TABLE OF CONTENTS




|                                        |                                                                                                                                             |                                                 |  |  |  |  |  | 
|--------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART I                                 
|                                        | Item 1. Business                                                                                                                           
|                                        | Item 2. Properties                                                                                                                         
|                                        | Item 3. Legal Proceedings                                                                                                                  
|                                        | Item 4. Submission of Matters to a Vote of Security Holders                                                                                
|                                        | Item 4A. Executive Officers of the Registrant                                                                                              
|PART II                                
|                                        | Item 5. Market and Dividend Information                                                                                                    
|                                        | Item 6. Selected Consolidated Financial Data                                                                                               
|                                        | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations of Cold Metal Products, Inc. and Subsidiaries
|                                        | Item 8. Financial Statements and Supplementary Data                                                                                        
|                                        |                                                                                                                                             | Independent Auditors Report                   
|                                        |                                                                                                                                             | CONSOLIDATED BALANCE SHEETS                    
|                                        |                                                                                                                                             | CONSOLIDATED STATEMENTS OF OPERATIONS          
|                                        |                                                                                                                                             | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
|                                        |                                                                                                                                             | CONSOLIDATED STATEMENTS OF CASH FLOWS          
|                                        |                                                                                                                                             | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     
|                                        | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures                                              
|PART III                               
|                                        | Item 10. Directors and Executive Officers of the Registrant                                                                                
|                                        | Item 11. Executive Compensation                                                                                                            
|                                        | Item 12. Security Ownership of Certain Beneficial Owners and Management                                                                    
|                                        | Item 13. Certain Relationships and Related Transactions                                                                                    
|PART IV                                
|                                        | Item 14. Exhibits, Financial Statement, Schedules, and Reports on Form 8-K                                                                 
|SIGNATURES                             
|EXHIBIT 23--Deloitte and Touche Consent



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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

For the fiscal year ended March 31, 2001. Commission file number  1-12870.

COLD METAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

|                                                          |  |                                     
|--------------------------------------------------------- |  | ------------------------------------
|New York                                                  |  | 16-1144965                          
|                                                         
|                                                         
|                                                         
|                                                         
|(State or other jurisdiction of                           |  | (I.R.S. Employer Identification No.)
|incorporation or organization)                           
|                                                         
|2200 Georgetown Drive, Suite 301, Sewickley, Pennsylvania |  | 15143                               
|                                                         
|                                                         
|                                                         
|                                                         
|(Address of principal executive offices)                  |  | (Zip Code)                          

Registrants telephone number, including area code: (724) 933-3445

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

|                         |  |                                           | 
|------------------------ |  | ----------------------------------------- | 
|Title of Each Class      |  | Name of Each Exchange on Which Registered
|                         |  |                                          
|Common Shares            |  | American Stock Exchange                  
|Par Value $.01 Per Share

Securities registered pursuant to Section 12(g) of the Act:NONE
(Title of Class)

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

Indicate 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.  [   ]

The aggregate market value of the voting common shares, $.01 par value, held by
non-affiliates of the registrant as computed by reference to the closing price
on the American Stock Exchange on June 12, 2001 was $3,402,489.

The number of shares of Registrants Common Stock, par value $.01 per share,
outstanding as of June 12, 2001 was 6,384,491.

DOCUMENTS INCORPORATED BY REFERENCE

Select portions of the 2001 Proxy Statement of Cold Metal Products, Inc. are
incorporated by reference into Part III of this Form 10-K to the extent
provided herein.





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##### Table of Contents



COLD METAL PRODUCTS, INC.

FORM 10-K  Fiscal Year Ended March 31, 2001

TABLE OF CONTENTS

|         |  |      |  |  |    |  |  |                                                                                       |  |      |    |  |  | 
|-------- |  | ---- |  |  | -- |  |  | ------------------------------------------------------------------------------------- |  | ---- | -- |  |  | 
|         |  |      |  |  |    |  |  | DESCRIPTION                                                                           |  | PAGE
|         |  |      |  |  |    |  |  |                                                                                       |  |     
|PART I   |  | Item |  |  | 1  |  |  | Business                                                                              |  |      | 3  | 
|        
|        
|        
|        
|         |  |      |  |  | 2  |  |  | Properties                                                                            |  |      | 8  | 
|        
|        
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|         |  |      |  |  | 3  |  |  | Legal Proceedings                                                                     |  |      | 8  | 
|        
|        
|        
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|         |  |      |  |  | 4  |  |  | Submission of Matters to a Vote of Security Holders                                   |  |      | 8  | 
|        
|        
|        
|        
|         |  |      |  |  | 4A |  |  | Executive Officers of the Registrant                                                  |  |      | 9  | 
|        
|        
|        
|        
|PART II  |  | Item |  |  | 5  |  |  | Market and Dividend Information                                                       |  |      | 10 | 
|        
|        
|        
|        
|         |  |      |  |  | 6  |  |  | Selected Consolidated Financial Data                                                  |  |      | 11 | 
|        
|        
|        
|        
|         |  |      |  |  | 7  |  |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations |  |      | 12 | 
|        
|        
|        
|        
|         |  |      |  |  | 7A |  |  | Quantitative and Qualitative Disclosures About
Market Risk                            |  |      | 16 | 
|        
|        
|        
|        
|         |  |      |  |  | 8  |  |  | Financial Statements and Supplementary Data                                           |  |      | 17 | 
|        
|        
|        
|        
|         |  |      |  |  | 9  |  |  | Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures |  |      | 38 | 
|        
|        
|        
|        
|PART III |  | Item |  |  | 10 |  |  | Directors and Executive Officers of the Registrant                                    |  |      | 38 | 
|        
|        
|        
|        
|         |  |      |  |  | 11 |  |  | Executive Compensation                                                                |  |      | 38 | 
|        
|        
|        
|        
|         |  |      |  |  | 12 |  |  | Security Ownership of Certain Beneficial
Owners and Management                        |  |      | 38 | 
|        
|        
|        
|        
|         |  |      |  |  | 13 |  |  | Certain Relationships and Related Transactions                                        |  |      | 38 | 
|        
|        
|        
|        
|PART IV  |  | Item |  |  | 14 |  |  | Exhibits, Financial Statement, Schedules
and Reports on Form 8-K                      |  |      | 38 | 
|        
|        
|        
|        
|         |  |      |  |  |    |  |  | Signatures                                                                            |  |      | 41 | 

2



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##### Table of Contents






PART I




Item 1. Business

General

Cold Metal Products, Inc. together with its wholly owned subsidiaries
(collectively referred to herein as the Company) is a corporation organized
in 1980 under the laws of the State of New York. The Company is a leading
intermediate processor of flat-rolled steel engineered to meet the
critical requirements of precision parts manufacturers. As an intermediate
processor of flat-rolled steel, the Company purchases coils of rolled steel
from primary producers and in some cases from other intermediate steel
processors, for further processing using techniques such as cold-rolling,
annealing, normalizing, edge-conditioning and oscillate-winding, as well as
more basic services of slitting and cutting to length. The Companys products
include strip steel for specialty and conventional applications, and to a
lesser extent, processed sheet steel. Specialty strip is highly engineered to
meet customer needs in precision parts manufacturing while conventional strip
is supplied to high-volume manufacturers whose purchasing criteria emphasize
quality, price and service rather than unique specifications.

Production and distribution of specialty, conventional strip steel and
processed sheet steel comprises a single segment of the intermediate steel
processing industry, involving inter-related equipment, technology and raw
materials. Accordingly, the Company operates in one industry segment.

Products and Services

An intermediate processor of flat-rolled steel, the Company purchases
coils of rolled steel from primary producers and processes the steel using
techniques such as cold-rolling, annealing and normalizing to alter the gauge
thickness and physical properties of the material to permit its use in other
manufacturing activities. The Company also performs other highly specialized
operations to strip steel, including edge-conditioning and oscillate-winding,
as well as the more basic services of slitting and cutting to length. The
Company processes and markets over 50 grades of steel, including grades that
are custom-designed to meet special customer and application requirements.
Product grades include specialty, ultra-low, high and very high carbon steel,
alloy, high strength-low alloy and both 300 and 400 series stainless, as well
as low and medium carbon commodity grades of steel. The Company has decided to
discontinue the full process manufacturing of stainless steel, and it is
expected that such processing will be completely suspended and all customer
commitments will be fulfilled during the third quarter of fiscal 2002.

The Company believes that it is one of the few flat-rolled steel
processors with a significant position in both the specialty and conventional
strip steel markets, and is an industry leader in at least two key areas of
specialty strip technology: (i) continuous annealing and normalizing of steel
to produce special metallurgical properties and (ii) multi-head
oscillate-winding to produce long lengths of narrow strip steel.

Specialty strip products are highly engineered and customized, processed
from flat-rolled coils of steel meeting exacting specifications in multiple
rolling, annealing and finishing operations. Specialty strip is used in the
manufacture of a variety of products, including bearings, cutting tools and
chain saw blades, tape measures, high-tolerance springs and pen clips.
Specialty strip production takes place principally at the Companys
Indianapolis, Indiana, New Britain, Connecticut, and Youngstown, Ohio, plants.
Conventional strip products are generally used in high-volume manufacturing
applications that typically have stringent quality requirements. Customer
purchasing decisions are usually based on prices offered by processors who can
meet those requirements. Conventional strip product applications are used in
the manufacture of such products as seat belt parts, transmission parts,
industrial chains, door hinges, drawer slides, golf club shafts and other
products. Conventional strip production takes place principally at the
Companys Ottawa, Ohio and Hamilton, Ontario plants. The Companys subsidiary,
Alkar Steel Corporation (Alkar), located in Roseville, Michigan, distributes
principally to the automotive industry both specialty and conventional strip
products produced at the Companys facilities or purchased from others.

At its steel service center in Pointe Claire, Quebec, the Company produces
and distributes processed sheet steel consisting primarily of hot-rolled,
cold-rolled and galvanized steel. The steel service center purchases sheet
steel from primary steel producers and adds value by slitting, cutting to
length and providing warehousing services. This processed sheet steel is
typically used in applications that do not require precision tolerances, such
as for heating ducts and wall studs principally used in the construction
industry.

3



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The principal processing techniques and the related equipment of the
Company  rolling, annealing, slitting, oscillate-winding and finishing  are
described below:



| |  | Cold-rolling is the process of rolling steel to a specified thickness,
temper and finish. Most strip-rolling is performed on reversing mills
of three major types: 4-High, 6-High and cluster mills (or Z-mills).
The Company utilizes all three types.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Annealing is a thermal process, which changes the hardness and certain
metallurgical characteristics of steel. The most common means of
softening strip steel for further processing or customer use is by
annealing (heating and cooling) stacks of wound coils of strip steel
in batch furnaces. All of the Companys strip mills are equipped for
batch annealing. The Company is one of only two domestic strip
producers to operate continuous annealing lines, which soften the
strip steel by uncoiling the strip and passing it through a long
temperature-controlled furnace to produce more uniform and
grain-normalized properties in the strip. The Company believes it is
the only North American producer to perform continuous annealing of
high carbon and alloy steel grades.
| 
| |  | Slitting is the cutting of steel to specified widths and is performed
at all of the Companys facilities. Coils of fully-processed strip or
wide sheet coil are unwound, passed through rotary slitting knives and
rewound in narrow-width coils as required by customer specifications.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| |  | Oscillate-winding is a means of producing exceptionally long lengths
of narrow strip steel by winding consecutive coils, much like thread
is wound on a spool. This operation can be performed after slitting
or, at a lower cost, on a multiple head-slitting and oscillate-winding
line.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| 
| |  | Several finishing operations are performed by the Company, including
coating and edge-conditioning. Coating is performed internally on an
electro-galvanizing line at the Youngstown facility and by outside
vendors for other platings or paints as needed to meet a given
customers needs. Edge-conditioning is the conditioning of edges of
processed steel into square, full-round or partially-round shapes by
rolling and skiving and is done at several of the Companys plants.                                                                                                                                                                                                                                                                                                      

Recent Developments

As part of its efforts to rationalize capacity with current market
conditions during the second half of fiscal 2001, the Company restructured its
manufacturing operations by adopting a plan to discontinue manufacturing at its
New Britain, Connecticut facility and reduce the size of its Hamilton, Ontario
facility workforce. These actions will result in the total overall termination
of approximately 125 salaried and hourly employees when fully implemented.

On March 31, 2000, the Company acquired all of the outstanding common stock of
Alkar in a business combination accounted for as a purchase transaction.
Alkars business activities consist of a steel service center operating in the
Detroit, Michigan area. Prior to its acquisition by the Company it had been a
significant customer for the Companys specialty and conventional strip steel
products. Alkar employs approximately 65 people.

Effective March 30, 1999, the company disposed of its steel service centers in
Hamilton and Concord, Ontario, Canada, which prior to their disposition
employed approximately 100 people and engaged in slitting of steel, primarily
for the automotive and industrial goods markets. After the disposition of the
two service centers in Hamilton and Concord, the Companys only remaining
Canadian steel service center is in Montreal, Quebec, Canada.

4



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##### Table of Contents



In the fourth quarter of the fiscal year ended March 31, 1999, management of
the Companys business operations was restructured to provide for significant
autonomy and accountability at each geographic business unit that collectively
comprise a single segment of the intermediate steel processing industry.
Corporate management now concentrates on overall business strategy, decisions
regarding executive personnel, major capital projects, leveraged procurement
opportunities and financial evaluation of performance of the business units.
This restructuring has also enabled corporate supply chain directives that
maximize the utilization of inter-related equipment, technology and raw
materials within each geographic region of the Companys operations.

Raw Materials

The primary raw materials used in the Companys operations are hot-rolled
and cold-rolled steel coils. Currently, the Company obtains steel for
processing from a number of primary steel producers, and to a lesser extent,
from other intermediate steel processors. The Company has developed cooperative
relationships with its principal suppliers, primarily domestic integrated steel
producers, that the Company believes will enable it to assure itself of the
availability of steel. The Company has also developed supply relationships
with several primary steel producers outside of the U.S. and Canada. Over the
Companys last three fiscal years, approximately 10% of its steel requirements
were purchased from foreign suppliers. The Companys ability to acquire steel
from sources outside the U.S. and Canada affords it access to certain grades
required for its specialty strip production and, the Company believes, can
afford substantial protection in the event of limited steel supply in North
America.

The Companys largest component of cost of sales is raw material costs.
These costs can vary over time due to changes in steel pricing which the
Company attempts to pass on as market conditions or contractual pricing
agreements permit. In periods of changing steel prices, however, reductions in
the Companys raw material costs may lag behind pressure on the Companys
prices or increases in raw material costs may precede increases in the
Companys prices, temporarily compressing the Companys profit margins.

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Patents and Trademarks

The Company has no patents material to its business. With respect to
trademarks, the Company has developed and produces the UniForm®
series of specialty strip products and also has developed a proprietary
LaserMatte® finish utilizing laser texturing technology. These
products help customers solve problems in their manufacturing processes and
include:

|             |  |                                                                                             |  |  |  | 
|------------ |  | ------------------------------------------------------------------------------------------- |  |  |  | 
|Product      |  | Application                                                                                
|             |  |                                                                                            
|UniForm® 100 |  | Magnetic shielding and relay applications                                                  
|            
|            
|            
|            
|UniForm® 200 |  | Extra-deep drawn parts                                                                     
|            
|            
|            
|            
|UniForm® 300 |  | Cut-shaped parts                                                                           
|            
|            
|            
|            
|UniForm® 500 |  | Severely bent or stretched formed parts                                                    
|            
|            
|            
|            
|UniForm® 700 |  | Pre-hardened flat parts                                                                    
|            
|            
|            
|            
|UniForm® 800 |  | High-strength parts requiring high ductility                                               
|            
|            
|            
|            
|Lasermatte®  |  | Laser-generated surface finish for deep drawing,
friction and enhanced bonding applications

Seasonality

The Company normally experiences lower levels of net sales in the months
of July, November and December, due primarily to holiday periods and customer
plant shutdowns; however, volume levels are significantly affected by general
economic conditions.

Working Capital Requirements

The Company generally maintains its inventory of raw materials at levels
that it believes are sufficient to satisfy the anticipated needs of its
customers based on historic buying practices and market conditions. The
Company believes that its practices are comparable to other companies in the
intermediate steel processing industry. The Company believes that cash
generated from operations and from borrowing under its committed revolving line
of credit facility provide adequate cash for the Companys working capital
requirements.

Customers

The Company sells its products primarily in the automotive, construction,
cutting tools, consumer goods and industrial markets and to specialty steel
distributors. During the fiscal year ended March 31, 2001, 45% of the
Companys net sales were to the automotive market. These sales are primarily
to manufacturers who produce component parts for sale to automotive
manufacturers and after-market parts suppliers. The balance of the Companys
net sales is almost equally divided among the other markets served.

