<PAGE>   1
                                                                    Exhibit 13.1


                                                       Weirton Steel Corporation


MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

This following should be read in conjunction with, and is qualified in its
entirety by reference to, the Consolidated Financial Statements of Weirton Steel
Corporation (the "Company") including the notes thereto, which begin on page 26.

OVERVIEW

The Company is a major integrated producer of flat rolled carbon steels with
major product lines consisting of sheet and tin mill product. Sheet product
includes hot and cold rolled and both hot-dipped and electrolytic galvanized
steels. Tin mill product includes tin-plate, chrome coated and black plate.

   Domestic steel producers face significant competition from foreign producers.
In 1998, foreign competition adversely affected product prices in the United
States and the tonnage sold by domestic producers. Relative strength of foreign
economies and fluctuation in the value of the United States dollar against
foreign currencies substantially affect the intensity of foreign competition. In
1998, foreign producers exported 41.4 million tons of steel to the United States
compared to 31.2 million tons in 1997. A significant portion of the increase
occurred in the second half of 1998.

   On September 30, 1998, the Company, eleven of its competitors and two labor
organizations filed trade cases against imported hot-rolled steel from Brazil,
Japan, and Russia. The cases were filed with the U.S. International Trade
Commission (the "ITC") and the U.S. Department of Commerce. Anti-dumping cases
were filed against the three countries while a subsidy complaint was also filed
against Brazil. These cases allege the countries have engaged in dumping
practices, a violation of U.S. trade laws.

   On November 16, 1998, the ITC issued its preliminary ruling that the high
volumes of low-priced imported steel had damaged the domestic steel industry.

   On February 12, 1999, the Commerce Department made a preliminary ruling in
favor of the U.S. producers on the hot-rolled cases against Brazil and Japan.
The Commerce Department imposed anti-dumping duties against the steel producers
of both nations as well as countervailing duties against the Brazilian
producers. (Countervailing duties are meant to counter the effect of government
subsidization.) The anti-dumping margins ranged from 25% to 67% against Japanese
producers and from 50% to 71% against Brazilian producers. Countervailing duties
assessed against Brazilian producers ranged from 6% to 9%.

   Additionally, in February 1999, the Commerce Department announced a tentative
suspension agreement with Russia. Under this agreement, the preliminary duties
ranging from 71% to 218% will be suspended in exchange for a six month
moratorium on shipments, a price floor, and import quotas limiting Russian
hot-rolled steel to the pre-surge, 1996 levels.


--------------------------------------------------------------------------------
RESULTS OF OPERATIONS

1998 Compared To 1997

The net loss for 1998 was $6.1 million or $0.15 per diluted share compared to a
net loss of $17.7 million or $0.42 per diluted share in 1997. The results for
1998 and 1997 included pretax restructuring charges of $2.9 million and $17.0
million, respectively, associated with employee reduction programs. Excluding
the effect of this non-recurring item, and the resulting impact on income taxes,
the net loss for 1998 would have been $3.8 million or $0.09 per diluted share
compared to a net loss for 1997 of $4.1 million or $0.10 per diluted share.

   Total shipments in 1998 were 2,575 thousand tons compared to 2,772 thousand
tons in 1997. Net sales were $1,254.8 million in 1998 compared to $1,397.2
million in 1997.

   Sheet product shipments in 1998 were 1,771 thousand tons compared to 1,918
thousand tons in 1997; a decrease of 8%. Sheet mill product shipments resulted
in net sales of $755.3 million in 1998, a decrease of $107.3 million compared to
1997. The decrease in net sales is attributable to reduced shipments and a
decrease in average selling price. The lower shipments and selling prices were
the result of unfairly priced imports which drastically weakened the domestic
steel market in the second half of 1998.

   Tin mill product shipments in 1998 were 804 thousand tons compared to 854
thousand tons in 1997; a decrease of 6%. Tin mill product shipments resulted in
net sales of $499.5 million in 1998, a decrease of $35.1 million compared to
1997. The decrease in net sales is primarily attributable to the decrease in tin
mill product shipments.

   Cost of sales per ton decreased approximately $20 per ton from $454 per ton
in 1997 to $434 per ton in 1998. The decrease resulted primarily from a full
year's benefit of the rebuild of the No. 1 Blast Furnace, lower raw material and
employment costs and continued benefits of the Company's cost reduction
programs.


                                                                           14.15
<PAGE>   2



MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

   Selling, general and administrative expenses in 1998 were $39.2 million
compared to $36.3 million in 1997. The increase is primarily attributable to
costs incurred in the start-up of the Company's consolidated subsidiary,
MetalSite LP.

   During 1998, the Company initiated a special voluntary retirement window for
certain supervisory and managerial employees. As a result of the retirement
window, the Company recorded a restructuring charge of $2.9 million, consisting
of early retirement benefits.

   During 1997, the Company finalized its labor agreements with its principal
union. The new contracts, among other things, provided for a retirement window
for represented retirement eligible employees. As a result of the retirement
window, the Company recorded a restructuring charge of $17.0 million in 1997.
The restructuring charge consisted of the recognition of special retirement
benefits and a lump sum payment for those choosing to retire during the
window.

   Interest expense was $44.3 million in 1998, a decrease of $4.3 million from
1997. The decrease resulted from lower outstanding debt due to the repayment of
$42.2 million in senior debt in March 1998.

1997 Compared To 1996

The net loss for 1997 was $17.7 million or $0.42 per diluted share compared to a
net loss of $49.9 million or $1.18 per diluted share in 1996. The results for
1997 and 1996 included pretax restructuring charges of $17.0 million in each
year associated with employee reduction programs. The 1996 results included a
$5.4 million after-tax extraordinary loss on the early extinguishment of debt.
Excluding the effect of these non-recurring items and the resulting impact on
income taxes, net loss for 1997 would have been $4.1 million or $0.10 per
diluted share compared to a net loss for 1996 of $30.8 million or $0.73 per
diluted share.

   Total shipments in 1997 were 2,772 thousand tons compared to 2,857 thousand
tons in 1996. Net sales were $1,397.2 million in 1997 compared to $1,383.3
million in 1996.

   Sheet product shipments in 1997 were 1,918 thousand tons or 2% lower than in
1996. However, net sales generated by sheet product in 1997 increased $39.6
million to $862.6 million, due to overall higher average selling prices and an
improved product mix.

   Tin mill product shipments in 1997 were 854 thousand tons compared to 900
thousand tons in 1996; a decrease of 5%. Tin mill product shipments resulted in
net sales of $534.6 million in 1997, a decrease of $25.7 million compared to
1996. The decrease in net sales is attributable to the decrease in tin mill
product shipments.

   Cost of sales as a percentage of net sales was 90% in 1997 compared to 93% in
1996 reflecting higher average selling prices and lower operating costs in 1997
due to lower employment levels and improved operations after the rebuild of the
No. 1 Blast Furnace. Operating costs in the fourth quarter of 1996 were
adversely affected by the planned shut down of the No. 1 Blast Furnace. Higher
operating costs associated with the No. 1 Blast Furnace carried into 1997, but
were offset by lower operating costs after start-up in the first quarter of the
year.

   Selling, general and administrative expenses in 1997 were $36.3 million
compared to $39.1 million in 1996. The decrease is primarily attributable to
lower salaries resulting from the managerial and supervisory workforce reduction
in 1996.

   Depreciation expense increased $2.9 million to $60.9 million in 1997. This
increase was the result of a higher depreciable asset base as a result of the
capital expenditures associated with the No. 1 Blast Furnace rebuild.

   During 1997, the Company finalized its labor agreements with its principal
union. The new contracts, among other things, provided for a retirement window
for represented retirement eligible employees. As a result of the retirement
window, the Company recorded a restructuring charge of $17.0 million in 1997.
The restructuring charge consisted of the recognition of special retirement
benefits and a lump sum payment for those choosing to retire during the window.
During 1996, the Company recognized a $17.0 million restructuring charge
associated with an approximately 20% reduction in the supervisory and managerial
workforce. The charge related to this employee reduction consisted of early
retirement benefits for those eligible to retire and severance benefits for
those choosing not to retire or ineligible to retire.

   Interest expense was $48.7 million in 1997, an increase of $4.3 million from
1996. The increase resulted from a net increase of approximately $23.0 million
of senior debt obligations during the second half of 1996, the full effect of
which was not realized until 1997.

   In July 1996, the Company refinanced approximately $100.0 million of its
senior notes through the issuance of $125.0 million principal amount of 11-3/8%
Senior Notes due 2004. The refinancing resulted in the recognition of a $5.4
million after-tax extraordinary loss on the early extinguishment of debt in
1996.



WEIRTON STEEL CORPORATION
<PAGE>   3



                                                       Weirton Steel Corporation

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

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1998, the Company had cash and equivalents of $68.4 million
compared to $124.7 million as of December 31, 1997. The Company's liquidity
requirements arise primarily from working capital requirements, debt service and
capital investments. The Company's statements of cash flows for the years
indicated are summarized below:

<TABLE>
<CAPTION>
(Dollars in thousands)                                    1998             1997
--------------------------------------------------------------------------------
<S>                                                   <C>              <C>      
Net cash provided by operating activities             $ 50,224         $ 72,104 
Net cash used by investing activities                  (57,943)         (60,170)
Net cash provided (used) by financing activities       (48,582)             664
                                                      --------         -------- 
Increase (decrease) in cash                           $(56,301)        $ 12,598
                                                      ========         ========
</TABLE>

   Net cash flows from operating activities were $50.2 million and $72.1 million
during 1998 and 1997, respectively. The decline in cash flow from operations
from 1998 to 1997 resulted from a weaker steel market in the second half of 1998
and payment of federal alternative minimum tax.

   The Company's investing activities included capital spending for property,
plant and equipment of $50.4 million and $60.1 million in 1998 and 1997,
respectively. The Company used these expenditures to purchase, modernize or
upgrade production equipment, maintain facilities and comply with environmental
regulations. The Company's planned capital expenditures for 1999 are
approximately $15.0 million. Included in the Company's planned capital
expenditures are approximately $0.5 million for environmental control projects.
In addition, investing activities included investments in unconsolidated
subsidiaries of $7.8 million and $0.1 million in 1998 and 1997, respectively.

   Net cash flows used by financing activities were $48.6 million for 1998. Net
cash flows provided by financing activities were $0.7 million in 1997. The
Company repaid $42.2 million of senior notes in 1998. The Company also purchased
$6.3 million of its common stock in 1998 which is being held in treasury.

   Through a wholly owned subsidiary, Weirton Receivables Inc. ("WRI"), the
Company has in place a receivables participation agreement with a group of four
banks (the "WRI Receivables Participation Agreement"). The facility, which is
AAA rated by Standard and Poor's Rating Service, provides for a total commitment
by the banks of up to $85.0 million, including a letter of credit subfacility of
up to $25.0 million. The WRI Receivables Participation Agreement, as amended,
makes the facility available to WRI through April, 2003. As of December 31,
1998, after reductions from amounts in place under the letter of credit
subfacility, the base amount of participation interests available for cash sales
was approximately $34.4 million.

   As of March 19, 1999, after reductions from amounts in place under the letter
of credit subfacility, the base amount of participation interest available for
cash sales was approximately $44.2 million. The Company, WRI and the banks have
agreed on amendments to the Receivables Participation Agreement in order to
increase the amounts of participation interest available for cash sale.
Implementation of the amendments is subject to the execution by the parties of
definitive documentation and the satisfaction of customary conditions by the
Company and WRI.

   In order to improve its liquidity position, the Company is also pursuing
various operating initiatives. These include inventory reduction programs
supported by purchase consignment agreements and recent arrangements related to
the strategic sourcing of raw materials and slabs. Further inventory reductions
are planned through changes in
operating practices.

   The Company's net deferred tax assets were $154.7 million as of December 31,
1998, which consisted primarily of the carrying value of net operating loss
carryforwards and other tax credits and net deductible temporary differences
available to reduce the Company's cash requirements for the payment of future
federal income tax. The Company was required in 1998 and 1997, and may be
required in future periods, to make cash payments for income taxes under federal
alternative minimum tax regulations.

