<PAGE>   1
                                                                    EXHIBIT 13.1

2000 MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The 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" or "Weirton") including the notes thereto, which
begin on page 13.

OVERVIEW

The Company is a major integrated producer of flat rolled carbon steels whose
principal product lines consist 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.

The domestic steel industry is characterized by overcapacity relative to demand,
cyclicality and price volatility, aggravated in recent years by global trade
conditions. Domestic steel producers face significant competition, not only
amongst themselves, but from foreign producers. The relative strength of foreign
economies, including foreign markets for steel, and fluctuations in the value of
the United States dollar against foreign currencies substantially affect the
intensity of foreign competition. During the past three years, foreign producers
exported record levels of steel into the United States, amounting to 38.0
million, 35.6 million and 41.4 million tons in 2000, 1999 and 1998,
respectively. Imported steel, some of which was dumped in violation of United
States trade laws, has adversely affected product prices in the United States
and tonnages sold by domestic producers.

Unfairly priced and illegally dumped foreign steel has been a major factor in
destabilizing the domestic steel industry, directly contributing to the
bankruptcies of two major producers in 2000. Simply increasing efficiencies will
not solve the problem. The Company and other domestic producers have sought and
continue to seek legal and legislative remedies to stop the flow of illegally
dumped steel imported into the United States.

On October 28, 1999, the Company filed a trade case against Japan for illegally
pricing its tin mill products sold in American markets. On August 8, 2000, the
International Trade Commission (ITC) set final antidumping duties of 95% on
Japanese imports of tin mill products to be applied for a five-year period.
However, on March 3, 2000, the ITC ruled that low-priced cold rolled imports
from six countries, including Japan and Brazil, were not a threat to the U.S.
steel industry, dropping cases that could have led to antidumping duties as high
as 80%. The ITC preliminarily ruled on December 28, 2000 that hot rolled
products imported from 10 countries harmed the domestic industry. The Commerce
Department is expected to assess preliminary duties on these imports in early
2001. A final determination in this matter is expected from the ITC by the end
of the third quarter in 2001.

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

RESULTS OF OPERATIONS

2000 Compared to 1999


The net loss for 2000 was $85.1 million or $2.06 per diluted share compared to
net income of $30.9 million or $0.71 per diluted share in 1999. The results for
1999 include a net pretax gain of $170.1 million related to the sale of a
portion of the Company's investment in MetalSite and a non-cash pretax asset
impairment charge of $22.5 million associated with the write down of a
long-lived asset to fair value. Excluding the effects of these non-recurring
items, profit sharing, and the resulting impact on income taxes, the net loss
for 1999 would have been $76.4 million or $1.84 per diluted share.

Total shipments in 2000 were 2,448 thousand tons compared to 2,514 thousand tons
in 1999. Net sales were $1,117.8 million in 2000 compared to $1,130.4 million in
1999.

Shipments and selling prices improved slightly in the first half of 2000, but
near record levels of imports caused steep declines in shipments and selling
prices in the second half of the year.

Sheet product shipments in 2000 were 1,712 thousand tons compared to 1,743
thousand tons in 1999, a decrease of 2%. Sheet mill product shipments resulted
in net sales of $679.6 million in 2000, an increase of $10.1 million compared to
1999. The increase in net sales is primarily attributable to an improvement in
sheet product selling prices during the first half of 2000.


6
<PAGE>   2

                                                                    WEIRTON
                                                               STEEL CORPORATION

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


Tin mill product shipments in 2000 were 736 thousand tons compared to 771
thousand tons in 1999, a decrease of 5%. Tin mill product shipments resulted in
net sales of $438.2 million in 2000, a decrease of $21.8 million compared to
1999. The decrease in net sales is primarily the result of the decrease in
shipment volume.

Cost of sales per ton increased approximately $2 per ton from $428 per ton in
1999 to $430 per ton in 2000. The Company benefited from a two furnace
configuration for most of 2000 and favorable raw material prices in the first
half of 2000. These benefits were offset by a significant increase in natural
gas costs in the fourth quarter of 2000 and lower shipment and production levels
in the second half of 2000. In response to these conditions, the Company idled
its No. 4 Blast Furnace in November 2000.

Selling, general and administrative expenses in 2000 were $41.7 million compared
to $44.8 million in 1999. The decrease resulted primarily from the inclusion of
MetalSite's selling, general and administrative costs during 1999, which had
been consolidated. MetalSite's results were reported using the equity method of
accounting during 2000. The decrease associated with MetalSite was partially
offset by an increase in reserve for bad debt expense related to specific
customers.

Depreciation expense increased $3.1 million from 1999 to 2000. The increase is
primarily attributable to increased units of production depreciation associated
with restarting the No. 4 Blast Furnace in December 1999. The furnace had been
idled for most of 1999.

The Company's loss from unconsolidated subsidiaries increased $25.1 million from
1999 to 2000. The additional loss resulted primarily from the recognition of a
$15.9 million loss associated with funding requirements of GalvPro resulting
from start-up expenditures and adverse market conditions and an $11.1 million
equity loss recorded for MetalSite.

Interest expense decreased $9.6 million in 2000 compared to 1999. The Company
repaid $84.0 million in senior notes at maturity in October 1999, resulting in
lower average outstanding debt during 2000.

The Company recorded an income tax benefit of $11.6 million in 2000 compared to
an income tax provision of $8.2 million in 1999. The change resulted from the
change in the Company's net income (loss) and a reduction in the effective tax
rate due to increased valuation allowance requirements based on the Company's
analysis of its ability to realize deferred tax assets.

The results for 1999 include a net pretax gain of $170.1 million related to the
sale of a portion of the Company's investment in MetalSite.

During 1999, the Company recognized an asset impairment charge of $22.5 million
associated with the write down of a slab sizing press to its estimated fair
value.

In 1999, the Company recorded a provision for profit sharing of $15.5 million
pursuant to the company wide Profit Sharing Plan. In 2000, there was no profit
sharing provision due to the net loss incurred.

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

RESULTS OF OPERATIONS

1999 Compared to 1998

Net income for 1999 was $30.9 million or $0.71 per diluted share compared to a
net loss of $6.1 million or $0.15 per diluted share in 1998. The results for
1999 included a net pretax gain of $170.1 million related to the sale of a
portion of the Company's investment in MetalSite and a non-cash pretax asset
impairment charge of $22.5 million associated with the write down of a
long-lived asset to fair value. The results for 1998 included a pretax
restructuring charge of $2.9 million associated with an employee reduction
program. Excluding the effects of these non-recurring items, profit sharing, and
the resulting impact on income taxes, the net loss for 1999 would have been
$76.4 million or $1.84 per diluted share compared to a net loss for 1998 of $3.8
million or $0.09 per diluted share.

Total shipments in 1999 were 2,514 thousand tons compared to 2,575 thousand tons
in 1998. Net sales were $1,130.4 million in 1999 compared to $1,296.7 million in
1998.


                                                                               7
<PAGE>   3


2000 MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Sheet product shipments in 1999 were 1,743 thousand tons compared to 1,771
thousand tons in 1998, a decrease of 2%. Sheet mill product shipments resulted
in net sales of $669.5 million in 1999, a decrease of $114.7 million compared to
1998. The decrease in net sales is primarily attributable to a decrease in
average selling prices.

Tin mill product shipments in 1999 were 771 thousand tons compared to 804
thousand tons in 1998, a decrease of 4%. Tin mill product shipments resulted in
net sales of $460.0 million in 1999, a decrease of $52.5 million compared to
1998. The decrease in net sales is primarily attributable to the decrease in tin
mill product selling prices and shipments.

Overall, lower shipments and selling prices were the result of unfairly priced
imports which drastically weakened domestic steel pricing beginning in the
second half of 1998 and continuing throughout 1999.

Cost of sales per ton decreased approximately $22 per ton from $450 per ton in
1998 to $428 per ton in 1999 due to the benefit of purchasing slabs in the open
market to meet incremental requirements and a reduction in employee benefit
costs.

Selling, general and administrative expenses in 1999 were $44.8 million compared
to $39.2 million in 1998. The increase is primarily attributable to costs
incurred by MetalSite during its first full year of operation. MetalSite's
results of operations were consolidated through December 29, 1999.

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 1999, the Company recognized an asset impairment charge of $22.5 million
associated with the write down of a slab sizing press to fair value.

In 1999, the Company recorded a provision for profit sharing of $15.5 million
pursuant to the company wide Profit Sharing Plan.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2000, the Company had cash and equivalents of $32.0 million
compared to $209.3 million as of December 31, 1999. The Company's liquidity
requirements arise primarily from working capital requirements, debt service and
capital investments.

The Company's consolidated statements of cash flows for the years indicated are
summarized below:

--------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                2000        1999

Net cash provided (used) by
    operating activities          $ (84,919)   $ 80,589
Net cash provided (used) by
    investing activities            (77,628)    145,325
Net cash used by financing
    activities                      (14,696)    (85,033)
                                  ---------    --------
Increase (decrease) in cash       $(177,243)   $140,881
                                  =========    ========

Net cash flows provided (used) by operating activities were $(84.9) million and
$80.6 million for the years ended December 31, 2000 and 1999, respectively. Cash
flows from operations declined primarily due to higher inventory balances and
lower accounts payable at December 31, 2000, and the payment of profit sharing
and alternative minimum tax during the first quarter of 2000.

The Company's investing activities include capital spending for property, plant
and equipment of $37.8 million and $21.6 million in 2000 and 1999, respectively.
The Company used these expenditures to purchase, modernize or upgrade production
equipment and business systems, maintain facilities and comply with
environmental regulations. The Company plans capital expenditures for 2001 of up
to $15.0 million, including up to $2.9 million for environmental projects.
Depending on its cash resources and needs, some of these projects could be
delayed or scaled back to increase the Company's flexibility. In addition,
investing activities include loans and advances to unconsolidated subsidiaries
of $40.9 million and $3.2 million in 2000 and 1999, respectively. The Company
currently anticipates that funding for its joint ventures in 2001 will be
limited to $1.0 million. In 1999, the increase in cash flow from investing
activities was due to the sale of a portion of the Company's investment in
MetalSite.


8
<PAGE>   4

                                                                    WEIRTON
                                                               STEEL CORPORATION

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


Net cash flows used by financing activities were $14.7 million for 2000 compared
to $85.0 million in 1999. During the first half of 2000, the Company repurchased
approximately 2.6 million shares of its outstanding common stock at a cost of
$16.0 million and realized proceeds of $7.2 million from the exercise of stock
options. Also during the first half of 2000, the Company retired approximately
$5.8 million in long term debt prior to maturity through open market purchases.
The Company repaid $84.0 million of senior notes in 1999.

