<PAGE>   1

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
             QUARTERLY REPORT FILED PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998   COMMISSION FILE NUMBER 033-80618

                       GS TECHNOLOGIES OPERATING CO., INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                       43-1656035
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                           GS TECHNOLOGIES CORPORATION
             (Exact name of registrant as specified in its charter)

           DELAWARE                                       04-3204785
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

         1901 ROXBOROUGH ROAD
               SUITE 200
       CHARLOTTE, NORTH CAROLINA                                   28211
(Address of principal executive office)                         (Zip Code)


       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (704) 366-6901



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

         There were 100 shares of GS Technologies Operating Co., Inc. Common
Stock, par value $.01 per share, outstanding at August 4, 1998. There were 100
shares of GS Technologies Corporation Common Stock, par value $.01 per share,
outstanding at August 4, 1998.

         This document consists of 16 sequentially numbered pages.

================================================================================


<PAGE>   2

PART I. FINANCIAL INFORMATION (UNAUDITED)

GS Technologies Corporation (the "Company" or "GST") a wholly-owned subsidiary
of GS Industries, Inc. ("GSI"), is the largest producer of steel wire rod in
North America and of grinding media and mill liners for the worldwide mining
industry as well as a leading producer of certain wire products for the U.S. and
export markets. GST has fully and unconditionally guaranteed two series of
senior notes totaling $250 million aggregate principal amount issued by its
wholly-owned subsidiary, GS Technologies Operating Co., Inc. ("GSTOC").

FORWARD-LOOKING STATEMENTS

The forward-looking statements, included in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" which reflect
management's best judgment based on factors currently known, involve risks and
uncertainties. Words such as "expects", "anticipates", "believes" and "intends",
variations of such words and similar expressions are intended to identify such
forward-looking statements. Actual results could differ from those anticipated
in these forward-looking statements as a result of a number of factors
including, but not limited to, the factors discussed in that section.
Forward-looking information provided by the Company pursuant to the safe harbor
established under the Private Securities Litigation Reform Act of 1995 should be
evaluated in the context of these factors.

INDEX

<TABLE>
<CAPTION>
       ITEM                                                                                                      PAGE
       <S>        <C>                                                                                            <C>
        (1)       Unaudited Consolidated Financial Statements of the Company

                  Unaudited Consolidated Statements of Operations for the Three Months
                  and Six Months ended June 30, 1997 and June 30, 1998                                            3

                  Unaudited Consolidated Balance Sheets as of December 31, 1997
                  and June 30, 1998                                                                               4

                  Unaudited Consolidated Statements of Cash Flows for the Six Months
                  ended June 30, 1997 and June 30, 1998                                                           5

                  Notes to Unaudited Consolidated Financial Statements                                            6

        (2)       Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                                          11
</TABLE>

                                       2
<PAGE>   3

                           GS TECHNOLOGIES CORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                             (Dollars in thousands)




<TABLE>
<CAPTION>
                                                           Three Months Ended               Six Months Ended
                                                       -------------------------       -------------------------
                                                       June 30,        June 30,        June 30,        June 30,
                                                         1997            1998            1997            1998
                                                       ---------       ---------       --------        ---------

<S>                                                    <C>             <C>             <C>             <C>      
Net sales                                              $ 184,515       $ 224,742       $ 393,398       $ 441,432


Operating costs and expenses:
     Cost of products sold                               168,693         203,130         345,682         387,914
     Selling, general and administrative expenses         12,104          10,632          23,654          21,573
     Depreciation and amortization                         7,695           8,133          14,904          15,797
                                                       ---------       ---------       ---------       ---------
                                                         188,492         221,895         384,240         425,284
                                                       ---------       ---------       ---------       ---------

Operating profit (loss)                                   (3,977)          2,847           9,158          16,148

Other income (expense):
     Interest expense, net                               (10,398)        (10,358)        (20,598)        (20,497)
     Equity in income (loss) of joint ventures             1,423              91           3,239              (6)
     Fees from joint ventures                                558             849           1,445           2,028
     Gain on disposition of properties (Note 4)              157           6,340             158           6,418
     Other, net                                               77              43             462             395
                                                       ---------       ---------       ---------       ---------
                                                          (8,183)         (3,035)        (15,294)        (11,662)
                                                       ---------       ---------       ---------       ---------

Income (loss) from continuing operations before
   income tax                                            (12,160)           (188)         (6,136)          4,486

Income tax (provision) benefit                             6,199             104           3,128          (1,909)
                                                       ---------       ---------       ---------       ---------

