TABLE OF CONTENTS




|                                                                                              |                                            |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  |  | 
|ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                                                              | CONSOLIDATED STATEMENT OF OPERATIONS      
|                                                                                              | CONSOLIDATED BALANCE SHEET                
|                                                                                              | CONSOLIDATED STATEMENT OF CASH FLOWS      
|                                                                                              | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II OTHER INFORMATION                                                                    
|                                                                                              | Item 5. Other Information.                
|                                                                                              | Item 6. Exhibits and Reports on 8-K.      
|SIGNATURES                                                                                   
|EXHIBIT (10)-(56)  EMPLOYMENT TERMS                                                          
|EXHIBIT (10)-(57)  1ST AMEND/REVOLVING CREDIT AGRM                                           



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##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|    |  |                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

OR

|      |  |                                                                                                                                                
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________
 TO _________

Commission File No. 1-4368

|                                                                          
|--------------------------------------------------------------------------
|THE LTV CORPORATION
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                             
|----------------------------------------------------------------------- |  | --------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 75-1070950
(IRS Employer
Identification No.)

|                                                                           |  |                      
|-------------------------------------------------------------------------- |  | ---------------------
|200 Public
Square
Cleveland, Ohio
(Address of principal executive offices) |  | 44114-2308
(Zip Code)

Registrants telephone number, including area code: (216) 622-5000

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  [X]
   No  [ ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.104,683,191 shares of common
stock     
(as of September 30, 2001)





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##### Table of Contents



PART I. FINANCIAL INFORMATION







|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |       |       |  
|-------------------------------------------------- | -------------------------------------- | ------------------------------ | ---- | ------------------ | ----- | ----------------- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | - | ----- | ----- | ----- | -
|                                                   |                                        |                                |      | Three Months Ended |       | Nine Months Ended
|                                                   |                                        |                                |      | September 30,      |       | September 30,    
|                                                   |                                        |                                |      |                    |       |                  
|                                                   |                                        |                                |      | 2001               |       | 2000              |       | 2001  |       | 2000
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |     
|Sales                                              |                                        | $                              | 847  |                    |       | $                 | 1,200 |       |       | $    | 2,795 |       |       | $ | 3,865 |      
|Costs and expenses:                                |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|                                                   | Cost of products sold                  |                                |      | 888                |       |                   |       | 1,106 |       |      |       | 2,865 |       |   |       | 3,493 |      
|                                                   | Depreciation and amortization          |                                |      | 73                 |       |                   |       | 81    |       |      |       | 220   |       |   |       | 245   |      
|                                                   | Selling, general and administrative    |                                |      | 44                 |       |                   |       | 61    |       |      |       | 148   |       |   |       | 177   |      
|                                                   | Results of affiliates operations      |                                |      |                   |       |                   |       | 9     |       |      |       | 2     |       |   |       | 9     |      
|                                                   | Loss on writedown of equity affiliate  |                                |      |                   |       |                   |       |      |       |      |       |      |       |   |       | 84    |      
|                                                   | Net interest expense                   |                                |      | 14                 |       |                   |       | 24    |       |      |       | 45    |       |   |       | 73    |      
|                                                   | Other (income) expense                 |                                |      |                   |       |                   |       | (4    | )     |      |       | (10   | )     |   |       | (64   | )    
|                                                   | Special charges                        |                                |      |                   |       |                   |       |      |       |      |       |      |       |   |       | 207   |      
|                                                   | Reorganization and restructuring items |                                |      | 126                |       |                   |       |      |       |      |       | 263   |       |   |       |      |      
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|                                                   |                                        | Total                          |      |                    | 1,145 |                   |       |       | 1,277 |      |       |       | 3,533 |   |       |       | 4,224 |  
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|Loss
before income taxes                           |                                        |                                | (298 | )                  |       |                   | (77   | )     |       |      | (738  | )     |       |   | (359  | )    
|Income tax provision                               |                                        |                                | (3   | )                  |       |                   | (3    | )     |       |      | (9    | )     |       |   | (9    | )    
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|Loss before extraordinary loss                     |                                        |                                | (301 | )                  |       |                   | (80   | )     |       |      | (747  | )     |       |   | (368  | )    
|Extraordinary loss on early extinguishment of debt |                                        |                                | (2   | )                  |       |                   |      |       |       |      | (4    | )     |       |   |      |      
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|Net
loss                                           |                                        | $                              | (303 | )                  |       | $                 | (80   | )     |       | $    | (751  | )     |       | $ | (368  | )    
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|Dividends on preferred stock                       |                                        |                                | (2   | )                  |       |                   | (2    | )     |       |      | (6    | )     |       |   | (7    | )    
|Net
loss to common shareholders                    |                                        | $                              | (305 | )                  |       | $                 | (82   | )     |       | $    | (757  | )     |       | $ | (375  | )    
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|Loss per share:                                    |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|                                                   | Basic and diluted                      |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |       |      
|                                                   |                                        | Loss before extraordinary loss |      | $                  | (2.89 | )                 |       | $     | (0.82 | )    |       | $     | (7.20 | ) |       | $     | (3.75 | )
|                                                   |                                        | Extraordinary loss             |      |                    | (0.02 | )                 |       |       |      |      |       |       | (0.04 | ) |       |       |      |  
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|                                                   |                                        | Net loss                       |      | $                  | (2.91 | )                 |       | $     | (0.82 | )    |       | $     | (7.24 | ) |       | $     | (3.75 | )
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|Average shares outstanding                         |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|                                                   | Basic and diluted                      |                                |      | 105                |       |                   |       | 100   |       |      |       | 104   |       |   |       | 100   |      
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      
|Cash dividends per common share                    |                                        | $                              |     |                    |       | $                 | 0.03  |       |       | $    |      |       |       | $ | 0.09  |      
|                                                   |                                        |                                |      |                    |       |                   |       |       |       |      |       |       |       |   |       |      



---

| |  | See notes to consolidated financial statements.
| |  | -----------------------------------------------

1



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##### Table of Contents



THE LTV CORPORATION




|                                                                |                                                         |                                                                  |                                      |        |               |       |              |        |     |       | 
|--------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------ | ------ | ------------- | ----- | ------------ | ------ | --- | ----- | 
|                                                                |                                                         |                                                                  |                                      |        | September 30, |       | December 31,
|                                                                |                                                         |                                                                  |                                      |        | 2001          |       | 2000        
|                                                                |                                                         |                                                                  |                                      |        |               |       |             
|ASSETS                                                          |                                                         | (Unaudited)                                                      |                                      |        |               |      
|                                                                |                                                         |                                                                  |                                      |        |               |      
|Current assets                                                  |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                | Cash and cash equivalents                               |                                                                  | $                                    | 66     |               |       | $            | 68     |    
|                                                                | Receivables, less allowance for doubtful accounts       |                                                                  |                                      | 390    |               |       |              | 495    |    
|                                                                | Inventories:                                            |                                                                  |                                      |        |               |       |              |        |    
|                                                                |                                                         | Products                                                         |                                      |        | 572           |       |              |        | 690 |      
|                                                                |                                                         | Materials, purchased parts and supplies                          |                                      |        | 123           |       |              |        | 281 |      
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         |                                                                  | Total inventories                    |        |               | 695   |              |        |     | 971   | 
|                                                                | Prepaid expenses, deposits and other                    |                                                                  |                                      | 29     |               |       |              | 25     |    
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         |                                                                  | Total current assets                 |        |               | 1,180 |              |        |     | 1,559 | 
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|Investments in and advances to affiliates                       |                                                         |                                                                  | 98                                   |        |               |       | 106          |       
|Goodwill and other intangibles, net of accumulated amortization |                                                         |                                                                  | 230                                  |        |               |       | 338          |       
|Other noncurrent assets                                         |                                                         |                                                                  | 75                                   |        |               |       | 106          |       
|Property, plant and equipment                                   |                                                         |                                                                  | 4,491                                |        |               |       | 4,554        |       
|                                                                | Allowance for depreciation                              |                                                                  |                                      | (1,469 | )             |       |              | (1,305 | )  
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         |                                                                  | Total property, plant and equipment  |        |               | 3,022 |              |        |     | 3,249 | 
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         | $                                                                | 4,605                                |        |               | $     | 5,358        |       
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|LIABILITIES AND SHAREHOLDERS EQUITY                            |                                                         |                                                                  |                                      |        |               |       |              |       
|Current liabilities                                             |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                | Accounts payable                                        |                                                                  | $                                    | 117    |               |       | $            | 45     |    
|                                                                | Accrued employee compensation and benefits              |                                                                  |                                      | 82     |               |       |              | 56     |    
|                                                                | Other accrued liabilities                               |                                                                  |                                      | 110    |               |       |              | 53     |    
|                                                                | Secured debt in default                                 |                                                                  |                                      | 558    |               |       |              | 667    |    
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         |                                                                  | Total current liabilities            |        |               | 867   |              |        |     | 821   | 
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|Noncurrent liabilities                                          |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                | Postemployment health care and other insurance benefits |                                                                  |                                      | 45     |               |       |              | 46     |    
|                                                                | Pension benefits                                        |                                                                  |                                      | 4      |               |       |              | 4      |    
|                                                                | Other                                                   |                                                                  |                                      | 36     |               |       |              | 52     |    
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         |                                                                  | Total noncurrent liabilities         |        |               | 85    |              |        |     | 102   | 
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|Liabilities subject to compromise                               |                                                         |                                                                  | 3,806                                |        |               |       | 3,858        |       
|Shareholders equity                                            |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                | Preferred stock                                         |                                                                  |                                      |        |               |       |              |        |    
|                                                                |                                                         | Series A Cumulative Convertible (aggregate liquidation value $62 |                                      |        | 1             |       |              |        | 2   |      
|                                                                |                                                         |                                                                  | in 2001 and $80 in 2000)             |        |               |       |              |        |     |       | 
|                                                                |                                                         | Series B Convertible (aggregate liquidation value $50)           |                                      |        | 1             |       |              |        | 1   |      
|                                                                | Common stock (par value $0.50 per share)                |                                                                  |                                      | 55     |               |       |              | 53     |    
|                                                                | Additional paid-in capital                              |                                                                  |                                      | 1,098  |               |       |              | 1,101  |    
|                                                                | Retained deficit                                        |                                                                  |                                      | (1,260 | )             |       |              | (509   | )  
|                                                                | Treasury stock (5 million shares at cost)               |                                                                  |                                      | (64    | )             |       |              | (65    | )  
|                                                                | Other comprehensive income (loss) and other             |                                                                  |                                      | 16     |               |       |              | (6     | )  
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         |                                                                  | Total shareholders equity (deficit) |        |               | (153  | )            |        |     | 577   | 
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       
|                                                                |                                                         | $                                                                | 4,605                                |        |               | $     | 5,358        |       
|                                                                |                                                         |                                                                  |                                      |        |               |       |              |       



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| |  | See notes to consolidated financial statements.
| |  | -----------------------------------------------

