##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K



|                                            |   |  |                                                                                         
|------------------------------------------- | - |  | ----------------------------------------------------------------------------------------
|(Mark One)                                 
|                                            | x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934    
|                                           
|For the fiscal year ended October 31, 2002.
|                                           
|                                            |   |  | or                                                                                      
|                                           
|                                            | o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from                      to

Commission file number:  333-18019

WCI STEEL, INC.

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Ohio                                                           |  | 34-1585405                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                              
|1040 Pine Ave., S.E.,
Warren, Ohio                             |  | 44483-6528                          
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

(330) 841-8302

---

(Registrants telephone number, including area code)


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

|                    |  |                                     
|------------------- |  | ------------------------------------
|Title of each class |  | Name of exchange on which registered
|                    |  |                                     
|None                |  |                                     

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None.

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 last 90 days. Note: The Registrant files pursuant
to an indenture, but is not otherwise subject to Section 13 or 15(d) filing
requirements.    o 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 the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K.   x

The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant at March 6, 2003 was $0.

1



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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                                  
|PART II                                                     
|                                                             | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                 
|                                                             | ITEM 6.  SELECTED FINANCIAL DATA                                                              
|                                                             | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                                                             | ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                                             |                                                                                                | CONDOLIDATED BALANCE SHEETS                              
|                                                             |                                                                                                | CONSOLIDATED STATEMENTS OF OPERATIONS                    
|                                                             |                                                                                                | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
|                                                             |                                                                                                | CONSOLIDATED STATEMENT OF CASH FLOWS                     
|                                                             |                                                                                                | Note to Consolidated Financial Statements                
|INDEPENDENT AUDITORS REPORT                                
|                                                             | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  
|PART III                                                    
|                                                             | ITEM 10.  DIRECTORS AND OFFICERS                                                              
|                                                             | ITEM 11.  EXECUTIVE COMPENSATION                                                              
|                                                             | ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                                             | ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|                                                             | ITEM 14.  DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS                            
|                                                             | ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K                     
|INDEPENDENT AUDITORS REPORT ON FINANCIAL STATEMENT SCHEDULE
|SIGNATURES                                                  
|Certification                                               
|Certification                                               
|Exhibit Index                                               
|EX-10.2.17 Amendement to Net Worth Appreciation             
|EX-10.4.17 Amendmt. #3 for Restated Loan 09/13/02           
|EX-10.4.18 Amendment # 4 dated 02/2003                      
|EX-99.1 Cert. of Principle Financial Officer                
|EX-99.2 Cert. of Principle Executive Officer                



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##### Table of Contents



WCI STEEL, INC. AND SUBSIDIARIES
FORM 10-K
INDEX

|         |                                                                                                      |  |                                                                                       |          |  |    | 
|-------- | ---------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- | -------- |  | -- | 
|PART I   |                                                                                                      |  |                                                                                       | Page No.
|         |                                                                                                      |  |                                                                                       |          | 
|        
|         | Item 1.                                                                                              |  | Business                                                                              |          |  | 3  | 
|        
|         | Item 2.                                                                                              |  | Properties                                                                            |          |  | 11 | 
|        
|         | Item 3.                                                                                              |  | Legal Proceedings                                                                     |          |  | 12 | 
|        
|         | Item 4.                                                                                              |  | Submission of Matters to a Vote of Security Holders                                   |          |  | 12 | 
|        
|PART II  |                                                                                                      |  |                                                                                       |          |  |   
|        
|         | Item 5.                                                                                              |  | Market for Registrants Common Equity and Related Stockholder
Matters                 |          |  | 13 | 
|        
|         | Item 6.                                                                                              |  | Selected Financial Data                                                               |          |  | 14 | 
|        
|         | Item 7.                                                                                              |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations |          |  | 15 | 
|        
|         | Item 7A                                                                                              |  | Quantitative and Qualitative Disclosures About Market Risk                            |          |  | 23 | 
|        
|         | Item 8.                                                                                              |  | Financial Statements and Supplementary Data                                           |          |  | 24 | 
|        
|         | Item 9.                                                                                              |  | Changes in and disagreements with Accountants on Accounting and
Financial Disclosure  |          |  | 42 | 
|        
|PART III |                                                                                                      |  |                                                                                       |          |  |   
|        
|         | Item 10.                                                                                             |  | Directors and Executive Officers of the Registrant                                    |          |  | 43 | 
|        
|         | Item 11.                                                                                             |  | Executive Compensation                                                                |          |  | 45 | 
|        
|         | Item 12.                                                                                             |  | Security Ownership of Certain Beneficial Owners and Management                        |          |  | 47 | 
|        
|         | Item 13.                                                                                             |  | Certain Relationships and Related Transactions                                        |          |  | 48 | 
|        
|         | Item 14.                                                                                             |  | Disclosure Controls and Procedures and Internal Controls                              |          |  | 49 | 
|        
|PART IV  |                                                                                                      |  |                                                                                       |          |  |   
|        
|         | Item 15.                                                                                             |  | Exhibits, Financial Statement Schedule, and Reports on Form 8-K                       |          |  | 50 | 
|        
|         | Financial Statement Schedule (including Independent Auditors Report
on Financial Statement Schedule) |  |                                                                                       | 51       | 
|        
|         | Signatures                                                                                           |  |                                                                                       | 53       | 
|        
|         | Exhibit Index                                                                                        |  |                                                                                       | 56       | 

2



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PART I




ITEM 1.  BUSINESS

General

WCI Steel, Inc. (WCI or Company), a niche oriented integrated producer of
value-added, custom steel products, was incorporated in Ohio in 1988 and
commenced operations on September 1, 1988. WCIs primary facility covers
approximately 1,100 acres in Warren, Ohio, with additional facilities owned by
subsidiaries located in Niles and Youngstown, Ohio, all of which are situated
between Cleveland and Pittsburgh. WCI currently produces approximately 185
grades of flat rolled custom and commodity steel products. Total shipments
were 1,281,140 tons in fiscal 2002 and 1,041,209 tons in fiscal 2001. Custom
flat rolled products, which include high carbon, alloy, ultra high strength,
silicon electrical and heavy gauge galvanize steel, constituted approximately
48.5% of net tons shipped during fiscal 2002 and 51.5% during fiscal 2001 (see
Overview below for a discussion of custom products). Major users of WCI
products are steel converters, steel service centers, construction product
companies, electrical equipment manufacturers and, to a lesser extent,
automobile and automotive parts manufacturers.

The Company and the industry continue to face difficult and volatile
market conditions. During 2000 and 2001 there was intense downward pressure on
steel prices due to the surge of imports into the United States. This resulted
in the Company incurring a net loss of $100.8 million in 2001. Order entry
rates and steel prices increased significantly during 2002 as a result of
significant capacity reductions caused by the closing of a number of steel
producers and the effects of the implementation of the Section 201 tariffs. As
a result of the increased shipping volume and prices, the Company returned to
profitability during the fourth quarter of 2002. However, for the full year of
2002 the Company incurred a net loss of $37.6 million. In addition to
incurring significant losses during the last two years, the Company had
negative cash flows which have reduced the cash resources available to support
its operations.

Many of the steel companies shut down in the past two years have been
restarted by other companies with cost structures significantly lower than
WCIs. This low cost capacity returning to the market coupled with continued
high levels of imports and a slowing manufacturing sector has resulted in
reduced volume and pricing expectations for the first half of 2003. As a
result, the Company expects to incur a net loss for 2003.

The Companys liquidity depends on its operating performance and borrowing
availability under its revolving credit facility. If market conditions fail to
improve adequately, operating losses will continue, and the Company will be
unable to meet certain covenants associated with its revolving credit facility.
Under these circumstances, if the Company is unable to obtain waivers of
covenant violations or secure additional financing sources to fund expected
operating losses, it would likely have a material adverse effect on WCIs
operations.

Products

Overview

WCI produces a wide range of custom flat rolled steel products, including
high carbon, alloy, ultra high strength, silicon electrical and heavy gauge
galvanize steel. WCIs custom products are characterized by small order
quantities, specialized chemistries, narrow widths and value added processing,
with an emphasis on customer specific quality requirements and delivery
performance.

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WCIs commodity steel product sales consist principally of hot and cold
rolled low carbon sheet steel, other high strength applications and light gauge
galvanize products. Export sales were approximately 1.7% of net sales during
the last three fiscal years.

The table below shows the Companys product mix for the last three years.

|                         |                 |                   |           |                   |  |      |           |         |  |      |           |         |  |  |       |      |   |  |       |      |   |  |       |      |  
|------------------------ | --------------- | ----------------- | --------- | ----------------- |  | ---- | --------- | ------- |  | ---- | --------- | ------- |  |  | ----- | ---- | - |  | ----- | ---- | - |  | ----- | ---- | -
|                         |                 |                   |           |                  
|                         |                 | Net Tons Shipped  |           | Percent of Total 
|                         |                 |                   |           |                  
|                         |                 |                   |           |                  
|                         |                 | Fiscal Year Ended |           | Fiscal Year Ended
|                         |                 | October 31,       |           | October 31,      
|                         |                 | 2002              |           | 2001              |  | 2000 |           | 2002    |  | 2001 |           | 2000   
|                         |                 |                   |           |                   |  |      |           |         |  |      |           |        
|CUSTOM PRODUCTS:         |                 |                   |           |                   |  |      |           |         |  |      |           |         |  |  |       |      |   |  |       |      |   |  |       |     
|                        
|                        
|                        
|                        
|                         | Hot Rolled      |                   |           | 407,090           |  |      |           | 302,389 |  |      |           | 394,213 |  |  |       | 31.8 | % |  |       | 29.0 | % |  |       | 31.1 | %
|                        
|                        
|                        
|                        
|                         | Cold Rolled     |                   |           | 24,828            |  |      |           | 19,450  |  |      |           | 19,929  |  |  |       | 1.9  | % |  |       | 1.9  | % |  |       | 1.6  | %
|                        
|                        
|                        
|                        
|                         | Coated Products |                   |           | 189,631           |  |      |           | 214,460 |  |      |           | 245,969 |  |  |       | 14.8 | % |  |       | 20.6 | % |  |       | 19.4 | %
|                         |                 |                   |           |                   |  |      |           |         |  |      |           |         |  |  |       |      |   |  |       |      |   |  |       |     
|TOTAL CUSTOM PRODUCTS    |                 |                   | 621,549   |                   |  |      | 536,299   |         |  |      | 660,111   |         |  |  | 48.5  | %    |   |  | 51.5  | %    |   |  | 52.1  | %   
|                        
|                        
|                        
|                        
|Total Commodity Products |                 |                   | 659,591   |                   |  |      | 504,910   |         |  |      | 605,784   |         |  |  | 51.5  | %    |   |  | 48.5  | %    |   |  | 47.9  | %   
|                         |                 |                   |           |                   |  |      |           |         |  |      |           |         |  |  |       |      |   |  |       |      |   |  |       |     
|Total Steel Products     |                 |                   | 1,281,140 |                   |  |      | 1,041,209 |         |  |      | 1,265,895 |         |  |  | 100.0 | %    |   |  | 100.0 | %    |   |  | 100.0 | %   
|                         |                 |                   |           |                   |  |      |           |         |  |      |           |         |  |  |       |      |   |  |       |      |   |  |       |     

Custom Products

High Carbon, Alloy, Ultra High Strength WCI has developed markets for
high carbon, alloy and ultra high strength steel products that are sold to
strip converters, steel service centers, and automobile and automotive parts
manufacturers. Products required by the strip converter customers are
characterized by small order quantities, relatively narrow widths and specific
metallurgical properties. WCI presently produces over 100 specialized
chemistries for these markets.

WCIs customers in this sector, in turn, supply end-users which have
highly specific product needs requiring the strip converter to order steel with
close gauge tolerances, minimal crown profiles, critical surface qualities and,
in certain cases, in narrow widths.

In the high carbon and alloy markets, WCI competes with several other
domestic integrated and minimill producers, as well as various steel producers
in Canada, Europe and Japan. In the ultra high strength market, WCI competes
with several integrated mills.

SiliconSilicon electrical steel is sheet steel that exhibits certain
electrical or magnetic properties. The magnetic properties of this product
permit electric motors to run at high speeds for extended periods of time with
greater efficiency while minimizing heat loss.

The market for silicon electrical sheet steel can be divided into two main
segments: grain oriented silicon sheet and non-grain oriented silicon sheet.
The distinction between grain and non-grain oriented silicon sheet pertains to
the electrical properties of the steel. WCIs silicon annealing line is
designed for production of non-grain oriented silicon sheet and all of WCIs
silicon shipments are in this segment. Presently, there is one domestic
competitor in this segment and several foreign competitors. In addition, the
Companys product also has experienced increasing competition from cold-rolled
motor laminations produced by several other integrated steelmakers, which have
been developed as a substitute product for silicon steel in certain
applications. Due to the migration of certain motor manufacturing capability
to Mexico and Asia, the market to which the Company can cost effectively supply
its product is contracting.

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Heavy gauge galvanizeGalvanize steel is zinc-coated sheet steel
produced on WCIs hot dipped galvanizing line. The market for galvanize sheet
steel is divided into two broad categories: heavy and light gauge steel. Heavy
gauge galvanize steel, which is generally hot rolled based, is used in the
manufacture of electrical boxes, culvert coil, construction hardware, HVAC
components and automotive stampings, as well as many other end uses.

WCIs galvanize finishing line is well suited to produce heavy gauge hot
rolled steel. WCI competes with several other integrated producers and
minimills, as well as independent producers in the heavy gauge galvanize steel
market.

Commodity Products

In fiscal 2002, WCI shipped 659,591 tons in the aggregate of sheet and
strip products consisting of hot and cold rolled low carbon, other high
strength and light gauge galvanize steel, which represented approximately 51.5%
of the Companys net tons shipped. Hot rolled low carbon and high strength
sheet is sold to steel service centers or manufacturers producing a broad array
of products, including tubing, stampings and roll formed parts. Cold rolled
low carbon and light gauge galvanize sheet and strip is purchased by service
centers, container manufacturers, and the automotive and appliance industries.
In these commodity steel markets, WCI competes with all major integrated
producers, minimills, and independent producers.

Marketing

WCIs marketing, sales and customer service functions are conducted
through three wholly owned subsidiaries, WCI Steel Sales LP (WCI Sales), WCI
Steel Metallurgical Services Inc. (WCI Metallurgical Services) and WCI Steel
Production Control Services Inc. (WCI Production Services).

WCI Sales is responsible for developing and implementing a sales and
marketing strategy aimed at increasing the sales of custom steel products and
building the strategic customer base. WCI Sales employs a direct sales force
covering approximately 230 active accounts and other potential steel accounts
within WCIs geographic market. Approximately 50% of WCI Sales shipments are
to customers within 200 miles of the Warren facility, and as a result of this
concentration of active and potential customers in its service area, WCI Sales
believes that it has a competitive advantage over competitors located farther
away.