Income (loss) from continuing operations                  (5,961)            (84)         (3,008)          2,577


Discontinued operations (Note 3):
     Income from discontinued operations,
       net of taxes                                                                        1,402
     Loss on disposal of discontinued operations,
       net of taxes                                                                      (23,965)
                                                       ---------       ---------       ---------       ---------
                                                                                         (22,563)
                                                       ---------       ---------       ---------       ---------

Net income (loss)                                      $  (5,961)      $     (84)      $ (25,571)      $   2,577
                                                       =========       =========       =========       =========
</TABLE>



            See notes to unaudited consolidated financial statements

                                       3
<PAGE>   4

                           GS TECHNOLOGIES CORPORATION
                      UNAUDITED CONSOLIDATED BALANCE SHEETS

                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                              December 31,    June 30,
                                                                                  1997          1998
                                                                              ------------    ---------
<S>                                                                           <C>             <C>      
ASSETS
Current assets:
   Cash and cash equivalents                                                  $   3,362       $  11,456
   Receivables net of allowance for doubtful accounts                            94,768         116,032
   Receivable from related party                                                  6,484           5,723
                                                                              ---------       ---------
     Total receivables                                                          101,252         121,755
                                                                              ---------       ---------
   Inventories                                                                  144,063         134,096
   Prepaid expenses and other current assets                                      6,495           6,664
   Deferred tax benefit                                                           1,023             673
                                                                              ---------       ---------
     Total current assets                                                       256,195         274,644


Investments in joint ventures                                                    41,639          41,014
Properties, net                                                                 260,957         254,772
Acquisition premium                                                              60,713          59,908
Other assets                                                                     26,773          24,710
                                                                              ---------       ---------
     Total assets                                                             $ 646,277       $ 655,048
                                                                              =========       =========


LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
   Notes payable                                                              $  10,794       $   7,389
   Current portion of long-term debt                                                500             512
   Income taxes payable                                                           1,261           1,209
   Payables and accrued liabilities                                             138,099         147,191
                                                                              ---------       ---------
     Total current liabilities                                                  150,654         156,301


Long-term debt                                                                  334,888         336,374
Post retirement benefit obligations other than pensions                          26,848          27,582
Deferred income taxes payable                                                     7,098           4,733
Other long-term liabilities                                                      31,628          34,021
Commitments and contingencies (Note 9)
                                                                              ---------       ---------
     Total liabilities                                                          551,116         559,011
                                                                              ---------       ---------

Stockholder's equity:
   Common Stock, $.01 par value, 1,000 shares authorized, and 
      100 shares issued and outstanding at December 31, 1997 and 
      June 30, 1998                                                                   1               1
   Additional paid in capital                                                   132,166         132,166
   Accumulated deficit                                                          (33,845)        (31,268)
   Cumulative translation adjustment                                             (3,161)         (4,862)
                                                                              ---------       ---------
     Total stockholder's equity                                                  95,161          96,037
                                                                              ---------       ---------
     Total liabilities and stockholder's equity                               $ 646,277       $ 655,048
                                                                              =========       =========
</TABLE>




            See notes to unaudited consolidated financial statements

                                       4
<PAGE>   5

                           GS TECHNOLOGIES CORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                                  Six Months Ended
                                                                             -------------------------
                                                                             June 30,        June 30,
                                                                               1997            1998
                                                                             ---------       ---------
<S>                                                                          <C>             <C>      
OPERATING ACTIVITIES:
   Net income (loss)                                                         $ (25,571)      $   2,577
   Adjustments to reconcile net loss to net cash provided by operating
       activities:
     Depreciation and amortization                                              14,904          15,797
     Loss on disposal of discontinued operations                                23,965
     Net cash from discontinued operations                                      (3,095)
     (Gain) on disposition of properties                                          (158)         (6,418)
     Deferred income taxes                                                      (6,573)         (2,016)
     Equity in (income) loss of joint ventures                                  (3,239)              6
     Dividends from joint ventures                                               1,922           6,290
     Post retirement benefit obligations accrued in excess of cash paid            566             734
     Changes in operating assets and liabilities:
         Receivables                                                            14,990         (20,503)
         Inventories                                                               402           9,967
         Payables and accrued liabilities                                      (10,725)          9,094
         Income taxes                                                           (1,711)            (52)
         Other                                                                     897             901
                                                                             ---------       ---------
           Net cash provided by operating activities                             6,574          16,377
                                                                             ---------       ---------