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##### Table of Contents



THE LTV CORPORATION




|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |        |     |      |  
|----------------------------------------------------------- | ------------------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------------- | ------ | ------------------------------- | ---- | ---- | ------ | --- | ---- | -
|                                                            |                                                                                 |                                                            |                                           |        | Nine Months Ended September 30,
|                                                            |                                                                                 |                                                            |                                           |        |                                
|                                                            |                                                                                 |                                                            |                                           |        | 2001                            |      | 2000
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |     
|Operating activities                                        |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|                                                            | Net loss                                                                        |                                                            | $                                         | (751   | )                               |      | $    | (368   | )  
|                                                            | Adjustments to reconcile net loss to net cash
provided by operating activities: |                                                            |                                           |        |                                 |      |      |        |    
|                                                            |                                                                                 | Extraordinary loss                                         |                                           |        | 4                               |      |      |        |    |     
|                                                            |                                                                                 | Gain on sale of business                                   |                                           |        |                                |      |      |        | (26 | )   
|                                                            |                                                                                 | Noncash special charges and write down of equity affiliate |                                           |        |                                |      |      |        | 291 |     
|                                                            |                                                                                 | Depreciation and amortization                              |                                           |        | 220                             |      |      |        | 245 |     
|                                                            |                                                                                 | Pension funding less than related expense                  |                                           |        | 42                              |      |      |        | 17  |     
|                                                            |                                                                                 | Postemployment benefit payments more than related expense  |                                           |        | (20                             | )    |      |        | (22 | )   
|                                                            |                                                                                 | VEBA trust recoveries (funding)                            |                                           |        | 26                              |      |      |        | (10 | )   
|                                                            |                                                                                 | Reorganization and restructuring items                     |                                           |        | 263                             |      |      |        |    |     
|                                                            |                                                                                 | Less: payments on reorganization and restructuring items   |                                           |        | (32                             | )    |      |        |    |     
|                                                            |                                                                                 | Changes in assets, liabilities and other                   |                                           |        | 332                             |      |      |        | (47 | )   
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|                                                            |                                                                                 |                                                            | Net cash provided by operating activities |        |                                 | 84   |      |        |     | 80   |  
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|Investing activities                                        |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|                                                            | Capital expenditures                                                            |                                                            |                                           | (58    | )                               |      |      | (188   | )  
|                                                            | Investments in and advances to steel-related businesses                         |                                                            |                                           | (13    | )                               |      |      | (23    | )  
|                                                            | Proceeds from reorganization  sale of business                                 |                                                            |                                           | 106    |                                 |      |      |       |    
|                                                            | Proceeds from sale of business                                                  |                                                            |                                           |       |                                 |      |      | 31     |    
|                                                            | Proceeds from sale / leaseback and other                                        |                                                            |                                           | (7     | )                               |      |      | 27     |    
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|                                                            |                                                                                 |                                                            | Net cash used in investing activities     |        |                                 | 28   |      |        |     | (153 | )
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|Financing activities                                        |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|                                                            | Net borrowings (repayments)                                                     |                                                            |                                           | (106   | )                               |      |      | 61     |    
|                                                            | Deferred financing fees                                                         |                                                            |                                           | (8     | )                               |      |      |       |    
|                                                            | Dividends paid and other                                                        |                                                            |                                           |       |                                 |      |      | (15    | )  
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|                                                            |                                                                                 |                                                            | Net cash used in financing activities     |        |                                 | (114 | )    |        |     | 46   |  
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|Net decrease in cash and cash equivalents                   |                                                                                 |                                                            | (2                                        | )      |                                 |      | (27  | )     
|Cash and cash equivalents at beginning of period            |                                                                                 |                                                            | 68                                        |        |                                 |      | 72   |       
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|Cash and cash equivalents at end of period                  |                                                                                 | $                                                          | 66                                        |        |                                 | $    | 45   |       
|                                                            |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|Supplemental cash flow information is presented as follows: |                                                                                 |                                                            |                                           |        |                                 |      |      |       
|                                                            | Interest payments                                                               |                                                            | $                                         | 48     |                                 |      | $    | 78     |    
|                                                            | Income tax payments                                                             |                                                            |                                           | 3      |                                 |      |      | 11     |    
|                                                            | Capitalized interest                                                            |                                                            |                                           | 4      |                                 |      |      | 11     |    
|                                                            | Borrowings under credit facilities                                              |                                                            |                                           | 4,555  |                                 |      |      | 3,544  |    
|                                                            | Payments on borrowings under credit facilities                                  |                                                            |                                           | (4,661 | )                               |      |      | (3,483 | )  



---

| |  | See notes to consolidated financial statements.
| |  | -----------------------------------------------

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##### Table of Contents



THE LTV CORPORATION




NOTE (1)- On December 29, 2000, The LTV Corporation (LTV or the Company)
and forty-eight of its wholly owned subsidiaries (collectively, the Debtors),
which include its principal operating subsidiaries, LTV Steel Company, Inc.
(LTV Steel) and Copperweld Corporation (Copperweld) and the former operating
subsidiary, VP Buildings, Inc. (VP Buildings), filed voluntary petitions for
reorganization under Chapter 11 (Chapter 11) of the Federal Bankruptcy Code
(Bankruptcy Code) in the United States Bankruptcy Court in the Northern
District of Ohio, Eastern Division (Court). The Company is managing its
business as debtor-in-possession subject to Court approval.

The Companys consolidated financial statements have been prepared in
conformity with the AICPAs Statement of Position 90-7, Financial Reporting by
Entities In Reorganization Under the Bankruptcy Code (SOP 90-7). The
consolidated financial statements are prepared on a going concern basis, which
contemplates continuity of operations, realization of assets and liquidation of
liabilities in the ordinary course of business and do not reflect adjustments
that might result if the Debtors are unable to continue as a going concern. As a
result of the Chapter 11 filings, such matters are subject to significant
uncertainty.

Under Chapter 11 proceedings, actions by creditors to collect claims in
existence at the filing date (prepetition) are stayed (deferred), absent
specific Court authorization to pay such claims, while the Company continues to
manage the business as debtor-in-possession. LTV received approval from the
Court to pay or otherwise honor certain of its prepetition obligations,
including employee wages and certain employee benefits. The Company believes
provisions have been made in the accompanying consolidated financial statements
for the potential claims that could be estimated at the date of these financial
statements. The amount of the claims to be filed by the creditors could be
significantly different than the amount of the liabilities recorded by the
Company. The Company has many executory contracts that could be rejected during
the Chapter 11 proceedings.

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

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

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to

4



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##### Table of Contents



Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and disclosures required by accounting principles generally
accepted in the United States for complete financial statements. All adjustments
that are, in the opinion of management, necessary for a fair presentation have
been made and are of a recurring nature unless otherwise disclosed herein.
Certain prior period amounts have been reclassified to conform to the current
period presentation. The results of operations for the interim periods are not
necessarily indicative of results of operations for a full year. For further
information, refer to the consolidated financial statements and the notes
thereto for the year ended December 31, 2000 included in the 2000 Annual Report
on Form 10-K and 10-K/A filed with the Securities and Exchange Commission.

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 141, Business
Combinations and No. 142, Goodwill and Other Intangible Assets. SFAS No. 141
addresses financial accounting and reporting for business combinations and
supersedes APB No. 16 Business Combinations and SFAS No. 38 Accounting for
Preacquisition Contingencies of Purchased Enterprises. SFAS No. 142 provides
that goodwill and indefinite lived intangible assets are no longer amortized but
are reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that do not have an indefinite life will
continue to be amortized over their useful lives (but with no maximum life). The
Company is required to adopt these statements effective January 1, 2002.
Amortization of goodwill totaled $10 million for the year 2000.

In July 2001, the FASB issued SFAS No. 143 Accounting for Asset Retirement
Obligations that records the fair value of the liability for closure and
removal costs associated with the legal obligations upon retirement or removal
of any tangible long-lived assets. The initial recognition of the liability will
be capitalized as part of the asset cost and depreciated over its estimated
useful life. The Company is required to adopt this statement effective January
1, 2003.

In August 2001, the FASB issued SFAS No. 144 Accounting for the Impairment
or Disposal of Long-Lived Assets that supersedes SFAS No. 121 Accounting for
the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. The Company is required to adopt this statement effective January
1, 2002. The effect of adoption of all these new pronouncements has not yet been
determined.

NOTE (2)- Total comprehensive loss for the three months ended September 30,
2001 and 2000 totaled $305 million and $82 million, respectively. Total
comprehensive loss for the nine months ended September 30, 2001 and 2000 totaled
$737 million and $373 million, respectively. On January 1, 2001, the Company
adopted SFAS No. 133, as amended, which resulted in a transitional cumulative
adjustment of $50 million of other comprehensive income for futures contracts
that were sold in 2000. A total of $21 million of the transitional adjustment
was reclassified to the Consolidated Statement of Operations as a reduction of
cost of products sold in the nine months ended September 30, 2001. Approximately
$14 million is anticipated to be reclassified to the statement of operations
during the next twelve months. The other comprehensive loss included in the
balance sheet at September 30, 2000 was $5 million, with no material changes
since December 31, 1999.

NOTE (3)- Liabilities of the Company that existed at the time of the filing of
the petition under Chapter 11 on December 29, 2000 are classified as liabilities
subject to compromise. With the exception of the Companys secured debt and
liabilities of non-filing subsidiaries, all liabilities as of

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the filing date were classified as liabilities subject to compromise and have
been deferred. The Court authorized payments of wages and certain employee
benefits and limited other prepetition obligations. Current year provisions for
retiree obligations are included as prepetition obligations. Payments of
prepetition obligations in 2001 of $227 million were primarily for wages, active
and retiree healthcare, other employee related costs (including withholdings)
and certain other limited obligations (including environmental and plant
shutdown). Liabilities subject to compromise at September 30, 2001 and December
31, 2000 were as follows (in millions):

|                                                                    |  |               |       |              |  |   |       | 
|------------------------------------------------------------------- |  | ------------- | ----- | ------------ |  | - | ----- | 
|                                                                    |  | September 30, |       | December 31,
|                                                                    |  | 2001          |       | 2000        
|                                                                    |  |               |       |             
|Postemployment health care and other insurance benefits             |  | $             | 1,574 |              |  | $ | 1,593 | 
|Pension benefits                                                    |  |               | 701   |              |  |   | 642   | 
|Undersecured debt                                                   |  |               | 572   |              |  |   | 572   | 
|Accounts payable                                                    |  |               | 320   |              |  |   | 363   | 
|Accrued employee compensation and benefits                          |  |               | 166   |              |  |   | 213   | 
|Environmental and plant rationalization                             |  |               | 126   |              |  |   | 161   | 
|Benefits under the Coal Industry Retiree Health Benefit Act of 1992 |  |               | 133   |              |  |   | 130   | 
|Accrued taxes other than income                                     |  |               | 104   |              |  |   | 85    | 
|Accrued income taxes                                                |  |               | 25    |              |  |   | 27    | 
|Other                                                               |  |               | 85    |              |  |   | 72    | 
|                                                                    |  |               |       |              |  |   |       | 
|                                                                    |  | $             | 3,806 |              |  | $ | 3,858 | 
|                                                                    |  |               |       |              |  |   |       | 

NOTE (4)- The following unaudited condensed combined financial statements of
the Debtors were prepared on the same basis as the consolidated financial
statements and are presented below in accordance with SOP 90-7 (in millions):

|                         |                                                    |                    |      |                    |       |                   |       |       |       | 
|------------------------ | -------------------------------------------------- | ------------------ | ---- | ------------------ | ----- | ----------------- | ----- | ----- | ----- | 
|Statement of Operations  |                                                    | September 30, 2001
|                         |                                                    |                   
|                         |                                                    |                    |      | Three Months Ended |       | Nine Months Ended
|                         |                                                    |                    |      |                    |       |                  
|Sales                    |                                                    | $                  | 818  |                    |       | $                 | 2,548 |      
|Costs and expenses:      |                                                    |                    |      |                    |       |                   |       |      
|                         | Cost of products sold                              |                    |      | 871                |       |                   |       | 2,659 |      
|                         | Depreciation and amortization                      |                    |      | 68                 |       |                   |       | 207   |      
|                         | Selling, general and administrative                |                    |      | 41                 |       |                   |       | 137   |      
|                         | Net interest expense                               |                    |      | 12                 |       |                   |       | 35    |      
|                         | Other (income) expense                             |                    |      |                   |       |                   |       | (6    | )    
|                         | Reorganization and restructuring items             |                    |      | 126                |       |                   |       | 263   |      
|                         |                                                    |                    |      |                    |       |                   |       |      
|                         |                                                    | Total              |      |                    | 1,118 |                   |       |       | 3,295 | 
|                         |                                                    |                    |      |                    |       |                   |       |      
|Loss before income taxes |                                                    |                    | (300 | )                  |       |                   | (747  | )    
|Income tax provision     |                                                    |                    | (2   | )                  |       |                   | (7    | )    
|                         |                                                    |                    |      |                    |       |                   |       |      
|                         | Loss before extraordinary loss                     |                    |      | (302               | )     |                   |       | (754  | )    
|                         | Extraordinary loss on early extinguishment of debt |                    |      | (2                 | )     |                   |       | (4    | )    
|                         |                                                    |                    |      |                    |       |                   |       |      
|Net loss                 |                                                    | $                  | (304 | )                  |       | $                 | (758  | )    
|                         |                                                    |                    |      |                    |       |                   |       |      