Sales outside WCIs geographic market are made through independent sales
representatives on a commission basis. Although transportation costs can be
prohibitive at extreme distances from the Warren facility, select custom
products are competitively priced outside WCI Sales normal target markets. WCI
Sales believes that independent sales representatives provide the most
cost-effective method to access these customers. Approximately 4.8% of WCI
Sales volume in fiscal 2002 was sold through the independent sales
representatives.

Marketing and pricing are centralized at the Warren facility, where the
marketing strategy and pricing levels are established for all WCI products.
WCI Sales has a marketing staff that works closely with the sales and technical
service representatives to coordinate the implementation of the sales and
marketing strategy.

WCI Metallurgical Services is responsible for developing the specialized
chemistries that support WCIs custom product mix. In addition, WCI
Metallurgical Services has a staff of technical service representatives with
strong metallurgical and technical backgrounds who assist the sales force in
the field. Together, WCI believes the sales force and the technical staff
comprise a knowledgeable team qualified to identify and meet customer needs.

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WCI Production Services provides order entry and order status services to
assist WCI Sales in meeting customer needs. It also provides customer service
and utilizes a fully automated computerized sales network that furnishes the
sales force and customers with product specifications and timely order status
information.

Customers

WCIs customer base is dominated by steel converters and steel service
centers, which in fiscal 2002 represented 76.7% of shipments. The remaining
shipments were directly to end-users.

The following table sets forth the percentage of WCIs net tons shipped to
various markets for the past three fiscal years.

|                              |  |                               |       |      |  |      |       |   |  |  |       |  
|----------------------------- |  | ----------------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                              |  |                              
|                              |  | Fiscal
Year Ended
October 31,
|Customer
Category             |  | 2002                          |       | 2001 |  | 2000
|                              |  |                               |       |      |  |     
|                              |  |                               |       |      |  |     
|                             
|                             
|                             
|                             
|Conversion/further processing |  |                               | 59.1  | %    |  |      | 51.8  | % |  |  | 49.2  | %
|                             
|                             
|                             
|                             
|Steel service centers         |  |                               | 17.6  | %    |  |      | 18.7  | % |  |  | 24.8  | %
|                             
|                             
|                             
|                             
|Construction                  |  |                               | 11.3  | %    |  |      | 15.1  | % |  |  | 12.0  | %
|                             
|                             
|                             
|                             
|Electrical equipment          |  |                               | 3.3   | %    |  |      | 4.5   | % |  |  | 5.0   | %
|                             
|                             
|                             
|                             
|Direct automotive             |  |                               | 4.4   | %    |  |      | 5.1   | % |  |  | 4.9   | %
|                             
|                             
|                             
|                             
|Other                         |  |                               | 4.3   | %    |  |      | 4.8   | % |  |  | 4.1   | %
|                              |  |                               |       |      |  |      |       |   |  |  |       |  
|Total                         |  |                               | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                              |  |                               |       |      |  |      |       |   |  |  |       |  

In fiscal years 2002, 2001 and 2000, WCIs twenty largest customers
represented approximately 63%, 62% and 62%, respectively, of net sales. The
Companys largest customer, Worthington Industries, represented approximately
11.7%, 9.8% and 10.1% of net sales in fiscal 2002, 2001 and 2000, respectively.

Backlog

On October 31, 2002, WCIs order backlog was approximately 195,000 net
tons with an approximate value of $89 million compared to approximately 135,000
net tons with an approximate value of $52 million at October 31, 2001, based in
each case on the then current prices. Under the applicable orders, WCI shipped
substantially all of the orders in the October 31, 2002 backlog by January 31,
2003. Although customers may cancel orders included in the backlog, such
cancellations have been negligible in the past.

Competition

The domestic steel market is highly competitive. Competition in the
domestic steel market is intensified by excess world capacity which results in
significant steel imports to the United States. This competition affects the
prices the Company can charge for its products and the utilization of its
production facilities.

In the United States WCI competes with many other integrated producers and
minimills in most of its custom products. Minimills are generally smaller
volume steel producers that use ferrous scrap metals as their basic raw
material in an electric furnace production process. Compared to most
integrated producers, minimills, which rely on less capital-intensive hot metal
sources, have certain

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production cost advantages. Because minimills typically
are not unionized, they have more flexible work rules, which have resulted in
lower employment costs per net ton shipped. Through the use of various higher
quality raw materials and the development of thin slab casting technology,
electric furnace producers are able to compete directly with producers of
higher value products, including high carbon, alloy and coated products. The
penetration of the minimills into the high carbon and alloy product markets has
resulted from the distortion of steel supply created by a significant level of
imports in flat rolled steel products into the United States. This penetration
has influenced the pricing structure of these products and has reduced the
premium WCI is able to receive on these products compared to commodity
products. In addition, certain integrated producers, which had ceased
operations, have been restarted. These restarted integrated facilities have a
number of competitive advantages over other integrated operations, including
lower manning, more flexible work arrangements, lower benefit costs and lower
debt obligations. With several other integrated producers operating under
bankruptcy court protection, changes to the competitive steel environment are
expected to continue.

During the last several years steel imports into the U.S. have adversely
affected shipping volume and have contributed significantly to pricing
volatility. During this period, WCI and the steel industry have filed various
trade cases against hot-rolled and cold-rolled carbon steel flat products from
various countries in response to this increase in imports. While various
duties have been imposed on these products from certain countries, to date
these duties have been ineffective in reducing overall steel imports to the
U.S.

In response to the surging imports, in June 2001 the U.S. Trade
Representative, at the direction of President Bush, requested an investigation
by the International Trade Commission under Section 201 of the Trade Act of
1974 to determine whether steel is being imported into the U.S. in such
quantities as to be a substantial cause of serious injury to the U.S. steel
industry.

This investigation culminated on March 5, 2002 when President Bush issued
his remedy regarding the Section 201 investigation which became effective for
imports entering the U.S. on or after March 20, 2002. This remedy includes a
tariff rate quota on carbon and alloy slabs of 30% in excess of 5.4 million
tons per year adjusting over a three year period to 18% on imports in excess of
6.4 million tons and a 30% tariff on hot-rolled, cold-rolled and coated sheet
and strip declining over a three year period to 18%. These remedies pertain to
imports from all countries except Canada, Mexico, Jordan, Israel and certain
developing countries. Since the March 2002 Section 201 remedy was imposed, the
U.S. government has limited its effectiveness by excluding millions of tons of
steel products originally covered by those tariffs. More than 700 exclusion
requests to the 201 tariffs have been granted, affecting approximately 30% of
the steel initially covered under the Section 201 remedy. Additional
exclusions have been requested and are pending before the U.S. government.
These tariffs will be reviewed in September 2003 and may be adjusted at that
time.

The relative strength of the U.S. dollar and economy versus the strength
of foreign currencies and economies can significantly affect the import/export
trade balance for flat rolled steel. In addition to competition from domestic
and foreign steel producers, materials such as aluminum, cement, composites,
glass and plastics compete as substitutes for steel in many markets.

Manufacturing Process

In WCIs primary steelmaking process, iron ore pellets, coke, limestone,
and other raw materials are consumed in the blast furnace to produce hot
metal. Hot metal is further converted into liquid steel through the basic
oxygen furnace (BOF) process where impurities are removed, recycled scrap is
added and metallurgical properties for end use are determined on a
batch-by-batch basis. WCIs BOF has two vessels, each with a steelmaking
capacity of 182 tons per heat. From the BOF, the heats of steel are
sent to the ladle metallurgy

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facility (LMF), where the temperature and chemistry of the
steel are adjusted to precise tolerances. In addition, the steel may be vacuum
degassed to further improve its cleanliness. Liquid steel from the LMF then is
formed into slabs through the process of continuous casting. WCIs
twin-strand continuous slab caster (Continuous Caster) allows WCI to cast all
of its steel products. After continuous casting, slabs then are reheated,
reduced and finished by extensive rolling, shaping, tempering and, in certain
cases, by the application of coatings at WCIs downstream operations. Finished
products are usually shipped to customers in the form of coils. WCI has linked
its steelmaking and rolling equipment with a computer based integrated
manufacturing control system to coordinate production and sales activities.

Raw Materials

WCIs steelmaking operations are dependent on reliable supplies of various
raw materials, principally iron ore pellets, coke, scrap and energy. WCI
believes that it has adequate sources of its principal raw materials to meet
its present needs.

Iron Ore Pellets

WCI has a contract with a major supplier of iron ore pellets for its
requirements through calendar 2004. Iron ore pellets satisfied approximately
97.7% of WCIs iron requirements for the blast furnace in fiscal 2002. The iron
ore pellet contract requires WCI to purchase all of its iron ore pellet
requirements through calendar 2004 from the contracting vendor. WCI carries an
increased level of iron ore pellet inventory immediately preceding the winter
months, due to the curtailment of vendor shipments during the winter as a
result of the freezing of the Great Lakes.

Coke

Coke is the principal fuel used to produce hot metal and is an essential
ingredient in steelmaking. WCI has a contract with an integrated steel
producer for a majority of its estimated coke requirements through calendar
2004. WCIs coke requirements are approximately 670,000 tons per year. The
domestic supply of coke has decreased significantly over the last decade and
may decrease further in the future due to the requirements of the Clean Air Act
and the financial condition of certain producers. As the Company does not own
a coke battery, it is dependent upon commercially available domestic or
imported coke to sustain its operations. Although the Company believes that
there will be adequate supplies of domestic or imported coke available for its
purposes after the expiration of its contracts in 2004, there can be no
assurance to such effect.

Scrap

WCI uses scrap steel to supplement the hot metal produced at the blast
furnace for the steel making process. Scrap steel accounted for approximately
26.0% of the Companys liquid steel production in fiscal 2002. Scrap steel is
readily available and is purchased on an as-needed basis.

Energy and Gases

WCIs steel operation consumes large amounts of electricity, natural gas,
oxygen and other industrial gases. WCI purchases its electrical power
requirements under a contract that extends through March 2005 from a local
utility. WCI can generate approximately 20% of its electrical needs. Natural
gas is also purchased pursuant to supply contracts, certain of which extend
through March 2003. Oxygen is delivered, under a contract that extends through
April 2017, from a supplier-owned facility located at the Warren facility.

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Environmental Matters

In common with much of the steel industry, the Companys facilities are
located on sites that have been used for heavy industrial purposes for decades.
The Company is and will continue to be subject to numerous federal, state and
local environmental laws and regulations governing, among other things, air
emissions, waste water discharge and solid and hazardous waste management. The
Company has made and intends to continue to make the necessary expenditures for
environmental remediation and compliance with environmental laws and
regulations. Environmental laws and regulations continue to change and have
generally become more stringent, and the Company may be subject to more
stringent environmental laws and regulations in the future. Compliance with
more stringent environmental laws and regulations could have a material adverse
effect on the Companys financial condition and results of operations.

The Company is subject to a consent decree as a result of a civil action
instituted by the Department of Justice (DOJ), on behalf of the Environmental
Protection Agency (EPA). Work required under the consent decree was completed
during January 2003 with the exception of final reporting. The consent decree
also provides for stipulated penalties in the event of noncompliance which the
Company does not believe will be material.

As a condition of a previous Resource Conservation and Recovery Act (RCRA)
operating permit, the Company is required to undertake a corrective action
program with respect to on-site waste management practices at the Warren
facility. The work plan for the initial phase of the investigation step of the
corrective action program, the RCRA Facility Investigation (RFI), identifies
thirteen solid waste management units to be investigated. The Company has
completed and submitted its RFI Phase 1 report to the EPA. The Company has
also completed human health and ecological risk assessments, the results of
which will be used to identify whether any further investigative steps are
required to complete the RFI. The Company submitted its risk assessment
reports to the EPA, and is awaiting a response. Any additional investigative
steps, such as sampling, would then be undertaken in 2003 and 2004 as phase two
of the RFI. The final scope of corrective action required to address any
contamination that may be present at or emanating from the solid waste
management units at the Warren facility, including the potential for
remediation, is dependent upon the completion and findings of the RFI and the
development and approval of a corrective action program. Accordingly, the
Company is unable at this time to estimate the final cost of the corrective
action program or the period over which such costs may be incurred and there
can be no assurance that any such corrective action program would not have a
material adverse effect on the operating results or financial condition of the
Company.

The Company completed construction of the first phase of a new landfill
during 2002 which is currently operational at its Warren facility, which
receives waste materials from the iron and steel-making operations. The
Company has a plan which has been approved by the EPA for closure of the former
landfill through recycling by providing approximately one-third of its contents
to established markets for construction materials and disposing of any
non-salable or non-recyclable material in the new lined landfill. The Company
is not permitted to put any new material on the former landfill. The Company
is permitted to cease the recycling process and close the former landfill under
an EPA approved plan at the Companys discretion.

The EPA issued a unilateral administrative order (Order) to the Company
pursuant to Section 7003 of RCRA, effective on September 24, 2002. The Order
asserts that the Companys handling of solid waste in various impoundment areas
presents an imminent and substantial endangerment to health or the environment by virtue of potential harm to wildlife, including migratory birds, that may

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land on or enter the areas. The Order required the Company, among other things,
to (i) take immediate measures to deter and discourage wildlife from landing on
or entering the areas, (ii) remove all oily wastes from the impoundments, and
(iii) remove all remaining oily sludge from the banks and bottoms of the
impoundments. RCRA provides for civil penalties of up to $5,500 per day for
noncompliance with the Order. In written comments, the Company raised several
concerns and objected to both the issuance of the Order and its scope,
including portions of the Order calling for removal of all oily material from
the impoundments. The Company also submitted a draft work plan to EPA setting
forth a number of activities that the Company considers reasonably necessary to
abate any alleged endangerment, and began implementing the draft work plan in
the fall of 2002. In January 2003, EPA approved portions of the draft work plan and
disapproved other portions. EPA also issued an Amended Order, dated January
21, 2003. The Amended Order requires the Company to continue implementing its
immediate deterrent measures. For impoundments that are a required part of the
Companys ongoing operations, the Amended Order requires the Company to either
install a netting system over the impoundments or remove all oily material.
For the inactive areas, the Amended Order requires that all oily material be
removed. The Company is currently evaluating the feasibility of EPAs demands,
including timing, and available options for responding to the Amended Order.

In addition, the Company received correspondence dated December 27, 2002
from the U.S. Attorneys office on behalf of the United States Fish & Wildlife
Service alleging that the Company has violated Section 703(a) of the Migratory
Bird Treaty Act (a misdemeanor). The Company and its legal counsel met with the
Assistant U.S. Attorney in February 2003 to discuss possible resolutions for
this matter, and those discussions are ongoing. The
Company believes that it will resolve this matter in a manner that will not
have a material adverse effect on the Companys financial position or results
of operations.

A liability has been established for an amount, which the Company believes
is adequate, based on information currently available, to cover the costs to
resolve the above described matters, including remediation, if any, except for
any costs of corrective action that may result from the RFI for which no
estimate can currently be made. The outcome of the above described matters
could have a material adverse effect on the future operating results of the
Company in a particular quarter or annual period; however, the Company believes
that the effect of such matters will not have a material adverse effect on the
Companys consolidated financial position.

