<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1999
                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from                           to
                               -------------------------    --------------------

                         Commission File Number 1-12852

                             ROUGE INDUSTRIES, INC.
                             ----------------------
             (Exact name of registrant as specified in its charter)

         DELAWARE                                               38-3340770
         --------                                               ----------

(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

3001 MILLER ROAD, P.O. BOX 1699, DEARBORN, MICHIGAN              48121-1699
---------------------------------------------------              ----------
(Address of principal executive offices)                         (Zip Code)

                                 (313) 317-8900
                                 --------------
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
                                                         Name of each exchange
         Title of each class                              on which registered
         -------------------                              -------------------

Class A Common Stock, $0.01 par value                    New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

                                      None

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]

      Based upon the closing price of the Class A Common Stock on February 29,
2000, as reported on the New York Stock Exchange composite tape (as reported by
the Wall Street Journal), the aggregate market value of registrant's Class A
Common Stock held by nonaffiliates of registrant as of such date was
$109,981,565.

      The number of shares of common stock issued and outstanding as of February
29, 2000 was 22,134,435. This amount includes 14,572,035 shares of Class A
Common Stock and 7,562,400 shares of Class B Common Stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the 2000 Proxy Statement of Rouge Industries, Inc. are
incorporated by reference into Part III of this Form 10-K to the extent provided
herein.



<PAGE>   2



                             ROUGE INDUSTRIES, INC.
                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

PART I                                                                                                       PAGE
------                                                                                                       ----

<S>                <C>                                                                                      <C>
Item 1.            Business..................................................................................    3

Item 2.            Properties................................................................................   13

Item 3.            Legal Proceedings.........................................................................   13

Item 4.            Submission of Matters to a Vote of Security Holders.......................................   14

PART II

Item 5.            Market for Registrant's Common Stock and Related Stockholder Matters......................   17

Item 6.            Selected Financial Data...................................................................   18

Item 7.            Management's Discussion and Analysis of Financial Condition and
                   Results of Operations.....................................................................   20

Item 8.            Financial Statements and Supplementary Data...............................................   32

Item 9.            Changes in and Disagreements With Accountants on Accounting
                   and Financial Disclosure..................................................................   55

PART III

Item 10.           Directors and Executive Officers of the Registrant........................................   56

Item 11.           Executive Compensation....................................................................   56

Item 12.           Security Ownership of Certain Beneficial Owners and Management............................   56

Item 13.           Certain Relationships and Related Transactions............................................   56


PART IV

Item 14.           Exhibits, Financial Statement Schedules, and Reports on Form 8-K..........................   57
</TABLE>




                                        2

<PAGE>   3





                                     PART I

Item 1.        Business.

GENERAL

       Rouge Steel Company ("Rouge Steel") is the primary operating subsidiary
of Rouge Industries, Inc., a Delaware corporation (together with its
subsidiaries, "Rouge Industries" or the "Company"). The Company was incorporated
in 1996. Rouge Steel is an integrated producer of high quality, flat rolled
carbon steel products consisting of hot rolled, cold rolled and galvanized
steel. The Company's products generally command higher margins than commodity
flat rolled carbon steel products. The Company's products generally, and its
value-added products specifically, are sold primarily to customers in the
automotive industry which have exacting quality, delivery and service
requirements. The Company's ability to meet these requirements and its
participation in the development of new products designed for automotive
applications have enabled it to expand its sales to automotive customers. The
Company also sells its products to steel converters, service centers and other
end users.

       Other wholly-owned subsidiaries of Rouge Industries include QS Steel Inc.
("QS Steel") and Eveleth Taconite Company ("Eveleth"). QS Steel holds minority
ownership interests in five Michigan-based joint ventures. Eveleth holds a 45%
interest in Eveleth Mines LLC ("EVTAC"), a Minnesota-based iron ore mining and
pellet producing operation.

PRODUCTS

       The Company currently produces four finished sheet steel products: (i)
hot rolled, which is sold to automotive, converter and service center customers
and other end users; (ii) cold rolled, which is hot rolled steel that is
subsequently cold reduced in thickness, annealed and typically tempered to
enhance ductility and surface characteristics and is sold to automotive,
converter and service center customers and other end users; (iii)
electrogalvanized, which is cold rolled steel that can be differentially coated
on one or both sides with either pure zinc or a zinc/iron combination to make
the steel more corrosion resistant and is sold almost exclusively to automotive
customers; and (iv) hot dip galvanized, which is cold rolled steel that is
coated on both sides with zinc to make the steel more corrosion resistant and is
sold to automotive and service center customers and other end users such as
commercial and residential door manufacturers.

       The following table sets forth the percentage of Rouge Industries' steel
product revenues from hot rolled, cold rolled, electrogalvanized and hot dip
galvanized steel for the years from 1997 through 1999.

<TABLE>
<CAPTION>
                                                                     Year Ended December 31
                                                         -----------------------------------------------
                                                           1999               1998                1997
                                                           ----               ----                ----

<S>                                                      <C>                 <C>                 <C>
Hot Rolled                                                37.3%               44.6%               49.4%
Cold Rolled                                               27.4                30.5                29.8
Electrogalvanized                                         21.9                21.0                20.2
Hot Dip Galvanized                                        13.4                 3.9                 0.6
                                                         -----               -----               -----
       Total                                             100.0%              100.0%              100.0%
                                                         =====               =====               =====
</TABLE>

                                        3

<PAGE>   4



       Approximately one-half of the Company's sales of hot rolled steel have
been to the automotive market for wheels and structural components such as
suspension arms, frames and seat frames. Rouge Steel also sells hot rolled steel
in the non-automotive end user markets for the manufacture of roof decking,
grating, guard rails and pipes and to converters and service centers to be
further processed or sold directly to other end users. Cold rolled steel is sold
by the Company for use in automotive parts, lighting fixtures, room dividers and
doors, and for unexposed applications such as the manufacture of floor pans and
tubing. Electrogalvanized products are sold to automotive customers for use as
major automotive body panels such as doors, quarter panels and fenders. Hot dip
galvanized products are presently sold to automotive, construction and service
center customers.

       One of the Company's primary objectives is to increase its production and
sales of value-added higher margin products. In order to increase the Company's
capability to produce more sophisticated products as well as retain and add
customers, the Company has entered into five Michigan-based strategic joint
ventures:

       (i)   Shiloh of Michigan, L.L.C. ("Shiloh of Michigan"), a joint venture
             with Shiloh Industries, Inc. ("Shiloh") which produces engineered
             steel blanks that the Company sells to its automotive customers;

       (ii)  Spartan Steel Coating, L.L.C. ("Spartan Steel"), a joint venture
             with Worthington Industries, Inc. (together with its subsidiaries,
             "Worthington") which produces hot dip galvanized steel primarily
             for automotive applications;

       (iii) TWB Company, L.L.C. ("TWB"), a joint venture with Worthington,
             Thyssen Inc., Bethlehem Blank Welding, Inc. and LTV Steel Company,
             Inc. which produces laser welded blanks sold primarily for
             automotive and other end use applications;

       (iv)  Delaco Processing, L.L.C. ("Delaco Steel Processing"), a joint
             venture with Delaco Supreme Tool & Gear Co. which slits and
             warehouses steel coils to be sold to automotive customers and other
             end users; and

       (v)   Bing Blanking, L.L.C. ("Bing Blanking"), a joint venture with Bing
             Management II, L.L.C. which produces first operation blanks and
             roll formed parts primarily for the automotive industry.

       The Company has invested approximately $52.1 million in Spartan Steel and
$6.5 million in TWB. Shiloh of Michigan has a $30 million credit facility, 20%
of which is guaranteed by the Company. Delaco Steel Processing and Bing Blanking
have credit facilities of $7.3 million and $5 million, respectively, both of
which are guaranteed by the Company. Delaco Steel Processing and Bing Blanking
are minority business enterprises which allow the Company to take advantage of
an opportunity created by an announced commitment to minority suppliers by the
Company's three largest customers. Rouge Industries' participation in these
joint ventures responds to the demand by end users for increasingly complex
products and is intended to mitigate the erosion in sales that might occur if
the Company were unable to provide these products to its current customers. In
addition, participation in these joint ventures may provide opportunities for
the Company to supply new customers.



                                        4

<PAGE>   5



MARKETS AND CUSTOMERS

       Consistent with the Company's goal to strengthen long-term customer
relationships, customer service is a key component of Rouge Industries' strategy
and significant resources have been devoted toward that end. The Company has
approximately 200 steel customers, virtually all of which are located within 350
miles of Rouge Steel's integrated facility. The Company believes its proximity
to its customers allows it to provide focused customer service and resources.
The primary goal in this respect is to maintain and improve its responsiveness
to customer needs in a continually changing competitive environment.

       Ford Motor Company ("Ford") and DaimlerChrysler AG ("DaimlerChrysler"),
the Company's two largest customers, accounted for approximately 39% and 10%,
respectively, of total sales in 1999. Sales to Ford and DaimlerChrysler were 37%
and 10%, respectively, of total sales in 1998. While the loss of Ford as a
customer could have a materially adverse effect on the Company's business, the
Company believes that its relationship with Ford provides a stable sales base
and the ability to expand its product capability and concentrate on increasing
margins through more efficient production. No single customer, other than Ford,
DaimlerChrysler or Worthington, has accounted for more than 10% of the Company's
total sales over the past five years. The Company's ten largest customers in the
aggregate accounted for approximately 71% of total sales in 1999 and
approximately 75% of total sales in 1998. For 1999, the Company estimates that
its share of the domestic flat rolled steel market, as measured by shipments,
was approximately 4.2%.

       The Company's primary customers are in the automotive, converter, service
center and other end user markets. The following table sets forth the percentage
of the Company's steel product revenues from various markets for the years ended
December 31, 1997 through 1999.

<TABLE>
<CAPTION>
                                                            Year Ended December 31
                                                     ---------------------------------
                                                     1999           1998          1997
                                                     -----          -----         -----

<S>                                                 <C>            <C>           <C>
        Automotive                                    63.0%          67.0%         62.0%
        Converters                                     7.5           13.5          19.0
        Service Centers                               27.2           16.7          15.8
        Other End Users                                2.3            2.8           3.2
                                                     -----          -----         -----
           Total                                     100.0%         100.0%        100.0%
                                                     =====          =====         =====
</TABLE>

       Automotive. The Company is a significant supplier of hot rolled, cold
rolled, hot dip galvanized and electrogalvanized steel to the automotive
industry. Car and truck manufacturers and their parts suppliers require sheet
steel with exact dimensions, enhanced formability and defect-free surfaces. The
Company's steel products have been used in a variety of automotive applications
including exposed and unexposed panels and high strength parts for safety
applications and to achieve weight reduction. The Company supplies sophisticated
steel products to meet the demand for lighter, safer and longer lasting vehicles
such as bake hardenable steel and steel for hot forming, which is used for high
strength and safety applications such as automotive door beams. The automotive
market comprised 63.0% of the Company's steel product revenues in 1999 down from
67.0% in 1998.

       Sales to Ford, the Company's largest customer, accounted for
approximately 39% of total sales in 1999, 37% of total sales in 1998 and 32% of
total sales in 1997. In addition to its relationship with Ford, the Company has
diversified its automotive customer base. Until the early

                                        5

<PAGE>   6



1990's, the Company sold only a small amount of steel to DaimlerChrysler and had
no direct sales to General Motors Corporation ("GM"). Sales to DaimlerChrysler,
the Company's second largest customer, were approximately 10% of total sales in
1999 and 1998 and 9% of total sales in 1997. Currently, GM is the Company's
third largest customer. The Company believes that its ability to provide the
sophisticated grades of steel required for automotive applications combined with
its ability to provide competitive pricing, quality and delivery prompted
DaimlerChrysler and GM to begin purchasing significant quantities of hot rolled,
cold rolled and galvanized steel from the Company.

       Converters. The Company sells hot rolled and cold rolled steel to the
converter market, which includes customers that process steel into a more
finished state such as pipes, tubing and cold rolled strip steel. Although the
converter market is typically more price sensitive than the end user market due
to its reliance on purchases at prevailing prices, it provides the Company with
some sales stability during downturns in the automotive market.

       Service Centers. The Company sells hot rolled, cold rolled and hot dip
galvanized steel to service center customers that provide processing services
such as slitting, shearing and blanking for distribution primarily to automotive
end users. Steel service centers are a major factor in the distribution of flat
rolled products to end users.

       Direct Sales to Other End Users. The Company sells hot rolled steel to
manufacturers of roof decking, grating, guard rails and pipes. The Company sells
cold rolled steel to manufacturers of lighting fixtures, room dividers and
doors. Steel products are distributed by Rouge Steel principally through its own
sales organization.

       Order Status. The order load was 617,000 net tons at December 31, 1999,
compared to 432,000 net tons at December 31, 1998. All orders related to the
order load at December 31, 1999 are expected to be shipped during the first half
of 2000. The order load represents orders received but not yet filled.

RAW MATERIALS AND ENERGY SOURCES

       The principal raw materials and energy sources used by Rouge Steel in its
production process are coke, iron ore pellets, steel scrap, natural gas,
electricity, steam, oxygen and nitrogen. Coke, iron ore pellets, electricity,
steam, oxygen and nitrogen are predominantly purchased pursuant to long-term or
annual agreements. The other raw materials are generally purchased in the open
market from various sources. Certain of the purchased raw materials are not
covered by long-term contracts and, therefore, availability and price are
subject to world market conditions.

       Coke. Coke represents the Company's single largest raw material
expenditure. The Company does not produce coke and, as a consequence, relies
upon outside sources. In 1999, approximately 42% of the Company's coke was
provided by USX Corporation ("USX"). The Company acquired approximately 40% of
its coke through a tolling agreement with New Boston Coke Corporation ("New
Boston"), whose total productive capacity is dedicated to the Company. Under the
tolling agreement, the Company provides coal to New Boston for processing into
coke. Approximately 18% of the Company's coke was purchased in the open market.
During the past ten to fifteen years, coke production capacity in the United
States has been reduced. Due to the environmental issues associated with
operating coke ovens, the Company expects coke production capacity to be reduced
further in the next ten years. The coke shortage that may result from the

                                        6

<PAGE>   7



reduction in capacity may cause the price that the Company pays for coke to
increase which may adversely affect the Company's results of operations.

       Iron Ore Pellets. The Company has consumed an average of 3.3 million
gross tons of iron ore pellets annually over the three-year period ended
December 31, 1999. Approximately 74% of the Company's requirements for pellets
during this period was obtained under a trade arrangement with Stelco, Inc.
Under this arrangement, the Company exchanged acid pellets purchased from its
45% owned joint venture, EVTAC, for fluxed pellets or acid pellets with a higher
manganese content, which are used to enhance blast furnace productivity. The
Company is required to pay a cash premium indexed to inflation factors in
addition to providing the EVTAC acid pellets. The premium is equal to the
difference between the market price of the fluxed pellets and the market price
of EVTAC acid pellets. During the three-year period ended December 31, 1999, the
Company traded an average of 2.4 million gross tons of EVTAC pellets annually,
which constituted 100% of the Company's share of the pellets produced by EVTAC.
The balance of the Company's pellet requirements was purchased pursuant to a
contract with The Cleveland-Cliffs Iron Company. In June 1999, EVTAC temporarily
scaled back operations by 18%, reducing capacity to 4.4 million gross tons of
pellets to be purchased by Rouge Steel and the other owners pursuant to the
terms of their existing purchase agreements.

       The iron ore reserves of EVTAC are sufficient to provide the Company with
an estimated 25-year supply at the current level of production. The Company and
the other owners of EVTAC continue discussions regarding EVTAC's operations and
activities. These discussions and any subsequent resulting actions may affect,
among other things, the cost and availability of iron ore pellets, the timing of
EVTAC employee benefit liability recognition and funding requirements and
recognition of other obligations relating to the mining operations.

       Scrap. The price of steel scrap increased during 1999 from near-record
low prices in 1998. The price of #1 industrial bundles increased by 81% between
the end of 1998 and the end of 1999. The higher price reflects reduced supply in
1999 compared to the supply of steel scrap in 1998 as a result of the high level
of steel imports that arrived in the U.S. in the second half of 1998. As a
result of the dramatic increase in the price of #1 industrial bundles, the
Company began to substitute less expensive scrap in the basic oxygen furnaces.
The Company spent approximately $60 million to purchase steel scrap in 1999
compared to $99 million in 1998.

       Other Raw Materials and Energy Sources. During 1999, natural gas,
electricity and steam constituted 39%, 38% and 23%, respectively, of the
Company's total energy costs. Natural gas is acquired at prevailing market
prices from various producers. The Company has purchased electricity from DTE
Energy Company since the February 1, 1999 explosion at the Rouge Complex
Powerhouse (the "Powerhouse") which is owned 60% by the Company and 40% by Ford.
Prior to the explosion, the Powerhouse provided electricity for all of the
Company's steel- making facilities except its ladle refining facility, as well
as all of its steam requirements pursuant to an operating agreement with Ford
(the "Powerhouse Joint Operating Agreement") which expired December 31, 1999,
but was extended until March 31, 2000 and will be extended thereafter on a
rolling 30-day basis unless terminated by either party upon 30 days notice. The
Company installed temporary package steam boilers to provide heating and
processing steam after the Powerhouse explosion. In December, 1998, Rouge Steel
and Ford signed an agreement for long-term energy services with CMS Energy
Corporation (together with its subsidiaries, "CMS") which has commenced to build
and will operate a co-generation power plant. The new power plant is expected to
be in operation by mid-2000. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Powerhouse Explosion and
Insurance Claim."

                                        7

<PAGE>   8



       The Company has a long-term contract for the supply of oxygen and
nitrogen with Praxair, Inc. which expires in 2005. The contract contains annual
minimum oxygen and nitrogen purchase levels of $8.3 million and $550,000,
respectively.

COMPETITION

       The Company competes directly with domestic and foreign flat rolled
carbon steel producers and producers of plastics, aluminum and other materials
which can be used in place of flat rolled carbon steel in manufactured products.
The Company competes principally on the basis of service, quality, price and the
ability to meet customers' product specifications and delivery schedules. The
Company believes, however, that its competitive position in the steel industry
is strengthened by, among other things, (i) substantially reduced postretirement
expenses resulting from certain agreements with Ford, (ii) environmental
indemnifications from Ford until 2009, (iii) substantial capital investments
during the past six years in steel-making equipment and downstream joint
ventures, (iv) a single-site, geographically strategic location, and (v)
financial flexibility.

       Imports. Domestic steel producers face significant competition from
foreign producers. Decisions by these foreign steel producers with respect to
production and sales may be influenced to a greater degree by political and
economic policy considerations than by prevailing market conditions.

       Steel imports in 1999 are estimated to be 35.0 million tons, a 16%
decrease from 1998 levels. The high import levels in 1998 resulted from the
depressed economic conditions in other parts of the world, particularly in the
Pacific Basin and Russia. Imports in 1999 were closer to historic levels.
Imports as a percentage of apparent domestic consumption, including semifinished
steel, averaged approximately 26% in 1999 compared to 30% in 1998, which was an
all time high. In the previous five years (1993 through 1997), steel imports
averaged 26.9 million tons, or 22.5% of apparent domestic consumption.