During the fiscal year ended March 31, 2001, the Company sold products to
approximately 1,200 customers with the largest single customer, Borg Warner
Automotive, Inc. together with its subsidiaries, accounting for approximately
12% of the Companys net sales. During the fiscal year ended March 31, 2001,
approximately 34% of the Companys net sales were made pursuant to arrangements
with customers that contemplate deliveries over a period of 12 months or more.

For the fiscal year ended March 31, 2001, approximately 72% of the
Companys net sales were to customers in the U.S. and 28% were to customers in
Canada. Less than 1% of the Companys net sales, in each of its last three
fiscal years, were derived from sales to customers outside the U.S. and Canada.

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Backlog

At March 31, 2001,the Companys backlog was approximately $36 million
compared with approximately $42.5 million at March 31, 2000. The decrease in
backlog as of March 2001 reflected weakened market conditions. Management
estimates that substantially all of the existing backlog will be shipped during
the current fiscal year.

Competition

The intermediate steel processing industry is highly competitive. The
Company competes on the basis of quality, technical expertise, price and its
ability to meet the delivery demands of its customers. Its principal
competitors in the specialty strip market consist primarily of small, privately
held concerns, many of which focus on certain grades, finishes or coatings.
The Companys competitors in the conventional strip market include Steel
Technologies, Inc., Worthington Industries and Gibraltar Steel Corporation.
Imported processed steel from Japan and Europe also competes with the Companys
strip steel products.

Compliance With Environmental Regulations

The Companys steel processing facilities are subject to many federal,
state, provincial and local requirements relating to the protection of the
environment, and the Company has made, and will continue to make, expenditures
to comply with such provisions. The Company believes that its facilities are
being operated in material compliance with these laws and regulations and does
not believe that future compliance with such existing laws and regulations will
have a material adverse effect on its results of operations or financial
condition. Capital expenditures and expenses attributable to environmental
control compliance were approximately $800,000 in fiscal 2001, which included
anticipated environmental remediation costs of $500,000 related to the New
Britain facility closure. Capital expenditures and expenses attributable to
environmental control compliance are forecast to be approximately $350,000 in
fiscal 2002 and $400,000 in fiscal 2003.

The Company has retained the services of an environmental consultant who
continuously reviews the Companys operations to insure compliance with
environmental laws and regulations. While the Companys facilities are located
on old industrial sites, and although some contamination has been discovered,
based upon studies and reports conducted by the Companys consultants, the
Company believes it is unlikely that any of the sites will require the Company
to incur material remediation costs.

Employees

As of May 31, 2001, the Company employed a total of 574 people, consisting
of 204 salaried, 289 union hourly, and 81 non-union hourly employees. The
total employee count is down from 652 as of May 31, 2000 principally as a
result of the reduction in force in connection with restructuring plans. An
additional reduction of approximately 80 people is expected in the second
fiscal quarter to complete the closure of the New Britain facility. The
Company is a party to five collective bargaining agreements at four of its
different manufacturing facilities and its Quebec service center. During the
year ended March 31, 2001, the Company negotiated a contract extension through
August 2005 at its Indianapolis, Indiana facility, and in June 2001 negotiated
a contract extension through August 2004 at its Youngstown, Ohio facility.
During the year ended March 31, 2000 the Company negotiated a contract
extension through December 2004 at its Hamilton, Ontario facility, and in May
2000 entered into a five year contract with the employees of its Point Claire,
Quebec service center. The Company believes its employee relations are good.

7



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##### Table of Contents






Item 2. Properties

The following table sets forth the location, square footage and use of
each of the Companys principal production facilities as of March 31, 2001.

|                         |  |                |         |                  |  |                                             |  |            |  |  |  | 
|------------------------ |  | -------------- | ------- | ---------------- |  | ------------------------------------------- |  | ---------- |  |  |  | 
|                         |  |                |         |                  |  |                                             |  | Owned or  
|Location                 |  | Square Footage |         | Type of Facility |  | Leased (1)                                 
|                         |  |                |         |                  |  |                                            
|Indianapolis, Indiana    |  |                | 147,000 |                  |  | Specialty and Conventional
Strip production |  | Owned     
|                        
|                        
|                        
|                        
|Hamilton, Ontario        |  |                | 314,000 |                  |  | Conventional Strip production               |  | Owned     
|                        
|                        
|                        
|                        
|New Britain, Connecticut |  |                | 290,000 |                  |  | Specialty Strip production                  |  | Owned (2) 
|                        
|                        
|                        
|                        
|Ottawa, Ohio             |  |                | 145,000 |                  |  | Conventional Strip production               |  | Owned     
|                        
|                        
|                        
|                        
|Pointe Claire, Quebec    |  |                | 45,000  |                  |  | Steel service center                        |  | Owned     
|                        
|                        
|                        
|                        
|Roseville, Michigan      |  |                | 58,000  |                  |  | Steel service center                        |  | Leased (3)
|                        
|                        
|                        
|                        
|Youngstown, Ohio         |  |                | 430,000 |                  |  | Specialty Strip production                  |  | Owned     



---

|(1) |  | Each of the facilities owned by the Company is subject to the liens of financial institutions
providing revolving and term loan credit facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | As of March 31, 2001 the Company had adopted a plan to discontinue specialty strip production at its New Britain,
Connecticut facility. It is expected that such operations will be permanently idled during the second quarter of
fiscal 2002, and the real estate will be available for sale at that time.                                                                                                                                                                                                                                                                                          
|   
|   
|   
|   
|(3) |  | Leased under agreement for $300,000 per year payable to John M. Fayad,
President of the Alkar Steel Corporation. Lease term expires March 31,
2003, subject to one three-year renewal option. Mr. Fayad owned the
premises occupied by Alkar at the time of its acquisition by the Company
and the terms of the lease were negotiated as a part of the acquisition
transaction. The Company believes that the rental rate of approximately
$5.18 per square foot basis net of taxes and utilities is consistent with
fair market lease values for similar facilities in the Detroit
metropolitan area.

Changes in product mix result in significant variations in productive
capacity of the Companys facilities in any measurable period. The Company
estimates that its facilities operated at an estimated 72% of productive
capacity in fiscal 2001.




Item 3. Legal Proceedings

As of March 31, 2001, no material legal proceedings were pending against
the Company. Certain claims, suits and complaints arising in the ordinary
course of the Companys business have been filed or are pending against the
Company. In the opinion of management, none of such claims, suits or
complaints is material and in the aggregate, they will not have a material
adverse effect on the Companys results of operations or financial condition.




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

There were no submissions of matters to a vote of the shareholders in the
fourth quarter of the fiscal year ended March 31, 2001.

8



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##### Table of Contents






Item 4A. Executive Officers of the Registrant

The following table lists the names, positions held and ages of all the
executive officers of the Company:

|                  |  |     |    |                       |  |                                            |  |  |  | 
|----------------- |  | --- | -- | --------------------- |  | ------------------------------------------ |  |  |  | 
|Name              |  | Age |    | Position with Company
|                  |  |     |    |                      
|Heidi A. Nauleau  |  |     | 44 |                       |  | Chairman of the Board of Directors        
|                 
|                 
|                 
|                 
|Raymond P. Torok  |  |     | 54 |                       |  | President and Chief Executive Officer     
|                 
|                 
|                 
|                 
|Joseph C. Horvath |  |     | 46 |                       |  | Vice-President and Chief Financial Officer
|                 
|                 
|                 
|                 
|Paul H. Eagle     |  |     | 46 |                       |  | Vice-President, Marketing                 
|                 
|                 
|                 
|                 
|Paul M. Hoppe     |  |     | 49 |                       |  | Vice-President, Manufacturing             

Executive officers are elected by the Board of Directors and serve at its
discretion.

Heidi A. Nauleauis Chairman of the Company and a Director, having been elected
to those positions in 1998 and 1993, respectively. Aarque Capital Corporation,
a corporation controlled indirectly by Mrs. Nauleau and her parents, R. Quintus
Anderson and Sondra R. Anderson, owns approximately 58% of the shares of Common
Stock of the Company. Mrs. Nauleau is Chairman of The Aarque Companies, a
group of corporations which are in businesses unrelated to the business of the
Company and which are controlled by Aarque L. P., a limited partnership
established by the Anderson family, including Mrs. Nauleau. Mrs. Nauleau
joined The Aarque Companies in 1981 and has served in various capacities up to
February 1996 when she was elected Chairman.

Raymond P. Torokis President and Chief Executive Officer of Cold Metal
Products, Inc. since October 1998. He is also a Director of the Company,
having been elected by the Board of Directors in October 1998 to fill the
vacancy created by the resignation of James R. Harpster. Prior to joining the
Company, he served as President and Chief Executive Officer of Philadelphia
Gear Corporation from 1994 to 1998. From 1968 to 1994, Mr. Torok was employed
at Aluminum Company of America (Alcoa).

Joseph C. Horvathis Vice-President and Chief Financial Officer of Cold Metal
Products, Inc. since July 1999. Prior to joining the Company, he served since
1991 as a Principal of Ernst & Young, LLP.

Paul H. Eagleis Vice-President, Marketing of Cold Metal Products, Inc. since
April 2000. Prior to joining the Company, he served as Chief Operating Officer
of Toledo Pickling and Steel Sales, Inc. since 1995. From 1991 to 1995, Mr. Eagle
was employed at Greer Steel Corporation for five years, including serving
as its President from 1993.

Paul M. Hoppeis Vice-President, Manufacturing since September 2000. He has
served the Company in various operations management positions since 1974.

9



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##### Table of Contents






PART II




Item 5. Market and Dividend Information

As of June 8, 2001, there were 6,384,491 shares of common stock
outstanding that were held by 82 holders of record and approximately 726
individual participants in security position listings. The Companys common
stock is traded on the American Stock Exchange under the symbol CLQ. The
Company declared its first regular quarterly dividend of $.05 per share on
October 19, 1999 and continued to pay such dividends through October 2000.
Prior to October 1999, the Company had not declared any dividends. The
Companys ability to pay dividends in the future is limited by the terms of its
credit facilities requiring it to meet specified minimum borrowing availability
and pretax profits. Additional information regarding the principal market for
the Companys common stock and market prices, based on selling prices, for the
Companys common stock is set forth below.

|               |  |                              |      |      |  |      |      |     |  |   |      |  |  |   |      |  |  |  |  | 
|-------------- |  | ---------------------------- | ---- | ---- |  | ---- | ---- | --- |  | - | ---- |  |  | - | ---- |  |  |  |  | 
|               |  | Market Price Ranges         
|               |  |                             
|               |  | Fiscal Year Ending March 31,
|               |  |                             
|               |  | 2001                         |      | 2000
|               |  |                              |      |     
|               |  | High                         |      | Low  |  | High |      | Low
|               |  |                              |      |      |  |      |      |    
|First Quarter  |  | $                            | 3.88 |      |  | $    | 2.88 |     |  | $ | 3.00 |  |  | $ | 1.63 | 
|              
|              
|              
|              
|Second Quarter |  | $                            | 3.50 |      |  | $    | 2.38 |     |  | $ | 4.31 |  |  | $ | 2.50 | 
|              
|              
|              
|              
|Third Quarter  |  | $                            | 2.75 |      |  | $    | 1.13 |     |  | $ | 3.94 |  |  | $ | 2.81 | 
|              
|              
|              
|              
|Fourth Quarter |  | $                            | 2.38 |      |  | $    | 1.21 |     |  | $ | 4.00 |  |  | $ | 3.00 | 

10



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##### Table of Contents






Item 6. Selected Consolidated Financial Data

|                                              |  |                                                  |           |      |  |      |           |      |  |      |           |   |  |   |           |  |  |   |           |  |  |  |  | 
|--------------------------------------------- |  | ------------------------------------------------ | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- |  |  | - | --------- |  |  |  |  | 
|                                              |  | Year Ended March 31,                            
|                                              |  |                                                 
|                                              |  | 2001                                             |           | 2000 |  | 1999 |           | 1998 |  | 1997
|                                              |  |                                                 
|                                              |  | (Dollars in thousands, except per share amounts)
|Statement of Operations Data:                
|                                             
|                                             
|                                             
|                                             
|Net sales                                     |  | $                                                | 214,484   |      |  | $    | 208,612   |      |  | $    | 253,240   |   |  | $ | 294,019   |  |  | $ | 290,397   | 
|                                             
|                                             
|                                             
|                                             
|Cost of sales                                 |  |                                                  | 200,017   |      |  |      | 183,410   |      |  |      | 238,515   |   |  |   | 269,605   |  |  |   | 266,506   | 
|                                              |  |                                                 
|Gross profit                                  |  |                                                  | 14,467    |      |  |      | 25,202    |      |  |      | 14,725    |   |  |   | 24,414    |  |  |   | 23,891    | 
|                                             
|                                             
|                                             
|                                             
|Selling, general, and
administrative expenses |  |                                                  | 17,026    |      |  |      | 14,374    |      |  |      | 17,747    |   |  |   | 16,343    |  |  |   | 15,647    | 
|                                             
|                                             
|                                             
|                                             
|Special charges                               |  |                                                  | 2,205     |      |  |      |          |      |  |      | 6,636     |   |  |   |          |  |  |   |          | 
|                                             
|                                             
|                                             
|                                             
|Interest expense                              |  |                                                  | 4,923     |      |  |      | 3,460     |      |  |      | 4,418     |   |  |   | 4,624     |  |  |   | 3,115     | 
|                                              |  |                                                 
|(Loss) income before income taxes             |  |                                                  | (9,687    | )    |  |      | 7,368     |      |  |      | (14,076   | ) |  |   | 3,447     |  |  |   | 5,129     | 
|                                             
|                                             
|                                             
|                                             
|Income tax (benefit) expense                  |  |                                                  | (3,901    | )    |  |      | 2,831     |      |  |      | (3,997    | ) |  |   | 1,386     |  |  |   | 1,700     | 
|                                              |  |                                                 
|Net (loss) income                             |  | $                                                | (5,786    | )    |  | $    | 4,537     |      |  | $    | (10,079   | ) |  | $ | 2,061     |  |  | $ | 3,429     | 
|                                              |  |                                                 
|Net (loss) earnings per share:               
|                                             
|                                             
|                                             
|                                             
|Basic                                         |  | $                                                | (0.90     | )    |  | $    | .71       |      |  | $    | (1.44     | ) |  | $ | 0.29      |  |  | $ | 0.48      | 
|                                              |  |                                                 
|Diluted                                       |  | $                                                | (0.90     | )    |  | $    | .70       |      |  | $    | (1.44     | ) |  | $ | 0.29      |  |  | $ | 0.48      | 
|                                              |  |                                                 
|Weighted average shares outstanding:         
|                                             
|                                             
|                                             
|                                             
|Basic                                         |  |                                                  | 6,394,854 |      |  |      | 6,408,586 |      |  |      | 6,985,612 |   |  |   | 7,142,026 |  |  |   | 7,162,250 | 
|                                              |  |                                                 
|Diluted                                       |  |                                                  | 6,394,854 |      |  |      | 6,445,141 |      |  |      | 6,985,612 |   |  |   | 7,142,026 |  |  |   | 7,162,250 | 
|                                              |  |                                                 

|                     |  |                        |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         |  |  |  |  | 
|-------------------- |  | ---------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- |  |  |  |  | 
|                     |  | March 31,             
|                     |  |                       
|                     |  | 2001                   |         | 2000 |  | 1999 |         | 1998 |  | 1997
|                     |  |                       
|                     |  | (Dollars in thousands)
|                    
|Balance Sheet Data: 
|                    
|                    
|                    
|                    
|Total assets         |  | $                      | 123,251 |      |  | $    | 137,749 |      |  | $    | 122,850 |  |  | $ | 150,433 |  |  | $ | 153,034 | 
|                    
|                    
|                    
|                    
|Working capital      |  |                        | 35,580  |      |  |      | 39,815  |      |  |      | 25,324  |  |  |   | 56,825  |  |  |   | 43,419  | 
|                    
|                    
|                    
|                    
|Long-term debt       |  |                        | 59,383  |      |  |      | 52,621  |      |  |      | 37,356  |  |  |   | 60,859  |  |  |   | 48,330  | 
|                    
|                    
|                    
|                    
|Shareholders equity |  |                        | 16,497  |      |  |      | 26,652  |      |  |      | 22,351  |  |  |   | 35,761  |  |  |   | 35,194  | 

11



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##### Table of Contents






Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations of Cold Metal Products, Inc. and Subsidiaries

The following discussion and analysis provides information with respect to
the results of operations of the Company for fiscal 2001, 2000 and 1999 and
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto.