INVESTING ACTIVITIES:
   Proceeds from disposal of discontinued operations                            57,024
   Purchase of properties                                                      (12,165)        (10,021)
   Investment in joint ventures                                                   (497)         (6,538)
   Proceeds from disposal of properties                                            514          11,884
                                                                             ---------       ---------
           Net cash provided by (used in) investing activities                  44,876          (4,675)
                                                                             ---------       ---------

FINANCING ACTIVITIES:
   Borrowings from parent                                                                        4,900
   Borrowings under revolving credit facility                                   93,597         114,634
   Repayments on revolving credit facility                                    (145,609)       (117,784)
   Repayments on long-term debt                                                   (250)           (250)
   Proceeds from (payments on) notes payable, net                                 (237)         (3,407)
                                                                             ---------       ---------
           Net cash used in financing activities                               (52,499)         (1,907)
                                                                             ---------       ---------

Effect of exchange rate changes on cash                                           (489)         (1,701)
                                                                             ---------       ---------
Net increase (decrease) in cash and cash equivalents                            (1,538)          8,094


CASH AND CASH EQUIVALENTS:
   Beginning of period                                                           7,747           3,362
                                                                             ---------       ---------
   End of period                                                             $   6,209       $  11,456
                                                                             =========       =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for interest                                  $  19,837       $  20,421
   Cash paid during the period for taxes                                     $   4,266       $   3,951

</TABLE>




            See notes to unaudited consolidated financial statements

                                       5
<PAGE>   6

                           GS TECHNOLOGIES CORPORATION
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                 (Dollars in thousands, unless otherwise noted)

1   BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of GS Technologies
Corporation (the "Company" or "GST") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, these statements reflect all adjustments (which include only
normal recurring adjustments unless otherwise noted herein) necessary for a fair
presentation.

2.   FINANCIAL STATEMENT NOTES

Reference is made to the Notes to Consolidated Financial Statements included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
for a summary of significant accounting policies and other information, the
substance of which has not changed materially as of June 30, 1998, unless
otherwise noted herein.

3.   DISCONTINUED OPERATIONS

In 1997, the Company sold Georgetown Wire Company, Inc. and Tree Island
Industries, Ltd. (the "West Coast Wire Business"). Accordingly, the results of
operations, cash flows and net assets of this business have been classified as
discontinued operations for all periods presented. The West Coast Wire Business
had combined annual sales of $124.3 million and net earnings of $2.4 million in
1996.

4.   PROPERTY DISPOSITIONS

In June 1998, the Company completed the sale of its wholly-owned subsidiary,
Tubos Y Alcantarillas S.A., ("Tubos") for $9.5 million resulting in a gain on
disposition of $5.2 million. Tubos was created in March 1998, and was
capitalized by the Company through the contribution of certain non-strategic
assets located in Peru.

In June 1998, the Company sold an idle plant located in Cividale, Italy for $1.9
million resulting in a gain on disposition of $1.1 million. The manufacturing
assets from this facility were transferred into an Italian joint venture in
October 1996.

5.   INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
                                                                 December 31,     June 30,
                                                                     1997           1998
                                                                 ------------    ---------
<S>                                                              <C>             <C>      
         Inventories at FIFO and average cost:
              Finished and semi-finished                         $  81,871       $  77,669
              Raw materials                                         60,870          55,426
                                                                 ---------       ---------
                   Total                                           142,741         133,095
                                                                 ---------       ---------

         Inventories at LIFO:
              Finished and semi-finished                             1,382           1,061
              Adjustment to state inventories at LIFO value            (60)            (60)
                                                                 ---------       ---------
                   Total                                             1,322           1,001
                                                                 ---------       ---------
                                                                 $ 144,063       $ 134,096
                                                                 =========       =========
</TABLE>

The carrying value of inventories approximates replacement cost.


                                       6

<PAGE>   7

                           GS TECHNOLOGIES CORPORATION
       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                 (Dollars in thousands, unless otherwise noted)

6.   JOINT VENTURES

The Company has a 50% interest in a Direct Reduced Iron ("DRI") joint venture
which started operations January 1998. This DRI facility is expected to produce
approximately 1.2 million metric tons of DRI annually. DRI is a substitute for
steel scrap used in the Company's steel making facilities. The Company has made
equity contributions of $20 million ($6.5 million during 1998) to the joint
venture. Under certain circumstances, the Company may be required to make an
additional equity contribution of up to $7.5 million. The Company is also party
to a DRI purchase agreement with this joint venture to purchase up to 600,000
metric tons of DRI annually.