       Domestic Steel Industry. The domestic steel industry is a cyclical
business that is highly competitive. In the United States, the Company competes
with many domestic integrated steel companies. The Company also competes with
electric furnace based mini-mills, which generally target regional markets, have
reduced environmental maintenance costs and liabilities and derive certain
competitive advantages by utilizing less capital intensive steel-making
processes. The capability of electric furnace based, thin slab mini-mills to
produce flat rolled steel products is increasing. In the future, these
mini-mills may provide increased competition in the higher quality, value-added
product lines now dominated by the integrated steel producers. New mini- mills
that produce flat rolled steel and improvements in the production efficiencies
of integrated mills have increased overall production capacity in the United
States, which has caused downward price pressure. The ability of mini-mill
producers to capture a significant percentage of the sheet steel markets, which
represented approximately half of domestic industry shipments in 1999, cannot
presently be determined due to operating cost and product quality issues
associated with thin-slab technology. In addition, the availability and
fluctuations in the cost of scrap, the primary raw material for mini-mill steel
production, may influence the ability of mini- mills to compete with domestic
integrated producers.

       A number of integrated steel producers have gone through bankruptcy
reorganizations. These proceedings have resulted in reduced operating costs for
these producers and may permit them to price their steel products at levels
below those that could otherwise be maintained. The

                                        8

<PAGE>   9



Company believes, however, that due to Ford's retention of certain retiree costs
and reduced exposure to historical environmental liabilities resulting from
certain agreements with Ford, as well as limited levels of indebtedness since
the Company's initial public offering, Rouge Industries is in a better position
to compete with these companies than many of its competitors.

       Steel Substitutes. In the case of many steel products, there is
substantial competition from other products, including plastics, aluminum,
ceramics, glass, wood and concrete. However, the Company, to a limited degree,
and certain other manufacturers of steel products have begun to compete in
recent years in markets not traditionally served by steel producers, including
the markets for steel construction studs and steel frames for houses.

EMPLOYEES

       At December 31, 1999, the work force of Rouge Steel was comprised of
2,364 hourly and 642 salaried personnel, including Rouge Steel employees working
at Double Eagle Steel Coating Company ("Double Eagle"). In 1999, the Company's
employment cost per ton shipped was $101 and tons shipped per employee was
approximately 772.

       Hourly employees of Rouge Steel are represented by the International
Union, United Automobile, Aerospace and Agricultural Implement Workers of
America, UAW (the "UAW"). Most of the hourly employees of the Company's
competitors are represented by the United Steelworkers of America (the "USWA")
and are subject to USWA-patterned agreements. Rouge Steel and the UAW have a
labor agreement with a five-year term which expires August 1, 2000. The labor
agreement includes provisions for employment security and profit sharing. The
Company believes that it continues to maintain a good relationship with the UAW.
EVTAC workers, who are employed by Thunderbird Mining Company, a wholly-owned
subsidiary of EVTAC, are represented by the USWA. EVTAC is presently operating
under a rolling 21-day extension of the agreement between the USWA and
Thunderbird Mining Company that was scheduled to expire on August 1, 1999.

ENVIRONMENTAL CONTROL AND CLEANUP EXPENDITURES

       The Company's operations are subject to many federal, state and local
laws, regulations, permits and consent agreements relating to the protection of
human health and the environment. Except as set forth below, the Company
believes that its facilities are in material compliance with these provisions
and does not believe that future compliance with such provisions will have a
materially adverse effect on its results of operations or financial position.
The Company has incurred capital expenditures in connection with matters
relating to environmental control of approximately $1 million during the past
four years. In addition, the Company has planned an aggregate of approximately
$8 million in capital expenditures for environmental compliance for the years
2000 through 2003. Since environmental laws and regulations are becoming
increasingly stringent, the Company's environmental capital expenditures
and costs for environmental compliance may increase in the future. In addition,
due to the possibility of unanticipated regulatory or other developments, the
amount and timing of future environmental expenditures may vary substantially
from those currently anticipated. The costs for current and future environmental
compliance may also place domestic integrated steel producers at a competitive
disadvantage with respect to foreign steel producers, which may not be required
to undertake equivalent costs in their operations, and manufacturers of steel
substitutes, which are subject to less stringent environmental requirements.


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<PAGE>   10



       In connection with the acquisition of the Company from Ford in 1989 (the
"Acquisition"), Ford has agreed to indemnify the Company (the "Ford Indemnity")
for any liability arising out of an environmental condition existing prior to
the Acquisition or a subsequent change in law relating to such condition that
results in an environmental claim under any federal or state environmental law,
including the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, ("CERCLA"), the Resource Conservation and Recovery Act
("RCRA"), the Clean Water Act, the Safe Drinking Water Act, the Clean Air Act
and the Occupational Safety and Health Act of 1970 or an environmental claim
based upon a release of a material of environmental concern. An environmental
claim includes, among other things, the costs associated with the release of any
pollutants, contaminants, toxic substances and hazardous substances into the
environment. The Ford Indemnity provides that Ford shall pay the Company's
liabilities, including any penalties and attorney's fees, in connection with any
environmental claim relating to a pre-Acquisition condition. The Ford Indemnity
terminates on December 15, 2009. In some instances, Ford has acted proactively;
in others, it has denied responsibility. The submitted claims include asbestos
removal, CERCLA liabilities, National Pollutant Discharge Elimination System
permit violations, underground storage tank removal, transformer replacement and
transformer removal and disposal. The Company does not believe the rejection by
Ford of any claims made under the Ford Indemnity will have a materially adverse
effect on the Company's results of operations or financial position.

       From time to time, the Company has received from the United States
Environmental Protection Agency (the "U.S. EPA") various requests for
information in connection with an environmental statute. Whether these
information requests suggest contemplated actions by the U.S. EPA and whether
such requests for information will lead to a materially adverse effect on the
Company's results of operations or financial position is unknown.

       In 1990, Congress passed amendments to the Clean Air Act which impose
more stringent standards on air emissions. Pursuant to Title V of the Clean Air
Act Amendments of 1990, the Company submitted an application for a facility
operating permit (a "Title V Permit") in 1997 with amendments in 1998. The
Michigan Department of Environmental Quality (the "MDEQ") advised the Company
that the application and the amendments were administratively complete. The
Company expects to receive a draft Title V Permit in the first half of 2000.

       In 1998, the Company and the Wayne County Air Quality Management
Division (the "Division") entered into a consent order resolving certain notices
of violation ("NOVs") and issues involving the basic oxygen furnace ("BOF")
electrostatic precipitator and the blast furnace flare stack. The settlement
agreement includes performance of a supplemental environmental project ("SEP")
for the installation of a waste oxide dryer. The dryer was installed in January
1999 and is intended to secure significant additional environmental and public
health improvements. The settlement agreement imposed a $125,000 penalty,
stipulated penalties for future violations, a compliance program and a five-year
term.

       In 1999, the Company and the Division executed a consent order resolving
certain NOVs for events which occurred in 1997 and 1998. The consent order
required the Company to pay $140,000 and undertake an SEP for design
improvements to the BOF off-gas conditioning system.

       In 1997, the Company voluntarily disclosed its failure to obtain a
construction and operating permit for an operational change previously thought
to be exempt from the air permitting requirements. The Company discovered the
error through an environmental self-audit.

                                       10

<PAGE>   11



Disclosure was made under a Michigan statute that provides immunity from state
enforcement for environmental violations discovered through self-audits if they
are voluntarily and promptly reported and corrected. The Company has formally
requested immunity under the law. A permit application for the operational
change has been submitted to both the Division and the MDEQ and is presently in
the public comment process.

       In 1997, the Company received a notice from the Corporation Counsel of
the City of Melvindale (the "City") of the City's intention to sue the Company
for alleged release of particulates into the air and violations of the County of
Wayne permit. The City has also made damage claims against the Company on behalf
of approximately 50 residents who claim to have incurred property damage as a
result of dust fallout. In 1998, a separate class action lawsuit was filed
against the Company on behalf of residents allegedly injured by dust. In late
1999, discussions among Rouge Steel and the class action plaintiffs resulted in
a tentative settlement agreement. In early 2000, the Company agreed to a final
judgement and consented to pay $1.5 million for distribution to plaintiff class
members and their attorneys. The final judgment also formalizes the Company's
obligation to undertake specified abatement measures, some of which had already
been initiated at the time of the tentative settlement. In addition, two
separate actions have been initiated for alleged property damage from dust
fallout. The Company intends to vigorously defend the property damage claims.
Rouge Steel does not believe that these matters will have a materially adverse
effect on its results of operations or financial position.

       In September 1998, the U.S. EPA Region 5 commenced a multimedia
investigation of Rouge Steel's facility. The Company furnished information to
the U.S. EPA in response to a request for information issued by the agency
pursuant to Section 114(a) of the Clean Air Act. The Company also furnished
information in accordance with Section 3007 of RCRA. The Company has been
notified that certain compliance issues arising from the investigation have been
referred to the United States Department of Justice for enforcement action. If
this matter proceeds, the Company believes it may include claimed monetary
sanctions in excess of $500,000. The Company does not believe that the
enforcement action will have a materially adverse effect on its results of
operations or financial position.

       Rouge Steel has received a series of NOVs from the Division for incidents
occurring in August and September 1998 and September 1999. The NOVs allege
violations of the Division's air rules and characterize the facility's emission
fallout as a nuisance condition. Rouge Steel has denied the allegations
contained in the NOVs. The preliminary nature of the NOVs and Rouge Steel's
response make it difficult to predict the outcome or its impact on the Company's
results of operations or financial position.

       Rouge Steel and the former owner of the Rouge Steel facility have
voluntarily approached the MDEQ with a joint proposal to conduct a phased
cleanup of their solid waste management units ("SWMUs") at the Rouge Complex
under the RCRA corrective action program. In connection with this proposal, the
companies have voluntarily submitted a work plan for demolition and remediation
of the coke plant. The MDEQ is considering the proposal. The former owner of the
Rouge Steel facility has agreed to pay for most of the coke plant remediation
project. Therefore, this work is not expected to have a materially adverse
effect on Rouge Steel's results of operations or financial position. Further
investigation is needed to develop a reasonably accurate estimate of the
potential costs of remediating the remaining Rouge Steel SWMUs. The cost of the
necessary investigation is estimated to be in the range of $150,000 to $200,000.
In the absence of the additional facility-specific information that will be
developed by this investigation, the potential costs to clean up the remaining
Rouge Steel SWMUs cannot be established at this time.

                                       11

<PAGE>   12



The Company has no information to suggest that the cost of remediating the
remaining SWMUs would have a materially adverse effect on its results of
operations or financial position. The companies have proposed to complete the
remediation of the SWMUs before 2005.

       On February 1, 1999, there was a catastrophic explosion and fire at the
Powerhouse that effectively disabled the Powerhouse's capability to produce
steam and electricity for the Rouge Complex. The emergency situation required
the immediate installation of temporary steam boilers and electricity generating
equipment before permits could be obtained to prevent major damage to plant
equipment. Soon after the explosion, the Company approached the State and County
environmental agencies to request an emergency variance from the permitting
requirements. When the agencies refused to consider a variance, the Company
voluntarily proposed a settlement agreement to address any potential liability
associated with the emergency installation of this equipment. After lengthy
discussions regarding the settlement proposal, neither the State nor the County
has indicated any intent to take enforcement action or demand penalties in this
matter. However, the Company has not received formal notice that no action will
be taken, and it can provide no assurance in this regard.

       On August 4, 1999, the Company voluntarily disclosed to the Division that
when briquettes from the Company's waste oxide reclamation facility are added to
hot metal at the BOF, the Company has experienced particulate emission control
problems. The Company has developed a plan to re-engineer the BOF baghouse to
address the problem. In the interim, the Company voluntarily suspended use of
the waste oxide pellets in the reladling process late in 1999. It is expected
that the BOF baghouse modifications will be completed in the second quarter of
2000.

RESEARCH AND DEVELOPMENT

       The Company does not incur material expenses in research and development
activities but does participate in various research and development programs.
The Company addresses research and development requirements and product
enhancement by maintaining a staff of technical support, quality assurance and
engineering personnel. The Company also participates in joint projects with the
American Iron and Steel Institute.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

       The matters discussed in this Annual Report on Form 10-K include certain
forward-looking statements that involve risks and uncertainties. These
forward-looking statements may include, among others, statements concerning
projected levels of production, sales, shipments and income, pricing trends,
cost reduction strategies, product mix, anticipated capital expenditures and
other future plans and strategies.

       As permitted by the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, Rouge Industries is identifying in this Annual
Report on Form 10-K a number of factors which could cause the Company's actual
results to differ materially from those anticipated. These factors include, but
are not necessarily limited to, (i) changes in the general economic climate,
(ii) the supply of and demand for steel products in the Company's markets, (iii)
pricing of steel products in the Company's markets, (iv) potential environmental
liabilities, (v) the availability and prices associated with raw materials,
supplies, utilities and other services and items required by the Company's
operations, (vi) uncertainty related to the Powerhouse explosion and the
Company's ability to resolve the insurance claim and (vii) higher than expected
operating costs.


                                       12

<PAGE>   13



Item 2.        Properties.

       Rouge Steel's integrated single-site facility is located on a 457-acre
industrial site adjacent to Ford's stamping, engine, glass, frame and assembly
plants in Dearborn, Michigan. The Rouge Steel facility is strategically located
in the heart of the automotive manufacturing region and in an area where many
customers of flat rolled steel are situated. The Company believes that Rouge
Steel's single-site location is a strategic advantage because it permits reduced
transportation costs, increased efficiencies and better management response
times.

       Rouge Steel's facilities include three blast furnaces (one of which has
been idle since 1988), two basic oxygen furnaces, two electric arc furnaces
(which have been idle since 1992), two ladle refining facilities, a vacuum
degassing facility, one three-strand continuous caster, one hot strip mill,
three pickle lines, one tandem mill, two annealing facilities (one of which is a
hydrogen annealing facility), two temper mills, two slitters and one recoil
welder. In addition, Rouge Steel owns a 50% interest in Double Eagle, the
world's largest electrogalvanizing facility and a 60% interest in the Powerhouse
that was managed, operated and maintained by Ford (which owns the other 40%). On
February 1, 1999, an explosion and fire at the Powerhouse curtailed the supply
of utilities which resulted in the temporary idling of the Company's steel
making facilities. It is considered unlikely that the Powerhouse will be
operational in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Powerhouse Explosion and
Insurance Claim." Prior to the Powerhouse explosion, Ford and Rouge Steel had
entered an agreement for long-term energy services with CMS which has commenced
to build and will operate a co-generation power plant scheduled to begin
operating in mid-2000. Along with Rouge Steel's properties, Rouge Industries
owns (i) a 48% interest in Spartan Steel, a cold rolled hot dip galvanizing
facility; (ii) a 20% interest in Shiloh of Michigan, an engineered steel
blanking facility; (iii) a 45% interest in EVTAC, an iron ore mining and pellet
producing facility; (iv) an 11.1% interest in TWB, a producer of laser welded
blanks; (v) a 49% interest in Delaco Steel Processing, a steel processor and
(vi) a 40% interest in Bing Blanking, a steel blanker and producer of roll
formed parts.

Item 3.         Legal Proceedings.

ENVIRONMENTAL LAWSUIT

       Residents of the City of Melvindale (a community in close proximity to
Rouge Steel) filed a class action lawsuit against the Company in 1998 claiming
trespass, nuisance and negligence as a result of alleged air pollution. In late
1999, discussions among Rouge Steel and the class action plaintiffs resulted in
a tentative settlement agreement. In early 2000, the Company agreed to final
judgement and consented to pay $1.5 million for distribution to plaintiff class
members and their attorneys.



                                       13

<PAGE>   14



POWERHOUSE EXPLOSION LAWSUITS

       Three liability lawsuits resulting from the Powerhouse explosion have
been filed against Rouge Steel. The Company has general liability insurance that
provides coverage for such lawsuits. Ford, which owns 40% of the Powerhouse
assets and was responsible for the day-to-day management, operation and
maintenance of the Powerhouse, has made settlement offers to certain workers
injured in the explosion and the families of the deceased, including the three
persons maintaining the above-referenced lawsuits. The Company has been informed
that the settlement offers have been accepted by the three persons maintaining
lawsuits against Rouge Steel and dismissal documents have been received for two
of the lawsuits. It is possible that Ford will seek recovery from Rouge Steel or
its insurers for liabilities incurred to settle with the workers who accept
Ford's settlement offers. It is presently not possible to reasonably estimate
the Company's monetary exposure with respect to these matters.

       From time to time, Rouge Industries and its consolidated subsidiaries are
defendants in routine litigation incidental to their business. The Company
believes that such current proceedings, individually or in the aggregate, will
not have a materially adverse effect on the Company's results of operations or
financial position.


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

       There were no matters submitted to a vote of security holders during the
fourth quarter of 1999.


                                       14

<PAGE>   15



                      EXECUTIVE OFFICERS OF THE REGISTRANT

       The following table sets forth, as of December 31, 1999, certain
information with respect to the executive officers of the Company. Executive
officers are chosen by the Board of Directors of the Company at the first
meeting of the Board after each annual meeting of stockholders. Officers of the
Company serve at the discretion of the Board of Directors and are subject to
removal at any time. There is no family relationship among any of the officers
or directors.

<TABLE>
<CAPTION>

NAME                             AGE                POSITION
----                             ---                --------

<S>                             <C>    <C>
Carl L. Valdiserri............    63   Chairman and Chief Executive Officer
Louis D. Camino...............    62   President and Chief Operating Officer
Gary P. Latendresse...........    56   Vice Chairman and Chief Financial Officer
William E. Hornberger.........    53   Senior Vice President, Corporate Relations and External Affairs
George T. Kilavos.............    68   Vice President, Production Planning
Daniel A. Marion..............    61   Vice President, Purchasing and Transportation
Ronald J. Nock................    47   Vice President, Sales and Marketing
Martin Szymanski..............    46   Vice President, General Counsel and Secretary
</TABLE>

BUSINESS EXPERIENCE

       Mr. Valdiserri has been Chairman and Chief Executive Officer of the
Company since 1989. From 1987 until 1989 he was an independent consultant
regarding the steel industry, principally to The Chase Manhattan Bank, N.A. From
1982 until 1987, Mr. Valdiserri was Executive Vice President of Weirton Steel
Company. Mr. Valdiserri joined the Weirton Division of National Steel
Corporation in 1978. He was Chief Engineer in the Great Lakes Division of
National Steel Corporation from 1973 to 1978 and held various other engineering
positions from 1964 to 1972. He began his career with Wheeling-Pittsburgh Steel
Corporation in 1958. Mr. Valdiserri has 40 years of experience in the steel
manufacturing industry. Mr. Valdiserri is also a director of Champion
Enterprises, Inc.

       Mr. Camino has served as President and Chief Operating Officer, as well
as a director of the Company, since 1990. Mr. Camino was Vice President of
Operations for Acme Steel Company from 1986 to 1990. Mr. Camino began his career
with Jones and Laughlin Steel Corporation as a supervisor in 1960, and has 39
years of experience in the steel manufacturing industry.

