<PAGE>   1
                                    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 six month periods        Commission File Number: 333-90709-04
         ended June 30, 2001





                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                 (IRS Employer Identification No.)
of 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 July 31, 2001: AS OF JULY 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>   2


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

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                 PART I - FINANCIAL INFORMATION

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

                Consolidated Statements of Operations for the Three and Six Months Ended
                June 30, 2001 and 2000                                                                           3

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

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

                Consolidated Statements of Cash Flows for the Six Months Ended
                June 30, 2001 and 2000                                                                           7

                Notes to Consolidated Financial Statements                                                    8-17

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

Item 3.         Quantitative and Qualitative Disclosures About Market Risk                                      21

                                                   PART II - OTHER INFORMATION


Item 1.         Legal Proceedings                                                                               21

Item 2.         Changes in Securities                                                                           21

Item 3.         Defaults Upon Senior Securities                                                                 21

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

Item 5.         Other Information                                                                               22

Item 6.         Exhibits and Reports on Form 8-K                                                                22

                Signatures                                                                                      23
</TABLE>




                                        2
<PAGE>   3



                         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 SIX MONTHS ENDED JUNE, 2001 AND 2000
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                       Three Months Ended                 Six Months Ended
                                                               June 30, 2001     June 30, 2000     June 30, 2001     June 30, 2000
                                                               -------------     -------------     -------------     -------------
<S>                                                           <C>               <C>               <C>               <C>
Net sales                                                        $ 250,745         $ 352,915         $ 517,256         $ 711,439

Cost of goods sold                                                 229,208           320,147           520,437           654,273
                                                                 ---------         ---------         ---------         ---------

Gross profit (loss)                                                 21,537            32,768            (3,181)           57,166

Selling, general and administrative expense                         10,955            12,814            23,374            27,388

Monitoring fees                                                         --             1,000             1,000             2,000

Depreciation and amortization expense                               14,110            15,403            28,550            31,098

Special charges:

   Workforce reduction charges (Note 5)                              3,898               408            14,015             1,543

   Restructuring charges (Note 6)                                      300            47,821             1,158            49,469

Loss (gain) on sale of assets                                          671                --            (1,627)               --

Other expense, net                                                     277               252               458             1,196
                                                                 ---------         ---------         ---------         ---------

Operating loss                                                      (8,674)          (44,930)          (70,109)          (55,528)

Interest expense  (Excludes contractual interest of
$17,253 and for the three and six months ended
June 30, 2001                                                        9,534            27,116            39,530            53,837

Reorganization items-expense (Note 4)                                6,486                --             6,486                --
                                                                 ---------         ---------         ---------         ---------

Loss before income taxes                                           (24,694)          (72,046)         (116,125)         (109,365)

Provision (benefit) for income taxes                                    (4)               76               203               251
                                                                 ---------         ---------         ---------         ---------

Loss from continuing operations                                    (24,690)          (72,122)         (116,328)         (109,616)

Loss from disposition of discontinued operations                        --             9,821                --             9,821
                                                                 ---------         ---------         ---------         ---------

Net loss                                                         $ (24,690)        $ (81,943)        $(116,328)        $(119,437)
                                                                 =========         =========         =========         =========
</TABLE>


The accompanying notes are an integral part of these statements.


                                       3
<PAGE>   4


       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2000 AND DECEMBER 31, 1999
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                        June 30, 2001     December 31, 2000
                                                                                        -------------     -----------------
<S>                                                                                    <C>               <C>
ASSETS

Current assets:
        Cash and cash equivalents                                                        $     4,573         $     1,795
        Accounts receivable, less allowances of $14,857 and $25,210, respectively            139,116             129,278
        Inventories (Note 3)                                                                 244,867             271,154
        Assets held for sale (Note 9)                                                          8,687               9,306
        Prepaid expenses and other current assets                                              3,510              11,389
                                                                                         -----------         -----------

Total current assets                                                                         400,753             422,922