All joint ventures are invoiced technical service fees pursuant to technology
and management support agreements. These amounts are included in the
accompanying income statements as a separate component of other income.

7.   PAYABLES AND ACCRUED LIABILITIES

Payables and accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                              December 31,   June 30,
                                 1997          1998
                              ------------  ---------
<S>                           <C>           <C>     
Trade payables                $ 86,015      $ 94,653
Salaries and wages              12,936        11,593
Accrued interest payable        10,509         9,743
Other                           28,639        31,202
                              --------      --------
                              $138,099      $147,191
                              ========      ========
</TABLE>

8.   NOTES PAYABLE

Notes payable of $7.4 million consists of short-term revolving credit facilities
in Chile, Peru, and Italy.


                                       7

<PAGE>   8

                           GS TECHNOLOGIES CORPORATION
       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                 (Dollars in thousands, unless otherwise noted)

9.   COMMITMENTS AND CONTINGENCIES

LITIGATION OTHER CONTINGENCIES

In August, 1996, Samsung America, Inc. ("Samsung") filed an action in the
Supreme Court of the state of New York seeking monetary damages against GSI, the
Company, its Peruvian subsidiary, Acerco, and Acerco's partners in the Siderperu
joint venture, collectively, ("the Defendants"). Samsung seeks to recover
purported damages of $48.5 million and punitive damages of $10.0 million and
alleges that the Defendants failed to honor a written contract which entitled
Samsung to obtain an equity interest in Siderperu and to provide certain
distribution and trading services on an exclusive basis. The Company believes
that it has substantial and meritorious defenses and will defend itself
accordingly.

The Company's subsidiary, Georgetown Steel Corporation, is the defendant in
three related suits filed in June 1998 and July 1998 by certain private
plaintiffs in the Court of Common Pleas for the County of Georgetown, South
Carolina. The plaintiffs allege trespass, nuisance, negligence and violation of
State and Federal law in connection with the escape of "mill dust" and gases
from Georgetown's steel mill into the atmosphere and onto the plaintiffs'
property in Georgetown, South Carolina. The plaintiffs seek certification as a
class action in each case. The plaintiffs in these actions seek unspecified
actual, compensatory and punitive damages. The Company believes the actions lack
merit and intends to defend them vigorously.

There are various claims pending involving the Company arising out of the normal
course of business. In management's opinion, the ultimate liability resulting
therefrom will not materially effect the financial position or results of
operations of the Company.

ENVIRONMENTAL MATTERS

The Company's U.S. facilities are subject to a broad range of federal, state and
local environmental requirements, including those governing discharges to the
air and water, the handling and disposal of solid and hazardous wastes and the
remediation of contamination associated with releases of hazardous substances at
Company facilities and associated offsite disposal locations. Liabilities with
respect to hazardous substance releases arise principally under the federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
and similar state laws, which impose strict, retroactive, joint and several
liability upon statutorily defined classes of "potentially responsible parties."
The Company's foreign facilities and joint ventures are subject to varying
degrees of environmental regulation in the jurisdictions in which those
facilities are located.

Based on the continuing review of environmental requirements, the Company
believes it is currently in compliance with environmental requirements.
Nevertheless, as is the case with steel producers in general, if a release of
hazardous substances occurs on or from the Company's properties or any
associated offsite disposal locations, or if contamination from prior activities
is discovered at such properties or locations, the Company may be held liable
and may be required to pay the cost of remedying the condition or satisfying
third party damage claims. The amount of any such liability could be material.
The Company devotes considerable resources to ensuring that its operations are
conducted in a a manner that reduces such risks.

The Company has several environmental issues currently under discussion with
various federal and local agencies, some of which involve compliance and/or
remediation at certain properties. The Company records certain operating
expenses for environmental compliance, testing and other environmental related
costs as expenses when incurred. When it has been possible to determine
reasonable estimates of liabilities related to environmental issues, based upon
information from engineering and environmental specialists, the Company has made
provisions and accruals. At June 30, 1998, $2.7 million was accrued for
environmental related issues. The Company believes, based upon information
currently available to management that it will not require expenditures to
maintain compliance with environmental requirements which would have a material
adverse effect on its financial condition, results of operations or competitive
position. As part of the Purchase and Sale Agreement with Armco, the Company has
been indemnified by Armco for certain environmental issues at certain of its
facilities.