Apart from its operations and investing activities, the Company's other sources
of liquidity consist of its financing facilities. Through a wholly-owned
subsidiary, Weirton Receivables Inc. ("WRI"), the Company has two receivables
participation agreements: the WRI Receivables Participation Agreement and the
Additional Receivable Facility. Under these facilities, the Company is able to
receive cash in exchange for the sale of a participation interest in its
accounts receivable. The WRI Receivables Participation Agreement provides for a
total commitment of up to $80.0 million, including a letter of credit
subfacility of up to $25.0 million. As of December 31, 2000, $25.0 million of
funded participation interest had been sold and $8.8 million in letters of
credit under the subfacility was outstanding. Subsequent to December 31, 2000,
$5.0 million of the funded participation interest was redeemed.

The Additional Receivable Facility provides for a total commitment of up to
$15.0 million. No funded participation interest had been sold under the
Additional Receivable Facility as of December 31, 2000.

The base amount available for cash sale under both receivable facilities was
approximately $3.6 million on December 31, 2000 and approximately $17.6 million
on February 28, 2001.

The amount of participating interests committed to be purchased 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.
The facilities are subject to termination events based on financial tests,
periodic reporting requirements and a change in control of the Company. The
financial tests focus on the Company's sales, the age of receivables and the
amount of dilutive credits issued against the receivables. During 2000, the
Company negotiated an amendment and a prospective waiver to the WRI Receivables
Participation Agreement. The amendment excludes accounts receivable from certain
affiliated entities and provides the Company with additional flexibility in
financing and other arrangements with certain affiliates. The amendment is
effective through March 2004. The waiver, dated November 21, 2000, relaxed one
of the financial tests for a period from November 30, 2000 through April 30,
2001. Without the waiver, a termination event may have occurred. The Company
anticipates that it will remain in compliance with all of the financial tests
subsequent to April 30, 2001.

In March 2001, the Company and a group of banks agreed to an additional
amendment to the Receivables Participation Agreement. The additional amendment
relaxes certain restrictions on the availability of receivables for cash sale to
the banks. The additional amendment will increase the total amount available
under the facility.

The Company also has a working capital bank credit facility of up to $100.0
million secured by a first priority lien on the Company's inventory (the
"Inventory Facility"). The agreement establishing the Inventory Facility
contains a number of restrictive financial and other covenants typical of
facilities of this kind and substantially similar to those in the Company's
current senior notes indentures. However, certain of the covenants under the
Inventory Facility become more restrictive than under the senior notes
indentures when borrowing availability under the facility is less than $25.0
million. The amount available for borrowing is based on the amount and nature of
the Company's inventory. The amount available can be reduced if the Company
fails to achieve a certain minimum operating ratio. As of December 31, 2000, no
amounts were outstanding under the Inventory Facility, and $90.6 million was
available for borrowing. Subsequent to December 31, 2000, the Company borrowed
$50.0 million from the Inventory Facility. On February 28, 2001, $28.2 million
was available for borrowing. The amounts available for borrowing at December 31,
2000 and February 28, 2001 had been reduced because the Company had not achieved
the


                                                                               9
<PAGE>   5

2000 MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


certain minimum operating ratio. While amounts are outstanding under the
Inventory Facility, the agreement precludes the Company from prepaying any other
outstanding debt.

At December 31, 2000, the Company had outstanding $243.0 million of publicly
held senior notes under two substantially identical indentures. The senior notes
are unsecured and contain no financial maintenance covenants. They do contain
restrictive covenants that limit, among other things, the Company's ability to
incur additional indebtedness, including liens and sale-leaseback transactions,
and to make certain investments such as in joint ventures. As of December 31,
2000 and February 28, 2001, the Company's ability to incur additional
indebtedness, excluding debt from the Inventory Facility, was limited to $100.0
million.

The Company's financing facilities contain typical default provisions, including
cross default provisions. Generally, termination events under the WRI facilities
and defaults under the senior notes constitute events of default under the
Inventory Facility, and events of default under instruments for at least $25.0
million of borrowed money constitute events of default under the senior notes
indentures.

The Company's net deferred tax assets were $153.8 million as of December 31,
2000, 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 2000 and 1999, and may be
required in future periods, to make cash payments for income taxes under federal
alternative minimum tax regulations.

As of December 31, 2000 and 1999, the Company had pension funding credits of
approximately $76.8 million and $80.8 million, respectively. Accordingly, the
Company is not required to contribute to its pension plan in 2001, nor was the
Company required to, and therefore did not, contribute to its pension plan in
2000 or 1999.

The Company plans to substantially reduce cash outflows from investing
activities in 2001 compared to 2000. The Company currently plans 2001 capital
expenditures of up to $15.0 million compared to $37.8 million in 2000. The
Company also plans to reduce loans and advances to joint ventures from $40.9
million in 2000 to less than $1.0 million in 2001. The Company also plans
measures to reduce its overall operating costs, net working capital investment
and cash outflows for financing activities in 2001 compared to 2000.

Based on these initiatives, the amount of cash on hand, the amount of cash
expected to be generated from operating activities and amounts available under
the Company's financing facilities, the Company expects to have sufficient cash
to meet its short term cash needs.

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

ENVIRONMENTAL MATTERS

The Company continued its environmental remediation and regulatory compliance
activities required under its 1996 consent decree with federal and state
environmental authorities that had settled certain water discharge, air
emissions and waste handling enforcement issues. Under the consent decree, the
Company committed to undertake environmental upgrade and modification projects
totaling approximately $19.8 million, of which $16.1 million had been spent
through December 31, 2000.

As part of a related corrective action order, the Company also continued its
investigative activities and interim corrective measures aimed at determining
the nature and extent of hazardous substances which might be located on its
property. These activities are being accomplished on an area by area basis and
generally are at an early stage. Because the Company does not know the nature
and extent of hazardous substances which may be located on its properties, it is
not possible at this time to estimate the ultimate cost to comply with the
corrective action order.

At December 31, 2000 and 1999, the Company had accrued approximately $9.0
million related to the consent decree, the corrective action order, and other
environmental liabilities.


10
<PAGE>   6

                                                                    WEIRTON
                                                               STEEL CORPORATION

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


Depending on the circumstances, the Company, according to the purchase
agreements by which it purchased its facilities in 1984, may be entitled to
indemnification from National Steel Corporation for portions of the costs
incurred in complying with the corrective action order.

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

LABOR NEGOTIATIONS

Approximately 83% of the Company's workforce is covered under collective
bargaining agreements which are scheduled to expire on March 25, 2001. The
Company is currently conducting negotiations with the unions representing the
employees in an effort to reach new collective bargaining agreements. Although
the Company cannot predict the timing or results of its labor negotiations, it
has generally been the practice of both the Company and its unions to extend
current contract terms while new terms are being negotiated.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The fair values of cash and cash equivalents, receivables and accounts payable
approximated carrying values and were relatively insensitive to changes in
interest rates at December 31, 2000 due to the short term maturity of these
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 on purchases of scrap, tin, zinc, oxygen, nitrogen, natural gas,
electric power and other raw materials and utility requirements. As part of its
market risk strategy, the Company has entered into fixed price, multiple year
contracts for its iron ore pellets, oxygen, electricity and nitrogen
requirements. The Company has a coke supply contract whereby it is able to
purchase the greater of 850,000 tons of blast furnace coke annually or 80% of
its actual annual coke requirements. Under the contract, the price of coke
fluctuates with the market, subject to a ceiling and 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 are subject to price fluctuation. As of December 31,
2000, the Company had no significant derivative financial instruments or
derivative commodity instruments outstanding.

A primary source of energy used by the Company in its steel manufacturing
process is natural gas. For the three months ended December 31, 2000 and 1999,
the average price of natural gas consumed by the Company was $5.82/mcf and
$3.08/mcf, respectively, for a total cost of $17.0 million and $14.0 million,
respectively. The Company expects its natural gas prices to remain relatively
unchanged during the first quarter of 2001 for a total cost of approximately
$16.5 million. A hypothetical 10% change in the Company's natural gas prices
would result in a change in the Company's first quarter pretax income of
approximately $1.5 million.

The Company's 50% owned unconsolidated venture, WeBCo, utilizes forward
contracts to mitigate its exposure to changes in foreign currency exchange
rates. At December 31, 2000, WeBCo had two outstanding forward contracts to sell
foreign currencies. A hypothetical 10% change in the applicable 2000 year end
spot rates would result in a change to WeBCo's pretax income of approximately
$0.6 million.

As of December 31, 2000, the Company had the following financial liabilities
where the fair value differed from the carrying value:

--------------------------------------------------------------------------------
                             CARRYING VALUE         FAIR VALUE

Long term debt                     $299,253           $121,758
Series A Redeemable
   Preferred Stock                 $ 21,111           $  1,815
--------------------------------------------------------------------------------



                                                                              11
<PAGE>   7

2000 MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RECENT ACCOUNTING PRONOUNCEMENTS

In September 2000, SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a replacement of FASB
Statement No. 125" was issued. SFAS No. 140 revises criteria for accounting for
asset securitizations, other financial-asset transfers, and collateral and
introduces new disclosures, but otherwise carries forward most of SFAS No. 125's
provisions without amendment. SFAS No. 140 has an immediate impact through new
disclosure requirements and amendments of the collateral provisions of SFAS No.
125. These changes must be applied for transactions occurring after March 31,
2001, except for certain required disclosures which must be applied for fiscal
years ending after December 15, 2000. The Company is currently evaluating the
effects of SFAS No. 140 and is preparing a plan for implementation. The required
disclosures are included in Note 6 to the consolidated financial statements.

In the fourth quarter of 2000, the Company adopted Emerging Issues Task Force
Issue 00-10, "Accounting for Shipping and Handling Fees and Costs" ("EITF
00-10"), which addresses the diversity in the income statement classification of
amounts charged to customers for shipping and handling, as well as for costs
incurred related to shipping and handling. EITF 00-10 requires all amounts
billed to a customer in a sales transaction related to shipping and handling be
classified as revenue and that shipping and handling charges incurred by the
Company not be recorded as a reduction of revenue. Therefore, the Company has
reclassified from net sales to cost of sales $42.4 million, $39.0 million and
$41.5 million for 2000, 1999 and 1998, respectively, which represent those
shipping and handling costs incurred by the Company and previously recorded as a
reduction of revenue.

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement 133"). The Statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. The impact of the Company's implementation of Statement 133,
effective January 1, 2001, was immaterial to the Company's financial position.

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

OUTLOOK

In 2001, the Company will continue to analyze cost reduction initiatives.
Included in the Company's plans for the first quarter of 2001 is a reduction in
the Company's non-represented staff workforce. The reduction will result in a
one-time restructuring charge of $11.0 million to $13.0 million in the first
quarter of 2001, but will decrease operating costs thereafter. Despite this and
other cost saving initiatives, the Company's management does not believe such
efforts will be sufficient to overcome depressed markets for flat-rolled carbon
steel products in the short term. Accordingly, the Company anticipates that it
will record a loss in the first quarter of 2001.

