<PAGE>

                                    FORM 10-Q
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                Quarterly Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934


                 For the three month period ended March 31, 2002
                      Commission File Number: 333-90709-04




                REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
                   (DEBTOR-IN-POSSESSION AS OF APRIL 2, 2001)
             (Exact name of registrant as specified in its charter)




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


         3770 EMBASSY PARKWAY
        AKRON, OHIO  44333-8367                          (330) 670-3000
----------------------------------------         ------------------------------
(Address of principal executive offices)         (Registrant's telephone number)




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.
                                    X  Yes     No
                                   ---     ---




Number of shares outstanding of common stock as of May 20, 2002: AS OF MAY 20,
2002, THERE WERE 740 CLASS A UNITS OF MEMBERS' INTEREST, 1,000 CLASS B UNITS OF
MEMBERS' INTEREST AND 30,000 CLASS C UNITS OF MEMBERS' INTEREST OUTSTANDING.


                                       1
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)

                                TABLE OF CONTENTS



                         PART I - FINANCIAL INFORMATION
                         ------------------------------


<TABLE>
<S>             <C>                                                                                             <C>
Item 1.         Unaudited Financial Statements

                Consolidated Statements of Operations for the Three Months Ended March 31, 2002 and 2001        3

                Consolidated Balance Sheets as of March 31, 2002 and December
                31, 2001                                                                                        4-5

                Consolidated Statements of Members' Interest for the Three Months Ended March 31, 2002
                and the Year Ended December 31, 2001                                                            6

                Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2002 and 2001        7

                Notes to Consolidated Financial Statements                                                      8-17

Item 2.         Management's Discussion and Analysis of Financial Condition and Results of Operations           17-21

Item 3.         Quantitative and Qualitative Disclosures About Market Risk                                      21


                           PART II - OTHER INFORMATION
                           ---------------------------


Item 1.         Legal Proceedings                                                                               21

Item 2.         Changes in Securities                                                                           21

Item 3.         Defaults Upon Senior Securities                                                                 21

Item 4.         Submission of Matters to a Vote of Security Holders                                             21

Item 5.         Other Information                                                                               21

Item 6.         Exhibits and Reports on Form 8-K                                                                21

                Signatures                                                                                      23
</TABLE>


                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1 - UNAUDITED FINANCIAL STATEMENTS

       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
               For the Three Months Ended March 31, 2002 and 2001
                            (In thousands of dollars)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED           THREE MONTHS ENDED
                                                                      MARCH 31, 2002                MARCH 31, 2001
                                                                  ------------------------     -------------------------
<S>                                                                             <C>                           <C>
Net sales                                                                       $ 256,236                     $ 266,511
Cost of goods sold                                                                244,330                       291,229
                                                                  ------------------------     -------------------------

Gross profit (loss)                                                                11,906                       (24,718)

Selling, general and administrative expense                                         9,999                        12,419

Monitoring fees                                                                         -                         1,000

Depreciation and amortization expense                                              14,170                        14,440

Special charges:

       Workforce reduction charges (Note 5)                                         3,909                        10,117

       Restructuring charges (Note 6)                                                 853                           858

Loss (gain) on sale of assets                                                           -                        (2,298)

Other (income) expense, net                                                        (1,024)                          181
                                                                  ------------------------     -------------------------

Operating loss                                                                    (16,001)                      (61,435)

Interest expense, net (excludes contractual interest of $16,553
       million for the three months ended March 31, 2002)                           7,839                        29,996

Reorganization items - expense, net (Note 4)                                          654                             -
                                                                  ------------------------     -------------------------

Loss before income taxes                                                          (24,494)                      (91,431)

Provision for income taxes                                                             31                           207
                                                                  ------------------------     -------------------------

Net loss                                                                        $ (24,525)                    $ (91,638)
                                                                  ========================     =========================
</TABLE>


The accompanying notes are an integral part of these statements.


                                       3
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2002 AND DECEMBER 31, 2001
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                     MARCH 31,            DECEMBER 31,
                                                                       2002                   2001
                                                                --------------------   --------------------
<S>                                                                         <C>                    <C>
ASSETS

Current assets:
        Cash and cash equivalents                                      $      2,507           $      5,745
        Accounts receivable, less allowances of $13,649 and
          $17,234, respectively                                             130,908                100,768
        Inventories (Note 3)                                                181,066                207,864
        Assets held for sale (Note 9)                                         7,807                  9,013
        Prepaid expenses and other current assets                             9,971                 14,139
                                                                --------------------   --------------------

Total current assets                                                        332,259                337,529

Property, plant and equipment:
        Land and improvements                                                14,356                 14,356
        Buildings and improvements                                           35,218                 35,218
        Machinery and equipment                                             722,814                723,387
        Construction-in-progress                                              6,378                  6,142
                                                                --------------------   --------------------

Total property, plant and equipment                                         778,766                779,103

Accumulated depreciation                                                   (167,127)              (153,774)
                                                                --------------------   --------------------

Net property, plant and equipment                                           611,639                625,329

Assets held for sale (Note 9)                                                 2,286                  2,355

Intangible assets, net of accumulated amortization
        of $21,353 and $24,453, respectively (Note 2)                        53,833                 67,133

Goodwill net of accumulated amortization
        of $5,468 (Note 2)                                                   10,933

Other assets                                                                 17,308                 17,213
                                                                --------------------   --------------------

Total assets                                                           $  1,028,258           $  1,049,559
                                                                ====================   ====================
</TABLE>


The accompanying notes are an integral part of these statements.


