager of process
metallurgy, manager of the Canton No. 4 melt shop and manager of the Canton
Bloom Cast facility, where he was part of the successful start-up.

JOSEPH KACZKA became Vice President of Finance and Controller for RTI in
September 1999. Mr. Kaczka joined RTI following over 32 years of service with
USS/Kobe Steel Company and its predecessor companies. He most recently served as
Treasurer and Controller for USS/Kobe Steel Company, which he had held since
1997. From 1995 through 1997, Mr. Kaczka held the position of Treasurer for
USS/Kobe Steel Company and from 1989 through 1995 he served as Controller for
USS/Kobe Steel Company. Prior to 1989, he held various positions at USX
locations in Pennsylvania, Alabama and Ohio.

JOHN B. GEORGE has over 32 years of experience in the steel industry and became
Vice President of Finance and Treasurer for BarTech and Republic in October
1998. He was also appointed Secretary in December 1998. Prior to joining the
Company, Mr. George previously served as Treasurer of Republic Engineered
Steels, Inc., since April 1991. From November 1989 to April 1991, he was
Assistant Treasurer for Republic Engineered Steels, Inc.

JOHN WILLOUGHBY joined the Company in July 2000 and currently serves as Vice
President, Human Resources. Mr. Willoughby was most recently Vice President of
Human Resources at RHI Refractories America, a Pittsburgh-based company. Mr.
Willoughby was also Chief Human Resources and Communications Executive at North
American Refractories for more than two years. Previously, Mr. Willoughby had
spent nearly 20 years at Republic's predecessor companies. He was General
Supervisor of Labor Relations for six years at Republic Engineered Steels, and
served in Labor Relations and Public Affairs positions with LTV Steel Company's
bar group and with Republic Steel Corporation's Cleveland headquarters.

RICHARD C. LAPPIN became a director of Republic in January 1999. Mr. Lappin
became Chairman of the Board of RTI, Inc. in November 1999. Mr. Lappin is a
Senior Managing Director of The Blackstone Group, L.P., with which he has been
associated since 1999. Prior to this time, Mr. Lappin served as President of
Farley Industries, which included West-Point Pepperell, Inc., Acme Boot Company,
Inc., Tool and Engineering Inc., Magnus Metals, Inc. and Fruit of the Loom Inc.
Mr. Lappin is also a director of American Axle & Manufacturing Inc., Clark
Refining Holdings, Inc., Collins & Aikman Corporation and Prime Succession, Inc.

ROBERT FRIEDMAN has been a Senior Managing Director of The Blackstone Group,
L.P. since March 1999. From 1975 to March 1999, Mr. Friedman was a partner with
the law firm of Simpson Thatcher & Bartlett. Mr. Friedman is also a director of
American Axle & Manufacturing Inc., Clark Refining Holdings, Inc. and Corp.
Group.

LYNN R. WILLIAMS has been retired since 1994. From 1983 until his retirement,
Mr. Williams served as President of the USWA.

JOHN J. CONNELLY has over 31 years experience in the steel industry and became
Vice President, Business Development and Long Range Planning for U.S. Steel
Group a unit of USX Corporation in January 2001. Mr. Connelly was elected
president of USSI in July 1989, a position he held until November 1999. In
October 1994 he was named Vice President - International Business for the U.S.
Steel Group and served as


                                       31
<PAGE>


president of USX Engineers and Consultants, Inc. from October 1994 to September
1996. In December 1999, Mr. Connelly was named as Vice President long-range
planning and international business.

ALBERT E. FERRARA, JR. has served as vice President - Strategic Planning of USX
since 1997. From 1994 to 1997, Mr. Ferrara served as the President of USX Realty
Development, an affiliate of USX.

DAVID BLITZER was elected as a director of Republic in September 1998. Mr.
Blitzer is a Senior Managing Director of The Blackstone Group, L.P., which he
joined in 1991. He also currently serves on the board of directors of Haynes
International, Inc., Imperial Home Decor Group, Inc., Volume Services America,
Inc. and Volume Services, Inc.

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE
The following table sets forth for the fiscal years ended December 31, 2001,
2000, and 1999, the compensation paid by the Company and its affiliates to its
Chief Executive Officer and each of its four most highly compensated executive
officers:

<TABLE>
<CAPTION>
--------------------------------------------- -------- --------------- -------------- ------------------------
                                                                                               ALL OTHER
        NAME AND PRINCIPLE POSITION            YEAR      SALARY ($)      BONUS ($)        COMPENSATION ($) (B)
--------------------------------------------- -------- --------------- -------------- ------------------------
<S>                                            <C>           <C>            <C>                       <C>
Joseph F. Lapinsky                             2001          $460,755       $375,000                  $98,500
Chief Executive Officer, President & Chief     2000          $394,145       $125,000                  $29,023
Operating Officer (a)                          1999          $275,000        $36,675                   $2,640
--------------------------------------------- -------- --------------- -------------- ------------------------
Thomas N. Tyrrell                              2001               N/A       $150,000                 $101,000
Former Chief Executive Officer (a)             2000           $66,667       $187,500                 $735,448
                                               1999          $400,000        $75,000                   $3,840
--------------------------------------------- -------- --------------- -------------- ------------------------
John G. Asimou                                 2001          $212,625        $75,000                  $28,011
Executive Vice President and General           2000          $225,346        $93,750                   $3,619
Manager, Cold Finished Bar Division            1999          $225,000        $52,500                   $2,160
--------------------------------------------- -------- --------------- -------------- ------------------------
Noel J. Huettich                               2001          $149,370        $20,000                  $31,255
Vice President, Vice President, Hot Rolled     2000          $132,140             --                   $6,921
Bar Operations                                 1999          $113,278        $11,275                   $5,969
--------------------------------------------- -------- --------------- -------------- ------------------------
John B. George                                 2001          $157,980        $40,000                   $2,500
Vice President, Finance and Treasurer          2000          $145,462        $43,750                   $7,457
                                               1999          $145,000        $18,375                  $18,366
--------------------------------------------- -------- --------------- -------------- ------------------------
James T. Thielens                              2001          $156,384        $25,000                  $14,043
Vice President, Marketing                      2000          $150,554        $31,250                   $9,300
                                               1999          $150,000        $20,825                   $7,634
--------------------------------------------- -------- --------------- -------------- ------------------------
Stephen Graham                                 2001          $176,926        $75,000                  $57,976
Former Executive Vice President & Chief        2000          $230,000     (c)$20,000                  $33,431
Financial Officer (a)                          1999               N/A            N/A                      N/A
--------------------------------------------- -------- --------------- -------------- ------------------------
Charles T. Cochran                             2001          $157,056        $25,000                  $11,520
Vice President, Commercial-Cold Finished       2000          $160,246        $31,250                  $10,341
                                               1999          $160,000        $25,825                   $8,220
--------------------------------------------- -------- --------------- -------------- ------------------------
</TABLE>


                                       32
<PAGE>

(a)      Mr. Tyrrell resigned from the Company in February 2000. Mr. Lapinsky
         was named Chief Executive Officer at that time. Mr. Graham joined the
         Company in February 2000, and resigned from the Company in October
         2001.

(a)      The amounts set forth in this column for Messrs. Lapinsky and Asimou
         include amounts of annual premiums paid by the Company under group term
         life insurance for such officers. The life insurance carries a maximum
         value of four times base salary for Mr. Lapinsky (beginning in 2000),
         and two times base salary for each other officer (and for Mr. Lapinsky
         in 1999), and has no cash surrender value. This column also includes
         severance dollars received by Mr. Tyrrell who is no longer employed by
         Republic Technologies International, LLC.

(c)      Mr. Graham received a bonus of $20,000 in 2000 in conjunction with his
         hiring.



EMPLOYMENT AGREEMENTS

Mr. Lapinsky entered into an employment agreement effective in March 2000. This
agreement will continue in effect until December 31, 2004, unless either Mr.
Lapinsky or the Company gives written notice of termination no later than
September 30, 2001. If no such notice is given, the agreement automatically
extends for an additional 12-month period ending December 31, subject to
additional annual extensions. The annual base salary specified in Mr. Lapinsky's
contract is currently $495,000, as well as, an annual increase based on
performance. Mr. Lapinsky was also entitled to receive an annual bonus, which
will be no less than $150,000.

DIRECTORS' COMPENSATION AND CONSULTING ARRANGEMENTS

The Company's directors receive no remuneration for serving as directors. All
directors are reimbursed for reasonable expenses incurred in attending director
meetings.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Republic Technologies is a limited liability company whose managing member is
Republic Technologies International, Inc. A number of material arrangements
relating to the voting or disposition of equity securities of Republic
Technologies International, Inc. and Republic Technologies are included in an
equityholders' agreement, described under Item 13, "Certain Relationships and
Related Party Transactions". Except as indicated below, the following table sets
forth information as to the approximate beneficial ownership of the voting
securities of Republic Technologies International, Inc. after the consummation
of the Combination and prior to the Petition Date, assuming exercise of
outstanding warrants, conversion of outstanding convertible preferred stock and
exchange by USX and Kobe of their membership interests in the Company into
Republic Technologies, Inc. common stock, by the following:

     -   owners of more than 5% of the outstanding equity;
     -   each of the Company's directors and named executive officers; and
     -   all of the Company's executive officers and directors as a group.

The following table does not take into account options that are expected to be
granted to management in the future. Blackstone has the right to appoint a
majority of the directors of Republic Technologies International, Inc. for so
long as it beneficially owns at least 25% of the fully diluted common stock of
Republic Technologies International, Inc. Except as indicated in the footnotes
to this table, the Company believes that the persons named in the table have
sole voting and investment power with respect to all equity interests shown as
beneficially owned by them. Unless otherwise indicated below, the address for
each of our beneficial owners is c/o Republic Technologies International
Holdings, LLC, 3770 Embassy Parkway, Akron, Ohio 44333-8367.


                                       33
<PAGE>


<TABLE>
<CAPTION>
                                                                                   OWNERSHIP OF REPUBLIC
                                                                                     TECHNOLOGIES, INC.
                                                                            ---------------------------------
                                                                                 NUMBER OF        PERCENTAGE
NAME                                                                             SHARES (#)        OWNED (%)
----                                                                             ----------        ---------
<S>                                                                              <C>                   <C>
Blackstone Management Associates II L.L.C. ("BMA II")(1)(6)                      12,110,808            52.2%
 345 Park Avenue
  New York, New York 10154
Veritas Capital Management L.L.C. ("VCM")(2)                                      3,678,970            15.8%
  660 Madison Avenue
  New York, New York 10021
USX Corporation(3)                                                                3,989,457            17.2%
  600 Grant Street
  Pittsburgh, Pennsylvania 15219
Kobe Steel, Ltd.(4)                                                                 927,790             4.0%
  10-26 Wakinohama Cho
  2 Chome Chuo-ku
  Kobe City Hyogo
FirstEnergy Services Corp.(5)                                                       429,478             1.9%
  76 South Main Street
  Akron, Ohio 44308
Joseph F. Lapinsky                                                                       --               --
John B. George                                                                           --               --
Richard C. Lappin(1)(6)                                                          12,110,808            52.2%
Robert Friedman(1)(6)                                                            12,110,808            52.2%
David Blitzer(1)(6)                                                              12,110,808            52.2%
Lynn R. Williams                                                                         --               --
Albert E. Ferrara, Jr.                                                                   --               --
John Connelly                                                                            --               --
R. Jeffrey Pollock                                                                       --               --
All directors and named executive officers as a group (23 persons)(6)            15,789,778            68.0%
</TABLE>

(1)  BMA II's beneficial ownership interest in the Company is held indirectly
     through Republic Technologies, Inc. BMA II beneficially owns all of the
     536,829 outstanding shares of Class B common stock of Republic
     Technologies, Inc., 393,701, or approximately 73.3%, of the total 536,865
     outstanding shares of Class C common stock of Republic Technologies, Inc.
     and 2,147,388, or approximately 67.3%, of the total 3,191,637 outstanding
     shares of Class D common stock of Republic Technologies, Inc. Of BMA II's
     Class B common stock, 423,132 shares are held directly by BRW Steel
     Holdings, L.P., a Delaware limited partnership initially organized by
     persons associated with Veritas in connections with the initial formation
     of BarTech, and 113,697 shares are held by BRW Steel Offshore Holdings,
     L.P., a Delaware limited partnership initially organized by persons
     associated with Blackstone and Veritas in connection with Blackstone's
     initial investment in BarTech. Blackstone, a Delaware limited partnership
     for which BMA II is the sole general partner, is the Class B general
     partner of BRW Steel Holdings, and pursuant to the limited partnership
     agreement of BRW Steel Holdings exercises all voting and dispositive powers
     with respect to the Class B common stock held by BRW Steel Holdings. BMA II
     controls the Class B general partners of BRW Steel Offshore Holdings, and
     pursuant to the limited partnership of BRW Steel Offshore Holdings,
     exercises all voting and dispositive powers with respect to the Class B
     common stock held by BRW Steel Offshore Holdings. Accordingly, because BMA
     II has voting and dispositive control with respect to all of the shares of
     Class B common stock held by these partnerships, it may be deemed to
     beneficially own these shares. The shares of Class C and Class D common
     stock beneficially owned by BMA II are held directly by Blackstone Capital
     Partners II Merchant Banking Fund, Blackstone Family Investment Partnership
     II L.P., Delaware limited partnerships for which BMA II is the sole general
     partner, and Blackstone Offshore Capital Partners II L.P., a Cayman Islands
     exempted limited partnership for which BMA II is the general partner with
     voting and dispositive power. Accordingly, BMA II may be deemed to
     beneficially own all of the shares of Class C and Class D common stock held
     by Blackstone Capital Partners II Merchant Banking Fund, Blackstone
     Offshore Capital Partners II L.P. and


                                       34
<PAGE>


     Blackstone Family Investment Partnership II. Messers. Peter G. Peterson and
     Stephen A. Schwarzman are the founding members of BMA II and control BMA
     II. Accordingly, they may be deemed to share beneficial ownership of the
     shares of Republic Technologies, Inc. held by BMA II, although they
     disclaim this beneficial ownership. In connection with the restructuring of
     July 2000, 15 million warrants, convertible to one share each of common
     stock were issued. BMA II owns 9,032,890 or approximately 60.2% of the
     total warrants.

(2)  VCM's beneficial ownership interest in the Company is held indirectly
     through Republic Technologies, Inc. VCM beneficially owns 196,410, or
     approximately 66.5%, of the total 295,199 outstanding shares of Class A
     common stock of Republic Technologies, Inc. (which includes outstanding
     warrants for 91,609 shares of Class A common stock), 143,164, or
     approximately 26.7% of the total 536,865 outstanding shares of Class C
     common stock of Republic Technologies, Inc. and 732,878, or approximately
     23.0%, of the total 3,191,637 outstanding shares of Class D common stock of
     Republic Technologies, Inc. Of VCM's Class A common stock, 154,811 shares
     are held directly by BRW Steel Holdings, L.P., a Delaware limited
     partnership initially organized by persons associated with VCM in
     connection with the initial formation of BarTech, and 41,599 shares are
     held by BRW Steel Offshore Holdings, L.P., a Delaware limited partnership
     initially organized by persons associated with Blackstone and Veritas in
     connection with Blackstone's initial investment in BarTech. BRW Partners,
     Inc., a Delaware corporation controlled by the principals of VCM, is the
     Class A general partner of both BRW Steel Holdings and BRW Steel Offshore
     Holdings, and pursuant to the limited partnership agreements of these
     partnerships, exercises all voting and dispositive powers with respect to
     the Class A common stock held by these partnerships. Accordingly, because
     VCM has voting and dispositive control with respect to all of the shares of
     Class A common stock held by these partnerships, it may be deemed to
     beneficially own these shares. The shares of Class C common stock
     beneficially owned by VCM are held directly by BRW Steel Holdings II, L.P.,
     a Delaware limited partnership, and Veritas Capital, L.L.C. and KDJ,
     L.L.C., each Delaware limited liability companies. The general partner of
     BRW Steel Holdings II is BRW Partners, L.L.C., a limited liability company
     controlled by VCM. Each of Veritas Capital and KDJ are also controlled by
     VCM. Accordingly, VCM may be deemed to beneficially own all of these shares
     of Class C common stock. The shares of Class D common stock beneficially
     owned by VCM are held directly by The Veritas Capital Fund, L.P., a
     Delaware limited partnership of which VCM controls the general partner with
     voting and dispositive power. Accordingly, VCM may be deemed to
     beneficially own all of the shares of Class D common stock held by The
     Veritas Capital Fund. The beneficial ownership number for VCM does not
     include .06% of the fully diluted common stock held by an investor that is
     related to, but not an affiliate of, VCM.

(3)  USX's beneficial ownership interest in the Company is held directly by USX
     Republic Technologies Holdings, Inc., a Delaware corporation and an
     indirect subsidiary of USX. Under the equityholders' agreement described
     under Item 13, "Certain Relationships and Related Party Transactions", USX
     may exchange its ownership interests in the Company for Class D common
     stock and warrants of Republic Technologies, Inc. at any time after
     consummation of the Transactions, and under some circumstances may be
     required to do so by Blackstone. The Company has assumed such exchange in
     the above table.

(4)  Kobe's beneficial ownership interest in the Company is held directly by
     Kobe Republic Technologies Holdings, Inc., a Delaware corporation and an
     indirect subsidiary of Kobe. Under the equityholders' agreement described
     under Item 13, "Certain Relationships and Related Party Transactions", Kobe
     may exchange its ownership interests in the Company for Class D common
     stock and warrants of Republic Technologies, Inc. at any time after
     consummation of the Transactions, and under some circumstances may be
     required to do so by Blackstone. The Company has assumed such exchange in
     the above table.

(5)  In connection with the consummation of the Transactions, FirstEnergy or its
     affiliate purchased 30 thousand shares of the Class C Convertible Preferred
     Stock of Republic Technologies, Inc., which shares are immediately
     convertible, at the option of FirstEnergy, into the indicated number of
     shares of Republic Technologies, Inc. common stock beneficially owned by
     FirstEnergy. The conversion of




                                       35
<PAGE>

     FirstEnergy's shares has been assumed in the table above.

(6)  Messrs. Lappin, Friedman and Blitzer are affiliated with Blackstone in the
     capacities described under Item 10, "Directors and Executive Officers".
     Messrs. Lappin, Friedman and Blitzer disclaim beneficial ownership of any
     equity of the Company or Republic Technologies, Inc. beneficially owned by
     BMA II.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

MASTER RESTRUCTURING AGREEMENT

The Combination was effected pursuant to a master restructuring agreement
entered into among Republic Technologies International Inc., the Company,
Republic Technologies International, LLC, Blackstone, Veritas, USX, Kobe and
various of their affiliates and related investors. The master restructuring
agreement contains customary representations, warranties, covenants and
indemnities. Indemnification claims under the master restructuring agreement are
generally satisfied through adjustments to our owners' relative ownership
interests.

EQUITYHOLDERS' AGREEMENT

The following are descriptions of the Company's equityholders' agreement prior
to the Petition Date. All such agreements are subject to the outcome of the
Chapter 11 proceedings.

In connection with the completion of the Combination, Republic Technologies
International, Inc., Blackstone, Veritas, USX, Kobe, FirstEnergy, various of
their affiliates and other equityholders' of Republic Technologies International
Inc. entered into an equityholders' agreement regarding their ownership of the
Company's equity and the common stock of Republic Technologies International,
Inc.

Election of Directors. The equityholders' agreement provides that the parties
will vote their shares of Republic Technologies International, Inc. common stock
to elect a board of directors that includes the following individuals:

     -   six directors designated by Blackstone;
     -   two directors designated by Veritas;
     -   two directors designated by USX;
     -   two directors designated by Kobe; and
     -   one director designated by the United Steelworkers union.

In each of the cases above other than the United Steelworkers, the right to
designate one or more directors is subject to decrease or termination if the
respective party's ownership level falls below thresholds specified in the
equityholders' agreement. In addition, for so long as Blackstone is entitled to
designate six directors, it has the right upon its request to appoint additional
directors so as to obtain majority board control.

Fundamental Matters. Until the third anniversary of an initial public offering
of Republic Technologies International, Inc. common stock and provided that each
of USX and Kobe maintains specified equity ownership levels, the consent of each
of USX and Kobe is required for Republic Technologies International, Inc. to
take specified actions, which, subject to various exceptions, include the
following:

     -   entering into or modifying specified types of material contracts
         between Republic Technologies International, Inc. and affiliates of
         Blackstone or Veritas;
     -   issuing equity interests in Republic Technologies International, Inc.
         and its subsidiaries, other than specified allowances for management
         incentives, strategic transactions and an initial public offering;
     -   incurring indebtedness other than pursuant to the Combination-related
         transactions, refinancings of indebtedness existing at the time of the
         Combination or otherwise permitted to be incurred by



                                       36
<PAGE>


         the equityholders' agreement, indebtedness pursuant to undrawn
         commitments under existing credit facilities, and other incremental
         indebtedness not to exceed $500 million;
     -   other than pursuant to Republic Technologies International, Inc.'s
         existing capital expenditures budget, making annual capital
         expenditures in excess of $50 million during the period ending August
         13, 2004;
     -   merging Republic Technologies International, Inc. with or into any
         other entity, or the acquisition of the capital stock or assets of any
         other person, subject to various exceptions; and
     -   selling two-thirds or more of the consolidated assets of Republic
         Technologies International, Inc., subject to various exceptions.

In addition, USX and Kobe generally have the right in connection with an initial
public offering of Republic Technologies International, Inc. common stock to
purchase additional shares in the public offering to the extent necessary to
maintain their ownership percentage.

Exchange Events. Each of the affiliates of USX and Kobe that initially hold
interests in the Company have the right, subject to specified requirements, to
exchange the interests then owned by it for shares of Class D common stock of
Republic Technologies International, Inc. In addition, these parties are also
entitled to receive in the exchange warrants designed to mitigate the dilutive
effect of the warrants issued with the outstanding Senior Secured Notes issued
by Republic Technologies and RTI Capital Corp. and other Republic Technologies
International, Inc. warrants. If these exchanges are completed, Republic
Technologies International, Inc. will own 100% of Holdings. Blackstone also
generally may require these exchanges to occur upon an initial public offering
of the common stock of Republic Technologies International, Inc.