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

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 its assumptions made in connection with
forward-looking statements are reasonable, there are no assurances that the
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.

12
<PAGE>   8

                                                                    WEIRTON
                                                               STEEL CORPORATION




2000 CONSOLIDATED STATEMENTS OF INCOME
      YEAR ENDED DECEMBER 31

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                           2000                 1999                 1998

<S>                                                              <C>                  <C>                  <C>
NET SALES                                                        $ 1,117,829          $ 1,130,432          $ 1,296,670
Operating costs:
Cost of sales                                                      1,052,867            1,076,077            1,159,339
Selling, general and administrative expenses                          41,673               44,806               39,219
Depreciation                                                          63,968               60,866               60,822
Restructuring charge                                                      --                   --                2,871
Asset impairment                                                          --               22,522                   --
Profit sharing provision                                                  --               15,473                   --
                                                                 -----------          -----------          -----------
      TOTAL OPERATING COSTS                                        1,158,508            1,219,744            1,262,251
                                                                 -----------          -----------          -----------

INCOME (LOSS) FROM OPERATIONS                                        (40,679)             (89,312)              34,419
Gain on sale of investment, net                                           --              170,117                   --
Income (loss) from unconsolidated subsidiaries                       (26,208)              (1,105)                  34
Interest expense                                                     (34,633)             (44,223)             (44,338)
Other income, net                                                      4,797                2,198                4,684
ESOP contribution                                                         --               (1,305)              (2,610)
                                                                 -----------          -----------          -----------

Income (loss) before income taxes and minority interest              (96,723)              36,370               (7,811)
Income tax provision (benefit)                                       (11,607)               8,227               (1,391)
                                                                 -----------          -----------          -----------
Income (loss) before minority interest                               (85,116)              28,143               (6,420)
Minority interest in loss of subsidiary                                   --                2,804                  293
                                                                 -----------          -----------          -----------
NET INCOME (LOSS)                                                $   (85,116)         $    30,947          $    (6,127)
                                                                 ===========          ===========          ===========

PER SHARE DATA:
Weighted average number of common shares (in thousands):
   Basic                                                              41,401               41,600               41,924
   Diluted                                                            41,401               43,299               41,924

Net income (loss) per share:
   Basic                                                         $     (2.06)         $      0.74          $     (0.15)
   Diluted                                                       $     (2.06)         $      0.71          $     (0.15)
</TABLE>


The accompanying notes are an integral part of these statements.


                                                                              13
<PAGE>   9


2000 CONSOLIDATED BALANCE SHEETS
      AS OF DECEMBER 31

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                                            2000                 1999

<S>                                                                                 <C>                <C>
ASSETS:
CURRENT ASSETS:
   Cash and equivalents, including restricted cash of
      $775 and $810, respectively                                                   $  32,027          $   209,270
   Receivables, less allowances of $7,808 and $9,302, respectively                     76,187              104,647
   Inventories                                                                        202,377              186,710
   Deferred income taxes                                                               39,654               42,517
   Other current assets                                                                11,342                3,167
                                                                                    ---------          -----------
         TOTAL CURRENT ASSETS                                                         361,587              546,311

Property, plant and equipment, net                                                    487,664              514,464
Investment in unconsolidated subsidiaries                                              19,375                6,833
Deferred income taxes                                                                 114,111              109,110
Other assets and deferred charges                                                       8,834               10,804
                                                                                    ---------          -----------
TOTAL ASSETS                                                                        $ 991,571          $ 1,187,522
                                                                                    =========          ===========

LIABILITIES:
CURRENT LIABILITIES:
   Payables                                                                         $  86,615          $   142,930
   Employment costs                                                                    68,751               81,688
   Taxes other than income taxes                                                       12,886               13,805
   Other current liabilities                                                            9,122               17,511
                                                                                    ---------          -----------
         TOTAL CURRENT LIABILITIES                                                    177,374              255,934

Long term debt obligations                                                            299,253              304,768
Long term pension obligation                                                           79,994               91,295
Postretirement benefits other than pensions                                           319,320              327,665
Other long term liabilities                                                            31,619               30,886
                                                                                    ---------          -----------
         TOTAL LIABILITIES                                                            907,560            1,010,548

REDEEMABLE STOCK:
Preferred stock, Series A, $0.10 par value; 1,555,470 and 1,664,469
   shares authorized and issued; 1,536,688 and 1,647,214 subject to put                21,728               23,147
Less: Preferred treasury stock, Series A, at cost, 42,797 and 12,207 shares              (617)                (174)
                                                                                    ---------          -----------
         TOTAL REDEEMABLE STOCK                                                        21,111               22,973

STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $0.10 par value; 18,782 and 17,255 shares
   not subject to put                                                                     273                  250
Common stock, $0.01 par value; 50,000,000 shares authorized;
   43,788,832 and 43,499,363 shares issued                                                438                  435
Additional paid-in capital                                                            460,521              458,249
Common stock issuable, 279,792 and 304,113 shares                                         279                  431
Retained earnings (deficit)                                                          (383,310)            (298,194)
Less: Common treasury stock, at cost, 2,498,198 and 1,885,682 shares                  (15,301)              (7,170)
                                                                                    ---------          -----------
         TOTAL STOCKHOLDERS' EQUITY                                                    62,900              154,001
                                                                                    ---------          -----------

TOTAL LIABILITIES, REDEEMABLE STOCK
   AND STOCKHOLDERS' EQUITY                                                         $ 991,571          $ 1,187,522
                                                                                    =========          ===========
</TABLE>


The accompanying notes are an integral part of these statements.


14
<PAGE>   10


                                                                    WEIRTON
                                                               STEEL CORPORATION



2000 CONSOLIDATED STATEMENTS OF CASH FLOWS
      YEAR ENDED DECEMBER 31

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                                               2000                  1999                  1998

<S>                                                             <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   NET INCOME (LOSS)                                            $ (85,116)            $  30,947             $  (6,127)
   ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
 TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
   Depreciation                                                    63,968                60,866                60,822
   (Income) loss from unconsolidated subsidiaries                  26,208                 1,105                   (34)
   Amortization of deferred financing costs                         1,987                 1,899                 1,662
   Restructuring charge                                                --                    --                 2,871
   Asset impairment                                                    --                22,522                    --
   ESOP contribution                                                   --                 1,305                 2,610
   Minority interest                                                   --                (2,804)                 (293)
   Deferred income taxes                                           (5,001)                 (153)               (5,889)
   Cash provided (used) by working capital items:
       Receivables                                                 28,460                 7,631                28,565
       Inventories                                                (15,667)               72,622                 1,601
       Other current assets                                        (5,312)                6,716                (2,831)
       Payables                                                   (56,315)               22,233               (11,969)
       Other current liabilities                                  (22,245)               20,772                (6,805)
   Long term pension obligation                                   (11,301)                9,387               (17,713)
   Proceeds from sale of investment, net                               --              (170,117)                   --
   Other                                                           (4,585)               (4,342)                3,754
                                                                ---------             ---------             ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                  (84,919)               80,589                50,224
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from gain on sale of investment, net                       --               170,117                    --
   Loans and advances to unconsolidated subsidiaries              (40,858)               (3,178)                   --
   Investment in unconsolidated subsidiaries                           --                    --                (7,561)
   Distribution from unconsolidated subsidiary                      1,000                    --                    --
   Capital spending                                               (37,770)              (21,614)              (50,382)
                                                                ---------             ---------             ---------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                  (77,628)              145,325               (57,943)
CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of debt obligations                                   (5,831)              (84,232)              (42,831)
   Purchase of treasury stock                                     (15,990)                   --                (6,283)
   Reissuance of treasury stock                                     7,205                    --                    --
   Issuance of common stock                                            72                    --                    --
   Common shares issuable                                            (152)                 (101)                  532
   Deferred financing costs                                            --                  (700)                   --
                                                                ---------             ---------             ---------
NET CASH USED BY FINANCING ACTIVITIES                             (14,696)              (85,033)              (48,582)
                                                                ---------             ---------             ---------
NET CHANGE IN CASH AND EQUIVALENTS                               (177,243)              140,881               (56,301)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD                       209,270                68,389               124,690
                                                                ---------             ---------             ---------
CASH AND EQUIVALENTS AT END OF PERIOD                           $  32,027             $ 209,270             $  68,389
                                                                =========             =========             =========
SUPPLEMENTAL CASH FLOW INFORMATION
   Interest paid, net of capitalized interest                   $  34,630             $  46,147             $  45,953
   Income taxes paid (refunded), net                                5,127                (3,191)                7,803
</TABLE>


The accompanying notes are an integral part of these statements.


                                                                              15
<PAGE>   11



2000 CONSOLIDATED 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>
CONSOLIDATED STOCKHOLDERS' EQUITY 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 plan:
   Shares issued                                                        40,558           --                   98
   Shares issuable                                                          --           --                   --
Deferred compensation                                                       --           --                   --
--------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STOCKHOLDERS' EQUITY AT DECEMBER 31, 1998              43,178,134          432              457,851
Net income                                                                  --           --                   --
Conversion of preferred stock                                           30,167           --                  437
Exercise of preferred stock put options                                     --           --                  124
Purchase of treasury stock                                                  --           --                    2
Reclassification of preferred Series A not subject to put                   --           --                   --
Employee stock purchase plan:
   Shares issued                                                       285,430            3                  376
   Shares issuable                                                          --           --                   --
Board of Directors compensation plans:
   Shares issued                                                         5,632           --                 (541)
   Shares issuable                                                          --           --                   --
Amortization of deferred compensation                                       --           --                   --
Deferred compensation                                                       --           --                   --
--------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STOCKHOLDERS' EQUITY AT DECEMBER 31, 1999              43,499,363          435              458,249
Net loss                                                                    --           --                   --
Conversion of preferred stock                                           91,744            1                1,329
Exercise of preferred stock put options                                     --           --                  275
Purchase of treasury stock                                                  --           --                    3
Reclassification of preferred Series A not subject to put                   --           --                   --
Exercise of stock options                                               30,250           --                1,215
Employee stock purchase plan:
   Shares issued                                                       167,475            2                  230
   Shares issuable                                                          --           --                   --
Board of Directors compensation plans:
   Shares issued                                                            --           --                 (780)
   Shares issuable                                                          --           --                   --
Amortization of deferred compensation                                       --           --                   --
Deferred compensation                                                       --           --                   --
     CONSOLIDATED STOCKHOLDERS' EQUITY AT DECEMBER 31, 2000         43,788,832         $438             $460,521
====================================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.