       Mr. Latendresse has been Vice Chairman and Chief Financial Officer since
July 1999. From January 1998 to July 1999, he was Executive Vice President and
Chief Financial Officer. Mr. Latendresse was Vice President and Chief Financial
Officer from 1992 to 1997. He became a director of the Company in 1992. He was
Vice President, Finance and Controller from 1987 until 1992. Mr. Latendresse has
held various financial positions with the Company and Ford for 31 years. Mr.
Latendresse has 31 years of experience in the steel manufacturing industry. Mr.
Latendresse is also the Treasurer and Assistant Secretary of the Company.

       Mr. Hornberger has been Senior Vice President, Corporate Relations and
External Affairs since July 1999. He was Vice President, Employee Relations and
Public Affairs from 1992 to 1999. From 1987 to 1992, he was Vice President,
Employee Relations. Mr. Hornberger has held various employee relations positions
at Rouge Steel and Ford since 1973. He has 16 years of experience in the steel
manufacturing industry.

                                       15

<PAGE>   16



       Mr. Kilavos was Vice President, Production Planning from 1990 until his
retirement on January 1, 2000. From 1984 to 1990, Mr. Kilavos was Director,
Production Planning at Weirton Steel Company. He previously held various
materials management positions at Weirton Steel Company and National Steel
Corporation. As of his retirement, Mr. Kilavos had 38 years of experience in the
steel manufacturing industry.

       Mr. Marion was Vice President, Purchasing and Transportation from 1995
until his retirement on March 1, 2000. From 1988 to 1995, Mr. Marion was
Procurement Manager, Purchasing and Supply Staff, Ford Motor Company. He
previously held various purchasing positions during his 34 years with Ford,
including more than ten years of steel purchasing experience.

       Mr. Nock has been Senior Vice President, Commercial and Strategic
Planning since January 2000. He served as Vice President, Sales and Marketing
from 1988 through 1999. Mr. Nock held various positions at the Company since
1982, including Manager of Sales and Sales Representative. He has 24 years of
experience in the steel manufacturing industry.

       Mr. Szymanski has been Vice President, General Counsel and Secretary
since October 1999. He served as Secretary and General Counsel from January 1,
1998 to October 1999. From January 1997 to December 1997, he was Associate
General Counsel of the Company. From 1990 through 1996, he served as General
Counsel and Assistant Secretary of Modern Engineering, Inc., a Warren,
Michigan-based tier one automotive technical services, prototype and assembly
tooling supplier. Prior to that, he held key legal assignments at Stroh Brewery
Company and Fruehauf Corporation. Mr. Szymanski has over 21 years of corporate
and private practice legal experience.


                                       16

<PAGE>   17



                                     PART II

Item 5.        Market for Registrant's Common Stock and Related Stockholder
               Matters.

       As of December 31, 1999, there were (i) 14,570,511 shares of class A
common stock, par value $0.01 per share (the "Class A Common Stock"), issued and
outstanding and held by approximately 7,000 stockholders of record, and (ii)
7,562,400 shares of class B common stock, par value $0.01 per share (the "Class
B Common Stock" and together with the Class A Common Stock, the "Common Stock"),
issued and outstanding and held by two stockholders of record. As of December
31, 1999, Carl L. Valdiserri and Worthington held 7,140,400 and 422,000 shares,
respectively, of Class B Common Stock. In February 1997, Worthington issued debt
securities ("DECS") which, upon maturity, could be redeemed for shares of Common
Stock or cash. On March 1, 2000, Worthington relinquished its shares of Common
Stock to satisfy its obligations with respect to the DECS. Worthington no longer
owns any Common Stock. The principal market for the Class A Common Stock is the
New York Stock Exchange, Inc. (the "NYSE"). The Class B Common Stock is not
listed for trading on any securities exchange.

       Quarterly cash dividends of $0.03 per share of Common Stock were paid on
January 23, April 24, July 24 and October 23, 1998, January 22, April 23, July
23, October 22, 1999 and January 21, 2000. Future dividends on the Common Stock
are payable in cash or shares of Class A Common Stock, at the discretion of the
Board of Directors of the Company. The Company's Certificate of Incorporation
provides that (i) no dividends be paid on the Class B Common Stock unless a
dividend (equal to the dividend declared and paid to the holders of Class B
Common Stock) is declared and paid on the Class A Common Stock and (ii) any
dividend paid on the Class B Common Stock will be paid only in shares of Class A
Common Stock or cash. Holders of Class A Common Stock and Class B Common Stock
will be entitled to share ratably, as a single class, in any dividends paid on
the Common Stock. The declaration and payment of dividends on the Common Stock
will be subject to a quarterly review by the Board of Directors of the Company.
The timing and amount of dividends, if any, will depend, among other things, on
the Company's funding obligations with respect to profit sharing plans, results
of operations, financial condition, cash requirements, restrictions, if any, in
loan agreements, obligations with respect to preferred stock, if any, and other
factors deemed relevant by the Board of Directors.

       The Company's Class A Common Stock has been listed for trading on the
NYSE since March 29, 1994 under the symbol ROU. The following table sets forth,
for the periods indicated, the high and low sales prices of the Company's Class
A Common Stock. The closing sale price of the Company's Class A Common Stock on
February 29, 2000 was $7.69.
<TABLE>
<CAPTION>

1999                                                               HIGH                      LOW
----                                                              ------                    ------
<S>                                                               <C>                       <C>
First Quarter............................................         $14.00                    $ 8.00
Second Quarter...........................................          11.94                      8.25
Third Quarter............................................           9.75                      6.63
Fourth Quarter...........................................           8.50                      5.63

<CAPTION>
1998.....................................................          HIGH                        LOW
----                                                              ------                    ------
<S>                                                               <C>                       <C>
First Quarter............................................         $16.13                    $12.13
Second Quarter...........................................          16.00                     10.75
Third Quarter............................................          12.75                      7.13
Fourth Quarter...........................................          10.63                      6.25
</TABLE>


                                       17

<PAGE>   18




Item 6.        Selected Financial Data.

      The Statement of Operations data and Balance Sheet data in the following
table present selected historical consolidated financial information derived
from the historical consolidated financial statements of the Company as of and
for each of the years in the five-year period ended December 31, 1999. This
information should be read in conjunction with the historical consolidated
financial statements of the Company and related notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
beginning on page 20.

<TABLE>
<CAPTION>
                                                                          Year Ended December 31
                                                    -----------------------------------------------------------------
                                                      1999         1998         1997            1996           1995
                                                    --------     ---------    --------        ---------     ---------
                                                             (dollars in millions, except per share amounts)
<S>                                                <C>          <C>          <C>             <C>           <C>
STATEMENT OF OPERATIONS DATA
Total Sales                                         $  967.6     $ 1,163.2    $ 1,341.6       $ 1,307.4     $ 1,206.6
Operating Income (Loss)                               (254.1)(5)      35.1         31.7            24.7         121.6(1)
Net Interest Income (Expense)                           (2.1)          0.7          0.8             4.8           5.4
Income Tax (Provision) Benefit                          30.5          (8.7)        (8.1)           (6.9)        (33.5)
Net Income (Loss)                                      (47.8)(5)      23.4         22.4            23.4          94.7(1)

Per Share Data
  Net Income (Loss) - Basic and Diluted             $  (2.16)    $    1.06    $    1.02       $    1.07     $    4.37
  Cash Dividends Declared                               0.12          0.12         0.12            0.12          0.10

Weighted-Average Shares Outstanding (000)             22,122        22,025       21,939          21,845        21,677

<CAPTION>
                                                                             December 31
                                                    -----------------------------------------------------------------
                                                      1999         1998         1997            1996          1995
                                                    --------     ---------    ---------       ---------     ---------
                                                                           (dollars in millions)
<S>                                                 <C>          <C>          <C>             <C>           <C>
BALANCE SHEET DATA
Working Capital                                     $  198.3     $   212.4    $   177.2       $   216.6     $   294.2
Property, Plant, and Equipment, Net                    278.6         258.1        268.6           209.2         135.7
Total Assets                                           867.6         768.9        728.5           682.0         672.5
Long-Term Debt, Including Current Portion              104.8          29.0         17.9               -             -
Stockholders' Equity                                   409.8         459.6        438.6           417.3         393.9

<CAPTION>
                                                                        Year Ended December 31
                                                    -----------------------------------------------------------------
                                                      1999         1998         1997            1996           1995
                                                    --------     ---------    ---------       ---------     ---------
<S>                                                <C>           <C>          <C>             <C>           <C>
OTHER DATA
Net Tons Shipped (000)                                 2,320         2,630        3,029           2,876         2,542
Raw Steel Production (Mils) NT                           2.2           3.1          2.8             2.6           2.9
Effective Capacity Utilization                            66%           94%          91%             84%           96%
Continuously Cast Percentage                             100           100          100              95            92
Purchased Slabs (000) NT                                 351            76          619             843             -
Number of Employees at Year-End  (2)                   3,006         3,108        3,128           3,119         3,167
Average Hourly Labor Rate (3)                       $  31.28     $   30.25    $   30.43        $  30.81     $   32.40
Total Sales per Employee (000) (2)                       322           374          429             419           381
Hours Worked per Net Ton Produced (2)                   2.94          2.81         2.81            2.89          3.14
Operating Income (Loss) per Net Ton Shipped         $   (110)(5) $      13    $      10        $      9     $      48(1)
Capital Expenditures (Mils) (4)                         80.5          31.8        112.4           101.5          69.4
</TABLE>


                                       18

<PAGE>   19





(1)  Operating income and net income for the year ended December 31, 1995
     include the pre-tax effect of a $30.0 million (or $12 per net ton shipped)
     gain from the settlement of certain litigation relating to property tax
     assessment matters.
(2)  Includes all hourly and salaried employees.
(3)  Includes $0.29 per hour in 1998, $0.35 per hour in 1997, $0.49 per hour in
     1996 and $1.94 per hour in 1995 paid or accrued pursuant to the Rouge Steel
     Company Profit Sharing Plan for Hourly Employees. Due to losses sustained
     in 1999, no amounts were paid or accrued.
(4)  Includes capital expenditures paid or accrued and investments in
     unconsolidated subsidiaries.
(5)  Operating loss and net loss for the year ended December 31, 1999 include
     the pre-tax effect of business interruption and property damage losses and
     other claim-related expenses of $221.4 million (or $95 per net ton shipped)
     resulting from the February 1, 1999 explosion at the Powerhouse.


                                       19
<PAGE>   20


Item 7.        Management's Discussion and Analysis of
               Financial Condition and Results of Operations.

OVERVIEW

       The following discussion should be read in conjunction with, and is
qualified in its entirety by reference to, the Consolidated Financial Statements
which begin on page 32.

       Rouge Steel Company ("Rouge Steel") is the primary operating subsidiary
of Rouge Industries, Inc., a Delaware corporation (together with its
subsidiaries, "Rouge Industries" or the "Company"). Rouge Steel is an integrated
producer of high quality, flat rolled steel products consisting of hot rolled,
cold rolled and galvanized steel. In recent years, the Company has emphasized
the production of value-added flat rolled carbon steel products that require
additional processing and generally command higher margins than commodity flat
rolled carbon steel products. The Company's products generally, and its
value-added products specifically, are sold primarily to customers in the
automotive industry which have exacting quality, delivery and service
requirements. The Company also sells its products to steel converters, service
centers and other end users.

       Other wholly-owned subsidiaries of Rouge Industries include QS Steel Inc.
("QS Steel") and Eveleth Taconite Company ("Eveleth"). QS Steel holds minority
ownership interests in five Michigan-based joint ventures. Eveleth holds a 45%
interest in Eveleth Mines LLC ("EVTAC"), a Minnesota-based iron ore mining and
pellet producing operation.

       Rouge Steel's operations are subject to the cyclicality of the steel
industry and the domestic economy as a whole. Given the inherent cyclicality of
the domestic steel industry, the Company believes it is important to maintain
financial flexibility in order to take advantage of opportunities to reduce
costs and upgrade the quality and mix of its products. Rouge Industries believes
that its strong balance sheet combined with its ongoing effort to reduce
operating costs will position the Company to continue to pursue its business
strategy throughout the economic cycle and to respond to the continually
changing needs of its customers.

       The following table summarizes the annual raw steel capacity, raw steel
production, utilization rates and finished shipment information for the domestic
steel industry (as reported by the American Iron and Steel Institute) and for
Rouge Steel for the years from 1997 through 1999:
<TABLE>
<CAPTION>

                                                                          Year Ended December 31
                                                             -----------------------------------------------
                                                               1999                1998               1997
                                                               ----                ----               ----
<S>                                                            <C>                 <C>                <C>
                                                                 (in millions of tons except utilization)
DOMESTIC INDUSTRY
        Raw Steel Capacity                                     128.1              125.4              121.4
        Raw Steel Production                                   104.2              108.7              108.6
        Utilization                                             81.3%              86.7%              89.4%
        Finished Shipments                                     103.1              102.4              105.9

ROUGE STEEL
        Raw Steel Capacity                                       3.3                3.3                3.1
        Raw Steel Production                                     2.2                3.1                2.8
        Utilization                                             65.7%(1)           94.3%              91.2%
        Finished Shipments                                       2.3                2.6                3.0
</TABLE>

                                       20

<PAGE>   21



(1)     The decrease in utilization was the result of a 93-day outage in primary
        operations caused by the Powerhouse explosion.  See " - Powerhouse
        Explosion and Insurance Claim."

        The cyclicality of the steel industry and the domestic economy affects
the Company's steel product prices. To protect itself from the volatile nature
of prices in the domestic steel industry, the Company sells approximately two
thirds of its steel products pursuant to fixed price contracts, under which
prices are typically set annually. In 1991, when domestic steel industry
production and shipments were low, the Company's steel product prices reached a
nine-year low. In 1993, prices began to rise and in 1994 they reached the
highest level since 1988. By mid-1995, however, prices began to soften despite
the continuing strong demand for the Company's products. During the second half
of 1995, the Company lost approximately one half of the pricing gains which it
realized in 1993 and 1994. Prices in 1996 made a modest recovery from late-1995
levels, but nevertheless remained lower than average 1995 prices. In 1997,
prices declined slightly from 1996 levels despite strong demand for the
Company's products. In 1998, prices declined again, partially as a result of the
unprecedented levels of imports. Prices in late 1999 made a modest recovery from
late-1998 levels but did not increase to early-1998 levels.

        Total Sales. The Company's total sales are a function of net tons
shipped, prices and mix of products. The following table sets forth the
percentage of the Company's steel product revenues represented by each of its
product types for each of the years from 1997 through 1999:

<TABLE>
<CAPTION>
                                                                          Year Ended December 31
                                                             -----------------------------------------------
                                                               1999                1998               1997
                                                               ----                ----               ----
<S>                                                            <C>                 <C>                <C>
Hot Rolled                                                     37.3%               44.6%              49.4%
Cold Rolled                                                    27.4                30.5               29.8
Electrogalvanized                                              21.9                21.0               20.2
Hot Dip Galvanized                                             13.4                 3.9                0.6
                                                              -----               -----              -----
      Total                                                   100.0%              100.0%             100.0%
                                                              =====               =====              =====
</TABLE>


        Sales to affiliates are comprised primarily of sales to Worthington
Industries, Inc. ("Worthington"), Rouge Industries' sixth largest customer and
second largest shareholder in 1999. Until March 1, 2000, Worthington owned
approximately 27.2% of the Company's common stock which represented a voting
interest of 19.8%. In February 1997, Worthington issued debt securities ("DECS")
which, upon maturity, could be redeemed for shares of Rouge Industries common
stock or cash. On March 1, 2000, Worthington relinquished its shares of the
Company's common stock to satisfy its obligations with respect to the DECS.
Worthington no longer owns any Rouge Industries common stock.

        Sales to Ford Motor Company ("Ford"), the Company's largest customer,
are primarily made pursuant to a ten-year steel purchase agreement which expires
after model-year 2000. The Company does not believe that the expiration of the
steel purchase agreement will have a materially adverse effect on its results of
operations or financial position.

        Costs of Goods Sold. The principal elements constituting Rouge
Industries' costs of goods sold are raw materials, labor and energy. Outside
processing costs represent a growing element of the Company's costs of goods
sold. The major raw materials and energy used by the Company in its production
process are coke, iron ore pellets, steel scrap, natural gas, electricity,
steam, oxygen and nitrogen.

                                       21

<PAGE>   22



        Iron ore pellets are purchased from EVTAC pursuant to a pellet purchase
agreement which expires in 2002. The Company's wholly-owned subsidiary, Eveleth,
holds a 45% interest in EVTAC.

        Rouge Steel's hourly production and maintenance employees are
represented by the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America, UAW and are working under a labor
contract which expires on August 1, 2000.

        Outside processing costs, which are principally costs for value-added
processing that the Company cannot perform at Rouge Steel's integrated facility,
have always been an element of the Company's costs of goods sold. The Company's
joint ventures will increase the use of outside processing and related costs.
However, Rouge Industries believes that the incremental revenue generated from
additional sales of value-added products produced by the joint ventures will
exceed such cost increases.

POWERHOUSE EXPLOSION AND INSURANCE CLAIM

        On February 1, 1999, an explosion and fire at the Rouge Complex
Powerhouse (the "Powerhouse") resulted in the interruption of the supply of
electricity, process and heating steam, turbo air, mill water and other
utilities to virtually all of the facilities of Rouge Steel. The loss of power
resulted in the temporary shutdown of Rouge Steel's steel making facilities. The
Powerhouse is owned 60% by Rouge Steel and 40% by Ford. Ford was responsible for
the day-to-day management, operation and maintenance of the Powerhouse.

        Rouge Industries' insurance program provides coverage for damage to
property destroyed, interruption of business operations, including profit
recovery, and expenditures incurred to minimize the period and total cost of
disruption to operations. The Company continues to evaluate its potential
insurance recoveries in three areas:

1.    Damage to Rouge Steel property and Powerhouse property as a result of the
      explosion Costs for repairs are being expensed as incurred, with related
      estimated insurance recoveries recorded as they are considered to be
      probable, up to the amount of the actual costs incurred.

2.    Rouge Steel business interruption costs - The non-capitalizable costs are
      being expensed as incurred. Estimated insurance recoveries are recorded to
      the extent such recoveries are considered to be probable. Recoveries in
      excess of actual costs incurred will be recorded as gains when the claims
      are settled and proceeds are received. Certain costs relating to temporary
      steam boilers and electrical distribution equipment which were procured to
      mitigate the Company's loss from the Powerhouse explosion are being
      capitalized and amortized over their estimated useful lives. Insurance
      recoveries relating to these items are being recognized over the same
      periods. The amount capitalized for these temporary facilities was
      approximately $65.1 million. Of that amount, approximately $40.4 million
      has been amortized through December 31, 1999 and the remainder will be
      amortized through the third quarter of 2000.

3.    Powerhouse property damage - The net book value of the Powerhouse property
      destroyed, which was $1.6 million, was written off in 1999. Any proceeds
      from the claims relating to Powerhouse property damage (other than amounts
      relating to repairs discussed in 1. above) are expected to result in a
      gain since the proceeds are expected to exceed the net book value

                                       22

<PAGE>   23



      of the property written off.  The anticipated gain will be recorded as the
      claims are settled and proceeds are received.