Transfers of Common Stock. Unless an initial public offering of Republic
Technologies International, Inc.'s common stock has occurred, transfers of
common stock prior to August 13, 2004 require the consent of Blackstone, except
for transfers:

          (1) to an affiliate,
          (2) pursuant to the "tag-along" provision discussed below,
          (3) pursuant to the "drag-along" provision discussed below,
          (4) after three years following the closing of the Combination,
              transfers subject to a right of first offer on the part of
              Blackstone and,
          (5) pursuant to the exercise of the registration rights discussed
              below.

The equityholders' agreement also provides that, without the prior consent of
Blackstone, USX and Kobe may only transfer equity interests in the Company to
each other or to Republic Technologies International, Inc.

Tag-Along Rights. The equityholders' agreement grants to the parties the right,
subject to specified conditions, in connection with a proposed transfer of
common stock by either Blackstone or Veritas, to require the proposed transferee
to purchase a proportionate percentage of the shares owned by the other parties,
as applicable, at the same price and upon the same economic terms.

Drag-Along Rights. So long as Blackstone owns 31% or more of the outstanding
common stock of Republic Technologies International, Inc. on a fully diluted
basis, Blackstone has the right, subject to specified conditions, in connection
with an offer by a third party to purchase all of the outstanding shares of
common stock of Republic Technologies International, Inc. held by the parties,
to require the other parties to transfer all shares owned by them to this third
party at the same price and on the same economic terms as the offer accepted by
Blackstone.

Registration Rights. The equityholders' agreement gives Blackstone the right to
"demand" that Republic Technologies International, Inc. register its shares
under the federal securities laws on three separate occasions. The
equityholders' agreement also grants three "demand" registrations to USX, three
"demand" registrations to Kobe, one "demand" registration to FirstEnergy and,
subject to conditions, three "demand" registrations to Veritas. The demand
registration rights granted to USX, Kobe, FirstEnergy and Veritas


                                       37
<PAGE>


may, with limited exceptions, generally only be exercised after an initial
public offering of Republic Technologies International, Inc. common stock has
occurred. In addition, the equityholders' agreement grants "piggyback"
registration rights to each of the equityholders' each time Republic
Technologies, Inc. files a registration statement in connection with a sale of
common stock, except for registration statements relating to

         (1) shares underlying management options,
         (2) the offering contemplated by the new labor agreement with the
             United Steelworkers union or
         (3) an initial public offering consisting only of primary shares.

PAYMENT OF FEES AND EXPENSES

From April 1996 to August 13, 1999, Blackstone and Veritas received annual
monitoring fees from BarTech equal to approximately $.9 million per year
pursuant to a monitoring agreement. Under the terms of the monitoring agreement,
Blackstone and Veritas provided management and financial monitoring services to
BarTech. Blackstone and Veritas have split the monitoring fees paid evenly
between them. Blackstone and Veritas have also been reimbursed by BarTech for
their out-of-pocket expenses incurred in providing such services.

In connection with the acquisition of Republic in 1998, RES Holding paid
transaction fees of $3.4 million to Blackstone and $0.8 million to Veritas and
reimbursed them for all related out-of-pocket expenses. In addition, pursuant to
a monitoring agreement entered into with RES Holding, Blackstone and Veritas
were entitled to receive an annual monitoring fee for providing management and
financial monitoring services equal to approximately $1.1 million, with
Blackstone receiving 75% and Veritas receiving 25% of this monitoring fee.
Blackstone and Veritas have also been reimbursed by RES Holding and Republic for
their out-of-pocket expenses incurred in providing these services. Approximately
$2.4 million of accrued but unpaid BarTech and RES Holding monitoring fees were
paid following the Combination.

In connection with the Combination, the Company paid transaction fees in the
aggregate of $4.0 million to Blackstone, Veritas, USX and affiliates of Kobe. In
addition, the Company reimbursed Blackstone, Veritas, USX and Kobe for their
out-of-pocket expenses related to the Combination. Upon consummation of the
Combination, the Company entered into a new monitoring agreement with
Blackstone, Veritas, USX and Kobe that replaced the existing monitoring
agreements regarding BarTech and Republic, with the parties to receive an
aggregate annual fee of $4.0 million. This agreement has been stayed due to the
Chapter 11 proceedings, therefore, the Company accrued only $1.0 million under
this agreement in the current year.

In addition, in the future, Blackstone, Veritas, USX and Kobe or their
affiliates may receive customary fees for other advisory and transactional
services rendered to the Company. If such services are rendered in the future,
the fees will be negotiated from time to time on an arms-length basis and will
be based on the services performed and the fees charged to third parties for
comparable services.

SALES TO AND AGREEMENTS WITH BLACKSTONE AFFILIATES

During the years ended December 31, 2001 and 2000, and the periods from August
13, 1999 to December 31, 1999 and January 1, 1999 to August 12, 1999, the
Company had approximately $77.9 million, $112.9 million, $43.6 million, and
$54.2 million, respectively, of net sales to American Axle & Manufacturing, a
company controlled by Blackstone. All such sales were in the ordinary course of
business and on arms-length terms.

AGREEMENTS WITH USX, KOBE, FIRSTENERGY AND THEIR AFFILIATES

In connection with the Combination, the Company entered into the following
agreements with USX, Kobe and FirstEnergy (another equity investor in the
Company's parent) or their affiliates. The terms discussed below are all prior
to the Petition Date:


                                       38
<PAGE>


ROUND SUPPLY AGREEMENT
----------------------
The Company entered into a five-year supply agreement with USX and the new
tubular company owned by USX, which provides for the tubular joint venture
purchasing all of its requirements for steel rounds at its Lorain, Ohio pipemill
from the Company up to a maximum of 400,000 tons per year for a price equal to
the Company's production costs plus an agreed upon margin per ton. The tubular
company also has the right to purchase up to an additional 200,000 tons per year
for a price equal to the Company's fixed production costs plus an agreed upon
margin per ton. If the tubular company is unable to purchase at least 400,000
tons of steel rounds per year for its Lorain, Ohio pipemill, USX is required to
purchase any shortfall, under specified circumstances, to satisfy the steel
round requirements of its Fairfield, Alabama pipemill facility that can not be
satisfied from USX's internal production of steel rounds. The Company sold
$106.1 million of seamless rounds to USX in the year ended December 31, 2001.

COKE SUPPLY AGREEMENT
---------------------
The Company entered into a five-year supply agreement with USX, which provides
that Republic Technologies purchase substantially all of its requirements for
coke for use in its Lorain, Ohio blast furnace from USX. The purchase price for
coke is based on market prices and adjusted annually, subject to most favored
nations provisions for price and other conditions, which allow the Company to
receive the most favorable terms that USX grants to any of its coke customers.
The Company purchased $51.2 million of coke from USX in the year ended December
31, 2001.

PELLET SUPPLY AGREEMENT
-----------------------
Under this agreement, the Company agreed to purchase all of its iron ore pellet
requirements for its Lorain, Ohio blast furnace from USX for a period of five
years. The purchase price for pellets is generally based on market prices and
will be adjusted annually, subject to most favored nations provisions for price
and other conditions, which allow the Company to receive the most favorable
terms that USX grants to any of its pellet customers. The Company purchased
$59.9 million of iron ore pellets from USX in the year ended December 31, 2001.

SAFE HARBOR LEASE MATTERS AGREEMENT
-----------------------------------
Pursuant to the master restructuring agreement, the Company received certain
property formerly owned by USS/Kobe that qualifies as "Safe Harbor Lease
Property," thus affording USX and Kobe with tax benefits. The Safe Harbor Lease
Matters Agreement contains covenants and warranties to ensure that the property
remains qualified as Safe Harbor Lease Property and to ensure the continuation
of the tax benefits.

ENERGY MANAGEMENT AGREEMENT
---------------------------
In connection with the consummation of the Combination, the Company entered into
an agreement with FirstEnergy under which it appointed FirstEnergy as its
exclusive representative for the procurement of energy supply and services. As a
result of this arrangement, it is likely that much of the Company's energy
purchasing requirements will eventually be filled by FirstEnergy. Also in
connection with the consummation of the Combination, FirstEnergy purchased $30.0
million of the Series C convertible preferred stock of Republic Technologies
International, Inc. (the Company's ultimate parent).

In connection with the Combination, the Company also entered into an agreement
with the new tubular steel company owned by USX regarding the provision of
various utilities and an agreement with USX regarding the provision of various
transitional services. In addition, at the closing of the Combination, the
Company entered into an agreement with USX regarding payment of certain payables
owed by USS/KOBE to USX.



                                       39
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
------------------------------------------------------------------------

(a)(1)            The following consolidated/combined financial statements of
                  the Company are included in a separate section of this report
                  following the signature page:

                  Independent Auditors' Report

                  Consolidated/Combined Statements of Operations - For the Years
                  Ended December 31, 2001 and 2000, and the Periods From August
                  13, 1999 to December 31, 1999 and January 1, 1999 to August
                  12, 1999

                  Consolidated Balance Sheets - December 31, 2001 and 2000

                  Consolidated/Combined Statements of Members'
                  Interest/Stockholders' Deficit - For the Periods From January
                  1, 1999 to August 12, 1999 and August 13, 1999 to December 31,
                  1999, and the Years Ended December 31, 2000 and 2001

                  Consolidated/Combined Statements of Cash Flows - For the Years
                  Ended December 31, 2001 and 2000, and the Periods From August
                  13, 1999 to December 31, 1999 and January 1, 1999 to August
                  12, 1999

                  Notes to Consolidated/Combined Financial Statements - For the
                  Years Ended December 31, 2001 and 2000, the Periods From
                  August 13, 1999 to December 31, 1999 and January 1, 1999 to
                  August 12, 1999

(a)(2)  Financial Statement Schedule

                  The following consolidated/combined financial statement
                  schedule of the Company is included in a separate section of
                  this report following the signature page:

                 Schedule II - Valuation and Qualifying Accounts

                  All other schedules for which provision is made in the
                  applicable accounting regulation of the Securities and
                  Exchange Commission are not required under the related
                  instructions or are inapplicable, and therefore, have been
                  omitted.

(a)(3)  Exhibits

       Exhibit No.                            Description
       -----------                            -----------

         2.1*              Master Restructuring Agreement, dated as of August
                           13, 1999, among Republic Technologies International,
                           Inc., RES Holding Corporation ("RES Holding"),
                           Republic Engineered Steels, Inc ("Republic"),
                           Blackstone Capital Partners II Merchant Banking Fund
                           L.P. ("BCP II"), Blackstone Offshore Capital Partners
                           II L.P. ("BOCP II"), Blackstone Family Investment
                           Partnership II L.P. ("BFIP II"), The Veritas Capital
                           Fund L.P. ("Veritas Fund"), HVR Holdings, LLC
                           ("HVR"), USX Corporation ("USX"), Kobe Steel, Ltd.
                           ("Kobe"), Kobe Delaware Inc. ("Kobe Delaware"), USS
                           Lorain Holding Company, Inc. ("USS Lorain"), USX
                           Republic Technologies Holdings, Inc. ("USX
                           Holdings"), Kobe/Lorain Inc. ("Kobe/Lorain"), Kobe
                           Republic Technologies Holdings Inc. ("Kobe
                           Holdings"), Republic


                                       40
<PAGE>


                           Technologies, Lorain Tubular Company, LLC ("Lorain
                           Tubular") and USS/Kobe Steel Company ("USS/Kobe
                           SteelCo").

         3.1*              Limited Liability Company Agreement of Republic
                           Technologies International Holdings, LLC


         4.1*              Indenture, dated as of August 13, 1999, Republic
                           Technologies International, LLC , Republic
                           Technologies Capital Corp. ("Republic Technologies
                           CapCo."), Republic Technologies International, Inc. ,
                           Nimishillen & Tuscarawas, LLC ("N&T"), Bliss &
                           Laughlin, LLC ("B&L"), Canadian Drawn Steel Company,
                           Inc. ("CDSC"), and United States Trust Company of New
                           York, as Trustee.

         4.2*              Form of 13 3/4% Senior Secured Note due 2009, Series
                           B (included in Exhibit 4.1)

         4.3*              Notes Exchange and Registration Rights Agreement,
                           dated as of August 13, 1999, among Republic
                           Technologies International, LLC, Republic
                           Technologies CapCo, Republic Technologies
                           International, LLC, N&T, B&L, CDSC, Chase, DLJ and
                           BBRS.

         4.4*              Security Agreement, dated as of August 13, 1999,
                           among Republic Technologies International, LLC,
                           Republic Technologies CapCo, Republic Technologies
                           International Holdings, LLC, N&T, B&L, CDSC and the
                           United States Trust Company of New York, as
                           Collateral Agent.

         4.5*              Form of Mortgage, Assignment of Leases, Security
                           Agreement and Fixture Filing, dated as of August 13,
                           1999, by Republic Technologies International, LLC to
                           United States Trust Company of New York, as
                           Mortgagee.

         4.6*              Master Pledge Agreement, dated as of August 13, 1999,
                           among Republic Technologies International, LLC,
                           Republic Technologies CapCo, Republic Technologies
                           International Holdings, LLC, N&T, B&L, CDSC and
                           United States Trust Company of New York, as
                           Collateral Agent.

         4.7*              Amended and Restated Intercreditor and Subordination
                           Agreement, dated as of August 13, 1999, among United
                           States Trust Company of New York, as Collateral
                           Agent, United States Trust Company of New York, as
                           Trustee, the Pennsylvania Lenders (as defined
                           therein), BankBoston, N.A., as Agent, Republic
                           Technologies International, LLC, Republic
                           Technologies International Holdings, LLC, Republic
                           Technologies CapCo, N&T, B&L and CDSC.

         4.8*              Pledge Intercreditor Agreement, dated as of August
                           13, 1999, among the Secured Parties (as defined
                           therein) and United States Trust Company of New York,
                           as Collateral Agent.

         10.1*             Revolving Credit Agreement, dated as of August 13,
                           1999, among Republic Technologies International, LLC,
                           BankBoston, N.A., as Administrative Agent and Co-Book
                           Manager, Bank of America, N.A, as Syndication Manager
                           and Co-Book Manager, The Chase Manhattan Bank , as
                           Documentation Agent and Co-Book Manager, the Lending



                                       41
<PAGE>


                           Institutions Named Therein, and BBRS and Bank of
                           America, N.A., as Co-Arrangers.

         10.2*             Security Agreement, dated as of August 13, 1999,
                           among Republic Technologies International, LLC,
                           Republic Technologies International Holdings, LLC,
                           Republic Technologies CapCo, N&T, B&L, CDSC and
                           BankBoston, N.A.

         10.3*             Trademark Collateral Security and Pledge Agreement,
                           dated as of August 13, 1999, between Republic
                           Technologies International, LLC and BankBoston, N.A.

         10.4*             Patent Collateral Security and Pledge Agreement,
                           dated as of August 13, 1999, between Republic
                           Technologies International, LLC and BankBoston, N.A.

         10.5*             Canadian Security Agreement, dated as of August 13,
                           1999, between CDSC and BankBoston, N.A.

         10.6*             Assignment of Intellectual Property, dated as of
                           August 13, 1999, by CDSC to BankBoston, N.A.

         10.7*             Open-End Mortgage, Security Agreement, Assignment of
                           Rents, Income and Proceeds, dated as of August 13,
                           1999, from Republic Technologies International, LLC
                           to BankBoston, N.A.

         10.8*             Amended and Restated Equityholders' Agreement, dated
                           as of August 13, 1999, among BCP II, BOCP II, BFIP
                           II, Veritas Fund, Veritas Capital, LLC, KDJ, LLC, BRW
                           Steel Holdings, L.P., BRW Steel Holdings II, L.P.,
                           BRW Steel Offshore Holdings, L.P., Republic
                           Technologies, Inc., RES Holding, Republic
                           Technologies International, LLC, USX, USX Holdings,
                           Kobe Delaware, Kobe, Kobe Holdings, HVR, Sumitomo
                           Corporation of America, FirstEnergy Services Corp.,
                           Triumph Capital Investors II, L.P., TCI-II Investors,
                           L.P., First Dominion Capital, LLC, TCW Leveraged
                           Income Trust, L.P., TCW Leveraged Income Trust II,
                           L.P., TCW Shared Opportunity Fund, L.P., Shared
                           Opportunity Fund IIB, LLC, Shared Opportunity Fund
                           III, LLC, and the other equityholders' named therein.

         10.9*             Round Supply Agreement, dated as of August 13, 1999,
                           between Republic Technologies International, LLC and
                           USX.

         10.10*            Master Energy Services and Supply Agreement, dated as
                           of August 13, 1999, between Republic Technologies
                           International, LLC and FirstEnergy Services Corp.

         10.11*            Transition, Administration and Utilities Services
                           Agreement, dated as of August 13, 1999, between
                           Lorain Tubular and Republic Technologies
                           International, LLC.

         10.12*            Letter Agreement, dated August 13, 1999, among
                           Republic Technologies International, LLC and USX.

         10.13*            Letter Agreement, dated August 13, 1999, Republic
                           Technologies International, LLC, Lorain Tubular, Kobe
                           and USX.




                                       42
<PAGE>


         10.14             Master Agreement dated July 18, 1994, by and among
                           the Commonwealth of Pennsylvania, acting by and
                           through the Department of Commerce, the Pennsylvania
                           Industrial Development Authority, the Commonwealth of
                           Pennsylvania, acting by and through the Department of
                           Community Affairs, the Johnstown Industrial
                           Development Corporation, the County of Cambria, the
                           City of Johnstown Republic Technologies
                           International, LLC and BRW Steel
                           Corporation-Johnstown. (Filed as exhibit to the
                           Registration Statement on Form S-4 of Bar
                           Technologies Inc. (SEC Registration No. 333-4254) and
                           incorporated by reference and made a part hereof.)

         10.15             Amendment No. 1 to the Master Agreement dated
                           September 21, 1994, by and among the Commonwealth of
                           Pennsylvania, acting by and through the Department of
                           Commerce, the Pennsylvania Industrial Development
                           Authority, the Commonwealth of Pennsylvania, acting
                           by and through the Department of Community Affairs,
                           the Johnstown Industrial Development Corporation, the
                           County of Cambria, the City of Johnstown and Republic
                           Technologies International, LLC. (Filed as exhibit to
                           the Registration Statement on Form S-4 of Bar
                           Technologies Inc. (SEC Registration No. 333-4254) and
                           incorporated by reference and made a part hereof.)

         10.16*            Amendment No. 2 to the Master Agreement dated August
                           1999 among the Johnstown Industrial Development
                           Corporation, the County of Cambria, the City of
                           Johnstown and Republic Technologies International,
                           LLC.

         10.17             Economic Development Partnership Loan Agreement dated
                           September 21, 1994, between the City of Johnstown and
                           Republic Technologies International, LLC. (Filed as
                           exhibit to the Registration Statement on Form S-4 of
                           Bar Technologies Inc. (SEC Registration No. 333-4254)
                           and incorporated by reference and made a part
                           hereof.)

         10.18             Economic Development Set-Aside Loan Agreement dated
                           as of July 6, 1995, between the City of Johnstown and
                           Republic Technologies International, LLC. (Filed as
                           exhibit to the Registration Statement on Form S-4 of
                           Bar Technologies Inc. (SEC Registration No. 333-4254)
                           and incorporated by reference and made a part
                           hereof.)

         10.19             Economic Development Set-Aside Loan Agreement dated
                           July 6, 1995, between the City of Johnstown and
                           Republic Technologies International, LLC. (Filed as
                           exhibit to the Registration Statement on Form S-4 of
                           Bar Technologies Inc. (SEC Registration No. 333-4254)
                           and incorporated by reference and made a part
                           hereof.)

         10.20             Section 108 Loan Agreement dated July 20, 1994, by
                           and between the City of Johnstown, the County of
                           Cambria and Republic Technologies International, LLC.
                           (Filed as exhibit to the Registration Statement on
                           Form S-4 of Bar Technologies Inc. (SEC Registration
                           No. 333-4254) and incorporated by reference and made
                           a part hereof.)

         10.21             Amendment No. 1 to Section 108 Loan Agreement, dated
                           August 1994, by and among the City of Johnstown, the
                           County of Cambria and Republic Technologies
                           International, LLC. (Filed as exhibit to the
                           Registration Statement on Form S-4 of Bar
                           Technologies Inc. (SEC


                                       43
<PAGE>


                           Registration No. 333-4254) and incorporated by
                           reference and made a part hereof.)

         10.22             Community Development Block Grant Loan Agreement
                           dated November 3, 1995, between Cambria County and
                           Republic Technologies International, LLC. (Filed as
                           exhibit to the Registration Statement on Form S-4 of
                           Bar Technologies Inc. (SEC Registration No. 333-4254)
                           and incorporated by reference and made a part
                           hereof.)

         10.23             BID Loan Agreement dated March 12, 1996, between
                           Johnstown Industrial Development Corporation and
                           Republic Technologies International, LLC. (Filed as
                           exhibit to the Registration Statement on Form S-4 of
                           Bar Technologies Inc. (SEC Registration No. 333-4254)
                           and incorporated by reference and made a part
                           hereof.)

         10.24             Loan Agreement dated December 1, 1988 between
                           Development Authority of Cartersville and Bliss &
                           Laughlin Steel Company. (Filed as an exhibit to Form
                           10-K of Bliss & Laughlin Industries Inc. for the year
                           ended September 30, 1989 and incorporated by
                           reference and made a part hereof.)

         10.25             Trust Indenture dated as of October 1, 1994, between
                           BankOne, Columbus, N.A. ("BankOne") and the Ohio
                           Water Development Authority (the "Authority"). (Filed
                           as an exhibit to Quarterly Report on Form 10-Q of
                           Republic Engineered Steels, Inc. for the quarter
                           ended September 30, 1994 and incorporated by
                           reference and made a part hereof.)