Results of Operations

The following table presents the Companys results of operations expressed
as a percentage of net sales:

|                                              |  |                      |       |      |  |      |       |   |  |  |       |    |  |  |  | 
|--------------------------------------------- |  | -------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -- |  |  |  | 
|                                              |  | Year Ended March 31,
|                                              |  |                     
|                                              |  | 2001                 |       | 2000 |  | 1999
|                                              |  |                     
|Net sales                                     |  |                      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | % 
|                                             
|                                             
|                                             
|                                             
|Cost of sales                                 |  |                      | 93.3  |      |  |      | 87.9  |   |  |  | 94.2  |   
|                                              |  |                     
|Gross profit                                  |  |                      | 6.7   |      |  |      | 12.1  |   |  |  | 5.8   |   
|                                             
|                                             
|                                             
|                                             
|Selling, general, and administrative expenses |  |                      | 7.9   |      |  |      | 6.9   |   |  |  | 7.0   |   
|                                             
|                                             
|                                             
|                                             
|Special charges                               |  |                      | 1.0   |      |  |      |      |   |  |  | 2.6   |   
|                                             
|                                             
|                                             
|                                             
|Interest expense                              |  |                      | 2.3   |      |  |      | 1.7   |   |  |  | 1.8   |   
|                                              |  |                     
|(Loss) income before income taxes             |  |                      | (4.5  | )    |  |      | 3.5   |   |  |  | (5.6  | ) 
|                                             
|                                             
|                                             
|                                             
|Income tax (benefit) expense                  |  |                      | (1.8  | )    |  |      | 1.3   |   |  |  | (1.6  | ) 
|                                              |  |                     
|Net (loss) income                             |  |                      | (2.7  | )%   |  |      | 2.2   | % |  |  | (4.0  | )%
|                                              |  |                     

Fiscal 2001 Compared to Fiscal 2000

Net sales in fiscal 2001 of $214.5 million were $5.9 million, or 2.8%
higher than the Companys net sales of $208.6 million in fiscal 2000,
reflecting the effect of the Alkar acquisition offset by significantly weaker
market conditions during the second half of the 2001 fiscal year. Tons shipped
increased 4.5%, accounting for $9.4 million of revenue increase, while lower
prices and product mix decreased sales by $3.5 million. Adjusting to remove
the incremental effect of the Alkar acquisition, net sales declined $18.5
million, with $13.4 million of the decrease associated with volume decline and
$5.1 million attributable to lower priced product.

Gross profit in fiscal 2001 was $14.5 million, or 6.7% of net sales,
reflecting a $10.7 million decrease over fiscal 2000. The primary factors
affecting gross margins were weaker market conditions, particularly in the last
two quarters of the year and the effect of resulting low activity levels in
relation to the Companys fixed operating cost structure. In addition,
provisions for inventory valuation reserve of $1.8 million and environmental
remediation reserve of $.5 million contributed to the gross margin decreases in
the same periods.

The Company adopted and has begun to implement plans to rationalize
capacity and concentrate manufacturing at the facilities most efficient for
customer needs. In conjunction with this strategy, the Company has announced
the shutdown of its New Britain, Connecticut facility, and a reduction in force
at its Hamilton, Ontario facility. As a result of these changes, fiscal year
2001 reflected a $2.2 million special charge comprised of a $1.3 million
equipment impairment charge associated with operating assets in New Britain and
reduction in force costs of $.9 million related to the termination of 43
salaried and hourly employees. Certain additional benefits will be negotiated
with hourly employees as part of these activities, but are not expected to be
material.

12



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##### Table of Contents



Selling, general and administrative costs of $17.0 million for fiscal 2001
represented 7.9% of net sales compared to $14.4 million, or 6.9% of net sales
for fiscal 2000. The increase primarily reflected the addition of Alkar costs.
Lower incentive compensation levels mostly offset incremental costs associated
with increased executive staffing levels in fiscal 2001.

Interest expense was $4.9 million, or 2.3% of net sales for fiscal 2001 as
compared to $3.5 million or 1.7% of net sales for fiscal 2000. Higher expense
was primarily attributable to the additional indebtedness related to the Alkar
acquisition, as well as higher market interest rates during most of the fiscal
year.

Income (loss) before taxes was $(9.7) million, or (4.5)% of net sales for
fiscal 2001, compared to $7.4 million, or 3.5% of net sales for fiscal 2000.

Income tax expense (benefit) for fiscal 2001 was $(3.9) million, or (1.8)%
of net sales compared to $2.8 million, or 1.3% of net sales for fiscal 2000.
The effective tax rate was (40.3)% for fiscal 2001, compared to 38.4% for
fiscal 2000 reflecting the recovery of certain income taxes previously paid and
adjusted upon appeal in Canada.

Net income (loss) for fiscal 2001 was $(5.8) million, or $(.90) per share
as compared to $4.5 million, or $.71 per share for fiscal 2000.

Fiscal 2000 Compared to Fiscal 1999

Net sales in fiscal 2000 of $208.6 million were $44.6 million or 17.6%
less than the Companys net sales of $253.2 million in fiscal 1999. Lower
revenue primarily reflected the elimination of $55.6 million of revenue
attributable to the Ontario, Canada service centers sold by the Company in
March 1999. After adjusting fiscal 1999 to remove the service center activity
for comparison purposes, net sales for fiscal 2000 increased $12.5 million or
6.5%. This increase is attributable to 13.3% higher volume of tons shipped
representing a $25.7 million sales increase, offset by $13.2 million sales
decrease partly associated with the change in the product mix to lower revenue
products. The Company also experienced downward pricing pressure for its
products as a result of the availability of imported steel at relatively low
costs.

Gross profit in fiscal 2000 was $25.2 million or 12.1% of net sales, which
was an increase of $10.5 million over fiscal 1999. Gross profit in fiscal 1999
reflected a charge of $2.7 million to write-down inventory in Canada to net
realizable value. The increase in margins in fiscal 2000 beyond the effect of
the inventory charge resulted from the elimination of the unprofitable service
center operations, cost savings from the Companys restructuring initiatives,
increased volume at the Companys Ottawa, Ohio facility and improved operating
performance at the Companys continuing Canadian operations. In both fiscal
1999 and 2000, the Company experienced some compression of gross margins as it
was negatively impacted by price increases for raw materials as steel imports
began to ease, while experiencing resistance to corresponding selling price
increases for its products in the marketplace.

13



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##### Table of Contents



Selling, general and administrative costs of $14.4 million for fiscal 2000
represented 6.9% of net sales; selling and administrative costs for fiscal 1999
were $17.7 million or 7.0% of net sales. Lower selling, general and
administrative expense in fiscal 2000 resulted from the elimination of such
costs associated with the Ontario service centers that were sold in March 1999.
In addition, as a result of the proceeds from the aforementioned sale being
applied to substantially reduce the Companys Canadian subsidiarys U.S. dollar
denominated indebtedness, currency transaction costs were lower in fiscal 2000.
In addition there was an increase associated with higher incentive
compensation in fiscal 2000 related to the improved profitability of the
Companys operations, that approximated a charge related to the former chief
executive officers retirement agreement recognized in fiscal 1999.

Interest expense in fiscal 2000 was $3.5 million or 1.7% of net sales as
compared to $4.4 million or 1.8% of net sales in fiscal 1999. Lower interest
expense primarily reflected using $14.6 million proceeds of the service center
sale to decrease debt, somewhat offset by higher effective interest rates.

Income before taxes in fiscal 2000 was $7.4 million or 3.5% of net sales.
In fiscal 1999 loss before taxes was $14.1 million or 5.6% of net sales.

Income tax expense for fiscal 2000 was $2.8 million or 1.3% of net sales
compared to a tax benefit of $4.0 million or 1.6% of net sales for fiscal 1999.
The effective tax rate for fiscal 2000 was 38.4% compared to 28.4% for fiscal
1999, which reflected the effect of a difference for the non-deductible
goodwill impairment charge and foreign currency transaction adjustments.

Net income for fiscal 2000 was $4.5 million, or $.71 per share as compared
to net loss of $10.1 million, or $1.44 per share for fiscal 1999.

Liquidity and Capital Resources

The Company requires capital primarily to fund working capital needs,
capital expenditures, including the acquisition, expansion and improvement of
facilities, machinery and equipment, and to acquire complementary steel-related
businesses. The Company met its capital requirements in fiscal 2001
principally from borrowings under credit facilities.

In fiscal 2001, cash from operating activities was generated by decreases
in receivables, inventories and other assets, largely offset by reductions in
trade accounts payable and accruals.

Net cash used in investing activities for fiscal 2001 totaled $5.2 million
and was associated with normal capital equipment spending.

Cash flows from financing activities provided $4.1 million in fiscal 2001.
The Companys primary lending facility provided $6.8 million that was used to
repay $1.8 million of term debt and pay $1.0 million of dividends. Three
quarterly dividends of $.05 per share were declared and paid during fiscal
2001. Dividends were suspended due to operating performance in the fourth
fiscal quarter.

14



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##### Table of Contents



The Companys primary lending facility is a revolving credit and term loan
agreement that provides up to a maximum of $70 million of borrowing
availability. As of March 31, 2001, $46.6 million was borrowed and unused
borrowing availability was $10.9 million. This credit agreement, as recently
amended, bears interest at LIBOR plus 1.5% and is secured by substantially all
of the assets of the Company, except certain Ottawa, Ohio assets. The
Companys Ottawa, Ohio assets secure a long-term borrowing agreement used to
finance the expansion and improvement of its cold rolling mill facility. At
March 31, 2001, approximately $15.7 million of this borrowing was outstanding.

At March 31, 2001, the Company was in non-compliance with certain
financial ratios in its revolving credit and term loan agreements pertaining to
minimum net worth and financial leverage. Subsequently, the lenders have
waived the events of non-compliance and amended the financial covenants in each
agreement to levels that management believes attainable in the future. The
revolving credit and term loan agreement was further amended to increase the
interest rate to LIBOR plus 1.5 %, subject to interest reductions of up to .5%
if future operating results are obtained.

Management expects that cash generated from operating activities and its
borrowing capacity will be sufficient to meet planned capital expenditures and
other cash requirements for the next twelve months.

Seasonality

The Company has in the past experienced lower levels of sales in the
months of July, November, and December, due primarily to holiday periods and
customers temporary plant shutdowns.

Inflation/Impact of Changing Prices

The Companys largest component of cost of sales is raw material costs.
These costs can vary over time due to changes in steel pricing which the
Company attempts to pass on to customers as market conditions or contractual
pricing agreements permit. The Company does not believe that inflation has had
a significant impact on the results of its operations over the periods
presented.

Environmental Matters

The Companys facilities are subject to numerous federal, state,
provincial and local regulations related to environmental protection and
compliance with such regulations is a factor in the Companys operations. The
Company has made, and intends to make, expenditures necessary to comply with
such regulations. Under existing laws and regulations, the Company believes
that compliance will not have a material adverse effect on its results of
operations or financial condition. In fiscal 2001, the Company recorded a $.5
million charge for anticipated environmental remediation costs related to the
New Britain facility closure.

15



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##### Table of Contents



Recent Accounting Pronouncements

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities, effective for fiscal years beginning after June 15,
2000. SFAS No. 133, as amended, establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities. Under SFAS No. 133, certain
contracts that were not formerly considered derivatives may now meet the
definition of a derivative. The Company will adopt the standard effective
April 1, 2001. Management does not expect the adoption of SFAS No. 133 to have
a significant impact on the financial position, results of operations, or cash
flows of the Company.

In September 2000, the Emerging Issues Task Force (EITF) of the
Financial Accounting Standards Board issued EITF 00-10, Accounting for Shipping
and Handling Fees and Costs, which became effective for the Company in the
fourth quarter of fiscal 2001. EITF 00-10 provides that all amounts billed to
a customer in a sale transaction related to shipping and handling should be
reported as revenue. The Company has complied with these recognition
principles for fiscal 2001 and reclassified earlier periods to conform to the
principles. This change has no effect on the dollar amount of the Companys
gross profit or net income.

Quantitative and Qualitative Disclosure About Market Risk

The Companys major market risk exposure is in the areas of possible
fluctuations in interest rates as they relate to its variable rate debt and
Canadian dollar currency rate fluctuations as they relate to U.S. dollar debt
carried on the books of the Canadian subsidiary. The Company does not enter
into derivative financial investments for trading, speculation or other
purposes. The Company believes that its market risk exposure is not material
to the Companys financial position, liquidity or results of operations. The
Company would be sensitive to a 10% market rate change in interest under its
credit agreements in the approximate after-tax amount of $.2 million. The
Company would be sensitive to a 10% change in the Canadian currency exchange
rate in the approximate after-tax amount of $.1 million.

Forward-Looking Information

This document contains various forward-looking statements and information
that are based on managements beliefs as well as assumptions made by and
information currently available to management. When used in this document, the
words expect, believe, anticipate, plan and similar expressions are
intended to identify forward-looking statements, which are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Because such statements include risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements include, but are
not limited to, general business and economic conditions, competitive factors
such as availability and pricing of steel, changes in customer demand, work
stoppages by customers, potential equipment malfunctions, or other risks and
uncertainties discussed herein.

16



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##### Table of Contents






Item 8. Financial Statements and Supplementary Data

The following information is submitted pursuant to the requirement of Item 8.

|                                                             |                                                   |      |    |    |  |  |  |  | 
|------------------------------------------------------------ | ------------------------------------------------- | ---- | -- | -- |  |  |  |  | 
|DESCRIPTION                                                  |                                                   | PAGE
|                                                             |                                                   |     
|Independent Auditors Report                                 |                                                   |      | 18 |   
|                                                            
|                                                            
|                                                            
|                                                            
|Consolidated Balance Sheets as of March 31, 2001 and 2000    |                                                   |      | 19 |   
|                                                            
|                                                            
|                                                            
|                                                            
|Consolidated Statements of Operations for the Years Ended   
|                                                             | March 31, 2001, 2000 and 1999                     |      |    | 20 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Consolidated Statements of Shareholders Equity             
|                                                             | for the Years Ended March 31, 2001, 2000 and 1999 |      |    | 21 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Consolidated Statements of Cash Flows for the Years Ended   
|                                                             | March 31, 2001, 2000 and 1999                     |      |    | 22 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Notes to Consolidated Financial Statements                   |                                                   |      | 23 |   
|                                                            
|                                                            
|                                                            
|                                                            
|Schedule II  Valuation and Qualifying Accounts and Reserves |                                                   |      | 37 |   

17



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##### Table of Contents






Independent Auditors Report

To the Board of Directors and Shareholders

Cold Metal Products, Inc.

Sewickley, PA



We have audited the accompanying consolidated balance sheets of Cold Metal
Products, Inc. and Subsidiaries (the Company) as of March 31, 2001 and 2000,
and the related consolidated statements of operations, shareholders equity and
cash flows for each of the three years in the period ended March 31, 2001. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a)(2). These consolidated financial statements and financial statement
schedule are the responsibility of the Companys management. Our responsibility
is to express an opinion on the consolidated financial statements and financial
statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Cold Metal Products, Inc. and
Subsidiaries as of March 31, 2001 and 2000, and the results of their operations
and cash flows for each of the three years in the period ended March 31, 2001
in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Cleveland, Ohio
May 18, 2001

18



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##### Table of Contents






CONSOLIDATED BALANCE SHEETS
Cold Metal Products, Inc. and Subsidiaries

|                                                                                    |                                            |   |                                                  |         |      |   |         |         |  |  |  |  | 
|----------------------------------------------------------------------------------- | ------------------------------------------ | - | ------------------------------------------------ | ------- | ---- | - | ------- | ------- |  |  |  |  | 
|                                                                                    |                                            |   | March 31,                                       
|                                                                                    |                                            |   |                                                 
|                                                                                    |                                            |   | 2001                                             |         | 2000
|                                                                                    |                                            |   |                                                  |         |     
|                                                                                    |                                            |   | (Dollars in
thousands, except per share amounts)
|Assets:                                                                            
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Cash                                                                                |                                            | $ | 1,547                                            |         |      | $ | 1,559   |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Receivables                                                                         |                                            |   | 25,239                                           |         |      |   | 33,952  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Inventories                                                                         |                                            |   | 34,436                                           |         |      |   | 42,684  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Prepaid and other current assets                                                    |                                            |   | 3,297                                            |         |      |   | 4,232   |        
|                                                                                    |                                            |   |                                                 
|                                                                                    | Total current assets                       |   |                                                  | 64,519  |      |   |         | 82,427  | 
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Property, plant and equipment  at cost                                             |                                            |   | 79,387                                           |         |      |   | 78,258  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Less accumulated depreciation                                                       |                                            |   | (38,963                                          | )       |      |   | (37,629 | )      
|                                                                                    |                                            |   |                                                 
|Property, plant and equipment  net                                                 |                                            |   | 40,424                                           |         |      |   | 40,629  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Other non-current assets                                                            |                                            |   | 18,308                                           |         |      |   | 14,693  |        
|                                                                                    |                                            |   |                                                 
|                                                                                    | Total assets                               |   | $                                                | 123,251 |      |   | $       | 137,749 | 
|                                                                                    |                                            |   |                                                 
|                                                                                   
|Liabilities and shareholders equity:                                              
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Short-term borrowings                                                               |                                            | $ | 4,818                                            |         |      | $ | 6,556   |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Accounts payable                                                                    |                                            |   | 15,756                                           |         |      |   | 25,597  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Other current liabilities                                                           |                                            |   | 8,365                                            |         |      |   | 10,459  |        
|                                                                                    |                                            |   |                                                 
|                                                                                    | Total current liabilities                  |   |                                                  | 28,939  |      |   |         | 42,612  | 
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Long-term debt                                                                      |                                            |   | 59,383                                           |         |      |   | 52,621  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Postretirement and other benefits                                                   |                                            |   | 18,432                                           |         |      |   | 15,864  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Shareholders equity:                                                              
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Common stock, $.01 par value; 15,000,000 shares
authorized, 7,532,250 shares issued |                                            |   | 75                                               |         |      |   | 75      |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Additional paid-in capital                                                          |                                            |   | 25,302                                           |         |      |   | 25,371  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Retained earnings                                                                   |                                            |   | 4,129                                            |         |      |   | 10,873  |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Accumulated other comprehensive loss                                                |                                            |   | (7,446                                           | )       |      |   | (4,023  | )      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Less treasury stock, 1,147,759 and 1,164,750
shares at cost                         |                                            |   | (5,563                                           | )       |      |   | (5,644  | )      
|                                                                                    |                                            |   |                                                 
|                                                                                    | Total shareholders equity                 |   |                                                  | 16,497  |      |   |         | 26,652  | 
|                                                                                    |                                            |   |                                                 
|                                                                                    | Total liabilities and shareholders equity |   | $                                                | 123,251 |      |   | $       | 137,749 | 
|                                                                                    |                                            |   |                                                 

See notes to consolidated financial statements.

