<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 and nine month
periods ended September 30, 2001            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 Identification No.)
incorporation or organization)

   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 October 31, 2001: AS OF
OCTOBER 31, 2001, 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.


<PAGE>



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

                                TABLE OF CONTENTS

                         PART I - FINANCIAL INFORMATION
                         ------------------------------
<TABLE>
<CAPTION>
Item 1.         Unaudited Financial Statements
<S>             <C>                                                                          <C>
                Consolidated Statements of Operations for the Three and Nine
                Months Ended September 30, 2001 and 2000                                              3

                Consolidated Balance Sheets as of September 30, 2001 and
                December 31, 2000                                                                   4-5

                Consolidated Statements of Members' Interest for the Nine
                Months Ended September 30, 2001 and the Year Ended December
                31, 2000                                                                              6

                Consolidated Statements of Cash Flows for the Nine Months Ended
                September 30, 2001 and 2000                                                            7

                Notes to Consolidated Financial Statements                                          8-18

Item 2.         Management's Discussion and Analysis of Financial
                Condition and Results of Operations                                                18-22

Item 3.         Quantitative and Qualitative Disclosures About Market Risk                            22

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

Item 1.         Legal Proceedings                                                                     22

Item 2.         Changes in Securities                                                                 22

Item 3.         Defaults Upon Senior Securities                                                       22

Item 4.         Submission of Matters to a Vote of Security Holders                                   22

Item 5.         Other Information                                                                     23

Item 6.         Exhibits and Reports on Form 8-K                                                      23

                Signatures                                                                            24
</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 AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                           (IN THOUSANDS OF DOLLARS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                              Three Months Ended                      Nine Months Ended
                                                    September 30, 2001   September 30, 2000   September 30, 2001  September 30, 2000
                                                    ------------------   ------------------   ------------------  ------------------
<S>                                                     <C>                 <C>                 <C>                 <C>
Net sales                                               $   240,017         $   294,980         $   757,272         $ 1,006,419

Cost of goods sold                                          240,005             266,841             760,441             921,114
                                                        -----------         -----------         -----------         -----------

Gross profit (loss)                                              12              28,139              (3,169)             85,305

Selling, general and administrative expense                  10,037              13,469              33,411              40,857

Monitoring fees                                                --                 1,000               1,000               3,000

Depreciation and amortization expense                        14,135              14,885              42,685              45,983

Special charges:

Workforce reduction charges (Note 5)                            617               2,989              14,633               4,632

Restructuring charges (Note 6)                                 --                 9,677               1,158              59,046

Loss (gain) on sale of assets                                    42                --                (1,585)               --

Other expense, (income) net                                     761              (1,770)              1,216                (574)
                                                        -----------         -----------         -----------         -----------

Operating loss                                              (25,580)            (12,111)            (95,687)            (67,639)

Interest expense  (Excludes contractual
interest of $25,738 and $82,520 for
the thee and nine months
ended, respectively)                                          8,457              27,507              47,986              81,344

Reorganization items - expense, net (Note 4)                  2,148                --                 8,634                --
                                                        -----------         -----------         -----------         -----------

Loss before income taxes                                    (36,185)            (39,618)           (152,307)           (148,983)

Provision for income taxes                                       31                  (9)                234                 242
                                                        -----------         -----------         -----------         -----------

Loss from continuing operations                             (36,216)            (39,609)           (152,541)           (149,225)

Loss from disposition of discontinued operations               --                 6,703                --                16,524
                                                        -----------         -----------         -----------         -----------

Net loss                                                $   (36,216)        $   (46,312)        $  (152,541)        $  (165,749)
                                                        ===========         ===========         ===========         ===========
</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
                    SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
                           (IN THOUSANDS OF DOLLARS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 September 30, 2001      December 31, 2000
                                                                                 ------------------       -----------------
<S>                                                                                    <C>                 <C>
ASSETS
Current assets:
      Cash and cash equivalents                                                        $     8,330         $     1,795
      Accounts receivable, less allowances of $16,566 and $25,210, respectively            128,134             129,278
      Inventories (Note 3)                                                                 226,668             271,154
      Assets held for sale (Note 9)                                                          8,895               9,306
      Prepaid expenses and other current assets                                              4,730              11,389
                                                                                       -----------         -----------

Total current assets                                                                       376,757             422,922

Property, plant and equipment:
      Land and improvements                                                                 14,361              15,039
      Buildings and improvements                                                            35,292              35,126
      Machinery and equipment                                                              723,111             716,437
      Construction-in-progress                                                               5,511              13,802
                                                                                       -----------         -----------

Total property, plant and equipment                                                        778,275             780,404

Accumulated depreciation                                                                  (140,461)           (102,492)
                                                                                       -----------         -----------

Net property, plant and equipment                                                          637,814             677,912

Assets held for sale (Note 9)                                                                2,460               7,294

Intangible assets, net of accumulated amortization
      of $20,151 and $17,696, respectively                                                  72,432              79,783

Other assets                                                                                13,275               9,173
                                                                                       -----------         -----------

Total assets                                                                           $ 1,102,738         $ 1,197,084
                                                                                       ===========         ===========
</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
                    SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
                           (IN THOUSANDS OF DOLLARS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                        September 30, 2001   December 31, 2000
                                                        ------------------   -----------------
<S>                                                    <C>                 <C>
LIABILITIES AND MEMBERS' INTEREST

Liabilities not subject to compromise:

  Current liabilities:
       Revolving credit facility (Note 1)                   $   357,198         $   329,398
       Long-term secured debt in default                          3,600                --
       Current maturities of long-term debt                        --                11,318
       Accounts payable                                          34,821             234,811
       Accrued interest                                           2,495              34,220
       Accrued compensation and benefits                         41,558              38,310
       Other postretirement benefits                               --                15,794
       Defined benefit pension obligations                         --                20,854
       Accrued environmental liabilities                            166               3,668
       Other accrued liabilities                                 32,453              63,127
                                                            -----------         -----------
  Total current liabilities                                     472,291             751,500