   As of December 31, 1998 and 1997, the Company had pension funding credits of
approximately $83.2 million and $89.0 million, respectively. Accordingly, the
Company is not required to contribute to its pension plan in 1999, nor was the
Company required to contribute to its pension plan in 1998. However, during
1998, the Company did contribute $43.0 million to its pension fund.

   Based upon available cash on hand, the amount of cash expected to be
generated from operating activities, including planned reductions in working
capital primarily through inventory reduction programs, and the pension funding
position, the Company expects to have sufficient cash to meet its short term
needs, including the retirement of the 10-7/8% Senior Notes in 1999 and the
completion of the 1999 capital spending plan.

   To the extent that cash on hand and cash generated from operating activities
do not generate an adequate amount of cash, the Company expects that its cash
requirements can be met by the WRIReceivables Participation Agreement.



                                                                           16.17
<PAGE>   4


MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

YEAR 2000

The Company (like most companies) faces difficulties resulting from computer
programs being written using two digits rather than four to define the
applicable year. The Company owns computer hardware and software and
date-sensitive electronic devices which may recognize a date using "00" as the
year 1900 rather than the year 2000. Such systems could cause disruption of
operations, including production difficulties and a temporary inability to
process ordinary business transactions.

   The Company started its Year 2000 readiness effort in 1996. The Company
currently employs a task force to analyze potential areas of risk associated
with the Year 2000. The Company, led by the task force, is executing a Year 2000
readiness plan which includes:

   o prioritizing and focusing on those information technology (IT) systems and
     production control (non-IT) systems which are critical to the operations 
     and pose the greatest operational, environmental, quality and financial 
     risks to the Company.

   o allocating appropriate resources to fix the Year 2000 problem.

   o communicating with, and aggressively pursuing, critical third parties to
     help ensure the Year 2000 readiness of their products and services.

   o performing rigorous Year 2000 testing of critical systems.

   o participating in and exchanging Year 2000 information with industry trade
     associations, such as the American Iron & Steel Institute, the Association
     of Iron and Steel Engineers and the Steel Industry Systems Association.

   o engaging qualified outside engineering and information technology
     consulting firms to assist in the Year 2000 impact assessment and readiness
     effort.

   o assessing the readiness of third party vendors, suppliers, customers and
     service providers.

State of Readiness

The Company has targeted the third quarter of 1999 for complete Year 2000
readiness including integration testing, contingency planning and tracking the
readiness of third parties. The Company will replace or upgrade current systems
with third-party Year 2000 ready products and services. The availability of
information and services from third-party suppliers/vendors may affect this
schedule.

   The chart below provides the percentage completion of the various phases of
the Year 2000 Plan. The phases included are:

   1. Y2K Inventory - identification of the systems and processes that may be
      affected by the Year 2000.

   2. Y2K Impact Assessment - the analysis performed to determine the Year 2000
      date impact of the Company's Year 2000 inventory.

   3. Y2K Readiness - The Year 2000 readiness of Y2K inventory including items
      already made Year 2000 ready and those items made Year 2000 ready through
      renovation/replacement. The Company only considers systems ready after
      testing and implementation activities have been completed.

<TABLE>
<CAPTION>
                                March 19, 1999
                     -------------------------------------
                               Percent Completed
                           Y2K    Y2K Impact          Y2K
                     Inventory    Assessment    Readiness
----------------------------------------------------------
<S>                        <C>           <C>           <C>
IT Systems                 100%          100%          75%
Non-IT Systems             100%          100%          65%
----------------------------------------------------------
</TABLE>

Third Parties

The Company depends on third-party suppliers for raw materials, energy,
utilities, telecommunications, transportation and others goods and services
critical to the operation. The Company contacted all of its critical third party
suppliers and analyzed their Year 2000 readiness based on responses to the
Company's inquiries. For suppliers who did not respond, and for suppliers whose
responses the Company considers inadequate, the Company has begun a follow-up
process. That process includes, among other things, additional inquiries, site
visits of the Company's most critical suppliers and contacting those suppliers
that did not respond to the initial inquiry.



WEIRTON STEEL CORPORATION
<PAGE>   5



                                                       Weirton Steel Corporation

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

Costs to Achieve Year 2000 Readiness

As part of its capital plan, the Company replaced, or is in the process of
replacing, certain of its business systems dealing with human resources and
financial reporting. The planned replacement of these systems was accelerated to
achieve Year 2000 readiness. Through December 31, 1998, the Company spent $10.8
million on these projects. The Company plans to spend an additional $4.9 million
to complete these projects.

   Through December 31, 1998, in addition to the replacement of the human
resources and financial reporting systems, the Company spent approximately $3.8
million in remediation costs to achieve Year 2000 readiness. All of these
remediation costs have properly been expensed in the Company's Consolidated
Statements of Income. Management anticipates that the Company will spend an
additional $4.0 million to $6.0 million, including approximately $1.0 million in
capital expenditures to achieve Year 2000 readiness. As the work of the task
force progresses, the Company will continue to revise its estimates of costs
required to achieve Year 2000 readiness.

Year 2000 Risks to the Company

The Year 2000 problem poses significant operational, environmental, quality and
financial risks to the Company. Failure to achieve Year 2000 readiness goals
would result in business consequences which might include production delays and
outages, inability to obtain needed goods and services from third party vendors
and suppliers, inability to process ordinary business transactions, lost revenue
and failure of management controls. Although the Company believes internal Year
2000 compliance will be achieved by the third quarter of 1999, there can be no
assurance that the Year 2000 problem will not have a material adverse affect on
the Company's business, financial condition and results of operations.

Contingency Plans

The Company is currently identifying and developing specific contingency plans
to mitigate the effects of possible Year 2000 disruptions. The Company expects
to finalize contingency plans by the third quarter of 1999.

   The cost of Year 2000 readiness, the dates by which the Company believes it
will achieve Year 2000 readiness and the adequacy of Year 2000 contingency plans
are based on management's best estimates and assumptions of future events. There
can be no guarantee that these estimates will be achieved, and actual results
could differ materially from those anticipated.

ENVIRONMENTAL MATTERS

In March 1996, the West Virginia Department of Environmental Protection ("DEP")
and the United States Environmental Protection Agency ("EPA") advised the
Company that they had identified a number of enforcement issues pertaining to
waste water discharge, air emissions and waste handling operations of the
Company. In September 1996, the Company, DEP and EPA reached a settlement
regarding these water, air and waste-related issues. Under the settlement, the
Company was required to pay a total penalty of $3.2 million. Such payment was
made in 1997.

   Under the settlement, the Company is required to conduct certain remedial
activity at one of its waste disposal sites. Additionally, the Company is
required to undertake certain capital projects to assure compliance with air,
water and waste-related regulations. Such capital costs will include upgrades
and modifications to air emissions control equipment, wastewater treatment
systems and waste handling facilities. Under the settlement, the Company has
committed to environmental related capital projects totaling approximately $19.8
million. Through December 31, 1998, the Company had expended $14.5 million
related to these capital commitments.

   In connection with the negotiations, the EPA issued a corrective action
order, effective October 18, 1996, requiring the Company to conduct
investigative activities to determine the nature and extent of hazardous
materials which may be located on the Company's property and to evaluate and
propose corrective measures needed to abate any unacceptable risks.

   The Company has accrued approximately $7.0 million related to environmental
related liabilities, including costs associated with the corrective action
order. Because the Company does not currently know the nature nor the extent of
hazardous waste located on the property, it is not presently possible to
estimate the ultimate cost to comply with the corrective action order or conduct
remedial activity that may be required.

   The Company believes that National Steel Corporation ("NSC") is obligated to
reimburse the Company for a portion of the costs that may be incurred by the
Company to comply with the corrective action order and to undertake any required
remedial action. Pursuant to the agreement whereby the Company purchased the
former Weirton Steel Division of NSC in 1984, NSC retained liability for cleanup
costs related to solid or hazardous waste facilities, areas or equipment as long
as such were not used by the Company in its operations subsequent to the
acquisition. The Company has not recorded any receivables from NSC related to
potential reimbursable costs.



                                                                           18.19
<PAGE>   6

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Fair values of cash and cash equivalents, receivables and accounts payable
approximate carrying values and were relatively insensitive to changes in
interest rates at December 31, 1998 due to the short term maturity of the
instruments.

   The Company's market risk strategy has generally been to obtain competitive
prices for its products and services and allow operating results to reflect
market price movements dictated by supply and demand for the Company's
products.

   In the normal course of business, the Company is exposed to market risk or
price fluctuations related to the purchase of iron ore pellets and blast furnace
coke. The Company is also exposed to market risk or price fluctuations on
purchases of scrap, tin, zinc, oxygen, nitrogen, natural gas, power and other
raw materials and utility requirements. As part of its market risk strategy, the
Company has entered into fixed price contracts, lasting at least until December
31, 1999, for its iron ore pellet, oxygen, natural gas and nitrogen
requirements. The Company has entered into a contract to purchase approximately
80% of its coke requirements. Under the contract, the price of coke fluctuates
with the market, subject to a ceiling and a floor. The remaining 20% of the
Company's coke requirements are sourced from the open market and are subject to
market risk. Scrap, tin, zinc and other raw materials are generally purchased in
the open market and subject to price fluctuation. As of December 31, 1998, the
Company had no significant derivative financial instruments or derivative
commodity instruments outstanding.

   As of December 31, 1998, the Company had the following financial liabilities
where the fair value differed from the carrying value:

<TABLE>
<CAPTION>
                                  Carrying Value   Fair Value
-------------------------------------------------------------
<S>                                     <C>          <C>     
Long term debt                          $304,626     $277,925
Series A Redeemable Preferred Stock     $ 23,543     $  2,651
</TABLE>

--------------------------------------------------------------------------------
OUTLOOK

Flat rolled steel product demand in the Company's end user markets remains
steady. However, record breaking volumes of unfairly priced imports weakened the
Company's order entry and shipping rates and caused reduction in prices in the
second half of 1998. While duties imposed on steel imported from Japan and
Brazil and the suspension agreement with Russia will help stabilize selling
prices, the market continues to be adversely affected by oversupply relative to
demand, including unfairly priced imported products against which duties and
other remedies have yet to be applied.

   In response to these conditions, the Company idled its No. 4 Blast Furnace
and reduced its workforce through layoffs. Consequently, the Company expects a
loss in the first quarter of 1999.


--------------------------------------------------------------------------------
RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement on
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivatives and
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument be recorded in the balance sheet as
an asset or liability measured at its fair value. The statement requires that
changes in the fair value of derivatives be recognized currently in earnings
unless specific hedge accounting criteria are met. SFAS No. 133 is effective for
fiscal years beginning after June 15, 1999. Management does not believe the
adoption of SFAS No. 133 will have a material impact on the Company's financial
position or its results of operations.