16
<PAGE>   12

                                                                    WEIRTON
                                                               STEEL CORPORATION



<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
           COMMON                                                     COMMON                  PREFERRED SERIES A
       SHARES ISSUABLE                         RETAINED            TREASURY STOCK             NOT SUBJECT TO PUT
     -------------------      DEFERRED         EARNINGS        ------------------------       ------------------      STOCKHOLDERS'
      SHARES      AMOUNT  COMPENSATION         (DEFICIT)          SHARES         AMOUNT       SHARES      AMOUNT             EQUITY
<S>               <C>     <C>                <C>               <C>             <C>            <C>         <C>         <C>
     288,423       $ 664         $(471)      $ (323,014)         209,514       $ (1,587)       8,838        $128           $132,527
          --          --            --           (6,127)              --             --           --          --             (6,127)
          --          --            --               --               --             --         (491)         (7)               626
          --          --            --               --               --             --           --          --                177
          --          --            --               --        1,774,047         (6,285)          --          --             (6,283)
          --          --            --               --               --             --        7,713         112                112

    (247,865)       (566)           --               --               --             --           --          --                 --
     285,430         379            --               --               --             --           --          --                379

     (40,558)        (98)           --               --               --             --           --          --                 --
      98,132         153          (153)              --               --             --           --          --
          --          --           132               --               --             --           --          --                132
------------------------------------------------------------------------------------------------------------------------------------
     383,562         532          (492)        (329,141)       1,983,561         (7,872)      16,060         233            121,543
          --          --            --           30,947               --             --           --          --             30,947
          --          --            --               --               --             --       (5,080)        (74)               363
          --          --            --               --               --             --           --          --                124
          --          --            --               --              253             --           --          --                  2
          --          --            --               --               --             --        6,275          91                 91

    (285,430)       (379)           --               --               --             --           --          --                 --
     167,475         231            --               --               --             --           --          --                231

     (98,132)       (153)           --               --          (98,132)           702           --          --                  8
     136,638         200          (200)              --               --             --           --          --                 --
          --          --           683               --               --             --           --          --                683
          --          --             9               --               --             --           --          --                  9
------------------------------------------------------------------------------------------------------------------------------------
     304,113         431            --         (298,194)       1,885,682         (7,170)      17,255         250            154,001
          --          --            --          (85,116)              --             --           --          --            (85,116)
          --          --            --               --               --             --       (3,895)        (56)             1,274
          --          --            --               --               --             --           --          --                275
          --          --            --               --        2,605,329        (15,990)          --          --            (15,987)
          --          --            --               --               --             --        5,422          79                 79
          --          --            --               --       (1,855,894)         6,879           --          --              8,094

    (167,475)       (231)           --               --               --             --           --          --                  1
      59,978          61            --               --               --             --           --          --                 61

    (136,638)       (200)           --               --         (136,919)           980           --          --                 --
     219,814         218            --               --               --             --           --          --                218
          --          --          (679)              --               --             --           --          --               (679)
          --          --           679               --               --             --           --          --                679
------------------------------------------------------------------------------------------------------------------------------------
     279,792       $ 279         $  --       $ (383,310)       2,498,198       $(15,301)      18,782        $273           $ 62,900
====================================================================================================================================
</TABLE>

                                                                              17
<PAGE>   13


2000 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 and controls are consolidated; entities of which the
Company owns a less than majority interest and does not control 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 and/or Weirton Steel Corporation together with its consolidated
subsidiaries are hereafter referred to as the "Company."

In the Company's consolidated balance sheets, MetalSite is accounted for under
the equity method as of December 31, 2000 and 1999. MetalSite's results of
operations are consolidated with the Company's results through December 29,
1999, and are reported under the equity method thereafter.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 over 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.

The Company's authorized capital consists of 50.0 million shares of Common
Stock, par value $0.01 per share, and 7.5 million shares of Preferred Stock, par
value $0.10 per share, issuable in series, as designated by the Company's Board
of Directors.

Prior to 1989, the Company was owned entirely by its employees through an
Employee Stock Ownership Plan (the "1984 ESOP"). In June 1989, the Company's
Common Stock commenced trading publicly on the New York Stock Exchange following
an underwritten secondary offering from the 1984 ESOP. In connection with that
offering, the Company established a second Employee Stock Ownership Plan (the
"1989 ESOP") and funded it with 1.8 million shares of Convertible Voting
Preferred Stock, Series A (the "Series A Preferred").

Substantially all of the Company's employees participate in the 1984 ESOP and
the 1989 ESOP which owned approximately 24% of the issued and outstanding common
shares and substantially all the preferred shares of the Company as of December
31, 2000. The common and preferred shares held by the 1984 ESOP and the 1989
ESOP collectively represent 42% of the voting power of the Company's voting
stock as of December 31, 2000.

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. The Company is currently conducting
negotiations with the represented employees in an effort to reach new collective
bargaining agreements.

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

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 $8.6 million and $12.4 million as of
December 31, 2000 and 1999, respectively.


18
<PAGE>   14

                                                                    WEIRTON
                                                               STEEL CORPORATION

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


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 a 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. 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. Shares may be
contributed to the ESOPs by the Company or their purchase may be financed by the
ESOPs. For financed shares, the number of shares allocated to participants for
the period is determined based on the ratio of the period's ESOP 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

There were no provisions for employee profit sharing in 2000 and 1998. The
provision for 1999 of $15.5 million for employee profit sharing was calculated
in accordance with the Profit Sharing Plan as amended in 1994.

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 totaled $2.7 million, $2.0 million and
$5.9 million in 2000, 1999 and 1998, respectively.

Shipping and Handling Fees and Costs

In the fourth quarter of 2000, the Company adopted Emerging Issues Task Force
Issue 00-10, "Accounting for Shipping and Handling Fees and Costs" ("EITF
00-10"), which addresses the diversity in the income statement classification of
amounts charged to customers for shipping and handling, as well as for costs
incurred related to shipping and handling. EITF 00-10 requires all amounts
billed to a customer in a sales transaction related to shipping and handling be
classified as revenue and that shipping and handling charges incurred by the
Company not be recorded as a reduction of revenue. Therefore, the Company has
reclassified from net sales to cost of sales $42.4 million, $39.0 million and
$41.5 million for 2000, 1999 and 1998 respectively which represent those
shipping and handling charges incurred by the Company and previously recorded as
a reduction of revenue.

Derivative Instruments

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement 133"). The Statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. The impact of the Company's implementation of Statement 133,
effective January 1, 2001, was immaterial to the Company's financial position.



                                                                              19
<PAGE>   15




2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


Revenue Recognition

On December 3, 1999, the SEC staff released Staff Accounting Bulletin No. 101
"Revenue Recognition" ("SAB 101") to provide guidance on the recognition,
presentation and disclosure of revenue in the financial statements. SAB 101 does
not change existing literature on revenue recognition, but rather it clarifies
the staff's position on pre-existing literature. The new standard did not
require management to change existing revenue recognition policies and therefore
had no impact on the Company's reported financial position or results of
operations as of December 31, 2000 and 1999.

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

NOTE 4

INVENTORIES

Inventories consisted of the following:

----------------------------------------------------------
DECEMBER 31,                           2000        1999

Raw materials                      $ 84,120   $  61,254
Work-in-process                      40,242      41,044
Finished goods                       78,015      84,412
                                   --------    --------
                                   $202,377    $186,710
                                   ========    ========

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

NOTE 5

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

-------------------------------------------------------------------
DECEMBER 31,                                 2000           1999

Land                                    $   1,112      $   1,129
Buildings                                   9,270          9,409
Machinery, equipment and other            959,298        973,651
Construction-in-progress                   14,173          6,285
                                        ---------      ---------
                                          983,853        990,474
Less: Allowances for depreciation        (496,189)      (476,010)
                                        ---------      ---------
                                        $ 487,664      $ 514,464
                                        =========      =========

During the fourth quarter of 1999, the Company recognized an asset impairment
charge of $22.5 million related to a slab sizing press. The service potential of
the asset was impaired as a result of changes in world slab markets and the
Company's decision to restart the No. 4 Blast Furnace. Further, the Company
terminated discussions with an entity concerning a strategic combination, which
if consummated would have provided support for the viability of the asset. Given
the existing facts and circumstances pertaining to the slab sizing press, the
Company has no plans to utilize the asset. In the event those facts and
circumstances change significantly, the Company may reconsider its decision.

The fair value was determined based upon the value of individual components and
the absence of opportunities to sell the slab sizing press.

Capitalized interest applicable to facilities under construction for the years
ended December 31, 2000 and 1998 amounted to $0.2 million and $0.4 million,
respectively. There was no capitalized interest applicable to facilities under
construction for the year ended December 31, 1999.

In 2000, the Company incurred capital expenditures of $7.3 million on a project
to install new equipment related to a new polymer coating process. The Company
has temporarily suspended the project. The Company plans to continue
installation of the equipment when resources for capital projects are more
readily available. The Company expects to incur capital spending of $3.8 on the
project in 2001 to satisfy outstanding purchase commitments.

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

NOTE 6

FINANCING ARRANGEMENTS

Debt Obligations

------------------------------------------------------------------
DECEMBER 31,                                 2000           1999

11-3/8% Senior Notes due 7/1/04          $122,724       $124,930
10-3/4% Senior Notes due 6/1/05           121,256        124,882
8-5/8% Pollution Control Bonds
   due 11/1/14                             56,300         56,300
                                         --------       --------
                                          300,280        306,112
Less: Unamortized debt discount            (1,027)        (1,344)
                                         --------       --------
Total debt obligations                   $299,253       $304,768
                                         ========       ========

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, investments in joint ventures, as well as



20
<PAGE>   16

                                                                    WEIRTON
                                                               STEEL CORPORATION

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


mergers, consolidations, liens and sales of certain assets. As of December 31,
2000, the Company's ability to incur additional indebtedness was limited to
$100.0 million, excluding certain types of permitted indebtedness such as under
the "Inventory Facility" referred to below. 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, 2000, pursuant to this covenant, the Company's ability to pay
dividends on its common stock was limited to $42.8 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 $122.7 million in principal payments due in 2004, $121.3 million
due in 2005 and $56.3 million due thereafter.

During 1999, the Company paid off the remaining $84.0 million outstanding on its
10-7/8% Senior Notes at maturity.

Receivables Participation Agreements

On March 29, 1999, through its wholly-owned subsidiary, Weirton Receivables Inc.
("WRI"), the Company amended its existing receivables facility with a group of
three banks (the "WRI Amended Receivables Facility"). The WRI Amended
Receivables Facility provides for a total commitment by the banks of up to $80.0
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 WRI.

During 2000, the Company negotiated an amendment and a prospective waiver to the
WRI Receivables Participation Agreement. The amendment excludes accounts
receivable from certain affiliated entities and provides the Company with
additional flexibility in financing and other arrangements with certain
affiliates. The amendment is effective through March 2004. The waiver, dated
November 21, 2000, relaxed a performance ratio for a period from November 30,
2000 through April 30, 2001. Without the waiver, an event of default may have
occurred. The Company anticipates that it will remain in compliance with all of
the financial tests subsequent to April 30, 2001.