  Long-term debt                                                   --               502,254
  Other postretirement benefits                                   3,392             217,620
  Defined benefit pension obligations                              --                69,089
  Accrued environmental liabilities                              17,700              15,933
  Other liabilities                                               5,179              43,101
                                                            -----------         -----------
  Total liabilities not subject to compromise                   498,562           1,599,497

Liabilities subject to compromise (Note 4)                    1,159,935                --
                                                            -----------         -----------
Total liabilities                                             1,658,497           1,599,497
                                                            -----------         -----------

Mandatory redeemable members' interest -- Class A Units           3,700               3,800

Members' interest:
  Class B Units                                                (588,701)           (435,689)
  Class C Units                                                  32,500              32,125
  Accumulated other comprehensive loss                           (3,258)             (2,649)
                                                            -----------         -----------
Total members' interest                                        (559,459)           (406,213)
                                                            -----------         -----------

Total liabilities and members' interest                     $ 1,102,738         $ 1,197,084
                                                            ===========         ===========
</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 NINE MONTHS ENDED SEPTEMBER 30, 2001 AND THE YEAR ENDED
                                DECEMBER 31, 2000
                            (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>
Balance, January 1, 2000                $(146,594)       $ 30,625                 $ (673)         $(116,642)
Accrual of preferred return                (1,861)          1,500                      -               (361)
Net loss                                 (287,234)              -                      -           (287,234)         $ (287,234)
Other comprehensive income:
  Foreign currency translation
    adjustment                                  -               -                   (383)              (383)               (383)
  Minimum pension liability
    adjustment                                  -               -                 (1,593)            (1,593)             (1,593)
                                   --------------------------------------------------------------------------  ------------------
Balance, December 31, 2000               (435,689)         32,125                 (2,649)          (406,213)         $ (289,210)
                                   --------------------------------------------------------------------------  ==================
Accrual of preferred return                  (471)            375                      -                (96)
Net loss                                 (152,541)              -                      -           (152,541)         $ (152,541)
Other comprehensive income:
  Foreign currency translation
    adjustment                                   -               -                   (609)              (609)               (609)
                                   --------------------------------------------------------------------------  ------------------
 Balance, September 30, 2001             $(588,701)       $ 32,500               $ (3,258)         $(559,459)         $ (153,150)
                                   ==========================================================================  ==================
</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 NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                NINE MONTHS ENDED
                                                                      SEPTEMBER 30, 2001  SEPTEMBER 30, 2000
                                                                      ------------------  --------------------
<S>                                                                       <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                              $(152,543)        $(165,749)
    Adjustments to reconcile net cash used
        in operating activities:
    Restructuring charges                                                     1,158            55,121
    (Gain)/loss on sale of fixed assets                                      (1,585)           (4,318)
    Depreciation and amortization                                            42,685            45,983
    Accretion of original issue discount                                        693             1,972
    Amortization of deferred financing cost                                   4,000             2,395
    Reorganization items                                                      8,692              --
    Changes in operating assets and liabilities:
        Decrease (increase) in accounts receivable                            1,144            (9,269)
        Decrease in inventory                                                44,486            37,968
        Decrease in prepaid assets                                            6,659             3,009
        Increase in accounts payable                                         21,789            16,027
        Increase in accrued compensation and benefits                         3,248               432
        Increase (decrease) in defined benefit pension obligations           11,721            (6,146)
        Increase in other postretirement benefits                             6,093            10,970
        Decrease in accrued environmental liabilities                        (1,735)           (1,043)
        Decrease in other current liabilities                               (15,746)          (24,415)
     Other                                                                    2,297             4,121
                                                                          ---------         ---------
NET CASH USED IN OPERATING ACTIVITIES BEFORE REORGANIZATION ITEMS           (16,944)          (32,942)
     Payments for professional fees and other reorganization items           (2,760)
                                                                          ---------         ---------
NET CASH USED IN OPERATING ACTIVITIES                                       (19,704)          (32,942)
                                                                          ---------         ---------


CASH FLOWS FROM INVESTING ACTIVITIES:

    Capital expenditures                                                     (2,731)           (7,336)
    Disposition of property, plant and equipment                              4,050             8,665
                                                                          ---------         ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES                                     1,319             1,329
                                                                          ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Proceeds from long-term debt                                              2,000            30,000
    Net proceeds under revolving credit facilities                           27,800            10,599
    Repayments of long-term debt                                               (557)           (2,411)
    Deferred financing costs                                                 (3,541)           (6,113)
    Redemption of Class A members' interest                                    (100)             (500)
    Payment of preferred return                                                 (73)             (288)
                                                                          ---------         ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                    25,529            31,287
                                                                          ---------         ---------
Effect of exchange rate changes on cash                                        (609)             (435)
                                                                          ---------         ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                     6,535              (761)
Cash and cash equivalents - beginning of period                               1,795             4,637
                                                                          ---------         ---------
Cash and cash equivalents - end of period                                 $   8,330         $   3,876
                                                                          =========         =========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                    $  52,557         $  84,126
                                                                          =========         =========
Cash paid for income taxes                                                $     316         $     901
                                                                          =========         =========
</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 OTHERWISE 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.
("RESI"), USS/Kobe Steel Company ("USS/Kobe") and various of their affiliates.
Following the Combination, Republic Technologies International, LLC
("Republic"), 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's SBQ steel products business.

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 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, salaries, benefits, and certain other employee
obligations. 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.