                                       4
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2002 AND DECEMBER 31, 2001
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                          MARCH 31,            DECEMBER 31,
                                                                             2002                  2001
                                                                      -------------------   -------------------
<S>                                                                              <C>                   <C>
LIABILITIES AND MEMBERS' INTEREST

Liabilities not subject to compromise:

     Current liabilities:
           Current maturities of long-term debt                              $     3,600           $     3,600
           Revolving credit facility                                             324,230               326,016
           Accounts payable                                                       36,836                45,350
           Accrued interest                                                        4,413                 3,031
           Accrued compensation and benefits                                      36,881                37,737
           Accrued environmental liabilities                                         237                   230
           Other accrued liabilities                                              36,645                38,530
                                                                      -------------------   -------------------
     Total current liabilities                                                   442,842               454,494

     Other postretirement benefits                                                 3,427                 3,398
     Accrued environmental liabilities                                            16,258                16,311
     Other liabilities                                                             5,038                 7,278
                                                                      -------------------   -------------------
     Total liabilities not subject to compromise                                 467,565               481,481

Liabilities subject to compromise (Note 4)                                     1,256,360             1,239,210

                                                                      -------------------   -------------------
Total liabilities                                                              1,723,925             1,720,691
                                                                      -------------------   -------------------


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

Members' interest:
     Class B Units                                                              (643,240)             (618,715)
     Class C Units                                                                32,500                32,500
     Accumulated other comprehensive loss                                        (88,627)              (88,617)
                                                                      -------------------   -------------------
Total members' interest                                                         (699,367)             (674,832)
                                                                      -------------------   -------------------

Total liabilities and members' interest                                      $ 1,028,258           $ 1,049,559
                                                                      ===================   ===================
</TABLE>


     The accompanying notes are an integral part of these statements.


                                       5
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                  CONSOLIDATED STATEMENTS OF MEMBERS' INTEREST
 FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND THE YEAR ENDED DECEMBER 31, 2001
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                          Accumulated
                                                                             Other               Total
                                       Class B          Class C          Comprehensive         Members'          Comprehensive
                                        Units            Units           Income (Loss)         Interest          Income (Loss)
                                   ----------------  --------------    -------------------  ----------------  --------------------
<S>                                 <C>               <C>                   <C>              <C>                    <C>
 Balance, January 1, 2001               $ (435,689)       $ 32,125              $  (2,649)       $ (406,213)
  Accrual of preferred return                 (471)            375                      -               (96)
  Net loss                                (182,555)              -                      -          (182,555)          $  (182,555)
  Other comprehensive income:
    Foreign currency translation
     adjustment                                  -               -                   (861)             (861)                 (861)
    Minimum pension liability
     adjustment                                  -               -                (85,107)          (85,107)              (85,107)
                                   -------------------------------------------------------------------------  --------------------
 Balance, December 31, 2001               (618,715)         32,500                (88,617)         (674,832)          $  (268,523)
                                   -------------------------------------------------------------------------  ====================
  Net loss                                 (24,525)              -                      -           (24,525)          $   (24,525)
  Other comprehensive income:
    Foreign currency translation
     adjustment                                  -               -                    (10)              (10)                  (10)

                                   -------------------------------------------------------------------------  --------------------
 Balance, March 31, 2002                $ (643,240)       $ 32,500              $ (88,627)       $ (699,367)          $   (24,535)
                                   =========================================================================  ====================
</TABLE>


The accompanying notes are an integral part of these statements.


                                       6
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED         THREE MONTHS ENDED
                                                                                MARCH 31, 2002             MARCH 31, 2001
                                                                            -----------------------    -----------------------
<S>                                                                                      <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                        $      (24,525)            $      (91,638)
    Adjustments to reconcile net cash used
        in operating activities:
    Restructuring Charges                                                                      853                        858
    (Gain)/Loss on sale of fixed assets                                                          -                     (2,298)
    Depreciation and amortization                                                           14,170                     14,440
    Accretion of original issue discount                                                         -                        693
    Amortization of deferred financing cost                                                  1,552                      1,038
    Reorganization items                                                                       654                          -
    Changes in operating assets and liabilities:
        Increase in accounts receivable                                                    (30,140)                   (23,420)
        Decrease in inventories                                                             26,798                     61,089
        Decrease in prepaid assets                                                           4,168                      4,427
        Increase (decrease) in accounts payable                                             (7,683)                    20,308
        Increase in accrued compensation and benefits                                        5,108                      3,365
        Increase in defined benefit pension obligations                                      8,863                      4,645
        Increase in other postretirement benefits                                            2,972                      3,485
        Increase (decrease) in accrued environmental liabilities                               (46)                       279
        Decrease in other current liabilities                                               (5,494)                    16,203
     Other                                                                                   2,729                      2,935
                                                                            -----------------------    -----------------------
NET CASH USED IN OPERATING ACTIVITIES                                                          (21)                    16,409
                                                                            -----------------------    -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                                      (567)                      (835)
    Disposition of property, plant and equipment                                                 -                      3,991
                                                                            -----------------------    -----------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                           (567)                     3,156
                                                                            -----------------------    -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from long-term debt                                                                 -                      2,000
    Net (payments)/proceeds under revolving credit facilities                               (1,787)                    13,396
    Repayments of long-term debt                                                                 -                       (514)
    Redemption of class A members' interest                                                      -                       (100)
    Payment of preferred return                                                                  -                        (73)
                                                                            -----------------------    -----------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                         (1,787)                    14,709
                                                                            -----------------------    -----------------------
Effect of exchange rate changes on cash                                                        (10)                      (573)
                                                                            -----------------------    -----------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        (2,385)                     1,295
Cash and cash equivalents - beginning of period                                              5,745                      1,795
                                                                            -----------------------    -----------------------
Cash and cash equivalents - end of period                                           $        3,360             $        3,090
                                                                            =======================    =======================

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                              $        4,648             $       41,769
                                                                            =======================    =======================
Cash paid for income taxes                                                          $           16             $           47
                                                                            =======================    =======================
</TABLE>


The accompanying notes are an integral part of these statements.