       Based on the magnitude and complexity of the insurance claim, the Company
is currently unable to reasonably estimate the amount of actual costs to be
incurred in the future as well as the extent of the Company's exposure for
amounts not covered by its insurance program.

       Pursuant to the accounting methodology described above, through December
31, 1999, the Company has recorded recoverable insurance proceeds of $202.1
million net of reserves of $40.0 million. Of the total amount recorded, $177.4
million has been included in other income and $24.7 million has been deferred
and will be recognized in other income over the period the related capital items
are amortized. At December 31, 1999, the Company has a receivable of $43.1
million, which is net of reserves of $40.0 million and advances from the
insurance carriers of $159.0 million. The Company continues to discuss the
determination of the total claim with its insurers. The Company's assessment of
probability with respect to the receivable was made based on discussions with
insurers and legal and financial experts retained to assist in the claims
process. The estimates will change as additional information becomes available
with respect to actual costs and as the insurers perform their review of claims
information submitted by the Company.

       The Company is currently evaluating ancillary costs relating to the
explosion, including cleanup and abatement activities. Certain of these costs
are probable, but are not currently subject to reasonable estimation. Such
amounts could be material to the Company's results of operations, cash flows and
financial position during future periods. Based on the available information,
during 1999, the Company recorded a $3.0 million reserve for its share of the
estimated cost to encapsulate the Powerhouse. If the abatement costs exceed $3.0
million, those costs will be recorded as incurred if they relate to future
operations. If they do not result in future benefit to the Company, additional
abatement costs will be recorded in the period during which losses become
probable and reasonably estimable.

       The Company is negotiating with its insurance carriers for interim cash
payments on the insurance claims. Through December 31, 1999, advances totaling
$138.0 million were received from the Company's insurance carriers for business
interruption losses. An additional $21.0 million advance was received for
property damage losses. The Company expects to fund the cash needs relating to
the matters noted above from bank borrowings, insurance proceeds and working
capital.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 VERSUS YEAR ENDED DECEMBER 31, 1998

       Total Sales. Total sales decreased 16.8% in 1999 to $967.6 million from
$1,163.2 million in 1998, a decrease of $195.6 million. The decrease in total
sales in 1999 was caused principally by lower steel product shipments. Steel
product shipments decreased 11.8% in 1999 to 2,320,000 net tons from 2,630,000
net tons in 1998, a decrease of 310,000 net tons. Rouge Industries' shipments
were lower in 1999 because of the disruption of production resulting from the
February 1, 1999 explosion and fire at the Powerhouse. The Company lost
approximately 900,000 tons of slab production in the first half of 1999. A
portion of the lost production was made up by processing semi-finished
inventories and purchased slabs and coils. The effect on the

                                       23

<PAGE>   24



Company of the decrease in total sales resulting from lower shipments was
magnified by lower steel product selling prices in 1999.  See "- Powerhouse
Explosion and Insurance Claim."

     Costs and Expenses. Total costs and expenses increased 8.3% in 1999 to
$1,221.7 million from $1,128.1 million in 1998, an increase of $93.6 million.
Costs of goods sold increased 4.3% in 1999 to $1,137.1 million from $1,090.0
million in 1998, an increase of $47.1 million. The increase in costs of goods
sold was primarily due to additional costs related to the Powerhouse explosion.
Rouge Steel recorded continuing expenses associated with its steelmaking plant
despite the entire plant being shut down for 11 days and primary operations,
which includes the blast furnaces, basic oxygen furnaces and continuous caster,
not resuming production until May. Additionally, the Company recorded expenses
for non-capital repairs to its damaged property. The higher costs associated
with the Powerhouse explosion were partially offset by lower steel product
shipments in 1999 resulting from the lost production discussed above. Costs of
goods sold in 1999 was 117.5% of total sales compared to 93.7% in 1998.
Depreciation and amortization increased 216.4% in 1999 to $63.3 million from
$20.0 million in 1998, an increase of $43.3 million. The higher depreciation and
amortization expense reflects the completion of major capital projects as well
as the amortization of the cost of the temporary steam boilers and electrical
distribution system installed to provide the Company with steam and
electricity until the co- generation power plant is placed into service. These
temporary facilities, which were placed into service in the second quarter of
1999, are being amortized over their estimated useful lives, at which time they
will be replaced by the co-generation power plant. See "- Powerhouse Explosion
and Insurance Claim."

     Selling and Administrative Expenses.  Selling and administrative expenses
in 1999 were $26.8 million compared to $23.9 million in 1998, an increase of
$2.9 million.  The increase in selling and administrative expense is primarily
comprised of legal and other professional services relating to the Powerhouse
explosion insurance claim.  See "- Powerhouse Explosion and Insurance Claim."

     Operating Income (Loss). The operating loss in 1999 was $254.1 million
compared to operating income of $35.1 million in 1998, a change of $289.2
million. The decrease in operating income was primarily due to the Powerhouse
explosion and weak steel product prices.

     Interest Expense. Interest expense increased 266.8% in 1999 to $2.8 million
from $775,000 in 1999, an increase of $2.0 million. The increase in interest
expense was the result of higher debt in 1999. The average debt balance in 1999
was $44.7 million compared to $10.2 million in 1998.

     Insurance Recovery. The Company recognized $177.4 million of income in 1999
for anticipated insurance proceeds related to the Powerhouse explosion. The
Company has an insurance program that provides coverage for damage to property
destroyed, interruption of business operations and expenses incurred to minimize
the period of disruption to operations. The Company expects that the Powerhouse
insurance claim will not be settled for at least another year. Since the claim
is not near settlement, the Company is unable to accurately estimate the extent
of its exposure to unrecoverable losses incurred as a result of the Powerhouse
explosion. The Company has recorded a reserve with respect to its anticipated
insurance proceeds which has the effect of reducing income recognized. See "-
Powerhouse Explosion and Insurance Claim."

     Income Tax (Provision) Benefit. The income tax benefit in 1999 was $30.5
million compared to an income tax provision of $8.7 million in 1998. The income
tax benefit in 1999 was a function of the loss incurred.

                                       24
<PAGE>   25

     Equity in Unconsolidated Subsidiaries. Equity in unconsolidated
subsidiaries increased in 1999 to $1.7 million from a loss of $1.0 million in
1998, a change of $2.7 million. The improvements in income from unconsolidated
subsidiaries came mostly from EVTAC and Spartan Steel Coating, L.L.C.

     Net Income (Loss). The net loss in 1999 was $47.8 million compared to net
income of $23.4 million in 1998. The net loss was primarily due to the
Powerhouse explosion and weak steel product prices.

     Powerhouse Explosion Insurance Claim. The insurance claim related to the
February 1, 1999 explosion and fire at the Powerhouse includes the effect of a
93-day outage and the corresponding reduction in shipments, Total Sales and
Costs of Goods Sold. Costs of Goods Sold includes property damage expenses of
$57.5 million and estimated business interruption expenses of $111.2 million
related to the Powerhouse explosion. Depreciation and Amortization Expense
includes an additional $40.4 million related to the temporary steam boilers and
electrical distribution equipment. The aggregate effect of Powerhouse
explosion-related items on Operating Loss was $217.4 million. Other income
includes $177.4 million of insurance recoveries. See "- Powerhouse Explosion and
Insurance Claim."

YEAR ENDED DECEMBER 31, 1998 VERSUS YEAR ENDED DECEMBER 31, 1997

     Total Sales. Total sales decreased 13.3% in 1998 to $1,163.2 million from
$1,341.6 million in 1997, a decrease of $178.4 million. The decrease in total
sales was caused by lower shipments and lower steel product selling prices,
partially offset by improved product mix. Shipments decreased 13.2% in 1998 to
2,630,000 net tons from 3,029,000 net tons in 1997, a decrease of 399,000 net
tons. Shipments were lower in 1998 for two reasons: (i) the unprecedented high
level of low-priced imports which resulted in the Company losing sales to
service center customers and (ii) the decision by the Company to purchase fewer
slabs to augment its own production.

     Costs and Expenses. Total costs and expenses decreased 13.9% in 1998 to
$1,128.1 million from $1,309.9 million in 1997, a decrease of $181.8 million.
Costs of goods sold decreased 14.7% in 1998 to $1,090.0 million from $1,278.3
million in 1997, a decrease of $188.3 million. The decrease in costs of goods
sold in 1998 can be attributed primarily to the 13.2% decrease in shipments
discussed above, as well as dramatically lower scrap prices, the absence of a
blast furnace reline and a reduced level of purchased slabs. The Company's
smaller blast furnace was relined in 1997. Costs of goods sold was 93.7% of
total sales in 1998, down from 95.3% of total sales in 1997. Depreciation and
amortization expense increased 28.5% in 1998 to $20.0 million from $15.6 million
in 1997, an increase of $4.4 million. The higher depreciation and amortization
expense reflects the completion of major capital projects, primarily the
automated raw material handling system and the reline of the Company's smaller
blast furnace. Selling and administrative expenses increased 9.7% in 1998 to
$23.9 million from $21.8 million in 1997, an increase of $2.1 million. The
increase in selling and administrative expenses is primarily due to higher
Michigan single business tax resulting from a lower capital acquisition
deduction in 1998.

     Operating Income. Operating income increased 10.7% in 1998 to $35.1 million
from $31.7 million in 1997, an increase of $3.4 million, despite lower steel
product shipments. Operating income represented 3.0% of total sales in 1998, up
from 2.4% of total sales in 1997.

     Other - Net. Other - net increased in 1998 to $2.7 million from $1.2
million in 1997, an increase of $1.5 million. The increase was comprised of two
items: (i) insurance deductibles for a

                                       25
<PAGE>   26

railroad accident and a mobile equipment fire and (ii) an increase in the
reserve for doubtful accounts.

LIQUIDITY AND CAPITAL RESOURCES

       Rouge Industries' liquidity needs arise predominantly from capital
investments and working capital requirements. As a result of the explosion and
fire at the Powerhouse on February 1, 1999, the Company incurred increased
levels of expenditures to restore its operations to normal levels. The Company
expects to meet its liquidity needs with cash provided by operating activities,
funds provided by borrowings and anticipated insurance recoveries.
See "- Powerhouse Explosion and Insurance Claim."

       Cash and cash equivalents on December 31, 1999 totaled $1.9 million
compared to $2.4 million on December 31, 1998, a decrease of $500,000. Cash
provided by financing activities was more than offset by cash used for operating
activities and capital expenditures during 1999.

       Cash Flows from Operating Activities. Net cash used for operating
activities was $3.7 million in 1999 compared to net cash provided by operating
activities of $20.3 million in 1998. The decrease of $24.0 million was primarily
attributable to the Powerhouse explosion and the resulting net loss. The $48.0
million increase in accounts receivable since December 31, 1998 is primarily
comprised of the insurance recovery receivable. Many of the Powerhouse-related
accruals had not yet been paid as of December 31, 1999, which explains the high
level of payables.

       Capital Expenditures. Cash used for capital expenditures, including
investments in unconsolidated subsidiaries, increased 78.6% in 1999 to $70.0
million from $39.2 million in 1998, an increase of $30.8 million. The
expenditures made in 1999 were primarily for computer systems, "C" blast furnace
upgrades and partial payment of the temporary electrical distribution system and
steam boilers which were installed after the Powerhouse explosion. Other
expenditures were made to modernize and expand the Company's facilities. In
2000, the Company plans to spend approximately $40 million on capital items,
including environmental equipment for the basic oxygen furnace (the "BOF") and
the remaining expenditures for the temporary steam and electrical distribution
systems. Other capital expenditures will be generally directed at improving
plant efficiency and product quality in order to improve Rouge Industries'
competitive position in the marketplace.

       Credit Facility. Rouge Steel has a $125 million, unsecured revolving loan
commitment under a credit agreement (the "Credit Agreement") among the Company,
the banks named therein and Bank One, Michigan, as administrative agent. On June
30, 2000, $25 million of the commitments of the banks under the Credit Agreement
will expire with the remaining $100 million expiring on December 16, 2002. The
revolving loans provided for under the Credit Agreement bear interest, at the
option of the Company, at a rate equal to either (i) the base rate, which is the
higher of the prime rate or the federal funds rate plus 0.5%, or (ii) the LIBOR
rate plus an applicable margin, which varies with the Company's debt to
capitalization ratio and can range from 0.50% to 0.80%. The Company had
borrowings of $104.8 million under the facility as of December 31, 1999. In
addition to the Credit Agreement, the Company has obtained two $25 million
uncommitted credit facilities, both of which expire in the second quarter of
2000. The Company believes that cash flows from operations and funds available
under its credit facilities, along with anticipated insurance proceeds, will be
adequate for its working capital and capital expenditure requirements.

                                       26
<PAGE>   27

ENVIRONMENTAL MATTERS

       The Company's operations are subject to many federal, state and local
laws, regulations, permits and consent agreements relating to the protection of
human health and the environment. Except as set forth below, the Company
believes that its facilities are in material compliance with these provisions
and does not believe that future compliance with such provisions will have a
materially adverse effect on its results of operations or financial position.
The Company has incurred capital expenditures in connection with matters
relating to environmental control of approximately $1 million during the past
four years. In addition, the Company has planned an aggregate of approximately
$8 million in capital expenditures for environmental compliance for the years
2000 through 2003. Since environmental laws and regulations are becoming
increasingly stringent, the Company's environmental capital expenditures and
costs for environmental compliance may increase in the future. In addition, due
to the possibility of unanticipated regulatory or other developments, the amount
and timing of future environmental expenditures may vary substantially from
those currently anticipated. The costs for current and future environmental
compliance may also place domestic integrated steel producers at a competitive
disadvantage with respect to foreign steel producers, which may not be required
to undertake equivalent costs in their operations, and manufacturers of steel
substitutes, which are subject to less stringent environmental requirements.

       In connection with the acquisition of the Company from Ford in 1989 (the
"Acquisition"), Ford has agreed to indemnify the Company (the "Ford Indemnity")
for any liability arising out of an environmental condition existing prior to
the Acquisition or a subsequent change in law relating to such condition that
results in an environmental claim under any federal or state environmental law,
including the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, ("CERCLA"), the Resource Conversation and Recovery Act
("RCRA"), the Clean Water Act, the Safe Drinking Water Act, the Clean Air Act
and the Occupational Safety and Health Act of 1970 or an environmental claim
based upon a release of a material of environmental concern. An environmental
claim includes, among other things, the costs associated with the release of any
pollutants, contaminants, toxic substances and hazardous substances into the
environment. The Ford Indemnity provides that Ford shall pay the Company's
liabilities, including any penalties and attorney's fees, in connection with any
environmental claim relating to a pre-Acquisition condition. The Ford Indemnity
terminates on December 15, 2009. In some instances, Ford has acted proactively;
in others, it has denied responsibility. The submitted claims include asbestos
removal, CERCLA liabilities, National Pollutant Discharge Elimination System
permit violations, underground storage tank removal, transformer replacement and
transformer removal and disposal. The Company does not believe the rejection by
Ford of any claims made under the Ford Indemnity will have a materially adverse
effect on the Company's results of operations or financial position.

       From time to time, the Company has received from the United States
Environmental Protection Agency (the "U.S. EPA") various requests for
information in connection with an environmental statute. Whether these
information requests suggest contemplated actions by the U.S. EPA and whether
such requests for information will lead to a materially adverse effect on the
Company's results of operations or financial position is unknown.

       In 1990, Congress passed amendments to the Clean Air Act which impose
more stringent standards on air emissions. Pursuant to Title V of the Clean Air
Act Amendments of 1990, the Company submitted an application for a facility
operating permit (a "Title V permit") in 1997, with amendments in 1998. The
Michigan Department of Environmental Quality (the

                                       27
<PAGE>   28

"MDEQ") advised the Company that the application and the amendment were
administratively complete. The Company expects to receive a draft Title V Permit
in the first half of 2000.

       In 1998, the Company and the Wayne County Air Quality Management Division
(the "Division") entered into a consent order resolving certain notices of
violation ("NOVs") and issues involving the BOF electrostatic precipitator and
the blast furnace flare stack. The settlement agreement includes performance of
a supplemental environmental project ("SEP") for the installation of a waste
oxide dryer. The dryer was installed in January 1999 and intended to secure
significant additional environmental and public health improvements. The
settlement agreement imposed a $125,000 penalty, stipulated penalties for future
violations, a compliance program and a five-year term.

       In 1999, the Company and the Division executed a consent order resolving
certain NOVs for events which occurred in 1997 and 1998. The consent order
required the Company to pay $140,000 and undertake an SEP for design
improvements to the BOF off-gas conditioning system.

       In 1997, the Company voluntarily disclosed its failure to obtain a
construction and operating permit for an operational change previously thought
to be exempt from the air permitting requirements. The Company discovered the
error through an environmental self-audit. Disclosure was made under a Michigan
statute that provides immunity from state enforcement for environmental
violations discovered through self-audits if they are voluntarily and promptly
reported and corrected. The Company has formally requested immunity under the
law. A permit application for the operational change has been submitted to both
the Division and the MDEQ and is presently in the public comment process.

       In 1997, the Company received a notice from the Corporation Counsel of
the City of Melvindale (the "City") of the City's intention to sue the Company
for alleged release of particulates into the air and violations of the County of
Wayne permit. The City has also made damage claims against the Company on behalf
of approximately 50 residents who claimed to have incurred property damage as a
result of dust fallout. In 1998, a separate class action lawsuit was filed
against the Company on behalf of residents allegedly injured by dust. In late
1999, discussions among Rouge Steel and the class action plaintiffs resulted in
a tentative settlement agreement. In early 2000, the Company agreed to a final
judgement and consented to pay $1.5 million for distribution to plaintiff class
members and their attorneys. The final judgement also formalizes the Company's
obligation to undertake specified abatement measures, some of which had already
been initiated at the time of the tentative settlement. In addition, two
separate actions have been initiated for alleged property damage from dust
fallout. The Company intends to vigorously defend the property damage claims.
Rouge Steel does not believe that these matters will have a materially adverse
effect on its results of operations or financial position.

       In September 1998, U.S. EPA Region 5 commenced a multimedia investigation
of Rouge Steel's facility. The Company furnished information to the U.S. EPA in
response to a request for information issued by the agency pursuant to Section
114(a) of the Clean Air Act. The Company also furnished information in
accordance with Section 3007 of RCRA. The Company has since been notified that
certain compliance issues arising from the investigation have been referred to
the United States Department of Justice for enforcement action. If this matter
proceeds, the Company believes it may include claimed monetary sanctions in
excess of $500,000. The Company does not believe that the enforcement action
will have a materially adverse effect on its results of operations or financial
position.

                                       28
<PAGE>   29

       Rouge Steel has received a series of NOVs from the Division for incidents
occurring in August and September 1998 and September 1999. The NOVs allege
violations of the Division's air rules and characterize the facility's emission
fallout as a nuisance condition. Rouge Steel has denied the allegations
contained in the NOVs. The preliminary nature of the NOVs and Rouge Steel's
response make it difficult to predict the outcome or its impact on the Company's
results of operations or financial position.