Property, plant and equipment:
        Land and improvements                                                                 14,387              15,039
        Buildings and improvements                                                            35,401              35,126
        Machinery and equipment                                                              721,913             716,437
        Construction-in-progress                                                               5,577              13,802
                                                                                         -----------         -----------

Total property, plant and equipment                                                          777,278             780,404

Accumulated depreciation                                                                    (127,245)           (102,492)
                                                                                         -----------         -----------

Net property, plant and equipment                                                            650,033             677,912

Assets held for sale (Note 9)                                                                  2,538               7,294

Intangible assets, net of accumulated amortization
        of $20,151 and $17,696, respectively                                                  74,567              79,783

Other assets                                                                                  12,765               9,173
                                                                                         -----------         -----------

Total assets                                                                             $ 1,140,656         $ 1,197,084
                                                                                         ===========         ===========
</TABLE>


The accompanying notes are an integral part of these statements.




                                       4
<PAGE>   5




       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2000 AND DECEMBER 31, 1999
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)



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

Liabilities not subject to compromise:

Current liabilities:
       Revolving credit facility (Note 1)                     $   352,455         $   329,398
       Long-term secured debt in default                            3,600                  --
       Current maturities of long-term debt                            --              11,318
       Accounts payable                                            40,967             234,811
       Accrued interest                                             3,257              34,220
       Accrued compensation and benefits                           42,448              38,310
       Other postretirement benefits                                   --              15,794
       Defined benefit pension obligations                             --              20,854
       Accrued environmental liabilities                            2,109               3,668
       Other accrued liabilities                                   31,734              63,127
                                                              -----------         -----------
Total current liabilities                                         476,570             751,500

Long-term debt                                                         --             502,254
Other postretirement benefits                                       3,499             217,620
Defined benefit pension obligations                                    --              69,089
Accrued environmental liabilities                                  17,365              15,933
Other liabilities                                                   6,022              43,101
                                                              -----------         -----------
Total liabilities not subject to compromise                       503,456           1,599,497

Liabilities subject to compromise (Note 4)                      1,156,219                  --
                                                              -----------         -----------

Total liabilities                                               1,659,675           1,599,497
                                                              -----------         -----------

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

Members' interest:
       Class B Units                                             (552,488)           (435,689)
       Class C Units                                               32,500              32,125
       Accumulated other comprehensive loss                        (2,731)             (2,649)
                                                              -----------         -----------
Total members' interest                                          (522,719)           (406,213)
                                                              -----------         -----------

Total liabilities and members' interest                       $ 1,140,656         $ 1,197,084
                                                              ===========         ===========
</TABLE>

The accompanying notes are an integral part of these statements.



                                       5
<PAGE>   6







       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                  CONSOLIDATED STATEMENTS OF MEMBERS' INTEREST
   FOR THE SIX MONTHS ENDED JUNE 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>              <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                               (116,328)            --               --          (116,328)         $(116,328)
 Other comprehensive income:
Foreign currency translation
adjustment                                    --             --              (82)              (82)               (82)
                                       ---------        -------          -------         ---------          ---------

 Balance, June 30, 2001                $(552,488)       $32,500          $(2,731)        $(522,719)         $(116,410)
                                       =========        =======          =======         =========          =========
</TABLE>


The accompanying notes are an integral part of these statements.