--------------------------------------------------------------------------------
FORWARD LOOKING STATEMENTS

This annual report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements are
based on assumptions and expectations, which may not be realized and are
inherently subject to risk and uncertainties, many of which cannot be predicted
with accuracy. Future events and actual results, financial and otherwise, may
differ from the results discussed in the forward-looking statements. Although
the Company believes that our assumptions made in connection with the
forward-looking statements are reasonable, there are no assurances that our
assumptions and expectations will prove to have been correct due to the
foregoing and other factors. Such forward-looking statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The Company is under no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

 
WEIRTON STEEL CORPORATION
<PAGE>   7


                                                       Weirton Steel Corporation

CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31

<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)                                   1998              1997              1996
------------------------------------------------------------------------------------------------------------------------

<S>                                                                       <C>               <C>               <C>       
NET SALES                                                                 $1,254,796        $1,397,204        $1,383,301
Operating costs:
Cost of sales                                                              1,117,465         1,258,035         1,282,923
Selling, general and administrative expense                                   39,219            36,308            39,102
Depreciation                                                                  60,822            60,855            58,019
Restructuring charge                                                           2,871            17,000            16,959
                                                                          ----------        ----------        ----------
      TOTAL OPERATING COSTS                                                1,220,377         1,372,198         1,397,003
                                                                          ----------        ----------        ----------


INCOME (LOSS) FROM OPERATIONS                                                 34,419            25,006           (13,702)
Income (loss) from unconsolidated subsidiaries                                    34               (12)               --
Interest expense                                                             (44,338)          (48,683)          (44,366)
Interest income                                                                4,684             4,259             5,415
ESOP contribution                                                             (2,610)           (2,610)           (2,610)
                                                                          ----------        ----------        ----------

LOSS BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND MINORITY INTEREST            (7,811)          (22,040)          (55,263)
Income tax benefit                                                            (1,391)           (4,298)          (10,776)
                                                                          ----------        ----------        ----------
LOSS BEFORE EXTRAORDINARY ITEM AND MINORITY INTEREST                          (6,420)          (17,742)          (44,487)
Loss on early extinguishment of debt                                              --                --             5,431
                                                                          ----------        ----------        ----------
LOSS BEFORE MINORITY INTEREST                                                 (6,420)          (17,742)          (49,918)
Minority interest in loss of consolidated subsidiary                             293                --                --
                                                                          ----------        ----------        ----------
NET LOSS                                                                  $   (6,127)       $  (17,742)       $  (49,918)
                                                                          ==========        ==========        ==========


PER SHARE DATA:
Weighted average number of common shares outstanding (in thousands):
   Basic                                                                      41,924            42,622            42,370
   Diluted                                                                    41,924            42,622            42,370

BASIC EARNINGS PER SHARE:
Loss before extraordinary item                                            $    (0.15)       $    (0.42)       $    (1.05)
Loss on early extinguishment of debt                                              --                --             (0.13)
                                                                          ----------        ----------        ----------
NET LOSS PER COMMON SHARE                                                 $    (0.15)       $    (0.42)       $    (1.18)
                                                                          ==========        ==========        ==========

DILUTED EARNINGS PER SHARE:
Loss before extraordinary item                                            $    (0.15)       $    (0.42)       $    (1.05)
Loss on early extinguishment of debt                                              --                --             (0.13)
                                                                          ----------        ----------        ----------
NET LOSS PER COMMON SHARE                                                 $    (0.15)       $    (0.42)       $    (1.18)
                                                                          ==========        ==========        ==========
</TABLE>


The accompanying notes are an integral part of these statements.


                                                                           20.21
<PAGE>   8


CONSOLIDATED BALANCE SHEETS
YEAR ENDED DECEMBER 31

<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)                                                     1998              1997
------------------------------------------------------------------------------------------------------------------------

<S>                                                                                         <C>               <C>       
ASSETS:
CURRENT ASSETS:
   Cash and equivalents, includes restricted cash of $1,275 and $2,046, respectively        $   68,389        $  124,690
   Receivables, less allowances of $8,574 and $9,853, respectively                             112,278           140,843
   Inventories                                                                                 259,332           260,933
   Deferred income taxes                                                                        43,254            34,437
   Other current assets                                                                          4,443             4,803
                                                                                            ----------        ----------
         TOTAL CURRENT ASSETS                                                                  487,696           565,706
Property, plant and equipment, net                                                             576,238           591,389
Investment in unconsolidated subsidiaries                                                        7,938                88
Deferred income taxes                                                                          111,411           111,148
Other assets and deferred charges                                                               12,416            14,209
                                                                                            ----------        ----------
TOTAL ASSETS                                                                                $1,195,699        $1,282,540
                                                                                            ==========        ==========


LIABILITIES:
CURRENT LIABILITIES:
   Current portion of long term debt obligations                                            $   84,044        $   42,163
   Payables                                                                                    120,697           132,666
   Employment costs                                                                             63,966            61,800
   Taxes other than income taxes                                                                15,060            22,417
   Other current liabilities                                                                    10,957            12,571
                                                                                            ----------        ----------
         TOTAL CURRENT LIABILITIES                                                             294,724           271,617

Long term debt obligations                                                                     304,626           388,997
Long term pension obligation                                                                    81,908            97,542
Postretirement benefits other than pensions                                                    337,443           338,474
Other long term liabilities                                                                     33,217            32,804
                                                                                            ----------        ----------
         TOTAL LIABILITIES                                                                  $1,051,918        $1,129,434


REDEEMABLE STOCK:
Preferred stock, Series A, $0.10 par value; 1,694,636 and 1,738,163
   shares authorized and issued; 1,678,576 and 1,729,325 subject to put                         23,852            24,652
Less: Preferred treasury stock, Series A, at cost, 21,454 and 10,892 shares                       (309)             (158)
Deferred ESOP compensation                                                                      (1,305)           (3,915)
                                                                                            ----------        ----------
         TOTAL REDEEMABLE STOCK                                                                 22,238            20,579


STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $0.10 par value: 16,060 and 8,838 shares not subject to put             233               128
Common stock, $0.01 par value; 50,000,000 authorized;
   43,178,134 and 42,846,184 shares issued                                                         432               428
Additional paid-in capital                                                                     457,851           456,379
Common stock issuable, 383,562 and 288,423 shares                                                  532               664
Deferred compensation                                                                             (492)             (471)
Retained earnings (deficit)                                                                   (329,141)         (323,014)
Less: Common treasury stock, at cost 1,983,561 and 209,514 shares                               (7,872)           (1,587)
                                                                                            ----------        ----------
         TOTAL STOCKHOLDERS' EQUITY                                                         $  121,543        $  132,527
                                                                                            ----------        ----------
TOTAL LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY                                $1,195,699        $1,282,540
                                                                                            ==========        ==========
</TABLE>


The accompanying notes are an integral part of these statements.


WEIRTON STEEL CORPORATION


<PAGE>   9



                                                       Weirton Steel Corporation


CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31

<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)                                   1998              1997              1996
------------------------------------------------------------------------------------------------------------------------


<S>                                                                       <C>                 <C>              <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
   NET LOSS                                                               $   (6,127)         $(17,742)        $ (49,918)
   ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED
   BY OPERATING ACTIVITIES:
   Depreciation                                                               60,822            60,855            58,019
   Amortization of deferred financing costs                                    1,662             1,836             1,982
   Restructuring charge                                                        2,871            17,000            16,959
   ESOP Contribution                                                           2,610             2,610             2,610
   Loss on early extinguishment of debt                                           --                --             5,431
   Deferred income taxes                                                      (9,080)           (1,742)           (7,078)
   Cash provided (used) by working capital items:
      Receivables                                                             28,565            13,583            (4,213)
      Inventories                                                              1,601            (1,794)           (3,779)
      Other current assets                                                       360             1,606             4,131
      Payables                                                               (11,969)          (16,932)           24,743
      Other current liabilities                                               (6,805)              838           (35,188)
   Long term pension obligation                                              (17,713)              368             6,973
   Other                                                                       3,427            11,618            13,936
                                                                          ----------          --------         --------- 
NET CASH PROVIDED BY OPERATING ACTIVITIES                                     50,224            72,104            34,608

CASH FLOWS FROM INVESTING ACTIVITIES
   Investment in unconsolidated subsidiaries                                  (7,561)             (100)               --
   Capital spending                                                          (50,382)          (60,070)          (67,937)
                                                                          ----------          --------         --------- 
NET CASH USED BY INVESTING ACTIVITIES                                        (57,943)          (60,170)          (67,937)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of debt obligations                                             (42,831)               --          (105,676)
   Purchase of treasury stock                                                 (6,283)               --                --
   Proceeds from issuance of debt obligations                                     --                --           122,610
   Common shares issuable                                                        532               664               773
   Deferred financing costs                                                       --                --            (4,097)
                                                                          ----------          --------         --------- 
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                             (48,582)              664            13,610
                                                                          ----------          --------         --------- 
NET CHANGE IN CASH AND EQUIVALENTS                                           (56,301)           12,598           (19,719)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD                                  124,690           112,092           131,811
                                                                          ----------          --------         --------- 
CASH AND EQUIVALENTS AT END OF PERIOD                                     $   68,389          $124,690         $ 112,092
                                                                          ==========          ========         ========= 
SUPPLEMENTAL CASH FLOW INFORMATION
   Interest paid, net of capitalized interest                             $   45,953          $ 48,489         $  40,275
   Income taxes paid (refunded), net                                           7,803            (2,556)           (3,699)
</TABLE>


The accompanying notes are an integral part of these statements.

                                                                           22.23
<PAGE>   10



STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                                              
                                                                                         Common Stock                         
                                                                                   ----------------------       Additional
(Dollars in thousands, except per share data)                                          Shares      Amount  Paid-in Capital    
--------------------------------------------------------------------------------------------------------------------------

<S>                                                                                <C>               <C>          <C>      
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1995                             42,289,944        $423         $454,197 
Net loss                                                                                   --          --               --    
Conversion of preferred stock                                                           7,142          --               94    
Exercise of preferred stock put options                                                    --          --               13    
Purchase of treasury stock                                                                 --          --               --    
Employee stock purchase plan:                                                                                               
   Shares issued                                                                      295,764           3            1,034    
   Shares issuable                                                                         --          --               --    
Board of Directors deferred compensation plan:                                                                              
   Shares issued                                                                           --          --              (27)   
   Shares issuable                                                                         --          --               --    
Deferred compensation                                                                      --          --               --    
--------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1996                             42,592,850         426          455,311    
Net loss                                                                                   --          --               --    
Conversion of preferred stock                                                          24,560          --              356    
Exercise of preferred stock put options                                                    --          --               77    
Purchase of treasury stock                                                                 --          --                1    
Reclassification of preferred Series A not subject to put                                  --          --               --    
Employee stock purchase plan:                                                                                               
   Shares issued                                                                      228,774           2              679    
   Shares issuable                                                                         --          --               --    
Board of Directors deferred compensation plan:                                                                              
   Shares issued                                                                           --          --              (45)   
   Shares issuable                                                                         --          --               --    
Deferred compensation                                                                      --          --               --    
--------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1997                             42,846,184         428          456,379    
Net loss                                                                                   --          --               --    
Conversion of preferred stock                                                          43,527           2              631    
Exercise of preferred stock put options                                                    --          --              177    
Purchase of treasury stock                                                                 --          --                2    
Reclassification of preferred Series A not subject to put                                  --          --               --    
Employee stock purchase plan:                                                                                               
   Shares issued                                                                      247,865           2              564    
   Shares issuable                                                                         --          --               --    
Board of Directors compensation plans:                                                                                      
   Shares issued                                                                       40,558          --               98    
   Shares issuable                                                                         --          --               --    
Deferred compensation                                                                      --          --               --    
--------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1998                             43,178,134        $432         $457,851    
==========================================================================================================================
</TABLE>


The accompanying notes are an integral part of these statements.