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|                                         |                           |               |       |              |  |   |       |       | 
|---------------------------------------- | ------------------------- | ------------- | ----- | ------------ |  | - | ----- | ----- | 
|Balance Sheet                            |                           | September 30, |       | December 31,
|                                         |                           | 2001          |       | 2000        
|                                         |                           |               |       |              | 
|Cash and cash equivalents                |                           | $             | 49    |              |  | $ | 55    |      
|Accounts receivable, net                 |                           |               | 343   |              |  |   | 72    |      
|Intercompany receivable, net             |                           |               | 31    |              |  |   | 941   |      
|Inventories                              |                           |               | 666   |              |  |   | 124   |      
|Prepaid expenses                         |                           |               | 21    |              |  |   | 22    |      
|                                         |                           |               |       |              |  |   |       |      
|                                         | Total current assets      |               |       | 1,110        |  |   |       | 1,214 | 
|                                         |                           |               |       |              |  |   |       |      
|Goodwill and other intangibles           |                           |               | 234   |              |  |   | 334   |      
|Investments in non-Debtor subsidiaries   |                           |               | 174   |              |  |   | 192   |      
|Other noncurrent assets                  |                           |               | 59    |              |  |   | 94    |      
|Property, plant and equipment, net       |                           |               | 2,907 |              |  |   | 3,124 |      
|                                         |                           |               |       |              |  |   |       |      
|                                         |                           | $             | 4,484 |              |  | $ | 4,958 |      
|                                         |                           |               |       |              |  |   |       |      
|Accounts payable and accrued liabilities |                           | $             | 270   |              |  | $ | 96    |      
|Secured debt in default                  |                           |               | 558   |              |  |   | 402   |      
|                                         |                           |               |       |              |  |   |       |      
|                                         | Total current liabilities |               |       | 828          |  |   |       | 498   | 
|                                         |                           |               |       |              |  |   |       |      
|Other noncurrent liabilities             |                           |               | 10    |              |  |   | 25    |      
|Liabilities subject to compromise        |                           |               | 3,806 |              |  |   | 3,858 |      
|Shareholders equity                     |                           |               | (160  | )            |  |   | 577   |      
|                                         |                           |               |       |              |  |   |       |      
|                                         |                           | $             | 4,484 |              |  | $ | 4,958 |      
|                                         |                           |               |       |              |  |   |       |      

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|                                                 |                                                                                 |                                                               |                                       |      |     |      |  
|------------------------------------------------ | ------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------------------------------------- | ---- | --- | ---- | -
|Statement of Cash Flows                          |                                                                                 | Nine Months Ended                                            
|                                                 |                                                                                 | September 30, 2001                                           
|                                                 |                                                                                 |                                                               |                                       |      |    
|Operating activities                             |                                                                                 |                                                               |                                       |     
|                                                 | Net loss                                                                        |                                                               | $                                     | (758 | )  
|                                                 | Adjustments to reconcile net loss to net cash provided by operating activities: |                                                               |                                       |      |    
|                                                 |                                                                                 | Extraordinary loss                                            |                                       |      | 4   |     
|                                                 |                                                                                 | Depreciation and amortization                                 |                                       |      | 207 |     
|                                                 |                                                                                 | Pension funding less than related expense                     |                                       |      | 40  |     
|                                                 |                                                                                 | Postemployment benefit payments more than related expense     |                                       |      | (22 | )   
|                                                 |                                                                                 | VEBA trust recoveries                                         |                                       |      | 26  |     
|                                                 |                                                                                 | Reorganization and restructuring items                        |                                       |      | 263 |     
|                                                 |                                                                                 | Less: payments against reorganization and restructuring items |                                       |      | (32 | )   
|                                                 |                                                                                 | Changes in assets, liabilities and other                      |                                       |      | 72  |     
|                                                 |                                                                                 |                                                               |                                       |     
|                                                 |                                                                                 |                                                               | Net cash used by operating activities |      |     | (200 | )
|                                                 |                                                                                 |                                                               |                                       |     
|Investing activities                             |                                                                                 |                                                               |                                       |     
|                                                 | Capital expenditures                                                            |                                                               |                                       | (48  | )  
|                                                 | Investments in steel-related businesses                                         |                                                               |                                       | (13  | )  
|                                                 | Proceeds from reorganization  sale of business                                 |                                                               |                                       | 106  |    
|                                                 |                                                                                 |                                                               |                                       |     
|                                                 |                                                                                 | Net cash provided by investing activities                     |                                       |      | 45  |     
|                                                 |                                                                                 |                                                               |                                       |     
|Financing activities                             |                                                                                 |                                                               |                                       |     
|                                                 | Net borrowings under credit facilities                                          |                                                               |                                       | 157  |    
|                                                 | Deferred financing fees                                                         |                                                               |                                       | (8   | )  
|                                                 |                                                                                 |                                                               |                                       |     
|                                                 |                                                                                 | Net cash provided by investing activities                     |                                       |      | 149 |     
|                                                 |                                                                                 |                                                               |                                       |     
|Net decrease in cash and cash equivalents        |                                                                                 |                                                               | (6                                    | )   
|Cash and cash equivalents at beginning of period |                                                                                 |                                                               | 55                                    |     
|                                                 |                                                                                 |                                                               |                                       |     
|Cash and cash equivalents at end of period       |                                                                                 | $                                                             | 49                                    |     
|                                                 |                                                                                 |                                                               |                                       |     

NOTE (5)- LTV operates in three reportable segments: Integrated Steel, Metal
Fabrication and Corporate and Other. Integrated Steel manufactures and sells a
diversified line of carbon flat rolled steel products consisting of hot rolled
and cold rolled sheet and galvanized products. The tin mill facilities were sold
on March 1, 2001 to the U. S. Steel Group of the USX Corporation pursuant to an
agreement made with USX Corporation in October 2000 and subsequently approved by
the Court in February 2001. Integrated Steel sales are made primarily to the
domestic transportation, appliance, and electrical equipment markets. The
product lines of the Metal Fabrication segment include pipe, conduit, mechanical
and structural tubular products for use in transportation, agriculture, oil and
gas, and construction industries and bimetallic wire for the telecommunications
and utilities industries. In September 2001, LTV completed the sale of VP
Buildings, a metal buildings systems manufacturer, which was included in the
Metal Fabrication segment. Corporate and Other consists of corporate investments
and related income and expenses and in 2000 included the results of two steel
technology joint ventures, Trico Steel Company L.L.C. (Trico Steel) and Cliffs
and Associates Limited (CAL). The Trico Steel investment was written off
effective in the fourth quarter of 2000 because Trico Steel

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ceased operations and filed for protection under Chapter 11 of the Bankruptcy
Code. As a result, the Company determined that any recovery of its investment in
Trico Steel would be remote. The CAL investment was sold on June 30, 2000. The
results of the ventures are included in the prior year through those dates,
respectively.

LTVs reportable segments are strategic business units grouped by similar
products, technologies and manufacturing processes. Segments are managed
separately because each serves a different market and group of customers.
Segment performance is measured on profit or loss before special items, income
taxes and interest. Integrated Steel accounts for intersegment sales at current
market prices as if transactions had taken place with third parties.

|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  |         |       |           |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|----------------------------------------------------------- |  | ---------- | ----- | ----------- |  | --------- | ----- | ----- |  | ----- | ----- | ----------- |  | ------- | ----- | --------- |  | - | ----- | - |  | - | ----- | - |  | - | ----- | - |  | - | ------ | -
|For the three months ended September 30,                    |  |            |       |             |  | 2001      |       |       |  |       |       |             |  |         |       | 2000      |  |   |       |  
|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  |         |       |           |  |   |       |  
|(dollars in millions)                                       |  | Integrated |       | Metal       |  | Corporate |       |       |  |       |       | Integrated  |  | Metal   |       | Corporate |  |   |       |  
|                                                            |  | Steel      |       | Fabrication |  | & Other   |       | Total |  | Steel |       | Fabrication |  | & Other |       | Total    
|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  |         |       |          
|Trade sales                                                 |  | $          | 521   |             |  | $         | 326   |       |  | $     |      |             |  | $       | 847   |           |  | $ | 777   |   |  | $ | 423   |   |  | $ |      |   |  | $ | 1,200  |  
|Intersegment sales                                          |  |            | 35    |             |  |           |      |       |  |       |      |             |  |         | 35    |           |  |   | 36    |   |  |   |      |   |  |   |      |   |  |   | 36     |  
|Segment income (loss) before income taxes
and special items |  |            | (153  | )           |  |           | 2     |       |  |       | (21   | )           |  |         | (172  | )         |  |   | (48   | ) |  |   | 13    |   |  |   | (42   | ) |  |   | (77    | )
|Reorganization and restructuring items                      |  |            | 8     |             |  |           | (125  | )     |  |       | (9    | )           |  |         | (126  | )         |  |   |      |   |  |   |      |   |  |   |      |   |  |   |       |  
|                                                           
|For the nine months ended September 30,                     |  |            |       |             |  | 2001      |       |       |  |       |       |             |  |         |       | 2000      |  |   |       |  
|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  |         |       |           |  |   |       |  
|(dollars in millions)                                       |  | Integrated |       | Metal       |  | Corporate |       |       |  |       |       | Integrated  |  | Metal   |       | Corporate |  |   |       |  
|                                                            |  | Steel      |       | Fabrication |  | & Other   |       | Total |  | Steel |       | Fabrication |  | & Other |       | Total    
|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  |         |       |          
|Trade sales                                                 |  | $          | 1,753 |             |  | $         | 1,042 |       |  | $     |      |             |  | $       | 2,795 |           |  | $ | 2,562 |   |  | $ | 1,303 |   |  | $ |      |   |  | $ | 3,865  |  
|Intersegment sales                                          |  |            | 120   |             |  |           |      |       |  |       |      |             |  |         | 120   |           |  |   | 105   |   |  |   |      |   |  |   |      |   |  |   | 105    |  
|Segment income (loss) before income taxes
and special items |  |            | (427  | )           |  |           | 10    |       |  |       | (58   | )           |  |         | (475  | )         |  |   | (25   | ) |  |   | 61    |   |  |   | (188  | ) |  |   | (152   | )
|Special charges                                             |  |            |      |             |  |           |      |       |  |       |      |             |  |         |      |           |  |   | (205  | ) |  |   | (2    | ) |  |   |      |   |  |   | (207   | )
|Reorganization and restructuring items                      |  |            | (102  | )           |  |           | (126  | )     |  |       | (35   | )           |  |         | (263  | )         |  |   |      |   |  |   |      |   |  |   |      |   |  |   |       |  
|Total Assets                                                |  |            | 3,130 |             |  |           | 500   |       |  |       | 1,412 |             |  |         | 5,042 |           |  |   | 3,872 |   |  |   | 688   |   |  |   | 2,807 |   |  |   | 7,367 
|                                                           
|Total Assets                                                |  |            |       |             |  |           |       |       |  |       |       |             |  |         | 5,042 |           |  |   |       |   |  |   |       |   |  |   |       |   |  |   | 7,367  |  
|Less: Intersegment eliminations                             |  |            |       |             |  |           |       |       |  |       |       |             |  |         | (437  | )         |  |   |       |   |  |   |       |   |  |   |       |   |  |   | (1,557 | )
|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  |         |       |           |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  
|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  | $       | 4,605 |           |  |   |       |   |  |   |       |   |  |   |       |   |  | $ | 5,810  |  
|                                                            |  |            |       |             |  |           |       |       |  |       |       |             |  |         |       |           |  |   |       |   |  |   |       |   |  |   |       |   |  |   |        |  

NOTE (6) - On March 20, 2001, the Court approved two new debtor-in-possession
financing facilities that were closed on April 9, 2001. The first facility was a
$100 million financing facility for working capital purposes. Outstanding
borrowings were repaid from the proceeds of the sale of VP Buildings on
September 19, 2001 and the facility was terminated. An extraordinary loss of $2
million from early termination of this facility was recorded in the third
quarter 2001.

The second facility is a Secured Revolving Credit Facility (Revolving
Credit Facility) which replaced the Companys receivables and inventory
facilities. The obligation is guaranteed by the direct and indirect subsidiaries
of LTV that have filed for bankruptcy. The original commitment under the
Revolving Credit Facility was $582 million. The current commitment, after a
mandatory permanent commitment reduction of $100 million on September 30, 2001
is $482 million and may be further limited by amounts of receivables and
inventories. In addition, the commitment amount under the Revolving Credit Facility is scheduled to be
further reduced by $100 million on December 31, 2001 and by an
additional $200 million on March 31, 2002. Of the total commitment as of September 30, 2001, $123
million may be used for standby letters of credit. Borrowings under the
Revolving Credit Facility will be required to be repaid in full and the
commitment will terminate on the earlier of June 30, 2002 or the substantial
consummation of a plan of reorganization that is confirmed by the Court or any
other court having jurisdiction over the Chapter 11 proceedings.

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Substantially all of LTV Steels and Georgia Tubing Corporations (a
wholly owned subsidiary of LTV) receivables and inventories and the receivables
of Welded Tube and Copperwelds domestic subsidiaries are pledged as collateral.
In addition, the lenders have a first priority lien on the Companys integrated
steel plant in Hennepin, Illinois (the Hennepin Plant) equal to $28 million
and a junior lien on all other assets of the debtors pledged under the Companys
five-year secured term loan of $225 million (the Secured Facility), which has
outstanding principal of $194 million at September 30, 2001. Upon the sale of
any integrated steel asset other than the Hennepin Plant, 50% of the net cash
proceeds shall be applied to permanently reduce the then current commitment, if
any, under the Revolving Credit Facility.