                                       6
<PAGE>   7

       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
                     SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                 Six Months Ended
                                                                         June 30, 2001        June 30, 2000
                                                                         -------------        -------------
<S>                                                                     <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                $(116,328)          $(119,437)
    Adjustments to reconcile net cash used
        in operating activities:
    Restructuring charges                                                       1,158              49,469
    (Gain)/Loss on sale of fixed assets                                        (1,627)             (1,156)
    Depreciation and amortization                                              28,550              31,849
    Accretion of original issue discount                                          693               1,339
    Amortization of deferred financing cost                                     2,328               1,437
    Reorganization items                                                        6,486                  --
    Changes in operating assets and liabilities:
        Increase in accounts receivable                                        (9,838)            (34,284)
        Decrease in inventory                                                  26,287              51,530
        Decrease in prepaid assets                                              7,879               3,158
        Increase in accounts payable                                           29,015              10,309
        Increase (decrease) in accrued compensation and benefits                4,138                 (25)
        Increase (decrease) in defined benefit pension obligations              8,830              (7,924)
        Increase in other postretirement benefits                               4,391              10,187
        Decrease in accrued environmental liabilities                            (127)               (716)
        Decrease in other current liabilities                                 (14,091)             (9,480)
     Other                                                                        830               4,522
                                                                            ---------           ---------
NET CASH USED IN OPERATING ACTIVITIES BEFORE REORGANIZATION ITEMS             (21,426)             (9,222)
     Payments for professional fees and other reorganization items             (1,421)
                                                                            ---------           ---------
NET CASH USED IN OPERATING ACTIVITIES                                         (22,847)             (9,222)
                                                                            ---------           ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                       (1,370)             (5,243)
    Disposition of property, plant and equipment                                4,050               4,482
                                                                            ---------           ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                             2,680                (761)
                                                                            ---------           ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from long-term debt                                                2,000                  --
    Net proceeds under revolving credit facilities                             23,057              11,881
    Repayments of long-term debt                                                 (557)               (831)
    Deferred financing costs                                                   (1,300)                 --
    Redemption of class A members' interest                                      (100)                 --
    Payment of preferred return                                                   (73)                 --
                                                                            ---------           ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                      23,027              11,050
                                                                            ---------           ---------
Effect of exchange rate changes on cash                                           (82)               (294)
                                                                            ---------           ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                       2,778                 773
Cash and cash equivalents - beginning of period                                 1,795               4,637
                                                                            ---------           ---------
Cash and cash equivalents - end of period                                   $   4,573           $   5,410
                                                                            =========           =========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                      $  50,401            $,46,849
                                                                            =========           =========
Cash paid for income taxes                                                  $     168           $     845
                                                                            =========           =========
</TABLE>



The accompanying notes are an integral part of these statements.



                                       7
<PAGE>   8
       REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


1. NATURE OF OPERATIONS, ORGANIZATION AND OTHER RELATED INFORMATION

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

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

On April 2, 2001 ("Petition Date"), Republic Technologies International, LLC and
its immediate parent, Republic Technologies International Holdings, LLC, and its
subsidiaries, Bliss & Laughlin LLC, and RTI Capital Corp. (collectively,
"Debtors"), filed voluntary petitions for reorganization under Chapter 11
("Chapter 11") of the Federal Bankruptcy Code ("Bankruptcy Code") in the United
States Bankruptcy Court in the Northern District of Ohio, Eastern Division
("Court"). The Company 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 are $420 million in the aggregate and include 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>   9


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 August 4, 2001 was
approximately $14.7 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, 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 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
six months ended June 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.

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.



                                       9
<PAGE>   10

The Company operates in three separate segments: hot-rolled, cold-finished, and
specialty steels. In connection with the acquisition of Republic, 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 issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangibles." SFAS
No. 141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase 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
an my 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 test 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
review may result in future write-downs.

3. INVENTORIES

<TABLE>
<CAPTION>
The components of inventories are as follows:     June 30, 2001        December 31, 2000
                                                  -------------        -----------------
<S>                                              <C>                  <C>
Raw materials                                          $ 17,368                 $ 21,583

Semi-finished and finished goods                        227,499                  249,571
                                                       --------                 --------

Total                                                  $244,867                 $271,154
                                                       ========                 ========
</TABLE>

At June 30, 2001 and December 31, 2000, inventories are net of market reserves
and obsolescence reserves aggregating $9.6 million and $6.7 million,
respectively.