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. The financial tests that were applicable to the receivable facility
prior to March 29, 1999 were amended so that, in most cases, the amount of
participation interest available for cash sale to the banks is greater under the
WRI Amended Receivables Facility than under the pre-existing facility. The March
29, 1999 amendment also modified the events and circumstances that would cause
the termination of the facility. The other terms and conditions of the WRI
Amended Receivables Facility are substantially the same as those of the
pre-existing facility.

Funded purchases of participation interests by the banks under the WRI Amended
Receivables Facility are generally available on a revolving basis for three
years, subject to extension as agreed to by the banks. In 1999, the facility was
extended through March 2004. 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



                                                                              21

<PAGE>   17



2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


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, 2000, WRI was in compliance with these requirements. WRI has
been set up as a bankruptcy-remote" subsidiary so that 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.

Because the WRI Amended Receivables Facility contains concentration limitation
provisions, from time to time, receivables from one of the Company's major
customers were ineligible to be considered in the calculation of participation
interest available for cash sale to the banks. As a result, on August 9, 1999,
WRI and one of the participating banks agreed to a second receivable facility
("Additional Receivable Facility") based on the receivables of the
aforementioned major customer of the Company.

The Additional Receivable Facility originally provided for a total commitment by
the participating bank of up to $20.0 million. Pursuant to the Additional
Receivable Facility Agreement, the total commitment was reduced to $15.0 million
as of December 31, 1999. The amount of participation interest in the accounts
receivable from the major customer available for sale to the bank fluctuates
depending upon the nature and amount of receivables from the customer generated
by the Company which are sold into the program and certain financial tests
applicable to them. Events that would cause the termination of the Additional
Receivable Facility are similar to those that exist under the WRI Amended
Receivables Facility.

As of December 31, 2000 and 1999, $25.0 million and $35.0 million, respectively,
of funded participation interest had been sold to the banks under the WRI
Amended Receivables Facility. For 2000 and 1999, the Company recognized $0.3
million and $0.6 million, respectively, in discount expense from the sale of the
funded participation interest. Discount expense was recorded as a reduction to
other income for financial reporting purposes. As of December 31, 2000 and 1999,
$8.8 million and $12.7 million, respectively, in letters of credit under the
subfacility were in place, and no funded participation under the Additional
Receivable Facility had been sold. After sale of funded participation interests
and amounts in place under the letter of credit subfacility, the base amount
available for cash sale under both facilities was approximately $3.6 million at
December 31, 2000.

The Company values its accounts receivable based on the face value of invoices
outstanding with allowances for uncollectible accounts and other potential
claims and deductions. The Company values the portion of the participation
interest it retained by WRI as its outstanding accounts receivable balance,
after allowances, less cash received in exchange for the participation interest
sold.

The participation interest sold to the banks is secured by the interest retained
by WRI. The Company continues to service and collect all accounts receivable.

The key assumption used in valuing the participation interest retained by WRI is
the allowance recorded against its accounts receivable. At December 31, 2000 and
1999, the Company had recorded a valuation allowance of $7.8 million and $9.3
million, respectively. Any hypothetical difference between the valuation
allowance recorded and the actual credit losses and other deductions will
entirely affect WRI's accounts receivable participation because that interest
secures the participation interest held by the banks. During the years ended
December 31, 2000 and 1999, the Company recorded net losses for uncollectible
accounts of $6.2 million and $2.3 million, respectively.


22
<PAGE>   18



                                                                    WEIRTON
                                                               STEEL CORPORATION

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


Inventory Facility


In November 1999, the Company and a bank agreed to a new working capital
facility of up to $100.0 million secured by a first priority lien on the
Company's inventory (the "Inventory Facility"). Borrowings under the Inventory
Facility are based upon the levels and composition of the Company's inventory
and generally are available on a revolving basis through October 2004. The
amount available for borrowing is limited by both the Inventory Facility
agreement and the Company's senior notes indentures which permit borrowing only
up to 50% of the Company's inventory balance. At the option of the Company, the
Inventory Facility bears interest at a prime or LIBOR rate. Based upon the
amount outstanding, basis points ranging from 0.00% to 2.50% are added to the
prime or LIBOR rate. The agreement establishing the facility contains a number
of restrictive financial and other covenants typical of facilities of this kind
and substantially similar to those in the Company's current senior notes
indentures. However, certain of the covenants under the Inventory Facility
become more restrictive than under the senior notes indentures when borrowing
availability under the facility is less than $25.0 million. The amount available
can be reduced if the Company fails to achieve a certain minimum operating
ratio. As of December 31, 2000, no amounts were outstanding under the Inventory
Facility, and $90.6 million was available for borrowing. The amount available
for borrowing at December 31, 2000 had been reduced because the Company had not
achieved the minimum operating ratio.

The Company's financing facilities contain typical default provisions, including
cross default provisions. Generally, termination events under the WRI facilities
and defaults under the senior notes constitute events of default under the
Inventory Facility, and events of default under instruments for at least $25.0
million of borrowed money constitute events of default under the senior notes
indentures.

Leases


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

Rental expense under operating leases was $9.0 million, $7.8 million and $8.0
million for the years ended December 31, 2000, 1999 and 1998, respectively. The
minimum future lease payments under noncancelable operating leases are $8.4
million, $7.5 million, $6.2 million, $5.0 million and $1.3 million for the years
ending 2001 through 2005, respectively, and $0.6 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. There were no employer contributions to the Pension Plan during
2000 and 1999. During the year ended December 31, 1998, the Company contributed
$43.0 million 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.




                                                                              23
<PAGE>   19




2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


Benefits Other Than Pensions


The Company provides healthcare and life insurance benefits to substantially
all of the Company's retirees and their dependents. The healthcare 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 funded status and amounts recognized in the Company's consolidated financial
statements related to employee retirement benefits are set forth in the
following table (in thousands):

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                      PENSION BENEFITS                      OTHER BENEFITS
                                                               ------------------------------      ------------------------------
                                                               DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                                                       2000              1999              2000              1999
<S>                                                            <C>               <C>               <C>               <C>
Change in benefit obligation:
   Benefit obligation at beginning of year                        $ 699,119         $ 772,167         $ 308,801         $ 336,857
   Service cost                                                      13,532            15,894             4,771             5,696
   Interest cost                                                     53,899            49,926            23,874            21,245
   Plan amendments                                                       --                --                --                --
   Actuarial (gain) loss                                             39,397           (85,363)           10,466           (31,796)
   Special termination benefits                                          --                --                --                --
   Benefits paid                                                    (51,961)          (53,505)          (26,472)          (23,201)
                                                                  ---------         ---------         ---------         ---------
   Benefit obligation at end of year                              $ 753,986         $ 699,119         $ 321,440         $ 308,801
                                                                  =========         =========         =========         =========

Change in plan assets:
   Fair value of plan assets at beginning of year                 $ 787,114         $ 687,537         $      --         $      --
   Actual return on plan assets                                      (7,996)          153,082                --                --
   Employer contributions                                                --                --            26,472            23,201
   Benefits paid                                                    (51,961)          (53,505)          (26,472)          (23,201)
                                                                  ---------         ---------         ---------         ---------
   Fair value of plan assets at end of year                       $ 727,157         $ 787,114         $      --         $      --
                                                                  =========         =========         =========         =========

Reconciliation of funded status:
   Accumulated benefit obligation                                 $ 678,064         $ 635,029
   Effect of projected compensation increases                        75,922            64,090
                                                                  ---------         ---------
   Actuarial present value of projected benefit obligation          753,986           699,119         $ 321,440         $ 308,801
   Plan assets at fair value                                        727,157           787,114                --                --
                                                                  ---------         ---------         ---------         ---------
   Projected benefit obligation greater than (less than)
      plan assets                                                    26,829           (87,995)          321,440           308,801
   Items not yet recognized:
      Prior service cost                                            (61,688)          (70,777)           31,575            42,092
      Actuarial gains (losses)                                      131,035           273,639            (8,693)            1,773
      Remaining net obligation at transition                        (16,182)          (23,572)               --                --
                                                                  ---------         ---------         ---------         ---------
   Accrued benefit obligation                                     $  79,994         $  91,295         $ 344,322         $ 352,666
                                                                  =========         =========         =========         =========
</TABLE>


24

<PAGE>   20


                                                                    WEIRTON
                                                               STEEL CORPORATION

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




<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                   PENSION BENEFITS                                  OTHER BENEFITS
                                      --------------------------------------------     --------------------------------------------
                                      DECEMBER 31,    DECEMBER 31,    DECEMBER 31,     DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                              2000            1999            1998             2000            1999            1998

<S>                                   <C>             <C>             <C>              <C>             <C>             <C>
Components of net periodic
  benefit cost:
   Service cost                           $ 13,532        $ 15,894        $ 15,704         $  4,771        $  5,696        $  5,462
   Interest cost                            53,899          49,926          48,902           23,874          21,245          24,136
   Expected return on plan assets          (79,982)        (69,810)        (54,471)              --              --              --
   Amortization of transition amount         7,390           7,390           7,390               --              --              --
   Amortization of prior service cost        9,089           9,089           9,089          (10,517)        (10,517)         (4,325)
   Recognized net actuarial gain           (15,229)         (3,102)         (1,367)              --              --              --
                                          --------        --------        --------         --------        --------        --------
   Net periodic benefit cost              $(11,301)       $  9,387        $ 25,247         $ 18,128        $ 16,424        $ 25,273
                                          ========        ========        ========         ========        ========        ========

Weighted-average assumptions
   as of end of year:
   Discount rate                              7.50%           8.00%           6.75%            7.50%           8.00%           6.75%
   Expected return on plan assets            10.50%          10.50%           9.25%              --              --              --
   Assumed increase in compensation
      levels                                     3%         2% for          2% for                3%         2% for          2% for
                                                            1 year         2 years                           1 year         2 years
                                                            and 3%          and 3%                           and 3%          and 3%
                                                        thereafter      thereafter                       thereafter      thereafter
</TABLE>


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                   FOR RETIREES WHO HAVE                    FOR RETIREES WHO ARE
                                                   NOT YET REACHED AGE 65                     AGE 65 AND OLDER
                                               ------------------------------         ------------------------------
                                               2000          1999        1998         2000         1999         1998

<S>                                            <C>           <C>         <C>          <C>          <C>          <C>
Base medical cost trend:
   Rate in first year                          5.75%         6.50%       7.25%        5.25%        5.75%        6.50%
   Ultimate rate                               4.50%         5.00%       4.00%        4.50%        5.00%        4.00%
   Year in which ultimate rate is reached      2003          2003        2003         2003         2003         2003
Major medical cost trend:
   Rate in first year                          6.25%         7.50%       8.50%          --           --           --
   Ultimate rate                               4.50%         5.00%       4.00%          --           --           --
   Year in which ultimate rate is reached      2003          2003        2003           --           --           --
Administrative expense trend                   4.50%         5.00%       4.00%        4.50%        5.00%        4.00%
</TABLE>


A one-percentage-point change in the assumed health care cost trend rates would
have the following effects:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                   ONE PERCENTAGE POINT INCREASE      ONE PERCENTAGE POINT DECREASE

<S>                                                                <C>                                <C>
Effect on total of service and interest cost components for 2000                         $ 1,316                           $ (1,478)
Effect on 2000 accumulated postretirement benefit obligation                             $16,071                           $(17,148)
</TABLE>





                                                                              25
<PAGE>   21

2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


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 pays 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 for
1998.