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. As of the Petition Date, the secured debt has been
classified as a current liability and the undersecured and unsecured debt has
been classified as liabilities subject to compromise.

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 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

                                       8
<PAGE>


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. The Company's net
availability on its revolving credit facility at November 12, 2001 was
approximately $15.0 million. 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 Ohio
Caster and Continuing Rolling Facility, 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.

Although the Company has entered into the DIP Credit Agreement, which was
amended on September 28, 2001, 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. The amended agreement serves as a waiver
to the September 30, 2001 covenant requirements and allows future maximum
borrowings of $360 million from October 1, 2001 through November 4, 2001, $355
million from November 5, 2001 through November 29, 2001, and $337 million
thereafter.

The Company's recurring losses and negative cash flows from operations, current
liabilities in excess of current assets, and the Chapter 11 cases raise
substantial doubt about the Company's ability to continue as a going concern. As
discussed above, management intends to submit a plan for reorganization to the
Bankruptcy Court. 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 its debtor-in-possession
financing agreement, (ii) submission and confirmation of a plan of
reorganization under the Bankruptcy Code, (iii) 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. 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 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. The outcome of these matters is not presently
determinable.

On confirmation of a plan of reorganization, the Company will apply "Fresh Start
Accounting" in accordance with the guidelines for accounting for emergence from
bankruptcy. Under Fresh Start Accounting, a revaluation of Company assets to
reflect current values can be expected.

The accompanying consolidated financial statements contain results for Republic
Technologies International Holdings, LLC and its subsidiaries for the three and
nine months ended September 30, 2001 and 2000. 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,
2000 included in the Company's Form 10-K, filed with the Securities and Exchange
Commission.


                                       9

<PAGE>

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 Company operates in three separate segments: hot-rolled, cold-finished, and
specialty steels. In connection with the acquisition of RESI, the Company
determined its intent to sell the specialty steels segment of the business
("Specialty Steel Division"). 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
sold certain assets from its Baltimore specialty steel plant in January 2001 and
is currently in the process of selling the remaining real estate and assets of
the Specialty Steel Division. The accompanying consolidated financial statements
reflect the Specialty Steel Division as a discontinued business in accordance
with Accounting Principles Board Opinion No. 30. See Note 9 for further
information related to discontinued operations.

In July 2001 the Financial Accounting Standards Board (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 broadens the criteria
for recording intangibles separate from goodwill. The Company's recorded
intangible assets will have to be evaluated against this new criteria and may
result in certain intangible assets being reclassified into goodwill. SFAS No.
142 eliminates the amortization of goodwill and certain intangible assets upon
adoption and also requires an initial goodwill impairment assessment 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 will be adopted by the Company on January 1, 2002. Management expects the
adoption of these accounting standards will result in certain intangible assets
being reclassified to goodwill and nonamortizing intangible asset categories,
which will have the impact of reducing amortization expense by an amount that
has not yet been determined commencing January 1, 2002; however, impairment
reviews may result in future write-downs.

In August 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 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 October 2001, The FASB issued SFAS No. 144, "Accounting for Impairment or
Disposals of Long-Lived Assets". This statement further refines the rules for
accounting for long-lived assets and long-lived assets that are disposed of.
This statement will become effective for the Company on January 1, 2002, but
early adoption is permitted. The Company has not completed its evaluation of the
impact, if any, of SFAS No. 144 on its financial statements.

3.  INVENTORIES

<TABLE>
<CAPTION>
The components of inventories are as follows:  September 30, 2001       December 31, 2000
                                               ---------------------  ---------------------
<S>                                               <C>                    <C>
Raw materials                                        $ 12,420               $ 21,583
Semi-finished and finished goods                      214,248                249,571
                                                     --------               --------
Total                                                $226,668               $271,154
                                                     ========               ========
</TABLE>

At September 30, 2001 and December 31, 2000, inventories are net of market
reserves and obsolescence reserves aggregating $11.8 and $6.7 million,
respectively.

4.       LIABILITIES SUBJECT TO COMPROMISE AND REORGANIZATION ITEMS

The accompanying consolidated balance sheet as of September 30, 2001 segregates
liabilities subject to compromise, such as unsecured claims, in the amount of
$1,159.9 million, 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

                                       10

<PAGE>


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 and certain other employee obligations.
Liabilities subject to compromise at September 30, 2001 were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                      SEPTEMBER 30, 2001
                                                      ------------------

<S>                                                   <C>
       Accounts payable                                        $ 221,779
       Accrued interest                                           20,387
       Other postretirement benefits                             236,114
       Defined benefit pension obligations                       101,664
       Other accrued expenses                                     31,459
       Long term deferred payables                                36,424
       Long term debt                                            512,108
                                                       ------------------
       Total  (a)                                            $ 1,159,935
                                                       ==================
</TABLE>

(a)      Excludes a net intercompany payable in the amount of $5,853 to the
         Company's subsidiary, Nimishillen & Tuscarawas LLC, 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 nine months ended September 30, 2001 include the following:

<TABLE>
<S>                                                           <C>
    Write-down of deferred financing costs related
      to the revolving credit facility                             $4,247

    Professional fees and administrative items, net                 4,387
                                                              -----------
    Total                                                          $8,634
                                                              ===========
</TABLE>


5.  WORKFORCE REDUCTION CHARGES

In connection with the RESI acquisition in September 1998, a new Master
Collective Bargaining Agreement and settlement agreement (collectively, the
"Master CBA") covering all of the former RESI and BarTech facilities with
employees represented by the United Steel Workers of America ("USWA") were
entered into with the USWA. The Master CBA replaced the existing collective
bargaining agreements with the USWA, other than selected plant-specific
agreements. In connection with the Combination, the scope of the Master CBA was
extended to cover the former USS/Kobe Lorain, Ohio facility. The Master CBA
expires on October 31, 2003. The Master CBA provides for improvements in the
existing defined benefit pension plans covering employees at former RESI
facilities, former USS/Kobe facilities, and the former Bliss & Laughlin Harvey,
Illinois facility. The agreement also provides for the creation of a defined
benefit pension plan obligation covering employees at former BarTech facilities.