4. LIABILITIES SUBJECT TO COMPROMISE AND REORGANIZATION ITEMS

The accompanying consolidated balance sheet as of June 30, 2001 segregates
liabilities subject to compromise, such as unsecured claims, in the amount of
$1,156.2 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 executory contracts or
unexpired leases, and determination as to the value of any collateral securing
claims or other events. Payment terms for these amounts, which are considered
long-term liabilities at this time, will be established in connection with the
Chapter 11 cases. The Company has received approval from the Bankruptcy Court to
pay pre-petition and post-petition employee wages, salaries, benefits and
certain other employee obligations. Liabilities subject to compromise at June
30, 2001 were as follows (in thousands):


                                                     JUNE 30, 2001
                                                     -------------
      Accounts payable                                 $  223,478
      Accrued interest                                     20,378
      Other postretirement benefits                       234,306
      Defined benefit pension obligations                  98,773
      Other accrued expenses                               30,752
      Long term deferred payables                          36,424
      Long term debt                                      512,108
                                                       ----------
      Total (a)                                        $1,156,219
                                                       ==========

(a)  Excludes a net intercompany payable in the amount of $5,890 to the
     Company's subsidiary, Nimishillen & Tuscarawas LLC, which is not included
     in the bankruptcy proceedings.




                                       10
<PAGE>   11

Reorganization items consist of expenses directly incurred or realized as a
result of the Chapter 11 cases and have been segregated from normal operations.
Reorganization expense included in the consolidated statement of operations for
the three and six months ended June 30, 2001 include the following:


    Write-down of deferred financing costs related to
    the revolving credit facility                                   $4,247
    Professional fees and administrative items                       2,239
                                                                    ------
    Total                                                           $6,486
                                                                    ======

5. WORKFORCE REDUCTION CHARGES

In connection with the Republic acquisition in September 1998, a new Master
Collective Bargaining Agreement and settlement agreement (collectively, the
"Master CBA") covering all of the former Republic and BarTech facilities with
employees represented by the United Steel Workers of America ("USWA") 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 Republic
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 June 30, 2001, 845 voluntary ERB packages were accepted.
As such, the Company has recorded $110.7 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 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 six months ended June 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 $.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.




                                       11
<PAGE>   12

Restructuring charges of $3.5 million were also recorded during 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 $.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 Republic acquisition. Fair value adjustments to
the fixed assets and shutdown reserves related to the Canton 12" facility were
recorded at the date of the Republic 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 Republic 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 six months ended June
30, 2000 was recorded as a restructuring charge in the consolidated statement of
operations.

The activity impacting the accruals for restructuring during the six months
ended June 30, 2001, is summarized in the table below:
                            Labor &        Facility Closure
                           Severance             Costs              Total
                           ---------             -----              -----

December 31, 2000           $18,568             $ 6,385            $24,953
    Provision                   858                 300              1,158
    Amount utilized          (2,523)             (1,701)            (4,224)
    Adjustments                  --               1,544  (a)         1,544
                            -------             -------            -------
June 30, 2001               $16,903             $ 6,528            $23,431
                            =======             =======            =======

    (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.

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 JUNE 30, 2001


Net sales                                       $241,690
Cost of goods sold
                                                 221,218
                                                --------
Gross profit (loss)
                                                  20,472

Selling, general and administrative expense       10,583
Depreciation and amortization expense             13,816
Special charges:
         Workforce reduction charges               3,898
         Restructuring charges                       300
Loss (gain) on sale of assets                        671
Other expense, net                                   355
                                                --------
Operating loss                                    (9,151)
Interest expense, net                              9,521
Reorganization items                               6,486
                                                --------
Loss before income taxes                         (25,158)
Provision for income taxes                            46
                                                --------
Net loss                                        $(25,204)
                                                ========




                                       12
<PAGE>   13



                               BALANCE SHEET
                               JUNE 30, 2001


ASSETS
Current assets:
      Cash and cash equivalents                                $    4,111
      Accounts receivable, less allowances of $14,706             133,671
      Accounts receivable with affiliates                          14,183
      Inventories                                                 239,261
      Assets held for sale                                          8,687
      Prepaid expenses and other current assets                     3,506
                                                               ----------
      Total current assets                                        403,419
Property, plant and equipment:
      Land and improvements                                        13,757
      Buildings and improvements                                   32,846
      Machinery and equipment                                     718,234
      Construction-in-progress                                      4,128
                                                               ----------
    Total property, plant and equipment                           768,965
    Accumulated depreciation                                     (124,745)
                                                               ----------
    Net property, plant and equipment                             644,220