       Rouge Steel and the former owner of the Rouge Steel facility have
voluntarily approached the MDEQ with a joint proposal to conduct a phased
cleanup of their solid waste management units ("SWMUs") at the Rouge Complex
under the RCRA corrective action program. In connection with this proposal, the
companies have voluntarily submitted a work plan for demolition and remediation
of the coke plant. The MDEQ is considering the proposal. The former owner of the
Rouge Steel facility has agreed to pay for most of the coke plant remediation
project. Therefore, this work is not expected to have a materially adverse
effect on Rouge Steel's results of operations or financial position. Further
investigation is needed to develop a reasonably accurate estimate of the
potential costs of remediating the remaining Rouge Steel SWMUs. The cost of the
necessary investigation is estimated to be in the range of $150,000 to $200,000.
In the absence of the additional facility-specific information that will be
developed by this investigation, the potential costs to clean up the remaining
Rouge Steel SWMUs cannot be estimated at this time. The Company has no
information to suggest that the cost of remediating the remaining SWMUs would
have a materially adverse effect on its results of operations or financial
position. The companies have proposed to complete the remediation of the SWMUs
before 2005.

        On February 1, 1999, there was a catastrophic explosion and fire at the
Powerhouse that effectively disabled the Powerhouse's capability to produce
steam and electricity for the Rouge Complex. The emergency situation required
the immediate installation of temporary steam boilers and electricity generating
equipment before permits could be obtained to prevent major damage to plant
equipment. Soon after the explosion, the Company approached the State and County
environmental agencies to request an emergency variance from the permitting
requirements. When the agencies refused to consider a variance, the Company
voluntarily proposed a settlement agreement to address any potential liability
associated with the emergency installation of this equipment. After lengthy
discussions regarding the settlement proposal, neither the State nor the County
has indicated any intent to take enforcement action or demand penalties in this
matter. However, the Company has not received formal notice that no action will
be taken, and it can provide no assurance in this regard.

       On August 4, 1999, the Company voluntarily disclosed to the Division that
when briquettes from the Company's waste oxide reclamation facility are added to
hot metal at the BOF, the Company has experienced particulate emission control
problems. The Company has developed a plan to re-engineer the BOF baghouse to
address the problem. In the interim, the Company voluntarily suspended use of
the waste oxide pellets in the reladling process late in 1999. It is expected
that the BOF baghouse modifications will be completed in the second quarter of
2000.

YEAR - 2000 CHANGEOVER

       The Company completed its Year-2000 assessment and remediation program,
which was initiated in 1998 to modify or replace significant portions of the
Company's hardware and software so that systems would properly interpret dates
beyond January 1, 2000. Prior to December 31, 1999, all critical internal
manufacturing business systems were either replaced or

                                       29
<PAGE>   30

remediated, tested and in operation, and live Year-2000 production or simulation
tests were successfully conducted on all manufacturing facilities.

       Rouge Steel suppliers identified by Purchasing and Operations as being
critical were asked to provide details regarding their contingency plans.
Meetings also were conducted with the Company's most critical steel processors,
all of whom indicated that they would be Year-2000 ready. The Company also met
with and received assurances from its critical infrastructure providers for
electricity, natural gas and oxygen that they would-be Year-2000 ready.

       Capital expenditures of approximately $7 million were incurred to replace
or significantly upgrade existing hardware and software with new equipment. The
Company also incurred approximately $4 million of additional expense to
remediate existing computer systems and manufacturing equipment that were not
Year-2000 ready. These expenditures were consistent with estimates provided in
earlier disclosures.

       Rouge Steel's Year-2000 rollover plan was to have in operation as few
facilities as practicable during the Year-2000 rollover period. As a result,
most operations were temporarily idled prior to midnight. Because of the smooth
rollover, manufacturing operations were resumed shortly after midnight on
January 1, 2000. Supplies from the critical infrastructure providers of
electricity, natural gas and oxygen, as well as all other material flow from
other key suppliers during the transition period, were uninterrupted. Although
contingency plans had been established to address unforeseen operational or
supply problems, they were never invoked.

       In summary, Rouge Steel's transition into the year 2000 has, to date,
been considered uneventful and successful and did not result in any noteworthy
events with respect to the Company or its suppliers. However, the potential for
future disruptions resulting from Year-2000 issues exists. Accordingly, the
Company will continue to monitor its operations and maintain appropriate
contingency plans.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

       The matters discussed in this Annual Report on Form 10-K include certain
forward-looking statements that involve risks and uncertainties. These
forward-looking statements may include, among others, statements concerning
projected levels of production, sales, shipments and income, pricing trends,
cost reduction strategies, product mix, anticipated capital expenditures and
other future plans and strategies.

       As permitted by the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, Rouge Industries is identifying in this Annual
Report on Form 10-K a number of factors which could cause the Company's actual
results to differ materially from those anticipated.  These factors include, but
are not necessarily limited to, (i) changes in the general economic climate,
(ii) the supply of and demand for steel products in the Company's markets, (iii)
pricing of steel products in the Company's markets, (iv) potential environmental
liabilities, (v) the availability and prices of raw materials, supplies,
utilities and other services and items required by the Company's operations,
(vi) uncertainty related to the Powerhouse explosion and the Company's ability
to resolve the insurance claim, and (vii) higher than expected operating costs.

RECENT EVENTS

                                       30
<PAGE>   31

       BOF Incident.  On January 7, 2000, a mechanical system failure occurred
at Rouge Steel's BOF which required approximately seven weeks to repair.  The
BOF operated at approximately 85% of its normal production capacity during the
repair.  The Company estimates that it lost approximately 50,000 tons of slab
production, but purchased slabs allowed the Company to continue to fill customer
orders.  While management is still evaluating the full impact, the BOF incident
is currently expected to result in a total loss in the range of $8 million to
$12 million.  All amounts in excess of the $2.5 million deductible are expected
to be covered under the Company's insurance program.  The estimate of the total
loss will change as additional information becomes available with respect to
actual costs incurred and as the insurers perform their review of claim
information submitted by the Company.  Considerable uncertainty still exists
with respect to the amount of actual costs to be incurred in the future as well
as the extent of the Company's exposure for amounts not covered by its insurance
program.

       The DECS. On March 1, 2000, pursuant to the terms of Worthington's 7 1/4%
Exchangeable Notes due March 1, 2000, Worthington delivered 5,999,600 shares of
the Company's Class A Common Stock (after converting its 422,000 shares of Class
B Common Stock into an equal number of shares of Class A Common Stock) to the
holders of the DECS. The amount delivered represented Worthington's entire
equity position in the Company. The Company did not receive any of the proceeds
from the sale of the DECS or delivery thereunder of the shares of Class A Common
Stock.


                                       31

<PAGE>   32



Item 8.        Financial Statements and Supplementary Data.

      The following information is submitted pursuant to the requirements of
Item 8:
<TABLE>
<CAPTION>

                                                                                                         Page
                                                                                                         ----
<S>                                                                                                       <C>
Report of Independent Accountants.......................................................................  33

 Consolidated Balance Sheets as of December 31, 1999 and 1998...........................................  34

Consolidated Statements of Operations for the Years Ended
  December 31, 1999, 1998 and 1997......................................................................  36

Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
  December 31, 1999, 1998 and 1997......................................................................  37

Consolidated Statements of Cash Flows for the Years Ended
  December 31, 1999, 1998 and 1997......................................................................  38

Notes to Consolidated Financial Statements..............................................................  39

Schedule II - Valuation and Qualifying Accounts and Reserves............................................  53
</TABLE>

                                       32

<PAGE>   33



                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors
and Stockholders of
Rouge Industries, Inc.



In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Rouge
Industries, Inc. and its subsidiaries at December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedule listed in the accompanying index presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.



PricewaterhouseCoopers LLP
Detroit, Michigan
February 2, 2000, except as to
  Note 12 which is as of March 1, 2000


                                       33
<PAGE>   34


                             ROUGE INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (amounts in thousands)


Assets


<TABLE>
<CAPTION>
                                                                        December 31
                                                                  ----------------------
                                                                    1999         1998
                                                                  ---------    ---------
<S>                                                              <C>          <C>
Current Assets

   Cash and Cash Equivalents                                      $   1,861    $   2,418
   Accounts Receivable
     Trade and Other (Net of Allowances of $15,997 and $17,937)     135,588      130,624
     Insurance Recovery                                              43,085         --
     Affiliates                                                       2,643        5,644
   Inventories                                                      269,808      275,811
   Other Current Assets                                              27,530        7,075
                                                                  ---------    ---------
     Total Current Assets                                           480,515      421,572
                                                                  ---------    ---------

Property, Plant, and Equipment

   Land                                                                 360          366
   Buildings and Improvements                                        23,000       23,018
   Machinery and Equipment                                          363,406      289,058
   Construction in Progress                                          13,145        4,525
                                                                  ---------    ---------
     Subtotal                                                       399,911      316,967
   Less:  Accumulated Depreciation                                 (121,301)     (58,846)
                                                                  ---------    ---------
     Net Property, Plant, and Equipment                             278,610      258,121
                                                                  ---------    ---------

Investment in Unconsolidated Subsidiaries                            71,258       64,646
                                                                  ---------    ---------

Deferred Charges and Other                                           37,223       24,548
                                                                  ---------    ---------

     Total Assets                                                 $ 867,606    $ 768,887
                                                                  =========    =========
</TABLE>




The accompanying notes are an integral part of the consolidated financial
statements.

                                       34

<PAGE>   35



                             ROUGE INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                   (amounts in thousands except share amounts)

Liabilities and Stockholders' Equity



<TABLE>
<CAPTION>
                                                                                                    December 31
                                                                                           ------------------------------
                                                                                             1999                  1998
                                                                                           --------              --------

<S>                                                                                        <C>                   <C>
Current Liabilities
   Accounts Payable
     Trade                                                                                 $191,737              $153,115
     Affiliates                                                                               9,890                13,776
   Deferred Insurance Recovery                                                               24,671                     -
   Current Portion of Long-Term Debt                                                          4,800                     -
   Accrued Vacation Pay                                                                      10,484                10,737
   Taxes Other than Income                                                                    4,506                 6,131
   Other Accrued Liabilities                                                                 36,129                25,394
                                                                                           --------              --------
     Total Current Liabilities                                                              282,217               209,153
                                                                                           --------              --------

Long-Term Debt                                                                              100,000                29,000
                                                                                           --------              --------

Other Postretirement Benefits                                                                63,936                54,301
                                                                                           --------              --------

Other Liabilities                                                                            11,678                11,327
                                                                                           --------              --------

Excess of Net Assets Acquired Over Cost                                                           -                 5,484
                                                                                           --------              --------

Commitments and Contingencies (Notes 10 and 11)

Stockholders' Equity
   Common Stock
     Class A, 80,000,000 shares authorized with 14,570,511 and 14,521,538 issued
       and outstanding as of December 31, 1999
       and 1998, respectively                                                                   146                   145
     Class B, 8,690,400 shares authorized with 7,562,400
       issued and outstanding                                                                    76                    76
   Capital in Excess of Par Value                                                           129,943               129,458
   Retained Earnings                                                                        282,409               332,876
   Accumulated Other Comprehensive Income (Loss)                                             (2,799)               (2,933)
                                                                                           --------              --------
     Total Stockholders' Equity                                                             409,775               459,622
                                                                                           --------              --------
     Total Liabilities and Stockholders' Equity                                            $867,606              $768,887
                                                                                           ========              ========
</TABLE>




The accompanying notes are an integral part of the consolidated financial
statements.

                                       35

<PAGE>   36



                             ROUGE INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            (amounts in thousands except share and per share amounts)


<TABLE>
<CAPTION>
                                                                                             Years Ended December 31
                                                                                 -------------------------------------------------
                                                                                    1999                 1998              1997
                                                                                 -----------          ----------        ----------
<S>                                                                              <C>                  <C>               <C>
Sales
   Unaffiliated Customers                                                        $   922,208          $1,050,144        $1,158,218
   Affiliates                                                                         45,434             113,045           183,342
                                                                                 -----------          ----------        ----------
      Total Sales                                                                    967,642           1,163,189         1,341,560
                                                                                 -----------          ----------        ----------

Costs and Expenses
   Costs of Goods Sold                                                             1,137,151           1,090,032         1,278,351
   Depreciation and Amortization                                                      63,267              19,993            15,563
   Selling and Administrative Expenses                                                26,772              23,875            21,760
   Amortization of Excess of Net Assets Acquired Over Cost                            (5,484)             (5,796)           (5,796)
                                                                                 -----------          ----------        ----------
      Total Costs and Expenses                                                     1,221,706           1,128,104         1,309,878
                                                                                 -----------          ----------        ----------

Operating Income (Loss)                                                             (254,064)             35,085            31,682

Interest Income                                                                          750               1,473             1,418
Interest Expense                                                                      (2,843)               (775)             (630)
Insurance Recovery                                                                   177,414                   -                 -
Other - Net                                                                           (1,214)             (2,722)           (1,244)
                                                                                 -----------          ----------        ----------
Income (Loss) Before Income Taxes
   and Equity in Unconsolidated Subsidiaries                                         (79,957)             33,061            31,226
Income Tax (Provision) Benefit                                                        30,494              (8,705)           (8,094)
                                                                                 -----------          ----------        ----------
Income (Loss) Before Equity in Unconsolidated Subsidiaries                           (49,463)             24,356            23,132
Equity in Unconsolidated Subsidiaries                                                  1,652                (964)             (718)
                                                                                 -----------          ----------        ----------

Net Income (Loss)                                                                $   (47,811)         $   23,392        $   22,414
                                                                                 ===========          ==========        ==========

Net Income (Loss) Per Share - Basic and Diluted                                  $     (2.16)         $     1.06        $     1.02
                                                                                 ===========          ==========        ==========

Weighted-Average Shares Outstanding                                               22,121,701          22,025,430        21,938,743
                                                                                 ===========          ==========        ==========
</TABLE>







The accompanying notes are an integral part of the consolidated financial
statements.

                                       36

<PAGE>   37



                             ROUGE INDUSTRIES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                             (amounts in thousands)



<TABLE>
<CAPTION>
                                                                                     Years Ended December 31
                                                                         ----------------------------------------------
                                                                           1999               1998              1997
                                                                         ---------          ---------         ---------
<S>                                                                      <C>                <C>               <C>
Class A and Class B Common Stock
   Beginning Balance                                                     $     221          $     220         $     219
   Common Stock Issued for Benefit Plans                                         1                  1                 1
                                                                         ---------          ---------         ---------
      Ending Balance                                                           222                221               220
                                                                         ---------          ---------         ---------

Capital in Excess of Par Value
   Beginning Balance                                                       129,458            128,517           127,096
   Common Stock Issued for Benefit Plans                                       410                932             1,405
   Common Stock Issued for ODEP                                                 55                  9                16
   Exercise of Stock Options                                                    20                  -                 -
                                                                         ---------          ---------         ---------
      Ending Balance                                                       129,943            129,458           128,517
                                                                         ---------          ---------         ---------

Retained Earnings
   Beginning Balance                                                       332,876            312,130           292,349
   Net Income (Loss)                                                       (47,811)            23,392            22,414
   Cash Dividends Declared                                                  (2,656)            (2,646)           (2,633)
                                                                         ---------          ---------         ---------
      Ending Balance                                                       282,409            332,876           312,130
                                                                         ---------          ---------         ---------

Accumulated Other Comprehensive Income (Loss)
   Beginning Balance                                                        (2,933)            (2,246)           (2,399)
   Additional Minimum Pension Liability Adjustment                             134               (687)              153
                                                                         ---------          ---------         ---------
      Ending Balance                                                        (2,799)            (2,933)           (2,246)
                                                                         ---------          ---------         ---------

Total Stockholders' Equity                                               $ 409,775          $ 459,622         $ 438,621
                                                                         =========          =========         =========

Comprehensive Income (Loss)
   Net Income (Loss)                                                     $ (47,811)         $  23,392         $  22,414
   Additional Minimum Pension Liability Adjustment                             134               (687)              153
                                                                         ---------          ---------         ---------
      Comprehensive Income (Loss)                                        $ (47,677)         $  22,705         $  22,567
                                                                         =========          =========         =========
</TABLE>






The accompanying notes are an integral part of the consolidated financial
statements.

                                       37

<PAGE>   38



                             ROUGE INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (amounts in thousands)


<TABLE>
<CAPTION>
                                                                                                Years Ended December 31
                                                                                   ----------------------------------------------
                                                                                       1999              1998              1997
                                                                                   -----------       -----------        ---------
<S>                                                                                <C>               <C>                <C>
Cash Flows From Operating Activities
   Net Income (Loss)                                                               $   (47,811)      $    23,392        $  22,414
   Adjustments to Reconcile Net Income (Loss) to Net Cash
     (Used for) Provided by Operating Activities:
       Deferred Taxes                                                                  (31,434)            3,193            9,540
       Depreciation and Amortization                                                    63,267            19,993           15,563
       Equity in Unconsolidated Subsidiaries                                            (1,652)              964              718
       Amortization of Excess of Net Assets Acquired Over Cost                          (5,484)           (5,796)          (5,796)
       Common Stock Issued for Benefit Plans                                               466               942            1,422
       Changes in Assets and Liabilities:
         Accounts Receivable                                                           (48,048)          (17,465)          (3,878)
         Inventories                                                                     4,723           (25,108)          21,164
         Prepaid Expenses                                                                3,696              (288)             (47)
         Accounts Payable and Accrued Liabilities                                       31,254            20,479           24,171
         Deferred Insurance Recovery                                                    24,671                 -                -
         Other - Net                                                                     2,629                 -              117
       Proceeds from Property Tax Settlement                                                 -                 -            5,000
                                                                                   -----------       -----------        ---------
            Net Cash (Used for) Provided by Operating Activities                        (3,723)           20,306           90,388
                                                                                   -----------       -----------        ---------

   Cash Flows From Investing Activities
     Capital Expenditures                                                              (64,700)          (21,226)         (82,359)
     Purchase of Marketable Securities                                                       -                 -           (6,310)
     Sale of Marketable Securities                                                           -                 -            8,349
     Investment in Unconsolidated Subsidiaries                                          (5,298)          (17,959)         (37,538)
     Other - Net                                                                             -               273             (142)
                                                                                   -----------       -----------        ---------
            Net Cash Used for Investing Activities                                     (69,998)          (38,912)        (118,000)
                                                                                   -----------       -----------        ---------

   Cash Flows From Financing Activities
     Drawdowns on Revolving Line                                                       453,200           271,700          121,800
     Principal Payments on Revolving Line                                             (377,400)         (260,600)        (103,900)
     Cash Dividend Payments                                                             (2,656)           (2,646)          (2,632)
     Exercise of Stock Options                                                              20                 -                -
                                                                                   -----------       -----------        ---------
            Net Cash Provided by Financing Activities                                   73,164             8,454           15,268
                                                                                   -----------       -----------        ---------

   Net Decrease in Cash and Cash Equivalents                                              (557)          (10,152)         (12,344)

   Cash and Cash Equivalents - Beginning of Year                                         2,418            12,570           24,914
                                                                                   -----------       -----------        ---------

   Cash and Cash Equivalents - End of Year                                         $     1,861       $     2,418        $  12,570
                                                                                   ===========       ===========        =========

</TABLE>





The accompanying notes are an integral part of the consolidated financial
statements.