19



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##### Table of Contents






CONSOLIDATED STATEMENTS OF OPERATIONS
Cold Metal Products, Inc. and Subsidiaries

|                                              |         |   |                                                  |           |      |   |         |           |  |   |         |           |   |  |  |  | 
|--------------------------------------------- | ------- | - | ------------------------------------------------ | --------- | ---- | - | ------- | --------- |  | - | ------- | --------- | - |  |  |  | 
|                                              |         |   | Year Ended March 31,                            
|                                              |         |   |                                                 
|                                              |         |   | 2001                                             |           | 2000 |   | 1999   
|                                              |         |   |                                                 
|                                              |         |   | (Dollars in thousands, except per share amounts)
|                                             
|Net sales                                     |         | $ | 214,484                                          |           |      | $ | 208,612 |           |  | $ | 253,240 |          
|                                             
|                                             
|                                             
|                                             
|Cost of sales                                 |         |   | 200,017                                          |           |      |   | 183,410 |           |  |   | 238,515 |          
|                                              |         |   |                                                 
|Gross profit                                  |         |   | 14,467                                           |           |      |   | 25,202  |           |  |   | 14,725  |          
|                                             
|                                             
|                                             
|                                             
|Selling, general, and administrative expenses |         |   | 17,026                                           |           |      |   | 14,374  |           |  |   | 17,747  |          
|                                             
|                                             
|                                             
|                                             
|Special charges                               |         |   | 2,205                                            |           |      |   |        |           |  |   | 6,636   |          
|                                             
|                                             
|                                             
|                                             
|Interest expense                              |         |   | 4,923                                            |           |      |   | 3,460   |           |  |   | 4,418   |          
|                                              |         |   |                                                 
|(Loss) income before income taxes             |         |   | (9,687                                           | )         |      |   | 7,368   |           |  |   | (14,076 | )        
|                                             
|                                             
|                                             
|                                             
|Income tax (benefit) expense                  |         |   | (3,901                                           | )         |      |   | 2,831   |           |  |   | (3,997  | )        
|                                              |         |   |                                                 
|Net (loss) income                             |         | $ | (5,786                                           | )         |      | $ | 4,537   |           |  | $ | (10,079 | )        
|                                              |         |   |                                                 
|Net (loss) earnings per share:               
|                                             
|                                             
|                                             
|                                             
|                                              | Basic   |   | $                                                | (0.90     | )    |   | $       | 0.71      |  |   | $       | (1.44     | )
|                                              |         |   |                                                 
|                                              | Diluted |   | $                                                | (0.90     | )    |   | $       | 0.70      |  |   | $       | (1.44     | )
|                                              |         |   |                                                 
|Weighted average shares outstanding:         
|                                             
|                                             
|                                             
|                                             
|                                              | Basic   |   |                                                  | 6,394,854 |      |   |         | 6,408,586 |  |   |         | 6,985,612 |  
|                                              |         |   |                                                 
|                                              | Diluted |   |                                                  | 6,394,854 |      |   |         | 6,445,141 |  |   |         | 6,985,612 |  
|                                              |         |   |                                                 

See notes to consolidated financial statements.

20



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##### Table of Contents






CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
Cold Metal Products, Inc. and Subsidiaries

|                                        |                      |  |                |  |         |   |            |   |          |   |               |   |       |   |         |   |                   |   |        |   |  |   |         |         |   |  |  |  | 
|--------------------------------------- | -------------------- |  | -------------- |  | ------- | - | ---------- | - | -------- | - | ------------- | - | ----- | - | ------- | - | ----------------- | - | ------ | - |  | - | ------- | ------- | - |  |  |  | 
|                                        |                      |  |                |  |         |   | Additional |   |          |   |               |   |       |   |         |   | Accumulated Other
|                                        |                      |  | Common         |  | Paid-In |   | Treasury   |   | Retained |   | Comprehensive
|                                        |                      |  | Shares         |  | Capital |   | Stock      |   | Earnings |   | Income/(Loss) |   | Total
|                                        |                      |  |               
|                                        |                      |  | (In thousands)
|                                       
|Balance, March 31, 1998                 |                      |  | 75             |  |         |   | 25,350     |   |          |   | (3,927        | ) |       |   | 17,053  |   |                   |   | (2,790 | ) |  |   | 35,761  |        
|                                       
|                                       
|                                       
|                                       
|Net loss                                |                      |  |               |  |         |   |           |   |          |   |              |   |       |   | (10,079 | ) |                   |   |       |   |  |   | (10,079 | )      
|                                       
|                                       
|                                       
|                                       
|Foreign currency translation adjustment |                      |  |               |  |         |   |           |   |          |   |              |   |       |   |        |   |                   |   | (1,941 | ) |  |   | (1,941  | )      
|                                        |                      |  |                |  |         |   |            |   |          |   |               |   |       |   |         |   |                   |   |        |   |  |   |         |        
|                                        | Comprehensive loss   |  |                |  |         |   |            |   |          |   |               |   |       |   |         |   |                   |   |        |   |  |   |         | (12,020 | )
|                                       
|                                       
|                                       
|                                       
|Stock compensation                      |                      |  |               |  |         |   | 10         |   |          |   |              |   |       |   |        |   |                   |   |       |   |  |   | 10      |        
|                                       
|                                       
|                                       
|                                       
|Acquisition of treasury stock           |                      |  |               |  |         |   |           |   |          |   | (1,400        | ) |       |   |        |   |                   |   |       |   |  |   | (1,400  | )      
|                                        |                      |  |               
|Balance, March 31, 1999                 |                      |  | 75             |  |         |   | 25,360     |   |          |   | (5,327        | ) |       |   | 6,974   |   |                   |   | (4,731 | ) |  |   | 22,351  |        
|                                       
|                                       
|                                       
|                                       
|Net income                              |                      |  |               |  |         |   |           |   |          |   |              |   |       |   | 4,537   |   |                   |   |       |   |  |   | 4,537   |        
|                                       
|                                       
|                                       
|                                       
|Foreign currency translation adjustment |                      |  |               |  |         |   |           |   |          |   |              |   |       |   |        |   |                   |   | 708    |   |  |   | 708     |        
|                                        |                      |  |                |  |         |   |            |   |          |   |               |   |       |   |         |   |                   |   |        |   |  |   |         |        
|                                        | Comprehensive income |  |                |  |         |   |            |   |          |   |               |   |       |   |         |   |                   |   |        |   |  |   |         | 5,245   |  
|                                       
|                                       
|                                       
|                                       
|Cash dividends                          |                      |  |               |  |         |   |           |   |          |   |              |   |       |   | (638    | ) |                   |   |       |   |  |   | (638    | )      
|                                       
|                                       
|                                       
|                                       
|Stock compensation                      |                      |  |               |  |         |   | 11         |   |          |   |              |   |       |   |        |   |                   |   |       |   |  |   | 11      |        
|                                       
|                                       
|                                       
|                                       
|Acquisition of treasury stock           |                      |  |               |  |         |   |           |   |          |   | (317          | ) |       |   |        |   |                   |   |       |   |  |   | (317    | )      
|                                        |                      |  |               
|Balance, March 31, 2000                 |                      |  | 75             |  |         | $ | 25,371     |   |          | $ | (5,644        | ) |       | $ | 10,873  |   |                   | $ | (4,023 | ) |  | $ | 26,652  |        
|                                       
|                                       
|                                       
|                                       
|Net loss                                |                      |  |               |  |         |   |           |   |          |   |              |   |       |   | (5,786  | ) |                   |   |       |   |  |   | (5,786  | )      
|                                       
|                                       
|                                       
|                                       
|Minimum pension liability adjustment    |                      |  |               |  |         |   |           |   |          |   |              |   |       |   |        |   |                   |   | (1,982 | ) |  |   | (1,982  | )      
|                                       
|                                       
|                                       
|                                       
|Foreign currency translation adjustment |                      |  |               |  |         |   |           |   |          |   |              |   |       |   |        |   |                   |   | (1,441 | ) |  |   | (1,441  | )      
|                                        |                      |  |                |  |         |   |            |   |          |   |               |   |       |   |         |   |                   |   |        |   |  |   |         |        
|                                        | Comprehensive loss   |  |                |  |         |   |            |   |          |   |               |   |       |   |         |   |                   |   |        |   |  |   |         | (9,209  | )
|                                       
|                                       
|                                       
|                                       
|Cash dividends                          |                      |  |               |  |         |   |           |   |          |   |              |   |       |   | (958    | ) |                   |   |       |   |  |   | (958    | )      
|                                       
|                                       
|                                       
|                                       
|Stock compensation                      |                      |  |               |  |         |   | (69        | ) |          |   | 81            |   |       |   |        |   |                   |   |       |   |  |   | 12      |        
|                                        |                      |  |               
|Balance, March 31, 2001                 |                      |  | 75             |  |         | $ | 25,302     |   |          | $ | (5,563        | ) |       | $ | 4,129   |   |                   | $ | (7,446 | ) |  | $ | 16,497  |        
|                                        |                      |  |               

See notes to consolidated financial statements.

21



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##### Table of Contents






CONSOLIDATED STATEMENTS OF CASH FLOWS
Cold Metal Products, Inc. and Subsidiaries

|                                                  |                                                                                     |                                         |        |                      |        |      |       |          |        |   |        |          |        |   |  |  |  | 
|------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------- | ------ | -------------------- | ------ | ---- | ----- | -------- | ------ | - | ------ | -------- | ------ | - |  |  |  | 
|                                                  |                                                                                     |                                         |        | Year Ended March 31,
|                                                  |                                                                                     |                                         |        |                     
|                                                  |                                                                                     |                                         |        | 2001                 |        | 2000 |       | 1999    
|                                                  |                                                                                     |                                         |        |                     
|                                                  |                                                                                     |                                         |        | (In thousands)      
|                                                 
|Cash flows from operating activities:            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net (loss) income                                                                   |                                         | $      | (5,786               | )      |      | $     | 4,537    |        |   | $      | (10,079  | )     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Adjustments to reconcile net (loss) income to cash
provided by operating activities
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Depreciation and amortization           |        |                      | 3,823  |      |       |          | 3,429  |   |        |          | 4,459  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Special charges                         |        |                      | 1,236  |      |       |          |       |   |        |          | 3,064  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Foreign currency translation adjustment |        |                      | 97     |      |       |          |       |   |        |          | 1,149  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Loss (gain) on sales of assets          |        |                      | 67     |      |       |          | (136   | ) |        |          | 991    |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Deferred income taxes                   |        |                      | (3,785 | )    |       |          | 1,582  |   |        |          | (2,437 | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Deferred directors fees                |        |                      | 12     |      |       |          | 11     |   |        |          | 10     |  
|                                                  |                                                                                     |                                         |        |                     
|                                                  |                                                                                     |                                         | (4,336 | )                    |        |      | 9,423 |          |        |   | (2,843 | )       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Changes in operating assets and liabilities excluding assets acquired and sold:    
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Receivables                             |        |                      | 8,043  |      |       |          | (7,861 | ) |        |          | 3,845  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Inventories                             |        |                      | 7,445  |      |       |          | (3,748 | ) |        |          | 13,504 |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Prepaid and other assets                |        |                      | 2,918  |      |       |          | (598   | ) |        |          | (250   | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Accounts payable                        |        |                      | (9,311 | )    |       |          | 4,430  |   |        |          | (1,927 | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                                     | Accrued expenses and other liabilities  |        |                      | (3,579 | )    |       |          | (1,034 | ) |        |          | 1,904  |  
|                                                  |                                                                                     |                                         |        |                     
|                                                  | Net cash provided by operating activities                                           |                                         |        | 1,180                |        |      |       | 612      |        |   |        | 14,233   |       
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from investing activities:            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Additions to property, plant, and equipment                                         |                                         |        | (5,028               | )      |      |       | (3,007   | )      |   |        | (5,290   | )     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Acquisition of Alkar, net of cash acquired                                          |                                         |        | (137                 | )      |      |       | (13,939  | )      |   |        |         |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from sale of assets (principally Ontario service centers)                  |                                         |        |                     |        |      |       | 15,330   |        |   |        |         |       
|                                                  |                                                                                     |                                         |        |                     
|                                                  | Net cash used in investing activities                                               |                                         |        | (5,165               | )      |      |       | (1,616   | )      |   |        | (5,290   | )     
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from financing activities:            
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from revolving credit and term loan facility                               |                                         |        | 170,792              |        |      |       | 162,678  |        |   |        | 151,430  |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Payments of revolving credit and term loan facility                                 |                                         |        | (163,990             | )      |      |       | (159,618 | )      |   |        | (158,721 | )     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from other debt                                                            |                                         |        |                     |        |      |       | 2,075    |        |   |        |         |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Payments of other debt                                                              |                                         |        | (1,778               | )      |      |       | (1,535   | )      |   |        | (1,378   | )     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Payment of dividends                                                                |                                         |        | (958                 | )      |      |       | (638     | )      |   |        |         |       
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Acquisition of treasury stock                                                       |                                         |        |                     |        |      |       | (755     | )      |   |        | (962     | )     
|                                                  |                                                                                     |                                         |        |                     
|                                                  | Net cash provided by (used in) financing activities                                 |                                         |        | 4,066                |        |      |       | 2,207    |        |   |        | (9,631   | )     
|                                                 
|                                                 
|                                                 
|                                                 
|Net increase (decrease) in cash                   |                                                                                     |                                         | 81     |                      |        |      | 1,203 |          |        |   | (688   | )       
|                                                 
|                                                 
|                                                 
|                                                 
|Effect of exchange rate change on cash            |                                                                                     |                                         | (93    | )                    |        |      | (43   | )        |        |   | (53    | )       
|                                                 
|                                                 
|                                                 
|                                                 
|Cash at beginning of period                       |                                                                                     |                                         | 1,559  |                      |        |      | 399   |          |        |   | 1,140  |         
|                                                  |                                                                                     |                                         |        |                     
|Cash at end of period                             |                                                                                     | $                                       | 1,547  |                      |        | $    | 1,559 |          |        | $ | 399    |         
|                                                  |                                                                                     |                                         |        |                     
|Supplemental Disclosure of Cash Flow Information:
|                                                 
|                                                 
|                                                 
|                                                 
|Interest paid                                     |                                                                                     | $                                       | 4,908  |                      |        | $    | 3,444 |          |        | $ | 4,349  |         
|                                                  |                                                                                     |                                         |        |                     
|Income taxes (refunded) paid                      |                                                                                     | $                                       | (502   | )                    |        | $    | 156   |          |        | $ | 313    |         
|                                                  |                                                                                     |                                         |        |                     

See notes to consolidated financial statements.