Assets held for sale                                                2,538
Intangible assets, net of accumulated amortization                 74,567
Investments in non-debtor subsidiaries                             16,221
Other assets                                                        7,994
                                                               ----------
Total assets                                                   $1,148,959
                                                               ==========

LIABILITIES AND MEMBERS' INTEREST
Liabilities not subject to compromise:
Current liabilities:
      Revolving credit facility                                $  352,455
      Long-term secured debt in default                             3,600
      Accounts payable                                             40,309
      Accounts payable with affiliates                             13,013
      Accrued interest                                              3,257
      Accrued compensation and benefits                            41,985
      Accrued environmental liabilities                             2,109
      Other accrued liabilities                                    31,644
                                                               ----------
Total current liabilities                                         488,372

Accrued environmental liabilities                                  17,365
Other liabilities                                                   6,022
                                                               ----------
Total liabilities not subject to compromise                       511,759

Liabilities subject to compromise                               1,156,219
                                                               ----------
Total liabilities                                               1,667,978
                                                               ----------
Members' interest                                                (519,019)
                                                               ----------
Total liabilities and members' interest                        $1,148,959
                                                               ==========








                                       13
<PAGE>   14



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

<TABLE>
<S>                                                                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                 $(25,204)
    Adjustments to reconcile net cash used in operating activities:
    Restructuring charges                                                         300
    Loss on sale of fixed assets                                                  671
    Depreciation and amortization                                              13,816
    Amortization of deferred financing cost                                     1,290
    Reorganization items                                                        6,486
    Changes in operating assets and liabilities:
        Decrease in accounts receivable                                        21,417
        Increase in inventory                                                 (34,791)
        Decrease in other current assets                                        3,401
        Increase in accounts payable                                            1,323
        Increase in accrued compensation and benefits                             697
        Increase in defined benefit pension obligations                         4,185
        Increase in other postretirement benefits                                 733
        Decrease in accrued environmental liabilities                            (406)
        Increase in other current liabilities                                   1,278
        Other                                                                    (425)
                                                                             --------
NET CASH USED IN OPERATING ACTIVITIES BEFORE REORGANIZATION ITEMS              (5,228)
     Payments for professional fees and other reorganization items             (1,421)
                                                                             --------
NET CASH USED IN OPERATING ACTIVITIES                                          (6,649)
                                                                             --------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                         (535)
    Disposition of property, plant and equipment                                   59
                                                                             --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                              (476)
                                                                             --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds under revolving credit facilities                              9,661
    Repayments of long-term debt                                                  (43)
    Deferred financing costs                                                   (1,300)
                                                                             --------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                       8,318

NET INCREASE IN CASH AND CASH EQUIVALENTS                                       1,193
Cash and cash equivalents - beginning of period                                 2,918
                                                                             --------
Cash and cash equivalents - end of period                                    $  4,111
                                                                             ========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                       $ 50,401
                                                                             ========
Cash paid for income taxes                                                   $    168
                                                                             ========
</TABLE>





                                       14
<PAGE>   15


8. SEGMENT INFORMATION

The Company operates in three reportable segments: hot-rolled, cold-finished and
specialty steels. As discussed previously in Note 2, the Company intends to sell
its specialty steel division and accordingly, the accompanying consolidated
financial statements reflect that division as a discontinued operation in
accordance with Accounting Principles Board Opinion No. 30. As such the
following tables do not reflect specialty steels as a reportable segment. The
Company manages the reportable segments as separate strategic business units.
Differences between the segments include manufacturing techniques and equipment,
competition, and end-users. The Company measures segment performance based on
earnings before net interest expense, income taxes, depreciation and
amortization expense, other postretirement benefit charges, workforce reduction
charges and other (income) loss, net ("EBITDA, as defined").