                                       7
<PAGE>


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (In thousands of dollars, except as noted)
                                   (Unaudited)

1.  NATURE OF OPERATIONS, ORGANIZATION AND OTHER RELATED INFORMATION

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

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

On April 2, 2001 ("Petition Date"), Republic Technologies International, LLC,
and its immediate parent, Republic Technologies International Holdings, LLC, and
its subsidiaries, Bliss & Laughlin, LLC and RTI Capital Corp. (collectively,
"Debtors"), filed voluntary petitions for reorganization under Chapter 11
("Chapter 11") of the Federal Bankruptcy Code ("Bankruptcy Code") in the United
States Bankruptcy Court in the Northern District of Ohio, Eastern Division
("Court"). The Company's Canadian subsidiary, Canadian Drawn Steel Company,
Inc., and its subsidiary Nimishillen & Tuscarawas, LLC in the United States were
not included in the filing. The Company is managing its business subsequent to
the Petition Date as debtor-in-possession. The Debtors attributed the need to
reorganize to extremely difficult market conditions that have made it impossible
for them to meet their financial obligations. The industry-wide market
conditions, the Company's high level of indebtedness following the Combination,
and an overall softening of the U. S. economy had substantially diminished the
Company's liquidity, adversely impacted operations, and undermined its ability
to implement strategic business initiatives in the short term.

Under Chapter 11 proceedings, actions by creditors to collect claims in
existence at the filing date ("prepetition") are stayed ("deferred"), absent
specific Court authorization to pay such claims, while the Company continues to
manage the business as debtor-in-possession. The Company received approval from
the Court to pay or otherwise honor certain of its prepetition obligations,
including employee wages and certain employee benefits. 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 and other agreements that could be rejected during the Chapter 11
proceedings.

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

The Company has received approval from the Bankruptcy Court to extend the
deadline for filing its reorganization plan to June 28, 2002.

As a result of the Chapter 11 filings, Events of Default, as defined in the
related debt agreements, have occurred with respect to all of the Company's
secured and unsecured debt. Subsequent to the Petition Date, the secured debt
has been classified as a current liability and the undersecured and unsecured
debt will be classified as liabilities subject to compromise (see Note 4).


                                       8
<PAGE>
On April 3, 2001, the Company entered into a Debtor-in-Possession Revolving
Credit Agreement ("DIP Credit Agreement") with Fleet Capital Corporation
("Fleet Capital") and other lenders who are parties thereto to provide secured
debtor-in-possession financing to the Company. The DIP Credit Agreement
contains certain restrictive covenants which, among other things, restrict the
Company's ability to incur additional indebtedness or guarantee the obligations
of others, change its line of business, merge, consolidate and acquire or sell
assets or stock, pay dividends, or prepay or amend the notes or any of its
subordinated indebtedness. The Company is also required to maintain minimum
cumulative EBITDA as defined in the DIP Credit Agreement and limit its net
capital expenditures. During 2001, the Company was in violation of certain
restrictive covenants requiring it enter into a series of amendments to the
agreement. On January 11, 2002, the Company continued to be in default of the
minimum cumulative EBITDA, as defined, covenant, and the minimum liquidity
covenants. Accordingly, the Company entered into a second forbearance agreement
with the lenders under a third amendment to the DIP Credit Agreement. The
second forbearance agreement restricts the lenders ability to exercise their
remedies under the DIP Credit Agreement for certain defaults through May 31,
2002. As a result of this amendment, the Company was granted temporary
increases in maximum borrowing limits, an amendment to the minimum liquidity
covenant, a new minimum sales covenant, and continuation of the 2% interest
penalty applied to all borrowings. Current maximum borrowings under the DIP
Credit Agreement are as follows: $340 million from January 11, 2002 to January
31, 2002; $345 million from February 1, 2002 to March 28, 2002; $342.5 million
from March 29, 2002 to April 30, 2002; and $337 million thereafter. The
Company's net availability on its revolving credit facility at May 16, 2002 was
$14.0 million.

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

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

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

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

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

On April 24, 2002, the Company announced that it had signed a non-binding
letter of intent to sell a substantial portion of its assets to RTI Acquisition
Corporation (RAC), a new company formed by KPS Special Situations Fund, L.P.
and Pegasus Partners II L.P.  On May 6, 2002, Pegasus withdrew from the
proposed transaction. KPS Special Situations Fund secured a replacement
investment partner, the Hunt Investment Group, L.P. of Dallas, Texas, to
proceed with the acquisition. The Company signed a letter of intent with the
new equity partners on May 17, 2002. The equity partners have an agreement in
principle with the Company's existing bank group to finance the transaction and
to permit the sale to be completed. RAC now has concluded significant
agreements concerning the transaction with the Company, the Company's bank
group, and the Company's hourly employees as represented by the United Steel
Workers of America.

The non-binding letter of intent is subject to higher and better offers, and on
May 17, 2002 the Company filed a motion in the U.S. Bankruptcy Court to
formalize a procedure for reviewing this and other purchase offers. If the
bankruptcy court grants the motion, other companies will have an opportunity to
submit bids through a court-approved bidding process in accordance with Section
363 of the Bankruptcy Code.

There can no assurance that the bankruptcy court will approve the sale or that
the transaction contemplated by the letter of intent will be consummated.

The accompanying consolidated financial statements have been prepared on a going
concern basis of accounting and do not reflect any adjustments that might result
if the Company is unable to continue as a going concern. The Company's recurring
losses and negative cash flows from operations, current liabilities in excess of
current assets and negative Members' interest raise substantial doubt about the
Company's ability to continue as a going concern. While management continues to
work on its plan of reorganization and intends to submit a plan for
reorganization to the Bankruptcy Court, it is also pursuing a sale of a
substantial portion of the Company's assets. The ability of the Company to
continue as a going concern and appropriateness of using the going concern basis
is dependent upon, among other things, (i) the Company's ability to comply with
debtor-in-possession financing agreements, (ii) submission and confirmation of a
plan of reorganization under the Bankruptcy Code, (iii)


                                       9
<PAGE>


the Company's ability to achieve profitable  operations after such confirmation,
and (iv) the Company's  ability to generate  sufficient  cash from operations to
meet its  obligations.  No  adjustment  to the carrying  value of the  Company's
assets has been made to reflect the proposed terms of the  transaction  referred
to above due to the  uncertainty  regarding the ultimate  terms,  probability of
completion,  and potential for competing offers. If the transaction is completed
based on the proposed  terms a  significant  portion of the  carrying  amount of
long-lived assets included in the transaction would not be recovered.