22



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##### Table of Contents






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cold Metal Products, Inc. and Subsidiaries

---

1. Principles of Consolidation, Business Description and Accounting Policies

Consolidation and PresentationThe consolidated financial statements
include the accounts of the Company and its subsidiaries, Cold Metal Products,
Limited, a Canadian Company and Alkar Steel Corporation (Alkar), a Michigan
corporation. All significant intercompany transactions and accounts have been
eliminated.

Business DescriptionThe Company operates in one business segment, the
intermediate steel processing business, and processes strip and sheet steel to
meet the critical requirements of precision parts manufacturers. Through cold
rolling, annealing, normalizing, slitting, edge-conditioning,
oscillate-winding, and cutting-to-length, the Company provides value-added
products to manufacturers in the automotive, construction, cutting tools,
consumer goods, and industrial goods markets. The Company also supplies
specialty steel distributors. The Company derived revenues from customers in
the United States of approximately $155.1 million, $146.8 million, and $141.6
million in fiscal 2001, 2000 and 1999, respectively. The remainder of the
Companys revenues is related to customers in Canada.

During fiscal 2001, 2000 and 1999, approximately 45%, 38% and 38% of the
Companys sales, respectively, and 43% and 45% of accounts receivable at March 31,
2001 and 2000, respectively, were with companies in the automotive
industry. The balance of the Companys net sales was approximately equally
divided among the other markets served. One customer accounted for 12%, 14%
and 11% of sales in fiscal 2001, 2000 and 1999, respectively and 14% and 12% of
accounts receivable at March 31, 2001 and 2000, respectively. The Company
performs ongoing credit evaluations of its customers financial condition and
generally requires no collateral.

Production facilities are located in Youngstown and Ottawa, Ohio;
Indianapolis, Indiana; New Britain, Connecticut; Detroit, Michigan; Hamilton,
Ontario, Canada; and Pointe Claire, Quebec, Canada. The Company has
long-lived assets located in the United States of $64.9 million and $59.2
million at March 31, 2001 and 2000, respectively. The remainder of the
Companys long-lived assets is related to operations in Canada.

Financial InstrumentsThe Company has various financial instruments
including cash, receivables, short-term and long-term debt, and miscellaneous
other assets. The Company has determined that the estimated fair value of its
financial instruments approximates carrying value.

InventoriesInventories are valued at the lower of cost or market. Cost
of the parents domestic inventories is determined under the last-in, first-out
(LIFO) method; cost of inventories of the Alkar and Canadian subsidiaries is
determined on the first-in, first-out (FIFO) method. Domestic inventories
represent approximately 78% and 75% of total consolidated inventories at March 31,
2001 and 2000, respectively. Under the FIFO method of inventory pricing,
domestic inventories would have been approximately $.7 million and $2.3 million
higher at March 31, 2001 and 2000, respectively.

23



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##### Table of Contents



Property, Plant, and EquipmentProperty, plant, and equipment are stated
at cost. The Company provides for depreciation over the estimated useful lives
of the assets on the straight-line method for financial statement reporting and
an accelerated method for income tax reporting purposes. Estimated useful
lives range from five to thirty years. Interest is capitalized in connection
with the construction of qualified assets.

GoodwillGoodwill is amortized using the straight-line method over a
period of 20 years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through projected undiscounted cash flows. In
fiscal 1999, goodwill of $2.2 million was written off due to continued
operating losses experienced at one of the Companys Canadian service center
locations that was sold effective March 30, 1999.

Revenue RecognitionRevenue is recognized when products are shipped to
customers. Sales returns and allowances are treated as a reduction to sales
and are provided for based on historical experience and current estimates.

Stock Based CompensationThe Company accounts for its stock option plans
using the intrinsic value accounting method, measured as the difference between
the option exercise price and the market value of the stock at the measurement
date. Accordingly, no compensation expense has been recognized for its
stock-based compensation plans in the accompanying financial statements.

Earnings (Loss) Per ShareBasic earnings (loss) per share is computed
based upon the weighted average number of common shares outstanding during the
periods presented. Earnings per share assuming dilution gives effect to the
dilutive effect of outstanding stock options.

|                                                        |  |                      |        |      |  |      |       |  |  |   |         |   |  |  |  | 
|------------------------------------------------------- |  | -------------------- | ------ | ---- |  | ---- | ----- |  |  | - | ------- | - |  |  |  | 
|                                                        |  | Year Ended March 31,
|                                                        |  |                     
|                                                        |  | 2001                 |        | 2000 |  | 1999
|                                                        |  |                     
|                                                        |  | (In thousands)      
|                                                       
|Net (loss) income                                       |  | $                    | (5,786 | )    |  | $    | 4,537 |  |  | $ | (10,079 | )
|                                                        |  |                     
|Weighted average shares outstanding                     |  |                      | 6,395  |      |  |      | 6,409 |  |  |   | 6,986   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Net effect of dilutive stock options                    |  |                      |       |      |  |      | 36    |  |  |   |        |  
|                                                        |  |                     
|Weighted average shares outstanding  assuming dilution |  |                      | 6,395  |      |  |      | 6,445 |  |  |   | 6,986   |  
|                                                        |  |                     

EstimatesThe preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions pending completion of related events. These estimates and
assumptions affect the amounts reported at the date of the financial statements
for assets, liabilities, revenues and expenses and the disclosure of
contingencies. Actual results could differ from these estimates.

New Accounting StandardsThe Financial Accounting Standards Board has
issued Statement of Financial Accounting Standard (SFAS) No. 133, Accounting
for Derivative Instruments and Hedging Activities, effective for fiscal years
beginning after June 15, 2000. SFAS No. 133, as amended, establishes
accounting and reporting standards for derivative instruments,

24



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##### Table of Contents



including certain derivative instruments embedded in other contracts, and for
hedging activities. Under SFAS No. 133, certain contracts that were not
formerly considered derivatives may now meet the definition of a derivative.
The Company will adopt the standard effective April 1, 2001. Management does
not expect the adoption of SFAS No. 133 to have a significant impact on the
financial position, results of operations, or cash flows of the Company.

In September 2000, the Emerging Issues Task Force (EITF) of the
Financial Accounting Standards Board issued EITF 00-10, Accounting for Shipping
and Handling Fees and Costs, which became effective for the Company in the
fourth quarter of fiscal 2001. EITF 00-10 provides that all amounts billed to
a customer in a sale transaction related to shipping and handling should be
reported as revenue. The Company has complied with these recognition
principles for fiscal 2001 and reclassified earlier periods to conform to the
principles. This change has no effect on the dollar amount of the Companys
gross profit or net income.

ReclassificationsCertain reclassifications have been made to prior period
balances to conform to the fiscal 2001 presentation.

2. Acquisition

Effective March 31, 2000, the Company acquired all of the outstanding
stock of Alkar Steel Corporation, a privately-held metal service center located
in Detroit, Michigan for a purchase price of $14.1 million including debt of
$5.5 million that was paid at closing. The purchase price was funded under the
Companys existing credit facilities. The acquisition was accounted for as a
purchase and, accordingly, assets and liabilities were recorded at estimated
fair values. Amounts recorded for this transaction were as follows:

|                                                  |  |                |      |  |  |  |  | 
|------------------------------------------------- |  | -------------- | ---- |  |  |  |  | 
|                                                  |  | (In thousands)
|                                                  |  |               
|Current assets                                    |  | $              | 13.0 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Machinery and equipment                           |  |                | 0.6  | 
|                                                  |  |                |      | 
|Total tangible assets acquired                    |  |                | 13.6 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Liabilities assumed                               |  |                | 5.4  | 
|                                                  |  |                |      | 
|Net tangible assets acquired                      |  |                | 8.2  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Goodwill                                          |  |                | 5.9  | 
|                                                  |  |                |      | 
|Total purchase price, including acquisition costs |  | $              | 14.1 | 
|                                                  |  |                |      | 

The fiscal 2000 operating results do not include any amounts attributable
to the Alkar acquisition. Unaudited pro forma consolidated results of
operations assuming the acquisition had occurred on April 1, 1999 and giving
effect to certain adjustments based on the allocation of the purchase price
reflect net sales of $233.0 million, net income of $4.7 million, and basic net
earnings per share of $.73.The unaudited pro forma information does not
necessarily reflect the actual results that would have occurred nor is it
necessarily indicative of future results of operations of the combined
operations.

25



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##### Table of Contents



3. Special Charges

As part of its efforts to rationalize capacity with current market
conditions during the second half of fiscal 2001, the Company restructured its
manufacturing operations by adopting a plan to discontinue manufacturing at its
New Britain, Connecticut facility and reduce the size of its Hamilton, Ontario
facility workforce. These actions resulted in special charges totaling $2.2
million being recognized, including a $1.3 million equipment impairment charge
associated with operating assets in New Britain, and reduction in force costs
of $.9 million related to the termination of 43 salaried and hourly employees.
Additional employee termination benefits will be negotiated with certain hourly
employees as part of the New Britain closure, which is anticipated to be
completed in July 2001. These benefit costs will be recognized when
determinable and are not expected to be material to the Companys operations.
Substantially all of the aforementioned termination benefits are to be paid
during the first and second quarters of fiscal 2002.

In the third quarter of fiscal 1999, as a result of continued operating
losses experienced at the Concord, Ontario service center, the Company
recognized special pretax charges of $2.2 million for impairment of goodwill,
and $0.9 million for machinery and equipment to adjust the assets to their
estimated realizable market value. Subsequently in the fourth quarter of
fiscal 1999, the Company completed the sale of both its Concord and Hamilton,
Ontario steel service center operations for $14.6 million in cash, which was
received in April 1999, and a $1.0 million subordinated note, which was
collected in fiscal 2000. The sale resulted in a pre-tax loss of $1.0 million,
primarily due to the costs of the transaction. Also, in the fourth quarter of
fiscal 1999, the Company initiated a restructuring plan to align its operations
with the then current market conditions, improve the productivity of its
operations, and create a more efficient organizational structure. In
conjunction with the plan, the Company recorded a pretax charge of $2.5 million
in the fourth quarter of fiscal 1999 comprised of severance and other
employment related costs resulting from a reduction of approximately 70
employees. Payments of approximately $2.5 million were completed in fiscal
2000.

26



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##### Table of Contents



4. Other Balance Sheet Information

|                                  |                                       |   |                |        |      |   |        |        |   |  |  |  | 
|--------------------------------- | ------------------------------------- | - | -------------- | ------ | ---- | - | ------ | ------ | - |  |  |  | 
|                                  |                                       |   | March 31,     
|                                  |                                       |   |               
|                                  |                                       |   | 2001           |        | 2000
|                                  |                                       |   |               
|                                  |                                       |   | (In thousands)
|                                 
|Receivables:                     
|                                 
|                                 
|                                 
|                                 
|                                  | Receivables                           |   | $              | 26,859 |      |   | $      | 35,417 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Less reserves and allowances          |   |                | (1,620 | )    |   |        | (1,465 | )
|                                  |                                       |   |               
|                                  |                                       | $ | 25,239         |        |      | $ | 33,952 |       
|                                  |                                       |   |               
|Inventories:                     
|                                 
|                                 
|                                 
|                                 
|                                  | Raw materials                         |   | $              | 16,228 |      |   | $      | 21,257 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Work in process                       |   |                | 10,174 |      |   |        | 14,527 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Finished goods                        |   |                | 8,034  |      |   |        | 6,900  |  
|                                  |                                       |   |               
|                                  |                                       | $ | 34,436         |        |      | $ | 42,684 |       
|                                  |                                       |   |               
|Prepaid and other current assets:
|                                 
|                                 
|                                 
|                                 
|                                  | Prepaid expenses                      |   | $              | 599    |      |   | $      | 769    |  
|                                 
|                                 
|                                 
|                                 
|                                  | Taxes receivable                      |   |                | 629    |      |   |        | 2,062  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Deferred income taxes                 |   |                | 2,069  |      |   |        | 1,401  |  
|                                  |                                       |   |               
|                                  |                                       | $ | 3,297          |        |      | $ | 4,232  |       
|                                  |                                       |   |               
|Property, plant and equipment:   
|                                 
|                                 
|                                 
|                                 
|                                  | Land                                  |   | $              | 1,556  |      |   | $      | 1,604  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Buildings                             |   |                | 15,300 |      |   |        | 14,209 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Machinery and equipment               |   |                | 61,810 |      |   |        | 59,223 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Construction in process               |   |                | 721    |      |   |        | 3,222  |  
|                                  |                                       |   |               
|                                  |                                       | $ | 79,387         |        |      | $ | 78,258 |       
|                                  |                                       |   |               
|Other non-current assets:        
|                                 
|                                 
|                                 
|                                 
|                                  | Deferred income taxes                 |   | $              | 8,672  |      |   | $      | 4,340  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Goodwill                              |   |                | 5,561  |      |   |        | 5,985  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Pension                               |   |                | 3,370  |      |   |        | 3,585  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Other                                 |   |                | 705    |      |   |        | 783    |  
|                                  |                                       |   |               
|                                  |                                       | $ | 18,308         |        |      | $ | 14,693 |       
|                                  |                                       |   |               
|Other current liabilities:       
|                                 
|                                 
|                                 
|                                 
|                                  | Payroll and related employee benefits |   | $              | 5,902  |      |   | $      | 6,975  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Income taxes                          |   |                | 359    |      |   |        | 1,556  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Other                                 |   |                | 2,104  |      |   |        | 1,928  |  
|                                  |                                       |   |               
|                                  |                                       | $ | 8,365          |        |      | $ | 10,459 |       
|                                  |                                       |   |               

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##### Table of Contents



5. Debt

|                   |  |                |       |           |  |      |       |      |  |   |        |  |  |   |        |  |  |  |  | 
|------------------ |  | -------------- | ----- | --------- |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ |  |  |  |  | 
|                   |  | Short-Term     |       | Long-Term
|                   |  |                |       |          
|                   |  | March 31,      |       | March 31,
|                   |  |                |       |          
|                   |  | 2001           |       | 2000      |  | 2001 |       | 2000
|                   |  |               
|                   |  | (In thousands)
|Committed facility |  | $              | 2,880 |           |  | $    | 4,778 |      |  | $ | 43,700 |  |  | $ | 35,000 | 
|                  
|                  
|                  
|                  
|Term note          |  |                | 1,789 |           |  |      | 1,640 |      |  |   | 13,928 |  |  |   | 15,716 | 
|                  
|                  
|                  
|                  
|Lease financing    |  |                | 149   |           |  |      | 138   |      |  |   | 1,755  |  |  |   | 1,905  | 
|                   |  |               
|Total              |  | $              | 4,818 |           |  | $    | 6,556 |      |  | $ | 59,383 |  |  | $ | 52,621 | 
|                   |  |               

The Company has a committed revolving and term loan credit facility that
provides availability up to a maximum of $70.0 million, based on a percentage
of accounts receivable and inventory. At March 31, 2001, unused availability
was $10.9 million. During fiscal 2001, the facility was amended to provide for
up to $10 million additional borrowings to finance capital expenditures of
which $1.9 million was advanced and outstanding at March 31, 2001, and to
extend the term through April 2004. Under the committed facility, the Company
has determined that $2.9 million would be subject to repayment with funds
generated from operating activities during the coming fiscal year. As such,
these funds are reflected as short-term in nature. The weighted average
interest rate at March 31, 2001 and 2000 was 6.1% and 7.5%, respectively. The
facility is collateralized by accounts receivable, inventory, common stock and
preferred stock of the Canadian subsidiary, the common stock of Alkar and
property, plant and equipment. As of March 31, 2001, the credit line supported
letters of credit in the amount of $.4 million.

In December 1996, the Company borrowed $21.8 million under an eight and
one-half year term loan at a fixed rate of 8.8% secured by the property, plant
and equipment of its expanded Ottawa, Ohio facility. At March 31, 2001,
approximately $15.7 million of the term loan was outstanding. The scheduled
maturities of the term loan are as follows: 2002  $1.8 million; 2003  $2.0
million; 2004  $2.1 million; 2005  $2.3 million and $7.5 million thereafter.

In December 1999, the Company completed a sale/leaseback transaction for a
new slitter project at the Companys Indianapolis plant. The $2.1 million
transaction has been accounted for as a financing lease. As of March 31, 2001,
approximately $1.9 million was outstanding. The lease has a seven-year term
and scheduled maturities are as follows: $.1 million in fiscal 2002, $.2
million in fiscal 2003 and 2004, $.3 million in fiscal 2005 and 2006, and $.8
million in fiscal 2007.

At March 31, 2001, the Company was in non-compliance with certain
financial ratios in its revolving credit and term loan agreements pertaining to
minimum net worth and financial leverage measurements. Subsequently, the
lenders have waived the events of non-compliance and amended the financial
covenants in each agreement to levels that management believes attainable in
the future. The revolving credit agreement was further amended to increase the
interest rate to LIBOR plus 1.5 %, subject to interest reductions of up to .5%
if future operating results are obtained.