HOT-ROLLED

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

COLD-FINISHED

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

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


<TABLE>
<CAPTION>
                                                 For the Three Months Ended June 30, 2001
                                  -------------------------------------------------------------------------
                                                     Cold-         Total      Inter Segment
                                  Hot-Rolled       Finished       Segments  Elimination/Other  Consolidated
<S>                              <C>              <C>            <C>       <C>                <C>
Net sales                           $229,527       $ 56,688       $286,215       $(35,470)       $250,745
Depreciation and amortization         12,848          1,262         14,110             --          14,110
Segment profit (EBITDA,
    as defined)                       14,078          1,045         15,123             --          15,123
Capital expenditures                     250            285            535             --             535
</TABLE>

<TABLE>
<CAPTION>
                                                  For the Three Months Ended June 30, 2000
                                 ---------------------------------------------------------------------------
                                                     Cold-         Total      Inter Segment
                                  Hot-Rolled       Finished       Segments  Elimination/Other  Consolidated
<S>                              <C>              <C>            <C>       <C>                <C>
Net sales                           $328,397        $78,008       $406,405       $(53,490)       $352,915
Depreciation and amortization         14,208          1,195         15,403             --          15,403
Segment profit (EBITDA,
    as defined)                       18,428          3,487         21,915             --          21,915
Capital expenditures                   1,672             73          1,745             --           1,745
</TABLE>



                                       15
<PAGE>   16


<TABLE>
<CAPTION>
                                                        For the Six Months Ended June 30, 2001
                                    ------------------------------------------------------------------------------
                                                       Cold-           Total        Inter Segment
                                    Hot-Rolled        Finished        Segments    Elimination/Other   Consolidated
<S>                                <C>               <C>             <C>         <C>                 <C>
Net sales                            $463,772         $116,001        $579,773         $(62,517)       $ 517,256
Depreciation and amortization          26,029            2,521          28,550               --           28,550
Segment profit (EBITDA,
    as defined)                       (17,997)             596         (17,401)              --          (17,401)
Capital expenditures                    1,033              337           1,370               --            1,370
</TABLE>

<TABLE>
<CAPTION>
                                                          For the Six Months Ended June 30, 2000
                                 ------------------------------------------------------------------------------------------
                                                     Cold-         Total      Inter Segment
                                  Hot-Rolled       Finished       Segments  Elimination/Other  Consolidated
<S>                              <C>              <C>            <C>       <C>                <C>
Net sales                           $643,026       $160,460       $803,486       $(92,047)       $711,439
Depreciation and amortization         28,687          2,411         31,098             --          31,098
Segment profit (EBITDA,
    as defined)                       29,305          6,974         36,279             --          36,279
Capital expenditures                   4,930            313          5,243             --           5,243
</TABLE>


<TABLE>
<CAPTION>
                                                           As of June 30, 2001
                                -----------------------------------------------------------------------------------
                                                     Cold-            Total         Inter Segment
                                Hot-Rolled         Finished          Segments     Elimination/Other    Consolidated
<S>                            <C>                <C>              <C>           <C>                  <C>
Segment assets                  $1,002,289         $123,823         $1,126,112         $14,544          $1,140,656
</TABLE>

<TABLE>
<CAPTION>
                                                          As of December 31, 2000
                                ------------------------------------------------------------------------------------
                                                     Cold-            Total         Inter Segment
                                Hot-Rolled         Finished          Segments     Elimination/Other    Consolidated
<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 Republic, 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 Republic 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 six months
ended June 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 third 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 June 30,      Six Months Ended June 30,
                                ---------------------------      -------------------------
                                    2001           2000             2001           2000
                                    ----           ----             ----           ----
<S>                               <C>            <C>             <C>             <C>
Net sales                          $6,550         $13,538         $12,874         $26,440
Gross loss                           (765)         (1,193)         (2,306)         (3,844)
Loss before income taxes             (989)         (2,365)         (2,112)         (6,208)
Provision for income taxes             --              --              --              --
                                   ------         -------         -------         -------
Net loss                           $ (989)        $(2,365)        $(2,112)        $(6,208)
                                   ======         =======         =======         =======
</TABLE>





                                       16
<PAGE>   17



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>
                                                                June 30, 2001      December 31, 2000
                                                                -------------      -----------------
<S>                                                            <C>                <C>
Assets held for sale, current- Inventories                          $8,687               $9,306
                                                                    ======               ======

Assets held for sale, non-current - Property, plant
       and equipment                                                $2,538               $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 six months ended June 30, 2001 and 2000. The
results for the three and six months ended June 30, 2001 are not necessarily
indicative of the results to be expected for the full year ended December 31,
2001.