                                       8
<PAGE>   9

                           GS TECHNOLOGIES CORPORATION
       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                 (Dollars in thousands, unless otherwise noted)

LABOR RELATIONS

A significant portion of the Company's employees are covered by collective
bargaining agreements negotiated with various unions. These agreements expire at
various times. In the course of previous contract negotiations, the Company has
on occasion been affected by work stoppages.

During 1997 the Company's results were adversely impacted by a ten week work
stoppage at its Kansas City facility (April 2 - June 13, 1997). A new long term
agreement is now in place at this facility through October 2002.

The Company's collective bargaining agreement at the Jacksonville, Florida
facility expired on April 30, 1998. The Company was unable to reach agreement
with the union and a work stoppage commenced. The Company re-staffed the
facility with permanent replacement workers and production is returning to
normal levels. On July 16, 1998, the union notified the Company that striking
workers had accepted the Company's final offer that was proposed by management
before the work stoppage began. The Company has advised the union that the
striking workers will be placed on a recall list for rehire as positions become
available in the future.

10.    GEOGRAPHIC INFORMATION

Financial information, by geographic region, for the Company is presented below.
United States includes GSTOC and MEI. South America is principally comprised of
the Company's operations in Chile and Peru. Europe and Other includes the
Company's operations in Europe (principally Italy), and other joint venture
interests around the world.


<TABLE>
<CAPTION>
                                                June 30, 1998 and the six months ended June 30, 1998
                                                ----------------------------------------------------
                                                United        South         Europe
                                                States       America      and Other       Total
                                                -------      -------      ---------      -------
<S>                                             <C>           <C>           <C>          <C>    
Net sales                                       380,690       56,951        3,791        441,432
Operating Profit                                  8,661        7,494           (7)        16,148
Equity in income (loss) of joint ventures          (837)         891          (60)            (6)
Net Income (loss)                                (5,426)       6,506        1,497          2,577
Identifiable assets                             575,667       67,207       12,174        655,048
Total liabilities                               517,961       37,133        3,917        559,011
Net assets                                       57,706       30,074        8,257         96,037
</TABLE>



<TABLE>
<CAPTION>
                                                       Six months ended June 30, 1997
                                               -------------------------------------------------
                                                United        South         Europe
                                                States       America      and Other       Total
                                               --------      -------      ---------     --------
<S>                                            <C>           <C>           <C>          <C>     
Net sales                                      $335,613      $49,608       $8,177       $393,398
Operating profit                                  4,604        4,393          161          9,158
Equity in income of joint ventures                1,526        1,597          116          3,239
Net (loss) income                               (29,906)       4,096          239        (25,571)
</TABLE>


                                       9

<PAGE>   10

                           GS TECHNOLOGIES CORPORATION
       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                 (Dollars in thousands, unless otherwise noted)

11.    SUMMARIZED FINANCIAL INFORMATION OF GSTOC

GS Technologies Operating Co., Inc. and its subsidiaries ("GSTOC") is a
wholly-owned subsidiary of the Company. GSTOC has issued Senior Notes
unconditionally guaranteed by the Company. Accordingly, summarized financial
information for GSTOC on a stand alone basis is provided below.

<TABLE>
<CAPTION>
                                      December 31,   June 30,
                                          1997         1998
                                      ------------  --------
<S>                                   <C>           <C>     
Current assets                        $191,164      $202,124
Noncurrent assets                      337,626       341,155
                                      --------      --------

     Total assets                     $528,790      $543,279
                                      ========      ========

Current liabilities                   $100,405      $106,905
Noncurrent liabilities                 371,485       376,929
                                      --------      --------
     Total liabilities                 471,890       483,834

Common stock, additional paid-in
   capital and retained earnings        56,900        59,445
                                      --------      --------

      Total                           $528,790      $543,279
                                      ========      ========
</TABLE>


<TABLE>
<CAPTION>
                                                                    Three Months Ended               Six Months Ended
                                                                -------------------------       -------------------------
                                                                 June 30,        June 30,        June 30,        June 30,
                                                                   1997            1998            1997            1998
                                                                ---------       ---------       ---------       ---------
<S>                                                             <C>             <C>             <C>             <C>      
Net sales                                                       $ 136,003       $ 173,781       $ 300,700       $ 341,716
Cost of products sold                                             131,558         164,574         274,222         312,754
Selling, general and administrative expenses                        6,843           5,995          13,358          12,279
Depreciation and amortization                                       6,733           7,115          13,015          13,745
                                                                ---------       ---------       ---------       ---------