Interest under the Revolving Credit Facility is, at the Companys option,
the Alternate Base Rate (which is the greater of the prime rate, a base CD rate
(as defined) plus 1.0% or the Federal Funds Effective Rate plus 0.5%) plus 1.5%
or LIBOR plus 2.5%. Interest is payable monthly. The Company is required to meet
certain covenants relating to cumulative EBITDA and capital expenditures,
minimum liquidity and is prohibited from paying dividends. On October 1, 2001,
the Company and the Lenders entered into a limited waiver of the cumulative
EBITDA and minimum liquidity covenants, which expires on October 31, 2001. The
lenders have agreed to waive the EBITDA covenant requirement through November
15, 2001. The Company is currently negotiating a further waiver or amendment
with the lenders.

NOTE (7) - In September 2001, LTV completed the sale of substantially all of the
assets and liabilities of its metal buildings systems business, VP Buildings,
resulting in a loss of $125 million subject to final working capital
adjustments. Net proceeds of $106 million were used to paydown the
debtor-in-possession facilities.

NOTE (8) - The Company sold the assets of LTV Steel Mining Company, an idled ore
mining operation in Minnesota for $25 million in cash and the assumption by the
purchasers of environmental and certain other liabilities. The sale was approved
by the Court on October 23, 2001 and completed on October 29, 2001. As a
result of this sale, LTVs third quarter 2001 results include an adjustment to
recognize the change in the fair value of LTV Steel Mining property, plant and
equipment and the corresponding adjustments to other shutdown accruals resulting
in a net gain of $8 million.

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NOTE (9)- Pursuant to SOP 90-7, provisions for gains and losses resulting from
the reorganization and restructuring of the business are reported in the
Consolidated Statement of Operations separately as reorganization and
restructuring items. Amounts were recorded as follows (in millions):

|                                                                         |                                                                          |   |                    |     |             |   |     |     | 
|------------------------------------------------------------------------ | ------------------------------------------------------------------------ | - | ------------------ | --- | ----------- | - | --- | --- | 
|                                                                         |                                                                          |   | September 30, 2001
|                                                                         |                                                                          |   |                   
|                                                                         |                                                                          |   | Three months       |     | Nine months
|                                                                         |                                                                          |   | ended              |     | ended      
|                                                                         |                                                                          |   |                    |     |            
|Sale of tin mill facilities                                              |                                                                          | $ |                   |     |             | $ | 39  |    
|Sale of VP Buildings                                                     |                                                                          |   | 125                |     |             |   | 125 |    
|Rejection of executory contracts and abandonment of
capitalized software |                                                                          |   | 4                  |     |             |   | 63  |    
|LTV Steel Mining shutdown                                                |                                                                          |   | (12                | )   |             |   | (5  | )  
|Salaried employee termination costs                                      |                                                                          |   |                   |     |             |   | 6   |    
|Chapter 11 administrative expenses, including professional fees          |                                                                          |   | 9                  |     |             |   | 37  |    
|Interest income                                                          |                                                                          |   |                   |     |             |   | (2  | )  
|                                                                         |                                                                          |   |                    |     |             |   |     |    
|                                                                         | Net gains (losses) resulting from reorganization
and restructuring items |   | $                  | 126 |             |   | $   | 263 | 
|                                                                         |                                                                          |   |                    |     |             |   |     |    

NOTE (10)- All of LTVs existing subsidiaries, including Copperweld and Welded
Tube, and future domestic wholly owned subsidiaries of LTV (other than certain
unrestricted subsidiaries and special purpose subsidiaries established for
working capital facilities) fully and unconditionally, jointly and severally
guarantee LTVs obligation to pay principal, premium, if any, and interest with
respect to the 11.75% Senior Notes due October 2009, the 8.2% Senior Notes due
September 2007 and the Secured Facility.

The following supplemental condensed consolidating financial statements of
The LTV Corporation present (in millions): balance sheets as of September 30,
2001 and December 31, 2000; statements of operations for the three months and
nine months ended September 30, 2001 and 2000; and statements of cash flows for
the nine months ended September 30, 2001 and 2000. The LTV Corporation (Parent),
the Guarantors and Non-Guarantor Subsidiaries investments in subsidiaries are
accounted for using the equity method. Necessary elimination entries have been
made to consolidate the Parent and all of its subsidiaries.

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Condensed Consolidating Balance Sheet
(in millions)

|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |       |       | 
|------------------------------------------------------- | ------------------------- | ------------------------------------------ | ----- | ------------------ | ----- | --------- | ----- | ------------ | ----- | ------------ | --- | ------------- | --- | - | ------ | - | ------ | - | ----- | ----- | ----- | 
|                                                        |                           |                                            |       | September 30, 2001
|                                                        |                           |                                            |       |                   
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     | Non-Guarantor |     |   |        |   |        |   |       |      
|                                                        |                           |                                            |       | Parent             |       | Guarantor |       | Subsidiaries |       | Eliminations |     | Consolidated 
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |              
|Cash and cash equivalents                               |                           | $                                          | 48    |                    |       | $         | 14    |              |       | $            | 4   |               |     | $ |       |   |        | $ | 66    |      
|Receivables                                             |                           |                                            |      |                    |       |           | 345   |              |       |              | 45  |               |     |   |       |   |        |   | 390   |      
|Inventories                                             |                           |                                            |      |                    |       |           | 667   |              |       |              | 28  |               |     |   |       |   |        |   | 695   |      
|Other current assets                                    |                           |                                            | 14    |                    |       |           | 13    |              |       |              | 2   |               |     |   |       |   |        |   | 29    |      
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|                                                        | Total current assets      |                                            |       | 62                 |       |           |       | 1,039        |       |              |     | 79            |     |   |        |  |        |   |       | 1,180 |      
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|Intercompany, net                                       |                           |                                            | 1,224 |                    |       |           | 820   |              |       |              | (39 | )             |     |   | (2,005 | ) |        |   |      |      
|Goodwill and other intangibles                          |                           |                                            |      |                    |       |           | 228   |              |       |              | 2   |               |     |   |       |   |        |   | 230   |      
|Investments and other noncurrent assets                 |                           |                                            | (217  | )                  |       |           | 199   |              |       |              | 9   |               |     |   | 182    |   |        |   | 173   |      
|Property, plant and equipment, net                      |                           |                                            |      |                    |       |           | 2,926 |              |       |              | 96  |               |     |   |       |   |        |   | 3,022 |      
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|                                                        |                           | Total assets                               |       | $                  | 1,069 |           |       | $            | 5,212 |              |     | $             | 147 |   |        | $ | (1,823 | ) |       | $     | 4,605 | 
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|Accounts payable and accrued liabilities                |                           | $                                          | 9     |                    |       | $         | 267   |              |       | $            | 33  |               |     | $ |       |   |        | $ | 309   |      
|Secured debt in default                                 |                           |                                            |      |                    |       |           | 558   |              |       |              |    |               |     |   |       |   |        |   | 558   |      
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|                                                        | Total current liabilities |                                            |       | 9                  |       |           |       | 825          |       |              |     | 33            |     |   |        |  |        |   |       | 867   |      
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|Postemployment health care and other insurance benefits |                           |                                            |      |                    |       |           | 35    |              |       |              | 10  |               |     |   |       |   |        |   | 45    |      
|Pension benefits                                        |                           |                                            |      |                    |       |           | 1     |              |       |              | 3   |               |     |   |       |   |        |   | 4     |      
|Other                                                   |                           |                                            |      |                    |       |           | 12    |              |       |              | 24  |               |     |   |       |   |        |   | 36    |      
|Liabilities subject to compromise                       |                           |                                            | 33    |                    |       |           | 3,773 |              |       |              |    |               |     |   |       |   |        |   | 3,806 |      
|Liabilities subject to compromise  Intercompany        |                           |                                            | 1,180 |                    |       |           | 825   |              |       |              |    |               |     |   | (2,005 | ) |        |   |      |      
|Shareholders equity                                    |                           |                                            | (153  | )                  |       |           | (259  | )            |       |              | 77  |               |     |   | 182    |   |        |   | (153  | )    
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      
|                                                        |                           | Total liabilities and shareholders equity |       | $                  | 1,069 |           |       | $            | 5,212 |              |     | $             | 147 |   |        | $ | (1,823 | ) |       | $     | 4,605 | 
|                                                        |                           |                                            |       |                    |       |           |       |              |       |              |     |               |     |   |        |   |        |   |       |      

|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |       |       | 
|------------------------------------------------------- | ------------------------- | ------------------------------------------ | ----- | ----------------- | ----- | --------- | ----- | ------------ | ----- | ------------ | ---- | ------------- | --- | - | ------ | - | ------ | - | ----- | ----- | ----- | 
|                                                        |                           |                                            |       | December 31, 2000
|                                                        |                           |                                            |       |                  
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      | Non-Guarantor |     |   |        |   |        |   |       |      
|                                                        |                           |                                            |       | Parent            |       | Guarantor |       | Subsidiaries |       | Eliminations |      | Consolidated 
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |              
|Cash and cash equivalents                               |                           | $                                          | 39    |                   |       | $         | 17    |              |       | $            | 12   |               |     | $ |       |   |        | $ | 68    |      
|Receivables                                             |                           |                                            | 3     |                   |       |           | 72    |              |       |              | 420  |               |     |   |       |   |        |   | 495   |      
|Inventories                                             |                           |                                            |      |                   |       |           | 125   |              |       |              | 846  |               |     |   |       |   |        |   | 971   |      
|Other current assets                                    |                           |                                            | 1     |                   |       |           | 21    |              |       |              | 3    |               |     |   |       |   |        |   | 25    |      
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      
|                                                        | Total current assets      |                                            |       | 43                |       |           |       | 235          |       |              |      | 1,281         |     |   |        |  |        |   |       | 1,559 |      
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      
|Intercompany, net                                       |                           |                                            | 1,307 |                   |       |           | 900   |              |       |              | (754 | )             |     |   | (1,453 | ) |        |   |      |      
|Goodwill and other intangibles                          |                           |                                            |      |                   |       |           | 334   |              |       |              | 4    |               |     |   |       |   |        |   | 338   |      
|Investments and other noncurrent assets                 |                           |                                            | 449   |                   |       |           | 221   |              |       |              | 12   |               |     |   | (470   | ) |        |   | 212   |      
|Property, plant and equipment, net                      |                           |                                            |      |                   |       |           | 3,145 |              |       |              | 104  |               |     |   |       |   |        |   | 3,249 |      
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      
|                                                        |                           | Total assets                               |       | $                 | 1,799 |           |       | $            | 4,835 |              |      | $             | 647 |   |        | $ | (1,923 | ) |       | $     | 5,358 | 
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      
|Accounts payable and accrued liabilities                |                           | $                                          |      |                   |       | $         | 103   |              |       | $            | 51   |               |     | $ |       |   |        | $ | 154   |      
|Secured debt in default                                 |                           |                                            |      |                   |       |           | 197   |              |       |              | 470  |               |     |   |       |   |        |   | 667   |      
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      
|                                                        | Total current liabilities |                                            |       |                  |       |           |       | 300          |       |              |      | 521           |     |   |        |  |        |   |       | 821   |      
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      
|Postemployment health care and other insurance benefits |                           |                                            |      |                   |       |           | 35    |              |       |              | 11   |               |     |   |       |   |        |   | 46    |      
|Pension benefits                                        |                           |                                            |      |                   |       |           | 1     |              |       |              | 3    |               |     |   |       |   |        |   | 4     |      
|Other                                                   |                           |                                            |      |                   |       |           | 27    |              |       |              | 25   |               |     |   |       |   |        |   | 52    |      
|Liabilities subject to compromise                       |                           |                                            | 39    |                   |       |           | 3,819 |              |       |              |     |               |     |   |        |   |        |   | 3,858 |      
|Liabilities subject to compromise  Intercompany        |                           |                                            | 1,183 |                   |       |           | 270   |              |       |              |     |               |     |   | (1,453 | ) |        |   |      |      
|Shareholders equity                                    |                           |                                            | 577   |                   |       |           | 383   |              |       |              | 87   |               |     |   | (470   | ) |        |   | 577   |      
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      
|                                                        |                           | Total liabilities and shareholders equity |       | $                 | 1,799 |           |       | $            | 4,835 |              |      | $             | 647 |   |        | $ | (1,923 | ) |       | $     | 5,358 | 
|                                                        |                           |                                            |       |                   |       |           |       |              |       |              |      |               |     |   |        |   |        |   |       |      