                                       38

<PAGE>   39



                             ROUGE INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Description of the Company

Rouge Steel Company ("Rouge Steel") is the principal operating subsidiary of
Rouge Industries, Inc. (together with its subsidiaries, "Rouge Industries" or
the "Company"). Rouge Steel is engaged in the production and sale of flat rolled
steel products primarily to domestic automotive manufacturers and their
suppliers. Other wholly-owned subsidiaries of Rouge Industries include QS Steel
Inc. ("QS Steel") and Eveleth Taconite Company ("Eveleth"). QS Steel holds
minority ownership interests in five Michigan- based joint ventures. Eveleth
holds a 45 percent interest in Eveleth Mines LLC, a Minnesota-based iron ore
mining and pellet producing operation. For the purpose of these Notes to
Consolidated Financial Statements, "Rouge Industries" or the "Company" refers to
Rouge Industries, Inc. and its subsidiaries, unless the context requires
otherwise.

Principles of Consolidation

The consolidated financial statements include the accounts of Rouge Industries
and its subsidiaries. Intercompany transactions have been eliminated.
Investments in business entities in which the Company does not have control, but
has the ability to exercise significant influence over the operating and
financial policies, are accounted for under the equity method.

Segment Information

Rouge Industries has one operating segment that comprises its flat rolled steel
products. The Company's business is conducted entirely in the United States.
Significant customers are discussed elsewhere in this Note.

Internal Use Software

In 1998, the Company adopted AICPA Statement of Position ("SOP") No. 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP No. 98-1 requires, in certain cases, capitalization of
software costs that previously would have been expensed as incurred. Software
costs capitalized were $1,864,000 and $4,669,000 in 1999 and 1998, respectively.
These capitalized software costs will be amortized over the lesser of 60 months
or the useful life of the software.

Financial Instruments

The carrying amount of the Company's financial instruments, which include cash
equivalents, marketable securities, accounts receivable, accounts payable and
long-term debt, approximates their fair value at December 31, 1999 and 1998. The
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk are cash equivalents, marketable securities and accounts receivable.
The Company attempts to limit its credit risk associated with cash equivalents
and marketable securities by utilizing outside investment managers to

                                       39

<PAGE>   40



place the Company's investments with highly rated corporate and financial
institutions. With respect to accounts receivable, the Company limits its credit
risk by performing ongoing credit evaluations and, when deemed necessary,
requiring letters of credit, guarantees or collateral. The Company's customer
base is comprised principally of domestic automotive manufacturers and their
suppliers. Management does not believe significant risk exists in connection
with the Company's concentrations of credit at December 31, 1999.

Significant Customers

The Company's significant customers are Ford Motor Company ("Ford") and
DaimlerChrysler AG ("DaimlerChrysler"). Sales to Ford, which are primarily made
pursuant to a ten-year steel purchase agreement, totaled $381,546,000 in 1999,
$429,230,000 in 1998 and $434,898,000 in 1997. The steel purchase agreement
expires after model-year 2000.

Sales to DaimlerChrysler totaled $96,667,000 in 1999, $120,061,000 in 1998 and
$116,013,000 in 1997.

Sales to Worthington Industries, Inc. ("Worthington") totaled $157,307,000 in
1997. In 1998 and 1999 sales to Worthington were less than 10 percent of
total sales.

Inventories

Inventories are stated at the lower of cost or market with cost determined by
the last-in, first-out ("LIFO") method for raw materials, work-in-process and
finished goods and the first-in, first-out ("FIFO") method for nonproduction and
sundry. Costs in inventory include materials, direct labor, Double Eagle
electrogalvanizing and Spartan Steel hot dip galvanizing (see Note 4) and
applied manufacturing overhead.

Nonmonetary Transactions

The Company routinely exchanges iron ore inventory with other parties. Since the
exchanges involve similar productive assets and do not complete an earnings
process, the Company accounts for the exchanges on the cost basis of the
inventory relinquished without recognition of gain or loss.

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Replacements and major
improvements are capitalized; maintenance and repairs are expensed as incurred.
Gains or losses on asset dispositions are included in the determination of net
income.

Depreciation and Amortization

Depreciation of the Company's property, plant, and equipment is computed using
the straight-line method. The average estimated useful lives are as follows:
                                                                   Years
                                                                   -----
      Buildings                                                     35
      Land Improvements                                             20
      Steel-Producing Machinery and Equipment                       18
      Power Equipment                                               28
      Office Furniture                                              12


                                       40

<PAGE>   41



The costs of relines to the blast furnaces and the refurbishment of turbo
generators are capitalized and amortized over their expected lives which are
eight to ten years and five years, respectively.

As a result of the Powerhouse explosion (see Note 11), during 1999 the Company
installed temporary facilities to provide steam and electrical distribution. The
cost of these assets was approximately $65,100,000, which is being amortized
over their expected useful lives of thirteen to sixteen months.

The excess of net assets acquired over cost, relating to the acquisition of the
Company from Ford in 1989 (the "Acquisition"), has been amortized on a
straight-line basis over a ten-year period.

Environmental Accounting

Environmental expenditures are capitalized if the costs mitigate or prevent
future environmental contamination or if the costs improve existing assets'
environmental safety or efficiency. All other environmental expenditures are
expensed. Liabilities for environmental expenditures are accrued when it is
probable that such obligations have been incurred and the amounts can be
reasonably estimated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.

NOTE 2 - MARKETABLE SECURITIES

As of December 31, 1999 and 1998, marketable securities classified as cash
equivalents were $439,000 and $313,000, respectively. The Company's investments
in marketable securities are comprised entirely of money market funds.

NOTE 3 - INVENTORIES

The major classes of inventories are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                 December 31
                                                                        -------------------------------
                                                                          1999                   1998
                                                                        --------               --------
<S>                                                                     <C>                    <C>
Production
   Raw Materials                                                        $ 79,434               $ 83,422
   Semifinished and Finished Steel Products                              182,517                175,831
                                                                        --------               --------
     Total Production at FIFO                                            261,951                259,253
   LIFO Reserves                                                          (9,214)                (4,651)
                                                                        --------               --------
     Total Production at LIFO                                            252,737                254,602
Nonproduction and Sundry                                                  17,071                 21,209
                                                                        --------               --------
     Total Inventories                                                  $269,808               $275,811
                                                                        ========               ========
</TABLE>

NOTE 4 - INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

At December 31, 1999, the Company's investments in unconsolidated subsidiaries
consist of a 50 percent interest in Double Eagle Steel Coating Company ("Double
Eagle"), a 45 percent interest in Eveleth Mines LLC ("EVTAC"), a 20 percent
interest in Shiloh of Michigan, L.L.C. ("Shiloh of Michigan"), a 48 percent
interest in Spartan Steel Coating, L.L.C. ("Spartan Steel"), an 11.1 percent
interest in TWB Company,

                                       41

<PAGE>   42



L.L.C. ("TWB"), a 40 percent interest in Bing Blanking, L.L.C. ("Bing Blanking")
and a 49 percent interest in Delaco Processing, L.L.C. ("Delaco Steel
Processing"). All of the Company's investments in unconsolidated subsidiaries
are accounted for under the equity method.

Double Eagle is an electrogalvanizing facility which is operated as a cost
center. Accordingly, Double Eagle records neither sales nor income. Rouge
Industries' proportionate share of Double Eagle's production costs of
$39,609,000, $40,432,000 and $39,459,000 for 1999, 1998 and 1997, respectively,
is included in the Company's costs and expenses and inventory. The Company is
committed to pay 50 percent of the fixed costs incurred and a pro rata share of
variable costs based on coatings applied to the Company's products. At December
31, 1999, the Company's share of the underlying net assets of Double Eagle
exceeded its investment by $33,234,000. This excess results from purchase
accounting adjustments made on the consolidated accounts of the Company at the
time of the acquisition of the Company from Ford and relates primarily to
property, plant, and equipment. This excess is being amortized as a reduction of
Rouge Industries' share of Double Eagle's costs over the remaining lives of the
property.

Eveleth became a wholly-owned subsidiary of the Company in 1996 and, in exchange
for a 45 percent ownership interest in EVTAC, Eveleth assigned substantially all
of its operating assets and liabilities to EVTAC. At December 31, 1999, the
Company's share of the underlying net assets of EVTAC exceeded its investment by
$8,234,000. This excess is being amortized over the estimated remaining useful
lives of the contributed assets.

Shiloh of Michigan produces engineered steel blanks, TWB produces laser welded
blanks, Spartan Steel is a cold rolled hot dip galvanizing facility, Bing
Blanking is a producer of first operation blanks and roll formed parts, and
Delaco Steel Processing is a steel processor and warehouser. Spartan Steel, Bing
Blanking and Delaco Steel Processing all began operation in 1998.

The table below sets forth summarized financial information for Rouge
Industries' unconsolidated subsidiaries (dollars in thousands):

<TABLE>
<CAPTION>
                                                                              December 31
                                                                     ----------------------------
                                                                       1999                1998
                                                                     --------            --------

<S>                                                                  <C>                 <C>
Current Assets                                                       $103,415            $ 97,468
Noncurrent Assets                                                     341,529             360,312
Current Liabilities                                                    80,285              91,756
Noncurrent Liabilities                                                110,513             119,155
<CAPTION>

                                                                                 Year Ended December 31
                                                                     -----------------------------------------------
                                                                       1999                1998               1997
                                                                     --------            --------           --------

<S>                                                                  <C>                 <C>                <C>
Net Sales                                                            $327,760            $258,779           $193,463
Gross Profit                                                           34,108              18,422              2,960
Net Income (Loss)                                                      15,546              (1,594)            (6,358)
</TABLE>


                                       42

<PAGE>   43




NOTE 5 - DEBT

The Company had borrowings of $104,800,000 outstanding as of December 31, 1999
and $29,000,000 outstanding as of December 31, 1998.

Rouge Steel has a $125,000,000, unsecured revolving loan commitment under a
credit agreement (the "Credit Agreement"). On June 30, 2000, $25,000,000 of the
commitments of the banks under the Credit Agreement will expire with the
remaining $100,000,000 expiring on December 16, 2002. Rouge Steel is the
borrower under the Credit Agreement and Rouge Industries is the guarantor.
Interest is calculated using one of two methods. Loans under the base rate
option are charged interest equal to the higher of the prime rate or the federal
funds rate plus 0.5%. Loans under the LIBOR option are charged interest at the
London Interbank Offered Rate plus a margin ranging from 0.50% to 0.80%,
depending on the Company's debt to capitalization ratio at the time of
borrowing. The interest rate option is chosen by Rouge Steel at the time of each
borrowing and is thereafter changeable under certain specified conditions. The
facility bears a fixed annual fee of $20,000 and a fee on the entire amount of
the facility which can vary from 0.125% to 0.2%, depending on the Company's debt
to capitalization ratio at the time. The Credit Agreement contains certain
financial covenants, with which the Company was in compliance on December 31,
1999. Additionally, during the second quarter of 1999, the Company obtained
uncommitted credit facilities from two banks for $25,000,000 each. Both of the
uncommitted facilities expire in the second quarter of 2000.

Cash paid for interest was $2,550,000 in 1999, $926,000 in 1998 and $462,000 in
1997.



                                       43
<PAGE>   44


NOTE 6 - PENSION AND POSTRETIREMENT BENEFIT PLANS

The following table presents benefit obligation, asset value, funded status,
cash flow and weighted average assumptions for Rouge Steel's pension and
postretirement benefit plans (dollars in thousands):

<TABLE>
<CAPTION>
                                                             Pension Plans                        Postretirement Benefit Plans
                                                  --------------------------------------     -------------------------------------
                                                       1999         1998        1997             1999         1998        1997
                                                       ----         ----        ----             ----         ----        ----
<S>                                               <C>            <C>           <C>           <C>           <C>           <C>
Change in Benefit Obligation
Benefit Obligation at Beginning of Year           $ 130,763      $ 109,087     $  91,957     $  67,879     $  54,530     $  47,189
   Service Cost                                       7,993          8,116         8,047         4,490         3,649         3,287
   Interest Cost                                      9,280          8,425         7,531         4,878         4,211         3,781
   Participants' Contributions                          337            337           305            --            --            --
   Plan Amendments                                       --             --         1,557            --            --            --
   Actuarial (Gain) Loss                             (4,034)         6,821           739        (8,320)        5,727           453
   Total Benefit Payments                            (2,893)        (2,023)       (1,049)         (333)         (238)         (180)
                                                  ---------      ---------     ---------     ---------     ---------     ---------
     Benefit Obligation at End of Year            $ 141,446      $ 130,763     $ 109,087     $  68,594     $  67,879     $  54,530
                                                  ---------      ---------     ---------     ---------     ---------     ---------

Change in Plan Assets
Fair Value of Plan Assets at Beginning of Year    $ 128,055      $ 121,360     $  87,729     $      --     $      --     $      --
   Actual Return on Plan Assets                      20,554          6,550        23,111            --            --            --
   Employer Contributions                               187          2,124        11,264           333           238           180
   Participants' Contributions                          337            337           305            --            --            --
   Total Benefit Payments                            (2,893)        (2,023)       (1,049)         (333)         (238)         (180)
   Other                                                 13           (293)           --            --            --            --
                                                  ---------      ---------     ---------     ---------     ---------     ---------
     Fair Value of Plan Assets at End of Year     $ 146,253      $ 128,055     $ 121,360     $      --     $      --     $      --
                                                  ---------      ---------     ---------     ---------     ---------     ---------

Funded Status                                     $   4,807      $  (2,708)    $  12,273     $ (68,594)      (67,879)      (54,530)
Unrecognized Actuarial (Gain) Loss                  (14,427)          (967)      (12,760)        4,380        13,273         7,743
Unrecognized Prior Service Cost                       7,492          8,600         9,707           190           237           284
Adjustment to Book Value                                 --             --            --            88            68            49
Adjustment for Sept. 30th Measurement Date               81             --           (96)           --            --            --
                                                  ---------      ---------     ---------     ---------     ---------     ---------
     Net Amount Recognized                        $  (2,047)     $   4,925     $   9,124     $ (63,936)    $ (54,301)    $ (46,454)
                                                  ---------      ---------     ---------     ---------     ---------     ---------

Amount Recognized in the Consolidated
 Balance Sheets Consists of
   Prepaid Benefit Cost                           $   3,945      $   6,837     $   9,498     $      --     $      --     $      --
   Accrued Benefit Liability                         (5,992)        (1,912)         (374)      (63,936)      (54,301)      (46,454)
   Additional Minimum Liability                      (5,286)        (5,878)       (3,462)           --            --            --
   Intangible Asset                                     980          1,366         1,216            --            --            --
   Accumulated Other Comprehensive Income             4,306          4,512         2,246            --            --            --
                                                  ---------      ---------     ---------     ---------     ---------     ---------
     Net Amount Recognized                        $  (2,047)     $   4,925     $   9,124     $ (63,936)      (54,301)      (46,454)
                                                  ---------      ---------     ---------     ---------     ---------     ---------

Weighted-Average Assumptions
 Discount Rate                                         7.50%          6.75%         7.25%         7.50%         6.75%         7.25%
 Expected Return on Plan Assets                        9.00           9.00          9.00           N/A           N/A           N/A
 Rate of Compensation Increase - Salaried              3.70           3.70          3.70          3.70          3.70          3.70
 Rate of Compensation Increase - Hourly                 N/A            N/A           N/A          3.00          3.00          3.00
</TABLE>

For measurement purposes, an assumed health care trend rate of 6.0% was used for
the postretirement benefit obligation in 1997, 1998 and 1999. A measurement date
of September 30 was used for the pension plans. A measurement date of December
31 was used for the postretirement benefit plans.



                                       44

<PAGE>   45



The following schedule sets forth the components of net periodic benefit cost
(dollars in thousands):

<TABLE>
<CAPTION>
                                                        Pension Plans                        Postretirement Benefit Plans
                                              -----------------------------------        -----------------------------------
                                                 1999         1998        1997              1999         1998        1997
                                                 ----         ----        ----              ----         ----        ----
<S>                                           <C>          <C>          <C>              <C>          <C>         <C>
Components of Net Periodic Benefit Cost
  Service Cost                                $  7,993     $  8,116     $  8,077         $  4,490     $  3,649    $  3,287
  Interest Cost                                  9,280        8,425        7,565            4,878        4,211       3,781
  Expected Return on Plan Assets               (11,411)     (10,833)      (8,358)              --           --          --
  Amortization of Prior Service Cost             1,108        1,108        1,140               47           47          47
  Recognized Actuarial (Gain) Loss                 271         (397)         131              573          197         382
                                              --------     --------     --------         --------     --------    --------
    Net Periodic Benefit Cost                 $  7,241     $  6,419     $  8,555         $  9,988     $  8,104    $  7,497
                                              ========     ========     ========         ========     ========    ========
</TABLE>

The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plans with accumulated benefit obligations in
excess of plan assets are set forth below (dollars in thousands):

<TABLE>
<CAPTION>

                                                          December 31
                                                -------------------------------
                                                 1999         1998        1997
                                                 ----         ----        ----
<S>                                            <C>          <C>         <C>
Projected Benefit Obligation                   $20,002      $18,577     $15,486
Accumulated Benefit Obligation                  19,759       18,317      15,271
Fair Value of Plan Assets                       14,529       12,939      12,262
</TABLE>

Rouge Steel Company has two nonpension postretirement benefit plans. One plan is
noncontributory. The health care provision of the other plan has a contribution
requirement for eligible participants hired after November 1, 1988. The life
insurance provision of this plan is noncontributory.

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage-point change in assumed
health care cost trend rates would have the following effects for the year ended
and as of December 31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>

                                                                     One Percentage     One Percentage
                                                                     Point Increase     Point Decrease
                                                                     --------------     --------------
<S>                                                                  <C>                <C>
Effect on Total of Service and Interest Cost Components                  $  2,324         $  (1,756)
Effect on Postretirement Benefit Obligation                                14,526           (11,166)
</TABLE>


NOTE 7 - INCOME TAXES

Rouge Industries' income tax provision, arising wholly from Federal taxation
since the Company neither has been nor is presently subject to state or foreign
income taxes, consists of the following components (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                  Year Ended December 31
                                                                  -----------------------------------------------------
                                                                    1999                   1998                 1997
                                                                    ----                   ----                 ----
<S>                                                               <C>                    <C>                  <C>
Current                                                           $   (940)              $ (3,275)            $  1,446
Deferred                                                            31,434                 (5,430)              (9,540)
                                                                  --------               --------             --------
     Total (Provision) Benefit                                    $ 30,494               $ (8,705)            $ (8,094)
                                                                  ========               ========             ========
</TABLE>



                                       45

<PAGE>   46



The Company's income tax provision is net of taxes related to the equity in the
income or loss of unconsolidated subsidiaries. The tax provision associated with
the income of unconsolidated subsidiaries was $783,000 in 1999, which is
comprised of a current provision of $847,000 and a deferred benefit of $64,000.
The income tax benefit associated with the loss of unconsolidated subsidiaries
was $655,000 in 1998, which was comprised of a current provision of $2,000 and a
deferred benefit of $657,000. The income tax benefit associated with the loss of
unconsolidated subsidiaries was $385,000 in 1997 which was comprised of a
current provision of $513,000 and a deferred benefit of $898,000.