28



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##### Table of Contents



6. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, operating loss and
capital loss carryforwards, and tax credit carryforwards. Components of the
Companys deferred tax assets and liabilities are as follows:

|                          |                                                           |   |                |        |      |   |        |        |   |  |  |  | 
|------------------------- | --------------------------------------------------------- | - | -------------- | ------ | ---- | - | ------ | ------ | - |  |  |  | 
|                          |                                                           |   | March 31,     
|                          |                                                           |   |               
|                          |                                                           |   | 2001           |        | 2000
|                          |                                                           |   |               
|                          |                                                           |   | (In thousands)
|                         
|Deferred tax assets:     
|                         
|                         
|                         
|                         
|                          | Postretirement and postemployment benefit obligations     |   | $              | 5,505  |      |   | $      | 5,636  |  
|                         
|                         
|                         
|                         
|                          | Inventory basis differences                               |   |                | 649    |      |   |        | 201    |  
|                         
|                         
|                         
|                         
|                          | Reserves not currently deductible                         |   |                | 1,499  |      |   |        | 1,228  |  
|                         
|                         
|                         
|                         
|                          | Minimum pension obligation                                |   |                | 1,215  |      |   |        |       |  
|                         
|                         
|                         
|                         
|                          | Tax operating loss carryforwards (expire 2012-2021)       |   |                | 8,330  |      |   |        | 4,933  |  
|                         
|                         
|                         
|                         
|                          | Tax capital loss carryforwards                            |   |                | 775    |      |   |        | 728    |  
|                         
|                         
|                         
|                         
|                          | Tax credit carryforwards (expire 2003-2006 and unlimited) |   |                | 523    |      |   |        | 580    |  
|                          |                                                           |   |               
|                          |                                                           |   | 18,496         |        |      |   | 13,306 |       
|                         
|                         
|                         
|                         
|                          | Valuation allowance                                       |   |                | (1,175 | )    |   |        | (1,111 | )
|                          |                                                           |   |               
|                          |                                                           |   | 17,321         |        |      |   | 12,195 |       
|                         
|                         
|                         
|                         
|Deferred tax liabilities:
|                         
|                         
|                         
|                         
|                          | Property, plant and equipment basis differences           |   |                | (5,254 | )    |   |        | (5,057 | )
|                         
|                         
|                         
|                         
|                          | Pension asset                                             |   |                | (1,326 | )    |   |        | (1,397 | )
|                          |                                                           |   |               
|Net deferred tax asset    |                                                           | $ | 10,741         |        |      | $ | 5,741  |       
|                          |                                                           |   |               

The provision (benefit) for income taxes includes:

|                |                                 |   |                      |        |      |   |       |       |  |   |        |        |   | 
|--------------- | ------------------------------- | - | -------------------- | ------ | ---- | - | ----- | ----- |  | - | ------ | ------ | - | 
|                |                                 |   | Year Ended March 31,
|                |                                 |   |                     
|                |                                 |   | 2001                 |        | 2000 |   | 1999 
|                |                                 |   |                     
|                |                                 |   | (In thousands)      
|               
|Current taxes: 
|               
|               
|               
|               
|                | U.S. federal                    |   | $                    | 33     |      |   | $     |      |  |   | $      |       |  
|               
|               
|               
|               
|                | Canadian federal and provincial |   |                      | (145   | )    |   |       | 1,246 |  |   |        | (1,569 | )
|               
|               
|               
|               
|                | State and local                 |   |                      | (4     | )    |   |       | 3     |  |   |        | 9      |  
|                |                                 |   |                     
|                |                                 |   | (116                 | )      |      |   | 1,249 |       |  |   | (1,560 | )     
|               
|               
|               
|               
|Deferred taxes:
|               
|               
|               
|               
|                | U.S.                            |   |                      | (3,674 | )    |   |       | 533   |  |   |        | (1,693 | )
|               
|               
|               
|               
|                | Canadian                        |   |                      | (111   | )    |   |       | 1,049 |  |   |        | (744   | )
|                |                                 |   |                     
|                |                                 |   | (3,785               | )      |      |   | 1,582 |       |  |   | (2,437 | )     
|                |                                 |   |                     
|Total           |                                 | $ | (3,901               | )      |      | $ | 2,831 |       |  | $ | (3,997 | )     
|                |                                 |   |                     

29



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##### Table of Contents



Reconciliations of the U.S. federal statutory tax rate to the
effective tax rate are as follows:

|                                 |  |                      |      |      |  |      |      |   |  |  |      |   |  |  |  | 
|-------------------------------- |  | -------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | - |  |  |  | 
|                                 |  | Year Ended March 31,
|                                 |  |                     
|                                 |  | 2001                 |      | 2000 |  | 1999
|                                 |  |                     
|U. S. federal statutory tax rate |  |                      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|                                
|                                
|                                
|                                
|Effect of graduated rates        |  |                      | (1.0 | )    |  |      | (1.0 | ) |  |  | (1.0 | )
|                                
|                                
|                                
|                                
|Effect of Canadian rates         |  |                      |     |      |  |      | 1.9  |   |  |  | 1.5  |  
|                                
|                                
|                                
|                                
|Canadian income tax recoveries   |  |                      | 2.8  |      |  |      |     |   |  |  |     |  
|                                
|                                
|                                
|                                
|State taxes                      |  |                      | 3.5  |      |  |      | 0.7  |   |  |  | 1.1  |  
|                                
|                                
|                                
|                                
|Goodwill                         |  |                      |     |      |  |      |     |   |  |  | (5.8 | )
|                                
|                                
|                                
|                                
|Other permanent differences      |  |                      | (0.5 | )    |  |      | 0.6  |   |  |  | (3.2 | )
|                                
|                                
|                                
|                                
|Change in valuation allowance    |  |                      | (0.6 | )    |  |      |     |   |  |  | 2.2  |  
|                                
|                                
|                                
|                                
|Other                            |  |                      | 1.1  |      |  |      | 1.2  |   |  |  | (1.4 | )
|                                 |  |                     
|Effective tax rate               |  |                      | 40.3 | %    |  |      | 38.4 | % |  |  | 28.4 | %
|                                 |  |                     

7. Employee Benefit Plans

The Company has various pension plans covering substantially all of its
employees. The Companys hourly employees and domestic salaried employees are
covered by noncontributory retirement benefit plans. These plans generally
provide benefits based upon a formula using employees fiscal average earnings
or at a stated amount for each year of service. The plans assets are
principally invested by outside asset managers in marketable debt and equity
securities. The Companys funding policy is to make actuarially determined
annual contributions to provide the plans with sufficient assets to meet future
benefit payments consistent with the funding requirements of applicable
regulations. The Canadian subsidiary has a defined contribution pension plan
covering its salaried employees. The Companys contributions to the defined
contribution pension plan include a noncontributory portion, which is a stated
percentage of salary, and a contributory portion, where the Company matches the
employees contribution 100% up to 5% of their salary. The Company also
contributes to a domestic multi-employer plan under a collective bargaining
agreement, accruing such costs as incurred and funding such costs on a monthly
basis.

Certain health care and life insurance benefits are provided for eligible
retirees through an unfunded defined benefit plan. The extent of benefits
provided is dependent upon the retirees years of service, age and retirement
date.

Certain curtailment and special termination benefits were recognized in
fiscal 1999 under these employee benefit plans in connection with a reduction
in workforce.

30



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##### Table of Contents



The following tables summarize the change in benefit obligations, plan
assets, funded status, and net periodic benefit costs of the Companys pension
and postretirement benefits plans:

|                                                                                             |  |                  |        |                               |  |      |        |      |  |   |         |   |  |   |         |   | 
|-------------------------------------------------------------------------------------------- |  | ---------------- | ------ | ----------------------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | - | 
|                                                                                             |  | Pension Benefits |        | Other Postretirement Benefits
|                                                                                             |  |                  |        |                              
|                                                                                             |  | March 31,       
|                                                                                             |  |                 
|                                                                                             |  | 2001             |        | 2000                          |  | 2001 |        | 2000
|                                                                                             |  |                 
|                                                                                             |  | (In thousands)  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Change in benefit obligation                                                                
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Benefits obligation at beginning of year                                                     |  | $                | 33,986 |                               |  | $    | 33,097 |      |  | $ | 13,474  |   |  | $ | 13,489  |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Service cost                                                                                 |  |                  | 901    |                               |  |      | 990    |      |  |   | 177     |   |  |   | 192     |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Interest cost                                                                                |  |                  | 2,509  |                               |  |      | 2,239  |      |  |   | 920     |   |  |   | 882     |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Amendments                                                                                   |  |                  | 356    |                               |  |      | 659    |      |  |   |        |   |  |   | 40      |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Actuarial (gain) loss                                                                        |  |                  | 2,351  |                               |  |      | (1,324 | )    |  |   | (243    | ) |  |   | (187    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Benefits paid                                                                                |  |                  | (2,048 | )                             |  |      | (1,798 | )    |  |   | (928    | ) |  |   | (960    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Foreign currency exchange rates                                                              |  |                  | (447   | )                             |  |      | 123    |      |  |   | (63     | ) |  |   | 18      |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Benefit obligation at end of year                                                            |  |                  | 37,608 |                               |  |      | 33,986 |      |  |   | 13,337  |   |  |   | 13,474  |  
|                                                                                            
|Change in plan assets                                                                       
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Fair value of plan assets at
beginning of year                                               |  |                  | 39,183 |                               |  |      | 34,072 |      |  |   |        |   |  |   |        |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Actual return on plan assets                                                                 |  |                  | (4,075 | )                             |  |      | 5,739  |      |  |   |        |   |  |   |        |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Employer contribution                                                                        |  |                  | 393    |                               |  |      | 1,017  |      |  |   | 928     |   |  |   | 960     |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Benefits paid                                                                                |  |                  | (2,048 | )                             |  |      | (1,798 | )    |  |   | (928    | ) |  |   | (960    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Foreign currency exchange rates                                                              |  |                  | (564   | )                             |  |      | 153    |      |  |   |        |   |  |   |        |  
|                                                                                             |  |                 
|Fair value of plan assets at end of year                                                     |  |                  | 32,889 |                               |  |      | 39,183 |      |  |   |        |   |  |   |        |  
|                                                                                            
|Reconciliation of funded status at
end of year                                              
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Plan assets in excess of (less than) benefit
obligation  domestic plans                     |  |                  | (4,814 | )                             |  |      | 4,359  |      |  |   | (12,618 | ) |  |   | (12,762 | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Plan assets in excess of (less than) benefit
obligation  Canadian plan                      |  |                  | 95     |                               |  |      | 838    |      |  |   | (719    | ) |  |   | (712    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Unrecognized net actuarial (gain) loss                                                       |  |                  | 5,165  |                               |  |      | (4,665 | )    |  |   | (571    | ) |  |   | (172    | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Unrecognized prior service cost                                                              |  |                  | 2,739  |                               |  |      | 2,766  |      |  |   | (768    | ) |  |   | (1,434  | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Unrecognized initial net obligation                                                          |  |                  | 205    |                               |  |      | 287    |      |  |   |        |   |  |   |        |  
|                                                                                             |  |                 
|Prepaid (accrued) benefit cost                                                               |  | $                | 3,390  |                               |  | $    | 3,585  |      |  | $ | (14,676 | ) |  | $ | (15,080 | )
|                                                                                             |  |                 
|                                                                                            
|Amounts recognized in Consolidated Balance Sheets                                           
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Prepaid benefit cost                                                                         |  | $                | 2,275  |                               |  | $    | 3,585  |      |  |   |        |   |  |   |        |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Intangible asset                                                                             |  |                  | 1,095  |                               |  |      |       |      |  |   |        |   |  |   |        |  
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Accrued benefit liabilities                                                                  |  |                  | (3,177 | )                             |  |      |       |      |  | $ | (14,676 | ) |  | $ | (15,080 | )
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Accumulated other comprehensive income (tax
effect of $1,215 is recorded as long term
asset) |  |                  | 3,197  |                               |  |      |       |      |  |   |        |   |  |   |        |  
|                                                                                             |  |                 
|Total                                                                                        |  | $                | 3,390  |                               |  | $    | 3,585  |      |  | $ | (14,676 | ) |  | $ | (15,080 | )
|                                                                                             |  |                 

31



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|                                                    |  |                                                    |              |      |  |      |              |  |  |  |              |  |  |  |  | 
|--------------------------------------------------- |  | -------------------------------------------------- | ------------ | ---- |  | ---- | ------------ |  |  |  | ------------ |  |  |  |  | 
|                                                    |  | Pension Benefits and Other Postretirement Benefits
|                                                    |  | Year Ended March 31,                              
|                                                    |  |                                                   
|                                                    |  | 2001                                               |              | 2000 |  | 1999
|                                                    |  |                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|Weighted average assumptions:                      
|                                                   
|                                                   
|                                                   
|                                                   
|Pension Benefits                                   
|                                                   
|                                                   
|                                                   
|                                                   
|Discount rate  U.S.                                |  |                                                    | 7.25%        |      |  |      | 7.50%        |  |  |  | 6.75%        | 
|                                                   
|                                                   
|                                                   
|                                                   
|Discount rate  Canada                              |  |                                                    | 7.00%        |      |  |      | 7.50%        |  |  |  | 6.75%        | 
|                                                   
|                                                   
|                                                   
|                                                   
|Expected return on plan assets                      |  |                                                    | 7.50  9.00% |      |  |      | 7.00  8.50% |  |  |  | 7.00  8.50% | 
|                                                   
|                                                   
|                                                   
|                                                   
|Rate of compensation increase  domestic plans only |  |                                                    | 5.00%        |      |  |      | 5.00%        |  |  |  | 5.00%        | 
|                                                   
|Postretirement Benefits                            
|                                                   
|                                                   
|                                                   
|                                                   
|Discount rate                                       |  |                                                    | 7.25%        |      |  |      | 7.50%        |  |  |  | 6.75%        | 

For measurement purposes, an 8.5% annual rate of increase in the per
capita costs of covered domestic health care benefits for pre-age 65 payments
(6.5% for post-age 65 payments) was assumed for fiscal 2001. The rate was
assumed to decrease gradually to 5.5% in 2007 for pre-age 65 payments and in
2003 for post-age 65 payments and remain at that level thereafter. In Canada,
a 7.8% annual rate of increase in the per capita cost of covered health care
benefits for pre-65 payments was assumed for fiscal 2001. The rate was assumed
to decrease gradually to 4.5% by 2005 and remain at that level thereafter.

|                                                      |  |                      |        |                               |  |      |        |      |  |      |        |      |  |   |      |   |  |   |      |   |  |   |      |   | 
|----------------------------------------------------- |  | -------------------- | ------ | ----------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ---- | - |  | - | ---- | - |  | - | ---- | - | 
|                                                      |  | Pension Benefits     |        | Other Postretirement Benefits
|                                                      |  |                      |        |                              
|                                                      |  | Year Ended March 31,
|                                                      |  |                     
|                                                      |  | 2001                 |        | 2000                          |  | 1999 |        | 2001 |  | 2000 |        | 1999
|                                                      |  |                     
|                                                      |  | (In thousands)      
|                                                     
|                                                     
|                                                     
|                                                     
|Components of net periodic
benefit cost              
|                                                     
|                                                     
|                                                     
|                                                     
|Service cost                                          |  | $                    | 901    |                               |  | $    | 990    |      |  | $    | 1,164  |      |  | $ | 177  |   |  | $ | 192  |   |  | $ | 186  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Interest cost                                         |  |                      | 2,509  |                               |  |      | 2,239  |      |  |      | 2,126  |      |  |   | 920  |   |  |   | 882  |   |  |   | 845  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Expected return on plan assets                        |  |                      | (3,199 | )                             |  |      | (2,759 | )    |  |      | (2,604 | )    |  |   |     |   |  |   |     |   |  |   |     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Amortization of prior service cost                    |  |                      | 261    |                               |  |      | 231    |      |  |      | 201    |      |  |   | (549 | ) |  |   | (561 | ) |  |   | (564 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Amortization of initial net obligation                |  |                      | 74     |                               |  |      | 74     |      |  |      | 74     |      |  |   |     |   |  |   |     |   |  |   |     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Recognized net actuarial (gain) loss                  |  |                      | (157   | )                             |  |      | 46     |      |  |      | 25     |      |  |   | 12   |   |  |   | 16   |   |  |   |     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Curtailment (gain) loss                               |  |                      |       |                               |  |      |       |      |  |      | (379   | )    |  |   |     |   |  |   |     |   |  |   | 286  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Cost of special termination benefits                  |  |                      |       |                               |  |      |       |      |  |      | 537    |      |  |   |     |   |  |   |     |   |  |   | 104  |  
|                                                      |  |                     
|Net periodic benefit cost  defined
benefit plans     |  |                      | 389    |                               |  |      | 821    |      |  |      | 1,144  |      |  |   | 560  |   |  |   | 529  |   |  |   | 857  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Net periodic benefit cost 
multi-employer plan       |  |                      | 88     |                               |  |      | 96     |      |  |      | 55     |      |  |   |     |   |  |   |     |   |  |   |     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Net periodic benefit cost  defined
contribution plan |  |                      | 184    |                               |  |      | 188    |      |  |      | 268    |      |  |   |     |   |  |   |     |   |  |   |     |  
|                                                      |  |                     
|Net periodic benefit cost                             |  | $                    | 661    |                               |  | $    | 1,105  |      |  | $    | 1,467  |      |  | $ | 560  |   |  | $ | 529  |   |  | $ | 857  |  
|                                                      |  |                     

Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects on
postretirement benefits:

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##### Table of Contents



|                                             |  |                             |     |                             |  |      |     |      |  |   |      |   |  |   |      |  
|-------------------------------------------- |  | --------------------------- | --- | --------------------------- |  | ---- | --- | ---- |  | - | ---- | - |  | - | ---- | -
|                                             |  | 1-Percentage-Point Increase |     | 1-Percentage-Point Decrease
|                                             |  |                             |     |                            
|                                             |  | 2001                        |     | 2000                        |  | 2001 |     | 2000
|                                             |  |                            
|                                             |  | (In thousands)             
|Effect on total of service and interest
cost |  | $                           | 24  |                             |  | $    | 26  |      |  | $ | (21  | ) |  | $ | (23  | )
|                                            
|                                            
|                                            
|                                            
|Effect on postretirement benefit
obligation  |  | $                           | 244 |                             |  | $    | 282 |      |  | $ | (217 | ) |  | $ | (252 | )

Domestic employees are eligible to participate in savings plans, which
include a 401(k) feature. The Company matches employee contributions 50% to
100%, in ranges of 3% to 6% of basic earnings. Employees vest in matching
contributions after attaining three years of service. Company matching
contributions to the savings plans were $.7 million, $.6 million and $.6
million for each of fiscal 2001, 2000 and 1999, respectively.