         10.26             Trust Indenture dated as of June 1, 1996, between
                           BankOne and the Authority. (Filed as an exhibit to
                           Annual Report on Form 10-K of Republic Engineered
                           Steels, Inc. for the fiscal year ended June 30, 1996
                           and incorporated by reference and made a part
                           hereof.)

         10.27             Loan Agreement dated as of October 1, 1994, between
                           Republic Technologies International, LLC and the
                           Authority. (Filed as an exhibit to Quarterly Report
                           on Form 10-Q of Republic Engineered Steels, Inc. for
                           the quarter ended September 30, 1994 and incorporated
                           by reference and made a part hereof.)

         10.28             Loan Agreement dated as of June 1, 1996, between
                           Republic Technologies International, LLC and the
                           Authority. (Filed as an exhibit to Annual Report on
                           Form 10-K of Republic Engineered Steels, Inc. for the
                           fiscal year ended June 30, 1996 and incorporated by
                           reference and made a part hereof.)

         10.29             Project Note dated October 1, 1994, by Republic
                           Technologies International, LLC to the Trustee.
                           (Filed as an exhibit to Quarterly Report on Form 10-Q
                           of Republic Engineered Steels, Inc. for the quarter
                           ended September 30, 1994 and incorporated by
                           reference and made a part hereof.)

         10.30             Project Note dated June 1, 1996, by Republic
                           Technologies International, LLC to the Trustee.
                           (Filed as an exhibit to Annual Report on Form 10-K of
                           Republic Engineered Steels, Inc. for the fiscal year
                           ended June 30, 1996 and incorporated by reference and
                           made a


                                       44
<PAGE>


                           part hereof.)

         10.31             Project Bond dated October 1, 1994, issued by the
                           Authority. (Filed as an exhibit to Quarterly Report
                           on Form 10-Q of Republic Engineered Steels, Inc. for
                           the quarter ended September 30, 1994 and incorporated
                           by reference and made a part hereof.)

         10.32             Project Bond dated as of June 1, 1996, issued by the
                           Authority. (Filed as an exhibit to Annual Report on
                           Form 10-K of Republic Engineered Steels, Inc. for the
                           fiscal year ended June 30, 1996 and incorporated by
                           reference and made a part hereof.)

         10.33*            Participation Agreement dated as of August 13, 1999,
                           between Republic Technologies International, LLC and
                           USX.

         10.34             Employment Agreement dated October 1, 1998, between
                           the Company and Mr. Joseph Lapinsky, President and
                           Chief Operating Officer. (Filed as exhibit to Annual
                           Report on Form 10-K of Bar Technologies Inc. for the
                           fiscal year ended January 2, 1999 and incorporated by
                           reference and made a part hereof.)

         10.35             Employment Agreement dated October 1, 1998, between
                           the Company and Mr. John Asimou, Executive Vice
                           President and General Manager, Cold-Finished Bar
                           Division. (Filed as exhibit to Annual Report on Form
                           10-K of Bar Technologies Inc. for the fiscal year
                           ended January 2, 1999 and incorporated by reference
                           and made a part hereof.)

         10.36*            Employment Agreement, dated July 1, 1999, between
                           Republic Technologies and Mr. George F. Babcoke.

         10.37*            Master Collective Bargaining Agreement dated as of
                           September 30, 1998 among Republic Technologies
                           International, LLC, Republic Technologies
                           International Holdings, LLC, and the United
                           Steelworkers of America (the "USWA").

         10.38*            1999 Settlement Agreement, dated as of August 2,
                           1999, between BarTech, Republic, Republic
                           Technologies International, LLC and the USWA.

         10.39*            Agreement dated as of November 2, 1998, between
                           Pension Benefit Guaranty Corporation and RES Holding.

         10.40*            Transaction and Monitoring Fee Agreement dated August
                           13, 1999, among Blackstone Management Partners L.P.,
                           Veritas, USX, Kobe and Republic Technologies
                           International, LLC.

         10.41**           Amendment No. 3 to the Revolving Credit Agreement
                           among Republic Technologies International, LLC,
                           Republic Technologies International Holdings, LLC,
                           Republic Technologies Capital Corp., Bliss &
                           Laughlin, LLC, CDSC, Nimishillen & Tuscarawas, LLC
                           and Fleet National Bank (f/k/a BankBoston, N.A.)
                           dated July 17, 2000.

         10.42**           Amendment to the Memorandum of Understanding dated
                           November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated December 29,
                           1999.


                                       45
<PAGE>


         10.43**           Second Amendment to the Memorandum of Understanding
                           dated November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated March 15,
                           2000.

         10.44**           Third Amendment to the Memorandum of Understanding
                           dated November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated March 22,
                           2000.

         10.45**           Fourth Amendment to the Memorandum of Understanding
                           dated November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated March 29,
                           2000.

         10.46**           Fifth Amendment to the Memorandum of Understanding
                           dated November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated March 31,
                           2000.

         10.47**           Sixth Amendment to the Memorandum of Understanding
                           dated November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated April 12,
                           2000.

         10.48**           Seventh Amendment to the Memorandum of Understanding
                           dated November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated June 28, 2000.

         10.49**           Eighth Amendment to the Memorandum of Understanding
                           dated November 2, 1998 between Republic Technologies
                           International, LLC and the PBGC, dated July 14, 2000.

         10.50**           Subordinated Credit Agreement among Republic
                           Technologies International, LLC (as Borrower),
                           Blackstone, USX RTI Holdings, Inc., Sumitomo
                           Corporation of America, Triumph Capital Investors II,
                           L.P. and First Dominion Capital, LLC (as Lenders)
                           dated July 17, 2000.

         10.51             Debtor-in-Possession Revolving Credit Agreement among
                           Republic Technologies International, LLC, Fleet
                           Capital Corporation, Bank of America, N.A., and The
                           Chase Manhattan Bank dated April 3, 2001

         10.53             Amendment and Limited Waiver to Debtor-in-Possession
                           Revolving Credit Agreement between Republic
                           Technologies International, LLC and Fleet Capital
                           Corporation.

         10.54             Forebearance and Amendment Number 2 to
                           Debtor-in-Possession Revolving Credit Agreement
                           between Republic Technologies International, LLC and
                           Fleet Capital Corporation.

         10.55             Forebearance and Amendment Number 3 to
                           Debtor-in-Possession Revolving Credit Agreement
                           between Republic Technologies International, LLC and
                           Fleet Capital Corporation.

         16                Letter regarding Changes in Certifying Accountants
                           (filed as Exhibit 16 to the Bar Technologies Inc.
                           Form 8-K dated December 28, 1998, and incorporated by
                           reference and made a part hereof).

         21*               Subsidiaries of the Registrant.


         23                Consent of Deloitte and Touche LLP


                                       46
<PAGE>


         *        Filed as an exhibit to the Registration Statement on Form S-4
                  (File No. 333-90709) of Republic Technologies International,
                  LLC and Republic Technologies Capital Corp, as co-issuers, and
                  Republic Technologies International Holdings, LLC and the
                  other guarantors named therein and incorporated by reference
                  and made a part hereof.

         **       Filed as an exhibit to the Form 10-Q (File No. 333-90709-04)
                  of Republic Technologies International Holdings, LLC for the
                  three and six month periods ended June 30, 2000.

(b)      Reports on Form 8-K

         10.52             Form 8-K dated April 9, 2001 related to Republic
                           Technologies International, LLC and its immediate
                           parent, Republic Technologies International Holdings,
                           LLC, and its subsidiaries, Bliss & Laughlin LLC, and
                           RTI Capital Corp. filing voluntary petitions for
                           reorganization under Chapter 11 of the Federal
                           Bankruptcy Code in the United States Bankruptcy Court
                           in the Northern District of Ohio, Eastern Division.





                                       47
<PAGE>


                                   SIGNATURES

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

                               Republic Technologies International Holdings, LLC
                               -------------------------------------------------
                                                 (Registrant)

Date: March 29, 2002                            By: /s/ Joseph F. Lapinsky
                                                    ----------------------
                                                       Joseph F. Lapinsky
                                                       Chief Executive Officer,
                                                         President and Chief
                                                         Operating Officer

                                                By: /s/ Joseph A. Kaczka
                                                    --------------------
                                                       Joseph A. Kaczka
                                                       Vice President, Finance,
                                                           Controller and Chief
                                                           Accounting Officer

                                POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
Richard C. Lappin, Joseph F. Lapinsky and Robert Friedman, each acting alone,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments or supplements to this
report and to file the same with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 29, 2002.


/s/ Joseph F. Lapinsky                               /s/ Robert Friedman
----------------------                               -------------------
     Joseph F. Lapinsky, Chief Executive             Robert Friedman, Director
       Officer, President, Chief Operating
       Officer and Director                          /s/ David Blitzer
                                                     -------------------
                                                     David Blitzer, Director

/s/ Richard C. Lappin                                /s/ Lynn R. Williams
---------------------                                --------------------
    Richard C. Lappin, Chairman and Director         Lynn R. Williams, Director

                                                     /s/ John Connelly
                                                     -------------------
                                                     John Connelly, Director

/s/ Albert E. Ferrara, Jr.
--------------------------
     Albert E. Ferrara, Jr., Director




                                       48
<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
Republic Technologies International Holdings, LLC

We have audited the accompanying consolidated balance sheets of Republic
Technologies International Holdings, LLC and subsidiaries (Debtor-in-Possession)
(the "Company") as of December 31, 2001 and 2000, and the related consolidated
statements of operations, members' interest, and cash flows for the years ended
December 31, 2001 and 2000 and for the period from August 13, 1999 to December
31, 1999. We have also audited the combined statements of operations,
stockholders' deficit, and cash flows of the Predecessor, Bar Technologies Inc.
and Republic Engineered Steels, Inc. while under common ownership and common
management, for the period from January 1, 1999 to August 12, 1999. Our audits
also included the financial statement schedule for the years ended December 31,
2001, 2000 and 1999 listed in the Index at Item 14(a)(2). These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.

In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of the Company as of December 31,
2001 and 2000, and the consolidated results of its operations and its cash flows
for the years ended December 31, 2001 and 2000 and for the period from August
13, 1999 to December 31, 1999, and the combined results of operations and cash
flows of the Predecessor for the period from January 1, 1999 to August 12, 1999
in conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, such financial statement schedule for the
years ended December 31, 2001, 2000 and 1999, when considered in relation to the
basic consolidated/combined financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.

As discussed in Notes 1 and 2, the Company has filed for reorganization under
Chapter 11 of the Federal Bankruptcy Code. The accompanying consolidated
financial statements do not purport to reflect or provide for the consequences
of the bankruptcy proceedings. In particular, such consolidated financial
statements do not purport to show (a) as to assets, their realizable value on a
liquidation basis or their availability to satisfy liabilities; (b) as to
prepetition liabilities, the amounts that may be allowed for claims or
contingencies, or the status and priority thereof; (c) as to member accounts,
the effect of any changes that may be made in the capitalization of the Company;
or (d) as to operations, the effect of any changes that may be made in its
business.


                                       49

<PAGE>


The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1, the
Company's recurring losses and negative cash flows from operations, current
liabilities in excess of current assets, and negative members' interest raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 1. The accompanying
consolidated financial statements do not include adjustments relating to the
recovery and classification of asset carrying amounts or the amount and
classification of liabilities that might result from the outcome of this
uncertainty.





Cleveland, Ohio
March 28, 2002



                                       50
<PAGE>

       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (Debtor-In-Possession)
                 CONSOLIDATED/COMBINED STATEMENTS OF OPERATIONS
        For the Years Ended December 31, 2001 and 2000, and the Periods
            From August 13, 1999 to December 31, 1999 and January 1,
                             1999 to August 12, 1999
                            (In thousands of dollars)

<TABLE>
<CAPTION>
                                                                                                                    The Predecessor-
                                                                             The Company - Consolidated                 Combined
                                                                ------------------------------------------------    ----------------

                                                                                                   Period From       Period From
                                                                Year Ended        Year Ended      August 13, 1999   January 1, 1999
                                                                December 31,      December 31,    to December 31,    to August 12,
                                                                    2001             2000              1999              1999
                                                                ----------------- ------------    ---------------   ---------------

<S>                                                             <C>               <C>               <C>               <C>
Net sales                                                       $   993,707       $ 1,265,401       $   527,580       $   525,326

Cost of goods sold                                                  985,640         1,140,750           550,435           498,342
                                                                -----------       -----------       -----------       -----------

Gross profit (loss)                                                   8,067           124,651           (22,855)           26,984

Selling, general and administrative expense                          43,440            54,709            50,013            32,491

Monitoring fees (Note 14)                                             1,000             4,000             1,500             1,331

Depreciation and amortization expense                                56,846            61,475            20,492            21,889

Special charges:

   Workforce reduction charges (Note 11)                              7,983               753            35,180            42,065

   Restructuring charges (Note 19)                                    3,650            74,658                 -                 -

   Goodwill impairment charge (Note 20)                                   -            79,608                 -                 -

Loss (gain) on sale of assets                                        (1,782)           (4,790)                -                 -

Other (income) expense, net                                           6,927             6,678             7,233              (144)
                                                                -----------       -----------       -----------       -----------

Operating loss                                                     (109,997)         (152,440)         (137,273)          (70,648)

Interest expense, net (excludes contracted
 interest of $103,314 for the 12 months ended)                       56,052           117,495            45,317            43,845

Reorganinzation items - expense, net (Note 9)                        16,031                 -                 -                 -
                                                                -----------       -----------       -----------       -----------

Loss before income taxes                                           (182,080)         (269,935)         (182,590)         (114,493)

Provision for income taxes (Note 12)                                     18               468               434               420
                                                                -----------       -----------       -----------       -----------

Loss from continuing operations                                    (182,098)         (270,403)         (183,024)         (114,913)

Loss from disposition of discontinued operations (Note 17)              457            16,831             6,378                 -
                                                                -----------       -----------       -----------       -----------

Loss before extraordinary item                                     (182,555)         (287,234)         (189,402)         (114,913)

Extraordinary loss from early
   extinguishment of debt (Note 4)                                        -                 -            23,874                 -
                                                                -----------       -----------       -----------       -----------

Net loss                                                        $  (182,555)      $  (287,234)      $  (213,276)         (114,913)
                                                                ===========       ===========       ===========

Preferred stock dividends                                                                                                     224
                                                                                                                      -----------

Net loss applicable to common shares                                                                                  $  (115,137)
                                                                                                                      ===========
</TABLE>

The accompanying notes are an integral part of these statements.




                                       51
<PAGE>



       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (Debtor-In-Possession)
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2001 and 2000
                            (In thousands of dollars)



<TABLE>
<CAPTION>
                                                                   DECEMBER 31,      DECEMBER 31,
                                                                       2001              2000
                                                                   -----------       -----------
<S>                                                                <C>               <C>
ASSETS

Current assets:
        Cash and cash equivalents                                  $     5,745       $     1,795
        Accounts receivable, less allowances of $17,234 and
        $25,210, respectively                                          100,768           129,278
        Inventories (Note 5)                                           207,864           271,154
        Assets held for sale (Note 17)                                   9,013             9,306
        Prepaid expenses and other current assets                       14,139            11,389
                                                                   -----------       -----------

Total current assets                                                   337,529           422,922

Property, plant and equipment:
        Land and improvements                                           14,356            15,039
        Buildings and improvements                                      35,218            35,126
        Machinery and equipment                                        723,387           716,437
        Construction-in-progress                                         6,142            13,802
                                                                   -----------       -----------

Total property, plant and equipment                                    779,103           780,404

Accumulated depreciation                                              (153,774)         (102,492)
                                                                   -----------       -----------

Net property, plant and equipment                                      625,329           677,912

Assets held for sale (Note 17)                                           2,355             7,294

Intangible assets, net of accumulated amortization                      67,133            79,783
        of $24,453 and $15,842, respectively (Notes 6 and 20)

Other assets                                                            17,213             9,173
                                                                   -----------       -----------

Total assets                                                       $ 1,049,559       $ 1,197,084
                                                                   ===========       ===========
</TABLE>

The accompanying notes are an integral part of these statements.



                                       52
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
                            (IN THOUSANDS OF DOLLARS)



<TABLE>
<CAPTION>
                                                                 DECEMBER 31,      DECEMBER 31,
                                                                    2001              2000
                                                                 ------------      ------------
<S>                                                              <C>               <C>
LIABILITIES AND MEMBERS' INTEREST

Liabilities not subject to compromise:

     Current liabilities:
           Current maturities of long-term debt (Note 7)         $     3,600       $    11,318
           Revolving credit facility (Note 8)                        326,016           329,398
           Accounts payable                                           45,350           234,811
           Accrued interest                                            3,031            34,220
           Accrued compensation and benefits                          37,737            38,310
           Other postretirement benefits (Note 11)                         -            15,794
           Defined benefit pension obligations (Note 11)                   -            20,854
           Accrued environmental liabilities (Note 16)                   230             3,668
           Other accrued liabilities                                  38,530            63,127
                                                                 -----------       -----------
     Total current liabilities                                       454,494           751,500

     Long-term debt (Note 7)                                               -           502,254
     Other postretirement benefits (Note 11)                           3,398           217,620
     Defined benefit pension obligations (Note 11)                         -            69,089
     Accrued environmental liabilities (Note 16)                      16,311            15,933
     Other liabilities                                                 7,278            43,101
                                                                 -----------       -----------
     Total liabilities not subject to compromise                     481,481         1,599,497

Liabilities subject to compromise (Note 9)                         1,239,210                 -

                                                                 -----------       -----------
Total liabilities                                                  1,720,691         1,599,497
                                                                 -----------       -----------


     Manditory redeemable members' interest - Class A Units            3,700             3,800

     Members' interest:
           Class B Units                                            (618,715)         (435,689)
           Class C Units                                              32,500            32,125
           Accumulated other comprehensive loss                      (88,617)           (2,649)
                                                                 -----------       -----------
     Total members' interest                                        (674,832)         (406,213)
                                                                 -----------       -----------

     Total liabilities and members' interest                     $ 1,049,559       $ 1,197,084
                                                                 ===========       ===========
</TABLE>


     The accompanying notes are an integral part of these statements.




                                       53
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
   CONSOLIDATED/COMBINED STATEMENTS OF MEMBERS' INTEREST/STOCKHOLDERS' DEFICIT

 FOR THE PERIODS FROM JANUARY 1, 1999 TO AUGUST 12, 1999 AND AUGUST 13, 1999 TO
                               DECEMBER 31, 1999,
                 and the Years Ended December 31, 2000 and 2001
                            (In thousands of dollars)


<TABLE>
<CAPTION>
                                       Republic Technologies
                                            International                               Bar Technologies Inc.
                                            Holdings, LLC         -----------------------------------------------------------------
                                    -------------------------   Series B      Class A        Class B        Class C
                                      Class B       Class C    Preferred      Common         Common         Common       Warrants
                                       Units         Units       Stock        Stock           Stock          Stock     Outstanding
                                    ------------- ---------------------------------------------------------------------------------
<S>                                    <C>          <C>         <C>           <C>             <C>            <C>         <C>
Balance, January 1, 1999                                        $    -        $   -           $   1          $    1      $ 5,119
                                                             ----------------------------------------------------------------------
Net loss                                                             -            -               -               -            -
Other comprehensive income:
   Foreign currency translation
      adjustment                                                     -            -               -               -            -
   Minimum pension liability
      adjustment                                                     -            -               -               -            -
Preferred stock dividends                                            -            -               -               -            -
                                                             ----------------------------------------------------------------------
Balance, August 12, 1999                                             -            -               1               1        5,119
                                                             ----------------------------------------------------------------------
Exchange of members' interest to
   effect combination                   $ 67,468    $ 30,000         -            -              (1)             (1)      (5,119)
Accrual of preferred return                 (786)        625         -            -               -               -            -
Net loss                                (213,276)          -         -            -               -               -            -
Other comprehensive income:
   Foreign currency translation
      adjustment                               -           -         -            -               -               -            -
                                    -----------------------------------------------------------------------------------------------
Balance, December 31, 1999              (146,594)     30,625         -            -               -               -            -
                                    -----------------------------------------------------------------------------------------------
Accrual of preferred return               (1,861)      1,500         -            -               -               -            -
Net loss                                (287,234)          -         -            -               -               -            -
Other comprehensive income:
   Foreign currency translation
      adjustment                               -           -         -            -               -               -            -
   Minimum pension liability
      adjustment                               -           -         -            -               -               -            -
                                    -----------------------------------------------------------------------------------------------
Balance, December 31, 2000              (435,689)     32,125         -            -               -               -            -
                                    ===============================================================================================
Accrual of preferred return                 (471)        375         -            -               -               -            -
Net loss                                (182,555)          -         -            -               -               -            -
Other comprehensive income:
   Foreign currency translation
      adjustment                               -           -         -            -               -               -            -
   Minimum pension liability
      adjustment                               -           -         -            -               -               -            -
                                    -----------------------------------------------------------------------------------------------
Balance, December 31, 2001             $(618,715)   $ 32,500    $    -        $   -           $   -          $    -      $     -
                                    ===============================================================================================

<CAPTION>

                                     Republic                                                  Total
                                    Engineered                                Accumulated    Members'
                                    Steels, Inc.  Additional                     Other       Interest/
                                      Common       Paid-In   Accumulated     Comprehensive  Stockholders' Comprehensive
                                      Stock        Capital     Deficit       Income (Loss)    Deficit     Income (Loss)
                                   ---------------------------------------------------------------------- ------------
<S>               <C>               <C>           <C>         <C>              <C>           <C>           <C>
Balance, January 1, 1999            $       -     $ 158,510   $(230,004)       $ (3,682)     $ (70,055)    $ (116,746)
                                   --------------------------------------------------------------------    ===========
Net loss                                    -             -    (114,913)              -       (114,913)    $ (114,913)
Other comprehensive income:
   Foreign currency translation
      adjustment                            -             -           -             157            157            157
   Minimum pension liability
      adjustment                            -             -           -           2,491          2,491          2,491
Preferred stock dividends                   -             -        (224)              -           (224)
                                   --------------------------------------------------------------------  -------------
Balance, August 12, 1999                    -       158,510    (345,141)         (1,034)      (182,544)    $ (112,265)
                                   --------------------------------------------------------------------  =============
Exchange of members' interest to
   effect combination                       -      (158,510)    345,141               -        278,978
Accrual of preferred return                 -             -           -               -           (161)
Net loss                                    -             -           -               -       (213,276)    $ (213,276)
Other comprehensive income:
   Foreign currency translation
      adjustment                            -             -           -             361            361            361
                                   --------------------------------------------------------------------  -------------
Balance, December 31, 1999                  -             -           -            (673)      (116,642)    $ (212,915)
                                   --------------------------------------------------------------------  =============
Accrual of preferred return                 -             -           -               -           (361)
Net loss                                    -             -           -               -       (287,234)    $ (287,234)
Other comprehensive income:
   Foreign currency translation
      adjustment                            -             -           -            (383)          (383)          (383)
   Minimum pension liability
      adjustment                            -             -           -          (1,593)        (1,593)        (1,593)
                                   --------------------------------------------------------------------  -------------
Balance, December 31, 2000                  -             -           -          (2,649)      (406,213)      (289,210)
                                   ====================================================================  =============
Accrual of preferred return                 -             -           -               -            (96)
Net loss                                    -             -           -               -       (182,555)    $ (182,555)
Other comprehensive income:                                                                          -
   Foreign currency translation                                                                      -
      adjustment                            -             -           -            (861)          (861)          (861)
   Minimum pension liability
      adjustment                            -             -           -         (85,107)       (85,107)       (85,107)
                                   --------------------------------------------------------------------  -------------
Balance, December 31, 2001          $       -     $       -   $       -       $ (88,617)    $ (674,832)    $ (268,523)
                                   ====================================================================  =============
</TABLE>


The accompanying notes are an integral part of these statements.