The Master CBA requires Republic Technologies International, LLC to offer Early
Retirement Buyouts ("ERBs") to at least 1,000 employees and permits the Company
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 intend to be awarded
by the Company. Through September 30, 2001, 848 voluntary ERB packages were
accepted. As such, the Company has recorded $111.3 million of workforce
reduction charges to date for early retirement benefits and special termination
payments.

Under the terms of Master CBA, if the ERBs and VSPs do not achieve targeted
headcount reductions, Republic Technologies International, LLC will have the
flexibility to reduce the hourly workforce by approximately 300 employees in
addition to the number of accepted ERBs and VSPs. Pursuant to the Master CBA,
USWA represented employees will be eligible for Supplemental Unemployment
Benefits (SUB) and the continuation of certain health insurance benefits.

6.  RESTRUCTURING CHARGES AND RESERVES

The Company continues to execute its consolidation plan developed at the time of
the Combination. Through the consolidation plan, the Company expects to create a
more efficient, higher quality network of production facilities operated by a
smaller more flexible workforce and to rationalize the corporate overhead
structure of the combined companies. During the year ended

                                       11

<PAGE>


December 31, 2000, the Company shutdown two of its production facilities: the
Johnstown, Pennsylvania melt shop facility and the Canton, Ohio 12" rolling mill
facility, announced the shutdown of its Willimantic, Connecticut cold-finishing
facility, which occurred in March of 2001, and continued to rationalize the
corporate overhead structure of the combined companies.

As a result of these actions, the Company recorded restructuring charges of
$74.7 million during the year ended December 31, 2000 and $1.2 million during
the nine months ended September 30, 2001. The charges recorded during the year
ended December 31, 2000 were for the write-down of property, plant, and
equipment for certain affected facilities and to establish reserves for labor
and severance costs, other than ERBs and VSPs discussed in Note 5, and facility
closure costs. The $1.2 million charge recorded in 2001 includes $0.9 for
severance costs relating to additional administrative staff reductions and $.3
million in additional environmental remediation required as a result of the
Willimantic facility closure.

During the year ended December 31, 2000, the Company recorded restructuring
charges of $66.5 million related to the closing of the Johnstown facility. These
charges consisted of a $40.6 million write-down of property, plant, and
equipment, $6.0 million of facility closure costs, and $3.2 million in
additional environmental remediation required as a result of the closure. The
restructuring charges also included hourly employee separation costs of $16.0
million for hourly workers and $0.7 million for non-hourly severance. The hourly
employee separation charge was based on estimates of the cost of an agreement
reached with the USWA.

Restructuring charges of $3.5 million were also recorded during the year ended
December 31, 2000 related to the announced closing of the Willimantic facility.
These charges consisted of a $3.2 million write-down of property, plant, and
equipment and $0.3 million in additional environmental remediation required as a
result of the closure.

Unlike the closure of the Johnstown facility, the closure of the Canton 12"
rolling facility was part of the Company's original consolidation plan
contemplated at the time of the RESI acquisition. Fair value adjustments to the
fixed assets and shutdown reserves related to the Canton 12" facility were
recorded at the date of the RESI acquisition. Charges for hourly labor of $1.4
million were recorded during the year ended December 31, 2000 related to
employment security provisions in the labor agreement with the USWA. The Company
has not recorded a provision for hourly employee separation costs in view of the
fact that all affected employees were offered and have accepted suitable
alternative employment at other Company facilities.

The Company had previously recorded a reserve for the reduction of non-union
labor and other shutdown reserves at the date of the RESI acquisition related to
the manufacturing locations selected for closure (the Canton 12" rolling
facility and the Chicago 11" rolling facility) amounting to $4.4 million and
$1.9 million, respectively. Adjustments reducing these previously recorded
reserves due to changes in estimates were recorded during the year ended
December 31, 2000 amounting to $1.4 million.

Additionally, a reserve for the reduction of administrative labor amounting to
$4.6 million during 2000, including $3.7 million for the nine months ended
September 30, 2000 was recorded as a restructuring charge in the consolidated
statement of operations.

The activity impacting the accruals for restructuring during the nine months
ended September 30, 2001 is summarized in the table below:

<TABLE>
<CAPTION>
                                                     Labor &           Facility Closure
                                                    Severance                Costs                 Total
                                                 ----------------     --------------------     ---------------
<S>                                                 <C>                      <C>               <C>
December 31, 2000                                     $   18,568                $   6,385            $ 24,953
    Provision                                                858                      300               1,158
    Amount utilized                                      (2,948)                  (2,236)             (5,184)
    Adjustments                                               --                    1,545(a)            1,545
                                                 ----------------     --------------------     ---------------
September 30, 2001                                    $   16,478                $   5,994            $ 22,472
                                                 ================     ====================     ===============
</TABLE>

         (a) The adjustment of $1.5 million represents a change in estimate in
         the reserve for facility closure costs provided from recoveries on
         dispositions of property, plant, and equipment previously written down
         in restructuring charges.