Employees

As of October 31, 2002, WCI had 437 salaried employees and 1,363 hourly
employees. Most of the employees are located at the Warren facility with most
of the hourly employees being represented by the United Steelworkers of America
(USWA) with which WCI has a five-year collective bargaining agreement that
expires October 31, 2004.

Benefit Plans

Hourly Profit Sharing Plan

Certain hourly employees represented by the USWA participate in a profit
sharing plan under which the Company pays 12% of pretax income as defined in
the profit sharing agreement. The Company advances one-half of the amounts due
under this plan on a quarterly basis, within 45 days following the end of each
fiscal quarter, and pays the remaining amounts by February 15 of the subsequent
year.

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Salaried Variable Compensation Plan

WCI has a variable compensation plan for salaried employees known as the
Company Performance Compensation Program (CPC). Under the CPC, salaried
employees receive variable compensation based on WCIs pretax income as defined
in the plan. CPC payments are measured as a percentage of the employees base
salary and paid quarterly.

Pension Plans

WCI has a defined contribution retirement plan that covers substantially
all salaried employees. WCI funds contributions to this plan as earned on a
monthly basis. Company contributions to the plan are based on employee age and
compensation.

The Company has a defined benefit floor offset pension plan, which covers
substantially all hourly employees at the Warren facility. The plan, when
combined with benefits from the Companys defined contribution plan which was
frozen effective September 1, 1999 and benefits from a predecessor companys
defined benefit pension plan, provide a minimum level of pension benefits for
eligible employees. Benefits are based on age and years of service, but not
compensation. Under this plan, employees who retired on or before August 31,
1999 receive a monthly benefit equal to $35 (Benefit Multiplier) times the
number of years of service with WCI or its predecessors. Effective September
1, 2000 for retirements on or after September 1, 1999, the Benefit Multiplier
increased from $35 to $52.50 for years of service up to 30 and $70 for years of
service in excess of 30. On September 1, 2002 for retirements on or after
September 1, 1999, the Benefit Multiplier further increased to $56.25 for years
of service up to 30 and $75 for years of service in excess of 30. If the
employee has at least 30 years of service at retirement, the monthly benefit is
subject to certain minimums based on age at retirement. No named executive
officer is eligible to participate in this plan.

Postretirement Benefit Plans

WCI provides postretirement health care and life insurance benefits to
substantially all employees who retire upon meeting certain age and length of
service eligibility requirements. The Company has established a trust to hold
contributions to fund future postretirement health care and life insurance
obligations related to the hourly workforce. This trust holds liens on certain
assets of the Company and one of its subsidiaries to secure the Companys
obligation for postretirement health care benefits. As a result of the
collective bargaining agreement effective September 1, 1999, the Company was
permitted to pay current claims up to $8.8 million from the trust. That limit
was reached during the three months ended July 31, 2001 thereafter requiring
the Company to pay claims from corporate assets. Claims paid by the Company or
trust totaled $7.1 million, $5.4 million and $4.4 million during fiscal years
2002, 2001, and 2000, respectively.




ITEM 2.  PROPERTIES

WCIs Warren, Ohio facility, situated on approximately 1,100 acres,
includes a blast furnace, a two vessel BOF shop, an LMF and a vacuum degasser,
a twin-strand Continuous Caster, a 56-inch hot strip mill, 54-inch tandem and
temper mills, annealing facilities, a silicon continuous annealing line,
hot-dip galvanizing line and other finishing facilities. The blast furnace was
last relined during 1995 as part of its planned maintenance, a procedure which
is performed on a routine basis about every six to ten years.

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Youngstown Sinter Company (YSC), a wholly owned subsidiary of WCI, owns a
sinter plant located in Youngstown, Ohio on 51 acres. YSC idled its plant
indefinitely effective July 15, 2001. YSC had been in operation since 1991
producing a clinker-type material (Sinter) from steelmaking by-products such as
slag and ore fines. The sinter was then used as a substitute feed stock in
WCIs blast furnace facility located in Warren, Ohio. The sinter plant may be
restarted in the future if economically advantageous.

Niles Properties, Inc., a subsidiary of the Company located approximately
five miles from the Warren facility, has approximately 525,000 square feet of
building space with one long-term tenant occupying approximately 5% of the
facility.

WCI believes that its facilities are well maintained and they are
considered satisfactory for their purposes.

See Part II, Item 8, Note 5 to the Consolidated Financial Statements for a
description of liens related to the Companys property, plant and equipment.




ITEM 3.  LEGAL PROCEEDINGS

See Item 1, Environmental Matters, for information as to legal proceedings
relating to environmental matters. The Company is contingently liable with
respect to lawsuits and other claims incidental to the ordinary course of its
business.




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

No matters were submitted to a vote of security holders during the quarter
ended October 31, 2002.

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##### Table of Contents






PART II






|ITEM 5. |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- |  | ---------------------------------------------------------------------

The Company is a direct wholly owned subsidiary of Renco Steel Holdings,
Inc. (Renco Steel) and an indirect wholly owned subsidiary of The Renco Group,
Inc. (Renco). There is no established public trading market for the Companys
common stock. Since December 1996, the Company has had one shareholder. The
Company did not pay dividends during fiscal year 2002 nor during fiscal year
2001. See Part II, Item 8, Note 5 to the Consolidated Financial Statements for
limitations on dividends.

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##### Table of Contents






ITEM 6.  SELECTED FINANCIAL DATA

|                              |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |         |  
|----------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------- | - | -------- | - | ---- | - | -------- | - | ---- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                              |                                                                                   |                                                        
|                              |                                                                                   | Fiscal Year Ended October 31,                          
|                              |                                                                                   | 2002                                                    |   | 2001(2)  |   | 2000 |   | 1999(1)  |   | 1998
|                              |                                                                                   |                                                         |   |          |   |      |   |          |   |     
|                              |                                                                                   |                                                        
|                              |                                                                                   | (Dollars and tons in thousands, except per ton amounts)
|                             
|                             
|                             
|                             
|Statement of Operations Data: |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|                             
|                             
|                             
|                             
|                              | Net Sales                                                                         |                                                         | $ | 502,047  |   |      | $ | 413,108  |   |      | $ | 560,689 |   |  | $ | 531,669 |   |  | $ | 665,741 |  
|                             
|                             
|                             
|                             
|                              | Cost of products sold                                                             |                                                         |   | 473,055  |   |      |   | 430,991  |   |      |   | 487,477 |   |  |   | 468,170 |   |  |   | 560,951 |  
|                              |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|                              | Gross margin (loss)                                                               |                                                         |   | 28,992   |   |      |   | (17,883  | ) |      |   | 73,212  |   |  |   | 63,499  |   |  |   | 104,790 |  
|                             
|                             
|                             
|                             
|                              | Depreciation and amortization                                                     |                                                         |   | 18,987   |   |      |   | 20,870   |   |      |   | 23,254  |   |  |   | 23,334  |   |  |   | 25,240  |  
|                             
|                             
|                             
|                             
|                              | Selling, general and administrative expenses                                      |                                                         |   | 14,939   |   |      |   | 16,833   |   |      |   | 15,770  |   |  |   | 14,613  |   |  |   | 17,343  |  
|                             
|                             
|                             
|                             
|                              | Unusual charges                                                                   |                                                         |   |         |   |      |   | 5,631    |   |      |   |        |   |  |   |        |   |  |   |        |  
|                              |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|                              | Operating income (loss)                                                           |                                                         |   | (4,934   | ) |      |   | (61,217  | ) |      |   | 34,188  |   |  |   | 25,552  |   |  |   | 62,207  |  
|                             
|                             
|                             
|                             
|                              | Interest expense                                                                  |                                                         |   | 33,179   |   |      |   | 31,980   |   |      |   | 31,940  |   |  |   | 32,030  |   |  |   | 32,057  |  
|                             
|                             
|                             
|                             
|                              | Interest and other income (expense)                                               |                                                         |   | 544      |   |      |   | (7,608   | ) |      |   | 8,054   |   |  |   | 8,062   |   |  |   | 2,308   |  
|                              |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|                              | Income (loss) before income taxes                                                 |                                                         |   | (37,569  | ) |      |   | (100,805 | ) |      |   | 10,302  |   |  |   | 1,584   |   |  |   | 32,458  |  
|                             
|                             
|                             
|                             
|                              | Income taxes                                                                      |                                                         |   |         |   |      |   |         |   |      |   |        |   |  |   | (4,279  | ) |  |   | 12,365  |  
|                              |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|                              | Net income (loss)                                                                 |                                                         | $ | (37,569  | ) |      | $ | (100,805 | ) |      | $ | 10,302  |   |  | $ | 5,863   |   |  | $ | 20,093  |  
|                              |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|Other Operating Data:         |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|                             
|                             
|                             
|                             
|                              | Net tons shipped                                                                  |                                                         |   | 1,281    |   |      |   | 1,041    |   |      |   | 1,266   |   |  |   | 1,212   |   |  |   | 1,412   |  
|                             
|                             
|                             
|                             
|                              | Percent custom products                                                           |                                                         |   | 48.5     | % |      |   | 51.5     | % |      |   | 52.1    | % |  |   | 56.6    | % |  |   | 52.7    | %
|                             
|                             
|                             
|                             
|                              | Average selling price per net ton shipped                                         |                                                         | $ | 392      |   |      | $ | 397      |   |      | $ | 443     |   |  | $ | 439     |   |  | $ | 471     |  
|                             
|                             
|                             
|                             
|                              | Average cost per net ton shipped                                                  |                                                         |   | 369      |   |      |   | 414      |   |      |   | 385     |   |  |   | 386     |   |  |   | 397     |  
|                             
|                             
|                             
|                             
|                              | Average gross margin (loss) per net ton shipped                                   |                                                         |   | 23       |   |      |   | (17      | ) |      |   | 58      |   |  |   | 52      |   |  |   | 74      |  
|                             
|                             
|                             
|                             
|                              | Average operating income (loss) per net ton
    shipped                           |                                                         |   | (4       | ) |      |   | (59      | ) |      |   | 27      |   |  |   | 21      |   |  |   | 44      |  
|                             
|                             
|                             
|                             
|Balance Sheet Data:           |                                                                                   |                                                         |   |          |   |      |   |          |   |      |   |         |   |  |   |         |   |  |   |        
|                             
|                             
|                             
|                             
|                              | Cash & cash equivalents                                                           |                                                         | $ | 2,751    |   |      | $ | 32,244   |   |      | $ | 89,478  |   |  | $ | 76,349  |   |  | $ | 62,195  |  
|                             
|                             
|                             
|                             
|                              | Working capital (excluding cash, cash equivalents
    and short-term investments) |                                                         |   | 41,408   |   |      |   | 18,163   |   |      |   | 46,946  |   |  |   | 39,113  |   |  |   | 45,645  |  
|                             
|                             
|                             
|                             
|                              | Property, plant and equipment, net                                                |                                                         |   | 185,433  |   |      |   | 193,453  |   |      |   | 202,578 |   |  |   | 208,477 |   |  |   | 217,624 |  
|                             
|                             
|                             
|                             
|                              | Total assets                                                                      |                                                         |   | 391,626  |   |      |   | 406,613  |   |      |   | 478,176 |   |  |   | 479,944 |   |  |   | 460,286 |  
|                             
|                             
|                             
|                             
|                              | Total debt (including current portion)                                            |                                                         |   | 336,297  |   |      |   | 301,647  |   |      |   | 301,380 |   |  |   | 301,502 |   |  |   | 301,618 |  
|                             
|                             
|                             
|                             
|                              | Shareholders equity (deficit)                                                    |                                                         |   | (246,831 | ) |      |   | (181,434 | ) |      |   | (80,629 | ) |  |   | (81,731 | ) |  |   | (84,873 | )



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fiscal 1999 statement of operations reflects an income tax
    benefit of $4.3 million resulting from the subchapter S election
    described in Note 1(g), a gain of $5.0 million resulting from an
    agreement with the USWA permitting the Company to pay certain
    medical benefits from assets in a trust previously restricted
    for other benefits and a benefit of $7.5 million resulting from
    the LIFO inventory valuation method.
|   
|(2) | Fiscal 2001 statement of operations includes unusual charges of
    $5.6 million related to the indefinite idling of an operating
    facility and a failed acquisition attempt (see Note 14 Unusual
    Charges). In addition, the Company recorded a charge of $10.5
    million (included in interest and other income (expense)) to
    write down an investment related to a potential acquisition (see
    Note 14 Unusual Charges).           

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|ITEM 7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
|------- |  | --------------------------------------------------------------------------------------

Unless otherwise indicated, references to a year are to the Companys
fiscal year ended
October 31.

Managements discussion and analysis of its financial condition and
results of operations are based upon the Companys consolidated financial
statements, which have been prepared in accordance with accounting standards
generally accepted in the United States of America. The preparation of these
consolidated financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at year-end, and the reported
amount of revenues and expenses during the year. Management regularly
evaluates these estimates, including those related to the carrying value of
property, plant and equipment, valuation allowances for receivables and
inventories, liabilities for environmental obligations, potential litigation
claims and settlements, and assets and obligations related to employee
benefits. Managements estimates are based on historical experience and
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Accordingly, actual results may differ materially from
current expectations under different assumptions or conditions.

Management believes that the following critical accounting policies affect
the more significant judgments and estimates used in the preparation of the
consolidated financial statements.

Asset Impairments The Company evaluates the impairment of its property, plant
and equipment on an individual asset basis or by logical groupings of assets.
Asset impairments are recognized when the carrying value of those productive
assets exceed their aggregate projected undiscounted cash flows. If future
demand and market conditions are less favorable than those projected by
management, asset write-downs may be required.

Allowances for Doubtful Accounts The Company maintains allowances for
doubtful accounts for estimated losses resulting from the inability of
customers to make required payments. If the financial condition of our
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.

Inventories The Company determines the cost of inventories under the last-in,
first-out (LIFO) method. The Company writes down inventories for the
difference between the carrying value of the inventories and the estimated
market value on a product by product basis. If actual market conditions become
less favorable than those projected by management, additional write-downs may
be required.

Environmental Remediation The Company provides for remediation costs and
penalties when the responsibility to remediate is probable and the amount of
associated costs is reasonably determinable. Remediation liabilities are
accrued based on estimates of known environmental exposures and are discounted
in certain instances. The Company regularly monitors the progress of
environmental remediation. Should studies indicate that the cost of
remediation is different than previously estimated, a change to the accrual
would be recorded in the period in which such determination was made.

Accruals for Potential Litigation Claims and Settlements The Company records
accruals for potential litigation claims and settlements when legal counsel
advises that an obligation is probable and reasonably estimable. Changes in
findings and negotiations as the cases progress cause changes in the recorded
accruals.

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Pensions and Other Postretirement Benefits (OPEB) Net pension and OPEB
expense are recorded for benefits based on, among other things, assumptions of
the discount rate, estimated return on plan assets, the mortality of
participants and the current level and escalation of health care costs in the
future. Changes in these and other factors and differences between actual and
assumed changes in the present value of liabilities or assets of the Companys
benefit plans above certain thresholds could cause net annual expense to
increase or decrease materially from year to year.