     Operating profit (loss)                                       (9,131)         (3,903)            105           2,938

Interest expense                                                   (9,816)        (10,114)        (19,573)        (19,874)
Equity in loss of joint venture                                                      (659)                         (1,912)
Fees from joint ventures                                              898           1,096           1,947           2,392
Other, net                                                            (76)            160             300             256
                                                                ---------       ---------       ---------       ---------
Income (loss) from continuing operations before income tax        (18,125)        (13,420)        (17,221)        (16,200)
Income tax benefit (provision)                                      6,049           6,416           5,747           7,745
                                                                ---------       ---------       ---------       ---------

Income (loss) from continuing operations                          (12,076)         (7,004)        (11,474)         (8,455)


Discontinued operations:
  Income from discontinued operations                                                               1,402
  Loss on disposal                                                                                (23,965)
                                                                ---------       ---------       ---------       ---------
                                                                                                  (22,563)
                                                                ---------       ---------       ---------       ---------

     Net loss                                                   $ (12,076)      $  (7,004)      $ (34,037)      $  (8,455)
                                                                =========       =========       =========       =========
</TABLE>

                                       10

<PAGE>   11

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

The following discussion and analysis is provided to increase understanding of,
and should be read in conjunction with, the unaudited consolidated financial
statements and accompanying notes. All amounts and percentages are presented net
of discontinued operations unless otherwise noted.

                        SUMMARY STATEMENTS OF OPERATIONS
                        (Dollars in millions, unaudited)

<TABLE>
<CAPTION>
                                                   Three Months Ended         Six Months Ended
                                                  ---------------------     ---------------------
                                                  June 30,     June 30,     June 30,     June 30,
                                                    1997         1998         1997         1998
                                                  --------     --------     --------     --------
<S>                                               <C>          <C>          <C>          <C>     
Net sales                                         $  184.5     $  224.7     $  393.4     $  441.4
Cost of products sold                                168.7        203.1        345.7        387.9
Selling, general and administrative expenses          12.1         10.6         23.6         21.6
Depreciation and amortization                          7.7          8.2         14.9         15.8
                                                  --------     --------     --------     --------
Operating profit                                      (4.0)         2.8          9.2         16.1
Net interest expense (1)                             (10.4)       (10.3)       (20.6)       (20.5)
Gain on disposition of properties                       .2          6.3           .2          6.4
Other income (2)                                       2.0          1.0          5.1          2.5
Income tax (provision) benefit                         6.2           .1          3.1         (1.9)
                                                  --------     --------     --------     --------
Income (loss) from continuing operations              (6.0)         (.1)        (3.0)         2.6
Income from discontinued operations                                              1.4
Loss on disposal of business                                                   (24.0)
                                                  --------     --------     --------     --------
Net income                                        $   (6.0)    $    (.1)    $  (25.6)    $    2.6
                                                  ========     ========     ========     ========
</TABLE>

1 - Net interest expense includes interest income, interest expense and
  $459 and $918 of amortization of debt issuance costs for the quarters
  and six months, respectively.

2 - Other income includes equity in income (loss) of joint ventures, fees
  from joint ventures, minority interest and other, net.

DISCONTINUED OPERATIONS. In 1997, the Company sold its West Coast Wire Business
resulting in an estimated loss on disposition of $24.0 million, net of taxes.
Accordingly, the results of operations of this business have been reclassified
as discontinued operations and the following discussion excludes results of this
business for all periods presented.

LABOR RELATIONS. The Company's labor contract for the Kansas City mini-mill
expired in March 1997. When the Company and the USWA were unable to reach accord
on the terms of a new contract, the union commenced a work stoppage. Management
estimates that the ten week work stoppage in Kansas City cost the Company
approximately $21.9 million in pre-tax earnings in the second quarter of 1997.

The Company's collective bargaining agreement at the Jacksonville, Florida
facility expired on April 30, 1998. The Company was unable to reach agreement
with the union and a work stoppage commenced. The Company re-staffed the
facility with permanent replacement workers and production is returning to
normal levels. On July 16, 1998, the union notified the Company that the
striking workers had accepted the Company's final offer that was proposed by
management before the work stoppage began. The Company has advised the union
that the striking workers will be placed on a recall list for rehire as
positions become available in the future.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997.