The Accumulated Other Comprehensive Income (Loss) of $4,306,000 and $4,512,000
for 1999 and 1998, respectively, are shown net of the deferred tax impact of
$1,507,000 and $1,579,000.

The differences between the total provision and the provision computed using the
Federal statutory income tax rate were as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31
                                                               -----------------------------------------------------------
                                                                    1999                   1998                  1997
                                                                    ----                   ----                  ----
<S>                                                               <C>                   <C>                    <C>
Pre-Tax Income (Loss)                                             $(79,957)             $  33,061              $ 31,226
                                                                  ========              =========              ========

Computed (Provision) Benefit                                      $ 27,985              $ (11,571)             $(10,929)
Source of Difference:
   Amortization of Negative Goodwill                                 1,919                  2,029                 2,029
   Change in Valuation Allowance                                       700                  1,106                   774
   Other                                                              (110)                  (269)                   32
                                                                  --------              ---------              --------
      Total (Provision) Benefit                                   $ 30,494              $  (8,705)             $ (8,094)
                                                                  ========              =========              ========
</TABLE>

Deferred tax assets (liabilities) are comprised of the following (dollars in
thousands):
<TABLE>
<CAPTION>

                                                                            December 31
                                                                 ---------------------------------
                                                                     1999                 1998
                                                                     ----                 ----
<S>                                                              <C>                  <C>
              ASSETS
Basis of Consolidated Subsidiary                                 $    7,254           $    7,033
Postretirement and Other Benefits                                    30,604               24,661
Other                                                                 9,516                9,991
Operating Loss and Alternative
     Minimum Tax Credit Carryforwards                                76,758               30,065
                                                                 ----------           ----------
Gross Deferred Tax Assets                                           124,132               71,750
Valuation Allowance                                                 (10,015)             (10,715)
                                                                 ----------           ----------
Gross Deferred Tax Assets
     After Valuation Allowance                                      114,117               61,035
                                                                 ----------           ----------

              LIABILITIES
Property, Plant, and Equipment                                      (48,845)             (36,637)
Inventories                                                         (11,696)             (11,495)
Insurance Adjustment                                                 (9,245)                   -
Other                                                                   (33)                 (33)
                                                                 ----------           ----------
Gross Deferred Tax Liabilities                                      (69,819)             (48,165)
                                                                 ----------           ----------
     Total Net Deferred Tax Assets                               $   44,298           $   12,870
                                                                 ==========           ==========
</TABLE>


                                       46

<PAGE>   47



Unused regular tax loss carryforwards were approximately $137,917,000 at
December 31, 1999. Alternative minimum tax credit carryforwards amounted to
$28,487,000 at December 31, 1999 and December 31, 1998. The alternative minimum
tax credit may be carried forward indefinitely.

A valuation allowance is recorded for deferred tax assets if it is more likely
than not that some or all of the deferred tax assets will not be realized. The
Company previously recorded a partial valuation allowance on certain deferred
tax assets. The reduction of the valuation allowance was primarily the result of
the utilization of basis differences in fixed assets. Current deferred tax
assets of $21,219,000 and $45,000 in 1999 and 1998, respectively, are recorded
in Other Current Assets. The remaining deferred tax assets are included in
Deferred Charges and Other.

The Company received a cash refund of $2,379,000 in 1999. Net cash paid for
income taxes was $6,557,000 in 1998. A net cash refund of $2,704,000 was
received in 1997.

NOTE 8 - COMMON STOCK

Class A shares have a par value of $0.01. Each Class A share has one vote.

Class B shares have a par value of $0.01.  Each Class B share has 2.5 votes.

The Company has an outside director equity plan (the "ODEP"), a 1994 stock
incentive plan and a 1998 stock incentive plan (the 1994 stock incentive plan
and the 1998 stock incentive plan together the "SIP"). The ODEP and the SIP
provide for stock option grants to the Company's directors and employees,
respectively, at fair market value on the date of grant. Under the plans, the
Company is authorized to grant options to its directors and employees for up to
1,000,000 shares of common stock. Of this amount, options are outstanding for
505,725 shares at December 31, 1999. These stock options generally vest over a
period of three years and are exercisable for a period not exceeding ten years
from the date of grant. The stock options may be exercised subject to continued
employment and certain other conditions.

The Company applies Accounting Principles Board Opinion No. 25 in accounting for
its stock-based compensation plans. Accordingly, no compensation cost has been
recognized for the ODEP and the SIP. If compensation cost for the ODEP and the
SIP had been determined based upon the fair value at the grant dates for awards
under these plans consistent with the method set forth in SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company's net income (loss) and
net income (loss) per share would have resulted in the pro forma amounts
indicated below:
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31
                                                                        ----------------------------------------------
                                                                          1999               1998               1997
                                                                          ----               ----               ----
<S>                                                 <C>                 <C>                <C>                <C>
Net Income (Loss) (dollars in thousands)            As Reported         $ (47,811)         $23,392            $22,414
                                                    Pro Forma             (48,010)          22,880             21,523

Net Income (Loss) Per Share                         As Reported         $   (2.16)         $  1.06            $  1.02
                                                    Pro Forma               (2.17)            1.04               0.98
</TABLE>



                                       47

<PAGE>   48



The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for grants in 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                   1999                       1998                       1997
                                                   ----                       ----                       ----
<S>                                             <C>                        <C>                        <C>
Dividend Yield                                     1.37%                      0.99%                      0.57%
Risk-Free Interest Rate                            4.74                       5.77                       6.35
Expected Volatility                               41.16                      36.40                      33.26
Expected Life                                   7 years                    7 years                    7 years
</TABLE>

A summary of the status of the Company's stock-based compensation plans as of
December 31, 1999, 1998 and 1997 and changes during the years then ended is
presented below:

<TABLE>
<CAPTION>

                                                     1999                          1998                        1997
                                           ------------------------      -----------------------     ------------------------
                                                         Weighted-                    Weighted-                    Weighted-
                                                          Average                      Average                      Average
                                             Shares        Price           Shares       Price           Shares       Price
                                             ------        -----           ------       -----           ------       -----
<S>                                          <C>          <C>              <C>        <C>               <C>        <C>
Outstanding at January 1                     383,950      $21.09           297,250     $24.29           207,325     $26.04
Granted                                      187,700        8.79           109,300      12.16           105,800      20.92
Forfeited                                    (63,625)      17.87           (22,600)     20.00           (15,875)     24.69
Exercised                                     (2,300)       8.75                 -        N/A                 -        N/A
                                             -------                       -------                      -------
Outstanding at December 31                   505,725      $16.98           383,950     $21.09           297,250     $24.29
                                             =======      ======           =======     ======           =======     ======

Options Exercisable at Year-End              399,244      $18.98           309,425     $22.58           222,175     $25.11
Weighted-Average Fair Value of
     Options Granted During the Year                      $ 3.86                       $ 5.41                       $ 9.57
</TABLE>

The following table presents summarized information about stock options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                         Options Outstanding                                 Options Exercisable
                     ----------------------------------------------------------      ---------------------------------
                          Number           Weighted-Average         Weighted-             Number           Weighted-
Range of              Outstanding at           Remaining             Average          Exercisable at        Average
Exercise Prices      December 31, 1999     Contractual Life      Exercise Price      December 31, 1999  Exercise Price
---------------      -----------------     ----------------      --------------      -----------------  --------------
<S>                  <C>                   <C>                   <C>                 <C>                <C>
$8.75 - 11.44             168,050                9 Years             $  8.80               84,025         $  8.80
$12.13 to 15.13            91,325                8                     12.22               68,869           12.23
$21.00 to 23.00            88,250                6.9                   21.11               88,250           21.11
$23.01 to 24.00            84,100                6                     23.72               84,100           23.72
$28.88                     74,000                5                     28.88               74,000           28.88
</TABLE>

NOTE 9 - EARNINGS PER SHARE

The calculation of diluted net income per share for the years ended December 31,
1999, 1998 and 1997 did not require an adjustment to net income for the effect
of dilutive securities. The weighted-average shares outstanding were adjusted
for the effect of 0, 0 and 37 shares of dilutive securities which were
outstanding as of December 31, 1999, 1998 and 1997, respectively.

The dilutive securities represent stock options which were granted to members of
management or the board of directors which had exercise prices lower than the
average market price of the Company's Class A Common Stock. Options to purchase
505,725 shares at $8.75 to $28.88 per share in 1999, 383,950 shares at $12.13 to
$28.88 per share in 1998 and 295,750 shares at $21.00 to $28.88 per share in
1997 were outstanding but were not included in the computation of diluted
earnings per share because the exercise

                                       48

<PAGE>   49



prices of these options were greater than the average market price of the
Company's Class A Common Stock. These options will expire between 2005 and 2009.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Commitments to Ford

The Company purchases various services including environmental, heavy equipment
repair, construction and transportation from Ford. In addition, the Company
leases certain land, office space and production support facilities from Ford
under cancelable operating leases with terms ranging from 1 to 99 years. The
costs of these services were approximately $7,182,000 in 1999, $9,464,000 in
1998 and $18,469,000 in 1997. The Company has assumed some of the services which
had previously been provided by Ford resulting in the decline in payments to
Ford.

The Company also jointly owns a powerhouse facility (the "Powerhouse") with
Ford, under a renewable ten-year agreement, which expired on December 31, 1999
but was extended until March 31, 2000 and will be extended thereafter on a
rolling 30-day basis unless terminated by either party upon 30 days notice. On
February 1, 1999, an explosion and fire at the Powerhouse resulted in the
interruption of the supply of electricity, process and heating steam, turbo air,
mill water and other utilities to virtually all of the facilities of Rouge
Steel. See Note 11 for a more detailed discussion of the Powerhouse explosion.
Prior to the explosion, the Powerhouse generated electricity, steam and other
utilities. The fixed assets of the Powerhouse are owned 60 percent by the
Company and 40 percent by Ford, with each party receiving a portion of the power
generated. The costs of operating the facility are allocated between the Company
and Ford based on the consumption of utilities. The Company's share of the costs
of this facility was approximately $7,118,000 in 1999, $76,185,000 in 1998 and
$78,499,000 in 1997. The cost in 1999 represents utility costs allocated to
Rouge Steel for the one month preceding the Powerhouse explosion. The Company
has signed an agreement for long-term energy services with CMS Energy
Corporation which has commenced to build and will operate a co-generation power
plant. It is expected that the new facility will begin generating electricity in
mid-2000.

In connection with its operation of the Powerhouse, Ford purchased a portion of
the gas produced by the Company's blast furnaces for use at the Powerhouse based
on a negotiated formula. Ford purchased $2,040,000, $27,046,000 and $26,497,000
worth of blast furnace gas in 1999, 1998 and 1997, respectively. Of these
amounts, between 60 and 70 percent was charged back to the Company for its
proportionate share of the cost of such gas. The temporary facilities that were
put into place after February 1, 1999 are not configured to use blast furnace
gas. Consequently, from February 1 through December 31, the blast furnace gas
was flared and not sold to the Powerhouse.

During 1999, 1998 and 1997, the Company purchased scrap from Ford at a cost of
$20,025,000, $31,774,000 and $40,496,000, respectively. These purchases were
made under a supply agreement that expires at the end of automotive model-year
2000.

Other Commitments

Pursuant to a purchase and sale agreement executed in connection with the
restructuring of EVTAC in 1996, Rouge Steel is required to purchase 45 percent
of the first 5.0 million natural gross tons of pellets produced each year by
EVTAC at world market prices. The Company also has the right of first refusal
with respect to 45 percent of any pellets produced by EVTAC in excess of 5.0
million natural gross tons. In June 1999, EVTAC temporarily scaled back
operations by 18 percent, reducing capacity to 4.4 million natural gross tons
of pellets to be purchased by the Company and the other owners pursuant to
the terms of

                                       49

<PAGE>   50



existing purchase agreements. The Company and the other owners of EVTAC are
continuing discussions regarding EVTAC's operations and activities. These
discussions and any subsequent resulting actions may affect, among other things,
the cost and availability of iron ore pellets, the timing of EVTAC employee
benefit liability recognition and funding requirements and recognition of other
obligations relating to the mining operations.

The Company has a ten-year contract for the supply of oxygen and nitrogen which
expires in 2005. The contract contains annual minimum oxygen and nitrogen
purchases of $8,300,000 and $550,000, respectively. Oxygen and nitrogen
purchases aggregated approximately $18,569,000 in 1999, $21,001,000 in 1998 and
$15,124,000 in 1997.

The Company has noncancellable operating lease commitments for facilities and
equipment with annual lease payments of $9,305,000, which will end in 2006.
Expense for 1999 was $2,640,000.

Shiloh of Michigan, L.L.C. Loan Guaranty

Rouge Industries guarantees the lesser of $6,000,000 or 20 percent of a line of
credit for Shiloh of Michigan, an engineered steel blanking joint venture
between the Company and Shiloh Industries, Inc. As of December 31, 1999, Shiloh
of Michigan had borrowings of $30,270,000 outstanding under its line of credit.

Delaco Processing, L.L.C. Loan Guaranty

Rouge Industries and Delaco Steel Corporation have agreed to jointly and
severally guarantee a $7,300,000 line of credit for Delaco Steel Processing, the
Company's 49 percent owned steel slitting joint venture with Delaco Supreme Tool
& Gear Co. As of December 31, 1999, Delaco Steel Processing had borrowings of
$2,898,000 outstanding under its line of credit.

Bing Blanking, L.L.C. Loan Guaranty

The Company guarantees a $4,000,000 term loan and a $1,000,000 line of credit
loan for Bing Blanking. As of December 31, 1999, Bing Blanking had $3,582,000
outstanding under its term loan and did not have any borrowings outstanding
under its line of credit. In addition, as of December 31, 1999, Bing Blanking
owes the Company $3,000,000.

Environmental Matters

The Company is indemnified by Ford through December 15, 2009 for environmental
obligations relating to conditions arising prior to the acquisition of the
Company from Ford in 1989. It is the Company's practice to coordinate the
resolution of such obligations with Ford. Management believes that disputed or
unresolved obligations are immaterial in relation to the Company's consolidated
financial position or results of operations.

The Company's operations are subject to many federal, state and local laws,
regulations, permits and consent agreements relating to the protection of human
health and the environment. Although the Company believes that its facilities
are in material compliance with these provisions, from time to time, the Company
is subject to investigations by an environmental agency. In management's
opinion, none of such current investigations, individually or in the aggregate,
will have a materially adverse effect on the Company's consolidated financial
position or results of operations.


                                       50

<PAGE>   51



Litigation

Residents of the City of Melvindale (a community in close proximity to Rouge
Steel) filed a class action lawsuit against the Company in 1998 claiming
trespass, nuisance and negligence as a result of alleged air pollution. In late
1999, discussion among Rouge Steel and the class action plaintiffs resulted in a
tentative settlement agreement. In early 2000, the Company agreed to a final
judgement and consented to pay $1,500,000 for distribution to the plaintiff
class members and their attorneys. The Company has accrued $1,500,000 for the
settlement and does not believe that the ultimate settlement will differ
materially from that amount.

Three liability lawsuits resulting from the Powerhouse explosion have been filed
against Rouge Steel. The Company has general liability insurance that provides
coverage for such lawsuits. Ford, which owns 40 percent of the Powerhouse assets
and was responsible for the day-to-day operation of the Powerhouse, has made
settlement offers to certain workers injured in the explosion and the families
of the deceased, including the three persons maintaining the above-referenced
lawsuits. The Company has been informed that the settlement offers have been
accepted by the three persons maintaining lawsuits against Rouge Steel and
dismissal documents have been received for two of the lawsuits. It is possible
that Ford will seek recovery from Rouge Steel or its insurers for liabilities
incurred to settle with the workers who accept Ford's settlement offers. It is
presently not possible to reasonably estimate the Company's monetary exposure
with respect to these matters.

From time to time, the Company is involved in routine litigation incidental to
its business. In management's opinion, none of such current proceedings,
individually or in the aggregate, will have a materially adverse effect on the
Company's consolidated financial position or results of operations.

NOTE 11 - POWERHOUSE EXPLOSION AND INSURANCE CLAIM

On February 1, 1999, an explosion and fire at the Powerhouse resulted in the
interruption of the supply of electricity, process and heating steam, turbo air,
mill water and other utilities to virtually all of the facilities of Rouge
Steel. The loss of power resulted in the temporary shutdown of Rouge Steel's
steel making facilities. The Powerhouse is owned 60 percent by Rouge Steel and
40 percent by Ford. Ford was responsible for the day-to-day management,
operation and maintenance of the Powerhouse.

The Company's insurance program provides coverage for damage to property
destroyed, interruption of business operations, including profit recovery, and
expenditures incurred to minimize the period and total cost of disruption to
operations. The Company continues to evaluate its potential insurance recoveries
in three areas:

1.     Damage to Rouge Steel property and Powerhouse property as a result of the
       explosion - Costs for repairs are being expensed as incurred, with
       related estimated insurance recoveries recorded as they are considered to
       be probable, up to the amount of the actual costs incurred.

2.     Rouge Steel business interruption costs - The non-capitalizable costs are
       being expensed as incurred. Estimated insurance recoveries are recorded
       to the extent such recoveries are considered to be probable. Recoveries
       in excess of actual costs incurred will be recorded as gains when the
       claims are settled and proceeds are received. Certain costs relating to
       capital improvements incurred to mitigate the Company's loss from the
       Powerhouse explosion are being capitalized and amortized over their
       estimated useful lives. Insurance recoveries relating to these items are
       being recognized over the same periods.


                                       51

<PAGE>   52



3.     Powerhouse property damage - The net book value of the Powerhouse
       property destroyed, which was $1,622,000, was written off in 1999. Any
       proceeds from the claims relating to Powerhouse property damage (other
       than amounts relating to repairs discussed in 1. above) are expected to
       result in a gain since the proceeds are expected to exceed the net book
       value of the property written off. The anticipated gain will be recorded
       as the claims are settled and proceeds are received.

Pursuant to the accounting methodology described above, through December 31,
1999, the Company has recorded recoverable insurance proceeds of $202,085,000
net of reserves of $39,990,000. Of the total amount recorded, $177,414,000 has
been included in other income and $24,671,000 has been deferred and will be
recognized in other income over the period the related capital items are
amortized. At December 31, 1999, the Company has a receivable of $43,085,000,
which is net of reserves of $39,990,000 and advances from the insurance carriers
of $159,000,000. The Company continues to discuss the determination of the total
claim with its insurers. The Company's assessment of probability with respect to
the receivable was made based on discussions with insurers and legal and
financial experts retained to assist in the claim process. The estimates will
change as additional information becomes available with respect to actual costs
and as the insurers perform their review of claim information submitted by the
Company. Based on the magnitude and complexity of the insurance claim, the
Company is presently unable to reasonably estimate the amount of actual costs to
be incurred in the future as well as the extent of the Company's exposure for
amounts not covered by its insurance program.