12



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##### Table of Contents



Condensed Consolidating Statement of Operations
(in millions)

|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    |               |    |   |     |      |      |   |      |     |       |  
|------------------------------------- | -------------------------------------------------- | ----------------- | ---- | ------------------------------------- | ---- | --------- | ---- | ------------ | ----- | ------------ | -- | ------------- | -- | - | --- | ---- | ---- | - | ---- | --- | ----- | -
|                                      |                                                    |                   |      | Three Months Ended September 30, 2001
|                                      |                                                    |                   |      |                                      
|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    | Non-Guarantor |    |   |     |      |      |   |      |    
|                                      |                                                    |                   |      | Parent                                |      | Guarantor |      | Subsidiaries |       | Eliminations |    | Consolidated 
|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    |              
|Net sales                             |                                                    | $                 |     |                                       |      | $         | 777  |              |       | $            | 82 |               |    | $ | (12 | )    |      | $ | 847  |    
|Costs and expenses:                   |                                                    |                   |      |                                       |      |           |      |              |       |              |    |               |    |   |     |      |      |   |      |    
|                                      | Cost of products sold                              |                   |      |                                      |      |           |      | 828          |       |              |    | 72            |    |   |     | (12  | )    |   |      | 888 |      
|                                      | Depreciation and amortization                      |                   |      |                                      |      |           |      | 70           |       |              |    | 3             |    |   |     |     |      |   |      | 73  |      
|                                      | Selling, general and administrative                |                   |      | 5                                     |      |           |      | 36           |       |              |    | 3             |    |   |     |     |      |   |      | 44  |      
|                                      | Results of affiliates operations                  |                   |      | 281                                   |      |           |      | (4           | )     |              |    |              |    |   |     | (277 | )    |   |      |    |      
|                                      | Net interest and other (income) expense            |                   |      | 6                                     |      |           |      | 10           |       |              |    | (2            | )  |   |     |     |      |   |      | 14  |      
|                                      | Reorganization and restructuring items             |                   |      | 9                                     |      |           |      | 117          |       |              |    |              |    |   |     |     |      |   |      | 126 |      
|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    |               |    |   |     |      |      |   |      |    
|                                      |                                                    | Total             |      |                                       | 301  |           |      |              | 1,057 |              |    |               | 76 |   |     |      | (289 | ) |      |     | 1,145 |  
|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    |               |    |   |     |      |      |   |      |    
|Income (loss) before income taxes     |                                                    |                   | (301 | )                                     |      |           | (280 | )            |       |              | 6  |               |    |   | 277 |      |      |   | (298 | )  
|Income tax provision                  |                                                    |                   | (2   | )                                     |      |           |     |              |       |              | (1 | )             |    |   |    |      |      |   | (3   | )  
|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    |               |    |   |     |      |      |   |      |    
|Income loss before extraordinary loss |                                                    |                   | (303 | )                                     |      |           | (280 | )            |       |              | 5  |               |    |   | 277 |      |      |   | (301 | )  
|                                      | Extraordinary loss on early extinguishment of debt |                   |      |                                      |      |           |      | (2           | )     |              |    |              |    |   |     |     |      |   |      | (2  | )    
|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    |               |    |   |     |      |      |   |      |    
|                                      |                                                    | Net income (loss) |      | $                                     | (303 | )         |      | $            | (282  | )            |    | $             | 5  |   |     | $    | 277  |   |      | $   | (303  | )
|                                      |                                                    |                   |      |                                       |      |           |      |              |       |              |    |               |    |   |     |      |      |   |      |    

|                                  |                                         |                   |     |                                       |     |           |       |              |       |              |     |               |     |   |      |      |      |   |       |       |       |  
|--------------------------------- | --------------------------------------- | ----------------- | --- | ------------------------------------- | --- | --------- | ----- | ------------ | ----- | ------------ | --- | ------------- | --- | - | ---- | ---- | ---- | - | ----- | ----- | ----- | -
|                                  |                                         |                   |     | Three Months Ended September 30, 2000
|                                  |                                         |                   |     |                                      
|                                  |                                         |                   |     |                                       |     |           |       |              |       |              |     | Non-Guarantor |     |   |      |      |      |   |       |      
|                                  |                                         |                   |     | Parent                                |     | Guarantor |       | Subsidiaries |       | Eliminations |     | Consolidated 
|                                  |                                         |                   |     |                                       |     |           |       |              |       |              |     |              
|Net sales                         |                                         | $                 |    |                                       |     | $         | 1,121 |              |       | $            | 926 |               |     | $ | (847 | )    |      | $ | 1,200 |      
|Costs and expenses:               |                                         |                   |     |                                       |     |           |       |              |       |              |     |               |     |   |      |      |      |   |       |      
|                                  | Cost of products sold                   |                   |     |                                      |     |           |       | 1,010        |       |              |     | 943           |     |   |      | (847 | )    |   |       | 1,106 |      
|                                  | Depreciation and amortization           |                   |     |                                      |     |           |       | 76           |       |              |     | 5             |     |   |      |     |      |   |       | 81    |      
|                                  | Selling, general and administrative     |                   |     | 4                                     |     |           |       | 53           |       |              |     | 4             |     |   |      |     |      |   |       | 61    |      
|                                  | Results of affiliates operations       |                   |     | 88                                    |     |           |       | 64           |       |              |     |              |     |   |      | (143 | )    |   |       | 9     |      
|                                  | Net interest and other (income) expense |                   |     | (16                                   | )   |           |       | 8            |       |              |     | 28            |     |   |      |     |      |   |       | 20    |      
|                                  |                                         |                   |     |                                       |     |           |       |              |       |              |     |               |     |   |      |      |      |   |       |      
|                                  |                                         | Total             |     |                                       | 76  |           |       |              | 1,211 |              |     |               | 980 |   |      |      | (990 | ) |       |       | 1,277 |  
|                                  |                                         |                   |     |                                       |     |           |       |              |       |              |     |               |     |   |      |      |      |   |       |      
|Income (loss) before income taxes |                                         |                   | (76 | )                                     |     |           | (90   | )            |       |              | (54 | )             |     |   | 143  |      |      |   | (77   | )    
|Income tax provision              |                                         |                   | (4  | )                                     |     |           |      |              |       |              | 1   |               |     |   |     |      |      |   | (3    | )    
|                                  |                                         |                   |     |                                       |     |           |       |              |       |              |     |               |     |   |      |      |      |   |       |      
|                                  |                                         | Net income (loss) |     | $                                     | (80 | )         |       | $            | (90   | )            |     | $             | (53 | ) |      | $    | 143  |   |       | $     | (80   | )
|                                  |                                         |                   |     |                                       |     |           |       |              |       |              |     |               |     |   |      |      |      |   |       |      

13



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##### Table of Contents



Condensed Consolidating Statement of Operations
(in millions)

|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     |               |     |   |     |      |      |   |       |       |       |  
|--------------------------------------- | -------------------------------------------------- | ----------------- | ---- | ------------------------------------ | ---- | --------- | ----- | ------------ | ----- | ------------ | --- | ------------- | --- | - | --- | ---- | ---- | - | ----- | ----- | ----- | -
|                                        |                                                    |                   |      | Nine Months Ended September 30, 2001
|                                        |                                                    |                   |      |                                     
|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     | Non-Guarantor |     |   |     |      |      |   |       |      
|                                        |                                                    |                   |      | Parent                               |      | Guarantor |       | Subsidiaries |       | Eliminations |     | Consolidated 
|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     |              
|Net sales                               |                                                    | $                 |     |                                      |      | $         | 2,554 |              |       | $            | 278 |               |     | $ | (37 | )    |      | $ | 2,795 |      
|Costs and expenses:                     |                                                    |                   |      |                                      |      |           |       |              |       |              |     |               |     |   |     |      |      |   |       |      
|                                        | Cost of products sold                              |                   |      |                                     |      |           |       | 2,658        |       |              |     | 244           |     |   |     | (37  | )    |   |       | 2,865 |      
|                                        | Depreciation and amortization                      |                   |      |                                     |      |           |       | 210          |       |              |     | 10            |     |   |     |     |      |   |       | 220   |      
|                                        | Selling, general and administrative                |                   |      | 19                                   |      |           |       | 118          |       |              |     | 11            |     |   |     |     |      |   |       | 148   |      
|                                        | Results of affiliates operations                  |                   |      | 688                                  |      |           |       |             |       |              |     |              |     |   |     | (686 | )    |   |       | 2     |      
|                                        | Net interest and other (income) expense            |                   |      |                                     |      |           |       | 25           |       |              |     | 10            |     |   |     |     |      |   |       | 35    |      
|                                        | Reorganization and restructuring items             |                   |      | 36                                   |      |           |       | 227          |       |              |     |              |     |   |     |     |      |   |       | 263   |      
|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     |               |     |   |     |      |      |   |       |      
|                                        |                                                    | Total             |      |                                      | 743  |           |       |              | 3,238 |              |     |               | 275 |   |     |      | (723 | ) |       |       | 3,533 |  
|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     |               |     |   |     |      |      |   |       |      
|Income (loss) before income taxes       |                                                    |                   | (743 | )                                    |      |           | (684  | )            |       |              | 3   |               |     |   | 686 |      |      |   | (738  | )    
|Income tax provision                    |                                                    |                   | (8   | )                                    |      |           |      |              |       |              | (1  | )             |     |   |    |      |      |   | (9    | )    
|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     |               |     |   |     |      |      |   |       |      
|Income (loss) before extraordinary loss |                                                    |                   | (751 | )                                    |      |           | (684  | )            |       |              | 2   |               |     |   | 686 |      |      |   | (747  | )    
|                                        | Extraordinary loss on early extinguishment of debt |                   |      |                                     |      |           |       | (2           | )     |              |     | (2            | )   |   |     |     |      |   |       | (4    | )    
|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     |               |     |   |     |      |      |   |       |      
|                                        |                                                    | Net income (loss) |      | $                                    | (751 | )         |       | $            | (686  | )            |     | $             |    |   |     | $    | 686  |   |       | $     | (751  | )
|                                        |                                                    |                   |      |                                      |      |           |       |              |       |              |     |               |     |   |     |      |      |   |       |      

|                                  |                                         |                   |      |                                      |      |           |       |              |       |              |       |               |       |   |        |        |        |   |       |       |       |  
|--------------------------------- | --------------------------------------- | ----------------- | ---- | ------------------------------------ | ---- | --------- | ----- | ------------ | ----- | ------------ | ----- | ------------- | ----- | - | ------ | ------ | ------ | - | ----- | ----- | ----- | -
|                                  |                                         |                   |      | Nine Months Ended September 30, 2000
|                                  |                                         |                   |      |                                     
|                                  |                                         |                   |      |                                      |      |           |       |              |       |              |       | Non-Guarantor |       |   |        |        |        |   |       |      
|                                  |                                         |                   |      | Parent                               |      | Guarantor |       | Subsidiaries |       | Eliminations |       | Consolidated 
|                                  |                                         |                   |      |                                      |      |           |       |              |       |              |       |              
|Net sales                         |                                         | $                 |     |                                      |      | $         | 3,579 |              |       | $            | 3,058 |               |       | $ | (2,772 | )      |        | $ | 3,865 |      
|Costs and expenses:               |                                         |                   |      |                                      |      |           |       |              |       |              |       |               |       |   |        |        |        |   |       |      
|                                  | Cost of products sold                   |                   |      |                                     |      |           |       | 3,247        |       |              |       | 3,018         |       |   |        | (2,772 | )      |   |       | 3,493 |      
|                                  | Depreciation and amortization           |                   |      |                                     |      |           |       | 235          |       |              |       | 10            |       |   |        |       |        |   |       | 245   |      
|                                  | Selling, general and administrative     |                   |      | 8                                    |      |           |       | 158          |       |              |       | 11            |       |   |        |       |        |   |       | 177   |      
|                                  | Results of affiliates operations       |                   |      | 316                                  |      |           |       | 77           |       |              |       |              |       |   |        | (468   | )      |   |       | (75   | )    
|                                  | Loss on write down of equity affiliate  |                   |      | 84                                   |      |           |       | 84           |       |              |       |              |       |   |        |       |        |   |       | 168   |      
|                                  | Net interest and other (income) expense |                   |      | (46                                  | )    |           |       | (23          | )     |              |       | 78            |       |   |        |       |        |   |       | 9     |      
|                                  | Special charges                         |                   |      |                                     |      |           |       | 207          |       |              |       |              |       |   |        |       |        |   |       | 207   |      
|                                  |                                         |                   |      |                                      |      |           |       |              |       |              |       |               |       |   |        |        |        |   |       |      
|                                  |                                         | Total             |      |                                      | 362  |           |       |              | 3,985 |              |       |               | 3,117 |   |        |        | (3,240 | ) |       |       | 4,224 |  
|                                  |                                         |                   |      |                                      |      |           |       |              |       |              |       |               |       |   |        |        |        |   |       |      
|Income (loss) before income taxes |                                         |                   | (362 | )                                    |      |           | (406  | )            |       |              | (59   | )             |       |   | 468    |        |        |   | (359  | )    
|Income tax provision              |                                         |                   | (6   | )                                    |      |           |      |              |       |              | (3    | )             |       |   |       |        |        |   | (9    | )    
|                                  |                                         |                   |      |                                      |      |           |       |              |       |              |       |               |       |   |        |        |        |   |       |      
|                                  |                                         | Net income (loss) |      | $                                    | (368 | )         |       | $            | (406  | )            |       | $             | (62   | ) |        | $      | 468    |   |       | $     | (368  | )
|                                  |                                         |                   |      |                                      |      |           |       |              |       |              |       |               |       |   |        |        |        |   |       |      