NET SALES. Net sales increased by $48 million to $441.4 million in the first
half of 1998 compared to the first half of 1997. The Company generated new sales
of $18.3 million in 1998 from DRI purchased for resale from the Company's 50%
owned DRI joint venture. This joint venture completed construction of its plant
and commenced production of DRI in January 1998. Due to falling scrap prices and
production interruptions, sales of DRI by the company are currently at
unfavorable margins. As the facility ramps-up to its rated capacity of 1.2
million metric tons, it is anticipated that margins will improve. 

                                       11
<PAGE>   12

Wire rod sales were up $28.4 million to $219.5 million for the first six months
of 1998 compared to $191.1 million for the first six months of 1997. For the
first half of 1997, wire rod shipping volume of 567,000 tons, was below normal
levels due to the Kansas City work stoppage. Shipments for the comparable period
of 1998 were 641,000 tons.

Grinding media sales were $101.8 million in the first six months of 1998
compared to $97.9 million in 1997. Worldwide grinding media shipments for the
first half of 1998 increased 6,070 tons over the prior year and average
worldwide selling prices were up $5 per ton.

The Company's wire products sales were down $1.7 million for the first six
months of 1998 compared to the first six months of 1997 reflecting the impact of
the work stoppage, continued competition from imports and weather related delays
in construction activity. Additionally, the Company has increased its internal
consumption of billets and billet sales to third parties have decreased by $5.2
million.

COST OF PRODUCTS SOLD AND GROSS MARGINS. Cost of products sold as a percent of
net sales remained constant at 87.9% for each of the six-month periods as
conversion costs for wire rod and grinding media continue at higher than normal
levels.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the first half have decreased as a percent of net
sales to 4.9% in 1998 from 6.0% in 1997.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for the
first six months increased by $0.9 million to $15.8 million. This increase
results from capital additions and improvements.

NET INTEREST EXPENSE. Net interest expense of $20.5 million for the first half
remained relatively constant with the $20.6 million for the same period of 1997.

GAIN ON DISPOSITION OF PROPERTIES. In June 1998, the Company recognized a gain
of $6.4 million on the disposition of properties, primarily an idle facility in
Italy and certain assets in Peru.

OTHER INCOME. Other income, which is primarily equity in income (loss) of joint
ventures and fees from joint ventures, decreased to $2.5 million for 1998
compared to $5.1 million for 1997 due primarily to the inclusion in the first
half of 1998 of an equity loss from start up operations at the DRI joint venture
in Louisiana of $1.9 million.

INCOME TAX PROVISION/BENEFIT. The Company recorded an income tax provision of
$1.9 million on pre-tax earnings from continuing operations of $4.5 million for
the first six months of 1998 at an effective rate of 42.5%. This compares to an
income tax benefit of $3.1 million on a pre-tax loss from continuing operations
of $6.1 million for the first six months of 1997 at an effective rate of 50.9%.
The effective rate remains high due primarily to the mix of U.S. and foreign
source income, limitations on the Company's ability to utilize foreign tax
credits and the nondeductibility of acquisition premium amortization expense.
The decrease in the effective rate in 1998 results from a change in the mix of
U.S. and foreign earnings.

INCOME (LOSS) FROM CONTINUING OPERATIONS. As a result of the factors discussed
above, the Company had net income of $2.6 million for the first half of 1998
compared to a loss from continuing operations of $3.0 million for the first half
of 1997.

NET INCOME (LOSS). Due to the loss on the disposal of the West Coast Wire
Business, the Company recorded a net loss for the first six months of 1997 of
$25.6 million compared to net income of $2.6 million for the first six months of
1998.

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997.

NET SALES. Net Sales for the second quarter of 1998 were $244.7 million compared
to $184.5 million for the second quarter of 1997. As discussed above, this
increase is primarily related to the 1997 Kansas City work stoppage.

Wire rod sales for the second quarter of 1998 were up $22.9 million to $107.8
million compared to the same period of 1997. An increase in wire rod shipments
of 77,800 tons was partially offset by a significant ($12 per ton) decrease in
average selling prices.

                                       12
<PAGE>   13

Grinding media sales were $52.4 million for the second quarter of 1998 compared
to $46.9 million in 1997. Worldwide grinding media shipments for the three
months ended June 30, 1998 were at the highest level in the Company's history
reaching approximately 110,000 tons and average selling prices were up $3 per
ton quarter to quarter.