WEIRTON STEEL CORPORATION
<PAGE>   11

                                                       Weirton Steel Corporation
<TABLE>
<CAPTION>
                                                                      Common
                                                                  Shares Issuable                       Retained    
                                                                 ------------------      Deferred       Earnings    
(Dollars in thousands, except per share data)                    Shares      Amount   Compensation     (Deficit)    
----------------------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>             <C>      <C>          
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1995           332,076    $ 1,170           $  --    $(255,354)   
Net loss                                                              --         --              --      (49,918)   
Conversion of preferred stock                                         --         --              --           --    
Exercise of preferred stock put options                               --         --              --           --    
Purchase of treasury stock                                            --         --              --           --    
Employee stock purchase plan:
   Shares issued                                                (295,764)    (1,037)             --           --    
   Shares issuable                                               228,774        681              --           --    
Board of Directors deferred compensation plan:
   Shares issued                                                 (36,312)      (133)             --           --    
   Shares issuable                                                30,403         92              --           --    
Deferred compensation                                                 --         --            (385)          --    
----------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1996           259,177        773            (385)    (305,272)   
Net loss                                                              --         --              --      (17,742)   
Conversion of preferred stock                                         --         --              --           --    
Exercise of preferred stock put options                               --         --              --           --    
Purchase of treasury stock                                            --         --              --           --    
Reclassification of preferred Series A not subject to put             --         --              --           --    
Employee stock purchase plan:
   Shares issued                                                (228,774)      (681)             --           --    
   Shares issuable                                               247,865        566              --           --    
Board of Directors deferred compensation plan:
   Shares issued                                                 (30,403)       (92)             --           --    
   Shares issuable                                                40,558         98             (98)          --    
Deferred compensation                                                 --         --              12           --    
----------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1997           288,423        664            (471)    (323,014)   
Net loss                                                              --         --              --       (6,127)   
Conversion of preferred stock                                         --         --              --           --    
Exercise of preferred stock put options                               --         --              --           --    
Purchase of treasury stock                                            --         --              --           --    
Reclassification of preferred Series A not subject to put             --         --              --           --    
Employee stock purchase plan:
   Shares issued                                                (247,865)      (566)             --           --    
   Shares issuable                                               285,430        379              --           --    
Board of Directors compensation plans:
   Shares issued                                                 (40,558)       (98)             --           --    
   Shares issuable                                                98,132        153            (153)          --    
Deferred compensation                                                 --         --             132           --    
----------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1998           383,562      $ 532           $(492)   $(329,141)   
================================================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                           Common              Preferred Series A
                                                                       Treasury Stock          Not Subject to Put
                                                                     -------------------       ------------------   Stockholders'
(Dollars in thousands, except per share data)                        Shares       Amount       Shares      Amount         Equity
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>           <C>           <C>        <C>     
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1995              275,829      $(1,882)       5,074        $ 74       $198,628
Net loss                                                                 --           --           --          --        (49,918)
Conversion of preferred stock                                            --           --           --          --             94
Exercise of preferred stock put options                                  --           --           --          --             13
Purchase of treasury stock                                              131           (1)          --          --             (1)
Employee stock purchase plan:
   Shares issued                                                         --           --           --          --             --
   Shares issuable                                                       --           --           --          --            681
Board of Directors deferred compensation plan:
   Shares issued                                                    (36,312)         160           --          --             --
   Shares issuable                                                       --           --           --          --             92
Deferred compensation                                                    --           --           --          --           (385)
--------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1996              239,648       (1,723)       5,074          74        149,204
Net loss                                                                 --           --           --          --        (17,742)
Conversion of preferred stock                                            --           --         (542)         (8)           348
Exercise of preferred stock put options                                  --           --           --          --             77
Purchase of treasury stock                                              269           (1)          --          --             --
Reclassification of preferred Series A not subject to put                --           --        4,306          62             62
Employee stock purchase plan:
   Shares issued                                                         --           --           --          --             --
   Shares issuable                                                       --           --           --          --            566
Board of Directors deferred compensation plan:
   Shares issued                                                    (30,403)         137           --          --             --
   Shares issuable                                                       --           --           --          --             --
Deferred compensation                                                    --           --           --          --             12
--------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1997              209,514       (1,587)       8,838         128        132,527
Net loss                                                                 --           --           --          --         (6,127)
Conversion of preferred stock                                            --           --         (491)         (7)           626
Exercise of preferred stock put options                                  --           --           --          --            177
Purchase of treasury stock                                        1,774,047       (6,285)          --          --         (6,283)
Reclassification of preferred Series A not subject to put                --           --        7,713         112            112
Employee stock purchase plan:
   Shares issued                                                         --           --           --          --             --
   Shares issuable                                                       --           --           --          --            379
Board of Directors compensation plans:
   Shares issued                                                         --           --           --          --             --
   Shares issuable                                                       --           --           --          --             --
Deferred compensation                                                    --           --           --          --            132
--------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY CONSOLIDATED AT DECEMBER 31, 1998            1,983,561      $(7,872)      16,060        $233       $121,543
================================================================================================================================
</TABLE>




                                                                           24.25

<PAGE>   12








NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS 
WHERE INDICATED)

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

NOTE 1

Basis of Presentation

The financial statements herein include the accounts of Weirton Steel
Corporation and its consolidated subsidiaries. Entities of which the Company
owns a majority interest are consolidated; entities of which the Company owns a
less than majority interest are not consolidated and are reflected in the
consolidated financial statements using the equity method of accounting. All
intercompany accounts and transactions with consolidated subsidiaries have been
eliminated in consolidation. Weirton Steel Corporation together with its
subsidiaries are herein referred to as the "Company."

   The preparation of financial statements in conformity with generally accepted
accounting principles 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.

   Certain reclassifications have been made to prior year amounts to conform
with current year presentation.


--------------------------------------------------------------------------------
NOTE 2

Organization and Background

The Company and its predecessor companies have been in the business of making
and finishing steel products for nearly 90 years. From November 1929 to January
1984, the Company's business was operated as either a subsidiary or a division
of National Steel Corporation ("NSC"). Incorporated in Delaware in November
1982, the Company acquired the principal assets of NSC's former Weirton Steel
Division in January 1984.

   Prior to 1989, the Company was owned in its entirety by its employees through
an Employee Stock Ownership Plan (the "1984 ESOP"). In June 1989, the 1984 ESOP
sold 4.5 million shares of the Company's common stock in a public offering. In
connection with the public offering of common stock in June 1989, the Company
sold 1.8 million shares of voting Redeemable Preferred Stock, Series A (the
"Series A Preferred") to a new Employee Stock Ownership Plan (the "1989 ESOP").
Each share of Series A Preferred is convertible at any time into one share of
common stock, subject to adjustment, and is entitled to 10 times the number of
votes allotted to the common stock into which it is convertible.

   In May 1994, the Company's stockholders approved an amendment to the
Company's Restated Certificate of Incorporation increasing the number of
authorized shares of common stock from 30.0 million shares to 50.0 million
shares. The amendment provided that 15.0 million shares of such increase were to
be issued only in conjunction with public offerings and that up to 5.0 million
shares of such increase were to be issued only pursuant to employee benefit
plans. In August 1994, the Company and the Pension Plan participated in a public
sale of the Company's common stock and sold 15.0 million and 4.55 million
shares, respectively.

   Substantially all of the Company's employees participate in the 1984 ESOP and
the 1989 ESOP which owned approximately 24.7% of the issued and outstanding
common shares and substantially all the preferred shares of the Company as of
December 31, 1998. The common and preferred shares held by the 1984 ESOP and the
1989 ESOP collectively represent 46.1% of the voting power of the Company's
voting stock as of December 31, 1998.

--------------------------------------------------------------------------------
NOTE 3

SIGNIFICANT ACCOUNTING POLICIES

Cash

The liability representing outstanding checks drawn against a zero-balance
general disbursement bank account is included in accounts payable for financial
statement presentation. Such amounts were $0.8 million and $21.8 million as of
December 31, 1998 and 1997, respectively.

Cash Equivalents

Cash equivalents, which consist primarily of certificates of deposit, commercial
paper and time deposits, are stated at cost, which approximates fair value. For
financial statement presentation, the Company considers all highly liquid
investments purchased with an original maturity of 90 days or less to be cash
equivalents.

Inventories

Inventories are stated at the lower of cost or market, cost being determined by
the first-in, first-out method. Inventory costs include materials, labor and
manufacturing overhead.

Property, Plant and Equipment

Property, plant and equipment is valued at cost. Major additions are
capitalized, while the cost of maintenance and repairs which do not improve or
extend the lives of the respective assets is charged to expense in the year
incurred.


WEIRTON STEEL CORPORATION
<PAGE>   13


                                                       Weirton Steel Corporation

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

Interest costs applicable to facilities under construction are capitalized.
Gains or losses on property dispositions are credited or charged to income.

   Depreciation of steelmaking facilities is determined by the
production-variable method which adjusts straight-line depreciation to reflect
actual production levels. The cost of relining blast furnaces is amortized over
the estimated production life of the lining. All other assets are depreciated on
a straight-line basis.

Employee Stock Ownership Plan (ESOP) Accounting

The Company recognizes as compensation expense an amount based upon its required
contributions to the ESOPs. The resulting expense approximates the cost to the
ESOPs for the shares allocated to participants for the period. The number of
shares allocated to participants for the period is determined based on the ratio
of the period's debt principal payment to the total estimated debt principal
payments. Shares are then allocated to individual participants based on the
participant's relative compensation.

Employee Profit Sharing

The provision for employee profit sharing is calculated in accordance with the
Profit Sharing Plan. There were no provisions for employee profit sharing in
1998, 1997 and 1996.

Research and Development

The Company incurs research and development costs to improve existing products,
develop new products and develop more efficient operating techniques. The costs
are charged to expense as incurred and totalled $2.9 million, $3.1 million and
$3.4 million in 1998, 1997, and 1996, respectively.

Comprehensive Income

In June 1997 the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 which established standards for reporting and displaying
comprehensive income and its components, requires the reporting of all changes
in equity of an enterprise that result from transactions and other economic
events other than transactions with owners. Comprehensive income is the total of
net income and all other nonowner changes in equity. Comprehensive income is the
same as the net income reported by the Company for 1998, 1997 and 1996.

NOTE 4

INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
                                           December 31,
                                    ----------------------
                                         1998         1997
----------------------------------------------------------
<S>                                  <C>          <C>      
Raw materials                        $ 84,274     $ 97,974
Work-in-process                        82,331       69,418
Finished goods                         92,727       93,541
                                     --------     --------
                                     $259,332     $260,933
                                     ========     ========
</TABLE>

--------------------------------------------------------------------------------
NOTE 5

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

<TABLE>
<CAPTION>
                                         December 31,
                                  ------------------------
                                         1998         1997
----------------------------------------------------------
<S>                                <C>          <C>       
Land                               $    1,119   $    1,115
Buildings                               9,327        9,088
Machinery, equipment and other        963,852      988,105
Construction-in-progress               41,392       39,581
                                   ----------   ----------
                                    1,015,690    1,037,889
Less: Allowances for depreciation    (439,452)    (446,500)
                                   ----------   ----------
                                   $  576,238   $  591,389
                                   ==========   ==========
</TABLE>

   Capitalized interest applicable to facilities under construction for the
years ended December 31, 1998, 1997 and 1996, amounted to $0.4 million, $0.5
million and $1.1 million, respectively.


--------------------------------------------------------------------------------
NOTE 6

FINANCING ARRANGEMENTS

Debt Obligations

<TABLE>
<CAPTION>
                                           December 31,
                                   -----------------------
                                         1998         1997
----------------------------------------------------------
<S>                                  <C>          <C>     
11-1/2% Senior Notes due 3/1/98      $     --     $ 42,163
10-7/8% Senior Notes due 10/15/99      84,044       84,712
11-3/8% Senior Notes due 7/1/2004     125,000      125,000
10-3/4% Senior Notes due 6/1/2005     125,000      125,000
8-5/8% Pollution Control Bonds
   due 11/1/2014                       56,300       56,300
                                     --------     --------
                                      390,344      433,175
Less: Unamortized debt discount        (1,674)      (2,015)
                                     --------     --------
Total debt obligations                388,670      431,160
Less: Current portion of long term
   debt obligations                   (84,044)     (42,163)
                                     --------     --------
                                     $304,626     $388,997
                                     ========     ========
</TABLE>


                                                                           26.27
<PAGE>   14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS
WHERE INDICATED)

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

   During 1998, the Company made principal payments of $42.2 million to redeem
the 11-1/2% Senior Notes at maturity. In addition, the Company repurchased $0.7
million of its 10-7/8% Senior Notes due 1999 at prices approximating par.

   In July 1996, the Company completed a private offering of $125.0 million of
its 11-3/8% Senior Notes due 2004. The net proceeds of the offering were $118.5
million, of which $105.7 million was used to repurchase $65.0 million principal
amount of the 10-7/8% Senior Notes and $35.0 million principal amount of 11-1/2%
Senior Notes. The privately placed notes were subsequently exchanged for
publicly registered notes. The Company recognized a $5.4 million after tax
extraordinary loss on the early extinguishment of debt, which included the
premiums paid to retire the notes and the recognition of previously deferred
financing costs.