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

2.  BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements contain results for Republic
Technologies International Holdings, LLC and its subsidiaries for the three
months ended March 31, 2002. These consolidated statements are unaudited.
Certain information and footnote disclosures normally prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
Although management believes that all adjustments, including normal recurring
adjustments necessary for a fair presentation, have been made, interim periods
are not necessarily indicative of the results of operations for a full year. As
such, these financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31, 2001
included in the Company's Form 10-K, filed with the Securities and Exchange
Commission.

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany balances have been
eliminated in consolidation. Certain reclassifications have been made to prior
period financial statements to conform to current period presentation.

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

In July 2001 the FASB issued SFAS No. 141 "Business Combinations" and SFAS No.
142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and redefines the criteria for recording
intangibles separate from goodwill. SFAS No. 142 eliminates the amortization of
goodwill and certain intangible assets upon adoption and also requires an
initial goodwill impairment assessment by the end of the second quarter in the
year of adoption and annual impairment tests thereafter. The provisions of each
statement that apply to goodwill and intangible assets acquired prior to July
1, 2001 were adopted by the Company on January 1, 2002. The Company's recorded
intangible assets have been evaluated against the new criteria in SFAS No. 142
and resulted in intangible assets relating to the assembled workforce being
reclassified into goodwill amounting to $10.9 million, which will have the
impact of reducing amortization expense annually by $1.6 million. Management
has not completed the initial goodwill impairment assessment. Such impairment
review will likely result in future write-downs.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", that requires recognition of the fair value of liabilities
associated with the retirement of long-lived assets when a legal obligation to
incur such costs arises as a result of the acquisition, construction,
development and/or the normal operation of a long-lived asset. Upon recognition
of the liability, a corresponding asset is recorded and depreciated over the
remaining life of the long-lived asset. The Statement defines a legal obligation
as one that a party is required to settle as a result of an existing or enacted
law, statute, ordinance, or written or oral contract or by legal construction of
a contract under the doctrine of promissory estoppel. SFAS No. 143 is


                                       10
<PAGE>


effective for fiscal years  beginning  after  December 15, 2002. The Company has
not  completed  its  evaluation  of the  impact,  if any, of SFAS No. 143 on its
financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment or
Disposals of Long-Lived Assets". This statement establishes a single accounting
model for long-lived assets to be disposed of by sale and provides additional
implementation guidance for assets to be held and used and assets to be disposed
of other than by sale. This statement became effective for the Company on
January 1, 2002. There was no financial statement implication related to the
adoption of this Statement and the guidance will be applied on a prospective
basis.

On April 30, 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from
the Extinguishment of Debt," which required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item, net of related income tax effect. As a result, the criteria
in Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions" will
now be used to classify those gains and losses. SFAS No. 64, "Extinguishments of
Debt Made to Satisfy Sinking Fund Requirements" amended SFAS No. 4 and is no
longer necessary because SFAS No. 4 has been rescinded. SFAS No. 44, "Accounting
for Intangible Assets of Motor Carriers" was issued to establish accounting
requirements for the effects of transition to the provisions of the Motor
Carrier Act of 1980. Because the transition has been completed, SFAS No. 44 is
no longer necessary. SFAS No. 13, "Accounting for Leases" is amended to require
certain lease modifications that have economic effects similar to sale-leaseback
transactions to be accounted for in the same manner as sale-leaseback
transactions. SFAS No. 145 also makes technical corrections to existing
pronouncements. While these corrections are not substantive in nature, in some
instances, they may change accounting practice. Generally, SFAS No. 145 is
effective for transactions occurring after May 15, 2002. The Company expects no
financial statement implication related to the adoption of this Statement.

3.  INVENTORIES

The components of inventories are as follows:

                                             March 31, 2002    December 31, 2001
                                             --------------    -----------------

Raw materials                                   $  9,319            $ 11,352

Semi-finished and finished goods                 171,747             196,512
                                                --------            --------

Total                                           $181,066            $207,864
                                                ========            ========

At March 31, 2002 and December 31, 2001, inventories are net of market reserves
and obsolescence reserves aggregating $8.4 million and $10.1 million,
respectively.

4.  LIABILITIES SUBJECT TO COMPROMISE AND REORGANIZATION ITEMS

The accompanying consolidated balance sheet as of March 31, 2002 and December
31, 2001 segregates liabilities subject to compromise, such as unsecured claims,
in the amount of $1,256.4 million and $1,239.2 million, respectively, from
liabilities not subject to compromise and liabilities arising subsequent to the
Petition Date. These amounts represent the Company's best estimate of known or
potential claims to be resolved in connection with the Chapter 11 cases. Such
claims remain subject to future adjustments based on negotiations, actions of
the Bankruptcy Court, further development with respect to disputed claims,
future rejection of additional executor contracts or unexpired leases, and
determination as to the value of any collateral securing claims or other events.
Payment terms for these amounts, which are considered long-term liabilities at
this time, will be established in connection with the Chapter 11 cases. The
Company has received approval from the Bankruptcy Court to pay pre-petition and
post-petition employee wages, salaries, benefits, certain other employee
obligations, and certain critical venders. Liabilities subject to compromise at
March 31, 2002 and December 31, 2001 were as follows (in thousands):


                                       11
<PAGE>


                                             March 31, 2002   December 31, 2001
      Accounts payable                             $ 219,991           $ 219,160
      Accrued interest                                20,370              20,370
      Other postretirement benefits                  230,204             227,262
      Defined benefit pension obligations            208,743             199,879
      Accrued Compensation                             5,964                  --
      Other accrued expenses                          22,287              23,738
      Long term deferred payables                     36,424              36,424
      Long term debt                                 512,377             512,377
                                           ----------------- -------------------
      Total  (a)                                 $ 1,256,360         $ 1,239,210
                                           ================= ===================

(a)  Excludes a net intercompany payable in the amount of $5,853 to the
     Company's subsidiary, Nimishillen & Tuscarawas LLC, at March 31, 2002 and
     December 31, 2001 which is not included in the bankruptcy proceedings.