                                       54
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (Debtor-In-Possession)
                 CONSOLIDATED/COMBINED STATEMENTS OF CASH FLOWS
       For the Years Ended December 31, 2001 and 2000, and the Periods
          From August 13, 1999 to December 31, 1999 and January 1, 1999
                               to August 12, 1999
                            (In thousands of dollars)

<TABLE>
<CAPTION>
                                                                                                                     The Predecessor
                                                                                  The Company - Consolidated             Combined
                                                                      --------------------------------------------    --------------

                                                                                                     Period From       Period From
                                                                      Year Ended      Year Ended    August 13, 1999  January 1, 1999
                                                                      December 31,    December 31,  to December 31,    to August 12,
                                                                          2001           2000            1999             1999
                                                                      ------------    ------------  ---------------    -------------

<S>                                                                    <C>             <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                           $(182,555)      $(287,234)      $(213,276)      $(114,913)
    Adjustments to reconcile net cash used
        in operating activities:
    Extraordinary loss from early extinguishment of debt (Note 4)              -               -          23,874               -
    Gain on sale of fixed assets                                          (1,782)         (4,790)              -               -
    Restructuring charges                                                  3,650          74,658               -               -
    Goodwill impairment charge                                                 -          79,608               -               -
    Depreciation and amortization                                         56,846          61,475          23,170          21,889
    Accretion of original issue discount                                     693           2,604             879           5,750
    Amortization of deferred financing cost                                5,352           4,114           4,138           1,483
    Reorganization items                                                  16,031               -               -               -
    Changes in operating assets and liabilities:
        (Increase) decrease in accounts receivable                        28,510          27,888          70,712         (61,295)
        (Increase) decrease in inventory                                  63,290          12,681          (6,744)         (6,645)
        (Increase) decrease in prepaid assets                             (2,750)         (3,482)         10,052          (3,237)
        Increase (decrease) in accounts payable                           29,699          38,761         (81,847)        111,959
        Increase (decrease) in accrued compensation and
            benefits                                                        (573)        (11,852)         (1,290)          2,774
        Increase (decrease) in defined benefit pension
            obligations                                                   24,829          (7,212)         10,294          (3,140)
        Increase (decrease) in other postretirement benefits              (2,754)         10,863          14,184          14,720
        Increase (decrease) in accrued environmental liabilities          (3,060)         (1,807)          1,489           1,805
        Increase (decrease) in other current liabilities                 (22,462)        (20,406)         17,408          (3,349)
     Other                                                                (5,092)         13,723         (11,893)        (23,228)
                                                                       ---------       ---------       ---------       ---------
NET CASH USED IN OPERATING ACTIVITIES                                      7,872         (10,408)       (138,850)        (55,427)
                                                                       ---------       ---------       ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                  (3,589)        (13,065)         (9,679)        (21,788)
    Disposition of property, plant and equipment                           5,913           9,009               -               -
    Acquisition, net of cash acquired                                          -               -          14,621               -
                                                                       ---------       ---------       ---------       ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                        2,324          (4,056)          4,942         (21,788)
                                                                       ---------       ---------       ---------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from long-term debt                                           2,000          30,000         419,950             387
    Net (payments)/proceeds under revolving credit facilities             (3,382)         (6,999)        272,025          80,816
    Repayments of long-term debt                                            (289)         (2,485)       (685,131)         (3,277)
    Preferred stock dividends                                                  -               -               -            (224)
    Redemption of class A members' interest                                 (100)         (1,700)              -               -
    Payment of preferred return                                              (73)           (450)              -               -
    Deferred financing costs                                              (3,541)         (6,361)        (30,274)              -
    Proceeds from capital contributions                                        -               -         155,025               -
                                                                       ---------       ---------       ---------       ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                 (5,385)         12,005         131,595          77,702
                                                                       ---------       ---------       ---------       ---------
Effect of exchange rate changes on cash                                     (861)           (383)            358             157

NET (DECREASE) INCREASE IN CASH AND CASH
    EQUIVALENTS                                                            3,950          (2,842)         (1,955)            644
Cash and cash equivalents - beginning of period                            1,795           4,637           6,592           5,948
                                                                       ---------       ---------       ---------       ---------
Cash and cash equivalents - end of period                              $   5,745       $   1,795       $   4,637       $   6,592
                                                                       =========       =========       =========       =========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                 $  58,000       $  95,964       $  26,329       $  41,224
                                                                       =========       =========       =========       =========
Cash paid for income taxes                                             $     619       $   1,075       $     128       $     156
                                                                       =========       =========       =========       =========
</TABLE>


The accompanying notes are an integral part of these statements.



                                       55
<PAGE>




                       REPUBLIC TECHNOLOGIES INTERNATIONAL
                         HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
               NOTES TO CONSOLIDATED/COMBINED FINANCIAL STATEMENTS
      FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000, AND THE PERIODS FROM
  AUGUST 13, 1999 TO DECEMBER 31, 1999 AND JANUARY 1, 1999 TO AUGUST 12, 1999
              (IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)


NOTE 1 - NATURE OF OPERATIONS, ORGANIZATION, AND OTHER RELATED INFORMATION
         INCLUDING PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

Republic Technologies International Holdings, LLC and subsidiaries ("Republic
Technologies" or the "Company") manufactures and markets special bar quality
("SBQ") steel products. SBQ steel products are high quality hot-rolled and
cold-finished carbon and alloy steel bars and rods used primarily in critical
applications in automotive and industrial equipment. The Company produces a wide
range of SBQ steel products and supplies a diverse customer base that includes
leading automobile and industrial equipment manufacturers and their first tier
suppliers.

The Company was formed in a combination completed on August 13, 1999 (the
"Combination"). The Combination was completed through a series of mergers, asset
transfers and related steps as set forth in a Master Restructuring Agreement
among Bar Technologies Inc. ("BarTech"), Republic Engineered Steels, Inc.
("Republic"), USS/Kobe Steel Company and various of their affiliates. Following
the Combination, Republic Technologies International, LLC, a newly formed legal
entity and a wholly owned subsidiary of the Company, directly or indirectly owns
and operates all of the assets of BarTech, Republic and USS/Kobe Steel Company's
SBQ steel products business ("USS/Kobe").

BarTech and Republic have been operated under common management and ownership
control since prior to the Combination. The consolidated financial statements of
Republic Technologies are being presented from the date of the Combination.
Comparative combined financial statements are being presented for BarTech and
Republic for the periods that they were under common control prior to the
Combination (the "Predecessor").

Republic has been under common management and control since September 8, 1998,
the date acquired. The acquisition of Republic has been accounted for as a
purchase. The combining of BarTech and Republic in the Combination is being
accounted for as a common control merger like a pooling of interests. The
acquisition of USS/Kobe as part of the Combination is being accounted for as a
purchase. See Note 4 for additional information related to the common control
combination of BarTech and Republic and information related to the acquisitions
of Republic and USS/Kobe.

The Company is in the process of exiting its Specialty Steel Division and
expects to complete the disposition during 2002 (see Note 17). The Company sold
certain assets from its Baltimore plant in January 2001 and is currently in the
process of selling the remaining real estate and assets of the Specialty Steel
Division. The Company is also attempting to sell real estate and equipment at
various locations throughout the organization, due to the other various facility
closings that have been announced.

On April 2, 2001 ("Petition Date"), Republic Technologies International, LLC,
and its immediate parent, Republic Technologies International Holdings, LLC, and
its subsidiaries, Bliss & Laughlin, LLC and RTI Capital Corp. (collectively,
"Debtors"), filed voluntary petitions for reorganization under Chapter 11
("Chapter 11") of the Federal Bankruptcy Code ("Bankruptcy Code") in the United
States Bankruptcy Court in the Northern District of Ohio, Eastern Division
("Court"). The Company's Canadian subsidiary, Canadian Drawn Steel Company,
Inc., and its subsidiary Nimishillen & Tuscarawas, LLC in the United States were
not included in the filing. The Company is managing its business subsequent to
the Petition Date as debtor-in-possession. The Debtors attributed the need to
reorganize to extremely difficult market conditions that have made it impossible
for them to meet their financial obligations. The industry-wide



                                       56
<PAGE>


market conditions, the Company's high level of indebtedness following the
Combination, and an overall softening of the U. S. economy had substantially
diminished the Company's liquidity, adversely impacted operations, and
undermined its ability to implement strategic business initiatives in the short
term.

As debtors-in-possession, the Debtors may not engage in transactions outside of
the ordinary course of business without approval, after hearing, of the
Bankruptcy Court. Under Chapter 11 proceedings, actions by creditors to collect
claims in existence at the filing date ("prepetition") are stayed ("deferred"),
absent specific Court authorization to pay such claims, while the Company
continues to manage the business as debtor-in-possession. The Company received
approval from the Court to pay or otherwise honor certain of its prepetition
obligations, including employee wages, certain employee benefits, and certain
critical vendors. The Court established October 31, 2001 as the bar date for all
persons, entities, and creditors to file proofs of claims against the Company.
The Company is currently reconciling the amount of the proofs of claims filed by
the creditors and has not recorded any additional liabilities as a result of
these claims. The Company also has many executory contracts and other agreements
that could be rejected during the Chapter 11 proceedings. When a contract or
agreement is rejected, the Company is relieved from their obligations to perform
further under the contract or agreement, but is subject to a claim for damages
for the breach thereof. The Company cannot presently determine or reasonably
estimate the ultimate liability that may result from rejecting contracts or
leases or from the filing of claims for any rejected contracts or leases, and no
provisions have yet been made for these items.

Under Chapter 11, the rights of and ultimate payments by the Company to
prepetition creditors and to equity investors may be substantially altered. This
could result in claims being liquidated in the Chapter 11 proceedings at less
(and possibly substantially less) than 100% of their face value and the equity
of the Company's equity investors being diluted or cancelled. The Company's
prepetition creditors and its equity investors will each have votes in the plan
of reorganization. The Company has not yet proposed a plan of reorganization.
Due to material uncertainties, it is not possible to determine the additional
amount of claims that may arise or ultimately be filed, or to predict the length
of time the Company will operate under the protection of Chapter 11, the outcome
of the Chapter 11 proceedings in general, whether the Company will continue to
operate under its current organizational structure, or the effect of the
proceedings on the business of the Company or its subsidiaries or on the
interests of the various creditors and security holders.

The Company has filed a motion with the Bankruptcy Court to extend the deadline
for filing its reorganization plan to June 28, 2002. The motion was heard on
March 20, 2002 with no objections, however the Company is awaiting the final
ruling from the Bankruptcy Court.

As a result of the Chapter 11 filings, Events of Default, as defined in the
related debt agreements, occurred during 2001 with respect to all of the
Company's secured and undersecured debt. As of the Petition Date, the secured
debt has been classified as a current liability and the undersecured and
unsecured debt has been classified as liabilities subject to compromise (see
Note 9).

On April 3, 2001, the Company entered into a Debtor-in-Possession Revolving
Credit Agreement ("DIP Credit Agreement") with Fleet Capital Corporation ("Fleet
Capital") and other lenders who are parties thereto to provide secured
debtor-in-possession financing to the Company. The maximum borrowings under the
DIP Credit Agreement were $420 million in the aggregate and included a
sub-facility of $50 million for the issuance of letters of credit. The proceeds
of the DIP Credit Agreement were used to repay the amounts outstanding under the
senior revolving credit facility entered into on August 13, 1999 and
restructured on July 17, 2000. The DIP Credit Agreement was amended twice during
2001, and most recently on January 11, 2002. See Note 8 for additional
information regarding the DIP Credit Agreement.

Although the Company has entered into the DIP Credit Agreement, the Company may
need to obtain additional financing to meet its cash flow requirements.
Restrictive covenants included in the debtor-in-possession credit facility and
oversight by the Bankruptcy Court limit the Company's ability to incur
additional indebtedness, or sell assets (most of which are pledged), and may
otherwise limit the operational and financial flexibility of the Company.


                                       57
<PAGE>


GOING CONCERN MATTERS - The accompanying consolidated/combined financial
statements have been prepared on a going concern basis of accounting and do not
reflect any adjustments that might result if the Company is unable to continue
as a going concern. The Company's recurring losses and negative cash flows from
operations, current liabilities in excess of current assets and negative
members' interest raise substantial doubt about the Company's ability to
continue as a going concern. Management intends to submit a plan for
reorganization to the Bankruptcy Court. The ability of the Company to continue
as a going concern and appropriateness of using the going concern accounting
basis is dependent upon, among other things, (i) the Company's ability to
comply with debtor-in-possession financing agreements, (ii) submission and
confirmation of a plan of reorganization under the Bankruptcy Code, (iii) the
Company's ability to achieve profitable operations after such confirmation, and
(iv) the Company's ability to generate sufficient cash from operations to meet
its obligations.

Management believes that a plan of reorganization, as it is being developed and
subject to approval of the Bankruptcy Court, and the debtor-in-possession
financing, along with cash provided by operations, will provide sufficient
liquidity to allow the Company to continue as a going concern; however, there
can be no assurance that the sources of liquidity will be available or
sufficient to meet the Company's needs. The consolidated financial statements do
not include any adjustments relating to recoverability and classification of
recorded asset amounts or the amount and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.

NOTE 2 - BASIS OF PRESENTATION AND
PRINCIPLES OF CONSOLIDATION

A plan of reorganization could materially change the amounts currently recorded
in the consolidated financial statements. The accompanying consolidated
financial statements for the periods after the Petition Date have been prepared
in accordance with the AICPA's Statement of Position 90-7, "Financial Reporting
by Entities In Reorganization Under the Bankruptcy Code" ("SOP 90-7"). The
consolidated financial statements are prepared on a going concern basis of
accounting and do not reflect any adjustments that might result if the Company
is unable to continue as a going concern. Accordingly, the consolidated
financial statements do not reflect adjustments or provide for the potential
consequences of the bankruptcy proceedings on the Company. In particular, the
consolidated financial statements do not purport to show (i) the realizable
value of assets on a liquidation basis or their availability to satisfy
liabilities; (ii) prepetition liability amounts that may be allowed for claims
or contingencies or the status and priority thereof; (iii) the effect of any
changes that may be made to the capitalization of the Company; or (iv) the
effect of any changes that may be made in the Company's business operations. The
outcome of these matters is not presently determinable.

On confirmation of a plan of reorganization, the Company will apply "Fresh Start
Accounting" in accordance with the guidelines for accounting for emergence from
bankruptcy. Under Fresh Start Accounting, a revaluation of Company assets to
reflect current values can be expected.

The accompanying consolidated/combined financial statements contain results for
BarTech and Republic for the years ended December 31, 2001, 2000 and 1999, and
the results for USS/Kobe for the years ended December 31, 2001, 2000 and the
period from August 13, 1999 to December 31, 1999.
 Prior period results are not comparable with the current periods due to the
acquisition of USS/Kobe on August 13, 1999.

The consolidated financial statements include the accounts of Republic
Technologies and its wholly owned subsidiaries. The combined financial
statements include the accounts of BarTech and its wholly owned subsidiaries and
Republic and its wholly owned subsidiaries for the periods that they were under
common control prior to the Combination. All significant intercompany balances
have been eliminated in consolidation.

The Company operates in three separate segments: hot-rolled, cold-finished and
specialty steels. In connection with the acquisition of Republic, the Company
determined its intent to sell the specialty steels segment of the business
("Specialty Steel Division"). The Company manages the reportable segments as
separate strategic business units. Differences between the segments include
manufacturing techniques and equipment, competition and end-users. The Company
sold certain assets from its Baltimore specialty steel


                                       58
<PAGE>


plant in January 2001 and is currently in the process of selling the remaining
real estate and assets of the Specialty Steel Division. The accompanying
consolidated/combined financial statements reflect the Specialty Steel Division
as a discontinued business in accordance with Accounting Principles Board
Opinion No. 30. See Note 17 for further information related to discontinued
operations.

The combination of USS/Kobe into Republic Technologies and the Republic
acquisition were accounted for as purchases as of their respective acquisition
dates. Under purchase accounting, the total purchase price of Republic has been
allocated to the assets acquired and liabilities assumed based on their
respective fair values as of September 8, 1998. The total purchase price of
USS/Kobe has been allocated to the assets acquired and liabilities assumed as of
August 13, 1999, based on their respective fair values, resulting in a reduction
in property, plant and equipment for the excess of the fair value of the net
assets of USS/Kobe over the purchase price (i.e., purchase discount). See Note 4
for further information related to business combinations.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS - The Company considers all short-term investments
with maturities at the date of purchase of three months or less to be cash
equivalents.

INVENTORIES - Inventories are carried at the lower of cost or market (net
realizable value). Cost is determined using the first-in, first-out (FIFO)
method.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost
and include improvements that significantly extend the useful lives of existing
plant and equipment. The Company provides for depreciation of property, plant
and equipment on the straight-line method based upon the estimated useful lives
of the assets. The range of estimated useful lives of the Company's assets are
as follows:

                  Buildings and improvements               20 - 40 years
                  Land improvements                        10 - 20 years
                  Machinery and equipment                   3 - 30 years

Repairs and maintenance costs are expensed as incurred. Capital expenditures
that cannot be put into use immediately are included in
construction-in-progress. As these projects are completed, they are transferred
to depreciable assets. Net gains or losses related to asset dispositions are
recognized in the Company's operating results in the period in which the
disposition occurs.

INTANGIBLE ASSETS - Intangible assets consist primarily of trademarks, patented
and unpatented technology, and other intangible assets arising from the
acquisitions of BarTech and Republic. Prior to the goodwill impairment charge
recorded during 2000 (see Note 20), goodwill was being amortized over the period
of expected benefit of 40 years. Other acquisition related intangible assets are
being amortized over the period of expected benefit ranging from 28 months to 40
years. Intangible assets also include deferred loan and bond fees. The deferred
loan fees related to the DIP Credit Agreement are being amortized using the
effective interest rate method over the life of the credit agreement. The
Company ceased amortizing the deferred loan and bond fees related to debt
reclassified as a liability subject to compromise at the Petition Date.

IMPAIRMENT OF LONG-LIVED ASSETS - Long-lived assets, consisting of property,
plant and equipment and intangible assets, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the recovery amount or fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.



                                       59
<PAGE>


INCOME TAXES - The Company is a limited liability company that is treated
similar to a partnership for U.S. federal and state income tax purposes and,
accordingly, has no income tax provision or deferred income tax assets or
liabilities related to these jurisdictions. Amounts for income taxes consist
primarily of a provision for foreign taxes relating to the Company's Canadian
subsidiary, Canadian Drawn Steel Company, Inc. ("CDSC"). Prior to the
Combination, the Predecessor accounted for income taxes pursuant to the asset
and liability method.

ENVIRONMENTAL COSTS - The Company and other steel companies have in recent years
become subject to increasingly stringent environmental laws and regulations. It
is the policy of the Company to endeavor to comply with applicable environmental
laws and regulations. The Company established a liability for an amount which
the Company believes is adequate, based on information currently available, to
cover costs of remedial actions it will likely be required to take to comply
with existing environmental laws and regulations.

The recorded amounts represent an estimate of the environmental remediation
costs associated with future events triggering or confirming the costs that, in
management's judgment, are likely to occur. This estimate is based on currently
available facts, existing technology, and presently enacted laws and
regulations, and it takes into consideration the likely effects of inflation and
other societal and economic factors. The precise timing of such events cannot be
reliably determined at this time due to absence of any deadlines for remediation
under the applicable environmental laws and regulations pursuant to which such
remediation costs will be expended. No claims for recovery are netted against
the stated amount.

MEMBERS' INTEREST - The Company has three classes of member interest units:
Class A, Class B and Class C. Class A units, which are mandatorily redeemable
and initially consisted of 1,100 units, have a stated value of $5,000 per unit
and carry a preferred return of $350 per unit, which is paid quarterly. Class B
units, consisting of 1,000 units, have no stated value and are allocated all net
income/loss after preferred returns have been allocated. Class C units,
consisting of 30,000 units have a stated value of $1,000 per unit and carry a
preferred return of 5% of stated value which is payable in kind or cash at the
Company's option. The accumulated and unpaid preferred return was $3.1 million
at the Petition Date, and $2.1 million and $0.6 million at December 31, 2000 and
1999, respectively. The Company ceased accruing preferred return at the Petition
Date. Both Class A and C units have distribution and dissolution preferences
ahead of Class B units. The mandatory redemption feature of the Class A units
causes it to be classified in the consolidated balance sheets outside of the
members' interest section. During 2001 and 2000, the Company redeemed $0.1
million and $1.7 million of Class A members' interest, respectively.