COST OF PRODUCTS SOLD AND GROSS MARGIN. Cost of products sold as a percent of
net sales decreased slightly from 91.4% in 1997 to 90.4% in 1998. Conversion
costs in the production of both wire rod and grinding media at Kansas City are
at a higher than normal levels. Contributing to the higher level of conversion
costs was a recent heat wave which caused temporary production curtailments due
to power interruptions and shortages and resulted in higher electricity cost and
reduced production.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percent of net sales decreased to 4.7% for the
second quarter of 1998 from 6.6% for the second quarter of 1997 as the Company
continues to closely monitor costs.

OTHER INCOME. Other income decreased $1.0 million from second quarter 1997 to
$1.0 million for the second quarter of 1998 due primarily to the start up
operations of AIR.

INCOME TAX PROVISION/BENEFIT. The Company recorded an income tax benefit of
$104,000 on a pre-tax loss of $188,000. This compares to an income tax benefit
of $6.2 million on a pre-tax loss from continuing operations of $12.2 million
for the second quarter of 1997. Taxes remain high due primarily to limitations
on the Company's current ability to utilize foreign tax credits and the
non-deductibility of acquisition premium amortization expense.

NET INCOME (LOSS). As a result of the factors discussed above, the Company has a
net loss of $84,000 for the three months ended June 30, 1998 compared to a net
loss of $6.0 million for the same period of 1997.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1998, the Company had total cash and cash equivalents of $11.5
million, an increase of $8.1 million from December 31, 1997. Operating
activities provided $16.4 million of cash during the six months ended June 30,
1998, composed primarily of net earnings of $2.6 million, non-cash depreciation
and amortization of $15.8 million, dividends from joint ventures of $6.3 million
and changes in current assets and liabilities for the period providing $0.6
million; combined with reductions for a gain on disposition of properties of
$6.4 million and for a $2.0 million change in deferred income taxes.

While management believes that funds available from the Company's cash flow from
operations and credit facilities will be sufficient, in the aggregate, to fund
planned working capital and capital expenditure requirements for the remainder
of 1998, management continues to evaluate alternative sources of funds. There
are fluctuations in the Company's working capital needs over the course of a
year, generally influenced by various factors such as seasonality, inventory
levels and the timing of raw material purchases. Due to the cyclical nature of
the Company's business, management believes that it is important for the Company
to maintain borrowing facilities in excess of working capital requirements.

As part of its strategy to expand its mining products business in South America,
GSI has signed an agreement to form a joint venture which will build and operate
a mill liner foundry in Santiago, Chile. GSI intends to make equity investments
of up to $9.0 million dollars through the end of 1999.

The Company will manage its liquidity needs on a consolidated basis with
borrowings that will be available under the Company's Revolving Credit Facility,
a revolving credit facility at MEI and various credit facilities available at
its international subsidiaries and joint ventures. Management believes the
additional borrowing availability under the Credit Facilities (as defined below)
and the cash flows from operations will be sufficient to meet anticipated
capital expenditures through the term of the Company's capital investment
program and to make principal and interest payments on the Company's
indebtedness when due. The Company believes cash flows from operations will
continue to improve due to the ongoing benefits of its business strategy,
including its cost reduction program and planned capital investment projects.

Borrowings under the Revolving Credit Facility bear interest at a floating rate.
Increases in prevailing rates could adversely affect the Company's cash flow. To
the extent that the interest rate on the Revolving Credit Facility increases or
the principal amount outstanding increases, there will be corresponding
increases in the Company's 

                                       13
<PAGE>   14

interest obligations. Under the Revolving Credit Facility, the Company's
availability is $120.0 million (subject to a borrowing base limitation). As of
June 30, 1998, the unused availability under the Revolving Credit Facility was
$82.0 million and $9.9 million of letters of credit were outstanding.

ENVIRONMENTAL AND TAX CONTINGENCIES AND INDEMNIFICATION

Note 9 to the Company's Unaudited Consolidated Financial Statements is herein
incorporated by reference.


                                       14

<PAGE>   15

PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         Note 9 to the Company's Unaudited Consolidated Financial Statements is
         herein incorporated by reference.





ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

              (a)  Exhibits filed herewith:

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

                   27                      Financial Data Schedule

               (b) No reports on Form 8-K were filed during the quarter ended
                   June 30, 1998.


                                       15


<PAGE>   16

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on the 4th day of August, 1998.


                                     GS Technologies Corporation
                                                 and
                                  GS Technologies Operating Co., Inc.
                                             (Registrant)


                                  By:      /s/ Luis E. Leon
                                     --------------------------------
                                     Luis E. Leon, Senior Vice President-Finance
                                     Chief Financial Officer and Treasurer



                                       16