                                       12
<PAGE>




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
               FOR THE PERIOD APRIL 2, 2001 TO SEPTEMBER 30, 2001

<TABLE>
<CAPTION>
                                                  Three Months      Period from
                                                      Ended        April 2, 2001 to
                                               September 30, 2001 September 30, 2001
<S>                                          <C>               <C>
Net sales                                           $ 232,088         $ 473,778
Cost of goods sold                                    232,714           453,932
                                                    ---------         ---------
Gross profit (loss)                                      (626)           19,846

Selling, general and administrative expense             9,665            20,248
Depreciation and amortization expense                  13,998            27,814
Special charges:                                                             --
         Workforce reduction charges                      617             4,515
         Restructuring charges                             --               300
Loss on sale of assets                                     42               713
Other expense, net                                        768             1,123
                                                    ---------         ---------
Operating loss                                        (25,716)          (34,867)
Interest expense, net                                   8,441            17,962
Reorganization items                                    2,148             8,634
                                                    ---------         ---------
Loss before income taxes                              (36,305)          (61,463)
Provision for income taxes                                 --                46
                                                    ---------         ---------
Net loss                                            $ (36,305)        $ (61,509)
                                                    =========         =========
</TABLE>


                                       13

<PAGE>




<TABLE>
<CAPTION>
                                 BALANCE SHEET
                               SEPTEMBER 30, 2001
<S>                                                                 <C>
ASSETS
Current assets:
      Cash and cash equivalents                                     $     8,138
      Accounts receivable, less allowances of $16,449                   123,267
      Accounts receivable with affiliates                                 7,128
      Inventories                                                       221,431
      Assets held for sale                                                8,895
      Prepaid expenses and other current assets                           4,696
                                                                    -----------
      Total current assets                                              373,555
Property, plant and equipment:
      Land and improvements                                              13,757
      Buildings and improvements                                         32,841
      Machinery and equipment                                           719,505
      Construction-in-progress                                            4,226
                                                                    -----------
    Total property, plant and equipment                                 770,329
    Accumulated depreciation                                           (137,916)
                                                                    -----------
    Net property, plant and equipment                                   632,413
Assets held for sale                                                      2,460
Intangible assets, net of accumulated amortization                       72,432
Investments in non-debtor subsidiaries                                   15,783
Other assets                                                              8,424
                                                                    -----------
Total assets                                                        $ 1,105,067
                                                                    ===========

LIABILITIES AND MEMBERS' INTEREST
Liabilities not subject to compromise:
Current liabilities:

      Revolving credit facility                                     $   357,198
      Long-term secured debt in default                                   3,600
      Accounts payable                                                   34,019
      Accounts payable with affiliates                                    1,179
      Accrued interest                                                    2,495
      Accrued compensation and benefits                                  41,009
      Accrued environmental liabilities                                     166
      Other accrued liabilities                                          32,338
                                                                    -----------
Total current liabilities                                               472,004
Accrued environmental liabilities                                        17,700
Other liabilities                                                         5,336
                                                                    -----------
Total liabilities not subject to compromise                             495,040
Liabilities subject to compromise                                     1,159,935
Liabilities subject to compromise with affiliates                         5,853
                                                                    -----------
Total liabilities                                                     1,660,828
                                                                    -----------

Members' interest                                                      (555,761)
                                                                    -----------
Total liabilities and members' interest                             $ 1,105,067
                                                                    ===========
</TABLE>


                                       14


<PAGE>




                             STATEMENT OF CASH FLOWS
               FOR THE PERIOD APRIL 2, 2001 TO SEPTEMBER 30, 2001

<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                        <C>
    Net loss                                                               $(61,509)
    Adjustments to reconcile net cash used in operating activities:
    Restructuring charges                                                       300
    Loss on sale of fixed assets                                                713
    Depreciation and amortization                                            27,833
    Amortization of deferred financing cost                                   2,961
    Reorganization items                                                      8,692
    Changes in operating assets and liabilities:
        Decrease in accounts receivable                                      23,945
        Increase in inventory                                               (16,845)
        Decrease in other current assets                                      2,211
        Increase in accounts payable                                          3,048
        Decrease in accrued compensation and benefits                          (279)
        Increase in defined benefit pension obligations                       7,076
        Increase in other postretirement benefits                             2,542
        Decrease in accrued environmental liabilities                        (2,014)
        Increase in other current liabilities                                   494
        Other                                                                  (253)
                                                                           --------

NET CASH USED IN OPERATING ACTIVITIES BEFORE REORGANIZATION ITEMS            (1,085)
     Payments for professional fees and other reorganization items           (2,760)
                                                                           --------
NET CASH USED IN OPERATING ACTIVITIES                                        (3,845)
                                                                           --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                     (1,814)
    Disposition of property, plant and equipment                                 59
                                                                           --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                          (1,755)
                                                                           --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds under revolving credit facilities                           14,404
    Repayments of long-term debt                                                (43)
    Deferred financing costs                                                 (3,541)
                                                                           --------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                    10,820

NET INCREASE IN CASH AND CASH EQUIVALENTS                                     5,220
Cash and cash equivalents - beginning of period                               2,918
                                                                           --------
Cash and cash equivalents - end of period                                  $  8,138
                                                                           ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                     $ 16,129
                                                                           ========
</TABLE>

                                       15

<PAGE>





8.  SEGMENT INFORMATION

The Company operates in three reportable segments: hot-rolled, cold-finished and
specialty steels. As discussed previously in Note 1, the Company intends to
dispose of its Specialty Steels 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 September 30, 2001
                                 ------------------------------------------------------------------------------------------
                                    Hot-Rolled           Cold-            Total          Inter Segment
                                                        Finished         Segments      Elimination/Other     Consolidated
<S>                                  <C>               <C>               <C>               <C>               <C>
Net sales                            $ 218,472         $  50,053         $ 268,525         $ (28,509)        $ 240,016
Depreciation and amortization           12,876             1,259            14,135              --              14,135
Segment profit (EBITDA,
    as defined)                         (4,359)           (1,613)           (5,972)             --              (5,972)
Capital expenditures                     1,478              (117)            1,361              --               1,361
</TABLE>