REVENUE RECOGNITION - The Company records revenues at the time the product is
shipped to its customers. Sales are made with no right of return. Reserves are
established for estimated returns and allowances when revenues are recognized.

FOREIGN CURRENCY TRANSLATION - Asset and liability accounts of the Company's
foreign subsidiary, CDSC, are translated into U. S. dollars using current
exchange rates in effect at the balance sheet date and for revenue and expense
accounts using a weighted average exchange rate during the period. Translation
adjustments are reflected as a component of members' interest/stockholders'
deficit.


Transaction gains and losses are included in the consolidated/combined
statements of operations as incurred. These amounts were not significant in all
periods presented.

USE OF ESTIMATES - The preparation of financial statements, in conformity with
accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

In preparation of the consolidated/combined financial statements included
herein, the Company uses estimates for, among others, defined benefit pension
obligations, other postretirement benefit obligations, environmental
remediation, shutdown reserves, liabilities subject to compromise, impairment of
long-lived


                                       60
<PAGE>


assets, and loss from disposition of discontinued operation, all of which are
significant to the consolidated/combined financial statements taken as a whole.
Changes in circumstances in the near term such as the outcome of the Chapter 11
proceedings in general, could have an impact on these estimates, and the change
in estimate could have a material effect on the consolidated/combined financial
statements.

NEW ACCOUNTING PRONOUNCEMENTS - The Financial Accounting Standards Board (the
"FASB") issued Statement of Financial Accounting Standards No. 133 - "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133") in June 1998,
and in June 2000, issued Statement of Financial Accounting Standards No. 138 -
"Accounting for Certain Derivative Instruments and Certain Hedging Activities an
amendment of FASB Statement No. 133", which will now be effective for financial
statements for all quarters of all years beginning after June 15, 2000. The
adoption of SFAS 133 as of January 1, 2001 did not have an effect on the
Company's results of operations or financial position.

In July 2001 the FASB issued SFAS No. 141 "Business Combinations" and SFAS No.
142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangibles separate from goodwill. The Company's recorded intangible assets
will have to be evaluated against this new criteria and may result in certain
intangible assets being reclassified into goodwill. SFAS No. 142 eliminates the
amortization of goodwill and certain intangible assets upon adoption and also
requires an initial goodwill impairment assessment in the year of adoption and
annual impairment tests thereafter. The provisions of each statement that apply
to goodwill and intangible assets acquired prior to July 1, 2001 will be
adopted by the Company on January 1, 2002. Management expects the adoption of
these accounting standards will result in certain intangible assets being
reclassified to goodwill and nonamortizing intangible asset amounting to $10.9
million categories, which will have the impact of reducing amortization expense
annually by $1.6 million, impairment reviews may result in future write-downs.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", that requires recognition of the fair value of liabilities
associated with the retirement of long-lived assets when a legal obligation to
incur such costs arises as a result of the acquisition, construction,
development and/or the normal operation of a long-lived asset. Upon recognition
of the liability, a corresponding asset is recorded and depreciated over the
remaining life of the long-lived asset. The Statement defines a legal obligation
as one that a party is required to settle as a result of an existing or enacted
law, statute, ordinance, or written or oral contract or by legal construction of
a contract under the doctrine of promissory estoppel. SFAS No. 143 is effective
for fiscal years beginning after December 15, 2002. The Company has not
completed its evaluation of the impact, if any, of SFAS No. 143 on its financial
statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment or
Disposals of Long-Lived Assets". This statement establishes a single accounting
model for long-lived assets to be disposed of by sale and provides additional
implementation guidance for assets to be held and used and assets to be
disposed of other than by sale. This statement will become effective for the
Company on January 1, 2002, but early adoption is permitted. The Company has
not completed its evaluation of the impact, if any, of SFAS No. 144 on its
financial statements.

RECLASSIFICATIONS - Certain reclassifications have been made to prior period
financial statements to conform to current period presentation.

NOTE 4 - BUSINESS COMBINATION

On August 13, 1999, the Combination of BarTech, Republic and USS/Kobe was
completed. The Combination occurred through a series of mergers, asset transfers
and related steps that resulted in the formation of the Company. Assuming
exercise of outstanding warrants and conversion of outstanding convertible
preferred stock of the Company's parent and exchange of Members' Interests by
USX Corporation ("USX") and Kobe Steel, Ltd. ("Kobe"), Blackstone Capital
Partners II Merchant Banking Fund L.P. and its affiliates (together,
"Blackstone") indirectly owns approximately 52.15 percent and Veritas Capital
Fund, L.P. and its affiliates (together, "Veritas") indirectly owns
approximately 15.80 percent of the combined operations, while USX indirectly
owns approximately 17.18 percent and Kobe


                                       61
<PAGE>


indirectly owns approximately 4.00 percent of the combined operations. In
conjunction with the Combination, the Company entered into a new credit facility
and applied proceeds from borrowings under this new credit facility, together
with proceeds of an offering of the senior secured notes and warrants, including
warrants sold separately from the senior secured notes concurrent with the
Combination, and new equity contributions, to refinance a substantial portion of
the indebtedness of Republic, RES Holding (Republic's parent), BarTech and
USS/Kobe.

Combined and separate results of BarTech and Republic during the period
presented preceding the Combination, while under common control, was as follows:

<TABLE>
<CAPTION>
                                      BarTech         Republic        Combined
                                   -------------  --------------     -----------
<S>                                   <C>             <C>              <C>
Period from January 1, 1999 to
  August 12, 1999:
    Net sales                         $157,523        $367,803         $525,326
    Net loss                           (25,279)        (89,634)        (114,913)
</TABLE>

The amount of intercompany profit in inventory at August 12, 1999 is not
significant.

In connection with the combination of BarTech and Republic, the Company recorded
one-time charges for investment banking and professional fees in the period from
August 13, 1999 to December 31, 1999 of approximately $7.9 million. The
transaction costs related to the acquisition of USS/Kobe are included in the
purchase price.

The Company also recorded an extraordinary loss for call and tender offer
premiums, prepayment penalties and write-off of unamortized deferred financing
costs associated with the retirement of various borrowings of BarTech and
Republic refinanced in connection with the Combination during the period from
August 13, 1999 to December 31, 1999 of $23.9 million.

The acquisition of USS/Kobe has been accounted for using the purchase method
of accounting. The purchase price for USS/Kobe totaled approximately $102.7
million, including transaction costs and net of cash acquired of $14.6 million.
Consideration in the transaction included equity to the sellers valued at
approximately $83.8 million and seller debt assumed of $23.8 million. Under
purchase accounting, the total purchase cost is allocated to the assets
acquired and liabilities assumed of USS/Kobe based on their respective fair
values as of August 12, 1999. The excess of the fair value of the net assets of
USS/Kobe over the purchase price (i.e., purchase discount) of $0.9 million was
recorded as a reduction of property, plant and equipment.


                                       62
<PAGE>


The respective purchase price was allocated to the assets purchased and
liabilities assumed based upon the fair values on the date of the acquisition as
follows:

<TABLE>
<CAPTION>
                                                                                                   USS/Kobe
                                                                                              -----------------
<S>                                                                                             <C>
Purchase price:
  Cash consideration
  Fair value of equity consideration                                                            $    83,756
  Additional seller debt assumed                                                                     23,844
  Acquisition fees and expenses                                                                       9,764
                                                                                              ----------------
          Total purchase price                                                                      117,364
  Book value of net assets acquired                                                                 206,859
                                                                                              ----------------
  Excess purchase price over (discount from) book value
    of net assets acquired                                                                          (89,495)

Allocation of purchase price:
  Increase in inventory                                                                              (3,290)
  Decrease in prepaids and other current assets                                                       1,077
  (Increase) decrease in property, plant and equipment                                                7,783
  (Increase) decrease in intangible and other assets                                                  2,475
  Decrease in deferred tax asset                                                                         --
  Decrease in accounts payable                                                                         (217)
  Increase in accrued expenses                                                                        8,388
  Increase in defined benefit pension obligation                                                     26,247
  (Decrease) increase in other postretirement benefits                                               47,032
  Other, net                                                                                             --
                                                                                              ----------------
Goodwill                                                                                        $        --
                                                                                              ================
</TABLE>


The following pro forma information presents the consolidated results of
operations assuming the Combination was completed as of the beginning of January
1999:

<TABLE>
<CAPTION>
                                                         Year Ended
                                                        December 31,
     (in millions)                                          1999
                                                        ------------


<S>                                                       <C>
     Net sales                                            $1,327.7
     Cost of goods sold (including freight expense
         of $20.1                                          1,323.0
                                                          --------
     Gross profit                                              4.7

     Selling, general and administrative
        expense                                               95.1

     Depreciation and amortization expense                    64.2

     Workforce reduction charges                              77.2

     Other (income) loss, net                                  7.7
                                                          --------
     Operating loss                                         (239.5)

     Interest expense, net                                   102.4

     Provision for income taxes                                 --
                                                          --------
     Net loss from continuing operations                  $ (341.9)
                                                          ========
</TABLE>


                                       63
<PAGE>



NOTE 5 - INVENTORIES

The components of inventories are as follows:

<TABLE>
<CAPTION>
                                                      December 31, 2001     December 31, 2000
                                                      -----------------     -----------------

<S>                                                        <C>                  <C>
Raw materials                                              $ 11,352             $ 21,583

Semi-finished and finished goods                            196,512              249,571
                                                        -----------          -----------

Total                                                      $207,864             $271,154
                                                        ===========          ===========
</TABLE>

At December 31, 2001 and 2000, inventories are net of market reserves and
obsolescence reserves aggregating $10.1 million and $6.7 million, respectively.

NOTE 6 - INTANGIBLE ASSETS

Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                                              December 31, 2001      December 31, 2000
                                                                              -----------------      -----------------


<S>                                                                               <C>                   <C>
Patented and unpatented technology, net of accumulated
     amortization of $7,499 and $5,879                                            $   31,401            $   33,021

Assembled workforce, net of accumulated amortization of
     $5,467 and $3,827                                                                10,933                12,573

Deferred loan and bond fees, net of accumulated amortization
     of $11,487 and $6,136                                                            24,799                34,189
                                                                             ---------------        --------------
Total                                                                             $   67,133            $   79,783
                                                                             ===============        ==============
</TABLE>


                                       64
<PAGE>


NOTE 7 - LONG-TERM DEBT

Long-term debt of the Company consists of the following:

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,     DECEMBER 31,
                                                                                      2001             2000
                                                                                  -------------    -------------
<S>                                                                                 <C>             <C>
SECURED DEBT

FORMER BAR TECH:
   Industrial Revenue Bond ("IRB"), interest rate is variable, calculated
      weekly, representing minimum rate required to sell bonds in a
            secondary market, due December 1, 2018                                  $   3,600       $   3,600

UNDERSECURED AND UNSECURED DEBT

REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC:
   13 3/4% Senior Secured Notes, due July 15, 2009
                                                                                      425,000         425,000
   Johnstown Enterprise Grant, interest rate at 3%, due on various dates
       through November 15, 2009                                                          381             391
    Financial Restructuring Notes, interest rate at 9.5%, due August 1, 2010
                                                                                       30,000          30,000
    Ohio Development Loan, interest rate at 3%, due December 1, 2003                    2,000              --
FORMER REPUBLIC:
   9% Solid Waste Revenue Bonds, Series 1996, due June 1, 2021
                                                                                       53,700          53,700
   8 1/4% Solid Waste Revenue Bonds, Series 1994, due October 1, 2014
                                                                                       20,200          20,200
FORMER BARTECH:
   Business Infrastructure Development ( "BID ") Program, interest rate at
      3.0%, due on various dates through April 1, 2001                                  2,049           2,091
   Economic Development Partnership ( "EDP I "), interest rate at 3.0%, due
    on various dates through October 1, 2009                                            5,048           5,182
   Economic Development Partnership ( "EDP II "), interest rate at 3.0%,
      due on various dates through July 1, 2010                                         1,163           1,191
   Economic Development Partnership ( "EDP III "), interest rate at 3.0%,
      due on various dates through October 1, 2010                                      2,691           2,753
   Community Development Block Grant Program ("CDBG"), interest rate
      at 3.0%, due on various dates through July 1, 2010                                  556             569
   Housing and Urban Development 108 ( "HUD ") Bonds, interest rates
      between 6.6% and 8.2%, due on various dates through September 26, 2003            3,150           3,150
FORMER USS/KOBE:
   Environmental Bonds:
     1984 Series, interest due monthly at a variable rate based on the average
        of thirty-day yield evaluations at par of not less than twenty issuers
          of tax-exempt securities, principal due December 1, 2001                      9,000           9,000
     1995 Series, variable rate tax-exempt securities, principal due November
        16, 2015                                                                        4,745           4,745
                                                                                    ---------       ---------
                                                                                      563,283         561,572
Original issue discount                                                               (47,306)        (48,000)
Amounts classified as current                                                          (3,600)        (11,318)
Amounts classified as subject to compromise                                          (512,377)             --
                                                                                    ---------       ---------
Long-term debt                                                                      $      --       $ 502,254
                                                                                    =========       =========
</TABLE>


As discussed in Note 1, on April 2, 2001, Republic Technologies International,
LLC and its immediate parent, Republic Technologies International Holdings, LLC,
and its subsidiaries, Bliss & Laughlin, LLC and RTI Capital Corp., filed
voluntary petitions for reorganization under Chapter 11 of the Federal
Bankruptcy Code in the United States Bankruptcy Court in the Northern District
of Ohio, Eastern Division.


                                       65
<PAGE>


The Debtors' filing for protection under Chapter 11 represents an Event of
Default under each of its debt instruments. As a result, all secured debt (the
Development Authority of Cartersville, Georgia industrial revenue bond and the
DIP credit facility - see Note 8) has been classified as current at December 31,
2001, while all undersecured and unsecured debt has been classified as
liabilities subject to compromise. The following description of historical debt
is presented without regard to the current status in the bankruptcy proceedings.
Due to the Chapter 11 filings, the Company is no longer permitted to make
scheduled principal and interest payments on undersecured and unsecured debt nor
is it required to maintain the financial ratios and covenants set forth in the
Company's debt instruments.

13 3/4% SENIOR SECURED NOTES
On August 13, 1999, Republic Technologies International, LLC and its subsidiary,
Republic Technologies Capital Corp., co-issued senior secured obligations
amounting to $425 million aggregate principal amount maturing on July 15, 2009
("Senior Secured Notes") in a private offering. Interest on the Senior Secured
Notes is payable semi-annually on each January 15 and July 15, commencing
January 15, 2000, to the holders of record of Senior Secured Notes at the close
of business on January 1 and July 1 immediately preceding such interest payment
date.

The Senior Secured Notes are redeemable, in whole or in part, at the option of
the issuers, at any time on or after July 15, 2004, at the redemption prices,
which are expressed as percentages of principal amount, set forth below, plus
accrued and unpaid interest and liquidated damages, if any, to the redemption
date, if redeemed during the 12-month period beginning on the years indicated
below:

YEAR
                                                                     PERCENTAGE
2004                                                                 106.875%
2005                                                                 105.156%
2006                                                                 103.438%
2007                                                                 101.719%
2008 and thereafter                                                  100.000%

In addition, at any time and from time to time prior to July 15, 2002, the
issuers may, at their option, following one or more Public Equity Offerings (as
defined in the indenture related to the Senior Secured Notes (the "Indenture"))
redeem up to an aggregate of 35% of the principal amount of notes originally
issued from the holders, on a pro rata basis, at a redemption price equal to
113.750% of the principal amount thereof, plus accrued and unpaid interest and
liquidated damages, if any, to the date of redemption; provided at least 65%
aggregate principal amount of Senior Secured Notes would remain outstanding
immediately after giving effect to any such redemption; provided, further, that
if the Public Equity Offering is by Republic Technologies International, LLC,
the Company or any other direct or indirect parent company of the Company, the
net proceeds thereof shall have been contributed to Republic Technologies
International, LLC or used to buy Capital Stock (other than Disqualified Capital
Stock) (as such terms are defined in the Indenture) of Republic Technologies
International, LLC on or prior to the date of redemption.

The Senior Secured Notes are initially secured by, subject to exceptions and
limitations, (1) a first priority lien on, and security interest in,
substantially all of the real and personal properties of the Company and its
restricted subsidiaries, other than real and personal property located at the
Canton Ohio Caster and Continuing Rolling Facility ("Canton CR") and
Cartersville, Georgia facilities and inventory, accounts receivable,
intellectual property and related assets and (2) a first priority lien, shared
on an equal and ratable basis with the lenders of Republic Technologies
International, LLC's credit facility, on Republic Technologies' equity interests
and its restricted subsidiaries. Collateral is subject to release without
substitution under a number of circumstances. The Senior Secured Notes contain
affirmative and negative covenants including provisions for restrictions on
additional borrowings, certain investments, certain payments, sale or
disposition of assets, payment of dividends and change of control provisions.

The Senior Secured Notes are fully and unconditionally guaranteed on a senior
basis, jointly and severally, by the Company and by all of Republic Technologies
International, LLC's subsidiaries, except for



                                       66
<PAGE>


Republic Technologies Capital Corp., a co-issuer of the securities, and Oberlin
Insurance Company ("OIC"). The Company has no assets other than its investment
in Republic Technologies International, LLC. Separate condensed consolidating
financial information of the guarantor subsidiaries and non-guarantor
subsidiaries is not presented as the non-issuer, non-guarantor subsidiary
represents less than one percent of the Company's assets and revenues and the
Company believes that such information is not material to investors.

As a result of the Chapter 11 filings, the principal amount of this debt
instrument is classified as a liability subject to compromise at December 31,
2001. The Company has not accrued interest on this note since the date of the
filings.


Financial Restructuring Notes
-----------------------------
In connection with a financial restructuring on July 17, 2000, several equity
partners made loans of $30 million in aggregate principal amount to Republic
Technologies International, LLC. In exchange for these loans, the lenders
received notes of $30 million aggregate principal amount and warrants to
purchase an aggregate of 15 million shares of Class D common stock of Republic
Technologies International, Inc., at par value of $0.001 per share. These notes
mature on August 1, 2010, and may be prepaid in certain instances and must be
prepaid upon a change of control of the Company. The interest rate on the notes
is 9.5% and is payable in arrears on each February 1 and August 1 commencing on
August 1, 2006 or earlier if the lenders consent. The notes are secured by a
second mortgage on the Canton CR facility.

As a result of the Chapter 11 filings, the principal amount of this debt
instrument is classified as a liability subject to compromise at December 31,
2001. The Company has not accrued interest on this note since the date of the
filings.


Ohio Development Loan
---------------------
In January 2001, Republic obtained a $2.0 million loan through the Director of
Development of the State of Ohio. The loan bears interest at 3% and is due
December 1, 2003.

As a result of the Chapter 11 filings, the principal amount of this debt
instrument is classified as a liability subject to compromise at December 31,
2001. The Company has not accrued interest on this note since the date of the
filings.

FORMER REPUBLIC LOAN AGREEMENTS
On June 1, 1996, Republic obtained $53.7 million of financing through the
issuance of 9% Solid Waste Revenue Bonds, Series 1996, due June 1, 2021 in
connection with the solid waste disposal facilities installed at its Canton
facility. These bonds were issued in addition to the Solid Waste Revenue Bonds,
Series 1994 noted below, to assist in financing the facilities. As of December
31, 2001 and 2000, Republic had available $2.8 thousand and $344.0 thousand,
respectively, of the $53.7 million which is classified as long-term restricted
cash in the accompanying consolidated/combined balance sheets.

On October 28, 1994, Republic obtained $20.2 million of financing through the
issuance of 8 1/4% Solid Waste Revenue Bonds, Series 1994, due October 1, 2014
in connection with the solid waste disposal facilities installed at the Canton
facility.

As a result of the Chapter 11 filings, the principal amount of these debt
instruments are classified as liabilities subject to compromise at December 31,
2001. The Company has not accrued interest on these notes since the date of the
filings.


FORMER BARTECH ECONOMIC DEVELOPMENT FINANCING
In connection with the acquisition of the assets of The Bethlehem Steel Company
("Bethlehem") Bar, Rod and Wire Division and its original modernization and
expansion plan, BarTech entered into loan agreements with lenders in
Pennsylvania to procure a portion of the financing for the transaction.


                                       67
<PAGE>


Pennsylvania Debt
-----------------
BarTech entered into the Master Agreement with the Commonwealth of Pennsylvania
and various of its agencies (collectively, the "Commonwealth") on July 18, 1994.
Pursuant to the Master Agreement, BarTech entered into loan agreements with the
Commonwealth, through its Department of Commerce and Department of Community
Affairs. The total amount committed to BarTech by the Commonwealth pursuant to
the Master Agreement was $33.0 million. The remaining loans related to this
agreement have been made by the Business Infrastructure Development Program
("BID"), the Economic Development Partnership ("EDP") and the Community
Development Block Grant Program ("CDBG").

During 2000, the Company shutdown its Johnstown, Pennsylvania plant that was
financed with the Pennsylvania debt. Following the facility closure, the City of
Johnstown (the "City") and the County of Cambria (the "County") filed lawsuits
indicating that the plant shutdown was an event of default under the original
promissory notes with the City and County. At the time of the Combination in
August 1999, the plaintiffs agreed to subordinate their liens to the first lien
provided to the trustee on behalf of the Senior Secured Notes as set forth in
the Intercreditor Agreement. The Intercreditor Agreement prohibits the
plaintiffs from taking any action to foreclose upon or execute on the collateral
securing the debt. As a result of the Company's Chapter 11 filing, the cases
against the debtors have been stayed.

As of December 31, 2001 and 2000, $11.5 million and $11.8 million, respectively,
in aggregate principal amount of Commonwealth Loans were outstanding.