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, 2000 and 1999,
were consistent with those used to measure pension and other postretirement
benefit obligations for each respective year. As of December 31, 2000 and 1999,
the Company had accrued $31.9 million and $27.4 million, respectively, for
postemployment benefit obligations.

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.

The 1998 restructuring charge consisted of a $2.1 million charge to the
Company's accrued pension cost and a $0.8 million charge to other long term
liabilities. The Company paid $0.2 million in 2000 and 1999 related to the other
long term liability component of the 1998 restructuring charge, leaving a
remaining liability associated with the other long term portion of the charge of
$0.4 million. The Company made no pension contributions in 2000 and 1999. The
liability associated with the accrued pension portion of the 1998 restructuring
charge was included in the Company's total accrued pension cost as of December
31, 2000 and 1999.

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

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:

---------------------------------------------------------------------------
DECEMBER 31,                                     2000                  1999

Deferred tax assets:
   Net operating loss and
      tax credit carryforwards              $ 115,023             $  89,240
   Deductible temporary
      differences:
      Allowance for doubtful
         accounts                               2,396                 2,973
      Inventories                               4,225                17,691
      Pensions                                 31,198                35,605
      Workers' compensation                    11,348                10,673
      Postretirement benefits
         other than pensions                  135,256               138,544
      Equity investments                        4,287                    --
      Other deductible temporary
         differences                           27,373                16,822
   Valuation allowance                        (61,811)              (39,712)
                                            ---------             ---------
                                              269,295               271,836
Deferred tax liabilities:
   Accumulated depreciation                  (115,530)             (120,209)
                                            ---------             ---------
Net deferred tax asset                      $ 153,765             $ 151,627
                                            =========             =========


26
<PAGE>   22

                                                                    WEIRTON
                                                               STEEL CORPORATION

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


As of December 31, 2000, the Company had available, for federal and state income
tax purposes, regular net operating loss carryforwards of approximately $239.7
million expiring in 2007 through 2020; an alternative minimum tax credit of
approximately $13.5 million; and general business tax credits of approximately
$8.1 million expiring in 2001 to 2005.

In 2000, 1999 and 1998, as a result of its deferred tax attributes, the Company
did not generate any liability for regular federal income tax. In 2000, the
Company did not generate any liability for alternative minimum tax. However, in
1999 and 1998, the Company did generate liability for alternative minimum tax.
The Company recognized a liability for alternative minimum tax of $8.4 million
and $3.3 million in 1999 and 1998, respectively.

The Company has recognized that it is more likely than not that certain future
tax benefits will not be realized as a result of current and future income.
Accordingly, the valuation allowance has been increased in the current year to
reflect lower than anticipated net deferred tax asset utilization.

At December 31, 2000, the deferred tax asset related to postretirement benefits
other than pensions was $135.3 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 pension 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. Notwithstanding the Company's belief that it will
be able to utilize its deferred tax assets, the Company has recorded a valuation
allowance of $61.8 million against its deferred tax assets at December 31, 2000.

The elements of the Company's deferred income taxes associated with its results
for the years ended December 31, 2000, 1999 and 1998, respectively, are as
follows:

---------------------------------------------------------------------------
                                   2000              1999              1998
Current income tax
  provision (benefit):
   Federal                     $(10,292)         $  8,381          $  3,265
Deferred income tax
  provision (benefit)           (23,414)            7,002            (5,977)
Valuation allowance              22,099            (7,156)            1,321
                               --------          --------          --------
     Total income
      tax provision
      (benefit)                $(11,607)         $  8,227          $ (1,391)
                               ========          ========          ========

The total income tax provision (benefit) recognized by the Company for the years
ended December 31, 2000, 1999 and 1998, reconciled to that computed under the
federal statutory corporate rate as follows:

--------------------------------------------------------------------------------
                                   2000              1999              1998
Tax provision
  (benefit) at federal
  statutory rate               $(33,853)         $ 13,711          $ (2,631)
State income taxes,
  net of federal                 (3,869)            1,567              (301)
Other                             4,016               105               220
Change in valuation
  allowance                      22,099            (7,156)            1,321
                               --------          --------          --------
Income tax provision
  (benefit)                    $(11,607)         $  8,227          $ (1,391)
                               ========          ========          ========


                                                                              27
<PAGE>   23


2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


NOTE 11

REDEEMABLE STOCK

In June 1989, the Company sold 1.8 million shares of the Series A Preferred to
the 1989 ESOP which has since allocated those shares to participants. 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, participants
to whom shares of Series A Preferred are distributed from the 1989 ESOP
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. In 1994, the 1989 ESOP was amended to
provide for recontribution to the plan by the Company for shares of Series A
Preferred reacquired for allocation among active employee participants on a per
capita basis. If not repurchased by the Company or reacquired for allocation by
the 1989 ESOP, shares of Series A Preferred automatically convert into common
stock upon transfer by a distributee.


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 "2000 Employee
Stock Purchase Plan") and deferred and stock compensation plans for nonemployee
members of the board of directors (the "Directors' Deferred Compensation Plan"
and the "Directors' Stock Compensation Policy").

1987 and 1998 Stock Option Plans

The Company may grant options for up to 750,000 shares under the 1987 Stock
Option Plan as amended. 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 on the date of
grant, with the remaining two-thirds becoming exercisable after the first and
second years. The options expire approximately 10 years from the date of grant.

During 2000, the 1998 Stock Option Plan was amended to increase the number of
options the Company may grant from 3,250,000 shares to 6,500,000 shares. The
option price and vesting requirements are determined by a Stock Option Committee
appointed by the board of directors. The options granted during 2000 under the
1998 Stock Option Plan vest on May 23, 2010 and expire the following day. The
options are subject to accelerated vesting based on the continued employment of
the recipients and the attainment of certain market prices for the Company's
common stock. The stock prices necessary for accelerated vesting range from
$6.12 to $12.41 and must be maintained for 20 consecutive trading days for
accelerated vesting to occur. Options that vest pursuant to the accelerated
vesting provisions expire on May 24, 2010. All the options granted during 1999
and 1998 under the 1998 Stock Option Plan had vested as of December 31, 2000 and
will expire on June 24, 2002.


28
<PAGE>   24


                                                                    WEIRTON
                                                               STEEL CORPORATION

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


The following is a summary of stock option activity under the 1987 and 1998
Stock Option Plans:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                           1987 STOCK OPTION PLAN                   1998 STOCK OPTION PLAN
                                       ------------------------------          --------------------------------
                                                     WEIGHTED AVERAGE                          WEIGHTED AVERAGE
                                         SHARES        EXERCISE PRICE              SHARES        EXERCISE PRICE

<S>                                    <C>           <C>                       <C>             <C>
Balance Dec. 31, 1997                   581,666                 $7.71                  --                 $  --
   Granted                              173,000                  3.13           2,875,000                  3.88
   Exercised                                 --                    --                  --                    --
   Repurchased/Forfeited               (169,666)                 8.53                  --                    --
                                       --------                 -----          ----------                 -----
Balance Dec. 31, 1998                   585,000                  6.12           2,875,000                  3.88
   Granted                              176,250                  1.75              99,750                  3.88
   Exercised                             (1,834)                 2.50                  --                    --
   Repurchased/Forfeited                (62,500)                 7.32            (201,250)                 3.88
                                       --------                 -----          ----------                 -----
Balance Dec. 31, 1999                   696,916                  4.91           2,773,500                  3.88
   Granted                               70,500                  2.63           1,994,894                  6.26
   Exercised                            (94,666)                 3.38          (1,794,894)                 3.88
   Repurchased/Forfeited               (123,582)                 6.84                  --                    --
                                       --------                 -----          ----------                 -----
Balance Dec. 31, 2000                   549,168                 $4.45           2,973,500                 $5.48
</TABLE>


The following table represents additional information with regard to the 1987
and 1998 Stock Option Plans at December 31, 2000:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                     OUTSTANDING                                         EXERCISABLE
                                 -------------------------------------------------------        -----------------------------
                                                       WEIGHTED         WEIGHTED AVERAGE                             WEIGHTED
RANGE OF                         NUMBER OF              AVERAGE                REMAINING        NUMBER OF             AVERAGE
EXERCISE PRICES                     SHARES       EXERCISE PRICE         CONTRACTUAL LIFE           SHARES      EXERCISE PRICE

<S>                              <C>             <C>                    <C>                     <C>            <C>
1987 Stock Option Plan:
   $1.75-3.13                      373,168                $2.45               7.79 years          279,685               $2.53
   $8.69-8.89                      176,000                $8.71               3.89 years          176,000               $8.71
1998 Stock Option Plan:
   $3.88-6.69                    2,973,500                $5.48               6.78 years          978,606               $3.88
</TABLE>


The fair value of each stock option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions for grants in 2000, 1999 and 1998:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                          2000              1999             1998
<S>                                                      <C>               <C>              <C>
1987 Stock Option Plan:
   Fair value of option granted                          $1.76             $1.08            $1.90
   Average risk free interest rate                        5.93%             5.35%            5.53%
   Expected dividend yield                                   0%                0%               0%
   Expected life of options                            7 years           7 years          7 years
   Expected volatility rate                               0.62              0.55             0.53

1998 Stock Option Plan:
   Weighted average fair value of options granted        $2.06             $1.91            $0.70
   Average risk free interest rate                        6.65%             6.25%            6.30%
   Expected dividend yield                                   0%                0%               0%
   Expected life of options                            5 years         2.5 years          5 years
   Expected volatility rate                               0.66              0.76             0.39
</TABLE>


                                                                              29
<PAGE>   25



2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


2000 Employee Stock Purchase Plan


In May 2000, the Company replaced the 1994 Employee Stock Purchase Plan, which
expired in 1999, with the 2000 Employee Stock Purchase Plan. The Company
reserved 1.0 million shares of its common stock to be offered over a four and a
half year period beginning July 1, 2000 to eligible employees under its 2000
Employee Stock Purchase Plan. The 2000 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. (For 2000, 85%
of the lesser of the stock's closing price on July 1, 2000 or December 31, 2000
was used to determine the purchase price.) As of December 31, 2000, 59,978
shares valued at approximately $0.1 million were issuable in accordance with the
2000 Employee Stock Purchase Plan. As of December 31, 1999, 167,475 shares
valued at approximately $0.2 million were issuable in accordance with the 1994
Employee Stock Purchase Plan.