<TABLE>
<CAPTION>
                                                       For the Three Months Ended September 30, 2000
                                 ------------------------------------------------------------------------------------------
                                    Hot-Rolled           Cold-            Total          Inter Segment
                                                        Finished         Segments      Elimination/Other     Consolidated
<S>                                    <C>                <C>              <C>             <C>                 <C>
Net sales                            $ 293,599          $ 65,742         $ 359,341         $ (64,361)        $ 294,980
Depreciation and amortization           13,723             1,162            14,885              --              14,885
Segment profit (EBITDA,
    as defined)                         14,934             2,851            17,785              --              17,785
Capital expenditures                     1,953               167             2,120              --               2,120
</TABLE>


                                       16


<PAGE>

<TABLE>
<CAPTION>
                                                       For the Nine Months Ended September 30, 2001
                                 ------------------------------------------------------------------------------------------
                                    Hot-Rolled          Cold-            Total          Inter Segment       Consolidated
                                                       Finished         Segments      Elimination/Other
<S>                                  <C>               <C>               <C>               <C>                 <C>
Net sales                            $ 682,243         $ 166,057         $ 848,300         $ (91,028)          757,272

Depreciation and amortization           38,906             3,779            42,685              --              42,685
Segment profit (EBITDA,
    as defined)                        (22,356)           (1,017)          (23,373)             --             (23,373)

Capital expenditures                     2,511               220             2,731              --               2,731
</TABLE>

<TABLE>
<CAPTION>

                                                       For the Nine Months Ended September 30, 2000
                                 ------------------------------------------------------------------------------------------
                                    Hot-Rolled          Cold-            Total          Inter Segment       Consolidated
                                                       Finished         Segments      Elimination/Other

<S>                                  <C>               <C>               <C>               <C>                <C>
Net sales                            $  936,626        $  226,201        $1,162,827        $ (156,408)        $1,006,419

Depreciation and amortization            42,410             3,573            45,983              --               45,983
Segment profit (EBITDA,
    as defined)                          44,197             9,838            54,035              --               54,035

Capital expenditures                      6,970               480             7,450              (114)             7,336
</TABLE>


<TABLE>
<CAPTION>
                                                                 As of September 30, 2001
                                 ------------------------------------------------------------------------------------------
                                    Hot-Rolled          Cold-            Total          Inter Segment       Consolidated
                                                       Finished         Segments      Elimination/Other
<S>                                 <C>               <C>             <C>                  <C>              <C>
Segment assets                        $ 976,593         $126,151        $1,102,744           $ 16,133         $1,118,877
</TABLE>


<TABLE>
<CAPTION>
                                                                As of December 31, 2000
                                 ------------------------------------------------------------------------------------------
                                    Hot-Rolled          Cold-            Total          Inter Segment       Consolidated
                                                       Finished         Segments      Elimination/Other
<S>                                  <C>                <C>              <C>                 <C>                <C>
Segment assets                       $1,029,916         $145,414         $1,175,330          $ 21,754           $ 1,197,084
</TABLE>

9.  DISCONTINUED OPERATIONS

In connection with its acquisition of RESI, the Company determined its intent to
sell its Specialty Steels 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 RESI purchase price. During the year ended December 31, 2000, an
additional provision of $16.8 million was made for the estimated additional loss
from disposition, including a charge of $7.0 million was taken for the permanent
shutdown of the Baltimore Specialty facility. In the nine months ended September
30, 2001, no additional provision was recorded related to the Specialty Steel
Division.

The Company sold certain assets from its Baltimore plant in January 2001 and is
currently in the process of selling the remaining real estate and assets of the
Specialty Steel Division. Management anticipates the disposition to be completed
during the fourth quarter of 2001.

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):

<TABLE>
<CAPTION>
                                    Three Months Ended September 30,         Nine Months Ended September 30,
                                  ------------------------------------    ------------------------------------
                                             2001                2000                  2001             2000

                                   -------------------------------------    ------------------------------------
<S>                               <C>               <C>                    <C>              <C>
Net sales                                    $5,375            $10,763                $17,916          $36,710
Gross loss                                    (221)             (1,404)                (2,527)          (5,249)
Loss before income taxes                      (377)             (2,265)                (2,489)          (8,474)
Provision for income taxes                      --                  --                     --               --
                                   -------------------------------------    ------------------------------------
Net loss                                     $(377)           $ (2,265)               $(2,489)        $ (8,474)
                                   =====================================    ====================================

</TABLE>

                                       17




<PAGE>

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

<TABLE>
<CAPTION>
                                                      September 30, 2001        December 31, 2000
                                                    -----------------------   -----------------------

<S>                                                   <C>                       <C>
Assets held for sale, current- Inventories                  $8,895                     $9,306
                                                            ======                     ======

Assets held for sale, non-current - Property, plant
       and equipment                                        $2,460                     $7,294
                                                            ======                     ======

</TABLE>

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 23%, based on 2000 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 and nine months ended September 30, 2001 and 2000. The
results for the three and nine months ended September 30, 2001 are not
necessarily indicative of the results to be expected for the full year ended
December 31, 2001.

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2000

Net sales for the three months ended September 30, 2001 totaled $240.0 million
on shipments of approximately 484,140 net tons compared with net sales of $295.0
million for the three months ended September 30, 2000 on shipments of
approximately 585,196 net tons. The decrease in net sales and tons shipped
reflects the weak demand in the automotive and service center markets that has
negatively affected the results for the three months ended September 30, 2001.
Net sales for the three months ended September 30, 2001 were comprised of $190.0
million of hot-rolled net sales and $50.0 million of cold-finished net sales,
compared with hot-rolled net sales of $229.2 million and cold-finished net sales
of $65.8 million for the three months ended September 30, 2000.