As a result of the Chapter 11 filings, the principal amount of these debt
instruments are classified as liabilities subject to compromise at December 31,
2001. The Company has not accrued interest on these notes since the date of the
filings.

Industrial Revenue Bonds
------------------------
In December 1988, the Development Authority of Cartersville, Georgia issued $3.6
million in aggregate principal amount of its tax exempt industrial revenue
bonds, or "IRBs," the proceeds of which were loaned to BarTech's Bliss &
Laughlin subsidiary and used to partially fund the construction and equipping of
Bliss & Laughlin's Cartersville, Georgia facility. The Cartersville IRBs bear
interest at a rate equal to the minimum rate of interest which, in the opinion
of the remarketing agent for the Cartersville IRBs, would be necessary to sell
Cartersville IRBs in the secondary market. The interest rate paid on the
Cartersville IRBs averaged 2.84% during calendar year 2001 and was 1.65% at
December 31, 2001. Principal payments of $300 thousand are due on the
Cartersville IRBs on each December 1 beginning in 2009 and continuing through
2012. Thereafter, payments of $400 thousand are due on each December 1 until the
final payment on December 1, 2018. The Cartersville IRBs are secured by Bliss &
Laughlin's Cartersville, Georgia facility and the equipment located at the
facility. As of December 31, 2001 and 2000, $3.6 million of indebtedness was
outstanding under the Cartersville IRBs.

The Chase Manhattan Bank ("Chase") has issued an irrevocable transferable letter
of credit to secure payment of the principal of, interest on and the purchase
price of the Cartersville IRBs, in a stated amount equal to the principal on the
Cartersville IRBs, plus an amount equal to 210 days of interest on the
Cartersville IRBs at a rate of 12% per year. Draws on the letter of credit are
secured by a first priority lien on bonds purchased as a result of the draw
pursuant to the terms of the reimbursement agreement and a pledge and security
agreement entered into between Bliss & Laughlin and Chase.

As a result of the Chapter 11 filings, the principal amount of this debt
instrument is classified as current maturities of long-term debt at December 31,
2001. The Company has continued to pay and accrue interest on this note since
the date of the filings.


                                       68
<PAGE>


USS/KOBE ENVIRONMENTAL BONDS

1984 EIRBs
----------
In December 1984, the Ohio Water Development Authority issued $9.0 million in
aggregate principal amount of tax exempt variable rate demand environmental
improvement revenue bonds, or "1984 EIRBs," the proceeds of which were loaned to
USX and used to finance the cost of pollution control equipment at the Lorain,
Ohio facility, which was contributed by USX to USS/Kobe Steel Company in 1989.
The 1984 EIRBs are special obligations of the State of Ohio exempt from various
forms of federal, state and local income taxation and are therefore subject to
mandatory redemption upon the occurrence of a determination of taxability, and
are further subject to optional and mandatory redemption and tender prior to
maturity pursuant to the terms of the trust indenture agreement concerning the
1984 EIRBs.

The 1984 EIRBs were to mature on December 1, 2001. As of December 31, 2001 and
2000, $9.0 million of indebtedness was outstanding under the 1984 EIRBs.

In connection with the consummation of the Combination, Republic Technologies
International, LLC agreed to pay the debt service on the 1984 EIRBs, including
remarketing fees and amounts due under a letter of credit between USX and a
bank.

As a result of the Chapter 11 filings, the principal amount of this debt
instrument is classified as liabilities subject to compromise at December 31,
2001. The Company has not accrued interest on this note since the date of the
filings. The principle payment that would have been due in December 2001 was not
made as a result of the Chapter 11 filings.

1995 EIRBs
----------
In November 1995, the Ohio Air Quality Development Authority issued $10.2
million of its tax exempt variable rate environmental improvement revenue bonds,
or "1995 EIRBs," the proceeds of which were loaned to USX for the purpose, in
part, of refinancing its outstanding $4.7 million Ohio Air Quality Development
Authority Floating Rate Environmental Improvement Revenue Bonds, Series B. These
Series B bonds had been issued in 1980 to finance the cost of pollution control
equipment at the Lorain facility. The 1995 EIRBs are special obligations of the
State of Ohio exempt from various forms of federal, state and local income
taxation and are therefore subject to mandatory redemption upon the occurrence
of a determination of taxability, and are further subject to optional and
mandatory redemption and tender prior to maturity pursuant to the terms of the
trust indenture agreement concerning the 1995 EIRBs.

The 1995 EIRBs mature on November 1, 2015. As of December 31, 2001 and 2000,
$4.7 million of indebtedness was outstanding under the 1995 EIRBs.

In connection with the consummation of the Combination, Republic Technologies
International, LLC agreed to pay 46.7% of the debt service on the 1995 EIRBs,
including 46.7% of the remarketing fees and amounts due under a letter of credit
between USX and a bank. The Company may need to make payments in respect of the
1995 EIRBs earlier than scheduled if USX terminates the letter of credit or
otherwise makes early payment in respect of the 1995 EIRBs.

As a result of the Chapter 11 filings, the principal amount of this debt
instrument is classified as liabilities subject to compromise at December 31,
2001. The Company has not accrued interest on this note since the date of the
filings.

NOTE 8 - REVOLVING CREDIT FACILITIES

On April 3, 2001, the Company entered into a Debtor-in-Possession Revolving
Credit Agreement ("DIP Credit Agreement") with Fleet Capital Corporation ("Fleet
Capital") and other lenders who are parties thereto to provide secured
debtor-in-possession financing to the Company through December 15, 2002. The
maximum borrowings under the DIP Credit Agreement initially were $420 million in
the aggregate and included a sub-facility of $50 million for the issuance of
letters of credit. The proceeds of the DIP



                                       69
<PAGE>


Credit Agreement were used to repay the amounts outstanding under the senior
revolving credit facility entered into on August 13, 1999 and restructured on
July 17, 2000. Advances under the DIP Credit Agreement bear interest at a base
rate used by Fleet Capital, plus the applicable margin; or a Eurodollar rate on
deposits for a given period, plus the applicable margin. The applicable margin
on base rate loans is 1.5% and on Eurodollar loans is 3.5%. The applicable
margin on base rate and Eurodollar loans may be increased by 2% under specified
circumstances. A borrowing base limits the amount available at any time. There
were $326.0 million of borrowings under the DIP Credit Agreement outstanding at
December 31, 2001. The weighted average interest rate for the year 2001 was
8.1%. Amounts available under the DIP Credit Agreement at March 22, 2002 and
December 31, 2001 were approximately $12.8 million and $7.3 million,
respectively.

The DIP Credit Agreement grants a security interest in accounts receivable,
inventory, intellectual property and related assets of the Company, and the real
estate and fixed assets comprising the Canton CR, including the related melt
shop. The DIP Credit Agreement also contains certain restrictive covenants
which, among other things, restrict the Company's ability to incur additional
indebtedness or guarantee the obligations of others, change its line of
business, merge, consolidate and acquire or sell assets or stock, pay dividends,
or prepay or amend the notes or any of its subordinated indebtedness. The
Company is also required to maintain minimum cumulative EBITDA, as defined, in
the DIP Credit Agreement and limit its net capital expenditures.

The Company violated the minimum cumulative EBITDA, as defined, covenant in the
DIP Credit Agreement during 2001. On September 28, 2001, the Company was granted
an amendment and limited waiver. The amendment further limited maximum
borrowings, and a weekly minimum liquidity covenant was added.

During November, the Company notified the lenders that they were in violation of
the weekly minimum liquidity covenant. On November 30, 2001, the Company entered
into a forbearance agreement with the lenders under an amendment to the DIP
Credit Agreement. The forbearance agreement restricted the lenders ability to
exercise their remedies under the DIP Credit Agreement for certain defaults
through January 11, 2002. As a result of this amendment, the Company was granted
temporary increases in maximum borrowing limits, amendments to the minimum
liquidity amount and weekly liquidity covenants, and a 2% interest penalty
applied to all borrowings.

On January 11, 2002, the Company continued to be in default of the minimum
cumulative EBITDA, as defined, covenant, and the minimum liquidity covenants.
Accordingly, the Company entered into a second forbearance agreement with the
lenders under a third amendment to the DIP Credit Agreement. The second
forbearance agreement restricts the lenders ability to exercise their remedies
under the DIP Credit Agreement for certain defaults through May 31, 2002. As a
result of this amendment, the Company was granted temporary increases in maximum
borrowing limits, an amendment to the minimum liquidity covenant, a new minimum
sales covenant, and continuation of the 2% interest penalty applied to all
borrowings. Current maximum borrowings under the DIP Credit Agreement are as
follows: $340 million from January 11, 2002 to January 31, 2002; $345 million
from February 1, 2002 to March 28, 2002; $342.5 million from March 29, 2002 to
April 30, 2002; and $337 million thereafter.

In connection with the Combination, Republic Technologies International, LLC
entered into a senior revolving credit facility ("Revolver") with Fleet Capital
Bank (formerly known as BankBoston, N.A.), as administrative agent, and other
lenders. The Revolver was for a total principal amount of up to $425.0 million
and secured by accounts receivable, inventory, intellectual property and related
assets of the Company, and the real estate and fixed assets comprising, and the
intellectual property relating to, the Canton CR, including the related melt
shop. The amount available at any time was limited by a borrowing base. The
borrowing base equaled 60% of eligible inventory subject to a maximum; plus 85%
of eligible accounts receivable; plus the lesser of (a) 67% of the appraised
liquidation in place value of the Canton CR facility plus the appraised value of
the related property in Canton, Ohio, provided that no downward adjustment based
on any revaluation was made prior to March 31, 2001 and, (b) $125.0 million,
minus the product of $4.5 million and the number of quarters elapsed beginning
with the quarter ended December 31,



                                       70
<PAGE>

2000; minus a reserve of between $35.0 million and $50.0 million, which was to
be adjusted based on the amount of undrawn available amounts under the facility.

On July 17, 2000 the Revolver was restructured to permit the new subordinated
debt mentioned in Note 7, as follows:

     a.  The cap on the amount to be borrowed against the Canton CR facility was
         reduced from $125.0 million to $92.0 million, with the reduction in the
         eligible fixed asset cap being deferred until the first quarter of
         2002, with subsequent decreases of $7.5 million per quarter until July
         2004;

     b.  The commitment cap was reduced from $425.0 million to $395.0 million,
         with subsequent reductions through January 1, 2002;

     c.  The reserve of $50.0 million was eliminated;

     d.  A minimum liquidity requirement of $3.0 million was established;

     e.  Minimum EBITDA requirements were established through June 2004;

     f.  The acquisition of off-balance sheet financing for the new four stand
         mill ("4 - Project") and large bar finishing/inspection equipment and
         certain other projects was permitted; and

     g.  Capital expenditure caps were revised for fiscal years 2000 through
         2004.

There were $329.4 million of borrowings under the Revolver outstanding at
December 31, 2000. The weighted average interest rate for the year 2000 was
9.88%.

The Revolver contained covenants that among other things, restricted the
Company's ability to incur additional indebtedness or guarantee the obligations
of others, change its line of business, merge, consolidate and acquire or sell
assets or stock, pay dividends, or prepay or amend the notes or any of its
subordinated indebtedness. The Company was also required to meet minimum
quarterly EBITDA requirements at September and December 2000, and March 2001,
and minimum trailing twelve month EBITDA requirements quarterly beginning in
June 2001 and ceasing in June 2004.

The Company, during 2000, violated a debt covenant under the Revolver with
respect to obtaining financing from a third party for the 4-stand project at the
Lorain plant prior to December 31, 2000. As a result, a waiver was obtained
during 2001 that eliminated the requirement to obtain financing from a third
party.

On September 8, 1998, the acquisition by RES Acquisition of Republic was
partially funded with short-term borrowings of approximately $65.0 million (the
"RES Holding Facility") under the Credit Agreement dated September 8, 1998
between RES Holding and The Chase Manhattan Bank ("Chase"), as administrative
agent. The maturity of the RES Holding Facility was June 8, 1999, however, the
agreement was extended to September 30, 1999. This debt was refinanced with
proceeds of the financing completed concurrent with the Combination.

BarTech had a revolving credit agreement with a group of banks with Chase as
agent that originally provided BarTech with borrowings in an aggregate principal
amount of up to $90.0 million, of which $5.4 million was in the form of letters
of credit. This revolving credit agreement was subsequently amended in September
1997 to provide for the addition of a new revolving sub-facility
("Sub-Facility") and amended certain portions of the original revolving credit
agreement. The Sub-Facility component of the amended agreement provided BarTech
with up to $15.0 million of additional borrowing capacity based on a higher
receivable and inventory advance rate than in the revolving credit agreement.

On May 5, 1999, BarTech further amended its revolving credit agreement ("BarTech
Amended Agreement") in conjunction with the formation of the Republic
Technologies International Marketing, LLC ("Marketing JV"). The BarTech Amended
Agreement provided for a reduction in BarTech's borrowing capacity to $77.0
million, of which $5.3 million was in the form of letters of credit. In
addition, amounts available under BarTech's Sub-Facility were reduced to $2.0
million with this BarTech Amended Agreement. By July 31, 1999, amounts available
under the BarTech Amended Agreement were further reduced to $71.5 million and
amounts were no longer available under BarTech's Sub-Facility. The


                                       71
<PAGE>


maturity date of the BarTech Amended Agreement remained April 2, 2000 and was
secured by certain assets and stock of BarTech.

The BarTech Amended Agreement was extinguished with proceeds of the financing
completed concurrent with the Combination. The Marketing JV was terminated as a
result of the Combination.

NOTE 9 - LIABILITIES SUBJECT TO COMPROMISE AND REORGANIZATION ITEMS

The accompanying consolidated balance sheet as of December 31, 2001 segregates
liabilities subject to compromise, such as unsecured claims, in the amount of
$1,239.2 million, from liabilities not subject to compromise and liabilities
arising subsequent to the Petition Date. These amounts represent the Company's
best estimate of known or potential claims to be resolved in connection with the
Chapter 11 cases. Such claims remain subject to future adjustments based on
negotiations, actions of the Bankruptcy Court, further development with respect
to disputed claims, future rejection of additional executory contracts or
unexpired leases, and determination as to the value of any collateral securing
claims or other events. Payment terms for these amounts, which are considered
long-term liabilities at this time, will be established in connection with the
Chapter 11 cases. The Company has received approval from the Bankruptcy Court to
pay pre-petition and post-petition employee wages, salaries, benefits, certain
other employee obligations, and certain critical venders. Liabilities subject to
compromise at December 31, 2001 were as follows (in thousands):


<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 2001
                                                                   ------------------
<S>                                                                       <C>
                  Accounts payable                                          $ 219,160
                  Accrued interest                                             20,370
                  Other postretirement benefits                               227,262
                  Defined benefit pension obligations                         199,879
                  Other accrued expenses                                       23,738
                  Long term deferred payables                                  36,424
                  Long term debt                                              512,377
                                                                   ------------------
                  Total (a)                                               $ 1,239,210
                                                                   ===================
</TABLE>

(a)  Excludes a net intercompany payable in the amount of $5,853 to the
     Company's subsidiary, Nimishillen & Tuscarawas LLC, which is not included
     in the bankruptcy proceedings.

Reorganization items consist of expenses directly incurred or realized as a
result of the Chapter 11 cases and have been segregated from normal operations.
Reorganization expense included in the consolidated statement of operations for
the year ended December 31, 2001 include the following:

<TABLE>
<S>                                                                                   <C>
    Write-down of deferred financing costs related to the revolving credit             $7,379
    facility
    Professional fees and administrative items, net                                     8,652
                                                                                   ----------
    Total                                                                             $16,031
                                                                                   ===========
</TABLE>


NOTE 10 - DEFINED CONTRIBUTION BENEFIT PLANS

The Company currently has a defined contribution retirement plan that covers
substantially all salary and non-union hourly employees. Company contributions
to the plan are based on age and compensation. The Company had provided a
defined contribution retirement plan for the former BarTech United Steel
Worker's of America ("USWA") employees. The Company contribution was seventy
cents for every hour worked. This plan was discontinued March 1, 2001 and the
participants merged into the defined benefit plan (see Note 11). The former
Republic USWA employees were covered under a defined contribution retirement
plan, which was, discontinued September 8, 1998 under the terms of the Master
Collective Barging Agreement (collectively, the "Master CBA") and the assets
merged into the defined benefit plan (see Note 11). The Company funds
contributions to these plans as accrued. Contributions to these plans by the
Company and its predecessors were $3.4 million, $4.4 million, $2.0 million, and
$2.3 million for the


                                       72
<PAGE>


years ended December 31, 2001 and 2000, the period August 13, 1999 to December
31, 1999, and the period January 1, 1999 to August 12, 1999, respectively.

The Company has a profit sharing plan covering all of its USWA employees.
Amounts provided to the profit sharing pool were based on percentages of the
consolidated excess cash flows of the Company, as defined in the Master CBA.
There was no expense relating to this plan for any of the periods presented.

NOTE 11 - DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT BENEFITS

In connection with the Republic acquisition in September 1998, a new Master
Collective Bargaining Agreement and settlement agreement (collectively, the
"Master CBA") covering all of the former Republic and BarTech facilities with
employees represented by the USWA were entered into with the USWA. The Master
CBA replaced the existing collective bargaining agreements with the USWA, other
than selected plant-specific agreements. In connection with the Combination, the
scope of the Master CBA was extended to cover the former USS/Kobe Lorain, Ohio
facility. The Master CBA provides for improvements in the existing defined
benefit pension plans covering employees at former Republic facilities, former
USS/Kobe facilities and the former Bliss & Laughlin Harvey, Illinois facility,
and the creation of a defined benefit pension plan obligation covering employees
at former BarTech facilities. The Master CBA was modified by the Modified Labor
Agreement ("MLA"), effective January 1, 2002. However, pension modifications
along with other long term provisions of the contract shall only become
effective if, prior to May 31, 2002, a plan of reorganization has been
consummated which includes receipt of a $250 million loan under the Emergency
Steel Loan Guarantee Program, approval of the Pension Benefit Guarantee
Corporation ("PBGC"), and settlement of the claims of the senior secured
note-holders. The existing defined benefit pension plans may be consolidated
into one defined benefit pension plan in the future, which will contain terms
found in traditional steel industry defined benefit pension plans.

The Master CBA requires Republic Technologies International, LLC to offer Early
Retirement Buyouts ("ERBs") to at least 1,000 employees and permits Republic
Technologies International, LLC to offer a Voluntary Severance Plan ("VSP"). The
purpose of these programs is to reduce the hourly workforce by a net reduction
of over 1,900 hourly employees over four years. These programs are substantially
voluntary in nature. Accordingly, the costs associated with these workforce
reductions are being recognized as the offers are accepted by the employees and
intended to be awarded by Republic Technologies International, LLC. Through
December 31, 2001, 851 voluntary ERB packages were accepted. As such, Republic
Technologies has recorded $104.7 million of workforce reduction charges to date
for early retirement benefits and special termination payments.

Under the terms of Master CBA, if the ERBs and VSPs do not achieve targeted
headcount reductions, Republic Technologies International, LLC will have the
flexibility to reduce the hourly workforce by approximately 300 employees in
addition to the number of accepted ERBs and VSPs. Pursuant to the Master CBA,
USWA represented employees will be eligible for Supplemental Unemployment
Benefits (SUB) and the continuation of certain health insurance benefits.

On January 24, 2002 the USWA ratified a Modified Labor Agreement ("MLA")
modifying the Master Collective Bargaining Agreement. The MLA provides interim
support designed to permit the Company to continue operating at its current
level while working to secure the financing necessary to emerge from Bankruptcy.

Under the terms of the MLA all employee wages will be reduced 15% for the period
of January 1, 2002 to May 31, 2002. Other modifications include immediate
elimination of 125 jobs and modifications to the employment security plan
allowing the Company to layoff employees as business conditions and operational
requirements dictate.

The MLA also includes certain long-term revisions which will become effective
only if prior to May 31, 2002 a plan of reorganization has been consummated
which includes receipt by the Company of a $250 million loan in addition to the
Company's current lending arrangements, pursuant to the Emergency Steel Loan
Guarantee Program, approval by the Pension Benefit Guaranty Corporation of new
pension funding


                                       73
<PAGE>


arrangements that will allow the Company to reduce its annual pension funding
obligations between 2002 and 2007 to a level that can be supported by the
Company's future cash flows, and the use of primarily equity and/or
interest-bearing debt to satisfy the claims of the senior-secured noteholders.

The long-term revisions include agreement on more effective management of health
care costs for active employees and retirees, profit sharing, employee stock
ownership and enhancements to pension benefits.

The following is a general description of the Company and its predecessors'
defined benefit plans.

REPUBLIC
The Company (formerly Republic) maintains a defined benefit "floor offset" plan,
which covers all former Republic USWA employees. The plan, when combined with
benefits from an LTV Steel Defined Benefit Pension Plan, will provide a minimum
level of pension benefits for USWA employees. Benefits are based on a
combination of employees' age and years of service. The Company's policy is to
fund this plan based on legal requirements and tax considerations. As a result
of the Chapter 11 filing, the Company has not funded this plan since the
Petition Date.

Republic entered into a memorandum of understanding with the PBGC on November 2,
1998, pursuant to which (1) the PBGC agreed to forebear from instituting
proceedings to terminate the USWA Defined Benefit Plan as a result of the
acquisition of Republic or the prospective combination with BarTech, (2) in
January 1999, Republic funded the pension plan with an approximate $27.0 million
initial contribution and (3) Republic made an additional contribution to such
pension plan in the amount of $20.0 million on July 1, 1999. The agreement with
the PBGC contemplated additional quarterly contributions commencing October 1,
1999 in accordance with the following schedule: $7.5 million per quarter for the
first four payments, $7.625 million per quarter for the next four payments,
$9.075 million per quarter for the next four payments and $8.475 million per
quarter for the final four payments.