   The indentures governing the senior notes are substantially similar and
contain covenants that limit, among other things, the incurrence of additional
indebtedness, the declaration and payment of dividends and distributions on the
Company's capital stock, as well as mergers, consolidations, liens and sales of
certain assets. Under covenants affecting the Company's ability to pay dividends
on its common stock, the Company is limited as to the payment of aggregate
dividends after March 31, 1993, to the greater of (i) $5.0 million or (ii) $5.0
million plus one-half of the Company's cumulative consolidated net income since
March 31, 1993, plus the net proceeds from future issuances of certain capital
stock less certain allowable payments. As of December 31, 1998, pursuant to this
covenant, the Company's ability to pay dividends on its common stock was limited
to $92.0 million. Upon the occurrence of a change in control, as defined under
the indentures, holders of the Senior Notes will have the option to cause the
Company to repurchase their Senior Notes at 101% of the principal amount, plus
accrued interest to the date of repurchase.

   The Company has scheduled principal payments of $84.0 million on its 10-7/8%
Senior Notes in 1999. No other principal payments become due until 2004.

Receivables Participation Agreement

The Company has in place, through a subsidiary, a receivables participation
agreement with a group of four banks. The facility provides for a total
commitment by the banks of up to $85.0 million, including a letter of credit
subfacility of up to $25.0 million. The Company sells substantially all of its
accounts receivable as they are generated, to its wholly-owned subsidiary,
Weirton Receivables Inc. ("WRI"). WRI finances its ongoing receivable purchases
from a combination of cash collections on receivables already in the pool, short
term intercompany obligations and issuances of redeemable preferred stock to
Weirton Steel Corporation. As of December 31, 1998, while no funded
participation interests had been sold under the facility, $12.8 million in
letters of credit under the subfacility were in place. The amount of
participation interests committed to be purchased by the banks fluctuates
depending upon the amounts and nature of receivables generated by the Company
which are sold into the program, and certain financial tests applicable to them.
With respect to the receivables comprising the pool and the financial tests
applicable to such, and after reduction for amounts in place under the letter of
credit subfacility, the base amount available for cash sale was approximately
$34.4 million as of December 31, 1998.

   Funded purchases of participation interests by the banks under the facility
are generally available on a revolving basis for three years, subject to
extension as agreed to by the banks. In 1998, the Participation Agreement was
extended through April 2003. Weirton Steel Corporation continues to act as
servicer of the assets sold into the program and continues to make billings and
collections in the ordinary course of business according to its established
credit practices. Except for warranties given by Weirton Steel Corporation
concerning the eligibility of receivables sold to WRI under the program, the
transactions under the facility are generally nonrecourse. WRI's commitments to
the banks, which do not include warranties as to collectibility of the
receivables, include those typical of sellers of similar property and are
secured by its interest in the receivables and related security. WRI is subject
to certain restrictions regarding its indebtedness, liens, asset sales not
contemplated by the facility, guarantees, investments, other transactions with
its affiliates, including Weirton Steel Corporation, and the maintenance of a
minimum net worth of not less than the greater of $5.0 million or 10% of the
outstanding receivables. As of December 31, 1998, WRI had a net worth of $90.9
million and outstanding receivables of $119.4 million. The banks and other
creditors of WRI have a priority claim on all assets of WRI prior to those
assets becoming available to any of Weirton Steel Corporation's creditors.

Leases

The Company uses certain lease arrangements to supplement its financing
activities.

   Rental expense under operating leases was $8.0 million, $6.4 million and $5.6
million for the years ended December 31,



WEIRTON STEEL CORPORATION
<PAGE>   15


                                                       Weirton Steel Corporation
--------------------------------------------------------------------------------

1998, 1997, and 1996, respectively. The minimum future lease payments under
noncancelable operating leases are $8.4 million, $7.7 million, $7.2 million,
$6.0 million and $4.4 million for the years ending 1999 through 2003,
respectively, and $4.6 million thereafter.


--------------------------------------------------------------------------------
NOTE 7

EMPLOYEE RETIREMENT BENEFITS

In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about
Pensions and Other Postretirement Benefits." SFAS No. 132 establishes amended
standards for pension and other postretirement benefits disclosures.
The standard disclosures established in SFAS No. 132 are included herein.

Pensions

The Company has a noncontributory defined benefit pension plan which covers
substantially all employees (the "Pension Plan"). The Pension Plan provides
benefits that are based generally upon years of service and compensation during
the final years of employment.

   The Company's funding policy is influenced by its general cash requirements
but, at a minimum, complies with the funding requirements of federal laws and
regulations. During the years ended December 31, 1998, 1997 and 1996, the
Company contributed $43.0 million, $41.1 million and $40.5 million,
respectively, to the Pension Plan. The Pension Plan's assets are held in trust,
the investments of which consist primarily of common stocks, fixed income
securities and short term investments.

   Following are the components of the Company's net pension cost recognized in
1998, 1997 and 1996:

<TABLE>
<CAPTION>
                                      Year Ended December 31,
                                ----------------------------------
                                    1998         1997         1996
------------------------------------------------------------------
<S>                             <C>          <C>          <C>     
Service cost                    $ 15,704     $ 18,629     $ 20,221
Interest cost on projected
   benefit obligation             48,902       53,935       49,773
Expected return on
   plan assets                   (54,471)     (47,591)     (38,773)
Amortization of
   transition amount               7,390        7,390        7,390
Amortization of prior
   service cost                    9,089        9,085        9,074
Recognized gain                   (1,367)          --           --
                                --------     --------     --------
                                $ 25,247     $ 41,448     $ 47,685
                                ========     ========     ========
</TABLE>

   The following table reconciles the funded status of the Pension Plan to the
accrued pension obligation recognized as of December 31:

<TABLE>
<CAPTION>
                                                  1998         1997
-------------------------------------------------------------------
<S>                                           <C>          <C>     
Accumulated benefit obligation                $684,938     $643,421
Effect of projected compensation
   increases                                    87,229      111,024
                                              --------     --------
Actuarial present value of projected
   benefit obligation                          772,167      754,445
Plan assets at fair value                      687,537      588,303
                                              --------     --------
Projected benefit obligation in excess
   of plan assets                               84,630      166,142
Items not yet recognized:
   Prior service cost                          (79,866)     (88,955)
   Actuarial gains                             108,106       58,707
   Remaining net obligation at transition      (30,962)     (38,352)
                                              --------     --------
Accrued pension obligation                    $ 81,908     $ 97,542
                                              ========     ========
</TABLE>

   The following table displays the changes in benefit obligation and plan
assets for the years ended December 31:

                                         1998         1997
----------------------------------------------------------
Changes in Benefit Obligation:
Projected benefit obligation
   at beginning of year              $754,445     $707,397
Service cost                           15,704       18,629
Interest cost                          48,902       53,935
Amendments                                 --          190
Actuarial (gain) or loss               (4,593)       6,400
Special termination benefits            2,079       10,424
Benefits paid                         (44,370)     (42,530)
                                     --------     --------
Projected benefit obligation
   at end of year                    $772,167     $754,445
                                     ========     ========

Change in Plan Assets:
Fair value of plan assets
   at beginning of year              $588,303     $499,211
Actual return on plan assets          100,644       90,542
Employer contributions                 42,960       41,080
Benefits paid                         (44,370)     (42,530)
                                     --------     --------
Fair value of plan assets
   at end of year                    $687,537     $588,303
                                     ========     ========


                                                                           28.29
<PAGE>   16


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS
WHERE INDICATED)

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

   The Company's projected, accumulated and vested pension obligations and
expense have been actuarially measured through the use of certain significant
assumptions. The table below depicts the assumptions used to measure the
Company's pension obligations and its net periodic expense.

<TABLE>
<CAPTION>
                            1998         1997        1996
---------------------------------------------------------
<S>                         <C>          <C>         <C>  
Weighted average interest
   rate used to discount
   the projected,
   accumulated and vested
   benefit obligations to
   present value            6.75%        7.00%       7.75%
Expected rate of return
   on plan assets           9.25%        9.25%       9.25%
Assumed increase in
   compensation levels    2% for       2% for        4.00%
                         3 years      4 years
                           and 3%       and 3%
                       thereafter   thereafter
</TABLE>

   The assumed weighted average interest rate used to discount the pension
obligations to present value is based upon the rates of return on high-quality,
fixed-income investments currently available.

Benefits Other Than Pensions

The Company provides healthcare and life insurance benefits to substantially all
of the Company's retirees and their dependents. The health care plans contain
cost-sharing features including co-payments, deductibles and lifetime maximums.
The life insurance benefits provided to retirees are generally based upon annual
base pay at retirement for salaried employees and specific amounts for
represented employees.

   The amount of net periodic expense for postretirement health care and life
insurance benefits recognized in 1998, 1997 and 1996 is comprised of the
following:

<TABLE>
<CAPTION>
                            1998         1997         1996
----------------------------------------------------------
<S>                      <C>          <C>          <C>    
Service cost-benefits
   earned during period  $ 5,462      $ 6,852      $ 5,766
Interest cost on
   accumulated
   postretirement
   benefit obligation     24,136       25,917       23,767
Amortization of
   prior service cost     (4,325)      (4,325)      (4,688)
                         -------      -------      -------
                         $25,273      $28,444      $24,845
                         =======      =======      =======
</TABLE>

   The actuarially determined net periodic expense in 1998, 1997 and 1996 for
retiree medical and life insurance benefits exceeded the $22.3 million, $18.1
million and $16.0 million cash outlay for providing such benefits by
approximately $3.0 million, $10.3 million and $8.8 million, respectively.

   The following table sets forth the components of the accumulated
postretirement benefit obligation and the reconciliation of amounts recognized
as of December 31:

<TABLE>
<CAPTION>
                                         1998         1997
----------------------------------------------------------
<S>                                  <C>          <C>     
Total accumulated postretirement
   benefit obligation                $336,857     $338,050
Items not yet recognized:
   Actuarial losses                   (30,023)      (5,321)
   Prior service cost                  52,609       23,745
                                     --------     --------
Accrued postretirement
   benefit obligation                $359,443     $356,474
                                     ========     ========
</TABLE>

   The accrued postretirement benefit obligation as of December 31, is
classified for financial statement presentation as follows:

<TABLE>
<CAPTION>
                                         1998         1997
----------------------------------------------------------
<S>                                  <C>          <C>     
Accrued postretirement benefits,
   a component of accrued
   employment costs                  $ 22,000     $ 18,000
Postretirement benefits
   other than pensions                337,443      338,474
                                     --------     --------
                                     $359,443     $356,474
                                     ========     ========
</TABLE>

   The following table displays the change in accumulated benefit obligation and
plan assets for the years ended December 31:

<TABLE>
<CAPTION>
                                         1998         1997
----------------------------------------------------------
<S>                                  <C>          <C>     
Change in Benefit Obligation:
Accumulated benefit obligation
   beginning of year                 $338,050     $334,611
Service cost                            5,462        6,852
Interest cost                          24,136       25,917
Amendments                            (33,189)          --
Actuarial (gain) or loss               24,702      (11,206)
Benefits paid                         (22,304)     (18,124)
                                     --------     --------
Accumulated benefit obligation
   end of year                       $336,857     $338,050
                                     ========     ========

Change in Plan Assets:
Fair value of plan assets
   at beginning of year              $     --      $    --
Employer contributions                 22,304       18,124
Benefits paid                         (22,304)     (18,124)
                                     --------     --------
Fair value of plan assets
   at end of year                    $     --      $    --
                                     ========     ========
</TABLE>


WEIRTON STEEL CORPORATION
<PAGE>   17

                                                       Weirton Steel Corporation

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

   Consistent with the Company's approach to measuring its accumulated benefit
obligation for pensions, the interest rate used to measure the obligation as of
December 31, 1998, was decreased to 6.75%. The interest rate used to discount
the accumulated postretirement obligation to present value as of December 31,
1997, was 7.00%.