Cost of sales totaled $240.0 million, or 100.0% of net sales, for the three
months ended September 30, 2001 compared with cost of sales of $266.9 million,
or 90.5% of net sales, for the similar period ended September 30, 2000. Cost of
sales for the three months ended September 30, 2001 consisted of $189.8 million
on hot-rolled products and $50.2 million on cold-finished products compared with
$206.9 million on hot-rolled products and $60.0 million on cold-finished
products for the three months ended September 30, 2000. The overall decrease in
cost of sales and higher percentage of net sales from the three months ended
September 30, 2000 to the three months ended September 30, 2001 was primarily
due to the decrease in sales and the efficiencies lost due to the lower sales.

Selling, general and administrative expenses were $10.0 million, or 4.2% of net
sales, for the three months ended September 30, 2001 compared with $14.5
million, or 4.9% of net sales, for the three months ended September 30, 2000.
The overall decrease in selling, general and administrative expenses is due in
part to the continuing benefits derived from combining selling, general and
administrative functions following the Combination. Additionally there was a
smaller selling, general and administrative staff in the third quarter of 2001
as compared to the third quarter of 2000.

Depreciation and amortization expense was $14.1 million for the three months
ended September 30, 2001, compared with $14.9 million for the three months ended
September 30, 2000. The decrease in the current period was primarily related to
the reduction of goodwill amortization following the impairment charge taken in
the fourth quarter of 2000.

Workforce reduction charges were $0.6 million for the three months ended
September 30, 2001, compared with $2.9 million for the three months ended
September 30, 2000. The decrease was primarily due to only 3 voluntary early
retirement buyouts ("ERBs") accepted during the third quarter of 2001 as
compared to 22 ERBs being accepted during the third quarter of 2000.

                                       18
<PAGE>

There were no restructuring charges for the three months ended September 30,
2001, compared with $9.7 million for the three months ended September 30, 2000.
The costs were recorded in connection with the shutdown of the Johnstown
facility in 2000.

Net interest expense was $8.5 million for the three months ended September 30,
2001 compared with $27.5 million for the three months ended September 30, 2000.
The decrease is primarily due to the Chapter 11 filings suspending the accrual
of interest expense on all debt other than the DIP credit facility and the
industrial revenue bond held with the Development Authority of Cartersville,
Georgia.

Reorganization items represent $2.1 million in costs relating to the Chapter 11
proceedings. These costs are primarily incurred for various consulting and legal
fees that are related to the bankruptcy proceedings.

The provision for income taxes for the three month period ended September 30,
2001 consisted primarily of currently payable foreign income taxes owed by
Canadian Drawn Steel Company ("CDSC").

As a result of the above, the Company reported a net loss of $36.2 million for
the three months ended September 30, 2001 compared with a net loss of $46.3
million for the three months ended September 30, 2000.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2000

Net sales for the nine months ended September 30, 2001 totaled $757.3 million on
shipments of approximately 1,515,040 net tons compared with net sales of
$1,006.4 million for the nine months ended September 30, 2000 on shipments of
approximately 2,013,696 net tons. The decrease in net sales and tons shipped
reflects the weak demand in the automotive and service center markets that has
negatively affected the results for the nine months ended September 30, 2001.
Net sales for the nine months ended September 30, 2001 were comprised of $591.2
million of hot-rolled net sales and $166.1 million of cold-finished net sales,
compared with hot-rolled net sales of $780.2 million and cold-finished net sales
of $226.2 million for the nine months ended September 30, 2000.

Cost of sales totaled $760.4 million, or 100.4% of net sales, for the nine
months ended September 30, 2001 compared with cost of sales of $921.1 million,
or 91.5% of net sales, for the similar period ended September 30, 2000. Cost of
sales for the nine months ended September 30, 2001 consisted of $598.5 million
on hot-rolled products and $161.9 million on cold-finished products compared
with $713.6 million on hot-rolled products and $207.5 million on cold-finished
products for the nine months ended September 30, 2000. The overall increase in
cost of sales as a percentage of net sales from the nine months ended September
30, 2000 to the nine months ended September 30, 2001 was primarily due to
reduced units of production in the current year coupled with primarily fixed
labor costs.

Selling, general and administrative expenses were $33.4 million, or 4.4% of net
sales, for the nine months ended September 30, 2001 compared with $40.9 million,
or 4.1% of net sales, for the nine months ended September 30, 2000. The overall
decrease in selling, general and administrative expenses is due in part to the
continuing benefits derived from combining selling, general and administrative
functions following the Combination.

Depreciation and amortization expense was $42.7 million for the nine months
ended September 30, 2001, compared with $46.0 million for the nine months ended
September 30, 2000. The decrease in the current period was primarily related to
the reduction of goodwill amortization following the impairment charge taken in
the fourth quarter of 2000.

Workforce reduction charges were $14.6 million for the nine months ended
September 30, 2001, compared with $4.6 million for the nine months ended
September 30, 2000. The increase was primarily due to 68 voluntary early
retirement buyouts ("ERBs") being accepted during the first nine months of 2001
as compared to only 65 ERBs accepted during the first nine months of 2000. There
were also 11 VSPs paid during the first nine months of 2001 as compared to only
one VSP payment in the first nine months of 2000.

Restructuring charges of $1.2 million were recorded during the nine months ended
September 30, 2001 as compared with $59.0 million during the same period in
2000. The decrease is primarily a result of the $45.8 million in shutdown costs
recorded in connection with the shutdown of the Johnstown facility in the second
quarter of 2000. In addition to the $0.3 million recorded in the second quarter
of 2001 in connection with the shutdown of Willimantic discussed previously, the
restructuring charges for the nine months ended September 30, 2001 also included
$0.9 million of severance related costs for administrative staff reductions as
compared to $3.9 million for the nine months ended September 30, 2000. The
decrease in the severance charges was due to fewer administrative staff
reductions in the first nine months of 2001 compared to the first nine months of
2000.