Reorganization items consist of expenses directly incurred or realized as a
result of the Chapter 11 cases and have been segregated from normal operations.
Reorganization expense included in the consolidated statement of operations for
the three months ended March 31, 2002 includes $654 thousand of professional
fees and administrative items.

5.   WORKFORCE REDUCTION CHARGES

The Master Collective Bargaining Agreement and settlement agreement
(collectively, the "Master CBA") covering all of the former Republic and BarTech
facilities with employees represented by the United Steel Workers of America
("USWA") requires Republic Technologies International, LLC to offer Early
Retirement Buyouts ("ERBs") to at least 1,000 employees and permits Republic
Technologies International, LLC to offer a Voluntary Severance Plan ("VSP"). The
purpose of these programs is to reduce the hourly workforce by a net reduction
of over 1,900 hourly employees over four years. These programs are substantially
voluntary in nature. Accordingly, the costs associated with these workforce
reductions are being recognized as the offers are accepted by the employees and
intended to be awarded by the Company. During the three months ended March 31,
2002 and 2001, there were 19 and 49 ERB's accepted, respectively, amounting to
$3.9 million and $10.1 million, respectively.

On January 24, 2002 the USWA ratified a Modified Labor Agreement ("MLA")
modifying the Master Collective Bargaining Agreement, effective January 1, 2002.
The MLA provides interim support designed to permit the Company to continue
operating at its current level while working to secure the financing necessary
to emerge from Bankruptcy.

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

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

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

6.   RESTRUCTURING CHARGES AND RESERVES

As an outcome of restructuring activities subsequent to the Combination, the
Company took several actions resulting in the need to record certain asset
impairments and restructuring reserves, including shutting down the Johnstown,
Pennsylvania melt shop facility, the Canton, Ohio 12" rolling mill facility, and
the Willimantic, Connecticut cold-finishing facility. During the three months
ended March 31, 2002 and 2001, the Company recorded restructuring charges of
$0.9 million and $0.9 million, respectively. The 2002 charge relates to
supplemental unemployment benefits payments, salary terminations, and the
related health insurance costs, while the 2001 charge was primarily related to
severance costs for administrative staff reductions.


                                       12
<PAGE>


The balances in the restructuring reserves at March 31, 2002 are comprised of
the following:


                        Labor &            Facility
                       Severance            Closure              Total
                                             Costs
                    ----------------    ----------------    -----------------

Johnstown                 $   5,501           $   6,410             $ 11,911
Willimantic                      18                 318                  336
Severance                     1,852                  --                1,852
                    ----------------    ----------------    -----------------
Total                     $   7,371           $   6,728             $ 14,099
                    ================    ================    =================

Approximately $1.4 million utilized by the Company related to the first
installment payment of the Johnstown labor settlement agreement. The activities
impacting the accruals for restructuring reserves during the year three months
ended March 31, 2002, are summarized in the table below:

                               Labor &           Facility
                              Severance          Closure            Total
                                                  Costs
                           ----------------   ---------------  -----------------

December 31, 2001                $   7,886         $   6,929           $ 14,815
    Provision                          853                --                853
    Amount utilized                (1,368)             (201)            (1,569)
                           ----------------   ---------------  -----------------
March 31, 2002                   $   7,371         $   6,728           $ 14,099
                           ================   ===============  =================


7.   CONDENSED COMBINED FINANCIAL STATEMENTS

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

STATEMENT OF OPERATIONS

                                                       THREE MONTHS
                                                           ENDED
                                                       MARCH 31,2002
                                                    ---------------------

Net sales                                                    $  247,260
Cost of goods sold                                              235,923
                                                    ---------------------
Gross profit                                                     11,337

Selling, general and administrative expense                       9,610
Depreciation and amortization expense                            14,036
Special charges:
         Workforce reduction charges                              4,755
Other (income) expense, net                                       (970)
                                                    ---------------------
Operating loss                                                 (16,094)
Interest expense, net                                             7,788
Reorganization items                                                654
                                                    ---------------------
Net loss                                                     $ (24,536)
                                                    =====================


                                       13
<PAGE>


BALANCE SHEET
<TABLE>
<CAPTION>
                                                                        MARCH 31, 2002    DECEMBER 31, 2001
                                                                        --------------    -----------------
<S>                                                                            <C>                  <C>
ASSETS
Current assets:
      Cash and cash equivalents                                           $      2,475          $     5,450
      Accounts receivable, less allowances of $13,544 and $16,449
               respectively                                                    125,533               96,675
      Accounts receivable with affiliates                                        6,142                7,406
      Inventories                                                              176,405              202,637
      Assets held for sale
                                                                                 7,807                9,013
      Prepaid expenses and other current assets                                  9,918               14,039
                                                                          ------------         ------------
      Total current assets                                                     328,280              335,220

Property, plant and equipment:
      Land and improvements                                                     13,757               13,758
      Buildings and improvements                                                32,789               32,789
      Machinery and equipment                                                  719,183              719,803
      Construction-in-progress                                                   5,006                4,722
                                                                          ------------         ------------
    Total property, plant and equipment                                        770,735              771,072
    Accumulated depreciation                                                  (164,336)            (151,115)
                                                                          ------------         ------------
    Net property, plant and equipment                                          606,399              619,957