   The medical cost and administrative expense rates used to project anticipated
cash flows and measure the Company's postretirement benefit obligation as of
December 31, 1998, 1997 and 1996, are as follows:

<TABLE>
<CAPTION>
                                                          For retirees who                        For retirees who
                                                            have not yet                            are age 65
                                                           reached age 65                            and older
                                                     --------------------------------------------------------------------
                                                      1998        1997       1996           1998        1997        1996
-------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>         <C>       <C>                                         
Base medical cost trend:
   Rate in first year                                 7.25%       8.00%      8.75%          6.50%       7.25%       7.75%
   Ultimate rate                                      4.00%       4.25%      4.75%          4.00%       4.25%       4.75%
   Year in which ultimate rate is reached             2003        2003       2003           2003        2003        2003
Major medical cost trend:
   Rate in first year                                 8.50%       9.50%     10.50%           N/A         N/A         N/A
   Ultimate rate                                      4.00%       4.25%      4.75%           N/A         N/A         N/A
   Year in which ultimate rate is reached             2003        2003       2003            N/A         N/A         N/A
Administrative expense trend                          4.00%       4.25%      4.75%          4.00%       4.25%       4.75%
</TABLE>

   A one percentage point increase in the assumed health care trend rates for
each future year would have increased the aggregate service and interest cost
components of the net periodic expense by $1.7 million, $2.6 million and $2.0
million in 1998, 1997 and 1996, respectively, and would have increased the
accumulated postretirement benefit obligation by $16.8 million and $25.1 million
as of December 31, 1998 and 1997, respectively.

   A one percentage point decrease in the assumed health care trend rates in
1998 would have reduced the aggregate service and interest cost components of
the net periodic expense by $2.0 million, and would have decreased the
accumulated postretirement benefit obligation by $18.1 million.

   For purposes of measuring life insurance benefits as of December 31, 1998 and
1997, increases in compensation levels in 1998 and 1997 were assumed to be 2%
through 2000 and 3% thereafter.

   During 1998, the Company amended its retiree healthcare plans to provide
eligible retirees an option to elect coverage under a Medicare Plus Choice
Program (the "Program"). For participants in the Program, medicare, major
medical coverage and the Company's medical benefits coverage are replaced by a
single insurance plan. Rather than funding coverage under the current
supplemental plan, the Company will pay a portion of the Program premiums
totaling $60 per participant per month. The amendment resulted in a $33.2
million decrease in the Company's accumulated postretirement benefit obligation.

Other

As a condition of the purchase of the Company's assets from NSC, NSC agreed to
retain liability for pension service and the cost of life and health insurance
for employees of the Company's predecessor business who retired through May 1,
1983. NSC also retained the liability for pension service through May 1, 1983,
for employees of the predecessor business who subsequently became active
employees of the Company.

--------------------------------------------------------------------------------
NOTE 8

POSTEMPLOYMENT BENEFITS

The components comprising the Company's obligations for postemployment benefits
are (i) workers' compensation; (ii) severance programs which include medical
coverage continuation; and (iii) sickness and accident protection, which
includes medical and life insurance benefits.

   Actuarial assumptions and demographic data, as applicable, that were used to
measure the postemployment benefit obligation as of December 31, 1998 and 1997,
were consistent with those used to measure pension and other postretirement
benefit obligations for each respective year. As of December 31, 1998 and 1997,
the Company had accrued $27.6 million and $25.4 million, respectively for
postemployment benefit obligations.



                                                                           30.31
<PAGE>   18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS
WHERE INDICATED)

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

NOTE 9

RESTRUCTURING CHARGES

In 1998, the Company recognized a $2.9 million restructuring charge stemming
from a special voluntary retirement window offered to certain supervisory and
managerial employees. The charge related to early retirement benefits.

   In 1997, the Company recognized a $17.0 million restructuring charge stemming
from a retirement window offered to its represented employees as a result of a
collective bargaining agreement. Approximately $10.4 million of the
restructuring charge related to pension benefits with the remainder resulting
from other separation benefits for employees retiring during the window.

   In 1996, the Company reduced its supervisory and managerial workforce by
approximately 20%. The restructuring charge of $17.0 million included
approximately $10.1 million of severance benefits (including compensation,
healthcare and outplacement services), approximately $3.8 million related to
special retirement supplements for eligible employees and $3.1 million related
to other termination related benefits.


--------------------------------------------------------------------------------
NOTE 10

INCOME TAXES

Deferred income tax assets and liabilities are recognized reflecting the future
tax consequences of net operating loss and tax credit carryforwards and
differences between the tax basis and the financial reporting basis of assets
and liabilities. The components of the Company's deferred income tax assets and
liabilities were as follows:

<TABLE>
<CAPTION>
                                             December 31,
                                      ------------------------
                                           1998           1997
--------------------------------------------------------------
<S>                                    <C>           <C>      
Deferred tax assets:
   Net operating loss and
      tax credit carryforwards         $ 103,625     $ 113,348
   Deductible temporary differences:
      Allowance for doubtful accounts      2,407         3,354
      Inventories                         17,262        14,399
      Pensions                            31,909        17,592
      Workers' compensation               10,050         8,912
      Postretirement benefits other
         than pensions                   140,923       139,024
      Other deductible temporary
         differences                      20,169        20,586
   Valuation allowance                   (46,868)      (45,547)
                                       ---------     ---------
                                         279,477       271,668
Deferred tax liabilities:
   Accumulated depreciation             (124,812)     (126,083)
                                       ---------     ---------
Net deferred tax asset                 $ 154,665     $ 145,585
                                       =========     =========
</TABLE>

   As of December 31, 1998, the Company had available, for federal and state
income tax purposes, regular net operating loss carryforwards of approximately
$199.1 million expiring in 2007 through 2011; an alternative minimum tax credit
of approximately $14.9 million; and general business tax credits of
approximately $11.1 million expiring in 1999 to 2005.

   In 1998, 1997 and 1996, as a result of its deferred tax attributes, the
Company did not generate any liability for regular federal income tax purposes.
The Company recognized alternative minimum tax of $3.3 million and $2.2 million
in 1998 and 1997, respectively. The Company recognized no alternative minimum
tax in 1996.

   The Company's deferred tax assets increased during 1998 due primarily to an
increase in expenses in excess of deductible amounts for pension.

   At December 31, 1998, the deferred tax asset related to postretirement
benefits other than pensions was $140.9 million. Based upon the length of the
period during which this deferred tax asset can be utilized and the Company's
expectations that under its current business strategy it will be able to
generate taxable income over the long term, the Company believes that it is more
likely than not that future taxable income will be sufficient to fully offset
these future deductions.

   The length of time associated with the carryforward period available to
utilize net operating losses and certain tax credits not associated with
postretirement benefits other than pensions liabilities is more definite. A
significant portion of these net operating losses are attributable to the
realization of differences between the tax basis and financial reporting basis
of the Company's fixed assets. In the aggregate, such differences, including
depreciation, are expected to reverse within the allowable carryforward periods.
In addition, certain tax planning strategies that include, but are not limited
to, changes in methods of depreciation for tax purposes, adjustments to employee
benefit plan funding strategies and potential sale leaseback arrangements, could
be employed to avoid expiration of the attributes. Not withstanding the
Company's belief that it be able to utilize its deferred tax assets, the Company
has recorded a valuation allowance of $46.9 million against its deferred tax
assets.


WEIRTON STEEL CORPORATION
<PAGE>   19



   The elements of the Company's deferred income taxes associated with its
results for the years ended December 31, 1998, 1997 and 1996, respectively, are
as follows:

<TABLE>
<CAPTION>
                            1998         1997         1996
----------------------------------------------------------
<S>                      <C>          <C>         <C>      
Current income tax 
  provision (benefit):
      Federal            $ 3,265      $(2,556)    $ (3,699)
Deferred income tax
  benefit                 (5,977)      (6,040)     (16,067)
Valuation allowance        1,321        4,298        8,990
                         -------      -------     -------- 
   Income tax
     benefit              (1,391)      (4,298)     (10,776)
Deferred income tax
  benefit allocated to
  extraordinary item          --           --       (1,316)
                         -------      -------     -------- 
      Total income tax
        benefit          $(1,391)     $(4,298)    $(12,092)
                         =======      =======     ======== 
</TABLE>

   The total income tax provision (benefit) recognized by the Company for the
years ended December 31, 1998, 1997 and 1996, reconciled to that computed under
the federal statutory corporate rate as follows:

<TABLE>
<CAPTION>
                            1998         1997         1996
----------------------------------------------------------
<S>                      <C>          <C>         <C>      
Tax benefit at federal
   statutory rate        $(2,631)     $(7,714)    $(19,342)
State income taxes,
   net of federal           (301)        (882)      (2,211)
Other                        220           --        1,787
Change in valuation
   allowance               1,321        4,298        8,990
                         -------      -------     -------- 
Income tax benefit       $(1,391)     $(4,298)    $(10,776)
                         =======      =======     ======== 
</TABLE>

NOTE 11

REDEEMABLE STOCK

In June 1989, the Company sold 1.8 million shares of the Series A Preferred to
the 1989 ESOP. The 1989 ESOP financed the purchase by issuing to the Company a
$26.1 million promissory note, payable ratably over a 10 year period. Each share
of Series A Preferred is convertible at any time into one share of common stock,
subject to adjustment, is entitled to 10 times the number of votes allotted to
the common stock into which it is convertible, and has a preference on
liquidation over common stock of $5 per share. The Series A Preferred has no
preference over common stock as to dividends. The Series A Preferred is not
intended to be readily tradable on an established market. As such, shares of
Series A Preferred distributed to 1989 ESOP participants following termination
of service are given a right, exercisable for limited periods prescribed by law,
to cause the Company to repurchase the shares at fair value. The Company also
has a right of first refusal upon proposed transfers of distributed shares of
Series A Preferred which it has agreed, to the extent it is permitted, to
exercise and to contribute or sell reacquired shares to the 1989 ESOP. In 1994,
the 1989 ESOP was amended to provide that shares of Series A Preferred
reacquired by the 1989 ESOP be reallocated annually among active employee
participants on a per capita basis. If not repurchased by the Company or
reacquired by the 1989 ESOP, shares of Series A Preferred automatically convert
into common stock upon transfer by a distributee.



                                                                           32.33
<PAGE>   20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS
WHERE INDICATED)

NOTE 12

STOCK PLANS

The Company has two stock option plans (the "1987 Stock Option Plan" and the
"1998 Stock Option Plan"), an employee stock purchase plan (the "1994 Employee
Stock Purchase Plan") and a deferred compensation plan for non-employee members
of the board of directors (the "Directors Deferred Compensation Plan").

   The Company may grant options for up to 750,000 shares under the 1987 Stock
Option Plan. Under the plan the option exercise price equals the stock's market
price on the date of grant. Generally, the options granted under the 1987 Stock
Option Plan vest in one-third increments beginning after the date of grant, with
the remaining two-thirds becoming exercisable after the second and third years.

   Activity under the 1987 Stock Option Plan is summarized below:

<TABLE>
<CAPTION>
                                                        1998                      1997                       1996
-------------------------------------------------------------------------------------------------------------------------
                                                             Average                    Average                   Average
                                                            Exercise                   Exercise                  Exercise
                                                 Shares        Price        Shares        Price          Shares     Price
-------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>        <C>             <C>           <C>        <C>  
Options outstanding at beginning of period       581,666       $7.71       750,000        $7.84         748,000     $8.38
Granted                                          173,000        3.13            --           --          65,000      2.50
Repurchased/Forfeited                           (169,666)       8.53      (168,334)        8.30         (63,000)     8.69
Exercised                                             --          --            --           --              --        --
-------------------------------------------------------------------------------------------------------------------------
Outstanding at end of period                     585,000        6.12       581,666           7.71       750,000      7.84
Exercisable at end of period                     473,057       $6.83       431,303          $7.80       430,000     $8.10

Weighted average fair value of option granted           $1.90                       $--                        $4.01
</TABLE>

   On January 17, 1999, 30,000 of the 1987 Stock Option Plan options with an
exercise price of $8.33 that were outstanding and exercisable at December 31,
1998 expired. The remaining 1987 Stock Option Plan options have exercises
between $2.50 and $8.88, with a weighted average exercise price of $6.00 and a
weighted average remaining contractual life of 7.14 years. Of these options,
443,057 are exercisable; their weighted average exercise price is $6.72.