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Condensed Consolidating Cash Flows Statement
(in millions)

|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |      |      |  
|---------------------------------------------------- | ----------------------------------------------- | --------------------------------------------------- | --- | ------------------------------------ | --- | --------- | ---- | ------------ | --- | ------------ | --- | ------------- | ---- | - | - | - | - | - | -- | ---- | ---- | -
|                                                     |                                                 |                                                     |     | Nine Months Ended September 30, 2001
|                                                     |                                                 |                                                     |     |                                     
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     | Non-Guarantor |      |   |   |   |   |   |    |     
|                                                     |                                                 |                                                     |     | Parent                               |     | Guarantor |      | Subsidiaries |     | Eliminations |     | Consolidated 
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |              
|Cash provided by (used in) operating activities      |                                                 | $                                                   | (89 | )                                    |     | $         | (298 | )            |     | $            | 471 |               |      | $ |  |   |   | $ | 84 |     
|Investing activities:                                |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     
|                                                     | Capital expenditures                            |                                                     |     |                                     |     |           |      | (49          | )   |              |     | (9            | )    |   |   |  |   |   |    | (58  | )   
|                                                     | Investments in steel-related businesses         |                                                     |     |                                     |     |           |      | (13          | )   |              |     |              |      |   |   |  |   |   |    | (13  | )   
|                                                     | Proceeds from reorganization  sale of business |                                                     |     | 106                                  |     |           |      |             |     |              |     |              |      |   |   |  |   |   |    | 106  |     
|                                                     | Other                                           |                                                     |     |                                     |     |           |      | (7           | )   |              |     |              |      |   |   |  |   |   |    | (7   | )   
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     
|                                                     |                                                 | Net cash provided by (used in) investing activities |     |                                      | 106 |           |      |              | (69 | )            |     |               | (9   | ) |   |   |  |   |    |      | 28   |  
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     
|Financing activities:                                |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     
|                                                     | Net borrowings/(repayments)                     |                                                     |     |                                     |     |           |      | 364          |     |              |     | (470          | )    |   |   |  |   |   |    | (106 | )   
|                                                     | Deferred financing fees                         |                                                     |     | (8                                   | )   |           |      |             |     |              |     |              |      |   |   |  |   |   |    | (8   | )   
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     
|                                                     |                                                 | Net cash provided by (used in) financing activities |     |                                      | (8  | )         |      |              | 364 |              |     |               | (470 | ) |   |   |  |   |    |      | (114 | )
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     
|Net increase (decrease) in cash and cash equivalents |                                                 |                                                     | 9   |                                      |     |           | (3   | )            |     |              | (8  | )             |      |   |  |   |   |   | (2 | )   
|Cash and cash equivalents at beginning of period     |                                                 |                                                     | 39  |                                      |     |           | 17   |              |     |              | 12  |               |      |   |  |   |   |   | 68 |     
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     
|Cash and cash equivalents at end of period           |                                                 | $                                                   | 48  |                                      |     | $         | 14   |              |     | $            | 4   |               |      | $ |  |   |   | $ | 66 |     
|                                                     |                                                 |                                                     |     |                                      |     |           |      |              |     |              |     |               |      |   |   |   |   |   |    |     

|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |      |      |  
|---------------------------------------------------- | ---------------------------------------- | --------------------------------------------------- | -- | ------ | --- | --------- | --- | ------------------------------------ | ---- | ------------ | --- | ------------- | --- | - | - | - | - | - | --- | ---- | ---- | -
|                                                     |                                          |                                                     |    |        |     |           |     | Nine Months Ended September 30, 2000 |      |              |     |              
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |              
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     | Non-Guarantor |     |   |   |   |   |   |     |     
|                                                     |                                          |                                                     |    | Parent |     | Guarantor |     | Subsidiaries                         |      | Eliminations |     | Consolidated 
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |              
|Cash provided by (used in) operating activities      |                                          | $                                                   | 25 |        |     | $         | 123 |                                      |      | $            | (68 | )             |     | $ |  |   |   | $ | 80  |     
|Investing activities:                                |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     
|                                                     | Capital expenditures                     |                                                     |    |       |     |           |     | (179                                 | )    |              |     | (9            | )   |   |   |  |   |   |     | (188 | )   
|                                                     | Investments in affiliates                |                                                     |    |       |     |           |     | (23                                  | )    |              |     |              |     |   |   |  |   |   |     | (23  | )   
|                                                     | Proceeds from sale of business           |                                                     |    |       |     |           |     | 31                                   |      |              |     |              |     |   |   |  |   |   |     | 31   |     
|                                                     | Proceeds from sale / leaseback and other |                                                     |    |       |     |           |     | 49                                   |      |              |     | (22           | )   |   |   |  |   |   |     | 27   |     
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     
|                                                     |                                          | Net cash provided by (used in) investing activities |    |        |    |           |     |                                      | (122 | )            |     |               | (31 | ) |   |   |  |   |     |      | (153 | )
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     
|Financing activities:                                |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     
|                                                     | Net borrowings/(repayments)              |                                                     |    |       |     |           |     | (34                                  | )    |              |     | 95            |     |   |   |  |   |   |     | 61   |     
|                                                     | Dividends paid and other                 |                                                     |    | (15    | )   |           |     |                                     |      |              |     |              |     |   |   |  |   |   |     | (15  | )   
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     
|                                                     |                                          | Net cash provided by (used in) financing activities |    |        | (15 | )         |     |                                      | (34  | )            |     |               | 95  |   |   |   |  |   |     |      | 46   |  
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     
|Net increase (decrease) in cash and cash equivalents |                                          |                                                     | 10 |        |     |           | (33 | )                                    |      |              | (4  | )             |     |   |  |   |   |   | (27 | )   
|Cash and cash equivalents at beginning of period     |                                          |                                                     | 9  |        |     |           | 40  |                                      |      |              | 23  |               |     |   |  |   |   |   | 72  |     
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     
|Cash and cash equivalents at end of period           |                                          | $                                                   | 19 |        |     | $         | 7   |                                      |      | $            | 19  |               |     | $ |  |   |   | $ | 45  |     
|                                                     |                                          |                                                     |    |        |     |           |     |                                      |      |              |     |               |     |   |   |   |   |   |     |     

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

RESULTS OF OPERATIONSSummary results for the three months and nine months ended September 30, 2001
and 2000 for each segment are listed below ($ in millions):

|                                                  |              |              |       |                                  |     |                   |       |                     |     |      |      |      |  |      |     |   |  |   |     |   |  |   |     |   |  | 
|------------------------------------------------- | ------------ | ------------ | ----- | -------------------------------- | --- | ----------------- | ----- | ------------------- | --- | ---- | ---- | ---- |  | ---- | --- | - |  | - | --- | - |  | - | --- | - |  | 
|                                                  |              |              |       | Three Months Ended September 30,
|                                                  |              |              |       |                                 
|                                                  |              |              |       | Integrated Steel                 |     | Metal Fabrication |       | Corporate and Other
|                                                  |              |              |       |                                  |     |                   |       |                    
|                                                  |              |              |       | 2001                             |     | 2000              |       | 2001                |     | 2000 |      | 2001 |  | 2000
|                                                  |              |              |       |                                  |     |                   |       |                     |     |      |      |      |  |     
|Sales  Trade                                     |              | $            | 521   |                                  |     | $                 | 777   |                     |     | $    | 326  |      |  | $    | 423 |   |  | $ |    |   |  | $ |    |  
|                                                  | Intersegment |              |       | 35                               |     |                   |       | 36                  |     |      |      |     |  |      |     |  |  |   |     |  |  |   |     |  | 
|Cost of products sold                             |              |              | 636   |                                  |     |                   | 773   |                     |     |      | 287  |      |  |      | 369 |   |  |   |    |   |  |   |    |  
|Selling, general and administrative               |              |              | 15    |                                  |     |                   | 25    |                     |     |      | 23   |      |  |      | 27  |   |  |   | 6   |   |  |   | 9   |  
|Results of affiliates operations                 |              |              |      |                                  |     |                   |      |                     |     |      |     |      |  |      | (1  | ) |  |   |    |   |  |   | 10  |  
|Net interest expense                              |              |              |      |                                  |     |                   |      |                     |     |      |     |      |  |      |    |   |  |   | 14  |   |  |   | 24  |  
|Other (income) expense                            |              |              | 1     |                                  |     |                   | (3    | )                   |     |      |     |      |  |      |    |   |  |   | (1  | ) |  |   | (1  | )
|Income (loss) before income taxes
and items below |              |              | (153  | )                                |     |                   | (48   | )                   |     |      | 2    |      |  |      | 13  |   |  |   | (21 | ) |  |   | (42 | )
|Reorganization and restructuring items            |              |              | 8     |                                  |     |                   |      |                     |     |      | (125 | )    |  |      |    |   |  |   | (9  | ) |  |   |    |  
|Tons in thousands:                                |              |              |       |                                  |     |                   |       |                     |     |      |      |      |  |      |     |   |  |   |     |   |  |   |     |  
|Steel shipments  Trade                           |              |              | 1,349 |                                  |     |                   | 1,688 |                     |     |      | 391  |      |  |      | 448 |   |  |   |     |   |  |   |     |  
|                                                  |              | Intersegment |       |                                  | 141 |                   |       |                     | 111 |      |      |      |  |      |     |   |  |   |     |   |  |   |     |   |  | 
|Raw steel production                              |              |              | 1,668 |                                  |     |                   | 2,053 |                     |     |      |      |      |  |      |     |   |  |   |     |   |  |   |     |  
|Operating rate                                    |              |              | 77    | %                                |     |                   | 94    | %                   |     |      |      |      |  |      |     |   |  |   |     |   |  |   |     |  

|                                                  |              |              |       |                                 |     |                   |       |                     |     |      |       |      |  |      |       |   |  |   |     |   |  |   |      |   |  | 
|------------------------------------------------- | ------------ | ------------ | ----- | ------------------------------- | --- | ----------------- | ----- | ------------------- | --- | ---- | ----- | ---- |  | ---- | ----- | - |  | - | --- | - |  | - | ---- | - |  | 
|                                                  |              |              |       | Nine Months Ended September 30,
|                                                  |              |              |       |                                
|                                                  |              |              |       | Integrated Steel                |     | Metal Fabrication |       | Corporate and Other
|                                                  |              |              |       |                                 |     |                   |       |                    
|                                                  |              |              |       | 2001                            |     | 2000              |       | 2001                |     | 2000 |       | 2001 |  | 2000
|                                                  |              |              |       |                                 |     |                   |       |                     |     |      |       |      |  |     
|Sales  Trade                                     |              | $            | 1,753 |                                 |     | $                 | 2,562 |                     |     | $    | 1,042 |      |  | $    | 1,303 |   |  | $ |    |   |  | $ |     |  
|                                                  | Intersegment |              |       | 120                             |     |                   |       | 105                 |     |      |       |     |  |      |       |  |  |   |     |  |  |   |      |  | 
|Cost of products sold                             |              |              | 2,070 |                                 |     |                   | 2,473 |                     |     |      | 915   |      |  |      | 1,125 |   |  |   |    |   |  |   |     |  
|Selling, general and administrative               |              |              | 54    |                                 |     |                   | 75    |                     |     |      | 74    |      |  |      | 79    |   |  |   | 20  |   |  |   | 23   |  
|Results of affiliates operations                 |              |              | 2     |                                 |     |                   |      |                     |     |      |      |      |  |      | (2    | ) |  |   |    |   |  |   | 11   |  
|Write down of equity affiliate                    |              |              |      |                                 |     |                   |      |                     |     |      |      |      |  |      |      |   |  |   |    |   |  |   | 84   |  
|Net interest expense                              |              |              |      |                                 |     |                   |      |                     |     |      |      |      |  |      |      |   |  |   | 45  |   |  |   | 73   |  
|Other (income) expense                            |              |              |      |                                 |     |                   | (56   | )                   |     |      | (1    | )    |  |      | (5    | ) |  |   | (9  | ) |  |   | (3   | )
|Income (loss) before income taxes
and items below |              |              | (427  | )                               |     |                   | (25   | )                   |     |      | 10    |      |  |      | 61    |   |  |   | (58 | ) |  |   | (188 | )
|Special charges                                   |              |              |      |                                 |     |                   | (205  | )                   |     |      |      |      |  |      | (2    | ) |  |   |    |   |  |   |     |  
|Reorganization and restructuring items            |              |              | (102  | )                               |     |                   |      |                     |     |      | (126  | )    |  |      |      |   |  |   | (35 | ) |  |   |     |  
|Tons in thousands:                                |              |              |       |                                 |     |                   |       |                     |     |      |       |      |  |      |       |   |  |   |     |   |  |   |      |  
|Steel shipments  Trade                           |              |              | 4,386 |                                 |     |                   | 5,415 |                     |     |      | 1,231 |      |  |      | 1,441 |   |  |   |     |   |  |   |      |  
|                                                  |              | Intersegment |       |                                 | 485 |                   |       |                     | 302 |      |       |      |  |      |       |   |  |   |     |   |  |   |      |   |  | 
|Raw steel production                              |              |              | 5,437 |                                 |     |                   | 6,468 |                     |     |      |       |      |  |      |       |   |  |   |     |   |  |   |      |  
|Operating rate                                    |              |              | 84    | %                               |     |                   | 100   | %                   |     |      |       |      |  |      |       |   |  |   |     |   |  |   |      |  

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Integrated Steel

Sales in the third quarter 2001 decreased due to 10% lower average selling
prices on shipments that were 17% lower than the prior year quarter. In the
first nine months of 2001 sales decreased due to 15% lower shipments and 10%
lower average steel selling prices compared to the prior year period.