In fiscal 1999, the Company established a supplemental executive
retirement plan for its former Chairman of the Board, one of the principal
shareholders of the Company. Funding of the plan by the Company resulted in a
pretax charge of $.5 million during fiscal 1999, not reflected in the tables
above. The benefit is to be paid over a fifteen-year period, but while the
former chairman continues to serve as Chairman of the Executive Committee of
the Companys Board of Directors, the Company and he have agreed to defer the
commencement of the benefit, no portion of which was paid in fiscal 2001 or
fiscal 2000.

8. Management Incentive Programs

The Company has programs that provide for the grant of incentive awards
including stock options or restricted stock to officers, key employees, and
non-employee directors. Under the officer and key employee stock option
program, the total common stock shares issuable are 715,350 shares. Stock
options granted may be either options intended to qualify for federal income
tax purposes as incentive stock options or options not qualifying for
favorable tax treatment, nonqualified stock options. The stock options are
exercisable over a period determined by the Board of Directors, with the
majority of options granted to date vesting at three years. In no case are
options exercisable longer than ten years after the date they are granted.

The Companys Non-Employee Directors Incentive Plan provides for the
issuance of shares to Directors (i) on a deferred basis, in lieu of payment of
annual retainer fees and (ii) through options granted at the beginning of a
directors term or, on a discretionary basis, thereafter. The plan reserves for
issuance 60,000 shares for deferral elections and 100,000 shares for the
granting of options that are exercisable at a price equal to the market price
on the date of the grant, for a period no longer than ten years after grant, or
upon certain specified events, such as a sale or merger of the Company. Options
grantable on a discretionary basis under the plan are exercisable no less than
six months from the date of the grant. Deferral elections under the plan allow
eligible directors to defer receipt of director fees in cash or common stock
until a specified period after his or her resignation or certain other events,
such as a sale or merger of the Company. Amounts deferred under this election
were 2,883 shares in fiscal 2001, 5,517 shares in fiscal 2000, and 2,119 shares
in fiscal 1999. A total of 16,991 shares were issued in fiscal 2001 upon the
resignation of one of the directors. Total deferred shares outstanding at March
31, 2001 including effects of dividend reinvestment were 7,700 shares.

A summary of the status of the Companys incentive stock options as of
March 31, 2001, 2000 and 1999 and changes during the years ending on those
dates is presented below:

33



---



##### Table of Contents



|                                                               |  |        |         |                |  |                  |      |                |  |        |         |                  |  |   |      |  |  |                  |         |   |  |   |      | 
|-------------------------------------------------------------- |  | ------ | ------- | -------------- |  | ---------------- | ---- | -------------- |  | ------ | ------- | ---------------- |  | - | ---- |  |  | ---------------- | ------- | - |  | - | ---- | 
|                                                               |  | 2001   |         | 2000           |  | 1999            
|                                                               |  |       
|                                                               |  |        |         |                |  | Weighted-Average |      |                |  |        |         | Weighted-Average |  |   |      |  |  | Weighted-Average
|                                                               |  | Shares |         | Exercise Price |  | Shares           |      | Exercise Price |  | Shares |         | Exercise Price  
|                                                               |  |       
|                                                              
|                                                              
|                                                              
|                                                              
|Outstanding at beginning of year                               |  |        | 642,500 |                |  | $                | 6.25 |                |  |        | 635,000 |                  |  | $ | 6.39 |  |  |                  | 472,500 |   |  | $ | 8.00 | 
|                                                              
|                                                              
|                                                              
|                                                              
|Granted                                                        |  |        |        |                |  |                  |     |                |  |        | 40,000  |                  |  |   | 3.16 |  |  |                  | 200,000 |   |  |   | 3.00 | 
|                                                              
|                                                              
|                                                              
|                                                              
|Exercised                                                      |  |        |        |                |  |                  |     |                |  |        |        |                  |  |   |     |  |  |                  |        |   |  |   |     | 
|                                                              
|                                                              
|                                                              
|                                                              
|Forfeited                                                      |  |        |        |                |  |                  |     |                |  |        | (32,500 | )                |  |   | 5.02 |  |  |                  | (37,500 | ) |  |   | 8.58 | 
|                                                               |  |        |         |                |  |                  |      |                |  |        |         |                  |  |   |      |  |  |                  |         |  
|Outstanding at end of year                                     |  |        | 642,500 |                |  |                  | 6.25 |                |  |        | 642,500 |                  |  |   | 6.25 |  |  |                  | 635,000 |   |  |   | 6.39 | 
|                                                               |  |        |         |                |  |                  |      |                |  |        |         |                  |  |   |      |  |  |                  |         |  
|Options exercisable at year-end                                |  |        | 555,833 |                |  |                  | 6.77 |                |  |        | 489,167 |                  |  |   | 7.29 |  |  |                  | 412,500 |   |  |   | 8.03 | 
|                                                               |  |        |         |                |  |                  |      |                |  |        |         |                  |  |   |      |  |  |                  |         |  
|Weighted-average fair value of
options granted during the year |  |        |         |                |  | $                |     |                |  |        |         |                  |  | $ | 0.48 |  |  |                  |         |   |  | $ | 0.91 | 

The following table summarizes information about incentive stock options
outstanding as of March 31, 2001:

|                  |  |                     |         |                     |  |                  |           |                  |  |                |      |  |  |                  |         |  |  |   |      | 
|----------------- |  | ------------------- | ------- | ------------------- |  | ---------------- | --------- | ---------------- |  | -------------- | ---- |  |  | ---------------- | ------- |  |  | - | ---- | 
|                  |  | Options Outstanding |         | Options Exercisable
|                  |  |                     |         |                    
|                  |  |                     |         |                     |  | Weighted-Average
|Range of Exercise |  |                     |         |                     |  | Remaining        |           | Weighted-Average |  |                |      |  |  | Weighted-Average
|Prices            |  | Number              |         | Contractual Life    |  | Exercise Price   |           | Number           |  | Exercise Price
|                 
|$2.69$3.00       |  |                     | 220,000 |                     |  |                  | 7.6 years |                  |  | $              | 2.97 |  |  |                  | 133,333 |  |  | $ | 3.00 | 
|                 
|                 
|                 
|                 
|$5.75$10.00      |  |                     | 422,500 |                     |  |                  | 3.4 years |                  |  | $              | 7.96 |  |  |                  | 422,500 |  |  | $ | 7.96 | 

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 used for grants in 2000 and 1999, respectively:
dividend yield of 6.0 percent for fiscal 2000 and 1999; expected volatility of
39% and 34%; risk-free interest rates of 6.75% and 6.0%; and weighted-average
expected life of 3 years for both years.

In fiscal 2000 and 1999, non-qualified stock option grants of 100,000 and
200,000, respectively, were granted at $3.19 and $3.00 per share, respectively,
in connection with the commencement of the employment of certain executive
employees. The exercise price is equal to the fair market value on the date of
the grant and the grant is subject to certain provisions relating to exercise
applicable on changes in control of the Company, termination of employment, and
on other terms and conditions comparable to the terms of the Companys employee
incentive stock option program. As of March 31, 2001, approximately 233,000 of
these options were exercisable at a weighted-average exercise price of $3.08.
The weighted-average fair value of these options granted in fiscal 2000 and
1999 (based on the assumptions used above) was $.62 per share and $.91 per
share, respectively.

As permitted by SFAS No. 123, the Company has continued to use the
intrinsic value method of measuring stock based compensation. If compensation
costs had been determined based on the fair value of the awards at the grant
date there would not have been a material impact on the Companys reported
amount of net income or loss or net earnings or loss per share.

34



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##### Table of Contents



9. Shareholders Equity

Under a stock repurchase program authorized by the Companys Board of
Directors, the Company purchased 165,000 shares of treasury stock in fiscal
2000 for a total of $.3 million, resulting in an aggregate purchase of treasury
shares of $3.0 million which is the maximum amount permitted by the Companys
current financing agreements. In fiscal 1999, 100,000 shares of treasury stock
were purchased in the open market for a total of $.3 million.

Pursuant to special agreements with former officers, the Company also
purchased an additional 233,700 shares of stock at a price of $.6 million in
fiscal 2000, and 208,050 shares of stock in fiscal 1999 for an aggregate
purchase price of $.9 million. The Company recorded a $.4 million charge in
fiscal 1999 in connection with these special agreements, which was related to
the excess of the purchase price over the fair market value of the stock.

10. Commitments and Contingencies

The Company leases certain facilities and various equipment under
noncancelable leases that expire through March 2006. The future minimum
obligations under noncancelable operating leases in effect at March 31, 2001
are: $.9 million in fiscal 2002, $.5 million in fiscal 2003, 2004 and 2005,
$.4 million in fiscal 2006 and an immaterial amount thereafter. Total rental
expense for operating leases was $.9 million, $.4 million and $.5 million in
fiscal 2001, 2000 and 1999, respectively. The Company leases a building at its
Alkar subsidiary from one of its officers for $.3 million per year through
fiscal 2003.

Certain claims, suits, and complaints arising in the ordinary course of
business have been filed or are pending against the Company. In the opinion of
management, none of these claims, suits or complaints is material and in the
aggregate will not have a material adverse effect on the Companys results of
operations or financial condition.

35



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##### Table of Contents



11. Quarterly Financial Data (unaudited)

The following tables set forth certain quarterly financial data.
Quarterly and year to date computations of per share amounts are made
independently. Therefore, the sum of per share amounts for the quarters may
not agree with per share amounts for the year due to rounding and weighting
effects. Fiscal 2001 results included special charges totaling $.9 million and
$1.3 million in the third and fourth quarters, respectively, that increased net
loss in those quarters $.6 million and $.8 million, respectively.

|                                            |  |                                          |        |         |  |         |        |         |  |        |        |   |  |   |        |   |  |   |         |   |  |  |  | 
|------------------------------------------- |  | ---------------------------------------- | ------ | ------- |  | ------- | ------ | ------- |  | ------ | ------ | - |  | - | ------ | - |  | - | ------- | - |  |  |  | 
|                                            |  | Year Ended March 31, 2001               
|                                            |  |                                         
|                                            |  | (In thousands, except per share amounts)
|                                           
|                                           
|                                           
|                                           
|                                            |  | 1st                                      |        | 2nd     |  | 3rd     |        | 4th     |  | Fiscal
|                                            |  | Quarter                                  |        | Quarter |  | Quarter |        | Quarter |  | Year  
|                                            |  |                                         
|                                           
|                                           
|                                           
|                                           
|Net sales                                   |  | $                                        | 60,300 |         |  | $       | 58,057 |         |  | $      | 49,461 |   |  | $ | 46,666 |   |  | $ | 214,484 |  
|                                           
|                                           
|                                           
|                                           
|Gross profit                                |  |                                          | 6,438  |         |  |         | 5,460  |         |  |        | 1,580  |   |  |   | 989    |   |  |   | 14,467  |  
|                                           
|                                           
|                                           
|                                           
|Net income (loss)                           |  | $                                        | 765    |         |  | $       | (173   | )       |  | $      | (3,188 | ) |  | $ | (3,190 | ) |  | $ | (5,786  | )
|                                            |  |                                         
|Basic and diluted
earnings (loss) per share |  | $                                        | 0.12   |         |  | $       | (0.03  | )       |  | $      | (0.50  | ) |  | $ | (0.50  | ) |  | $ | (0.90   | )
|                                            |  |                                         

|                           |  |                                          |        |         |  |         |        |         |  |        |        |  |  |   |        |  |  |   |         |  |  |  |  | 
|-------------------------- |  | ---------------------------------------- | ------ | ------- |  | ------- | ------ | ------- |  | ------ | ------ |  |  | - | ------ |  |  | - | ------- |  |  |  |  | 
|                           |  | Year
Ended March 31, 2000               
|                           |  |                                         
|                           |  | (In thousands, except per share amounts)
|                          
|                          
|                          
|                          
|                           |  | 1st                                      |        | 2nd     |  | 3rd     |        | 4th     |  | Fiscal
|                           |  | Quarter                                  |        | Quarter |  | Quarter |        | Quarter |  | Year  
|                           |  |                                         
|                          
|                          
|                          
|                          
|Net sales                  |  | $                                        | 52,032 |         |  | $       | 50,524 |         |  | $      | 49,969 |  |  | $ | 56,087 |  |  | $ | 208,612 | 
|                          
|                          
|                          
|                          
|Gross profit               |  |                                          | 6,101  |         |  |         | 6,260  |         |  |        | 6,002  |  |  |   | 6,839  |  |  |   | 25,202  | 
|                          
|                          
|                          
|                          
|Net income                 |  | $                                        | 1,061  |         |  | $       | 1,245  |         |  | $      | 802    |  |  | $ | 1,429  |  |  | $ | 4,537   | 
|                           |  |                                         
|Basic earnings per share   |  | $                                        | 0.16   |         |  | $       | 0.20   |         |  | $      | 0.13   |  |  | $ | 0.22   |  |  | $ | 0.71    | 
|                           |  |                                         
|Diluted earnings per share |  | $                                        | 0.16   |         |  | $       | 0.20   |         |  | $      | 0.13   |  |  | $ | 0.21   |  |  | $ | 0.70    | 
|                           |  |                                         