Republic amended the memorandum of understanding with the PBGC on July 14, 2000.
According to this Amendment, Republic has agreed to the following terms with
PBGC:

a.   During the year 2000, Republic shall pay $2.0 million of the $7.5 million
     required contribution, due in January, April and July, deferring the
     balance of the contributions.

b.   During the year 2000, Republic shall pay $2.0 million of the $7.625 million
     required contribution, due in October, deferring the balance of the
     contribution.

c.   During the year 2001, Republic shall pay $2.0 million of the $7.625 million
     required contribution, due in January, April, and July, deferring the
     balance of the contribution.

d.   During the year 2001, Republic shall pay $2.0 million of the $9.075 million
     required contribution, due in October, deferring the balance of the
     contribution.

e.   Republic shall pay the total deferred amount of approximately $46.1 million
     (items A thru D above) in eight equal quarterly installments commencing on
     January 1, 2002 and continuing through October 1, 2003. The amount of each
     deferred installment of the required contributions shall be added to the
     amount of each of the required contributions Republic is obligated to make
     in the years 2002 and 2003.

As a result of the Chapter 11 filings, the Company is currently seeking to
further amend this memorandum of understanding with the PBGC.

The Company (formerly Republic) also sponsors postretirement plans for health
care and life insurance that cover most full-time employees. The plans pay
stated percentages of most necessary medical expenses incurred by retirees,
after subtracting payments by Medicare or other providers and after a stated
deductible has been met. Hourly employees become eligible for benefits after
completing 15 years of service and reaching age 60. Salary employees become
eligible for benefits if they retire after reaching age 65.



                                       74
<PAGE>


BARTECH
Bliss & Laughlin (BLI) maintained a defined benefit pension plan covering
substantially all hourly employees of its Harvey, Illinois plant. As of January
1, 2000, the plan and covered employees were merged into the Republic pension
plan described above. Employees at the Cartersville, Georgia plant are non-union
hourly employees and are not covered under a defined benefit pension plan.
Canadian Drawn Steel Corporation ("CDSC") maintains pension plans covering
substantially all employees. Benefits for the CDSC salaried employees' plan are
based on an average salary for the five most recent years prior to retirement.
Benefits for the CDSC bargaining unit employees' plan are based on years of
service. Republic Technologies' policy is to fund pension cost in accordance
with the requirements of the Employee Retirement Income Security Act of 1974 in
the United States and local regulations in Canada.

CDSC also sponsors postretirement plans for health care and life insurance that
cover most full-time employees. The plans pay stated percentages of most
necessary medical expenses incurred by retirees, after subtracting payments by
other providers and after a stated deductible has been met. Participants become
eligible for benefits if they retire from CDSC after reaching age 55 with 10 or
more years of service. BLI employees at its Harvey, Illinois plant are covered
under the Republic post-retirement plan for health and life insurance.

USS/KOBE
The Company (formerly USS/Kobe) sponsors two noncontributory defined benefit
plans covering substantially all former USS/Kobe employees. Benefits under these
plans are based upon years of service and final average pensionable earnings, or
a minimum benefit based upon years of service, whichever is greater. Assets held
by the plans are invested primarily in corporate equity and debt securities and
interest bearing cash accounts. In addition, pension benefits from USS/Kobe's
two defined contribution plans, which cover participating employees, are based
upon years of service and career earnings.

In connection with the Combination, Republic Technologies International, LLC
agreed with the PBGC to maintain a specified level of funding for the USS/Kobe
Union Eligible Pension Plan, a defined benefit plan for union employees, based
on statutory funding requirements. The agreement with the PBGC with respect to
this plan contemplates that contributions will be made as follows: for the year
2000, an amount necessary to avoid an accumulated funding deficiency plus $4.0
million; for 2001, an amount so that the December 31, 2001 credit balance equals
that of December 31, 2000 with interest plus $2.0 million; for 2002, an amount
so that the December 31, 2002 credit balance equals that of December 2001 with
interest plus $2.0 million; for 2003, an amount so that the December 31, 2003
credit balance equals that of December 31, 2002 with interest plus $2.0 million.
The agreement with the PBGC further contemplates that, beginning with 2004,
Republic Technologies will make contributions to maintain the December 31, 2003
credit balance with interest. As security for such obligation, Republic
Technologies International, LLC has provided the PBGC with a $5.0 million letter
of credit. As a result of the Chapter 11 filings, the Company defaulted on the
required pension funding. The PBGC accordingly presented the letter of credit
for payment. Funds from the $5.0 million of the letter of credit are currently
being held by the PBGC and will be held until the Company is current with all
required pension contributions. The Company is currently negotiating with the
PBGC to amend the funding agreement and is unable to determine the amount of
funding that will be required in connection with these obligations.


                                       75
<PAGE>

The components of the net periodic pension costs are summarized as follows:

<TABLE>
<CAPTION>
                                                                                 Period From    Period From
                                                                                  August 13,     January 1,
                                                   Year ended      Year ended      1999 to        1999 to
                                                  December 31,    December 31,   December 31,    August 12,
                                                      2001            2000           1999           1999
                                                  -------------------------------------------------------------


<S>                                                 <C>            <C>            <C>            <C>
Service cost                                        $ 10,230       $  9,527       $  3,744       $  3,719

Interest cost on projected benefit obligations        21,479         20,517          7,746          4,662

Expected return on plan assets                       (18,598)       (19,222)        (6,811)        (3,024)

Amortization of prior service cost                       100            102             (7)            30

Recognized net actuarial (gain)/loss                      56           (327)           (26)           169

Curtailment (gain)/loss                                  (66)          (338)         2,962             --
                                                    --------       --------       --------       --------
Net periodic pension cost                           $ 13,201       $ 10,259       $  7,608       $  5,556
                                                    ========       ========       ========       ========
</TABLE>

Net periodic postretirement benefit cost included the following components:

<TABLE>
<CAPTION>
                                                                         Period From      January 1,      Period From
                                                         Year ended      Year ended     August 13, 1999    1999 to
                                                         December 31,    December 31,    to December 31,   August 12,
                                                             2001           2000             1999           1999
                                                  -----------------------------------------------------------------

<S>                                                        <C>             <C>               <C>            <C>
Service cost of benefit earned                             $ 1,707         $ 2,198            $ 748         $1,047
Interest on accumulated postretirement benefit
   obligations                                              15,843          17,013            4,289          6,004

Amortization of prior service cost                               6              11

Recognized net actuarial (gain)/loss                             0             (5)             (53)           (74)
                                                  -----------------------------------------------------------------
Net periodic postretirement cost                           $17,556         $19,217           $4,984         $6,977
                                                  =================================================================
</TABLE>

The change in benefit obligation, change in plan assets, funded status and
amounts recognized in the consolidated balance sheets related the to the
Company's pension plans and other postretirement benefits are as follows:

<TABLE>
<CAPTION>
                                                        Pension Plans               Other Postretirement Benefits
                                               ------------------------------      ------------------------------
                                                   December 31,   December 31,         December 31,   December 31,
                                                       2001           2000                 2001           2000
                                               ------------------------------      ------------------------------
<S>                                                  <C>            <C>                  <C>            <C>
CHANGE IN BENEFIT OBLIGATION:

Benefit obligation at beginning of year              $299,270       $284,569             $238,294       $233,515

Service cost                                           10,230          9,527                1,707          2,198

Interest cost                                          21,480         20,517               15,844         17,013

Amendments                                              3,613             --               24,534             --

Foreign currency exchange rate change                    (654)          (343)                (223)          (100)

Actuarial (gain) loss                                  57,071          5,350             (11,972)          1,115

Curtailment  loss                                      15,424            247                2,593             --

Plan transfers                                            257          3,894                   --             --

Benefits paid                                         (30,774)       (24,491)             (13,651)       (15,447)
                                               ------------------------------      ------------------------------
Benefit obligation at end of year                     375,917       299,270              257,126       238,294
                                               ------------------------------      ------------------------------
</TABLE>

                                       76
<PAGE>



<TABLE>
<S>                                                 <C>             <C>                 <C>            <C>
CHANGE IN PLAN ASSETS:
Fair value of plant assets at beginning of
year                                                  214,626        211,133                   --          9,299

Actual return on plan assets                          (10,962)         6,381                   --            527

Employer contribution                                   4,748         18,113               13,651         15,447

Foreign currency exchange rate change                    (765)          (405)                  --             --

Benefits paid                                         (30,776)       (24,491)             (13,651)       (15,447)

Plan transfers                                            257          3,894                   --             --
Assets transferred out                                     --             --                   --         (9,826)
                                               ------------------------------      ------------------------------

Fair value of plan assets at end of year              177,128        214,625                   --             --
                                               ------------------------------      ------------------------------


Funded status-underfunded                            (198,789)       (84,645)            (257,126)      (238,294)

Unrecognized net actuarial (gain) loss                 85,987           (516)               1,815          4,731
Unrecognized prior service cost                         4,677          1,195               24,651            149
                                               ------------------------------      ------------------------------

Net amount recognized                               $(108,125)      $(83,966)           $(230,660)     $(233,414)
                                               ==============================      ==============================
</TABLE>

Amounts recognized in the statement of financial position consist of:

<TABLE>
<S>                                                <C>              <C>                 <C>            <C>
       Prepaid benefit cost                             5,054       $  4,384                   --             --

       Accrued benefit liability                     (199,879)       (89,943)           $(230,660)     $(233,414)

       Accumulated other comprehensive loss            86,700         1,593                   --             --
                                               ------------------------------      ------------------------------
Accrued benefit costs                              $ (108,125)      $(83,966)           $(230,660)     $(233,414)
                                               ==============================      ==============================

WEIGHTED AVERAGE ASSUMPTIONS:
Discount rate                                            7.18%          7.47%                7.19%          7.49%
Expected return on plan assets                           8.98%          8.94%
Rate of compensation increase                            0.92%          2.60%
</TABLE>



The accumulated benefit obligation, projected benefit obligation, and fair value
of plan assets for the pension plans with accumulated benefit obligations in
excess of plan assets are summarized as follows:

<TABLE>
<CAPTION>
                                                           2001           2000
                                                           ----           ----
<S>                                                      <C>           <C>
Accumulated benefit obligation                           $362,916      $284,459
Projected benefit obligation                              364,539       287,197
Plan assets at fair value                                 163,778       200,702
</TABLE>

For measurement purposes, a weighted average annual rate of increase in the per
capita cost of covered health care claims of 6.5% was assumed for fiscal 2001;
the rate assumed to decrease by approximately 0.5% per year to 4.5% for fiscal
2004, and remain at that level thereafter.

To illustrate the health care cost trend on amounts reported, changing the
assumed health care cost trend rates by one percentage point in each year would
have the following effects as of and for the fiscal year ended December 31,
2001:

<TABLE>
<CAPTION>
                                                                One Percentage Point
                                                            --------------------------
                                                             Increase       Decrease
                                                            ------------  ------------
<S>                                                           <C>           <C>
Effect on total service and interest cost components          $ 1,622       $ (1,426)

Effect on accumulated postretirement benefit obligation        20,418        (17,972)
</TABLE>



                                       77



<PAGE>


NOTE 12 - INCOME TAXES

The Company is a limited liability company that is treated as a partnership for
income tax purposes and accordingly is not an income taxpaying entity. However,
pursuant to the limited liability company agreement, the Company is required to
make cash distributions to its members to the extent necessary to satisfy their
respective tax obligations. However, the Company believes that certain of its
members have net operating loss carryforwards which may be available to offset a
significant portion of their taxable income attributable to their investment in
the Company and reduce but not eliminate, the need for tax distributions. Use of
these net operating losses is subject to various limitations and uncertainties
and accordingly, the Company cannot give any assurances that these net operating
loss carryforwards will reduce the need for tax distributions or that they will
not be otherwise utilized.

The provision for income taxes included in the accompanying
consolidated/combined statements of operations for all periods presented
represents a provision for foreign income taxes. Deferred income taxes related
to the foreign subsidiary are recorded as a component of other accrued
liabilities in the consolidated balance sheet. Prior to the Combination, a
benefit for domestic income taxes is not included in the accompanying combined
statements of operations since the Company's deferred tax benefits for net
operating loss carryforwards were entirely offset by provisions for deferred tax
valuation allowances.

NOTE 13 - SEGMENTS AND RELATED INFORMATION

The Company operates in three reportable segments: hot-rolled, cold-finished,
and specialty steels. As discussed previously in Note 1, the Company intends to
sell its specialty steels division and accordingly, the accompanying
consolidated/combined financial statements reflect that division as a
discontinued operation in accordance with Accounting Principles Board Opinion
No. 30. As such, the following tables do not reflect specialty steels as a
reportable segment. The Company manages the reportable segments as separate
strategic business units. Differences between the segments include manufacturing
techniques and equipment, competition, and end-users. The Company measures
segment performance based on earnings before interest, taxes, depreciation and
amortization, other postretirement benefits, workforce reduction charges and
other (income) loss, net ("EBITDA, as defined").

HOT-ROLLED
Hot-rolled bars and rods are processed from blooms and billets on rolling mills
to change the internal physical properties, size or shape of the steel.
Desirable characteristics of hot-rolled products include internal soundness,
uniformity of chemical composition and freedom from surface imperfection. The
Company's hot-rolled products include rounds, squares and hexagons, in both
cut-lengths and coils. Customers for hot-rolled products include manufacturers
of automotive parts, industrial equipment, independent forgers, steel service
centers and converters. The Company's hot-rolled products are used in the
manufacture of end-use products such as automotive drive trains, engine and
transmission parts, bearings and tractor components.

COLD-FINISHED
Cold-finishing is a value-added process which improves the physical properties
of hot-rolled bars and rods. Cold-finished products are produced from hot-rolled
bars by cold-drawing, turning, grinding, thermal treating or a combination of
these processes. The manufacturing process allows for production of products
with more precise size and straightness tolerances, as well as improved strength
and surface finish, that provides customers with a more efficient means of
producing a number of end products by often eliminating processing steps in the
customers' use of the products. The Company's cold-finished products include
rounds, squares, hexagons, and flats, all of which can be further processed by
turning, grinding or polishing, or a combination thereof. Customers for
cold-finished products include manufacturers of automotive parts, industrial
equipment, steel service centers and distributors. The Company's cold-finished
products are used in the manufacture of end-use products such as automotive
steering assemblies, electrical motor shafts, ball and roller bearings, valves
and hand tools.


                                       78
<PAGE>


Prior to August 13, 1999, intersegment sales were made at current market prices
and were eliminated in consolidation.


<TABLE>
<CAPTION>
                                                         For the Year Ended December 31, 2001
                                 ----------------------------------------------------------------------------------------
                                                                                         Inter Segment
                                                            Cold-            Total         Elimination/     Consolidated/
                                         Hot-Rolled        Finished        Segments           Other           Combined
                                 ----------------------------------------------------------------------------------------

<S>                                       <C>              <C>            <C>               <C>               <C>
Net sales                                 $896,249         $213,845       $1,110,094        $(116,387)        $993,707

Depreciation and amortization               51,815            5,031           56,846               --           56,846
Segment loss (EBITDA,
   as defined)                              19,234            4,165           23,399               --           23,399

Segment assets                             918,943          115,244        1,034,187           15,372        1,049,559

Capital expenditures                         3,257              332            3,589               --            3,589
</TABLE>



<TABLE>
<CAPTION>
                                                         For the Year Ended December 31, 2000
                                 --------------------------------------------------------------------------------------
                                                                                        Inter Segment
                                                          Cold-           Total          Elimination/    Consolidated/
                                      Hot-Rolled         Finished        Segments           Other          Combined
                                 --------------------------------------------------------------------------------------

<S>                                   <C>                <C>            <C>               <C>             <C>
Net sales                             $1,114,833         $280,615       $1,395,448        $(130,047)      $1,265,401

Depreciation and amortization             55,273            6,202           61,475               --           61,475
Segment profit (EBITDA,
   as defined)                            68,123           13,779           81,902               --           81,902

Segment assets                         1,029,916          145,414        1,175,330           21,754        1,197,084

Capital expenditures                      11,977            1,088           13,065               --           13,065
</TABLE>


<TABLE>
<CAPTION>
                                               For the Period From August 13, 1999 to December 31, 1999
                                 --------------------------------------------------------------------------------------
                                                                                  Inter Segment
                                                       Cold-            Total      Elimination/      Consolidated/
                                    Hot-Rolled       Finished         Segments         Other           Combined
                                 --------------------------------------------------------------------------------------

<S>                                <C>               <C>             <C>              <C>             <C>
Net sales                          $   465,267       $ 121,233       $  586,500       $(58,920)       $  527,580

Depreciation and amortization           18,331           2,161           20,492             --            20,492
Segment profit (EBITDA,
    as defined)                        (74,589)           (259)         (74,848)            --           (74,848)

Segment assets                       1,216,231         169,992        1,386,223         29,034         1,415,257

Capital expenditures                    11,891           1,121           13,012             --            13,012
</TABLE>


<TABLE>
<CAPTION>
                                                For the Period From January 1, 1999 to August 12, 1999
                                 --------------------------------------------------------------------------------
                                                                                Inter Segment
                                                    Cold-           Total        Elimination/    Consolidated/
                                   Hot-Rolled      Finished        Segments         Other          Combined
                                 --------------------------------------------------------------------------------


<S>                                <C>            <C>             <C>             <C>             <C>
Net sales                          $ 354,458      $ 203,842       $ 558,300       $ (32,974)      $ 525,326

Depreciation and amortization         17,051          4,838          21,889              --          21,889
Segment profit (EBITDA,
    as defined)                          953         (3,449)         (2,496)             --          (2,496)

Capital expenditures                  18,784          1,574          20,358              --          20,358
</TABLE>


                                       79
<PAGE>


NOTE 14 - RELATED PARTY TRANSACTIONS

From April 1996 to August 13, 1999, Blackstone and Veritas received annual
monitoring fees from BarTech equal to $0.9 million per year pursuant to a
monitoring agreement. Under the terms of the monitoring agreement, Blackstone
and Veritas provided management and financial monitoring services to BarTech.
Blackstone and Veritas have split the monitoring fees paid evenly between them.
BarTech has also reimbursed Blackstone and Veritas for their out-of-pocket
expenses incurred in providing such services.

In connection with the acquisition of Republic in 1998, RES Holding paid
transaction fees of $3.4 million to Blackstone and $800 thousand to Veritas and
reimbursed them for all related out-of-pocket expenses. In addition, pursuant to
a monitoring agreement entered into with RES Holding, Blackstone and Veritas
were entitled to receive an annual monitoring fee for providing management and
financial monitoring services equal to $1.125 million, with Blackstone receiving
75% and Veritas receiving 25% of this monitoring fee. RES Holding has reimbursed
Blackstone and Veritas for their out-of-pocket expenses incurred in providing
these services. Approximately $2.4 million of accrued but unpaid BarTech and RES
Holding monitoring fees were paid following the Combination.

In connection with the Combination, the Company paid transaction fees in the
aggregate of $4.0 million to Blackstone, Veritas, USX and affiliates of Kobe. In
addition, the Company reimbursed Blackstone, Veritas, USX, and Kobe for their
out-of-pocket expenses related to the Combination. Upon consummation of the
Combination, the Company entered into a new monitoring agreement with
Blackstone, Veritas, USX and Kobe that replaced the existing monitoring
agreements regarding BarTech and Republic, with the parties to receive an
aggregate annual fee of $4.0 million. This agreement has been stayed due to the
Chapter 11 proceedings, therefore, the Company accrued only $1.0 million under
this agreement in the current year.

In addition, in the future, Blackstone, Veritas, USX and Kobe or their
affiliates may receive customary fees for other advisory and transactional
services rendered to the Company. If such services are rendered in the future,
the fees will be negotiated from time to time on an arms-length basis and will
be based on the services performed and the fees charged to third parties for
comparable services.

During the years ended December 31, 2001 and 2000, and the periods from August
13, 1999 to December 31, 1999 and January 1, 1999 to August 12, 1999, the
Company had approximately $77.9 million, $112.9 million, $43.6 million, and
$54.2 million, respectively, of net sales to American Axle & Manufacturing, a
company controlled by Blackstone. All such sales were in the ordinary course of
business and on arms-length terms.

The Company and Haynes Specialty Steels Company, a subsidiary of Haynes, a
company controlled by Blackstone, were parties to a facilities management
agreement dated as of April 15, 1999, by which Haynes agreed to manage the
Company's Baltimore, Maryland and Canton, Ohio (Harrison Avenue) specialty steel
finishing facilities. The Company continued to own these facilities and approved
all material expenditures and financial decisions of Haynes with respect to
these facilities. As compensation for the services provided, Haynes received
management fees equal to the total compensation costs, including benefits, of
the Haynes personnel providing management services to the Company that was
allocable to the time these personnel devoted to these facilities. In addition,
Haynes was reimbursed by the Company for all of its reasonable out-of-pocket
expenses incurred in connection with the provision of management services. This
agreement was terminated during 2000.

In connection with the Combination, the Company entered into the following
agreements with USX, Kobe and FirstEnergy Service Corp. ("FirstEnergy") (another
equity investor in the Company's indirect parent) or their affiliates:

ROUND SUPPLY AGREEMENT
----------------------

The Company entered into a five-year supply agreement with USX and the new
tubular company owned by USX, which provides for the tubular joint venture
purchasing all of its requirements for steel rounds at its



                                       80
<PAGE>


Lorain, Ohio pipemill from the Company up to a maximum of 400,000 tons per year
for a price equal to the Company's production costs plus an agreed upon margin
per ton. The tubular company also has the right to purchase up to an additional
200,000 tons per year for a price equal to the Company's fixed production costs
plus an agreed upon margin per ton. If the tubular company is unable to purchase
at least 400,000 tons of steel rounds per year for its Lorain, Ohio pipemill,
USX is required to purchase any shortfall, under specified circumstances, to
satisfy the steel round requirements of its Fairfield, Alabama pipemill facility
that can not be satisfied from USX's internal production of steel rounds. The
Company sold $106.1 million of seamless rounds to USX in the year ended December
31, 2001.