Cost of products sold as a percentage of sales increased in the 2001
periods primarily as a result of the impact of lower production volume on fixed
costs and lower selling prices in the 2001 periods.

Raw steel production at the Companys steelmaking facilities decreased in
the 2001 periods, primarily due to reduced operating levels as a result of lower
demand and the idling of the Direct Hot Charge Complex (DHCC) and C-1 blast
furnace of the West Side of the Cleveland Works in June 2001.

The Company follows American Iron and Steel Institute (AISI) standards in
calculating its maximum operating rate based on 95% of blast furnace capacity,
which recognizes the average effect of blast furnace relines. Steel production
may be supplemented with purchases of semifinished steel when demand for the
Companys products exceeds production capability.

Selling, general and administrative expenses in the 2001 periods were lower
than the comparable 2000 periods expenses primarily due to lower spending on
employment costs and professional fees. Results of affiliates operations in the
nine months ended September 30, 2001 reflects the write off of the Companys
investment in MetalSite L. P.

Included in other income and expense in the nine months ended September 30,
2000 are gains of $53 million from the demutualization of Metropolitan Life
Insurance Company and the sale of LTVs investment in Presque Isle Corporation,
a limestone quarry facility.

Metal Fabrication

Sales in the 2001 periods decreased primarily due to lower shipments in the
tubular products and metal buildings markets. Shipments decreased by 57,000 tons
in the third quarter and 210,000 tons in the nine months ended September 30,
2001 over the same periods in the prior year. The sales decline was also due to
lower average selling prices in the tubular products markets. Additionally,
metal buildings sales were 33% lower and 25% lower for the three months and nine
months ended September 30, 2001, respectively, compared to the prior year
periods. The metal buildings business, VP Buildings, was sold on September 19,
2001 and results are reflected through that date.

Cost of products sold as a percentage of sales increased in the 2001
periods primarily due to lower average selling prices and lower shipments.

Selling, general and administrative expenses were about equal to the prior
year periods.

Corporate and Other

Interest expense was lower in the 2001 periods due to the suspension of
interest expense on the Companys undersecured debt during the bankruptcy
proceedings of $15 million and $44 million for the third quarter and nine months
ended September 30, 2001, respectively.

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Results of the Trico Steel and CAL joint ventures were included in the
results of affiliates operations in the 2000 periods. Trico Steel was written
off effective in the fourth quarter of 2000 because the Company determined that
any recovery of its investment would be remote. The CAL investment was written
down by $84 million to its fair value and sold in June 2000.

Income Taxes

The cash taxes consist of state and foreign taxes and federal taxes
including a less than 80% owned subsidiary that was sold on June 30, 2000. In
all periods presented, the Company has recorded full valuation allowances to
offset the non-cash tax benefit arising from the losses. At this time, the
Company has concluded that the realization of deferred tax assets is not deemed
to be more likely than not and, consequently, established a valuation reserve
for all of its net deferred tax assets.

The Companys ability to reduce its future income tax payments through the
use of net operating loss carryforwards could be significantly limited on an
annual basis if the Company were to undergo an ownership change within the
meaning of Section 382 of the Internal Revenue Code of 1986. For the purpose of
preserving LTVs ability to utilize its net operating loss carryforwards,
Article Ninth of LTVs Restated Certificate of Incorporation prohibits, with
certain limited exceptions, any unapproved acquisition of common stock that
would cause the ownership interest percentage of the acquirer or any other
person to increase to 4.5% or above. However, an ownership change may occur
when the Company emerges from Chapter 11 and would limit the annual use of net
operating loss carryforwards after emergence from bankruptcy.

LIQUIDITY AND FINANCIAL RESOURCES

The Companys sources of liquidity include cash and cash equivalents, cash
from operations, and amounts available under its debtor-in-possession facility.
Interest expense for the first nine months of 2001 was $45 million. The accrual
and payment of interest on the undersecured debt has been suspended. The
contractual amount of interest not accrued at September 30, 2001 was $44
million. The Companys total liquidity, which includes the amount available
under the $482 million commitment under the Revolving Credit Facility, and cash
at September 30, 2001 was $ 85 million.

For the nine months ended September 30, 2001, cash provided by operating
activities amounted to $84 million. Major uses of cash during 2001 were $58
million in capital expenditures. Net proceeds of $106 million from the sale of VP Buildings were
used to paydown the debtor-in-possession facilities, coinciding with a scheduled
September 30, 2001 commitment reduction of $100 million under the Revolving
Credit Facility. The Working Capital Facility was terminated following its paydown
from the net proceeds of the VP Buildings sale.

Since filing under Chapter 11, no dividends have been paid, no shares have
been repurchased and the new debtor-in-possession facilities prohibit the
payment of dividends on all preferred and common stock.

Under the Companys debtor-in-possession credit facility, liquidity will be
impacted by the uncertainty of the bankruptcy proceedings, including
restructuring and settlement of prepetition

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obligations, the terms of the debtor-in-possession credit facility and the
ability to obtain other financing. See Note 6 in the Notes to Consolidated
Financial Statements for a complete description of the debtor-in-possession
credit facility and the related commitment reductions throughout the term of the
credit facility. Liquidity also may be impacted by, among other things, the market prices and demand for the Companys products, the availability and amount of trade credit and other business and operational issues. As a result of these uncertainties, there can be no assurance
existing or future sources of liquidity will be adequate. In
September 2001, the Company submitted an application through local banks for a
$250 million loan under the Federal Emergency Steel Loan Guarantee Program. The
Federal Emergency Steel Loan Guarantee Board must approve the loan application
and an approval and timely funding of the loan are essential to the short-term and long-term liquidity requirements of the Company. Additionally, the Company must negotiate amended terms of its Revolving Credit Facility with its debtor-in-possession lenders that accommodate the Companys liquidity requirements and the terms of the guaranteed loan. In the event the Company is
unable to find adequate sources of financing, the Company may not have adequate liquidity to continue the integrated steel operations.

The Company expects that it will not meet the consolidated EBITDA covenant
under its debtor-in -possession credit facility as of October 31, 2001. The
lenders have agreed to waive the EBITDA covenant requirement
through November 15, 2001. The Company is currently negotiating a further waiver
or amendment with the lenders. If a waiver or amendment is not obtained, the
Companys liquidity may be reduced.

OTHER ITEMS

On July 9, 2001 the Company negotiated a modified labor agreement with the
United Steelworkers of America (USWA) effective as of August 1, 2001 and
expiring on February 1, 2006. The agreement is expected to provide significant
cost reductions through deferral of wage increases, flexible work rules, cost
savings in active and retiree health care, and reduced employment levels. The
agreement also permits LTV to borrow from the Voluntary Employee Beneficiary
Association trust fund to pay health and life insurance benefits of USWA
retirees from July 1, 2001 through the expiration of the modified labor
agreement. LTVs Board of Directors and the Bankruptcy Court approved the
agreement in July 2001 and it was ratified by USWA employees in August 2001. The
following conditions must be met prior to October 31, 2001 for the agreement to
remain effective: receipt by the Company of unrestricted availability of $250
million in addition to the current lending arrangements with final maturity no
earlier than December 31, 2005 under the Emergency Steel Loan Guarantee Program;
approval by the Pension Benefit Guaranty Corporation of new pension funding
arrangements to allow the Company to reduce its annual pension funding
obligations between 2001 and 2007 to levels that can be supported by the
Companys cash flows based on reasonable forecasts; and an agreement by the
Company and USWA on a program concerning the Companys Cleveland Works West Side
facility. The Company anticipates that these conditions will not be met before
October 31, 2001 and also anticipates an extension of the October 31, 2001
commitment date with the USWA.

In April 2001, the Company announced its intention to permanently close the
DHCC and C-1 blast furnace of the West Side of the Cleveland Works. The DHCC,
which has an annual raw steel capacity of about 2 million tons, consists of a
basic oxygen furnace steelmaking shop, a continuous slab caster and hot strip
mill. The facilities employ about 800 hourly and 100 salaried people.
Approximately half of the affected employees will be eligible to retire. Under
the modified labor agreement, the DHCC and C-1 blast furnace will remain on hot
idle until October 31, 2001 while studies are

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conducted for possible future reuse of the facility. No shutdown reserves have
been accrued at September 30, 2001 because an agreement has not been reached
with the USWA.

In July 2001, LTVs largest customer, General Motors, announced its
intention not to renew its supply agreement with the Company after expiration of
the current agreement at the end of 2001. General Motors represented 9% of the
total revenues of LTV in 2000. The Company anticipates replacing the tonnage
with increased shipments to existing customers and selling to new customers.

LTV recorded special charges of $409 million in 2000 for the closure of the
LTV Steel Mining iron ore operation and a Cleveland tubular producing facility,
and the impairment and write-down of an electroplating line and tin mill
facilities. Spending against the reserve was $22 million in the first nine
months of 2001 with a balance remaining of $16 million at September 30, 2001. An
additional $7 million provision was recorded as part of the reorganization and
restructuring items in June 2001. In October 2001, LTV completed the previously
announced sale of the assets of LTV Steel Mining Company for $25 million in cash
and the assumption of environmental and certain other liabilities by the
purchasers that resulted in a gain of $8 million.

In the fourth quarter of 1998, a reserve of $55 million was recorded for
the shutdown of the cold roll finishing operations in the No. 2 finishing
department at the Cleveland Works, recognition of an asset impairment at an
electrogalvanizing joint venture, the shutdown of an electric-weld pipe line and
a salaried workforce reduction. During the first nine months of 2001, $1 million
was charged to this reserve with a balance remaining at September 30, 2001 of $1
million.

LTV established reserves for the cost of the closure and clean-up at the
Pittsburgh coke plant in the third quarter of 1997. The Company charged $3
million against this reserve in 2001 with a balance remaining of $20 million at
September 30, 2001.

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 141, Business
Combinations and No. 142, Goodwill and Other Intangible Assets. SFAS No. 141
addresses financial accounting and reporting for business combinations and
supersedes APB No. 16 Business Combinations and SFAS No. 38 Accounting for
Preacquisition Contingencies of Purchased Enterprises. SFAS No. 142 provides
that goodwill and indefinite lived intangible assets are no longer amortized but
are reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that do not have an indefinite life will
continue to be amortized over their useful lives (but with no maximum life). The
Company is required to adopt these statements effective January 1, 2002.
Amortization of goodwill totaled $10 million for the year 2000.

In July 2001, the FASB issued SFAS No. 143 Accounting for Asset Retirement
Obligations that records the fair value of the liability for closure and
removal costs associated with the legal obligations upon retirement or removal
of any tangible long-lived assets. The initial recognition of the liability will
be capitalized as part of the asset cost and depreciated over its estimated
useful life. The Company is required to adopt this statement effective January
1, 2003.

In August 2001, the FASB issued SFAS No. 144 Accounting for the Impairment
or Disposal of Long-Lived Assets that supersedes SFAS No. 121 Accounting for
the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. The Company is required to adopt

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this statement effective January 1, 2002. The effect of adoption of all these
new pronouncements has not yet been determined.