Assets held for sale                                                             2,286                2,355
Intangible assets, net of accumulated amortization                              53,833               67,133
Goodwill                                                                        10,933
Investments in non-debtor subsidiaries                                          17,189               13,960
Other assets                                                                    12,106               12,158
                                                                          ---------------------------------
Total assets                                                               $ 1,031,026          $ 1,050,783
                                                                          =================================

LIABILITIES AND MEMBERS' INTEREST
Liabilities not subject to compromise:
Current liabilities:
      Revolving credit facility                                            $   324,230          $   326,017
      Long-term secured debt in default                                          3,600                3,600
      Accounts payable                                                          36,101               44,760
      Accounts payable with affiliates                                           1,702                1,317
      Accrued interest                                                           4,413                2,928
      Accrued compensation and benefits                                         36,065               37,128
      Accrued environmental liabilities                                            237                  230
      Other accrued liabilities                                                 36,869               41,714
                                                                          ------------         ------------
Total current liabilities                                                      443,217              457,694

Accrued environmental liabilities                                               16,258               16,311
Other liabilities                                                                5,005                4,359
                                                                          ------------         ------------
Total liabilities not subject to compromise                                    464,480               20,670

Liabilities subject to compromise                                            1,256,360            1,239,313
Liabilities subject to compromise with affiliates                                5,853                5,853
                                                                          ------------         ------------
Total liabilities                                                            1,726,693            1,723,530
                                                                          ------------         ------------

Members' interest                                                            (695,667)            (672,747)
                                                                          ---------------------------------
Total liabilities and members' interest                                    $ 1,031,026          $ 1,050,783
                                                                          =================================
</TABLE>


                                       14
<PAGE>


STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                    THREE MONTHS
                                                                                        ENDED
                                                                                    MARCH 31,2002
                                                                                    -------------
<S>                                                                                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                       $     (24,536)
    Adjustments to reconcile net cash used in operating activities:
    Depreciation and amortization
                                                                                           14,104
    Amortization of deferred financing cost
                                                                                            1,552
    Reorganization items
                                                                                              654
    Changes in operating assets and liabilities:
        Increase in accounts receivable
                                                                                         (29,208)
        Decrease in inventories                                                            26,232
        Decrease in other current assets                                                    4,121
        Decrease in accounts payable
                                                                                          (7,443)
        Increase in accrued compensation and benefits
                                                                                            4,901
        Increase in defined benefit pension obligations
                                                                                            8,863
        Increase in other postretirement benefits
                                                                                            2,943
        Decrease in accrued environmental liabilities
                                                                                             (46)
        Decrease in other current liabilities
                                                                                          (1,847)
        Other
                                                                                            (913)
                                                                           -----------------------
NET CASH USED IN OPERATING ACTIVITIES                                                       (623)
                                                                           -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                                    (567)
                                                                           -----------------------
NET CASH USED IN INVESTING ACTIVITIES                                                       (567)
                                                                           -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayments under revolving credit facilities
                                                                                          (1,785)
                                                                           -----------------------
NET CASH USED IN FINANCING ACTIVITIES                                                     (1,785)

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                 (2,975)
Cash and cash equivalents - beginning of period                                             5,450
                                                                           -----------------------
Cash and cash equivalents - end of period                                           $       2,475
                                                                           =======================

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                               $      4,564
                                                                           =======================
</TABLE>


                                       15
<PAGE>


8.   SEGMENT INFORMATION

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

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

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

Intersegment sales are made at an agreed upon transfer cost which is adjusted
quarterly and are eliminated in consolidation. Selling, general and
administrative and other costs are allocated 80% to hot-rolled and 20% to
cold-finished. Pension costs are allocated based on the amount of payroll
incurred by each segment.

<TABLE>
<CAPTION>
                                                               For the Three Months Ended March 31, 2002
                                              -----------------------------------------------------------------------------
                                                                                              Inter Segment
                                                                Cold-            Total        Elimination/
                                                Hot-Rolled    Finished          Segments         Other          Consolidated
<S>                                               <C>          <C>             <C>              <C>              <C>
Net sales                                         $233,368     $50,689         $ 284,057        $(27,821)        $ 256,236
Depreciation and amortization                       12,919       1,251            14,170               --           14,170

Segment profit (loss) (EBITDA, as defined)          11,666      (3,147)            8,519               --            8,519
Segment assets                                     907,891      107,375        1,015,266           12,992        1,028,258
Capital expenditures                                   567           --              567               --              567

                                                               For the Three Months Ended March 31, 2001
                                              -----------------------------------------------------------------------------
                                                                                              Inter Segment
                                                                Cold-            Total        Elimination/
                                                Hot-Rolled    Finished          Segments         Other          Consolidated

Net sales                                        $ 234,245      $59,313        $ 293,558       $(27,047)         $ 266,511
Depreciation and amortization                       13,181        1,259           14,440              --            14,440

Segment loss  (EBITDA, as defined)                (32,075)        (449)         (32,524)              --          (32,524)

Segment assets                                     990,129      129,277        1,119,406          18,540         1,137,946

Capital expenditures                                   783           52              835              --               835
</TABLE>


                                       16
<PAGE>


9.   DISCONTINUED OPERATIONS

In connection with its acquisition of Republic, the Company determined its
intent to sell its specialty steel division and accordingly, the accompanying
consolidated financial statements reflect that division as a discontinued
operation in accordance with Accounting Principles Board Opinion No. 30. An
estimate of the operating results of the specialty steels division during the
phase-out period from the acquisition date to the estimated ultimate disposition
date was made and included as a fair value adjustment as part of the allocation
of the Republic purchase price. The Company is currently in the process of
selling the remaining real estate and assets of the Specialty steels division,
and management anticipates the disposition to be completed during 2002.