Directors' Deferred Compensation 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 a
member of the board of directors. The Company reserved 445,000 shares for
issuance under the Directors' Deferred Compensation Plan. During 2000, the
Directors' Deferred Compensation Plan was modified to allow directors to either
defer shares issuable to a non-qualified trust maintained by an institutional
trustee until such time as the shares are distributed to the directors or to
defer share equivalents to a separate account maintained by the Company. The
cost of the shares held in the trust are accounted for as a reduction to equity.
The liability to compensate the directors is retained until such time as the
shares are issued from the trust. The Directors' 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 or the
end of each year. As of December 31, 2000, 127,606 shares valued at $0.1 million
were issuable to the directors who elected to defer compensation to the trust
for 2000, and a total of 285,400 shares with a cost of $0.6 million were held by
the trust for future distribution. As of December 31, 2000, 92,208 shares valued
at $0.1 million were deferred by directors choosing not to have shares issued to
the trust.

Directors' Stock Compensation Policy

Under a stock compensation policy initiated in 1998, the Company's non-employee
directors receive a portion of their annual retainers payable in shares of the
Company's common stock. The directors may elect to defer all or a portion of the
shares under the Directors' Deferred Compensation Plan. As of December 31, 2000,
no shares were issuable to non-employee directors; all shares otherwise
attributable to retainers for 2000 were deferred under the Directors' Deferred
Compensation Plan.

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

NOTE 13

STOCK BASED COMPENSATION

The Company accounts for its 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 of 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:

--------------------------------------------------------
                          2000         1999        1998
Net income (loss):
   As reported        $(85,116)     $30,947     $(6,127)
   Pro forma           (89,836)      30,549      (6,598)

Basic income (loss)
  per share:
   As reported        $  (2.06)     $  0.74     $ (0.15)
   Pro forma             (2.17)        0.73       (0.16)

Diluted income (loss)
  per share:
   As reported        $  (2.06)     $  0.71     $ (0.15)
   Pro forma             (2.17)        0.71       (0.16)


30
<PAGE>   26
                                                                    WEIRTON
                                                               STEEL CORPORATION

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


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, 2000, 1,485,936
shares of Series A Preferred were allocated to participants of the 1989 ESOP.

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

NOTE 15

REPURCHASES OF COMMON STOCK FOR TREASURY

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. In February 2000, the Company announced that it
had been authorized by the board of directors to repurchase an additional 12% of
its capital stock. Under these stock repurchase programs, the Company paid $16.0
million during 2000 to repurchase approximately 2.6 million shares of its
outstanding common stock at prices ranging from $2.38 to $9.00 per share. There
were no repurchases of outstanding common stock during 1999 pursuant to the
stock repurchase program. Repurchased shares of common stock are held in the
Company's treasury and made available for stock issuance needs.

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

NOTE 16

EARNINGS PER SHARE

For the years ended December 31, 2000 and 1998, basic and diluted earnings per
share were the same; however, securities totaling 1,583,062 shares and 1,725,548
shares, respectively, were excluded from the diluted earnings per share
calculation due to their anti-dilutive effect. For 2000, 1999 and 1998, there
were an additional 722,149, 3,430,000 and 3,553,869 options, respectively,
outstanding for which the exercise price was greater than the average market
price. The following represents a reconciliation between basic earnings per
share and diluted earnings per share for the year ended December 31, 1999:

--------------------------------------------------------------------------------
 FOR THE YEAR ENDED                                                    INCOME
 DECEMBER 31, 1999                     INCOME          SHARES       PER SHARE

Basic earnings per share:
   Net income                         $30,947      41,600,077          $ 0.74
Effect of dilutive securities:
   Series A Preferred                      --       1,669,869           (0.02)
   Stock options                           --          28,736           (0.01)
                                      -------      ----------          ------
Diluted earnings per share:
   Net income                         $30,947      43,298,682          $ 0.71
                                      =======      ==========          ======

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

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 emissions and waste disposal. The
Company spent approximately $0.9 million for pollution control capital projects
in 2000.

The Company continued its environmental remediation and regulatory compliance
activities required under its 1996 consent decree with federal and state
environmental authorities that had settled certain water discharge, air
emissions and waste handling enforcement issues. Under the consent decree, the
Company committed to undertake environmental upgrade and modification projects
totaling approximately $19.8 million, of which $16.1 million had been spent
through December 31, 2000.


                                                                              31
<PAGE>   27




2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


As part of a related corrective action order, the Company also continued its
investigative activities and interim corrective measures aimed at determining
the nature and extent of hazardous substances which might be located on its
property. These activities are being accomplished on an area by area basis and
generally are at an early stage. Because the Company does not know the nature
and extent of hazardous substances which may be located on its properties, it is
not possible at this time to estimate the ultimate cost to comply with the
corrective action order.

At December 31, 2000, the Company had accrued approximately $9.0 million related
to the consent decree, the corrective action order, and other environmental
liabilities.

The Company believes that NSC is obligated to reimburse the Company for a
portion of the costs that have been and may be incurred by the Company to comply
with the corrective action order. 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. As potentially reimbursable costs are
incurred, the Company has been and may continue to be reimbursed by NSC.

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. On a quarterly and
annual basis, management establishes or adjusts financial provisions and
reserves for contingencies in accordance with SFAS No. 5, "Accounting for
Contingencies."

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 2006.

The Company has a 15-year agreement expiring in 2011 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, 2001, 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 levels. The price is to be the prevailing market price (subject to a
ceiling and floor) for blast furnace coke.

The Company participates in partner loan facilities with MetalSite whereby the
Company funded a significant portion of MetalSite's operations in 2000. The
Company expects to continue to fund up to $1.0 million of MetalSite's operations
in 2001. The Company's ownership percentage in MetalSite may be decreased by
options granted to MetalSite employees (see Note 20 "Subsidiaries and Joint
Ventures") and by options which may be exercised by Internet Capital Group, Inc.
(see Note 21 "Sale of MetalSite Investment").


32
<PAGE>   28


                                                                    WEIRTON
                                                               STEEL CORPORATION

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


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.

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

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, 2000 and 1999.

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, 2000 and 1999, respectively:

--------------------------------------------------------------------------------
                                     2000                           1999
                           -----------------------       -----------------------
                           CARRYING           FAIR       CARRYING           FAIR
                             AMOUNT          VALUE         AMOUNT          VALUE

Cash and equivalents       $ 32,027       $ 32,027       $209,270       $209,270
Redeemable
   Preferred stock           21,111          1,815         22,973         10,740
Long term debt
   obligations             $299,253       $121,758       $304,768       $302,957


Significant Group Concentrations of Credit Risk

One customer accounted for 10% and 11% of net sales in 1999 and 1998,
respectively. One customer accounted for 10% of trade receivables as of December
31, 2000 and 1999.

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

NOTE 20

SUBSIDIARIES AND JOINT VENTURES

The Company currently has investments in four joint ventures which the Company
accounts for using the equity method of accounting at December 31, 2000. The
Company has made advances to and investments in debt and other non-equity
instruments of MetalSite and GalvPro, classified as investment in unconsolidated
subsidiaries in the Company's consolidated balance sheets. Because of these
non-equity investments, the Company has recorded equity losses in excess of its
equity investments using the book value liquidation approach prescribed in
Emerging Issues Task Force Issue 99-10, "Percentage Used to Determine the Amount
of Equity Method Losses."

Summarized consolidated financial information for MetalSite and GalvPro follows:

--------------------------------------------------------------------------------
                                   2000           1999             1998
Income data(1)
   Revenues                   $ 60,147       $  2,299            $   1
   Operating loss              (37,192)       (13,916)            (834)
   Net loss                    (51,786)       (13,278)           $(612)
Balance sheet data
   Current assets               35,589         10,958
   Noncurrent assets            48,527         49,915
   Current liabilities          78,922         10,742
   Noncurrent liabilities     $ 56,102       $ 49,840


(1)      For MetalSite, income data is presented for the years ended December
         31, 2000 and 1999 and for the period from MetalSite's inception
         (November 15, 1998) through December 31, 1998. For GalvPro, income data
         is presented for the years ended December 31, 2000 and 1999 and for the
         period from GalvPro's inception (January 16, 1998) through December 31,
         1998.


                                                                              33
<PAGE>   29




2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


MetalSite

MetalSite L.P. and MetalSite General Partner LLC (collectively "the
Partnership") were formed in November 1998 to develop and offer a secure
web-based marketplace for the online purchase of metal products from various
suppliers and to provide the latest industry news and information. Prior to
November 1998, the Company incurred research and development expenditures
related to the creation of the infrastructure of the Partnership of $3.0
million.

On December 29, 1999, the Company sold a portion of its investment in the
Partnership to Internet Capital Group, Inc. (See Note 21 "Sale of MetalSite
Investment.")

On July 27, 2000, MetalSite General Partner LLC and MetalSite L.P. were merged
into MetalSite,Inc. ("MetalSite"), a Delaware corporation. In exchange for its
interest in the Partnership, the Company was given an equivalent interest in the
common stock of MetalSite.

On October 10, 2000, the Company agreed to loan MetalSite $10.0 million in
exchange for a Convertible Promissory Note (the "Note") and warrants to purchase
additional shares of MetalSite common stock. The Note carries a term of 18
months with an interest rate of 5%. The Company may opt to convert the principal
and interest of the Note into MetalSite common stock at defined ratios upon the
occurrence of specific transactions and events as defined in the Note agreement.
The warrants entitle the Company to purchase 250,000 shares of MetalSite common
stock at $0.01 per share. The warrants expire in 10 years.

As of December 31, 2000, the Company owned 6,546,000 or 21.82% of the
outstanding shares of MetalSite. Of these shares, 545,455 or 1.82% of the
outstanding shares of MetalSite were held in escrow pursuant to option
agreements of MetalSite employees. Subject to certain performance measures, the
employees of MetalSite may exercise options and require the Company to issue
shares from escrow to the employees.


GalvPro

GalvPro LP ("GalvPro" formerly "GalvStar LP") was formed in 1998 with affiliates
of Dutch steelmaker Koninklijke Hoogovens (now a unit of Corus Group plc) for
the purpose of constructing and operating a 300,000 ton hot-dipped galvanizing
line. Construction of GalvPro's Indiana facility was finally completed in 2000
although initial production commenced in the fourth quarter of 1999. As of
December 31, 2000, the Company had an indirect 45% ownership interest in
GalvPro, and the net carrying amount of the Company's investment in GalvPro was
$12.2 million. For the year ended December 31, 2000, the Company recorded equity
losses related to GalvPro of $15.9 million.

Construction of GalvPro's facility and its day to day working capital needs were
financed primarily through a ten year loan secured by GalvPro's assets and a
working capital facility secured by GalvPro's inventory and receivables. As of
December 31, 2000, $35.6 million was outstanding under the term loan facility
and $12.2 million was outstanding under the working capital facility. Both the
term loan and the working capital facility are without recourse to any equity
owner.