Overview

During the last four years steel imports into the U.S. have adversely
affected shipping volume and have contributed significantly to pricing
volatility. During this period, WCI and the steel industry have filed various
trade cases against hot-rolled and cold-rolled carbon steel flat products from
various countries in response to this increase in imports. While various
duties have been imposed on these products from certain countries, to date
these duties have been ineffective in reducing overall steel imports to the
U.S.

In response to the surging imports, in June 2001 the U.S. Trade
Representative, at the direction of President Bush, requested an investigation
by the International Trade Commission under Section 201 of the Trade Act of
1974 to determine whether steel was being imported into the U.S. in such
quantities as to be a substantial cause of serious injury to the U.S. steel
industry.

The investigation culminated on March 5, 2002 when President Bush issued
his remedy regarding the Section 201 investigation which became effective for
imports entering the U.S. on or after March 20, 2002. This remedy includes a
tariff rate quota on carbon and alloy slabs of 30% in excess of 5.4 million
tons per year adjusting over a three year period to 18% on imports in excess of
6.4 million tons and a 30% tariff on hot-rolled, cold-rolled and coated sheet
and strip declining over a three year period to 18%. These remedies pertain to
imports from all countries except Canada, Mexico, Jordan, Israel and certain
developing countries. Since the March 2002 Section 201 remedy was imposed, the
U.S. government has limited its effectiveness by excluding millions of tons of
steel products originally covered by those tariffs. More than 700 exclusion
requests to the 201 tariffs have been granted, affecting approximately 30% of
the steel initially covered under the Section 201 remedy. Additional
exclusions have been requested and are pending before the U.S. government.
These tariffs will be reviewed in September 2003 and may be adjusted at that
time.

The shipping levels and realized selling prices of WCI products will
continue to be influenced by the levels of imported steel, the strength of the
manufacturing sector of the domestic economy and production capacity changes by
domestic competitors. Domestic flat rolled steel production capacity had been
reduced by the closing of seven producers during the past several years with
total hot strip mill capacity of 16.7 million tons. This contributed to the
increases in product pricing and order intake realized during 2002. A majority
of this capacity has been restarted at significantly lower production costs and
as a result the impact of this closed capacity may be reversed in part.

Results of Operations

Fiscal 2002 Compared to Fiscal 2001

Net sales in 2002 were $502.0 million on 1,281,140 tons shipped,
representing a 21.5% increase in net sales and a 23.0% increase in tons shipped
compared to 2001. Shipping volume for 2002 began to increase substantially
during the second fiscal quarter and stabilized to more historical levels
during the second half of the fiscal year. In addition, selling prices
increased dramatically throughout 2002. This is a result of a variety of
favorable factors that included a decrease in domestic supply due to the
closing of facilities during the past

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several years, the implementation of
tariffs under a favorable Section 201 decision on certain imported steel which
became effective for imports entering the U.S. on or after March 20, 2002, and
a conclusion to inventory reductions by customers and a slight improvement in
overall economic activity. Net sales per ton shipped decreased 1.3% to $392 in
the 2002 period compared to $397 for the 2001 period, with net selling prices
increasing 3.5% offset with a less favorable product mix. Shipments of custom
carbon, alloy and electrical steels accounted for 48.5% of total shipments in
2002 compared to 51.5% in 2001. Net sales per ton shipped for the fourth
quarter of 2002 were $439 compared to $397 for the third quarter of 2002 and
$371 for the fourth quarter of 2001.

Gross margin (sales less cost of products sold)was $29.0 million in 2002
compared to gross margin (loss) of ($17.9) million in 2001. The increase in
gross margin reflects lower per ton production costs resulting from
significantly higher volume and its effect on fixed operating costs per ton and
higher shipping volume coupled with higher transaction prices, partially offset
by a less favorable product mix as discussed above. The 2002 period included
favorable adjustments to inventory valuation reserves of $ 4.6 million. The
2001 period included unfavorable adjustments to inventory valuation reserves of
$ 1.2 million. Excluding these adjustments the gross margin was $ 24.4 million
in 2002 compared to a gross margin (loss) of ($ 16.7) for 2001. Production
volume in 2002 was approximately 87% of operating capacity compared to
approximately 74% in 2001.

Operating income (loss) was ($4.9) million, or ($4) per ton, in 2002
compared to operating income (loss) of ($61.2) million, or ($59) per ton, in
2001. The decrease in operating loss reflects lower depreciation expense and
the increase in gross margin discussed above and also included significant
non-recurring items for both periods. The operating loss for the 2002 period
included a $1.6 million gain realized from the resolution of contract issues
relating to the sale of a third party owned coke plant adjacent to WCIs
facility and a charge of $2.1 million to establish a reserve for amounts due
from a financially distressed customer. The operating loss for the 2001 period
included a charge of $3.9 million associated with the Companys wholly-owned
subsidiary, Youngstown Sinter Company, indefinitely idling its operating
facility on July 15, 2001, a charge of $2.1 million to establish a reserve for
amounts due from a financially distressed steel company and a charge of $1.7
million to write-off costs incurred in an unsuccessful attempt to acquire
another steel maker. Excluding the gain and adjustments to inventory valuation
reserves and the non-recurring charges for the 2002 period, the operating loss
was ($ 9.1) million or ($7) per ton for fiscal year 2002. Excluding the
charges and adjustments to inventory valuation reserves in the 2001 period, the
operating loss was ($ 52.3) million or ($ 50) per ton for fiscal year 2001.

Interest and other income (expense), net was $0.5 million in 2002 compared
to ($7.6) million in 2001. Declining cash balances during the 2002 period
resulted in a decrease in interest income of $2.7 million. In the 2001 period,
WCI recorded a charge of $10.5 million to write down the carrying value of Acme
Metals 10.875% Senior Unsecured Notes owned by WCI.

As a result of the items discussed above, the Company had a loss before
taxes of $37.6 million in 2002 compared to a loss before taxes of $100.8
million in 2001.

Effective November 1, 1998, the Company was designated as a qualified
subchapter S subsidiary by Renco. Accordingly, the Company is generally not
subject to income taxes.

Fiscal 2001 Compared to Fiscal 2000

Net sales in 2001 were $413.1 million on 1,041,209 tons shipped ($105.7
million and 284,503 tons shipped for the fourth quarter), representing a 26.3%
decrease in net sales and a 17.7% decrease in tons shipped compared to 2000.
Shipping volume for the 2001 period was lower due primarily to lower customer
demand resulting from a general slowing in the U.S. economy coupled with high
levels of

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imported steel. Net sales per ton shipped decreased 10.4% to $397 in
2001 compared to $443 in 2000, with net selling prices down 12.2% offset
somewhat by changes in product mix. Shipments of custom carbon, alloy and
electrical steels accounted for 51.5% of total shipments in 2001 compared to
52.1% in 2000. Net sales per ton shipped for the fourth quarter of 2001 were
$371 compared to $395 for the third quarter of 2001 and $436 for the fourth
quarter of 2000. The decrease in net sales per ton for the fourth quarter
compared to the third quarter resulted primarily from changes in product mix.
On October 31, 2001, WCIs order backlog was approximately 135,000 net tons
compared to approximately 144,000 net tons at October 31, 2000.

Gross margin (loss) (sales less cost of products sold)was ($17.9) million
in 2001 compared to gross margin of $73.2 million in 2000. The decrease in
gross margin reflects the lower shipping volume and transaction prices
discussed above and higher per ton production costs resulting from
significantly lower production volume and its effect on fixed operating costs
per ton. Production volume in 2001 was approximately 74% of operating
capacity compared to approximately 89% in 2000. In addition, the Company
recorded inventory valuation charges totaling $2.6 million in the fourth
quarter of 2001 compared to $1.2 million in the fourth quarter of 2000.

Operating income (loss) was ($61.2) million, or ($59) per ton, in 2001
compared to operating income of $34.2 million, or $27 per ton, in 2000. The
decrease in operating income for the 2001 period reflects the lower gross
margin discussed above along with a charge of $3.9 million associated with
YSCs indefinite idling of its operating facility on July 15, 2001 (See Note
14: Unusual Charges), a charge of $2.1 million to establish a reserve for
amounts due from a financially distressed steel company (See Note 13: Other
Matters) and a charge of $1.7 million to write-off costs incurred in an
unsuccessful attempt to acquire another steel maker (See Note 14: Unusual
Charges). Excluding these charges, the operating loss was ($53.5) million, or
($51) per ton for fiscal year 2001.

Interest income and other income (expense), net was ($7.6) million in 2001
compared to $8.1 million in 2000. In the 2001 period WCI recorded a charge of
$10.5 million to write down the carrying value of Acme Metals, Inc. 10.875%
Senior Unsecured Notes owned by WCI. In the 2000 period, the Company recorded
a gain of $2.8 million as a result of an agreement with the United
Steelworkers, which permitted the Company to pay certain medical benefits from
assets in a trust previously restricted for other benefits. Interest income was
$2.7 million in 2001 compared to interest income of $4.8 million for 2000. The
decrease in interest income was due primarily to lower cash balances and lower
interest rates in the 2001 period compared to the 2000 period.

As a result of the items discussed above, the Company had a loss before
taxes of $100.8 million in 2001 compared to income before taxes of $10.3
million in 2000.

Effective November 1, 1998, the Company was designated as a qualified
subchapter S subsidiary by Renco. Accordingly, the Company is generally not
subject to income taxes.

Liquidity and Capital Resources

WCIs liquidity requirements result from operating losses, capital
investments, working capital requirements, postretirement health care and
pension funding, interest expense and, to a lesser extent, principal payments
on its indebtedness. The Companys primary sources of liquidity as of October
31, 2002 consisted of cash and cash equivalents of $2.8 million and available
borrowing under its revolving credit agreement (Revolver).

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The Revolver has a maximum borrowing limit of $100 million, is secured by
inventories and receivables and is subject to eligibility requirements, as
defined therein. As of October 31, 2002, the Company had net borrowings
outstanding of $32.1 million.

On March 6, 2003 the Company and its lenders agreed to amend the
Revolver. The amendment extended the maturity date of the Revolver to June 30,
2004, eliminated the working capital covenant, redefined net worth to exclude
accumulated other comprehensive income or loss and added an EBITDA covenant. Additionally, the
amended minimum availability covenant is zero unless the Company is
unable to meet an EBITDA test in which case the minimum availability
is $5 million, reduced from $25 million prior to the amendment.

Simultaneous with the execution of the amendment to the Revolver, Renco
agreed to participate in the Companys Revolver by agreeing to fund $15 million
with such participation being subordinated in right of payment to that of the other lenders.

After reflecting the March 6, 2003 amendment, as of October 31, 2002,
the Company would have had net borrowing availability of $53.0 million based on
eligible inventory and receivables after deducting $32.1 million of borrowings
outstanding and $14.9 million in letters of credit outstanding. As of January
31, 2003, assuming the Revolver amendment effective March 6, 2003 had been
in effect, WCI would have had net borrowing availability of $36.1 million based on
eligible inventories and receivables after deducting $41.8 million of
borrowings outstanding, and $14.9 million in letters of credit outstanding.

The Company and the industry continue to face difficult and volatile
market conditions. During 2000 and 2001 there was intense downward pressure on
steel prices due to the surge of imports into the United States. This resulted
in the Company incurring a net loss of $100.8 million in 2001. Order entry
rates and steel prices increased significantly during 2002 as a result of
significant capacity reductions caused by the closing of a number of steel
producers and the effects of the implementation of the Section 201 tariffs. As
a result of the increased shipping volume and prices, the Company returned to
profitability during the fourth quarter of 2002. However, for the full year of
2002 the Company incurred a net loss of $37.6 million. In addition to
incurring significant losses during the last two years, the Company had
negative cash flows which have reduced the cash resources available to support
its operations.

Many of the steel companies shut down in the past two years have been
restarted by other companies with cost structures significantly lower than
WCIs. This low cost capacity returning to the market coupled with continued
high levels of imports and a slowing manufacturing sector has resulted in
reduced volume and pricing expectations for the first half of 2003. As a
result, the Company expects to incur a net loss for 2003.

The Companys liquidity depends on its operating performance and borrowing
availability under its Revolver. If market conditions fail to improve
adequately, operating losses will continue and the Company will be unable to
meet certain covenants associated with its Revolver. Under these
circumstances, if the Company is unable to obtain waivers of covenant
violations or secure additional financing sources to fund expected operating
losses, it would likely have a material adverse effect on WCIs operations.

Cash from Operations

Cash provided (used) by operating activities was ($53.1) million for 2002
compared to ($44.1) million and $38.1 million for 2001 and 2000, respectively.
The decreased operating cash flow in 2002 compared to 2001 resulted primarily
from changes in working capital due to an increase in accounts receivable and
inventory resulting from increased revenue and shipping volume and by an
increase in pension funding partially offset by a significant reduction in net
loss.

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As of October 31, 2002, at pricing then in effect, WCI had commitments
under raw material supply contracts of approximately $9.3 million for 2003,
$5.7 million for 2004 and $70.7 million thereafter.

Capital Expenditures

Capital expenditures were $11.0 million, $13.6 million and $15.6 million
for 2002, 2001 and 2000, respectively. Capital expenditures are expected to be
approximately $15 million for all of fiscal 2003. At October 31, 2002, the
Company had commitments for capital expenditures of approximately $1.4 million.
The Company expects to complete a reline of its blast furnace in 2004 or later
at an estimated cost of up to $30 million.

Debt Transactions

Renco Steel is a holding company formed by Renco in January 1998, which
owns all the outstanding shares of capital stock of the Company. In February
1998, Renco Steel issued $120 million principal amount 10.875% Senior Secured
Notes due 2005, $103.8 million of which are now owned by Renco. These notes
are secured by a pledge of all the outstanding capital stock of the Company.
Historically, Renco Steel has met its debt service obligations from its cash
balances and earnings thereon, through distributions from the Company as
permitted under the Companys outstanding indebtedness as described in Note 5
and, most recently, from cash infusions from Renco. The Company does not
expect to be permitted to pay dividends or make other distributions for the
foreseeable future.

The Revolver and the indenture governing WCIs 10% Senior Secured Notes
due December 1, 2004 contain numerous covenants and prohibitions that limit the
financial activities of the Company, including requirements that the Company
satisfy certain financial ratios and limitations on the incurrence of
additional indebtedness. The Company is required to maintain a minimum net
worth excluding accumulated other comprehensive income or loss, as defined, of
not less than negative $260 million. A minimum cumulative EBITDA covenant has
been established for each month through October 2003 at which point it becomes
a rolling twelve month covenant. The minimum cumulative EBITDA covenant was
$8.0 million for the three months ended January 31, 2003, $12.5 million for the
six months ended April 30, 2003, $19.1 million for the nine months ended July
31, 2003 and $26.9 million for the twelve months ended October 31, 2003. After
October 2003 the minimum EBITDA covenant is $26.9 million over the previous
twelve month period. In addition, if the Company is unable to meet certain minimum
cumulative EBITDA targets, then the Company is required to maintain minimum borrowing
availability of $5 million. A minimum cumulative EBITDA target has been
established for each month through October 2003 at which point it becomes a
rolling twelve month covenant. The minimum cumulative EBITDA related to the
minimum availability covenant is $8.7 million as of January 31, 2003, $13.4
million as of April 30, 2003, $20.3 million as of July 31, 2003 and $28.6
million as of October 31, 2003 and thereafter. The ability of the Company to
meet its debt service requirements and to comply with such covenants will be
dependent upon future operating performance and financial results of the
Company, which will be subject to financial, economic, political, competitive
and other factors affecting the Company, many of which are beyond its control.