COKE SUPPLY AGREEMENT
---------------------
The Company entered into a five-year supply agreement with USX, which provides
that Republic Technologies purchase substantially all of its requirements for
coke for use in its Lorain, Ohio blast furnace from USX. The purchase price for
coke is based on market prices and adjusted annually, subject to most favored
nations provisions for price and other conditions, which allow the Company to
receive the most favorable terms that USX grants to any of its coke customers.
The Company purchased $51.2 million of coke from USX in the year ended December
31, 2001.

PELLET SUPPLY AGREEMENT
-----------------------
Under this agreement, the Company agreed to purchase all of its iron ore pellet
requirements for its Lorain, Ohio blast furnace from USX for a period of five
years. The purchase price for pellets is generally based on market prices and
will be adjusted annually, subject to most favored nations provisions for price
and other conditions, which allow the Company to receive the most favorable
terms that USX grants to any of its pellet customers. The Company purchased
$59.9 million of iron ore pellets from USX in the year ended December 31, 2001.

SAFE HARBOR LEASE MATTERS AGREEMENT
-----------------------------------
Pursuant to the master restructuring agreement, the Company received certain
property formerly owned by USS/Kobe that qualifies as "Safe Harbor Lease
Property," thus affording USX and Kobe with tax benefits. The Safe Harbor Lease
Matters Agreement contains covenants and warranties to ensure that the property
remains qualified as Safe Harbor Lease Property and to ensure the continuation
of the tax benefits.

ENERGY MANAGEMENT AGREEMENT
---------------------------
In connection with the consummation of the Combination, the Company entered into
an agreement with FirstEnergy under which it appointed FirstEnergy as its
exclusive representative for the procurement of energy supply and services. As a
result of this arrangement, it is likely that much of the Company's energy
purchasing requirements will eventually be filled by FirstEnergy. Also in
connection with the consummation of the Combination, FirstEnergy purchased $30.0
million of the Series C convertible preferred stock of Republic Technologies
International, Inc. (the Company's ultimate parent).

In connection with the Combination, the Company also entered into an agreement
with the new tubular steel company owned by USX regarding the provision of
various utilities and an agreement with USX regarding the provision of various
transitional services. In addition, at the closing of the Combination, the
Company entered into an agreement with USX regarding payment of certain payables
owed by USS/KOBE to USX.

NOTE 15 - COMMITMENTS AND CONTINGENCIES

The Company, in the ordinary course of business, is the subject of or party to
various pending or threatened legal and environmental actions. The Company
provides for the costs related to these matters when a loss is probable and the
amount is reasonably estimable. Based on information presently known to the
Company, management believes that any ultimate liability resulting from these
actions will not have a material adverse affect on its consolidated financial
position, results of operations or cash flows.

During January 2001, the Company sold and leased back certain assets related to
their Chicago operating facility for a term of two years. The resulting lease is
being accounted for as an operating lease. Net cash proceeds amounted to
approximately $6.0 million. The transaction resulted in a realized gain of $1.0



                                       81
<PAGE>


million and a deferred gain of $1.1 million. The balance of the deferred gain of
$539 thousand is included in other accrued liabilities on the accompanying
consolidated balance sheet at December 31, 2001. Total lease expense incurred
under this lease was $61 thousand for the year ended December 31, 2001.

The Company also uses certain lease arrangements to supplement its financing
activities. Rental expense under operating leases was approximately $4.9
million, $10.2 million, $2.7 million, and $1.3 million for the years ended
December 31, 2001 and 2000, the period from August 13, 1999 to December 31,
1999, and the period from January 1, 1999 to August 12, 1999. At December 31,
2001, total minimum lease payments under noncancellable operating leases are
$3.1 million in 2002, $2.4 million in 2003, $1.1 million in 2004, $0.6 million
in 2005, $0.6 million in 2006 and $1.2 million thereafter.

Republic Technologies International, Inc., the Company's ultimate parent, has
$5.5 million Series A Preferred Stock outstanding that was mandatorily
redeemable on September 26, 2000, payment for which is expected to be made by
Republic Technologies International, Inc. from distributions or loans from the
Company. On October 6, 2000, Bethlehem Steel Corporation and Republic
Technologies International, Inc. arranged for the deferral of the redemption of
$5.5 million Series A Preferred Stock. On September 29, 2000, the Company
redeemed $0.5 million of Class A Members' Interest so that the Parent Company
could redeem the same amount of Cumulative Preferred Stock. The Company as of
December 31, 2000 redeemed an additional $1.2 million of Class A Member's
Interest. The parties previously acknowledged that the redemption would be made
in installments during 2001, $0.1 million of which was made prior to the
Petition Date. Subsequent to the Petition Date, no shares have been redeemed.


NOTE 16 - ENVIRONMENTAL COMPLIANCE

The Company is subject to a broad range of federal, state, and local
environmental laws and regulations, including those governing discharges into
the air and water, the handling and disposal of solid and hazardous wastes, and
the remediation of contamination associated with the disposal of waste. The
Company continuously monitors its compliance with such environmental laws and
regulations and, accordingly, believes that it is currently in substantial
compliance with such laws and regulations. The Company expects to expend
approximately $1.5 million during the next twenty-four months for environmental
control measures. As is the case with most steel producers, the Company could
incur significant costs related to environmental compliance, in particular those
arising from remediation costs for historical waste disposal practices at
certain of the Company's facilities. The Company believes that these costs are
most likely to be in the range of $12.0 million to $23.6 million over the lives
of the Company's facilities. This range represents the estimated aggregate cost
to resolve the environmental contingencies. The Company does not anticipate any
third-party recoveries. The reserve to cover potential current and noncurrent
environmental liabilities was approximately $16.5 million and $19.6 million as
of December 31, 2001 and 2000, respectively, substantially all of which is
classified as a long-term obligation in the accompanying consolidated/combined
balance sheets.

The reserve has been established and is monitored based on continuing reviews of
the reserve, each matter comprising the reserve, and whether any new matters
should be included in the reserve, using currently available information
relative to enacted laws and regulations and existing technology. These reviews
are performed periodically by an in-house committee comprised of representatives
experienced in environmental matters from the environmental, operating, and
accounting departments in consultation with outside legal and technical experts,
as necessary.

NOTE 17 - DISCONTINUED OPERATIONS

In connection with its acquisition of Republic, the Company determined its
intent to sell its specialty steel division and accordingly, the accompanying
consolidated financial statements reflect that division as a discontinued
operation in accordance with Accounting Principles Board Opinion No. 30. An
estimate of the operating results of the specialty steels division during the
phase-out period from the acquisition date to the estimated ultimate disposition
date was made and included as a fair value adjustment as part of the allocation
of the Republic purchase price. During the period from August 13, 1999 to
December 31, 1999, a provision of $6.4 million was made for the estimated
additional loss related to the ultimate disposition of


                                       82
<PAGE>


the specialty steels division. In the year ended December 31, 2000, an
additional provision of $16.8 million was made for the estimated additional loss
from disposition, including a charge of $7.0 million taken for the permanent
shutdown of the Baltimore Specialty facility.

The Company recorded an additional provision for estimated losses related to the
disposition of the specialty steels division of approximately $0.5 million in
2001. Certain assets from its Baltimore plant were sold in January 2001 for
proceeds of approximately $8.1 million, and the Company is currently in the
process of selling the remaining real estate and assets of the specialty steels
division. Management anticipates the disposition to
be completed during 2002.

<TABLE>
<CAPTION>
                             ---------------------------------------------------------------------
                               Year Ending    Year Ending      Period From         Period From
                               December 31,   December 31,  August 13, 1999 to  January 1, 1999 to
                                   2001           2000      December 31, 1999    August 12, 1999
                             ---------------------------------------------------------------------
<S>                             <C>            <C>                <C>               <C>
Net sales                       $ 23,696       $ 44,556           $ 16,991          $ 30,016
Gross loss                        (2,525)        (7,645)            (3,779)           (1,249)

Loss before income taxes          (3,459)       (12,614)            (5,441)           (3,480)
Provision for income taxes            --             --                 --                --
                                ------------------------------------------------------------
Net loss                        $ (3,459)      $(12,614)          $ (5,441)         $ (3,480)
                                ============================================================
</TABLE>

The components of net assets of discontinued operations included in the
Company's balance sheets as assets held for sale were as follows:

<TABLE>
<CAPTION>
                                                        December 31, 2001         December 31, 2000
                                                    -----------------------   -----------------------


<S>                                                          <C>                       <C>
Assets held for sale, current- Inventories                   $  9,013                  $  9,306
                                                    =======================   =======================

Assets held for sale, non-current - Property, plant
       and equipment                                         $  2,355                  $  7,294
                                                    =======================   =======================
</TABLE>


NOTE 18 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS AND SIGNIFICANT
          GROUP CONCENTRATION OF CREDIT RISK

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

CASH AND CASH EQUIVALENTS
         The carrying amount approximates fair value because of the short
         maturity of those investments.

REDEEMABLE MEMBERS' INTEREST - CLASS A
         It is not practicable to estimate the fair value of this members'
         interest, which is not publicly traded.

LONG-TERM DEBT
         The fair value of the company's long-term debt obligations are
         estimated based upon quoted market prices for the same or similar
         issues or on the current rates offered to the company for debt of the
         same remaining maturities. The fair value of the company's senior
         secured notes is determined using quoted market prices. The fair value
         of the Company's Industrial Revenue Bond approximates book value.
         Fair values for the remaining economic development financing could
         not be determined and have been reflected in the table as zero.



                                       83
<PAGE>

The estimated fair values of the Company's financial instruments are as follows:
(in thousands)

<TABLE>
<CAPTION>
                                    December 31, 2001            December 31, 2000
                                 ------------------------     -----------------------
                                  Carrying         Fair       Carrying        Fair
                                   Amount          Value       Amount         Value
                                 ----------     ---------     ---------     ---------

<S>                               <C>           <C>           <C>           <C>
Cash and cash equivalents         $  5,745      $  5,745      $  1,795      $  1,795

Long-term debt                     512,377        31,200       513,572       115,400

Redeemable members' interest         3,700           N/A         3,800           N/A
</TABLE>


NOTE 19 - RESTRUCTURING CHARGES AND RESERVES

During the year ended December 31, 2001, the Company shutdown its Willimantic,
Connecticut cold-finishing facility. During the year ended December 31, 2000,
the Company shutdown two of its production facilities: the Johnstown,
Pennsylvania melt shop facility and the Canton, Ohio 12" rolling mill facility.
The Johnstown facility closed in August 2000, and the Canton 12" facility closed
in October of 2000. These actions were undertaken in an attempt to reduce costs
and improve efficiency. As a result of these actions, the Company recorded
charges of $3.7 million and $74.7 million during the years ended December 31,
2001 and 2000, respectively.

The Company recorded restructuring charges of $1.2 million and $66.5 million
during the years ended December 31, 2001 and 2000, respectively, related to the
closing of the Johnstown facility. These charges in 2000 consisted of a $40.6
million write-down of property, plant, and equipment, $6.0 million of facility
closure costs, and $3.2 million in additional environmental remediation required
as a result of the closure. The 2000 restructuring charges also included hourly
employee separation costs of $16.0 million for hourly workers and $0.7 million
for non-hourly severance. The hourly employee separation charge was based on
estimates of the cost of an agreement reached with the USWA. The 2001 charges
consisted primarily of additional facility closure costs. Additionally, during
2001 the Company sold a portion of the Johnstown facility previously written
down to zero for approximately $1.5 million and reflected this as an adjustment
to the estimated facility closure costs.

Restructuring charges of $1.8 million and $3.5 million were also recorded during
the years ended December 31, 2001 and 2000, respectively, related to the closing
of the Willimantic facility. The 2000 charges consisted of a $3.2 million
write-down of property, plant, and equipment and $0.3 million in additional
environmental remediation required as a result of the closure. The 2001 charges
consisted of $0.3 million for facility closure costs and $1.5 million related to
employment security provisions in the labor agreement with the USWA.

Unlike the closure of the Johnstown facility, the closure of the Canton 12"
rolling facility was part of the Company's original consolidation plan
contemplated at the time of the Republic acquisition. Fair value adjustments to
the fixed assets and shutdown reserves related to the Canton 12" facility were
recorded at the date of the Republic acquisition. Charges for hourly labor of
$1.4 million were recorded during the year ended December 31, 2000 related to
employment security provisions in the labor agreement with the USWA. As of
December 31, 2001 all affected hourly employees were placed in suitable
alternative employment at other nearby facilities.

The Company had previously recorded a reserve for the reduction of non-union
labor and other shutdown reserves at the date of the Republic acquisition
related to the manufacturing locations selected for closure (the Canton 12"
rolling facility and the Chicago 11" rolling facility) amounting to $4.4 million
and $1.9 million, respectively. Adjustments reducing these previously recorded
reserves due to changes in estimates were recorded in 2001 and 2000 amounting to
$0.2 million and $1.4 million, respectively.

Additionally, reserves for the reduction of administrative labor amounting to
$0.9 million and $4.6 million during the years ended December 31, 2001 and 2000,
respectively, were recorded as a restructuring charge in the consolidated
statement of operations.



                                       84
<PAGE>


The activity impacting the accruals for restructuring during the period from
January 1, 1999 to August 12, 1999, the period from August 13, 1999 to December
31, 1999, and the years ended December 31, 2001 and 2000 based on available
information, is summarized in the table below:

<TABLE>
<CAPTION>
                                                                                     Facility
                                                  Asset Write-     Labor &            Closure
                                                     Downs        Severance            Costs             Total
                                                ------------ ---------------     --------------    -------------
<S>                                                <C>            <C>                <C>               <C>
January 1, 1999                                                   $   3,534          $     320         $  3,854

    Purchase accounting adjustments                                     860              1,917            2,777
    Amount utilized                                                  (1,128)                --           (1,128)
    Charged against environmental liabilities                            --               (792)            (792)
                                                             ---------------     --------------    -------------
August 12, 1999                                                       3,266              1,445            4,711
                                                             ---------------     --------------    -------------

    Amount utilized                                                  (2,179)                --           (2,179)
    Adjustments                                                        (323) (a)            --             (323)
                                                             ---------------     --------------    -------------
December 31, 1999                                                                        1,445            2,209
                                                                        764
                                                             ---------------     --------------    -------------

    Provision                                      $ 43,739          22,851              9,502           76,092
    Amount utilized                                                  (5,047)            (2,476)          (7,523)
    Adjustments                                                          --             (1,434)          (1,434)
    Charged against inventory                                                             (652)            (652)
    Charged against property, plant and
         Equipment                                  (43,739)                                            (43,739)
                                                ------------ ---------------     --------------    -------------
December 31, 2000                                                                                        24,953
                                                         --          18,568              6,385
                                                ------------ ---------------     --------------    -------------

    Provision                                                         2,353                300            2,653
    Amount utilized                                                  (5,609)            (2,500)          (8,109)
    Charged against defined benefit
         obligation                                                  (7,223)                             (7,223)
    Adjustments                                                        (203)             2,745            2,542
                                                ------------ ---------------     --------------    -------------
December 31, 2001                                  $     --       $   7,886          $   6,930         $ 14,816
                                                ============ ===============     ==============    =============
</TABLE>


(a)      Amount is recorded in selling, general and administrative expense.

NOTE 20 - GOODWILL IMPAIRMENT CHARGE

During the fourth quarter of 2000, the Company recognized a non-cash impairment
charge of $79.6 million related to the write-off of its unamortized goodwill
balance. The industry-wide market conditions and the Company's high level of
indebtedness following the Combination adversely impacted operations and the
Company's ability to implement its consolidation plan. These factors lead to the
need to significantly revise the Company's operating plan and related financial
forecast. Based on the Company's capital structure, the revised operating plan,
and corresponding anticipated future operating cash flows less anticipated
capital expenditures were expected to be insufficient to recover the unamortized
goodwill balance. Accordingly, the carrying value of the Company's goodwill
balance was reduced to zero.


                                       85
<PAGE>



NOTE 21 - CONDENSED COMBINED FINANCIAL STATEMENTS

The following condensed combined financial statements of the Debtors were
prepared on the same basis as the consolidated financial statements and are
presented below in accordance with SOP 90-7 (in thousands):

                             STATEMENT OF OPERATIONS
                FOR THE PERIOD APRIL 2, 2001 TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                             Period from
                                                          April 2, 2001 to
                                                          December 31, 2001

<S>                                                             <C>
Net sales                                                       $  702,727
Cost of goods sold                                                 672,040
                                                         -----------------
Gross profit (loss)                                                 30,687

Selling, general and administrative expense                         29,891
Depreciation and amortization expense                               41,843
Special charges:                                                        --
         Workforce reduction charges                               (2,134)
         Restructuring charges                                       2,792
Loss on sale of assets                                                 511
Other expense, net                                                   6,838
                                                         -----------------
Operating loss                                                    (49,054)
Interest expense, net                                               26,010
Reorganization items                                                16,031
                                                         -----------------
Loss before income taxes                                          (91,095)
Provision for income taxes                                               9
                                                         -----------------
Loss from continuing operations                                   (91,104)
Loss from disposition of discontinued operations                       457
                                                         -----------------
Net loss                                                          (91,561)
                                                         =================
</TABLE>


                                       86
<PAGE>



                                 BALANCE SHEET
                               DECEMBER 31, 2001

<TABLE>
<S>                                                        <C>
ASSETS
Current assets:
      Cash and cash equivalents                            $     5,450
      Accounts receivable, less allowances of $16,449
                                                                96,675
      Accounts receivable with affiliates                        5,792
      Inventories
                                                               202,637
      Assets held for sale
                                                                 9,013
      Prepaid expenses and other current assets
                                                                14,039
                                                           -----------
      Total current assets
                                                               333,606
Property, plant and equipment:
      Land and improvements
                                                                13,758
      Buildings and improvements
                                                                32,789
      Machinery and equipment
                                                               719,803
      Construction-in-progress
                                                                 4,722
                                                           -----------
    Total property, plant and equipment
                                                               771,072
    Accumulated depreciation
                                                              (151,115)
                                                           -----------
    Net property, plant and equipment
                                                               619,957

Assets held for sale
                                                                 2,355
Intangible assets, net of accumulated amortization
                                                                67,133
Investments in non-debtor subsidiaries                          17,189
Other assets
                                                                12,158
                                                           -----------
                         TOTAL ASSETS                      $ 1,052,398
                                                           ===========

LIABILITIES AND MEMBERS' INTEREST
Liabilities not subject to compromise:
Current liabilities:
     Revolving credit facility                             $   326,016
     Long-term secured debt in default                           3,600
     Accounts payable                                           44,760
     Accounts payable with affiliates                            1,317
     Accrued interest
                                                                 3,031
     Accrued compensation and benefits
                                                                37,128
     Accrued environmental liabilities                             230
     Other accrued liabilities
                                                                38,829
                                                           -----------
Total current liabilities                                      454,911

Accrued environmental liabilities
                                                                16,311
Other liabilities
                                                                 7,245
                                                           -----------
Total liabilities not subject to compromise                    478,467

Liabilities subject to compromise                            1,239,210
Liabilities subject to compromise with affiliates                5,853
                                                           -----------
                      TOTAL LIABILITIES                      1,723,530
                                                           -----------

Members' interest                                             (671,132)
                                                           -----------
Total liabilities and members' interest                    $ 1,052,398
                                                           ===========
</TABLE>



                                       87
<PAGE>



                             STATEMENT OF CASH FLOWS
                FOR THE PERIOD APRIL 2, 2001 TO DECEMBER 31, 2001

<TABLE>
<S>                                                                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                             $(91,561)
    Adjustments to reconcile net cash used in operating activities:
    Restructuring charges                                                     300
    Loss on sale of fixed assets                                              511
    Depreciation and amortization                                          42,031
    Amortization of deferred financing cost                                 4,313
    Reorganization items                                                   13,351
    Changes in operating assets and liabilities:
        Decrease in accounts receivable                                    50,065
        Increase in inventory                                               1,949
        Decrease in other current assets                                   (7,132)
        Increase in accounts payable                                       11,357
        Decrease in accrued compensation and benefits                      (4,160)
        Increase in defined benefit pension obligations                    20,186
        Increase in other postretirement benefits                          (6,311)
        Decrease in accrued environmental liabilities                      (3,339)
        Increase in other current liabilities                              (4,225)
        Other                                                                 279
                                                                         --------
Net cash used in operating activities before reorganization items
                                                                           27,614
     Payments for professional fees and other reorganization items
                                                                           (2,760)
                                                                         --------
Net cash used in operating activities
                                                                           24,854
                                                                         --------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                   (2,494)
    Disposition of property, plant and equipment                              265
                                                                         --------
Net cash provided by (used in) investing activities                        (2,229)
                                                                         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds under revolving credit facilities                        (16,778)
    Repayments of long-term debt                                              226
    Deferred financing costs                                               (3,541)
                                                                         --------
Net cash provided by financing activities                                 (20,093)

Net increase in cash and cash equivalents                                   2,532
Cash and cash equivalents - beginning of period                             2,918
                                                                         --------
Cash and cash equivalents - end of period                                $  5,450
                                                                         ========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                   $ 19,505
                                                                         ========
</TABLE>


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<PAGE>


                REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS

              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             Additions
                                               ------------------------------------------
                                                                             Charged to
                                 Balance at     Charged to                      Other                         Balance at
                                 Beginning      Costs and                     Accounts -       Deductions       End of
         Description              of Year        Expenses     Recoveries       Describe       from Reserves      Year
--------------------------------------------------------------------------------------------------------------------------

<S>                               <C>            <C>              <C>         <C>                <C>          <C>
ALLOWANCE FOR DOUBTFUL
  ACCOUNTS:
             2001                 $ 19,332       $  7,770                                       $ (17,680)     $   9,422
             2000                    8,798         10,534                                                        19,332
             1999                    2,679          6,534          $40        $ 403(a)(b)            (858)        8,798

RESERVES FOR
  INVENTORIES:
             2001                   $6,650         $3,483                                                       $10,133
             2000                   13,585                                                        $(6,935)        6,650
             1999                    2,364         11,221                                                        13,585

</TABLE>

(a) Foreign currency translation
(b) Includes allowance recognized in connection with the acquisition of USS/Kobe
    Steel Company's SBQ bar division.


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