   The fair value of each 1987 Stock Option Plan option grant is estimated on
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions for grants in 1998 and 1996.
There were no option grants in 1997.

<TABLE>
<CAPTION>
                                           1998         1996
-------------------------------------------------------------
<S>                                        <C>          <C>  
Average risk free interest rate            5.53%        6.56%
Expected dividend yield                       0%           0%
Expected life of options                   7 years      7 years
Expected volatility rate                   0.53         0.50
</TABLE>

   Under the 1998 Stock Option Plan, the Company may grant options for up to
3,250,000 shares. The option price and vesting requirements are determined by a
Stock Option Committee appointed by the board of directors. In 1998, the Stock
Option Committee granted 2,875,000 options with an exercisable price of $3.88
under the 1998 Stock Option Plan. The exercise price equaled the market price of
the Company's common stock on the date of grant. The options granted had a fair
market value of $0.70, as determined using the Black-Scholes option pricing
model. In determining the fair value of options, granted under the 1998 Stock
Option Plan, an average risk free interest rate of 6.3%, a dividend yield of 0%,
an expected life of five years and an expected volatility rate of 0.391 were
used. All options granted and outstanding will vest on June 23, 2002. The
options expire the following day. The options are subject to accelerated vesting
based on the attainment of certain market prices for the Company's common stock.
The options that vest pursuant to the accelerated provision will expire on June
23, 2002. As of December 31, 1998, the 2,875,000 options that had been granted
were still outstanding. None of the options vested.


WEIRTON STEEL CORPORATION
<PAGE>   21

                                                       Weirton Steel Corporation

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

   In October 1994, the Company registered an additional 5.0 million shares of
its common stock to be offered over a five-year period beginning January 1,
1995, to eligible employees under its 1994 Employee Stock Purchase Plan. The
1994 Employee Stock Purchase Plan provides for participants to purchase the
Company's common stock at 85% of the lesser of the stock's closing price at the
beginning or the end of each year. As of December 31, 1998, 285,430 shares
valued at approximately $0.4 million were issuable in accordance with the 1994
Employee Stock Purchase Plan.

   During 1991, the Company adopted a deferred compensation plan (the "Directors
Deferred Compensation Plan") to permit nonemployee members of the Board of
Directors to receive shares of common stock in lieu of cash payments for total
compensation or a portion thereof for services provided in their capacity as
members of the Board of Directors. The Company reserved 300,000 shares for
issuance under the Directors' Deferred Compensation Plan. Shares to directors
are issued to a rabbi trust until such time as the shares are distributed to the
directors. The cost of the shares held in the rabbi trust are accounted for as a
reduction of equity. The liability to compensate the directors is retained and
accounted for until such time as the shares are issued from the rabbi trust. The
Director's Deferred Compensation Plan provides for the stock portion of the
directors compensation to be valued at 90% of the lesser of the stock's average
trading price at the beginning and the end of each year. As of December 31,
1998, 78,368 shares valued at $0.1 million were issuable to the directors who
selected deferred compensation and 110,622 shares with a cost of $0.5 million
were held by the trust.

   During 1998, the Company's independent directors received a portion of their
fees payable entirely in the Company's common stock. As of December 31, 1998,
19,764 shares were issuable to independent directors. The directors may elect to
defer all or a portion of the shares to the rabbi trust.


NOTE 13

STOCK BASED COMPENSATION

The Company accounts for it stock plans under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," under which
compensation costs, if applicable, have been determined. Had compensation costs
for these plans been determined consistent with Statement on Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation," (SFAS
No. 123), net income (loss) and earnings per share would have been reduced to
the following:

<TABLE>
<CAPTION>
                            1998         1997         1996
----------------------------------------------------------
<S>                      <C>         <C>          <C>      
Net loss:
   As reported           $(6,127)    $(17,742)    $(49,918)
   pro forma              (6,598)     (18,041)     (50,221)

Basic and diluted loss per share:
   As reported           $ (0.15)    $  (0.42)    $  (1.18)
   pro forma               (0.16)       (0.42)       (1.19)
</TABLE>

   Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation costs may
not be representative of that expected in future years.


--------------------------------------------------------------------------------
NOTE 14

ESOP FINANCING

The purchase by the 1989 ESOP of the Series A Preferred was financed through the
issuance of a $26.1 million promissory note to the Company payable ratably over
a 10 year period. The Company's contribution to the 1989 ESOP for the principal
and interest components of debt service was immediately returned. As such, the
respective interest income and expense on the ESOP notes were entirely offset
within the Company's net financing costs. As of December 31, 1998, 1,562,763
shares of Series A Preferred were allocated to participants of the 1989 ESOP.


--------------------------------------------------------------------------------
NOTE 15

PURCHASES OF TREASURY STOCK

During April 1998, the Company announced that it had been authorized by the
board of directors to repurchase up to 10%, or approximately 4.2 million shares
of its outstanding common stock. During 1998, the Company paid $6.3 million to
repurchase approximately 1.8 million shares of its outstanding common stock at
prices ranging from $1.75 to $4.50 per share.



                                                                           34.35
<PAGE>   22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS
WHERE INDICATED)

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

NOTE 16

EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued Statement on
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128).
SFAS No. 128 differs from prior accounting guidance in that earnings per share
is classified as basic earnings per share and diluted earnings per share,
compared to primary earnings per share and fully diluted earnings per share
under current standards. Basic earnings per share differs from primary earnings
per share in that it includes only the weighted average common shares
outstanding and does not include any dilutive common stock equivalents in the
calculation. Diluted earnings per share under the new standard differs in
certain calculations compared to fully diluted earnings per share under the
existing standards. For the years ended December 31, 1998, 1997 and 1996, basic
and diluted earnings per share were the same; however, securities totaling
1,725,548 shares, 1,760,090 shares and 1,753,198 shares, respectively, were
excluded from the diluted earnings per share calculation due to their
anti-dilutive effect.


--------------------------------------------------------------------------------
NOTE 17

ENVIRONMENTAL COMPLIANCE, LEGAL PROCEEDINGS AND COMMITMENTS AND CONTINGENCIES

Environmental Compliance

The Company, as well as its domestic competitors, is subject to stringent
federal, state and local environmental laws and regulations concerning, among
other things, waste water discharges, air emission and waste disposal. The
Company spent approximately $5.6 million for pollution control capital projects
in 1998.

   In March 1996, the West Virginia Department of Environmental Protection
("DEP") and the United States Environmental Protection Agency ("EPA") advised
the Company that they had identified a number of enforcement issues pertaining
to waste water discharge, air emissions and waste handling operations of the
Company. In September 1996, the Company and DEP and EPA reached a settlement
regarding these water, air and waste-related issues. Under the settlement, the
Company was required to pay a total penalty of $3.2 million in 1997.

   Under the settlement the Company is required to conduct certain remedial
activity at one of its waste disposal sites. Additionally, the Company is
required to undertake certain capital projects to assure compliance with air,
water and waste-related regulations. Such capital costs will include upgrades
and modifications to air emissions control equipment, wastewater treatment
systems and waste handling facilities. Under the settlement, the Company has
committed to environmental related capital projects totaling approximately $19.8
million. Through December 31, 1998, the Company had expended $14.5 million
related to these capital commitments.

   In connection with the negotiations, EPA issued a corrective action order,
effective October 18, 1996, requiring the Company to conduct investigative
activities to determine the nature and extent of hazardous materials which may
be located on the Company's property and to evaluate and propose corrective
measures needed to abate any unacceptable risks.

   The Company has accrued approximately $7.0 million related to environmental
related liabilities, including costs associated with the corrective action
order. Because the Company does not currently know the nature or the extent of
hazardous waste located on the property, it is not presently possible to
estimate the ultimate cost to comply with the corrective action order or 
conduct remedial activity that may be required.

   The Company believes that NSC is obligated to reimburse the Company for a
portion of the costs that may be incurred by the Company to comply with the
corrective action order and to undertake any required remedial action. Pursuant
to the agreement whereby the Company purchased the former Weirton Steel Division
of NSC in 1984, NSC retained liability for cleanup costs related to solid or
hazardous waste facilities, areas or equipment as long as such were not used by
the Company in its operations subsequent to the acquisition. The Company has not
recorded any receivables from NSC related to potential reimbursable costs.


WEIRTON STEEL CORPORATION
<PAGE>   23

                                                       Weirton Steel Corporation

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

Legal Proceedings

The Company, in the ordinary course of business, is the subject of, or party to,
various pending or threatened legal actions. The Company believes that any
ultimate liability resulting from these actions will not have a material adverse
effect on its financial position or results of operations.

Commitments and Contingencies

In October 1991, the Company entered into a supply agreement with a subsidiary
of Cleveland-Cliffs Inc. to provide the majority of its iron ore pellet
requirements beginning in 1992 and extending through 2005.

   In 1995, the Company entered into a 15-year agreement to purchase 100% of its
oxygen and nitrogen requirements from an independent party. The contract
specifies that the Company will pay a base monthly charge that is adjusted
annually based upon a percentage of the change in the producers price index for
industrial commodities.

   In 1996, the Company entered into an agreement commencing on January 1, 1997,
through December 31, 2000, with USX Corporation to purchase blast furnace coke.
The agreement provides for the purchase of the greater of 850,000 tons of blast
furnace coke annually, or 80% of the actual annual requirement of the Company.
Such quantities are subject to adjustment based upon changes in the Company's
operating configuration. The price is to be the prevailing market price (subject
to a ceiling and floor) for blast furnace coke.

   The Company has guaranteed debt incurred by GalvPro LP as described in Note
20 "Subsidiaries and Joint Ventures".


--------------------------------------------------------------------------------
NOTE 18

OPERATING SEGMENT INFORMATION

In June of 1997, the FASB issued SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way public companies report information about operating segments and it
establishes standards for related disclosures about products, services,
geographic areas and major customers.

   The Company operates a single segment, the making and finishing of carbon
steel products including sheet and tin mill products. One customer accounted for
12%, 11% and 10% of net sales in 1998, 1997 and 1996, respectively.

   Approximately 83% of the Company's workforce is covered under collective
bargaining agreements with the Independent Steelworkers Union (the "ISU") and
Independent Guard Union (the "IGU"). In 1997, the Company reached agreements
with the ISU and IGU which extend into 2001.


--------------------------------------------------------------------------------
NOTE 19

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS AND SIGNIFICANT GROUP
CONCENTRATIONS 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 Equivalents

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

Redeemable Preferred Stock

The fair value of the Series A Preferred stock was determined based upon an
independent appraisal performed as of December 31, 1998 and 1997.

Long Term Debt Obligations

The fair values of the Company's long term debt obligations are estimated based
upon quoted market prices.

   The estimated fair values of the Company's financial instruments are as
follows as of December 31, 1998 and 1997, respectively:

<TABLE>
<CAPTION>
                            1998                 1997
                    -----------------------------------------
                     Carrying       Fair   Carrying      Fair
                       Amount      Value     Amount     Value
-------------------------------------------------------------
<S>                  <C>        <C>        <C>       <C>     
Cash and equivalents $ 68,389   $ 68,389   $124,690  $124,690
Series A Redeemable
   Preferred stock     23,543      2,651     24,494     4,726
Long term debt
   obligations        304,626    277,925    388,997   404,068
</TABLE>

Significant Group Concentrations of Credit Risk

As of December 31, 1998 and 1997, the Company had trade receivables outstanding
of $12.8 and $20.6 million, respectively, from customers who had been acquired
in leveraged transactions.

   One customer accounted for 21% of trade receivables as of December 31, 1998.



                                                                           36.37
<PAGE>   24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS
WHERE INDICATED)

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

NOTE 20

SUBSIDIARIES AND JOINT VENTURES

In the fourth quarter of 1998, the Company, with LTV Corporation and Steel
Dynamics Inc. entered into a partnership venture called MetalSite L.P.
("MetalSite"). MetalSite will offer a secure Web-based marketplace for the
online purchase of metal products from various U.S. suppliers and will provide
the latest industry news and information. The Company has a majority interest in
MetalSite and consolidates its results.