Dividends

The Company paid no dividends and was not permitted to do so under the
Senior Secured Notes indenture during fiscal year 2002. The Company does not
expect to be permitted to pay dividends for the foreseeable future based on
limitations under the Senior Secured Notes indenture.

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Postretirement Benefit Plans

WCI provides postretirement health care and life insurance benefits to
substantially all employees who retire upon meeting certain age and length of
service eligibility requirements. The Company has established a trust to hold
contributions to fund future postretirement health care and life insurance
obligations related to the hourly workforce. This trust holds liens on certain
assets of the Company and one of its subsidiaries to secure the Companys
obligation for postretirement health care benefits. As a result of the
collective bargaining agreement effective September 1, 1999, the Company was
permitted to pay current claims up to $8.8 million from a trust. That limit
was reached during the three months ended July 31, 2001, thereafter requiring
the Company to pay claims from corporate assets. Claims paid by the Company or
trust totaled $7.1 million, $5.4 million and $4.4 million during fiscal years
2002, 2001, and 2000, respectively.

The Company has a defined benefit pension plan (DBP) which covers
substantially all bargained for employees. The Company expects to contribute
approximately $26.2 million, $20.6 million and $19.0 million to the DBP during
fiscal years 2003, 2004 and 2005, respectively, which is expected to satisfy
the minimum funding requirements of ERISA for those periods. The Company
contributed $29.6 million, $7.2 million, and $4.2 million to the DBP during the
fiscal years ended October 31, 2002, 2001 and 2000, respectively.

Environmental Matters

WCI has incurred and, in the future, will continue to incur capital
expenditures for matters relating to environmental control and monitoring.

Capital expenditures for environmental control and monitoring were $3.0
million, $2.6 million and $0.7 million in 2002, 2001 and 2000, respectively.
Operating costs for control and monitoring equipment, excluding depreciation
and amortization expense, were $9.5 million, $8.9 million and $9.3 million for
2002, 2001 and 2000, respectively. Operating costs for fiscal 2003 for control
and monitoring equipment are not expected to increase significantly from the
prior periods.

Environmental laws and regulations continue to change and generally have
become more stringent, and WCI may be subject to more stringent environmental
laws and regulations in the future. Compliance with more stringent
environmental laws and regulations could have a material adverse effect on
WCIs consolidated financial position and future results of operations.

Labor Matters

Most of the Companys hourly employees are represented by the USWA, with
which the Company has a five-year collective bargaining agreement effective
September 1, 1999 that expires October 31, 2004. This contract provides for a
wage increase of $1 per hour that becomes effective March 1, 2003.

Accounting Standards

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement No. 143, Accounting for Asset Retirement Obligations. Statement 143
applies to legal obligations associated with the retirement of certain
long-lived assets. It requires companies to record the fair value of the
liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the company capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset.
Upon settlement of the liability, the company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.

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Statement 143 is
required to be adopted in fiscal years beginning after June 15, 2002. WCI has
not yet determined the effect, if any, that adopting Statement 143 will have on
future earnings and financial position.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This statement requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
The statement is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002, and is not expected to have a significant
impact on our financial position and results of operations.

Outlook

WCIs order backlog was approximately 149,000 tons at January 31, 2003,
195,000 tons at October 31, 2002 and 135,000 at October 31, 2001. Shipping
volume during the first fiscal quarter of 2003 was 303,000 tons including
approximately 21,000 tons of semifinished steel. Excluding semifinished product
sales, net sales per ton was $443, flat compared to the fourth quarter of 2002
with cost of goods sold per ton of $396, an increase of approximately 8%
compared to the fourth quarter of 2002 due primarily to lower capacity
utilization. As a result, WCI incurred a loss of $4.1 million during the first
quarter of 2003. Volume for the second quarter of 2003 is expected to be
approximately 300,000 tons including 20,000 tons of semifinished products.
Excluding semifinished product shipments, net sales per ton shipped in the
second quarter of 2003 is expected to decline approximately 3% with cost of goods
sold per ton being flat compared to the first quarter. As a result, WCI
expects to incur a net loss during the second quarter of 2003. WCI expects to
generate free cash flow (cash provided by operating activities less capital
expenditures) of approximately $12 million during the second quarter of 2003
due primarily to a reduction in working capital.

Forward-Looking Statements

This report includes forward-looking statements which involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such risks, uncertainties and other important
factors include, among others: general economic and business conditions; demand
for Company products; changes in industry capacity and levels of imports of
steel or steel products; effectiveness of the Section 201 remedies; industry
trends, including product pricing; competition; currency fluctuations; the loss
of any significant customers; availability of qualified personnel; major
equipment failures; changes in, or the failure or inability to comply with,
government regulation, including, without limitation, environmental
regulations; and the outcome of legal matters. These forward-looking
statements speak only as of the date of this report. The Company expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein to reflect any change in the
Companys expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to commodity price risk with respect to natural gas
and zinc. The Company uses forward purchase contracts to manage the volatility
related to the exposure. No contracts are entered into for speculative
purposes. Based on the Companys commodity hedge exposure at October 31, 2002
and 2001, a hypothetical 10 percent change in market rates applied to the fair
value of the contracts would have no material impact on our earnings, cash
flow, or financial position.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WCI STEEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amount)

|                                               |                                                                                                                          |                                                      |         |             |          |      |         |          |          |  
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- | ------- | ----------- | -------- | ---- | ------- | -------- | -------- | -
|                                               |                                                                                                                          |                                                      |         | October 31,
|                                               |                                                                                                                          |                                                      |         |            
|                                               |                                                                                                                          |                                                      |         | 2002        |          | 2001
|                                               |                                                                                                                          |                                                      |         |             |          |     
|ASSETS                                         |                                                                                                                          |                                                      |         |             |          |      |         |         
|Current assets                                 |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               | Cash and cash equivalents                                                                                                |                                                      | $       | 2,751       |          |      | $       | 32,244   |         
|                                               | Accounts receivable, less allowances for doubtful accounts
of $3,436 and $3,100, respectively                            |                                                      |         | 58,986      |          |      |         | 48,875   |         
|                                               | Inventories                                                                                                              |                                                      |         | 97,592      |          |      |         | 87,075   |         
|                                               | Prepaid expenses and other current assets                                                                                |                                                      |         | 4,862       |          |      |         | 1,049    |         
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               |                                                                                                                          | Total current assets                                 |         |             | 164,191  |      |         |          | 169,243  |  
|Property, plant and equipment, net             |                                                                                                                          |                                                      | 185,433 |             |          |      | 193,453 |         
|Intangible pension assets, net                 |                                                                                                                          |                                                      | 38,831  |             |          |      | 39,556  |         
|Other assets, net                              |                                                                                                                          |                                                      | 3,171   |             |          |      | 4,361   |         
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               |                                                                                                                          | Total assets                                         |         | $           | 391,626  |      |         | $        | 406,613  |  
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         
|LIABILITIES
and SHAREHOLDERS EQUITY (DEFICIT) |                                                                                                                          |                                                      |         |             |          |      |         |         
|Current liabilities                            |                                                                                                                          |                                                      |         |             |          |      |         |         
|Current portion of long-term debt              |                                                                                                                          | $                                                    | 3,892   |             |          | $    | 536     |         
|                                               | Accounts payable                                                                                                         |                                                      |         | 44,758      |          |      |         | 45,939   |         
|                                               | Accrued liabilities                                                                                                      |                                                      |         | 71,382      |          |      |         | 72,361   |         
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               |                                                                                                                          | Total current liabilities                            |         |             | 120,032  |      |         |          | 118,836  |  
|Long-term debt, excluding current portion      |                                                                                                                          |                                                      | 332,405 |             |          |      | 301,111 |         
|Postretirement health care benefits            |                                                                                                                          |                                                      | 122,932 |             |          |      | 117,719 |         
|Pension benefits                               |                                                                                                                          |                                                      | 47,480  |             |          |      | 35,000  |         
|Other liabilities                              |                                                                                                                          |                                                      | 15,608  |             |          |      | 15,381  |         
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               |                                                                                                                          | Total liabilities                                    |         |             | 638,457  |      |         |          | 588,047  |  
|Shareholders equity (deficit)                 |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               | Preferred stock, par value $1,000 per share, 5000 shares authorized, none issued                                         |                                                      |         |            |          |      |         |         |         
|                                               | Common stock, no par value, stated value $.01 per share, 40,000,000 shares authorized,
100 shares issued and outstanding |                                                      |         |            |          |      |         |         |         
|                                               | Additional paid-in capital                                                                                               |                                                      |         | 279         |          |      |         | 279      |         
|                                               | Accumulated deficit                                                                                                      |                                                      |         | (219,282    | )        |      |         | (181,713 | )       
|                                               | Accumulated other comprehensive loss                                                                                     |                                                      |         | (27,828     | )        |      |         |         |         
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               |                                                                                                                          | Total shareholders equity (deficit)                 |         |             | (246,831 | )    |         |          | (181,434 | )
|Commitments and contingencies                  |                                                                                                                          |                                                      |        |             |          |      |        |         
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         
|                                               |                                                                                                                          | Total liabilities and shareholders equity (deficit) |         | $           | 391,626  |      |         | $        | 406,613  |  
|                                               |                                                                                                                          |                                                      |         |             |          |      |         |         

See accompanying notes to consolidated financial statements.

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WCI STEEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar in thousands)

|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |         |  
|-------------------------------------------------------------- | -------------------------------------------- | - | ----------------------- | ------- | ---- | - | -------- | ------- | - | - | ------- | ------- | -
|                                                               |                                              |   | Years ended October 31,
|                                                               |                                              |   |                        
|                                                               |                                              |   | 2002                    |         | 2001 |   | 2000    
|                                                               |                                              |   |                         |         |      |   |         
|Net sales                                                      |                                              | $ | 502,047                 |         |      | $ | 413,108  |         |   | $ | 560,689 |        
|Operating costs and expenses                                   |                                              |   |                         |         |      |   |          |         |   |   |         |        
|Costs of products sold                                         |                                              |   | 473,055                 |         |      |   | 430,991  |         |   |   | 487,477 |        
|                                                               | Depreciation and amortization                |   |                         | 18,987  |      |   |          | 20,870  |   |   |         | 23,254  |  
|                                                               | Selling, general and administrative expenses |   |                         | 14,939  |      |   |          | 16,833  |   |   |         | 15,770  |  
|                                                               | Unusual charges                              |   |                         |        |      |   |          | 5,631   |   |   |         |        |  
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        
|                                                               |                                              |   | 506,981                 |         |      |   | 474,325  |         |   |   | 526,501 |        
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        
|Operating income (loss)                                        |                                              |   | (4,934                  | )       |      |   | (61,217  | )       |   |   | 34,188  |        
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        
|Other income (expense)                                         |                                              |   |                         |         |      |   |          |         |   |   |         |        
|                                                               | Interest expense                             |   |                         | (33,179 | )    |   |          | (31,980 | ) |   |         | (31,940 | )
|                                                               | Interest and other income (expense), net     |   |                         | 544     |      |   |          | (7,608  | ) |   |         | 8,054   |  
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        
|                                                               |                                              |   | (32,635                 | )       |      |   | (39,588  | )       |   |   | (23,886 | )      
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        
|Income (loss) before income taxes                              |                                              |   | (37,569                 | )       |      |   | (100,805 | )       |   |   | 10,302  |        
|Income taxes                                                   |                                              |   |                        |         |      |   |         |         |   |   |        |        
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        
|Net income (loss)                                              |                                              | $ | (37,569                 | )       |      | $ | (100,805 | )       |   | $ | 10,302  |        
|Other comprehensive loss-
minimum pension liability adjustment |                                              |   | (27,828                 | )       |      |   |         |         |   |   |        |        
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        
|Total comprehensive income (loss)                              |                                              | $ | (65,397                 | )       |      | $ | (100,805 | )       |   | $ | 10,302  |        
|                                                               |                                              |   |                         |         |      |   |          |         |   |   |         |        

See accompanying notes to consolidated financial statements.

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WCI STEEL, INC. AND SUBIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(DEFICIT)
(Dollars in Thousands)

|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |          |  
|--------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------- | - | ----------- |  | ----------- | --- | ------------- |  | ------------- | -------- | -------- | - | - | ------- | ------- | - | - | -------- | -------- | -
|                            |                                                                               |                                             
|                            |                                                                               | Years Ended October 31, 2002, 2001, and 2000
|                            |                                                                               |                                             
|                            |                                                                               |                                              |   | Accumulated |  | Total      
|                            |                                                                               |                                              |   | Additional  |  |             |     | Other         |  | Shareholders
|                            |                                                                               | Common                                       |   | Paid-In     |  | Accumulated |     | Comprehensive |  | Equity       
|                            |                                                                               | Stock                                        |   | Capital     |  | Deficit     |     | Loss          |  | (Deficit)    
|                            |                                                                               |                                              |   |             |  |             |     |               |  |              
|                           
|                           
|                           
|                           
|Balance at October 31, 1999 |                                                                               | $                                            |  |             |  | $           | 279 |               |  | $             | (82,010  | )        |   | $ |        |         |   | $ | (81,731  | )       
|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |         
|                            | Net income                                                                    |                                              |   |            |  |             |     |              |  |               |          | 10,302   |   |   |         |        |   |   |          | 10,302   |  
|                           
|                           
|                           
|                           
|                            | Dividends paid on common stock                                                |                                              |   |            |  |             |     |              |  |               |          | (9,200   | ) |   |         |        |   |   |          | (9,200   | )
|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |         
|Balance at October 31, 2000 |                                                                               |                                              |  |             |  |             | 279 |               |  |               | (80,908  | )        |   |   |        |         |   |   | (80,629  | )       
|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |         
|                            | Net loss                                                                      |                                              |   |            |  |             |     |              |  |               |          | (100,805 | ) |   |         |        |   |   |          | (100,805 | )
|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |         
|Balance at October 31, 2001 |                                                                               |                                              |  |             |  |             | 279 |               |  |               | (181,713 | )        |   |   |        |         |   |   | (181,434 | )       
|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |         
|                            | Net loss                                                                      |                                              |   |            |  |             |     |              |  |               |          | (37,569  | ) |   |         |        |   |   |          | (37,569  | )
|                           
|                           
|                           
|                           
|                            | Accumulated other comprehensive loss-minimum
    pension liability adjustment |                                              |   |            |  |             |     |              |  |               |          |         |   |   |         | (27,828 | ) |   |          | (27,828  | )
|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |         
|Balance at October 31, 2002 |                                                                               | $                                            |  |             |  | $           | 279 |               |  | $             | (219,282 | )        |   | $ | (27,828 | )       |   | $ | (246,831 | )       
|                            |                                                                               |                                              |   |             |  |             |     |               |  |               |          |          |   |   |         |         |   |   |          |         

See accompanying notes to consolidated financial statements.