ENVIRONMENTAL LIABILITIES AND OTHER CONTINGENCIES

LTV is subject to changing and increasingly stringent environmental laws
and regulations concerning air emissions, water discharges and waste disposal,
as well as remediation activities that involve the clean-up of environmental
media such as soils and groundwater. As a consequence, the Company has incurred,
and will continue to incur, substantial capital expenditures and operating and
maintenance expenses in order to comply with such requirements. Additionally, if
any of the Companys facilities are unable to meet required environmental
standards or laws, those operations could be temporarily or permanently closed.
If, in the future, the Company were required to investigate and remediate any
contamination at plant sites where hazardous wastes have been used pursuant to
the Resource Conservation Recovery Act, the Company could be required to record
additional liabilities. The Company is unable to make meaningful estimates of
the cost of these potential liabilities at this time, but they could have a
material adverse effect on LTVs interim or annual operating results and
liquidity. Management does not believe that there would be a material adverse
effect on LTVs financial position. In addition, certain environmental laws such
as Superfund can impose a liability for the entire cost of clean-up of
contaminated sites upon any of the current and former site owners or operators
or parties who sent waste to these sites, regardless of fault or the lawfulness
of the original disposal activity. Permits and environmental controls are also
required at LTVs facilities to reduce air and water pollution from certain
operations; and these permits are subject to modification, renewal and
revocation by issuing authorities. Additional permits may be required, or more
onerous conditions may be imposed in our existing permits as a result of
increases in production or modifications to certain of our facilities.

The Company is unable to make a meaningful estimate of the amount or range
of possible losses that could result from an unfavorable outcome in the
following environmental and litigation matters: approximately 1,750 asbestosis
Ohio worker compensation claims filed since August 1, 1999 and a notice of
violation issued in 1995 by the Indiana Department of Environmental Management
alleging releases of contaminants onto and beneath the ground at the Indiana
Harbor Works. The Companys results of operations in one or more interim or
annual periods could be materially affected by unfavorable results in one or
both of these matters. Management believes that in the Companys current
financial condition, the outcome of these matters could have a material adverse
effect upon the consolidated cash flows or financial position of the Company.

The Company is the subject of various other threatened or pending legal
actions, contingencies and commitments in the normal course of conducting its
business. The Company provides for costs related to these matters when a loss is
probable and the amount is reasonably estimable. The effect of the outcome of
these matters on the Companys future results of operations and liquidity cannot
be predicted because any such effect depends on future results of operations and
the amount and timing of the resolution of such matters. While it is not
possible to predict with certainty, management believes that the ultimate
resolution of such matters will not have a material adverse effect on the
consolidated financial statements of the Company. Due to the Chapter 11 filings,
litigation relating to prepetition claims against the Debtors is stayed;
however, certain claims by the government or governmental agencies seeking
equitable or other non-equitable relief against the Debtors are not subject to
the automatic stay.

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The Company spent approximately $5 million and $13 million for
environmental clean-up and related demolition costs at operating and idled
facilities for the nine months ended September 30, 2001 and 2000, respectively.
At September 30, 2001, the Company has a recorded liability of $112 million for
known and identifiable environmental and related demolition costs. As the
Company becomes aware of additional matters or obtains more information, it may
be required to record additional liabilities for environmental remediation,
investigation and clean-up of contamination. The Company also spent
approximately $2 million and $10 million in the first nine months of 2001 and
2000 for environmental compliance-related capital projects and expects it will
be required to spend an average of approximately $12 million annually in capital
expenditures during the next five years to meet environmental standards.

OUTLOOK

Demand for LTVs and
other domestic integrated steel producers products has weakened as evidenced
by lower shipments and lower average selling prices for the
nine months ended September 30, 2001. The Integrated Steel segment is currently
pursuing aggressive cost reductions to be able to return to profitability. The
potential loss of General Motors as a customer could have a significant impact
on the Companys business, however, the Company anticipates replacing the
potential lost tonnage through increased shipments with existing customers and
selling to new customers. The Metal Fabrication segment is experiencing lower
shipment levels and softened demand due to the slower overall economic
conditions in 2001. Results in this segment will also be lower due to the sale
of VP Buildings in September 2001.

This report includes forward-looking statements. Our use of words such as
outlook, anticipate, believe, estimate, expect and similar words is
intended to identify these statements as forward-looking. These statements
represent our current judgment on what the future holds. While the Company
believes them to be reasonable, a number of important factors could cause actual
results to differ materially from those projected. These factors include
relatively small changes in market price or market demand; changes in domestic
capacity; changes in raw material costs; increased operating costs; loss of
business from major customers, especially for high value-added product;
availability of post petition financing including the Emergency Steel Loan Guarantee;
negative market and credit impact from the Chapter 11 filings; unanticipated
expenses; substantial changes in financial markets; labor unrest or the
inability to satisfy the conditions to adoption of the Modified Labor Agreement;
unfair foreign competition; major equipment failure; unanticipated results in
pending legal proceedings; or the timing and cost of completion of divestitures
or shutdown of facilities. Due to material uncertainties, it is not possible to
predict the length of time LTV will operate under the protection of Chapter 11,
the outcome of the Chapter 11 proceedings in general, whether the Company will
continue to operate under its current organizational structure or as a going
concern, or the effect of the proceedings on the business of LTV or its
subsidiaries.

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PART IIOTHER INFORMATION

Item 1. Legal Proceedings.

Bankruptcy Filings

On December 29, 2000, LTV and 48 of its direct and indirect subsidiaries
filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court for the Northern District of Ohio, Eastern Division, as
described in LTVs periodic reports previously filed with the Securities and
Exchange Commission.

United States Trade Cases

2001
Cases

Section 201 Investigation

On June 22, 2001, President Bush requested the International Trade
Commission (ITC) to initiate an investigation under Section 201 of the Trade
Act of 1974 as described in LTVs periodic reports previously filed with the
SEC. In September and early October 2001, the ITC held hearings in the Section
201 investigation. On October 22, 2001, the ITC determined that the domestic
flat-rolled steel industry suffered injury from foreign steel imports. In early
November, the ITC is expected to hold remedy hearings. The ITC is required to
render a remedy recommendation to the President no later than December 19, 2001,
and the President has until February 19, 2002 to select a remedy.

Cold Rolled Steel Cases

On September 28, 2001, LTV Steel joined with the other major domestic
integrated steel producers in filing antidumping and countervailing duty
petitions against several countries. Specifically, the petitioners filed
antidumping petitions against Argentina, Australia, Belgium, Brazil, China,
France, Germany, India, Japan, Korea, the Netherlands, New Zealand, Russia,
South Africa, Spain, Sweden, Taiwan, Thailand, Turkey and Venezuela. The
antidumping petitions allege margins ranging from 7.93% to 142.78%. The
petitioners filed countervailing duty petitions against Argentina, Brazil,
France and Korea. The countervailing duty petitions allege margins ranging from
5.56% to 40.79%.

2000 Cases

Hot Rolled Steel Cases

In November 2000, LTV Steel joined with other domestic producers, the
United Steel Workers of America and the Independent Steel Workers Union in
filing antidumping and countervailing duty petitions against several countries
as described in LTVs periodic reports previously filed with the SEC. As
previously described in December 2000, the ITC rendered an affirmative
preliminary injury determination on behalf of the domestic industry. In
September 2001, the U. S. Department of

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Commerce issued final antidumping margins ranging from 0.45% to 243.46% on
imports of hot rolled steel from the relevant countries. The ITCs final injury
determination is expected in November 2001.

LTV Steel is continuing to monitor the surge in unfairly traded imports and
its effect on operations, and anticipates that additional unfair trade cases may
be filed or other relief requested.

Environmental Proceedings

Indiana Harbor Works. LTV previously reported on the U. S. Environmental
Protection Agencys (EPA) identification of alleged violations of the Clean
Air Act at the Indiana Harbor Works as a result of a multi-media environmental
inspection in June and July 2000. The EPA has now issued a Notice of Violation
relating to those alleged violations that involve the sinter plant, H-3 and H-4
blast furnaces and the basic oxygen shop. LTV has accepted the EPAs offer to
confer on the alleged violations.

Other

As described in LTVs periodic reports previously filed with the SEC, in
1991 Inland Steel Company filed an action against LTV Steel and another domestic
steel producer alleging patent infringement. As previously reported,
the United States Patent Office, upon reexamination of the Inland
patent, rejected the claims of the patent, and the United States Patent Office Board
of Appeals affirmed that determination. On September 19, 2001, the United States Court of Appeals
for the Federal Circuit entered a judgment affirming the decision of the Board of Appeals in a further
appeal by Inland. Inland has the right to file a petition for reconsideration and/or
petition for rehearing en banc or to file a petition for certiorari to the
Supreme Court.

Since August 1, 1999, approximately 1,750 asbestosis Ohio workers
compensation claims have been filed against LTV Steel, the majority of which
were filed on behalf of retired employees who worked at facilities that were
closed in the early 1980s. LTV anticipates that additional claims may be filed.

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Item 5. Other Information.

Required Approval for Certain
Purchases of Common Stock

For the purpose of preserving LTVs ability to utilize certain favorable
tax attributes, Article Ninth of LTVs Restated Certificate of Incorporation
prohibits, with certain limited exceptions, any unapproved acquisition of common
stock that would cause the ownership interest percentage of the acquirer or any
other person to increase to 4.5% or above. A persons ownership interest
percentage for purposes of Article Ninth is determined by reference to specified
federal income tax principles, including attribution of shares from certain
related parties, deemed exercise of rights to acquire stock and aggregation of
shares purchased by persons acting in concert. PURCHASES OF COMMON STOCK FROM
ANY PERSON OTHER THAN THE COMPANY ARE SUBJECT TO THE LIMITATIONS IMPOSED BY
ARTICLE NINTH, AND ANY UNAPPROVED PURCHASE IN EXCESS OF THE AMOUNTS PERMITTED BY
ARTICLE NINTH WILL BE VOID AB INITIO. A PROSPECTIVE PURCHASER OF COMMON STOCK
WHO BELIEVES THAT IT MAY BE SUBJECT TO THE LIMITATIONS IMPOSED BY ARTICLE NINTH
SHOULD CONSULT WITH THEIR ADVISORS OR LTV IN ADVANCE OF ACQUIRING SUCH
SECURITIES TO DETERMINE IF ADVANCE APPROVAL MUST BE OBTAINED FROM LTVS BOARD OF
DIRECTORS.

LTVs Board of Directors was required by Article Ninth of LTVs Restated
Certificate of Incorporation to consider during 1999 whether to waive the
transfer restrictions in Article Ninth with respect to all future transfers of
securities. At its December 1999 meeting, the Board of Directors, after
considering all relevant factors, determined not to waive Article Ninth at that
time.

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Item 6. Exhibits and Reports on 8-K.

(a)  Exhibits

|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10)-(56)* |  | Employment Terms dated September 4, 2001 between The LTV
Corporation and Mr. Thomas L. Garrett                                                                                                                                                                                                                                                                                                                                  
|          
|(10)-(57)  |  | First Amendment and Limited Waiver, dated as of August 22, 2001,
to the Revolving Credit and Guaranty Agreement, dated as of March
20, 2001 (the Revolving Credit Agreement), by and among The LTV
Corporation, the Guarantors named in the Revolving Credit
Agreement, The Chase Manhattan Bank, individually and as agent,
Abbey National Treasury Services PLC, individually and as
co-agent, and the lenders party thereto



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|* |  | Management contract or compensatory plan or arrangement.
|- |  | --------------------------------------------------------

(b)  Reports on Form 8-K

| |  |                                                                                                                                                                                                                
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Current Report on Form 8-K, filed with the Commission (File No. 1-4368) on
August 20, 2001, filing the summary financial information of The LTV
Corporation for the month and year-to-date ended July 31, 2001.
| |  |                                                                                                                                                                                                                
| |  | Current Report on Form 8-K, filed with the Commission (File No. 1-4368) on
September 20, 2001, filing the summary financial information of The LTV for
the month and year-to-date ended August 31, 2001.       

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

| |  |                                
| |  | -------------------------------
|
| |  | THE LTV CORPORATION(Registrant)

| |  |    |  |                                                                                                                      
| |  | -- |  | ---------------------------------------------------------------------------------------------------------------------
|
| |  | By |  | /s/ Thomas L.
Garrett, Jr.                                                                                           
| |  |    |  | Thomas L.
Garrett, Jr.
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)

|      |  |                  | 
|----- |  | ---------------- | 
|     
|     
|Date: |  | October 30, 2001
|      |  |                 

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