Sales and related losses for the discontinued operations were as follows (net
loss on discontinued operations has been reflected in the Company's financial
statements as a reduction in the accrual for losses on the discontinued
operations that was provided as part of the estimated loss on disposition):

                                               Three Month's Ended March 31
                                                  2002               2001
                                           ------------------------------------
Net sales                                                           $6,324
                                                $4,936
Gross loss                                        (623)             (1,541)

Loss before income taxes                          (910)             (1,123)
Provision for income taxes                          --                  --
                                           ------------------------------------
Net loss                                        $ (910)            $(1,123)
                                           ====================================

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

                                         March 31, 2002      December 31, 2001
                                      --------------------  --------------------

Assets held for sale, current -
   Inventories                                $ 7,807               $  9,013
                                      ====================  ====================

Assets held for sale, non-current -
   Property, plant and equipment              $ 2,286               $ 2,355
                                      ====================  ====================


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

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

RESULTS OF OPERATIONS
The following discussion relates to the Company's consolidated results of
operations for the three months ended March 31, 2002 and 2001. The results for
the three months ended March 31, 2002 are not necessarily indicative of the
results to be expected for the full year ended December 31, 2002.

THREE MONTHS ENDED MARCH 31, 2002 COMPARED WITH THREE MONTHS ENDED MARCH 31,
2001
Net sales for the three months ended March 31, 2002 totaled $256.2 million on
shipments of approximately 525,169 net tons compared with net sales of $266.5
million for the three months ended March 31, 2001 on shipments of approximately
536,991 tons. Net sales for the three months ended March 31, 2002 were comprised
of $205.5 million for hot-rolled and $50.7 million for cold-finished, compared
with hot-rolled net sales of $207.2 million and cold-finished net sales of $59.3
million for the three


                                       17
<PAGE>


months ended March 31, 2001. The decrease in net sales and tons shipped reflects
the weak demand in the cold finished service center markets that has negatively
effected the results for the three months ended March 31, 2002.

Cost of sales totaled $244.3 million, or 95.4% of net sales, for the three
months ended March 31, 2002 compared with cost of sales of $291.2 million, or
109.3% of net sales, for the similar period ended March 31, 2001. Cost of sales
for the three months ended March 31, 2002 consisted of $191.3 million on
hot-rolled products and $53.0 million on cold-finished products compared with
$233.5 million on hot-rolled products and $57.7 million on cold-finished
products for the three months ended March 31, 2001. The overall decrease in cost
of sales as a percentage of net sales from the three months ended March 31, 2001
to the three months ended March 31, 2002 was primarily due to reduced costs of
scrap, utilities, and labor for production in the current quarter.

Selling, general and administrative expenses were $10.0 million, or 3.9% of net
sales, for the three months ended March 31, 2002 compared with $12.4 million, or
4.7% of net sales, for the three months ended March 31, 2001. The overall
decrease in selling, general and administrative expenses is due in part to the
fact that the Company's Information Technology department no longer maintains
the rights to certain software packages purchased by the Predecessor companies.
administrative headcount and compared to the first quarter of the prior year.

Depreciation and amortization expenses were $14.1 million for the three months
ended March 31, 2002, compared with $14.4 million for the three months ended
March 31, 2001. The depreciation and amortization expense in the current period
is consistent with the expense in the prior year.

Workforce reduction charges were $3.9 million for the three months ended March
31, 2002, compared with $10.1 million for the three months ended March 31, 2001.
The decrease was due to 49 voluntary early retirement buyouts ("ERBs") being
accepted during the first three months of 2001 compared to 19 ERBs accepted
during the first three months of 2002.

There were $0.9 million restructuring charges for the three months ended March
31, 2002 and $.9 million for the three months ended March 31, 2001. The
costs in both periods were made up of severance related costs for
administrative staff reductions.

Net interest expense was $7.8 million for the three months ended March 31, 2002
compared with $30.0 million for the three months ended March 31, 2001. The
decrease in net interest expense was primarily attributable to the Chapter 11
filings suspending the accrual of interest expense as of April 2, 2001 on all
debt other than the DIP credit facility and the industrial revenue bond held
with the Development Authority of Cartersville, Georgia.

The provision for income taxes for the three month periods ended March 31, 2002
and 2001, consisted of currently payable income taxes, primarily foreign income
taxes owed by Canadian Drawn Steel Company ("CDSC").

As a result of the above, the Company reported a net loss of $24.5 million for
the three months ended March 31, 2002 compared with a net loss of $91.6 million
for the three months ended March 31, 2001.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of liquidity include cash and cash equivalents, cash from
operations, and amounts available under its Debtor-in-Possession Credit
Facility.

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

PBGC OBLIGATIONS

In connection with the Combination, Republic Technologies International, LLC
agreed with the PBGC to fund $178 million into the Republic Engineered Steels,
Inc. USWA Defined Benefit Plan, a defined benefit pension plan for employees
represented by the USWA in connection with the headcount reduction and related
early retirement benefits contemplated by the Company's consolidation plan. Of
the $178 million, $66.5 million has been funded through April 2001. Republic
Technologies International, LLC, under the terms of the current amended PBGC
agreement, was required to make quarterly contributions in accordance with the
following schedule: $2.0 million per quarter for the next two payments, $14.8
million per quarter for the


                                       18
<PAGE>


next three payments, and $14.2 million per quarter for the next four payments,
and one final quarterly payment of $6.3 million. These funding levels are
subject to the outcome of the Chapter 11 proceedings. In addition, pursuant to
the Company's consolidation plan, Republic Technologies International, LLC was
to offer a combination of early retirement buyout packages to its employees. The
actual cost of the early retirement buyout packages and voluntary retirement
plans will depend on the outcome of the Chapter 11 proceedings and the mix of
such arrangements offered to and accepted by the hourly employees represented by
the USWA.

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

CAPITAL EXPENDITURES

The Company invested $567.5 thousand in capital expenditures during the three
months ended March 31, 2002 and $3.6 million during the year 2001. The Company's
debtor-in-possession facility limits capital expenditures to $30.2 million in
2002. The Company's four-year consolidation plan originally contemplated
construction of a new large bar mill which management estimates would cost
approximately $90 million. The plan to construct this facility is currently
under review and subject to the outcome of the Chapter 11 proceedings.