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WCI STEEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)

|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |         |         |         |  
|------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------------- | ------- | ----------------------- | ------- | ---- | -------- | ------ | ------- | - | ------- | ------- | ------- | -
|                                      |                                                                                                |                                             |                                                   |         | Years ended October 31,
|                                      |                                                                                                |                                             |                                                   |         |                        
|                                      |                                                                                                |                                             |                                                   |         | 2002                    |         | 2001 |          | 2000  
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |       
|CASH
FLOWS FROM OPERATING ACTIVITIES: |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      | Net income (loss)                                                                              |                                             | $                                                 | (37,569 | )                       |         | $    | (100,805 | )      |         | $ | 10,302  |        
|                                      | Adjustment to reconcile net income (loss) to net cash
provided (used) by operating activities: |                                             |                                                   |         |                         |         |      |          |        |         |   |         |        
|                                      |                                                                                                | Depreciation and amortization               |                                                   |         | 18,860                  |         |      |          | 19,338 |         |   |         | 20,311  |        
|                                      |                                                                                                | Amortization of deferred maintenance costs  |                                                   |         | 127                     |         |      |          | 1,532  |         |   |         | 2,943   |        
|                                      |                                                                                                | Amortization of financing costs             |                                                   |         | 1,409                   |         |      |          | 1,309  |         |   |         | 1,291   |        
|                                      |                                                                                                | Postretirement health care benefits         |                                                   |         | 7,113                   |         |      |          | 11,735 |         |   |         | 11,878  |        
|                                      |                                                                                                | Pension benefits                            |                                                   |         | (15,101                 | )       |      |          | 4,267  |         |   |         | 6,820   |        
|                                      |                                                                                                | Provision for losses on accounts receivable |                                                   |         | 2,483                   |         |      |          | 2,603  |         |   |         | 37      |        
|                                      |                                                                                                | Asset impairment and other charges          |                                                   |         |                        |         |      |          | 16,115 |         |   |         |        |        
|                                      |                                                                                                | Other                                       |                                                   |         | 191                     |         |      |          | 236    |         |   |         | 1,190   |        
|                                      | Cash provided (used) by changes in certain assets and liabilities                              |                                             |                                                   |         |                         |         |      |          |        |         |   |         |        
|                                      |                                                                                                | Accounts receivable                         |                                                   |         | (12,594                 | )       |      |          | (3,879 | )       |   |         | 10,210  |        
|                                      |                                                                                                | Inventories                                 |                                                   |         | (10,517                 | )       |      |          | 9,096  |         |   |         | (12,924 | )      
|                                      |                                                                                                | Prepaid expenses and other assets           |                                                   |         | (4,159                  | )       |      |          | (3,757 | )       |   |         | 1,223   |        
|                                      |                                                                                                | Accounts payable                            |                                                   |         | (1,181                  | )       |      |          | (1,262 | )       |   |         | (12,529 | )      
|                                      |                                                                                                | Accrued liabilities                         |                                                   |         | (2,401                  | )       |      |          | 1,095  |         |   |         | (717    | )      
|                                      |                                                                                                | Other liabilities                           |                                                   |         | 227                     |         |      |          | (1,693 | )       |   |         | (1,982  | )      
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      |                                                                                                |                                             | Net cash provided (used) by operating activities: |         |                         | (53,112 | )    |          |        | (44,070 | ) |         |         | 38,053  |  
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                     
|CASH
FLOWS FROM INVESTING ACTIVITIES: |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      | Additions to property, plant and equipment                                                     |                                             |                                                   | (11,031 | )                       |         |      | (13,567  | )      |         |   | (15,602 | )      
|                                      | Gross proceeds from the sale of assets                                                         |                                             |                                                   |        |                         |         |      | 136      |        |         |   |        |        
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      |                                                                                                |                                             | Net cash used by investing activities             |         |                         | (11,031 | )    |          |        | (13,431 | ) |         |         | (15,602 | )
|                                     
|CASH
FLOWS FROM FINANCING ACTIVITIES: |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      | Net borrowings under Revolving Credit Facility                                                 |                                             |                                                   | 32,086  |                         |         |      |         |        |         |   |        |        
|                                      | Other changes in long-term debt                                                                |                                             |                                                   | 2,564   |                         |         |      | 267      |        |         |   | (122    | )      
|                                      | Dividends paid                                                                                 |                                             |                                                   |        |                         |         |      |         |        |         |   | (9,200  | )      
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      |                                                                                                |                                             | Net cash provided (used) by financing activities  |         |                         | 34,650  |      |          |        | 267     |   |         |         | (9,322  | )
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      | Net increase (decrease) in cash and cash equivalents                                           |                                             |                                                   | (29,493 | )                       |         |      | (57,234  | )      |         |   | 13,129  |        
|                                      | Cash and cash equivalents at beginning of year                                                 |                                             |                                                   | 32,244  |                         |         |      | 89,478   |        |         |   | 76,349  |        
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      | Cash and cash equivalents at end of year                                                       |                                             | $                                                 | 2,751   |                         |         | $    | 32,244   |        |         | $ | 89,478  |        
|                                      |                                                                                                |                                             |                                                   |         |                         |         |      |          |        |         |   |        
|                                      | Supplemental disclosure of cash flow information                                               |                                             |                                                   |         |                         |         |      |          |        |         |   |         |        
|                                      |                                                                                                | Cash paid for interest                      |                                                   | $       | 31,786                  |         |      | $        | 30,673 |         |   | $       | 30,649  |        
|                                      |                                                                                                | Cash paid for income taxes                  |                                                   |         |                        |         |      |          |       |         |   |         | 21      |        

See accompanying notes to consolidated financial statements.

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WCI STEEL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

WCI Steel, Inc. (Company or WCI) is a wholly owned subsidiary of Renco
Steel Holdings, Inc. (Renco Steel) and an indirect wholly owned subsidiary of
The Renco Group, Inc. (Renco).

(a) Nature of Operations

The Company is a niche oriented integrated producer of value-added, custom
steel products. The Company produces a wide range of custom flat rolled
products at its primary facility in Warren, Ohio, including high carbon, alloy,
ultra high strength, silicon electrical and heavy gauge galvanize steel. In
addition, the Company produces commodity grade products that consist of low
carbon, high strength and light gauge galvanize steel. The Companys primary
customers are steel converters, steel service centers, construction product
companies, electrical equipment manufacturers and to a lesser extent,
automobile and automotive parts manufacturers located principally in the United
States.

During 2002, 2001, and 2000, sales to the Companys largest customer
accounted for 11.7%, 9.8%, and 10.1%, respectively, of net sales.
Concentration of credit risk related to trade receivables is limited due to the
large number of customers in a variety of industries. Approximately 50% of
WCIs shipments are to customers within 200 miles of its primary facility.

Since its inception, the Company has had labor agreements with the United
Steelworkers of America (USWA) and other organized labor organizations. The
USWA represents approximately 75% of the Companys employees. The Company has
a five-year agreement with the USWA that expires October 31, 2004.

(b) Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany profits,
transactions, and balances have been eliminated in consolidation.

(c) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and short-term investments
with original maturities of three months or less.

(d) Inventories

Inventories are stated at the lower of cost or market. Cost is determined
by the last-in, first-out (LIFO) method. Market value is determined based on
expected selling price of each product.

(e) Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is
calculated on the straight-line method over the estimated useful lives of the
assets (buildings 20 to 30 years and machinery and equipment 2 to 30 years with
a weighted average of 17 years). Expenditures for normal repairs and
maintenance are charged to expense as incurred.

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(f) Other Assets

Deferred financing costs, included in other non-current assets, are
amortized using the effective yield method over the term of the related
financing.

(g) Income Taxes

On January 15, 1999, Renco filed an election with the consent of its
shareholders with the Internal Revenue Service to change its taxable status
from that of a subchapter C corporation to that of a subchapter S corporation,
effective November 1, 1998. At the same time, Renco elected for the Company to
be treated as a qualified subchapter S subsidiary (QSSS). Most states in which
the Company operates follow similar tax treatment. QSSS status requires the
ultimate shareholders to include their pro rata share of the Companys income
or loss in their individual tax returns. The Company provides for state and
local income taxes for the taxing jurisdictions which do not recognize QSSS
status, however, management believes this is not material to the Company.
However, under the built in gains provisions of the tax law, certain federal
and state taxes may become payable and would be charged to the Companys
statement of operations. Such taxes are measured by the excess of the fair
market value of assets over their tax bases on the effective date of the
subchapter S subsidiary election if the associated assets are disposed of
within the ten-year post-election period. Management has not and does not
intend to trigger any taxes under the built-in-gains provisions of the tax law.

(h) Environmental Compliance Costs

Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current or
future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial expenditures are probable, and the
cost can be reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or the
Companys development of, or commitment to, a plan of action based on the then
known facts.

(i) Use of Estimates in Preparation of Consolidated Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

(j) Reclassifications

Certain amounts in the consolidated financial statements for 2001 have
been reclassified to conform to the 2002 presentation.

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(2)  Other Matters (Unaudited)

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed
below, the Company has incurred recurring losses from operations and negative
cash flows that raise substantial doubt about its ability to continue as a
going concern. Management is undertaking a comprehensive assessment of its
business to address these issues as described below. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

The Company and the industry continue to face difficult and volatile
market conditions. During 2000 and 2001 there was intense downward pressure on
steel prices due to the surge of imports into the United States. This resulted
in the Company incurring a net loss of $100.8 million in 2001. Order entry
rates and steel prices increased significantly during 2002 as a result of
significant capacity reductions caused by the closing of a number of steel
producers and the effects of the implementation of the Section 201 tariffs. As
a result of the increased shipping volume and prices, the Company returned to
profitability during the fourth quarter of 2002. However, for the full year of
2002 the Company incurred a net loss of $37.6 million. In addition to
incurring significant losses during the last two years, the Company had
negative cash flows which have reduced the cash resources available to support
its operations.

Many of the steel companies shut down in the past two years have been
restarted by other companies with cost structures significantly lower than
WCIs. This low cost capacity returning to the market coupled with continued
high levels of imports and a slowing manufacturing sector has resulted in
reduced volume and pricing expectations for the first half of 2003. As a
result, the Company expects to incur a net loss for 2003.

The Companys liquidity depends on its operating performance and borrowing
availability under its revolving credit facility. If market conditions fail to
improve adequately, operating losses will continue and the Company will be
unable to meet certain covenants associated with its revolving credit facility.
Under these circumstances, if the Company is unable to obtain waivers of
covenant violations or secure additional financing sources to fund expected
operating losses, it would likely have a material adverse effect on WCIs
operations.

The Company has attempted to conserve cash by reducing operating costs and
deferring capital spending. However, these measures have not and are not
expected to allow the Company to generate positive cash flow on a sustained
basis in the current operating environment. As a result, the Company is
undertaking a comprehensive assessment of its business including its equipment
and facilities, organizational structure, labor practices and utilization,
vendor relationships and capital structure. From this assessment WCI intends
to develop a business plan that addresses WCIs cost competitiveness in the
industry and ensures that the Company has adequate resources to fund its
operations and capital expenditure needs.

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(3)  Inventories

Inventories consist of the following:

|                                   |  |                        |        |      |  |   |        | 
|---------------------------------- |  | ---------------------- | ------ | ---- |  | - | ------ | 
|                                   |  | October 31,           
|                                   |  |                       
|                                   |  | 2002                   |        | 2001
|                                   |  |                        |        |     
|                                   |  | (Dollars in Thousands)
|Raw materials                      |  | $                      | 30,215 |      |  | $ | 33,542 | 
|Finished and semi-finished product |  |                        | 67,247 |      |  |   | 53,438 | 
|Supplies                           |  |                        | 130    |      |  |   | 95     | 
|                                   |  |                        |        |      |  |   |        | 
|                                   |  |                        | 97,592 |      |  |   | 87,075 | 
|Less LIFO reserve                  |  |                        |       |      |  |   |       | 
|                                   |  |                        |        |      |  |   |        | 
|                                   |  | $                      | 97,592 |      |  | $ | 87,075 | 
|                                   |  |                        |        |      |  |   |        | 

(4)  Property, Plant and Equipment

Property, plant and equipment consist of the following:

|                              |  |                        |         |      |  |   |         | 
|----------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | 
|                              |  | October 31,           
|                              |  |                       
|                              |  | 2002                   |         | 2001
|                              |  |                        |         |     
|                              |  | (Dollars in Thousands)
|Land and improvements         |  | $                      | 694     |      |  | $ | 694     | 
|Buildings                     |  |                        | 27,402  |      |  |   | 27,329  | 
|Machinery and equipment       |  |                        | 346,154 |      |  |   | 334,334 | 
|Construction in progress      |  |                        | 5,261   |      |  |   | 10,653  | 
|                              |  |                        |         |      |  |   |         | 
|                              |  |                        | 379,511 |      |  |   | 373,010 | 
|Less accumulated depreciation |  |                        | 194,078 |      |  |   | 179,557 | 
|                              |  |                        |         |      |  |   |         | 
|                              |  | $                      | 185,433 |      |  | $ | 193,453 | 
|                              |  |                        |         |      |  |   |         | 

(5)  Long-Term Debt

Long-term debt consist of the following:

|                                                                                                |  |                        |         |      |  |   |         | 
|----------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | 
|                                                                                                |  | October 31,           
|                                                                                                |  |                       
|                                                                                                |  | 2002                   |         | 2001
|                                                                                                |  |                        |         |     
|                                                                                                |  | (Dollars in Thousands)
|Senior Secured Notes with interest at 10% payable semi-annually, due December 1, 2004           |  | $                      | 300,000 |      |  | $ | 300,000 | 
|Revolving Credit Facility (Revolver) with interest at 5.51% at October 31, 2002 payable monthly |  |                        | 32,086  |      |  |   |        | 
|Other                                                                                           |  |                        | 4,211   |      |  |   | 1,647   | 
|                                                                                                |  |                        |         |      |  |   |         | 
|                                                                                                |  |                        | 336,297 |      |  |   | 301,647 | 
|Less current portion of long-term debt                                                          |  |                        | 3,892   |      |  |   | 536     | 
|                                                                                                |  |                        |         |      |  |   |         | 
|                                                                                                |  | $                      | 332,405 |      |  | $ | 301,111 | 
|                                                                                                |  |                        |         |      |  |   |         | 

The $300 million 10% Senior Secured Notes due December 1, 2004 (Senior
Secured Notes) are secured by a first priority lien on substantially all of the
existing property, plant and equipment of the Company. A Voluntary Employee
Beneficiaries Association trust fund, established to hold Company contributions
to fund postretirement health care and life insurance obligations for the
benefit of hourly employees, holds a second priority lien on the security for
the Senior Secured Notes.