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

Net sales for the three months ended June 30, 2001 totaled $250.7 million on
shipments of approximately 493,908 net tons compared with net sales of $352.9
million for the three months ended June 30, 2000 on shipments of approximately
719,700 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 June 30, 2001. Net sales for the three
months ended June 30, 2001 were comprised of $194.1 million of hot-rolled net
sales and $56.6 million of cold-finished net sales, compared with hot-rolled net
sales of $274.9 million and cold-finished net sales of $78.0 million for the
three months ended June 30, 2000.

Cost of sales totaled $229.2 million, or 91.4% of net sales, for the three
months ended June 30, 2001 compared with cost of sales of $320.1 million, or
90.7% of net sales, for the similar period ended June 30, 2000. Cost of sales
for the three months ended June 30, 2001 consisted of $176.0 million on
hot-rolled products and $53.2 million on cold-finished products compared with
$248.8 million on hot-rolled products and $71.3 million on cold-finished
products for the three months ended June 30, 2000. The overall decrease in cost
of sales from the three months ended June 30, 2000 to the three months ended
June 30, 2001 was primarily due to the decrease in sales as the cost of sales as
a percentage of net sales remained relatively constant.

Selling, general and administrative expenses were $11.0 million, or 4.4% of net
sales, for the three months ended June 30, 2001 compared with $12.8 million, or
3.6% of net sales, for the three months ended June 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 further reduction
in selling, general and administrative headcount during the quarter.

Depreciation and amortization expense was $14.1 million for the three months
ended June 30, 2001, compared with $15.4 million for the three months ended June
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 $3.9 million for the three months ended June
30, 2001, compared with $0.4 million for the three months ended June 30, 2000.
The increase was primarily due to 16 voluntary early retirement buyouts ("ERBs")
and 11 voluntary severance packages ("VSPs") accepted during the second quarter
of 2001 as compared to only 3 ERBs being accepted during the second quarter of
2000.



                                       17
<PAGE>   18

Restructuring charges of $0.3 million for the three months ended June 30, 2001,
compared with $47.8 million for the three months ended June 30, 2000. The
decrease was related to $45.8 million in shutdown costs recorded in connection
with the shutdown of the Johnstown facility in 2000. These costs included $40.6
million related to a write down of the property, plant and equipment for the
Johnstown facility, $3.2 million related to additional environmental remediation
required as a result of the closure, and $2.0 million is for other shutdown
costs related to the Johnstown facility. In addition, $2.0 million was recorded
due to severance related costs for administrative staff reductions. The $0.3
million recorded in the three months ended June 30, 2001 related to additional
environmental remediation required as a result of the Willimantic shutdown
and closure.

Net interest expense was $9.5 million for the three months ended June 30, 2001
compared with $27.1 million for the three months ended June 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 $6.5 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 $2.3 million of various consulting and
legal fees that are also related to the bankruptcy proceedings.

The provision for income taxes for the three month period ended June 30,
2000 consisted of currently payable foreign income taxes owed by Canadian
Drawn Steel Company ("CDSC").

The Company recorded charges of $9.8 million related to the disposition of its
Specialty Steels Division in the three months ended June 30, 2000.

As a result of the above, the Company reported a net loss of $24.7 million for
the three months ended June 30, 2001 compared with a net loss of $81.9 million
for the three months ended June 30, 2000.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000

Net sales for the six months ended June 30, 2001 totaled $517.3 million on
shipments of approximately 1,030,899 net tons compared with net sales of $711.4
million for the six months ended June 30, 2000 on shipments of approximately
1,428,500 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 six months ended June 30, 2001. Net sales for the six months
ended June 30, 2001 were comprised of $401.3 million of hot-rolled net sales and
$116.0 million of cold-finished net sales, compared with hot-rolled net sales of
$551.0 million and cold-finished net sales of $160.4 million for the six months
ended June 30, 2000.