DEBT SERVICE REQUIREMENTS

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

On April 3, 2001, the Company entered into a Debtor-in-Possession Revolving
Credit Agreement ("DIP Credit Agreement") with Fleet Capital Corporation ("Fleet
Capital") and other lenders who are parties thereto to provide secured
debtor-in-possession financing to the Company. The maximum borrowings under the
DIP Credit Agreement initially were $420 million in the aggregate and included a
sub-facility of $50 million for the issuance of letters of credit. The proceeds
of the DIP Credit Agreement were used to repay the amounts outstanding under the
senior revolving credit facility entered into on August 13, 1999 and
restructured on July 17, 2000. Advances under the DIP Credit Agreement bear
interest at a base rate used by Fleet Capital, plus the applicable margin; or a
Eurodollar rate on deposits for a given period, plus the applicable margin. The
applicable margin on base rate loans is 1.5% and on Eurodollar loans is 3.5%.
The applicable margin on base rate and Eurodollar loans may be increased by 2%
under specified circumstances. A borrowing base limits the amount available at
any time. There were $324.2 million of borrowings under the DIP Credit Agreement
outstanding at March 31, 2002. Amounts available under the DIP Credit Agreement
at March 31, 2002 and May 16, 2002 were approximately $7.2 million and $14.0
million, respectively.

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


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<PAGE>


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

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

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

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

LIQUIDITY SOURCES AND OTHER FACTORS AFFECTING LIQUIDITY

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

On April 2, 2001, the Company and the majority of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the Federal
Bankruptcy Code in the United States Bankruptcy Court (see Note 1 to the
consolidated financial statements).

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

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

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

     -    the Company's ability to develop and obtain approval of a plan of
          reorganization during its Chapter 11 proceedings;


                                       20
<PAGE>


     -    the Company's ability to increase sales to existing and new customers,
          particularly sales to automotive and industrial equipment
          manufacturers;
     -    market conditions and general risks associated with the steel
          industry; and
     -    the matters discussed under the caption "Risk Factors" in the
          Company's Registration Statement on Form S-4.

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

                           PART II - OTHER INFORMATION
                           ---------------------------

ITEM 1.  LEGAL PROCEEDINGS

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

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

On April 24, 2002, the Company announced that it had signed a non-binding
letter of intent to sell a substantial portion of its assets to RTI Acquisition
Corporation (RAC), a new company formed by KPS Special Situations Fund, L.P.
and Pegasus Partners II L.P.  On May 6, 2002, Pegasus withdrew from the
proposed transaction. KPS Special Situations Fund secured a replacement
investment partner, the Hunt Investment Group, L.P. of Dallas, Texas, to
proceed with the acquisition. The Company signed a letter of intent with the
new equity partners on May 17, 2002. The equity partners have an agreement in
principle with the Company's existing bank group to finance the transaction and
to permit the sale to be completed. RAC now has concluded significant
agreements concerning the transaction with the Company, the Company's bank
group, and the Company's hourly employees as represented by the United Steel
Workers of America.

The non-binding letter of intent is subject to higher and better offers, and on
May 17, 2002 the Company filed a motion in the U.S. Bankruptcy Court to
formalize a procedure for reviewing this and other purchase offers. If the
bankruptcy court grants the motion, other companies will have an opportunity to
submit bids through a court-approved bidding process in accordance with Section
363 of the Bankruptcy Code.

There can no assurance that the bankruptcy court will approve the sale or that
the transaction contemplated by the letter of intent will be consummated.

Other. The Company and its subsidiaries are involved in various legal
proceedings occurring in the ordinary course of business. It is the opinion of
management, after consultation with legal counsel, that except for certain
environmental proceedings (which is discussed in detail in the Company's Annual
Report filed on Form 10-K), these matters will not materially affect the
Company's consolidated financial position, results of operations or cash flows.

United States Steel LLC, United States Steel and Carnegie Pension Fund filed a
request for allowance and immediate payment of administrative expense (the
"Request"), alleging that the Company is obligated to reimburse U.S. Steel for
benefits paid to retired employees in the amount of approximately $9,878,616.44.
The Company has filed a response in opposition to the Request denying any such
obligation, except as a general unsecured claim in the Company's chapter 11
case. The Official Committee of Unsecured Creditors and Fleet Capital
Corporation (agent for the Company's lenders) also filed responses in opposition
to the Request. Subsequent thereto, U.S. Steel filed a brief in support of the
Request (the "Brief"). The Company filed its Sur-Response to the Brief, again
denying the obligation to reimburse U.S. Steel. A hearing on this matter is
scheduled for June 25, 2002.

ITEM 2.  CHANGES IN SECURITIES

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

As a result of the Chapter 11 filings, Events of Default, as defined in the
related debt agreements, have occurred with respect to all of the Company's
$516.0 million of secured and unsecured debt.

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

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     a.)  Reports on Form 8-K

     10.56 Form 8-K dated April 24, 2002 related to Republic Technologies
           International, LLC press release announcing that the Company has
           signed a non-binding letter of intent to sell substantially all its
           assets to RTI Acquisition


                                       21
<PAGE>


           Corporation, a new company formed by KPS Special Situations Fund L.P.
           and Pegasus Partners II L.P. to acquire the Company.

     b.)  Exhibits

     None.





                                       22
<PAGE>


                                   SIGNATURES



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




                               REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC





Date: May 20, 2002               By: /s/Joseph F. Lapinsky
                                     ---------------------
                                 Joseph F. Lapinsky
                                 Chief Executive Officer,
                                    President and Chief
                                    Operating Officer



Date: May 20, 2002               By: /s/ Joseph A. Kaczka
                                     --------------------
                                 Joseph A. Kaczka
                                 Vice President of Finance, Controller
                                    and Chief Accounting Officer








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