   The Company currently has investments in three joint ventures which the
Company accounts for using the equity method of accounting;

   o WeBco International LLC ("WeBco") was formed in 1997 with the Balli Group,
     plc. The primary function of WeBco is to market and sell the Company's
     products globally.

   o GALVPRO LP ("GALVPRO" formerly "Galvstar LP") was formed in 1997 with
     affiliates of Koninklijke Hoogovens ("Hoogovens") for the purpose of
     constructing and operating a 300,000 ton hot-dipped galvanizing line.
     Construction of GALVPRO's Indiana facility commenced in the second quarter
     of 1998, and final production is expected to commence during the fourth
     quarter of 1999. During 1998, the Company invested $6.9 million in GALVPRO.

   o W&A Manufacturing LLC was formed in 1998 with ATAS International for the
     purpose of manufacturing steel roofing products. During 1998, the Company
     invested $0.9 million in W&A Manufacturing LLC.

   Construction of GALVPRO's facility is being financed primarily through a
secured ten year term loan of up to $49.0 million. In connection with the
initial funding of the loan in February 1999, the Company, jointly and severally
with affiliates of Hoogovens, agreed to prepay up to a total of $6.0 million of
the loan if GALVPRO's facility fails to attain certain defined efficiency
standards within an allowed period of time after operations commence. The
Company and Hoogovens affiliates have each secured their respective obligations
to the other by pledging their interest in GALVPRO. The amount of the prepayment
is graduated based on operating performance, but it will not exceed $6.0
million. The Company's management believes that the likelihood that GALVPRO will
fail to meet the minimum operating performance level is remote. Not withstanding
management's belief, GALVPRO, together with the project lender is loss payee
under a policy of efficacy insurance carried by the project's general contractor
providing up to $4.0 million coverage in the event GALVPRO fails to commence
operations on schedule and up to an additional $4.0 million if GALVPRO fails to
operate at a defined level within a certain period of time after operations
commence.

   The Company's purchases from unconsolidated subsidiaries totaled $27.7
million in 1998. The Company's sales of steel to unconsolidated subsidiaries
totaled $6.0 million in 1998. These transactions arose in the ordinary course of
business and were transacted at arms-length. The Company had no purchases from
or sales to unconsolidated subsidiaries in 1997 or 1996. Pursuant to certain
service agreements, the Company provided services to unconsolidated
subsidiaries. The Company billed the unconsolidated subsidiary for the service
at amounts approximating the cost to provide the service. Such amounts totaled
$0.4 million in 1998 and $0.1 million in 1997. At December 31, 1998, the Company
had outstanding receivables from unconsolidated subsidiaries of $1.7 million.


WEIRTON STEEL CORPORATION         


<PAGE>   25



                                                       Weirton Steel Corporation


MANAGEMENTS' RESPONSIBILITY STATEMENT

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

The accompanying consolidated financial statements of the Company are the
responsibility of its management and have been prepared in conformity with
generally accepted accounting principles.

   The Company has a system of internal controls, including a Code of Ethics,
designed to provide reasonable assurance that assets are safeguarded, financial
statements are reliable and a high standard of business conduct is maintained.
Management monitors the system for compliance, and internal auditors
independently measure its effectiveness.

   The Company's independent public accountants, Arthur Andersen LLP, audit its
financial statements in accordance with generally accepted auditing standards.
The report of the independent public accountants is included in this report.

   The Board of Directors pursues its oversight role for the financial
statements through its Audit Committee. The Audit Committee continued its
practice of meeting regularly to review the financial affairs of the Company and
to interface with the internal audit staff and independent public accountants.
Both the independent public accountants and the internal auditors have full and
free access to the Audit Committee.

   Management believes that the existing system of internal controls, the
independent audit and the Audit Committee provide reasonable assurance that the
Company's financial accounting system adequately maintains accountability for
assets, assures the integrity of financial statements and maintains its
commitment to a high standard of business conduct.


/s/ RICHARD K. RIEDERER
-------------------------------
Richard K. Riederer
President,
Chief Executive Officer


/s/ MARK E. KAPLAN
-------------------------------
Mark E. Kaplan
Controller and
Principal Accounting Officer


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

To the Board of Directors of Weirton Steel Corporation:

We have audited the accompanying consolidated balance sheets of Weirton Steel
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

   In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Weirton Steel
Corporation and subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.



ARTHUR ANDERSEN LLP
----------------------------
Arthur Andersen LLP

Pittsburgh, Pennsylvania
February 23, 1999


                                                                           38.39
<PAGE>   26



SELECTED FINANCIAL AND STATISTICAL DATA




<TABLE>
<CAPTION>
                                                                                  December 31
                                                       -----------------------------------------------------------------
(Dollars in millions, except per share data)             1998           1997          1996           1995           1994
------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>           <C>            <C>            <C>   
Net sales                                             $ 1,255        $ 1,397       $ 1,383        $ 1,352        $ 1,261
Operating costs                                         1,220          1,372         1,397          1,252          1,212
Depreciation                                               61             61            58             55             46
Income taxes (benefit)                                   (1.4)          (4.3)        (10.8)          13.3            7.5
Profit sharing                                             --             --            --             24           17.6
Contribution to ESOP                                        3              3             3              3              3
Net income (loss)                                        (6.1)         (17.7)        (49.9)          48.4           35.2
Net income (loss) per diluted share                     (0.15)         (0.42)        (1.18)          1.10           0.95
Total assets                                            1,196          1,283         1,301          1,314          1,231
Additions to property, plant and equipment                 50             45            83             52            112
Long term debt obligations                                305            389           431            408            395
Redeemable preferred stock, net                            22             21            18             16             14
Working capital                                       $   193        $   294       $   291        $   340        $   256
Number of common shares
   outstanding at year end, (in thousands)             41,195         42,637        42,353         42,014         41,654
Number of preferred shares
   outstanding at year end, (in thousands)              1,657          1,727         1,748          1,729          1,767
Stockholders' equity                                  $   122        $   133       $   149        $   199        $   149
Stockholders' equity per common share                 $  2.95        $  3.12       $  3.52        $  4.73        $  3.57
</TABLE>



SELECTED QUARTERLY FINANCIAL DATA



<TABLE>
<CAPTION>
                                                           Quarterly periods in 1998          Quarterly periods in 1997
                                                      --------------------------------------------------------------------
(Dollars in millions,except per share data)              4th      3rd      2nd     1st      4th      3rd      2nd      1st
--------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>      <C>      <C>      <C>      <C>      <C>     <C>      <C>   
Net sales                                             $  262   $  315   $ 336    $ 341    $ 325    $ 359   $  364   $  350
Gross profit                                              18       33      45       42       38       42       37       23
Operating profit (loss)                                   (6)      10      16       14       15       17       (4)      (4)
Net income (loss)                                        (13)      (1)      5        2        3        4      (13)     (12)
Basic earnings (loss) per share                       $(0.32)  $(0.01)  $0.12    $0.05    $0.07    $0.10   $(0.30)  $(0.29)
Diluted earnings (loss) per share                     $(0.32)  $(0.01)  $0.12    $0.05    $0.07    $0.10   $(0.30)  $(0.29)
</TABLE>


WEIRTON STEEL CORPORATION

<PAGE>   27



WEIRTON STEEL CORPORATION


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




BOARD OF DIRECTORS
Richard R. Burt, Chairman(A, B, D)
Chairman
IEPAdvisors, Inc.
Washington, DC

Michael Bozic(B, C, E)
Vice Chairman
Kmart Corporation
Troy, Michigan

Earl E. Davis, Jr.(B, D)
Executive Vice President
Commercial
Weirton Steel Corporation
Weirton, West Virginia

Craig T. Costello(B)
Executive Vice President - Manufacturing
and Chief Operating Officer
Weirton Steel Corporation
Weirton, West Virginia

Robert J. D'Anniballe, Jr.(A, D)
Partner
Alpert, D'Anniballe & Visnic
Weirton, West Virginia

Mark G. Glyptis(B, D, E)
President
Independent Steelworkers Union
Weirton, West Virginia

Phillip A. Karber(B, D)
Chairman of the Board of
Directors of JFKInternational
Air Terminal
New York, New York

Ralph E. Reins(A, B)
Former President and CEO
A.P. Parts International
Scottsdale, Arizona

Robert S. Reitman(B, C, E)
Principal
Riverbend Advisors
Gates Mill, Ohio

Richard K. Riederer(E)
President and Chief Executive Officer
Weirton Steel Corporation
Weirton, West Virginia

Richard F. Schubert(C, D)
Former President and CEO
The Points of Light Foundation
Washington, DC

Thomas R. Sturges(A, D)
Executive Vice President
The Harding Group, Inc.
Greenwich, Connecticut

Ronald C. Whitaker(B, C, E)
Former President and CEO
Johnson Worldwide Associates
Sturtevant, Wisconsin

D. Leonard Wise(A, B, C, D, E)
Former President and CEO
Carolina Steel Corp.
Greensboro, North Carolina



EXECUTIVE OFFICERS OF THE COMPANY
Richard K. Riederer
President and Chief Executive Officer

Craig T. Costello
Executive Vice President - Manufacturing
and Chief Operating Officer

Earl E. Davis, Jr.
Executive Vice President - Commercial

David L. Robertson
Executive Vice President
Human Resources and Corporate Law

Narendra M. Pathipati
Senior Vice President
Corporate Development and Strategy

Thomas W. Evans
Vice President
Materials Management

William R.Kiefer
Vice President - Law and Secretary

Frank G. Tluchowski
Vice President
Engineering and Technology

Mark E. Kaplan
Vice President -
Information Technology
and Controller

Richard W. Garan
Assistant Treasurer



A  Member of Audit Committee

B  Member of Finance and Strategic Planning Committee

C  Member of Management Development and Compensation Committee

D  Member of Corporate Responsibility Committee

E  Member of Nominating Committee



                                                                           40.41
<PAGE>   28


WEIRTON STEEL CORPORATION


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


ENVIRONMENTAL MISSION STATEMENT

Protection of the environment, employees and the community is a basic commitment
in both the day-to-day operations and long-term planning of Weirton Steel
Corporation. The company is committed to devote the personnel and capital
resources necessary to achieve these objectives and is further committed to:

1. Continually review and, as appropriate, take steps to further enhance
environmental quality and to achieve and maintain compliance with relevant
federal, state and local environmental requirements;

2. Develop and/or evaluate waste prevention, waste minimization, reuse and
recycling efforts to conserve energy and natural resources;

3. Communicate this Environmental Mission Statement to Weirton Steel personnel;
and

4. Develop and revise, as necessary, objectives, targets and/or other indicators
to measure Weirton Steel's success
in fulfilling these commitments.


STOCKHOLDER INFORMATION
Additional financial information including this Annual Report or reports filed
with the Securities and Exchange Commission, and the Company's news and earnings
releases can be obtained by accessing our Internet World Wide Web site at
http://www.weirton.com and clicking on Investor Relations. Requests can also be
submitted by writing to:

Investor Relations
Weirton Steel Corporation
400 Three Springs Drive
Weirton, West Virginia 26062-4989
Telephone (304) 797-2728.

NOTICE OF ANNUAL MEETING
A notice of the annual meeting and proxy statement and a proxy voting card as
well as a copy of the current Annual Report will be mailed to each stockholder
prior to the meeting.

ESOP INFORMATION
Inquiries about Employee Stock Ownership Plan accounts should be directed to the
Weirton Steel Corporation ESOPAdministrator at the Executive Offices.


EXECUTIVE OFFICES
Weirton Steel Corporation
400 Three Springs Drive
Weirton, West Virginia 26062-4989
Telephone (304) 797-2000

STOCK TRANSFER AGENT AND REGISTRAR
The Company's transfer agent and registrar for its common stock is Harris Trust
and Savings Bank. Stockholders wishing to transfer their shares of the Company's
common stock to someone else or to change the name on a stock certificate should
contact the Shareholder Communications Department, Harris Trust and Savings
Bank, P.O. Box 1878, Chicago, Illinois 60690-9312, Telephone (800) 942-5908 for
assistance.

INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, Pennsylvania 15222


WEIRTON STEEL CORPORATION