Cost of sales totaled $520.4 million, or 100.6% of net sales, for the six months
ended June 30, 2001 compared with cost of sales of $654.3 million, or 92.0% of
net sales, for the similar period ended June 30, 2000. Cost of sales for the six
months ended June 30, 2001 consisted of $409.5 million on hot-rolled products
and $110.9 million on cold-finished products compared with $506.7 million on
hot-rolled products and $147.6 million on cold-finished products for the six
months ended June 30, 2000. The overall increase in cost of sales as a
percentage of net sales from the six months ended June 30, 2000 to the six
months ended June 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 $23.4 million, or 4.5% of net
sales, for the six months ended June 30, 2001 compared with $27.4 million, or
4.5% of net sales, for the six months ended June 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 further reduction in
selling, general and administrative headcount during 2001.

Depreciation and amortization expense was $28.6 million for the six months ended
June 30, 2001, compared with $31.1 million for the six months ended June 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 $14.0 million for the six months ended June 30,
2001, compared with $1.5 million for the six months ended June 30, 2000. The
increase was primarily due to 65 voluntary early retirement buyouts ("ERBs")
being accepted during the first six months of 2001 as compared to only 9 ERBs
accepted during the first six months of 2000.



                                       18
<PAGE>   19

Restructuring charges of $1.2 million were recorded during the six months ended
June 30, 2001 as compared with $49.5 million during the same period in 2000.
As discussed previously 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 six months
ended June 30, 2001 also included $0.9 million of severance related costs for
administrative staff reductions as compared to $3.6 million for the six months
ended June 30, 2000. The decrease in the severance charges was due to fewer
administrative staff reductions in the first six months of 2001 compared to
the first six months of 2000.

Net interest expense was $39.5 million for the six months ended June 30, 2001
compared with $53.8 million for the six months ended June 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 $6.5 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 $2.3 million of various consulting and
legal fees that are also related to the bankruptcy proceedings.

The provision for income taxes for the six month periods ended June 30, 2001 and
2000 consisted primarily of currently payable foreign income taxes owed by
CDSC.

The Company recorded charges of $9.8 million related to the disposition of its
Specialty Steels Division in the six months ended June 30, 2000.

As a result of the above, the Company reported a net loss of $116.3 million for
the six months ended June 30, 2001 compared with a net loss of $119.4 million
for the six months ended June 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



                                       19
<PAGE>   20


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 $1.3 million in capital expenditures during the six months
ended June 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.

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 are $420 million in the aggregate and include a
sub-facility of $50 million for the issuance of letters of credit. 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 August 4, 2001 was
approximately $14.7 million.

Under the terms of the bankruptcy cases, liabilities in the amount of
approximately $1,156 million at June 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 June 30, 2001 was $17.3
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 and second 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 third 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



                                       20
<PAGE>   21

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 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:

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

     o    the Company's ability to increase sales to existing and new customers,
          particularly sales to automotive and industrial equipment
          manufacturers;

     o    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;

     o    market conditions and general risks associated with the steel
          industry; and

     o    matters discussed under the caption "Risk Factors" in the Company's
          Registration Statement on Form S-4.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

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.




                                       21
<PAGE>   22

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

None.


ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         a.)      Reports on Form 8-K

         (10.51)  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.














                                       22
<PAGE>   23


                                   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: August 10, 2001                    By: /s/Joseph F. Lapinsky
                                             ---------------------------
                                         Joseph F. Lapinsky
                                         Chief Executive Officer,
                                            President and Chief
                                            Operating Officer

Date: August 10, 2001                    By: /s/Stephen Graham
                                            ----------------------------
                                         Stephen Graham
                                         Executive Vice President and
                                            Chief Financial Officer


Date: August 10, 2001                    By: /s/ Joseph A. Kaczka
                                            ----------------------------
                                         Joseph A. Kaczka
                                         Vice President of Finance, Controller
                                            and Chief Accounting Officer




                                       23