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<PAGE>

Net interest expense was $48.0 million for the nine months ended September 30,
2001 compared with $81.3 million for the nine months ended September 30, 2000.
The decrease is primarily due 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.

Reorganization items represent $8.6 million in costs relating to the current
Chapter 11 proceedings. These costs include a $4.2 million write-down of
deferred finance costs related to the revolving credit facility which has been
converted into the new DIP credit facility due to the bankruptcy proceedings.
The amount also includes $4.4 million of various consulting and legal fees that
are also related to the bankruptcy proceedings.

The provision for income taxes for the nine months ended September 30, 2001 and
2000 consisted primarily of currently payable foreign income taxes owed by CDSC.

As a result of the above, the Company reported a net loss of $152.5 million for
the nine months ended September 30, 2001 compared with a net loss of $165.7
million for the nine months ended September 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary liquidity requirements consist of working capital needs,
funding requirements relating to its agreement with the Pension Benefit Guaranty
Corporation (the "PBGC"), capital expenditures and other costs relating to the
Company's consolidation plan, debt service requirements, and Chapter 11
administrative expenses. The Company's current sources of liquidity include cash
and cash equivalents, cash from operations, and amounts available under its
debtor-in-possession facility.

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 June 30, 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 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, which the PBGC has called in total
during July 2001. The Company currently is not making payments to the PBGC and
future funding levels are also subject to the outcome of the Chapter 11
proceedings.

CAPITAL EXPENDITURES

The Company invested $2.7 million in capital expenditures during the nine months
ended September 30, 2001. The Company's debtor-in-possession facility limits
capital expenditures to $29.0 million in 2001 and $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.


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<PAGE>

DEBT SERVICE REQUIREMENTS

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 were $420 million in the aggregate and include a
sub-facility of $50 million for the issuance of letters of credit. The DIP
Credit Agreement was amended on September 28, 2001. The amended agreement serves
as a waiver to the September 30, 2001 covenant requirements and allows maximum
borrowings of $360 million from October 1, 2001 through November 4, 2001, $355
million from November 5, 2001 through November 29, 2001, and $337 million
thereafter. 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. The
Company's net availability on its revolving credit facility at November 12, 2001
was approximately $15.0 million.

Under the terms of the bankruptcy cases, liabilities in the amount of
approximately $1.2 billion at September 30, 2001, are subject to compromise
under the Chapter 11 proceedings. Included in the liabilities subject to
compromise, is approximately $512.1 million of long-term debt. The accrual and
payment of interest on debt facilities, other than the debtor-in-possession
facility and the Development Authority of Cartersville, Georgia industrial
revenue bond, has been suspended subsequent to the Petition Date. All such debt
service requirements are subject to the outcome of the Chapter 11 proceedings.
The contractual amount of the interest not accrued as of September 30, 2001 was
$34.5 million.

Although the Company has obtained a debtor-in-possession credit facility,
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.

LIQUIDITY SOURCES AND OTHER FACTORS AFFECTING LIQUIDITY

The Company's lower than expected sales in the first three quarters of 2001
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 incurring certain costs and the receipt
of the expected cash flow benefits, such as in the case of headcount reductions
requiring lump sum payouts.

Management has sought to improve the Company's liquidity position by taking a
number of actions including increasing spot prices, reducing administrative
staff, implementing cost cutting programs, and closing operations. The Company
closed its Baltimore, Maryland Specialty Steel facility and its Willimantic
cold-finishing plant in the first quarter of 2001. In addition, the Company
reduced its planned capital expenditures from $48.0 to $13.1 million for the
year 2001, and obtained deferrals of approximately $46.0 million of certain
quarterly 2000 and 2001 Pension Benefit Guaranty Corporation ("PBGC") funding
requirements until 2002 and 2003. The Company is also in the process of selling
its remaining specialty steels division assets and expects to complete the sale
in the fourth quarter of this year. The Company is also in the process of
selling certain real estate from facilities closed as part of the consolidation
plan.

Notwithstanding these actions, 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.

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

                                       21
<PAGE>

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;
-        the Company's ability to increase sales to existing and new customers,
         particularly sales to automotive and industrial equipment
         manufacturers;
-        the Company's ability to implement its consolidation plan and to
         realize the expected benefits of the Combination in the time frame and
         at the costs currently contemplated;
-        market conditions and general risks associated with the steel industry;
         and
-        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 11of 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.

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.

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 $515.7 million of the
Company's secured and unsecured debt.

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

None.


                                       22

<PAGE>

ITEM 5.  OTHER INFORMATION

None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

          a.)     Reports on Form 8-K

         (10.51)  Form 8-K dated April 9, 2001 related to Republic Technologies
                  International, LLC and its immediate parent, Republic
                  Technologies International Holdings, LLC, and its
                  subsidiaries, Bliss & Laughlin LLC, and RTI Capital Corp.
                  filing 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.

          b.)     Exhibits

         (10.52)  Amendment and Limited Waiver to Debtor-in-Possession Revolving
                  Credit Agreement between Republic Technologies International,
                  LLC and Fleet Capital Corporation.


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<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: November 14, 2001       By: /s/ Joseph F. Lapinsky
                                  ---------------------
                              Joseph F. Lapinsky
                              Chief Executive Officer,
                                 President and Chief
                                 Operating Officer

Date: November 14, 2001       By: /s/ Joseph A. Kaczka
                                  --------------------
                              Joseph A. Kaczka

                              Vice President of Finance, Controller
                                 and Chief Accounting Officer





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