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The Company has a $100,000,000 Revolver secured by inventories and
receivables and subject to eligibility requirements, as defined, reduced by any
outstanding letters of credit. The Revolver is subject to a monthly service
fee of $15,000 and an annual commitment fee of 0.5% of the unused balance up to
$60,000,000 payable monthly. There were borrowings of $32,086,000 outstanding
under the Revolver as of October 31, 2002. The Revolver also provides for up
to an aggregate amount of $20,000,000 in letters of credit.

On March 6, 2003 the Company and its lenders agreed to amend the
Revolver. The Revolver had been subject to a minimum availability covenant of
$20 million or $25 million depending on the Companys cumulative earnings
before interest, taxes, depreciation and amortization (EBITDA). This covenant
was replaced under the amendment as discussed below. Additionally, the
Revolvers expiration date was extended to June 30, 2004. At October 31, 2002,
the Company had net borrowing availability of $53,043,000 based on eligible
inventory and receivables after deducting $32,086,000 of borrowings
outstanding, and $14,870,000 in letters of credit outstanding after reflecting
the amendment effective March 6, 2003. Simultaneous with the execution of
the amendment to the Revolver, Renco agreed to participate in the Companys
Revolver by agreeing to fund $15 million with such participation being
subordinated in right of payment to that of the other lenders.

The Companys Revolver and Senior Secured Notes contain certain financial
and other covenants, including maintenance of specified levels of net worth as
defined, EBITDA, and debt service and limitations on capital expenditures.
Additional covenants limit the incurrence of additional indebtedness, payments
affecting subsidiaries, transactions with affiliates, sale/leaseback
transactions, impairment of security interest, consolidations, mergers and
transfer of the Companys assets. The Company is required to maintain a
minimum net worth excluding accumulated other comprehensive income or loss
related to the Companys defined benefit pension plan of not less
than negative $260 million. A minimum cumulative EBITDA covenant has been
established for each month through October 2003 at which point it becomes a
rolling twelve month covenant. The minimum cumulative EBITDA covenant is $8.0
million for the three months ended January 31, 2003, $12.5 million for the six
months ended April 30, 2003, $19.1 million for the nine months ended July 31,
2003 and $26.9 million for the twelve months ended October 31, 2003. After
October 2003 the minimum EBITDA covenant is $26.9 million over the previous
twelve month period. Interest is charged on the Revolver at prime rate plus
1.5% or as to Eurodollar Rate Loans, a rate of 3.5% in excess of the Adjusted
Eurodollar Rate applicable for the interest period selected by the Company.
In addition, if the Company is unable to meet certain minimum
cumulative EBITDA targets, then the Company is required to maintain minimum borrowing
availability of $5 million. A minimum cumulative EBITDA target has been established for
each month through October 2003 at which point it becomes a rolling twelve
month covenant. The minimum cumulative EBITDA related to the minimum
availability covenant is $8.7 million as of January 31, 2003, $13.4 million as
of April 30, 2003, $20.3 million as of July 31, 2003 and $28.6 million as of
October 31, 2003 and thereafter. The Company is permitted to declare and pay
dividends, and make other transactions with affiliates provided no condition of
default exists or will exist, and the accumulated amount of such transactions
is no greater than fifty percent (50%) of the consolidated net income as
defined (less 100% of any consolidated net loss) earned for periods subsequent
to October 31, 1996 when taken as a single accounting period, less management
fees paid to Renco in excess of $1,200,000 annually for the same period. Under
these agreements, there were no amounts available for dividends and other
transactions with affiliates at October 31, 2002.

Aggregate principal payments on long-term debt for the five years
subsequent to October 31, 2002 are as follows: $3,892,000 in 2003, $32,308,000
in 2004, $300,063,000 in 2005, $34,000 in 2006 and none thereafter.

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As of October 31, 2002, the fair value of the Senior Secured Notes was
$90,000,000 based on the quoted market price.

(6)  Accrued Liabilities

Accrued liabilities consist of the following:

|                                       |  |                        |        |      |  |   |        | 
|-------------------------------------- |  | ---------------------- | ------ | ---- |  | - | ------ | 
|                                       |  | October 31,           
|                                       |  |                       
|                                       |  | 2002                   |        | 2001
|                                       |  |                        |        |     
|                                       |  | (Dollars in Thousands)
|Payroll                                |  | $                      | 2,838  |      |  | $ | 3,638  | 
|Employee benefits                      |  |                        | 12,627 |      |  |   | 13,285 | 
|Defined benefit pension plan (current) |  |                        | 26,153 |      |  |   | 26,631 | 
|Retiree healthcare (current)           |  |                        | 7,500  |      |  |   | 5,600  | 
|Interest                               |  |                        | 12,504 |      |  |   | 12,520 | 
|Other                                  |  |                        | 9,760  |      |  |   | 10,687 | 
|                                       |  |                        |        |      |  |   |        | 
|                                       |  | $                      | 71,382 |      |  | $ | 72,361 | 
|                                       |  |                        |        |      |  |   |        | 

(7)  Employee Compensation Plans

The Company has variable compensation plans for the benefit of
substantially all employees. The amount of compensation due under these plans
is based on the Companys income as defined under each plan. Total expense
under the plans was $1,813,000, $685,000 and $4,929,000 for the years ended
October 31, 2002, 2001 and 2000, respectively. Certain amounts under these
plans represent deferred compensation.

(8)  Pension Plans

The Company has defined contribution retirement plans under which it
expensed approximately $1,971,000, $1,859,000 and $2,083,000 for the years
ended October 31, 2002, 2001 and 2000, respectively.

The Company also has a defined benefit pension plan for substantially all
hourly employees which provides minimum pension benefits based on age, years of
service, and benefits provided under the Companys frozen defined contribution
plan and a predecessor companys defined benefit plan. As a result of the
collective bargaining agreement effective September 1, 1999 with the USWA, the
plan was amended to provide an increase in pension benefits. In addition, as
active employees retire, assets from the Companys frozen defined contribution
component of the plan are transferred to the defined benefit
component of the plan with a corresponding increase in the projected benefit
obligation.

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The following table sets forth the actuarial present value of benefit
obligations and funded status of the Companys defined benefit pension plan:

|                                                                                                                    |  |                        |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | -
|                                                                                                                    |  | October 31,           
|                                                                                                                    |  |                       
|                                                                                                                    |  | 2002                   |         | 2001
|                                                                                                                    |  |                        |         |     
|                                                                                                                    |  | (Dollars in Thousands)
|Projected benefit obligation                                                                                        |  | $                      | 133,181 |      |  | $ | 98,682  |  
|Plan assets at fair value                                                                                           |  |                        | 59,344  |      |  |   | 36,906  |  
|                                                                                                                    |  |                        |         |      |  |   |         |  
|Projected benefit obligation in excess of plan assets                                                               |  |                        | 73,837  |      |  |   | 61,776  |  
|Unrecognized net gain (loss) from past experience
different from that assumed and effects of changes in assumptions |  |                        | (28,032 | )    |  |   | 5,504   |  
|Unrecognized prior service cost                                                                                     |  |                        | (38,831 | )    |  |   | (45,205 | )
|Accumulated other comprehensive loss                                                                                |  |                        | 27,828  |      |  |   |        |  
|Intangible pension asset                                                                                            |  |                        | 38,831  |      |  |   | 39,556  |  
|                                                                                                                    |  |                        |         |      |  |   |         |  
|Accrued pension cost                                                                                                |  |                        | 73,633  |      |  |   | 61,631  |  
|Less pension liability due within one year                                                                          |  |                        | 26,153  |      |  |   | 26,631  |  
|                                                                                                                    |  |                        |         |      |  |   |         |  
|Long-term pension liability                                                                                         |  | $                      | 47,480  |      |  | $ | 35,000  |  
|                                                                                                                    |  |                        |         |      |  |   |         |  

An assumed discount rate of 6.75%and 7.0% and an expected return on plan
assets of 9.0% and 9.0% in 2002 and 2001, respectively were used for purposes
of valuing the benefits under the defined benefit pension plan.

The following table sets forth a reconciliation of the beginning and end
of year projected benefit obligation:

|                                                  |  |                        |         |      |  |   |        |  
|------------------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------ | -
|                                                  |  | 2002                   |         | 2001
|                                                  |  |                        |         |     
|                                                  |  | (Dollars in Thousands)
|Projected benefit obligation at beginning of year |  | $                      | 98,682  |      |  | $ | 81,195 |  
|Service cost                                      |  |                        | 4,231   |      |  |   | 3,500  |  
|Interest cost                                     |  |                        | 7,824   |      |  |   | 6,155  |  
|Transfers from DC plan                            |  |                        | 2,737   |      |  |   | 4,827  |  
|Actuarial (gains) loss, net                       |  |                        | 27,419  |      |  |   | 9,476  |  
|Benefits paid                                     |  |                        | (7,712  | )    |  |   | (6,471 | )
|                                                  |  |                        |         |      |  |   |        |  
|Projected benefit obligation at end of year       |  | $                      | 133,181 |      |  | $ | 98,682 |  
|                                                  |  |                        |         |      |  |   |        |  

The following table sets forth a reconciliation of the beginning and end
of year fair value of plan assets:

|                                 |  |                        |        |      |  |   |        |  
|-------------------------------- |  | ---------------------- | ------ | ---- |  | - | ------ | -
|                                 |  | 2002                   |        | 2001
|                                 |  |                        |        |     
|                                 |  | (Dollars in Thousands)
|Plan assets at beginning of year |  | $                      | 36,906 |      |  | $ | 37,534 |  
|Actual return on assets          |  |                        | (2,230 | )    |  |   | (6,156 | )
|Employer contributions           |  |                        | 29,643 |      |  |   | 7,172  |  
|Benefits paid                    |  |                        | (7,712 | )    |  |   | (6,471 | )
|Transfers from DC plan           |  |                        | 2,737  |      |  |   | 4,827  |  
|                                 |  |                        |        |      |  |   |        |  
|Plan assets at end of year       |  | $                      | 59,344 |      |  | $ | 36,906 |  
|                                 |  |                        |        |      |  |   |        |  

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The following table sets forth the components of pension expense:

|                               |                                   |   |                         |       |      |   |        |        |   |   |        |        |  
|------------------------------ | --------------------------------- | - | ----------------------- | ----- | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                               |                                   |   | Years Ended October 31,
|                               |                                   |   |                        
|                               |                                   |   | 2002                    |       | 2001 |   | 2000  
|                               |                                   |   |                         |       |      |   |       
|                               |                                   |   | (Dollars in Thousands) 
|Service cost                   |                                   | $ | 4,231                   |       |      | $ | 3,500  |        |   | $ | 3,971  |       
|Interest cost                  |                                   |   | 7,824                   |       |      |   | 6,155  |        |   |   | 4,853  |       
|Expected return on plan assets |                                   |   | (3,887                  | )     |      |   | (3,254 | )      |   |   | (2,112 | )     
|Amortization of unrecognized:  |                                   |   |                         |       |      |   |        |        |   |   |        |       
|                               | Prior service cost                |   |                         | 6,374 |      |   |        | 6,374  |   |   |        | 6,374  |  
|                               | Actuarial (gains) and losses, net |   |                         |      |      |   |        | (1,336 | ) |   |        | (2,018 | )
|                               |                                   |   |                         |       |      |   |        |        |   |   |        |       
|                               |                                   | $ | 14,542                  |       |      | $ | 11,439 |        |   | $ | 11,068 |       
|                               |                                   |   |                         |       |      |   |        |        |   |   |        |       

(9)  Postretirement Health Care Benefits

The following table sets forth the accumulated postretirement benefit
obligation (APBO) of the Companys postretirement health care and life
insurance plans:

|                                                                                                       |  |                         |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------ |  | ----------------------- | ------- | ---- |  | - | ------- | -
|                                                                                                       |  | Years Ended October 31,
|                                                                                                       |  |                        
|                                                                                                       |  | 2002                    |         | 2001
|                                                                                                       |  |                         |         |     
|                                                                                                       |  | (Dollars in Thousands) 
|APBO                                                                                                   |  | $                       | 166,352 |      |  | $ | 154,369 |  
|Plan assets at fair value                                                                              |  |                         | 8,022   |      |  |   | 9,234   |  
|                                                                                                       |  |                         |         |      |  |   |         |  
|APBO in excess of plan assets                                                                          |  |                         | 158,330 |      |  |   | 145,135 |  
|Unrecognized prior service cost resulting from plan amendments                                         |  |                         | (1,927  | )    |  |   | (3,724  | )
|Unrecognized net loss from past experience different from that
assumed and from changes in assumptions |  |                         | (25,971 | )    |  |   | (18,092 | )
|                                                                                                       |  |                         |         |      |  |   |         |  
|Accrued postretirement benefit cost                                                                    |  |                         | 130,432 |      |  |   | 123,319 |  
|Less portion due within one year                                                                       |  |                         | 7,500   |      |  |   | 5,600   |  
|                                                                                                       |  |                         |         |      |  |   |         |  
|                                                                                                       |  | $                       | 122,932 |      |  | $ | 117,719 |  
|                                                                                                       |  |                         |         |      |  |   |         |  

The APBO was determined using a discount rate of 6.75% and 7.0% and an
expected return on plan assets of 9.0% and 9.0% in 2002 and 2001, respectively
and an assumed health care cost trend rate of 8.0% in 2003, gradually declining
to 5.0% after 2005. Assuming a 1% increase in the health care cost trend rate,
the APBO at October 31, 2002 would increase by $25,347,000 along with an
increase in the 2002 service and interest cost components of $2,478,000.
Assuming a 1% decrease in the health care cost trend rates, the APBO at October
31, 2002 would decrease by $20,229,000 along with a decrease in the 2002
service and interest cost components of $1,940,000.