36



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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

|                                |  |      |                     |              |                  |       |     |                |  |          |      |      |  |   |                  |   |  |   |       |  |  |  |  |  | 
|------------------------------- |  | ---- | ------------------- | ------------ | ---------------- | ----- | --- | -------------- |  | -------- | ---- | ---- |  | - | ---------------- | - |  | - | ----- |  |  |  |  |  | 
|(In thousands)                 
|                               
|                                |  |      | Balance at April 1, |              | Charged to Costs |       |     |                |  |          |      |      |  |   | Balance at March
|Description                     |  | 1998 |                     | and Expenses |                  | Other |     | Deductions (3) |  | 31, 1999
|                                |  |      |                     |              |                  |       |     |                |  |         
|                               
|                               
|                               
|                               
|Allowance for doubtful
accounts |  | $    | 550                 |              |                  | $     | 783 |                |  | $        | (260 | )(4) |  | $ | (593             | ) |  | $ | 480   | 
|                               
|                               
|                               
|                               
|Inventory aging reserves (1)    |  | $    | 1,624               |              |                  | $     | 443 |                |  |          |     |      |  |   |                 |   |  | $ | 2,067 | 
|                               
|                               
|                               
|                               
|Customer claims reserve (2)     |  | $    | 765                 |              |                  |       |    |                |  |          |     |      |  | $ | (52              | ) |  | $ | 713   | 

|                                |  |      |                     |              |                  |       |     |                |  |          |    |     |  |   |                  |   |  |   |       |  |  |  |  |  | 
|------------------------------- |  | ---- | ------------------- | ------------ | ---------------- | ----- | --- | -------------- |  | -------- | -- | --- |  | - | ---------------- | - |  | - | ----- |  |  |  |  |  | 
|                                |  |      | Balance at April 1, |              | Charged to Costs |       |     |                |  |          |    |     |  |   | Balance at March
|Description                     |  | 1999 |                     | and Expenses |                  | Other |     | Deductions (3) |  | 31,
2000
|                                |  |      |                     |              |                  |       |     |                |  |         
|                               
|                               
|                               
|                               
|Allowance for doubtful
accounts |  | $    | 480                 |              |                  |       |    |                |  | $        | 64 | (5) |  | $ | (86              | ) |  | $ | 458   | 
|                               
|                               
|                               
|                               
|Inventory aging reserves (1)    |  | $    | 2,067               |              |                  |       |    |                |  |          |   |     |  | $ | (598             | ) |  | $ | 1,469 | 
|                               
|                               
|                               
|                               
|Customer claims reserve (2)     |  | $    | 713                 |              |                  | $     | 293 |                |  |          |   |     |  |   |                 |   |  | $ | 1,006 | 

|                                |  |      |                     |              |                  |       |       |                |  |          |   |  |  |   |                  |   |  |   |       |  |  |  |  |  | 
|------------------------------- |  | ---- | ------------------- | ------------ | ---------------- | ----- | ----- | -------------- |  | -------- | - |  |  | - | ---------------- | - |  | - | ----- |  |  |  |  |  | 
|                                |  |      | Balance at April 1, |              | Charged to Costs |       |       |                |  |          |   |  |  |   | Balance at March
|Description                     |  | 2000 |                     | and Expenses |                  | Other |       | Deductions (3) |  | 31,
2001
|                                |  |      |                     |              |                  |       |       |                |  |         
|                               
|                               
|                               
|                               
|Allowance for doubtful
accounts |  | $    | 458                 |              |                  | $     | 207   |                |  |          |  |  |  | $ | (162             | ) |  | $ | 503   | 
|                               
|                               
|                               
|                               
|Inventory aging reserves (1)    |  | $    | 1,469               |              |                  | $     | 1,578 |                |  |          |  |  |  |   |                 |   |  | $ | 3,047 | 
|                               
|                               
|                               
|                               
|Customer claims reserve (2)     |  | $    | 1,006               |              |                  | $     | 111   |                |  |          |  |  |  |   |                 |   |  | $ | 1,117 | 



---

|(1) |  | To adjust specific inventory items to lower of cost or market value. Reserve is reflected in appropriate inventory categories.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | To adjust specific customer receivables for allowed claims. Reserve is reflected against receivables.                         
|   
|   
|   
|   
|(3) |  | Adjustments against the account for purposes provided.                                                                        
|   
|   
|   
|   
|(4) |  | Reserves related to disposed businesses.                                                                                      
|   
|   
|   
|   
|(5) |  | Reserves related to acquired businesses.                                                                                      

37



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##### Table of Contents






Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.




PART III




Item 10. Directors and Executive Officers of the Registrant

Information required by Item 10 as to the Directors of the Registrant is
incorporated by reference to the information set forth under the captions
Election of Directors and Security Ownership of Certain Beneficial Owners
and Management in the Registrants definitive proxy statement for its July
19, 2001 Annual Meeting of Shareholders which will be filed with the
Securities and Exchange Commission no later than June 29, 2001. Information
required by this Item 10 regarding Executive Officers of the Company is
incorporated by reference to Item 4A in Part I of this Report.




Item 11. Executive Compensation

Information required by Item 11 is incorporated herein by reference to the
information set forth under the captions Executive Compensation, Human
Resources Committee Report on Executive Compensation, and Performance
Graph, as well as the information under the caption Compensation of
Directors, in the Registrants definitive proxy statement for its July 19,
2001 Annual Meeting of Shareholders which will be filed with the Securities
and Exchange Commission no later than June 29, 2001.




Item 12. Security Ownership of Certain Beneficial Owners and Management

Information required by Item 12 is incorporated herein by reference to the
information set forth under the caption Security Ownership of Certain
Beneficial Owners and Management, in the Registrants definitive proxy
statement for its July 19, 2001 Annual Meeting of Shareholders which will be
filed with the Securities and Exchange Commission no later than June 29,
2001.




Item 13. Certain Relationships and Related Transactions

Information required by this Item 13 is incorporated by reference to Note
(2) at Item 2 in Part I of this Report.




PART IV




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

A.   The following documents are filed as part of this Form 10-K.

1.   Consolidated Financial Statements
      Included under Item 8 of this report:
          Independent Auditors Report
          Consolidated Balance Sheets, March 31, 2001 and 2000.
          Consolidated Statement of Operations for the each of the three years in
the period ended March 31, 2001.
          Consolidated Statement of Shareholders Equity for each of the three years
in the period ended March 31, 2001.
          Notes to Consolidated Financial Statement for each of the three years in
the period ended March 31, 2001.

38



---



##### Table of Contents



2.   Supplemental Schedules
      Included under Item 8 of this report:
          Financial Statement Schedule II  Valuation and Qualifying Accounts and
Reserves.

3.   Exhibits

|          |  |                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                            
|--------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |  | Exhibit No. and Description                                                                                                                                                                                                                                                                                                                                      |  | Location                                                                                                                                                                   
|          |  |                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                            
|(2)(a)    |  | Stock Purchase Agreement by and
among Cold Metal Products, Inc.
and Alkar Steel Corporation and the
Stockholders of Alkar Steel
Corporation dated March 31, 2000                                                                                                                                                                                                 |  | Previously filed as an
exhibit to the Companys
Form 10-K filed June 27, 2000.                                                                                             
|         
|         
|         
|         
|(2)(b)    |  | Asset Purchase Agreement between
Cold Metal Products, Limited and
Maksteel Inc. dated March 30, 1999                                                                                                                                                                                                                                                             |  | Previously filed as an exhibit
to the Companys Form 8-K filed
April 14, 1999                                                                                              
|         
|         
|         
|         
|(3)(i)(a) |  | Restated Certificate of
Incorporation of Registrant                                                                                                                                                                                                                                                                                                              |  | Previously filed as Exhibit
3.1 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986)  
|         
|         
|         
|         
|(3)(i)(b) |  | Amendment to the Restated
Certificate of Incorporation
of Registrant                                                                                                                                                                                                                                                                                             |  | Previously filed as Exhibit
3.3 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986)  
|         
|         
|         
|         
|(3)(ii)   |  | Amended By-Laws of Registrant                                                                                                                                                                                                                                                                                                                                    |  | Previously filed as Exhibit
E-1 to the Companys 1994
Annual Report on Form 10-K
filed on June 29, 1994                                                                    
|         
|         
|         
|         
|(4)       |  | Specimen stock certificate for the
Common Stock                                                                                                                                                                                                                                                                                                                  |  | Previously filed as Exhibit
E-1 to the Companys 1995
Annual Report on Form 10-K
filed on June 29, 1995                                                                    
|         
|         
|         
|         
|(10)(a)   |  | Fourth Amended and Restated Credit
and Security Agreement between GMAC
Commercial Credit LLC and the
Company, dated September 29, 2000,
which amended and restated the Third
Amended and Restated Discretionary
Credit facility previously filed and
listed as Exhibit 10(a) to the
Companys Annual Report on Form 10K
for the fiscal year ended March 31,
1998 |  | Previously filed as an
exhibit to the Companys
Report on Form 10-Q for the
fiscal quarter ended
December 31, 2000                                                         
|         
|         
|         
|         
|(10)(b)   |  | Cold Metal Canadian Subsidiary
Guaranty Agreement, dated as of
July 31, 1987, between Irving
Trust Company (predecessor to
The Bank of New York) and
Registrants Canadian Subsidiary,
Cold Metal Products Company, Ltd.                                                                                                                                         |  | Previously filed as Exhibit 3.1
to the Companys Registration
Statement on Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986)  
|         
|         
|         
|         
|(10)(c)   |  | Supply Agreement, dated February
1987, as amended June 20, 1989,
December 31, 1992 and December 31,
1993, subject to request for
confidential treatment                                                                                                                                                                                                          |  | Previously filed as Exhibit
10.3 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986) 
|         
|         
|         
|         
|(10)(d)   |  | Tax Sharing and Indemnification
Agreement, dated January 31, 1994,
among Registrant and its affiliates                                                                                                                                                                                                                                                           |  | Previously filed as Exhibit
10.5 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986) 
|         
|         
|         
|         
|(10)(e)   |  | Special Incentive Compensation Plan
of Registrant, effective December 1,
1993                                                                                                                                                                                                                                                                                    |  | Previously filed as Exhibit
10.10 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986)

39



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##### Table of Contents



|        |  |                                                                                                                                                                              |  |                                                                                                                                                                            
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|       
|       
|       
|(10)(f) |  | Special Incentive Compensation Plan
Trust Agreement, dated January 28,
1994                                                                                                  |  | Previously filed as Exhibit
10.11 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986)
|       
|       
|       
|       
|(10)(g) |  | Amended and Restated 1994 Incentive
Program                                                                                                                                  |  | Previously filed as Exhibit
A to the Companys 1995
Proxy Statement filed on
June 22, 1995                                                                                 
|       
|       
|       
|       
|(10)(h) |  | Share Purchase and Loan Agreement,
dated December 30, 1993, among Cold
Metal Products Company, Ltd., Lance
and Mara Dunlap, 955404 Ontario Inc.
and Direct Steel, Inc.       |  | Previously filed as Exhibit
10.13 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986)
|       
|       
|       
|       
|(10)(i) |  | Share Purchase and Loan Amendment
Agreement, dated March 23, 1994
among Cold Metal Products Company,
Ltd., Lance and Mara Dunlap, 955404
Ontario Inc. and Direct Steel, Inc. |  | Previously filed as Exhibit
E-5 to the Companys 1994
Annual Report on Form 10-K
filed on June 29, 1994                                                                    
|       
|       
|       
|       
|(10)(j) |  | Shareholders Agreement, dated March
23, 1994, Cold Metal Products
Company, Ltd., Lance and Mara
Dunlap, 955404 Ontario Inc. and
Direct Steel, Inc.                           |  | Previously filed as Exhibit
E-6 to the Companys 1994
Annual Report on Form 10-K
filed on June 29, 1994                                                                    
|       
|       
|       
|       
|(10)(k) |  | Supply Agreement, dated March 23,
1994, between Cold Metal Products
Company, Ltd. and Direct Steel, Inc.                                                                     |  | Previously filed as Exhibit
E-7 to the Companys 1994
Annual Report on Form 10-K
filed on June 29, 1994                                                                    
|       
|       
|       
|       
|(10)(l) |  | Agreement between Registrant and The
Stanley Works, dated February 17,
1994                                                                                                  |  | Previously filed as Exhibit
10.20 to the Companys
Registration Statement on
Form S-1, which became
effective on March 21, 1994
at 4:00 p.m. (Commission
File No. 33-74986)
|       
|       
|       
|       
|(10)(m) |  | Amended and Restated Non-Employee
Directors Incentive Plan                                                                                                                  |  | Previously filed as Exhibit B
to the Companys 1995
Proxy Statement filed on
June 22, 1995                                                                                 
|       
|       
|       
|       
|(10)(n) |  | Master Equipment Lease Agreement,
Equipment Schedule No. 01 and
related addenda between Cold Metal
Products, Inc. and KeyCorp Leasing
Ltd.                                   |  | Previously filed as Exhibit E-2 to the Companys 1995
Annual Report on Form 10-K
filed on June 29, 1995                                                                    
|       
|       
|       
|       
|(10)(o) |  | Russell Metal, Inc. and Cold Metal
Products Company, Ltd. Asset
Purchase Agreement dated October
21, 1996                                                                    |  | Previously filed as an
exhibit to the Companys
Report on Form 10-Q for the
fiscal quarter ended
December 31, 1996                                                         
|       
|       
|       
|       
|(10)(p) |  | Loan Agreement between Cold Metal
Products, Inc. and The CIT
Group/Equipment Financing, Inc.                                                                                 |  | Previously filed as an
exhibit to the Companys
Report on Form 10-Q for the
fiscal quarter ended
December 31, 1996                                                         
|       
|       
|       
|       
|(10)(q) |  | Letter Agreement between James R.
Harpster and Cold Metal Products,
Inc.                                                                                                     |  | Previously filed as an
exhibit to the Companys
Report on Form 10-Q for the
fiscal quarter ended
September 30, 1998                                                        
|       
|       
|       
|       
|(10)(r) |  | Letter Agreement between John A.
Watson and Cold Metal Products,
Inc.                                                                                                        |  | Previously filed as an
exhibit to the Companys
1999 Annual Report on Form
10-K filed on June 29, 1999                                                                     
|       
|       
|       
|       
|(10)(s) |  | Letter Agreement between Gordon A.
Wilber and Cold Metal Products,
Inc.                                                                                                      |  | Previously filed as an
exhibit to the Companys
1999 Annual Report on Form
10-K filed on June 29, 1999                                                                     
|       
|       
|       
|       
|(10)(t) |  | Letter Agreement between Allen R.
Morrow and Cold Metal Products,
Inc.                                                                                                       |  | Previously filed as an
exhibit to the Companys
1999 Annual Report on Form
10-K filed on June 29, 1999                                                                     

40



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##### Table of Contents



|        |  |                                                                                                |  |                                                                                                                   
|------- |  | ---------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------
|       
|       
|       
|       
|(10)(u) |  | Supplemental Executive Retirement
Agreement and Cold Metal Products,
Inc.                      |  | Previously filed as an
exhibit to the Companys
1999 Annual Report on Form
10-K filed on June 29, 1999            
|       
|       
|       
|       
|(10)(v) |  | Letter Agreement between John E.
Sloe and Cold Metal Products, Inc.                            |  | Previously filed as an
exhibit to the Companys
Report on Form 10-Q for the
fiscal quarter ended
June 30, 1999    
|       
|       
|       
|       
|(10)(w) |  | Master Lease Agreement between
National City Leasing Corporation
and Cold Metal Products, Inc. |  | Previously filed as an
exhibit to the Companys
Report on Form 10-Q for the
fiscal quarter ended
December 31, 1999
|       
|       
|       
|       
|(10)(x) |  | Lease Agreement between Cold Metal
Products, Inc. and John M. Fayad
dated March 31, 2000       |  | Previously filed as an
exhibit to the Companys
Form 10-K on June 27, 2000.                                       
|       
|       
|       
|       
|(21)    |  | Subsidiaries of Registrant                                                                     |  | Previously filed as an
exhibit to the Companys
Form 10-K on June 27, 2000.                                       
|       
|       
|       
|       
|(23)    |  | Independent Auditors Consent                                                                  |  | Filed herein                                                                                                      

(B) Reports on Form 8-K

None




SIGNATURES

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

|              |  |                           |  |                                                              |  |  | 
|------------- |  | ------------------------- |  | ------------------------------------------------------------ |  |  | 
|              |  | COLD METAL PRODUCTS, INC.
|             
|June 29, 2001 |  | By                        |  | /s/ Raymond P. Torok                                        
|              |  |                           |  |                                                             
|              |  |                           |  | Raymond P. Torok
President and Chief Executive Officer      
|             
|              |  | By                        |  | /s/ Joseph C. Horvath                                       
|              |  |                           |  |                                                             
|              |  |                           |  | Joseph C. Horvath
Vice President and Chief Financial Officer

41



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below, as of June 29, 2001, by the following persons on
behalf of the Registrant and in the capacities indicated.

|                        |  |                                                 |  |  |  | 
|----------------------- |  | ----------------------------------------------- |  |  |  | 
|/s/ Heidi A. Nauleau    |  | Chairman of the Board of Directors             
|                       
|Heidi A. Nauleau       
|                       
|/s/ Raymond P. Torok    |  | President, Chief Executive Officer and Director
|                        |  | (Principal Executive Officer)                  
|Raymond P. Torok       
|                       
|/s/ R. Quintus Anderson |  | Chairman of Executive Committee                
|                       
|R. Quintus Anderson    
|                       
|/s/ Wilbur J. Berner    |  | Director                                       
|                       
|Wilbur J. Berner       
|                       
|/s/ Claude F. Kronk     |  | Director                                       
|                       
|Claude F. Kronk        
|                       
|/s/ Robert D. Neary     |  | Director                                       
|                       
|Robert D. Neary        
|                       
|/s/ Peter B. Sullivan   |  | Director                                       
|                       
|Peter B. Sullivan      

42