As a result of failure to comply with a financial covenant, GalvPro incurred an
event of default under the term loan facility during the third quarter of 2000.
GalvPro's lender proposed a significant restructuring of the loan as a means of
curing the default, but GalvPro, the lender and GalvPro's investors were unable
to agree upon satisfactory terms. Although the lender has accelerated portions
of GalvPro's indebtedness and is entitled under the terms of the facility to
accelerate all the indebtedness, it has not done so thus far.

Aside from the bank facility, GalvPro's working capital requirements have been
financed by advances from the Company and Corus. As of December 31, 2000, the
Company had made advances to the joint venture totaling $24.7 million.


34
<PAGE>   30


                                                                    WEIRTON
                                                               STEEL CORPORATION

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


In the fourth quarter of 2000, the Company and Corus re-evaluated their
strategic direction regarding GalvPro. The Company and Corus engaged a third
party consultant to evaluate potential alternatives related to GalvPro,
including sale of the Company's and Corus' interests in GalvPro. If a sale
cannot be negotiated, the Company and Corus will consider other alternatives,
including asset swaps, mergers, other joint ventures and other business
combinations involving GalvPro or its assets. Due to continuing adverse market
conditions, GalvPro plans to temporarily idle its facility in the first quarter
of 2001 while the above strategic alternatives are considered or implemented.

Not withstanding the Company's belief that its investment in GalvPro is properly
stated as of the balance sheet date, alternatives available to GalvPro and
potential continued adverse business conditions may result in the recognition of
future additional equity losses.

WeBCo

WeBCo International LLC ("WeBCo") was formed in 1997 with the Balli Group, plc.
The primary function of WeBCo is to market and sell the partners' products
globally. As of December 31, 2000, the Company owned 50% of WeBCo, and the
carrying amount of the Company's investment in WeBCo was $1.5 million.

WeBCo has receivables due from major foreign customers denominated in Pounds
Sterling and Deutsche Marks. WeBCo utilizes forward contracts to mitigate the
risk associated with fluctuations in foreign currency exchange rates that would
affect the amounts ultimately collectible from these receivables. These
contracts mature on or before January 31, 2001. WeBCo's net realized gain
resulting from the forward contracts for the years ended December 31, 2000 and
1999 was $1.4 million and $1.1 million, respectively. The Company recognizes its
percentage of unrealized and realized gains and losses related to these
contracts based on the equity method of accounting.


W&A

W&A Manufacturing LLC ("W&A") was formed in 1998 with ATAS International for the
purpose of manufacturing steel roofing products. No investments in W&A were made
in 2000 or 1999. During 1998, the Company invested $0.9 million in W&A. As of
December 31, 2000, the Company owned 50% of W&A, and the carrying amount of the
Company's investment in W&A was $0.7 million.

Related Party Transactions

The Company's purchases of goods and services from unconsolidated subsidiaries
totaled $27.4 million, $62.6 million and $27.7 million in 2000, 1999 and 1998,
respectively. The Company's sales of steel to unconsolidated subsidiaries
totaled $42.8 million, $36.0 million and $6.0 million in 2000, 1999 and 1998,
respectively. These transactions arose in the ordinary course of business and
were transacted at arms-length. Pursuant to certain service agreements, the
Company provides services to unconsolidated subsidiaries. The Company billed for
these arrangements at amounts approximating the cost to provide the service.
Such amounts totaled $1.3 million in 2000, $0.4 million in 1999 and $0.4 million
in 1998. At December 31, 2000 and 1999, the Company had outstanding trade
receivables from unconsolidated subsidiaries of $3.9 million and $15.9 million,
respectively.

At December 31, 2000 and 1999, MetalSite had borrowed $9.4 million and $3.2
million, respectively, from the Company under a partner loan facility at the PNC
Bank prime interest rate plus 1%. Also at December 31, 2000 and 1999, the
Company had a promissory note from MetalSite for $1.8 million at an 8% fixed
interest rate. The Company's equity in MetalSite's losses has been netted
against the Note, the partner loan facility and the promissory note.

In 2000, the Company received a distribution of $1.0 million from WeBCo. There
were no dividends or partnership distributions received from equity affiliates
in 1999 or 1998.



                                                                              35
<PAGE>   31




2000 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF
      DOLLARS WHERE INDICATED


NOTE 21

SALE OF METALSITE INVESTMENT

Prior to December 29, 1999, the Company had a majority interest in MetalSite. On
December 29, 1999, the Company sold a portion of its investment in MetalSite to
Internet Capital Group, Inc. ("ICG") resulting in a net pretax gain of $170.1
million. MetalSite's results of operations are consolidated with the Company's
results through December 29, 1999, and are reported under the equity method
thereafter.

Pursuant to the purchase agreement, ICG has been granted options to purchase an
additional interest in MetalSite from the Company upon the occurrence of certain
events, including completion of an underwritten public offering of equity
securities by MetalSite.


NOTE 22

SUBSEQUENT EVENT

The Company established and implemented the 2001 Workforce Downsizing Program
effective March 8, 2001. The program will reduce non-represented staff employees
by approximately 10%. After the program, the Company will operate with
approximately 630 non-represented employees and approximately 3,500 represented
employees.

Due to the program, the Company will record a first quarter 2001 restructuring
charge of $11.0 million to $13.0 million consisting of $5.4 million of pension
benefits and $3.9 million of other postretirement benefits. The remaining $1.7
million to $3.7 million will result from other separation and severance benefits
provided to the affected employees.


36
<PAGE>   32


                                                                    WEIRTON
                                                               STEEL CORPORATION



2000 MANAGEMENT'S RESPONSIBILITY STATEMENT


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

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
consolidated financial statements in accordance with auditing standards
generally accepted in the United States. 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/ JOHN H. WALKER
---------------------------------------
John H. Walker
President and Chief Executive Officer


/s/ MARK E. KAPLAN
---------------------------------------
Mark E. Kaplan
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, 2000
and 1999, 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, 2000. 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 auditing standards generally accepted
in the United States. 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, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.


/s/ ARTHUR ANDERSEN LLP
---------------------------------------
Pittsburgh, Pennsylvania
March 8, 2001


                                                                              37
<PAGE>   33



2000 SELECTED FINANCIAL AND STATISTICAL DATA

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)       2000           1999           1998          1997          1996
<S>                                             <C>            <C>            <C>           <C>           <C>
Net sales(3)                                    $ 1,118        $ 1,130        $ 1,297       $ 1,397       $ 1,383
Operating costs                                   1,159          1,220          1,262         1,372         1,397
Depreciation                                         64             61             61            61            58
Asset impairment                                     --             23             --            --            --
Income tax provision (benefit)                      (12)             8             (1)           (4)          (11)
Profit sharing                                       --             16             --            --            --
Contribution to ESOP                                 --              1              3             3             3
Gain on sale of investment                           --            170             --            --            --
Net income (loss)                                   (85)            31             (6)          (18)          (50)
Net income (loss) per diluted share               (2.06)          0.71          (0.15)        (0.42)        (1.18)
Total assets                                        992          1,188          1,196         1,283         1,301
Additions to property, plant and equipment           38             22             50            45            83
Long term debt obligations                          299            305            305           389           431
Redeemable preferred stock, net                      21             23             22            21            18
Working capital                                 $   184        $   290        $   196       $   294       $   291
Number of common shares
   outstanding at year end, (in thousands)       41,291         41,614         41,195        42,637        42,353
Number of preferred shares
   outstanding at year end, (in thousands)        1,513          1,652          1,657         1,727         1,748
Stockholders' equity                            $    63        $   154        $   122       $   133       $   149
Stockholders' equity per common share           $  1.52        $  3.70        $  2.95       $  3.12       $  3.52
</TABLE>



SELECTED QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                      QUARTERLY PERIODS IN 2000                   QUARTERLY PERIODS IN 1999
                                                 -------------------------------------     ---------------------------------------
(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(3)                                     $  210      $  273     $ 305    $ 330     $ 290       $  290    $  276     $  274
Gross profit                                        (25)         14        38       37         9           17        25          3
Operating income (loss)                             (50)        (14)       12       12       (62)(1)       (6)      0.1        (22)
Net income (loss)                                   (60)        (26)      0.5      0.7        82 (2)      (14)       (9)       (28)
BASIC EARNINGS PER SHARE                         $(1.46)     $(0.63)    $0.01    $0.02     $1.96       $(0.33)   $(0.22)    $(0.67)
Diluted earnings per share                       $(1.46)     $(0.63)    $0.01    $0.02     $1.88       $(0.33)   $(0.22)    $(0.67)
</TABLE>


(1)      Includes an asset impairment charge of $22.5 million and a profit
         sharing provision of $15.5 million.

(2)      Includes gain on sale of investment of $170.1 million.

(3)      In accordance with Emerging Issues Task Force Issue 00-10, "Accounting
         for Shipping and Handling Fees and Costs," the Company reclassed from
         net sales to cost of sales shipping and handling costs incurred by the
         Company.


38
<PAGE>   34


                                                                    WEIRTON
                                                               STEEL CORPORATION



2000 WEIRTON STEEL CORPORATION
BOARD OF DIRECTORS

Richard R. Burt, Chairman(A, B, D)
Chairman
IEP Advisors, Inc.
Washington, DC

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

Robert J. D'Anniballe, Jr.(A, D)
Managing Attorney
Marshall, Dennehey, Warner,
Coleman and Goggin
Weirton, West Virginia

George E. Doty, Jr.(B, D)
Private Investor
New York, New York

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

Ralph E. Reins(A, B)
Chairman and CEO
Qualitor, Inc.
Southfield, Michigan

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

Richard F. Schubert(C, D)
Senior Vice President
EXCN Incorporated
LaJolla, California

Thomas R. Sturges(A, B)
Executive Vice President and
Chief Financial Officer
Hawkeye Communication, Inc.
New York, New York

John H. Walker(E)
President and Chief Executive Officer
Weirton Steel Corporation
Weirton, West Virginia

Ronald C. Whitaker(B, C, E)
President and CEO
Strategic Distribution, Inc.
Bensalem, Pennsylvania

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


EXECUTIVE OFFICERS OF THE COMPANY

John H. Walker
President and Chief Executive Officer

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

Mark E. Kaplan
Vice President and Chief Financial Officer

Thomas W. Evans
Vice President
Materials Management

William R.Kiefer
Vice President - Law and Secretary

Frank G. Tluchowski
Vice President
Engineering and Technology

Edward L. Scram
Vice President - Operations

Michael J. Scott
Vice President - Sales and Marketing

(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


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2000 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 ESOP Administrator 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 Computershare
Investor Services, LLC. 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,
Computershare Investor Services, LLC, 2 North LaSalle, Chicago, Illinois 60602,
Telephone (800) 942-5909 for assistance.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, Pennsylvania 15222




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