The Company is evaluating ancillary costs relating to the explosion, including
cleanup and abatement activities. Certain of these costs are probable, but are
not currently subject to reasonable estimation. Such amounts could be material
to the Company's results of operations, cash flows and financial position during
future periods. Based upon the available information, during 1999, the Company
recorded a $3,000,000 reserve for its share of the estimated cost to encapsulate
the Powerhouse. If the abatement costs exceed $3,000,000, those costs will be
recorded as incurred if they relate to future operations. If they do not result
in future benefit to the Company, additional abatement costs will be recorded in
the period during which losses become probable and reasonably estimable.

NOTE 12 - SUBSEQUENT EVENTS

BOF Incident

On January 7, 2000, a mechanical system failure occurred at Rouge Steel's basic
oxygen furnace facility (the "BOF") which required approximately seven weeks to
repair. The BOF operated at approximately 85 percent of its normal production
capacity during the repair. While management is still evaluating the full
impact, the BOF incident is currently expected to result in a total loss in the
range of $8,000,000 to $12,000,000. All amounts in excess of the $2,500,000
deductible are expected to be covered under the Company's insurance program. The
estimate of the total loss will change as additional information becomes
available with respect to actual costs incurred and as the insurers perform
their review of claim information submitted by the Company. Considerable
uncertainty still exists with respect to the amount of actual costs to be
incurred in the future as well as the extent of the Company's exposure for
amounts not covered by its insurance program.

The DECS

On March 1, 2000, pursuant to the terms of Worthington's 7 1/4% Exchangeable
Notes due March 1, 2000 (the "DECS"), Worthington delivered 5,999,600 shares of
the Company's Class A Common Stock (after converting its 422,000 shares of Class
B Common Stock into an equal number of shares of Class A Common Stock) to the
holders of the DECS. The Company did not receive any of the proceeds from the
sale of the DECS or delivery thereunder of the shares of Class A Common Stock.

                                       52

<PAGE>   53



SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Accounts Receivable Allowances (amounts in thousands):
<TABLE>
<CAPTION>
                                                   Charged
                              Balance           (Credited) to                                  Balance
   Year Ended              at Beginning           Cost and                                     at End
  December 31                of Period            Expenses             Write-Offs             of Period
  ------------               ---------            --------             ----------             ---------
  <S>                      <C>                  <C>                    <C>                    <C>
       1999                   $17,937              $  (776)             $(1,164)               $15,997
       1998                     6,333               11,604                    -                 17,937
       1997                     7,294                 (815)                (146)                 6,333
</TABLE>






                                       53

<PAGE>   54



                  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                     First            Second            Third          Fourth
                                                    Quarter           Quarter          Quarter         Quarter
                                                    -------           -------          -------         -------
                                                             (in thousands, except per share amounts)

1999
<S>                                                 <C>               <C>              <C>             <C>
Total Sales                                        $233,912          $173,238         $261,153        $299,339

Gross Margin                                        (69,975)          (81,390)         (42,056)        (39,355)

Net Loss                                            (11,582)          (14,827)         (10,950)        (10,452)

Net Loss Per Share                                    (0.52)            (0.67)           (0.49)          (0.47)


1998

Total Sales                                        $318,952          $306,001         $269,679        $268,557

Gross Margin                                         12,583            13,521           12,724          14,336

Net Income                                            4,071             6,150            5,543           7,628

Net Income Per Share                                   0.19              0.28             0.25            0.34
</TABLE>




                                       54

<PAGE>   55



Item 9.         Changes in and Disagreements With Accountants
                on Accounting and Financial Disclosure.

None.



                                       55

<PAGE>   56



                                    PART III
                                    --------

Item 10.        Directors and Executive Officers of the Registrant.

       Information regarding the Company's Directors is incorporated by
reference to the information contained under the caption "Proposal No. 1 -
Election of Directors" in the Company's 2000 Proxy Statement (the "Proxy
Statement"), which will be filed with the Securities and Exchange Commission not
later than April 28, 2000. Information regarding the Company's Executive
Officers is set forth in Part I of this Form 10-K pursuant to Instruction G of
Form 10-K.


Item 11.        Executive Compensation.

       Incorporated by reference to the information contained under the caption
"Executive Compensation" in the Company's Proxy Statement, which will be filed
with the Securities and Exchange Commission not later than April 28, 2000.


Item 12.        Security Ownership of Certain Beneficial Owners and Management.

       Incorporated by reference to the information contained under the caption
"Security Ownership" in the Company's Proxy Statement, which will be filed with
the Securities and Exchange Commission not later than April 28, 2000.


Item 13.        Certain Relationships and Related Transactions.

       Incorporated by reference to the information contained under the caption
"Certain Relationships and Related Transactions" in the Company's Proxy
Statement, which will be filed with the Securities and Exchange Commission not
later than April 28, 2000.

       With the exception of the information specifically incorporated by
reference, the Company's Proxy Statement is not to be deemed filed as part of
this report for purposes of this Part III.


                                       56

<PAGE>   57



                                     PART IV
                                     -------

Item 14.        Exhibits, Financial Statement Schedules, and Reports on Form
                8-K.

                (a)   Documents filed as part of this Report:

                (1)   A list of the financial statements filed as part of this
                      report is submitted as a separate section, the index to
                      which is located on page 32.
                (2)   A list of financial statement schedules required to be
                      filed by Item 8 is located on page 32.
                (3)   Exhibits:

       The following exhibits are included in this report or incorporated herein
by reference:

     Exhibit
     Number                        Description of Exhibit
     ------                        ----------------------
      2.1           Agreement and Plan of Merger dated July 20, 1997, by and
                    among the Registrant, Rouge Steel Company and Merger Sub
                    (incorporated herein by reference to Exhibit 2.1 to the
                    Registrant's Registration Statement on Form 8-B (the
                    "Form 8-B")).

      3.1           Amended and Restated Certificate of Incorporation of the
                    Registrant (incorporated herein by reference to Exhibit 3.1
                    to the Form 8-B).

      3.2           Amended and Restated By-Laws of the Registrant (incorporated
                    herein by reference to Exhibit 3.2 to the Form 8-B).

      4.1           Amended and Restated Stockholders Agreement dated as of
                    November 14, 1996 (the "Stockholders Agreement"), among the
                    Registrant, Carl L. Valdiserri and Worthington Industries,
                    Inc. ("Worthington") (incorporated herein by reference to
                    Exhibit 10.3 to the Registrant's 1996 Annual Report on Form
                    10-K (Commission File Number 1- 12852) (the "1996 Form
                    10-K")).

      4.2           First Amendment to Amended and Restated Stockholders
                    Agreement dated July 20, 1997, by and among Rouge Steel
                    Company, the Registrant, Carl L. Valdiserri and Worthington
                    (incorporated herein by reference to Exhibit 4.1 to the Form
                    8-B).

      10.1          Credit Agreement dated as of December 16, 1997 (the "Credit
                    Agreement"), among the Registrant, Rouge Steel Company, the
                    banks named therein and NBD Bank (incorporated herein by
                    reference to Exhibit 10.1 to the Registrant's 1997 Annual
                    Report on Form 10-K (Commission File Number I-12852) (the
                    "1997 Form 10-K")).

      10.2+         First Amendment to Credit Agreement dated as of July 23,
                    1999 among the Registrant, Rouge Steel Company, the banks
                    named therein and Bank One, Michigan, formerly known as NBD
                    Bank.



                                       57

<PAGE>   58




     Exhibit
     Number                        Description of Exhibit
     ------                        ----------------------
      10.3          Purchase and Sale Agreement dated as of December 15, 1989,
                    between Ford Motor Company ("Ford") and Marico Acquisition
                    Corp. ("Marico") (incorporated herein by reference to
                    Exhibit 10.10 to the Company's Registration Statement on
                    Form S-1 (Registration No. 33-74698) (the "S-1 Registration
                    Statement")).

      10.4          Oxygen, Nitrogen and Argon Supply Agreement dated as of
                    November 16, 1993, between Praxair, Inc. and the Registrant
                    (incorporated herein by reference to Exhibit 10.4 to the
                    Registrant's 1994 Annual Report on Form 10-K (Commission
                    File Number 1-12852) (the "1994 Form 10-K")).

      10.5          Steel Purchase Agreement dated as of December 15, 1989,
                    between the Registrant and Ford (incorporated herein by
                    reference to Exhibit 10.16 to the S-1 Registration
                    Statement).

      10.6          Steel Products Purchase Agreement dated as of December 15,
                    1989, between the Registrant and Worthington (the
                    "Worthington Agreement") (incorporated herein by reference
                    to Exhibit 10.17 to the S-1 Registration Statement).

      10.7          Letter dated February 20, 1996 confirming Exercise of Option
                    to Extend Term of Worthington Agreement (incorporated herein
                    by reference to Exhibit 10.8 to the Registrant's 1995 Annual
                    Report on Form 10-K (Commission File Number 1-12852) (the
                    "1995 Form 10-K")).

      10.8          Technical and Transportation Services Agreement dated as of
                    December 15, 1989, between the Registrant and Ford
                    (incorporated herein by reference to Exhibit 10.18 to the
                    S-1 Registration Statement).

      10.9          Scrap Sale Agreement dated as of December 15, 1989, between
                    the Registrant and Ford (incorporated herein by reference to
                    Exhibit 10.20 to the S-1 Registration Statement).

      10.10         Powerhouse Joint Operating Agreement dated as of December
                    15, 1989, between the Registrant and Ford (incorporated
                    herein by reference to Exhibit 10.21 to the S-1 Registration
                    Statement).

      10.11         Transitional Services Agreement dated as of December 15,
                    1989, between the Registrant and Ford (incorporated herein
                    by reference to Exhibit 10.22 to the S-1 Registration
                    Statement).

      10.12         Natural Gas Operating Agreement dated as of December 15,
                    1989 between the Registrant and Ford (incorporated herein by
                    reference to Exhibit 10.25 to the S-1 Registration
                    Statement).

      10.13         Joint Venture Agreement dated as of November 30, 1984 (the
                    "Joint Venture Agreement"), between United States Steel
                    Corporation ("USS") and the Registrant (incorporated herein
                    by reference to Exhibit 10.23 to the S-1 Registration
                    Statement).

                                       58

<PAGE>   59




     Exhibit
     Number                        Description of Exhibit
     ------                        ----------------------



      10.14         Amendment to Joint Venture Agreement (incorporated herein by
                    reference to Exhibit 10.24 to the S-1 Registration
                    Statement).

      10.15         Operating Agreement for Shiloh of Michigan, L.L.C. dated as
                    of January 2, 1996 by and among Shiloh of Michigan, L.L.C.,
                    the Registrant and Shiloh Industries, Inc. (incorporated
                    herein by reference to Exhibit 10.16 to the 1995 Form 10-K).

      10.16         Operating Agreement of TWB Company, L.L.C. dated as of April
                    15, 1997 by and between Thyssen Inc. ("Thyssen") and
                    Worthington Steel of Michigan, Inc., ("Worthington Steel")
                    (incorporated herein by reference to Exhibit 10.1 to the
                    Registrant's Quarterly Report on Form 10-Q for the Quarterly
                    Period Ended March 31, 1997 (the "First Quarter 1997
                    10-Q")).

      10.17         First Amendment to Operating Agreement of TWB Company,
                    L.L.C. dated as of April 15, 1997 by and among Thyssen,
                    Worthington Steel, LTV Steel Company, Inc. Bethlehem Blank
                    Welding, Inc. and QS Steel Inc. (incorporated herein by
                    reference to Exhibit 10.2 to the First Quarter 1997 10-Q).

      10.18         Operating Agreement of Delaco Processing, L.L.C. dated as of
                    September 3, 1997 by and between QS Steel Inc. and Delaco
                    Supreme Tool & Gear Co. (incorporated herein by reference to
                    Exhibit 10.18 to the 1997 Form 10-K).

      10.19         First Amended and Restated Operating Agreement for Bing
                    Blanking, L.L.C. dated as of March 31, 1998 by and among
                    Bing Blanking, L.L.C., QS Steel Inc., and Bing Management
                    II, L.L.C. (incorporated herein by reference to Exhibit 10.1
                    to the Registrant's Quarterly Report on Form 10-Q for the
                    Quarterly Period Ended March 31, 1998).

      10.20         Operating Agreement of Spartan Steel Coating, L.L.C. dated
                    as of November 14, 1996 among QS Steel Inc. and Worthington
                    Steel (incorporated herein by reference to Exhibit 10.18 to
                    the 1996 Form 10-K).

      10.21         Eveleth Mines Exit Agreement dated as of November 25, 1996
                    among Oglebay Norton Company, ONCO Eveleth Company, Eveleth
                    Taconite Company, Eveleth Expansion Company, AK Steel
                    Corporation, Virginia Horn Taconite Company, Rouge Steel
                    Company, Stelco, Inc., Ontario Eveleth Company and Eveleth
                    Mines LLC (incorporated herein by reference to Exhibit 10.19
                    to the 1996 Form 10-K).

      10.22         Pellet Sale and Purchase Agreement dated as of January 1,
                    1997 by and between Eveleth Mines LLC and Rouge Steel
                    Company (incorporated herein by reference to Exhibit 10.20
                    to the 1996 Form 10-K).


                                       59

<PAGE>   60



     Exhibit
     Number                        Description of Exhibit
     ------                        ----------------------

      10.23         Member Control Agreement of Eveleth Mines LLC dated as of
                    December 2, 1996 between Virginia Horn Taconite Company,
                    Rouge Steel Company and Ontario Eveleth Company
                    (incorporated herein by reference to Exhibit to 10.21 to the
                    1996 Form 10-K).

      10.24         Letter Agreement dated as of October 25, 1996 between
                    Worthington Industries and Rouge Steel Company (incorporated
                    herein by reference to Exhibit 10.22 to the 1996 Form 10-K).

      10.25         Pellet Sale and Purchase and Trade Agreement dated as of
                    January 1, 1991 by and between The Cleveland-Cliffs Iron
                    Company and the Registrant (incorporated herein by reference
                    to Exhibit 10.31 to the S-1 Registration Statement).

      10.26         Agreement for the Provision of Tolled Coke dated December
                    22, 1992 between New Boston Coke Corporation and the
                    Registrant (incorporated herein by reference to Exhibit
                    10.35 to the S-1 Registration Statement).

      10.27**       Rouge Steel Company Savings Plan for Salaried Employees
                    (incorporated herein by reference to Exhibit 4.1 to the
                    Company's Registration Statement on Form S-8 (Registration
                    No. 33-88520) (the "Form S-8 Registration Statement")).

      10.28**       Amendment to Rouge Steel Company Savings Plan for Salaried
                    Employees (incorporated herein by reference to Exhibit 10.3
                    to the Form 8-B).

      10.29         Rouge Steel Company Tax-Efficient Savings Plan for Hourly
                    Employees (incorporated herein by reference to Exhibit 4.2
                    to the Form S-8 Registration Statement).

      10.30         Amendment to Rouge Steel Company Tax-Efficient Savings Plan
                    for Hourly Employees (incorporated herein by reference to
                    Exhibit 10.4 to the Form 8-B).

      10.31         Rouge Steel Company Profit Sharing Plan for Salaried
                    Employees (incorporated herein by reference to Exhibit 10.38
                    to the S-1 Registration Statement).

      10.32**       Rouge Steel Company Incentive Compensation Plan
                    (incorporated herein by reference to Exhibit 10.39 to the
                    S-1 Registration Statement).

      10.33**       Rouge Steel Company Amended and Restated Stock Incentive
                    Plan (incorporated herein by reference to Exhibit 10.1 to
                    the Form 8-B).

      10.34**+      First Amendment to Rouge Steel Company Amended and Restated
                    Stock Incentive Plan.

      10.35**+      Rouge Steel Company 1998 Stock Incentive Plan.

      10.36**+      First Amendment to Rouge Steel Company 1998 Stock Incentive
                    Plan.

                                       60

<PAGE>   61



     Exhibit
     Number                        Description of Exhibit
     ---------                     ----------------------

      10.37**       Rouge Steel Company Retirement Plan for Salaried Employees
                    (incorporated herein by reference to Exhibit 10.41 to the
                    S-1 Registration Statement).

      10.38**+      Amended and Restated Supplemental Executive Retirement Plan.

      10.39**+      Amended and Restated Rouge Steel Company Benefit Restoration
                    Plan.

      10.40**       Rouge Steel Company Amended and Restated Outside Director
                    Equity Plan (incorporated herein by reference to Exhibit
                    10.2 to the Form 8-B).



      21+           List of Subsidiaries.

      23+           Consent of PricewaterhouseCoopers LLP.


      ---------------------
      +    Filed herewith.
      **   Compensatory plans in which the Registrant's directors and executive
           officers participate.

           (b)    The Company did not file a Current Report on Form 8-K during
                  the fourth quarter of 1999.

           (c)    The exhibits listed under Item 14(a)(3) are filed herewith or
                  incorporated herein by reference.

           (d)    The financial statement schedule listed under Item 14(a)(2) is
                  filed herewith.


                                       61

<PAGE>   62



                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on the
16th day of March 2000.

                                                 ROUGE INDUSTRIES, INC.



                                                 By: /s/ Carl L. Valdiserri
                                                 -------------------------------
                                                 Name:  Carl L. Valdiserri
                                                 Title: Chief Executive Officer


    Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
        Signatures                                     Title                                  Date
        ----------                                     -----                                  ----
<S>                                <C>                                                    <C>
/s/ Carl L. Valdiserri             Chief Executive Officer and Chairman of                March 16, 2000
-----------------------------
                                   the Board


/s/ Louis D. Camino                President, Chief Operating Officer                     March 16, 2000
-----------------------------
                                   and Director


/s/ Gary P. Latendresse            Vice Chairman, Chief Financial Officer                 March 16, 2000
-----------------------------
                                   and Director


/s/ Dominick C. Fanello            Director                                               March 16, 2000
-----------------------------


/s/ John E. Lobbia                 Director                                               March 16, 2000
-----------------------------


/s/ Peter J. Pestillo              Director                                               March 16, 2000
-----------------------------


/s/ Clayton P. Shannon             Director                                               March 16, 2000
-----------------------------
</TABLE>


                                       62
<PAGE>   63
                                 Exhibit Index
                                 -------------

<TABLE>
<CAPTION>

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

<S>                           <C>
10.2                          First Amendment to Credit Agreement dated as of
                              July 23, 1999 among the Registrant, Rouge Steel
                              Company, the banks named therein and Bank One,
                              Michigan, formerly known as NBD Bank.

10.34                         First Amendment to Rouge Steel Company Amended
                              and Restated Stock Incentive Plan.

10.35                         Rouge Steel Company 1998 Stock Incentive Plan.

10.36                         First Amendment to Rouge Steel Company 1998 Stock
                              Incentive Plan.

10.38                         Amended and Restated Supplemental Executive
                              Retirement Plan.

10.39                         Amended and Restated Rouge Steel Company Benefit
                              Restoration Plan.

21                            List of Subsidiaries.

23                            Consent of PricewaterhouseCoopers LLP.

27                            Financial Data Schedule

</TABLE>