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The following table sets forth a reconciliation of the beginning and end
of year APBO:

|                              |  |                        |         |      |  |   |         |  
|----------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | -
|                              |  | 2002                   |         | 2001
|                              |  |                        |         |     
|                              |  | (Dollars in Thousands)
|APBO at beginning of year     |  | $                      | 154,369 |      |  | $ | 132,686 |  
|Service cost                  |  |                        | 2,887   |      |  |   | 2,701   |  
|Interest cost                 |  |                        | 10,314  |      |  |   | 10,053  |  
|Actuarial (gains) losses, net |  |                        | 5,926   |      |  |   | 14,353  |  
|Benefits paid                 |  |                        | (7,144  | )    |  |   | (5,424  | )
|                              |  |                        |         |      |  |   |         |  
|APBO at end of year           |  | $                      | 166,352 |      |  | $ | 154,369 |  
|                              |  |                        |         |      |  |   |         |  

The following table sets forth a reconciliation of the beginning and end
of year fair value of plan assets:

|                                 |  |                        |        |      |  |   |        |  
|-------------------------------- |  | ---------------------- | ------ | ---- |  | - | ------ | -
|                                 |  | 2002                   |        | 2001
|                                 |  |                        |        |     
|                                 |  | (Dollars in Thousands)
|Plan assets at beginning of year |  | $                      | 9,234  |      |  | $ | 15,564 |  
|Actual loss on assets            |  |                        | (1,212 | )    |  |   | (2,329 | )
|Benefits paid                    |  |                        |       |      |  |   | (4,001 | )
|                                 |  |                        |        |      |  |   |        |  
|Plan assets at end of year       |  | $                      | 8,022  |      |  | $ | 9,234  |  
|                                 |  |                        |        |      |  |   |        |  

Net periodic postretirement benefit costs included the following
components:

|                                         |                       |   |                         |       |      |   |        |       |   |   |        |       |  
|---------------------------------------- | --------------------- | - | ----------------------- | ----- | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                         |                       |   | Years Ended October 31,
|                                         |                       |   |                        
|                                         |                       |   | 2002                    |       | 2001 |   | 2000  
|                                         |                       |   |                         |       |      |   |       
|                                         |                       |   | (Dollars in Thousands) 
|Service cost                             |                       | $ | 2,887                   |       |      | $ | 2,701  |       |   | $ | 2,658  |      
|Interest cost                            |                       |   | 10,314                  |       |      |   | 10,053 |       |   |   | 9,206  |      
|Expected return on plan assets           |                       |   | (831                    | )     |      |   | (1,184 | )     |   |   | (1,477 | )    
|Amortization of unrecognized:            |                       |   |                         |       |      |   |        |       |   |   |        |      
|                                         | Prior service cost    |   |                         | 1,797 |      |   |        | 1,797 |   |   |        | 1,797 |  
|                                         | Actuarial (gain) loss |   |                         | 90    |      |   |        | (208  | ) |   |        | (160  | )
|                                         |                       |   |                         |       |      |   |        |       |   |   |        |      
|Net periodic postretirement benefit cost |                       | $ | 14,257                  |       |      | $ | 13,159 |       |   | $ | 12,024 |      
|                                         |                       |   |                         |       |      |   |        |       |   |   |        |      

(10)  Income Taxes

As a result of the tax status described in Note (1) (g), the Company is
generally not subject to income taxes. As of October 31, 2002 and 2001, the
Companys tax basis in its assets and liabilities exceeded its book basis by
approximately $15,103,000 and $19,860,000, respectively.

(11)  Leases

The Company leases a portion of its operating and data processing
equipment. Rent expense for noncancellable operating leases amounted to
approximately $1,475,000, $1,741,000 and $1,914,000, for the years ended
October 31, 2002, 2001 and 2000, respectively.

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The following table is a summary of future minimum payments under
capitalized leases and under operating leases that have initial or remaining
noncancelable lease terms in excess of one year at October 31, 2002.

|                                                    |  |                        |     |           |  |   |       | 
|--------------------------------------------------- |  | ---------------------- | --- | --------- |  | - | ----- | 
|                                                    |  | Capitalized            |     | Operating
|Fiscal Year ended October 31,                       |  | Leases                 |     | Leases   
|                                                    |  |                        |     |          
|                                                    |  | (Dollars in Thousands)
|2003                                                |  | $                      | 598 |           |  | $ | 678   | 
|2004                                                |  |                        | 237 |           |  |   | 462   | 
|2005                                                |  |                        | 70  |           |  |   | 235   | 
|2006                                                |  |                        | 35  |           |  |   | 29    | 
|Thereafter                                          |  |                        |    |           |  |   | 5     | 
|                                                    |  |                        |     |           |  |   |       | 
|Total minimum lease payments                        |  |                        | 940 |           |  | $ | 1,409 | 
|                                                    |  |                        |     |           |  |   |       | 
|Imputed interest                                    |  |                        | (68 | )         |  |   |       | 
|                                                    |  |                        |     |           |  |   |       | 
|Present value of minimum
capitalized lease payments |  |                        | 872 |           |  |   |       | 
|Less current portion                                |  |                        | 553 |           |  |   |       | 
|                                                    |  |                        |     |           |  |   |       | 
|Long-term capitalized lease obligations             |  | $                      | 319 |           |  |   |       | 
|                                                    |  |                        |     |           |  |   |       | 

Assets recorded under capital leases and included in property, plant and
equipment in the Companys Balance Sheets consists of machinery and equipment
of $1,344,000 and $522,000 at October 31, 2002 and October 31, 2001,
respectively, and $307,000 and $38,000 of accumulated depreciation as of
October 31, 2002 and 2001, respectively.

(12)  Related Party Transactions

The Company has a management services agreement with Renco under which
Renco provides certain management services to the Company. Under terms of this
agreement, the Company is charged a monthly fee of $100,000. The term of this
agreement extends to October 31, 2004. Total expense for management services
fees amounted to $1,200,000 for each of the years ended October 31, 2002, 2001
and 2000.

For 2002, 2001, and 2000, Renco purchased certain insurance coverage for
its subsidiaries, including the Company, and the actual cost of such insurance,
without markup, is reimbursed by the covered subsidiaries. The major areas of
the Companys insurance coverage obtained under the Renco programs were
property, business interruption, general, product and auto liability, workers
compensation (other than Ohio for which the Company is self insured) and
casualty umbrella.

In fiscal 2002, 2001 and 2000, the Company incurred costs of approximately
$6.3 million, $2.3 million and $2.0 million, respectively, under the Renco
insurance program. The increased cost in 2002 is due, in part, to severe
capacity constraints and excessive price increases by both property insurers
and reinsurers following the September 2001 terrorist attacks.

During 2002, the Company purchased approximately $0.7 million of zinc and
other alloys from Doe Run Peru S.R. Ltd., an indirect subsidiary of Renco. The
Company believes that such purchases were on an arms length basis at a price
no less favorable than at which the Company could obtain from unaffiliated
entities. Also during 2002, the Company sold approximately $40,000 of flat
rolled steel products on an arms length basis to UNARCO Material Handling
Inc., a direct subsidiary of Renco.

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Renco Steel is a holding company formed by Renco in January 1998, which
owns all the outstanding shares of capital stock of the Company. In February
1998, Renco Steel issued $120 million principal amount 10.875% Senior Secured
Notes due 2005. These notes are secured by a pledge of all the outstanding
capital stock of the Company. Historically, Renco Steel has met its debt
service obligations from its cash balances and earnings thereon, through
distributions from the Company as permitted under the Companys outstanding
indebtedness as described in Note 5 and, most recently, from cash infusions
from Renco. The Company does not expect to be permitted to pay dividends for
the foreseeable future.

(13)  Commitments and Contingencies

At October 31, 2002, the Company had commitments to purchase data
processing services of approximately $2,856,000 in the aggregate over the
remaining 6 months of its management information systems agreement and
purchased services of approximately $5,560,000, $5,594,000 and $5,496,000 in
2002, 2001 and 2000, respectively, under the agreement.

The Company entered into a 15 year agreement for the supply of certain
gases commencing in 2002. This contract requires the Company to pay a minimum
monthly amount on a take or pay basis. Commitments under this contract total
approximately $5.4 million per year and are subject to escalation.

At October 31, 2002, at pricing then in effect, the Company had firm
commitments for the purchase of raw materials and gases of approximately
$9,348,000 in 2003, $5,656,000 in 2004, $5,656,000 in 2005, $5,656,000 in 2006,
$5,656,000 in 2007 and $53,730,000 thereafter. In addition, at October 31,
2002 the Company had commitments for capital expenditures of approximately
$1,426,000.

In common with much of the steel industry, the Companys facilities are
located on sites that have been used for heavy industrial purposes for decades.
The Company is and will continue to be subject to numerous federal, state and
local environmental laws and regulations governing, among other things, air
emissions, waste water discharge and solid and hazardous waste management. The
Company has made and intends to continue to make the necessary expenditures for
environmental remediation and compliance with environmental laws and
regulations. Environmental laws and regulations continue to change and have
generally become more stringent, and the Company may be subject to more
stringent environmental laws and regulations in the future. Compliance with
more stringent environmental laws and regulations could have a material adverse
effect on the Companys financial condition and results of operations.

The Company is subject to a consent decree as a result of a civil action
instituted by the Department of Justice (DOJ), on behalf of the Environmental
Protection Agency (EPA). Work required under the consent decree was completed
in January 2003 with the exception of final reporting. The consent decree also
provides for stipulated penalties in the event of noncompliance which the
Company does not believe will be material.

As a condition of a previous Resource Conservation and Recovery Act (RCRA)
operating permit, the Company is required to undertake a corrective action
program with respect to on-site waste management practices at the Warren
facility. The workplan for the initial phase of the investigation step of the
corrective action program, the RCRA Facility Investigation (RFI), identifies
thirteen solid waste management units to be investigated. The Company has
completed and submitted its RFI Phase 1 report to the EPA. The Company has
also completed human health and ecological risk assessments, the results of
which will be used to identify whether any further investigative steps are
required to complete the RFI. The Company submitted its risk assessment
reports to the EPA, and is awaiting a response. Any additional investigative
steps, such as sampling, would then be undertaken in 2003 and 2004 as phase two
of the RFI. The final scope of corrective action required to address any
contamination that may be present at or emanating from the solid waste
management units at the Warren facility, including the potential for remediation, is dependent upon the completion and findings of the

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RFI and the
development and approval of a corrective action program. Accordingly, the
Company is unable at this time to estimate the final cost of the corrective
action program or the period over which such costs may be incurred and there
can be no assurance that any such corrective action program would not have a
material adverse effect on the operating results or financial condition of the
Company.

The EPA issued a unilateral administrative order (Order) to the Company
pursuant to Section 7003 of RCRA, effective on September 24, 2002. The Order
asserts that the Companys handling of solid waste in various impoundment areas
presents an imminent and substantial endangerment to health or the environment
by virtue of potential harm to wildlife, including migratory birds, that may
land on or enter the areas. The Order required the Company, among other
things, to (i) take immediate measures to deter and discourage wildlife from
landing on or entering the areas, (ii) remove all oily wastes from the
impoundments, and (iii) remove all remaining oily sludge from the banks and
bottoms of the impoundments. RCRA provides for civil penalties of up to $5,500
per day for noncompliance with the Order. In written comments, the Company
raised several concerns and objected to both the issuance of the Order and its
scope, including portions of the Order calling for removal of all oily material
from the impoundments. The Company also submitted a draft work plan to the EPA
setting forth a number of activities that the Company considers reasonably
necessary to abate any alleged endangerment, and began implementing the draft
work plan in the fall of 2002. In January 2003, the EPA approved portions of the
draft work plan and disapproved other portions. The EPA also issued an Amended
Order, dated January 21, 2003. The Amended Order requires the Company to
continue implementing its immediate deterrent measures. For impoundments that
are a required part of the Companys ongoing operations, the Amended Order
requires the Company to either install a netting system over the impoundments
or remove all oily material. For the inactive areas, the Amended Order
requires that all oily material be removed. The Company is currently
evaluating the feasibility of the EPAs demands, including timing, and
available options for responding to the Amended Order.

In addition, the Company received correspondence dated December 27, 2002
from the U.S. Attorneys office on behalf of the United States Fish & Wildlife
Service alleging that the Company has violated Section 703(a) of the Migratory
Bird Treaty Act (a misdemeanor). The Company and its legal counsel met with
the Assistant U.S. Attorney in February 2003, to discuss possible resolutions
for this matter, and those discussions are ongoing.  The
Company believes that it will resolve this matter in a manner that will not
have a material adverse effect on the Companys financial position or results
of operations.

In addition to the above-described matters, the Company is contingently
liable with respect to lawsuits and other claims incidental to the ordinary
course of its business. A liability has been established for an amount, which
the Company believes is adequate, based on information currently available, to
cover the costs to resolve the above described matters, including remediation,
if any, except for any costs of corrective action that may result from the RFI
for which no estimate can currently be made. The outcome of the above
described matters could have a material adverse effect on the future operating
results of the Company in a particular quarter or annual period; however, the
Company believes that the effect of such matters will not have a material
adverse effect on the Companys consolidated financial position.

(14)  Unusual Charges

The Youngstown Sinter Company (YSC), a wholly owned subsidiary of WCI,
idled its plant indefinitely effective July 15, 2001. YSC had been in
operation since 1991 producing a clinker-type material (Sinter) from
steelmaking by-products such as slag and ore fines. The sinter was then used
as a substitute feed stock in WCIs blast furnace facility located in Warren,
Ohio. WCI recorded a charge of

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$3.9 million (included in Unusual charges)
during the three months ended April 30, 2001 to reflect plant idling costs, of
which $3.0 million represents the recognition of an impairment in the value of
the assets of the facility. The sinter plant may be restarted in the future if
economically advantageous.

During 2000 and 2001 WCI attempted to acquire substantially all of Acme
Steel Companys assets. WCI was unsuccessful in completing the acquisition due
to Acme Steels failure to meet certain conditions in the letter of intent. This resulted in WCI recording a charge of $10.5 million during
the quarter ended January 31, 2001 to write down the carrying value of Acme
Metals Senior Unsecured Notes owned by WCI (included in Interest and other
income (expense), net) and a charge of $1.7 million, recorded during the
quarter ended October 31, 2001, to expense certain accumulated acquisition
costs (included in Unusual Charges).

(15)  Selected Quarterly Data (Unaudited)

The following is a summary of unaudited quarterly results for the years
ended October 31, 2002 and 2001:

|                    |  |                         |         |          |  |         |         |            |  |   |         |   |  |   |         | 
|------------------- |  | ----------------------- | ------- | -------- |  | ------- | ------- | ---------- |  | - | ------- | - |  | - | ------- | 
|                    |  | Three Months Ended 2002
|                    |  |                        
|                    |  | January 31              |         | April 30 |  | July 31 |         | October 31
|                    |  |                         |         |          |  |         |         |           
|                    |  | (Dollars in thousands) 
|Net sales           |  | $                       | 89,604  |          |  | $       | 127,678 |            |  | $ | 132,756 |   |  | $ | 152,009 | 
|Gross margin (loss) |  |                         | (9,850  | )        |  |         | 3,144   |            |  |   | 10,434  |   |  |   | 25,264  | 
|Net income (loss)   |  |                         | (25,556 | )        |  |         | (11,829 | )          |  |   | (8,063  | ) |  |   | 7,879   | 

|                    |  |                         |         |          |  |         |         |            |  |   |         |   |  |   |         |  
|------------------- |  | ----------------------- | ------- | -------- |  | ------- | ------- | ---------- |  | - | ------- | - |  | - | ------- | -
|                    |  | Three Months Ended 2001
|                    |  |                        
|                    |  | January 31              |         | April 30 |  | July 31 |         | October 31
|                    |  |                         |         |          |  |         |         |           
|                    |  | (Dollars in thousands) 
|Net sales           |  | $                       | 98,191  |          |  | $       | 99,268  |            |  | $ | 109,988 |   |  | $ | 105,661 |  
|Gross margin (loss) |  |                         | (3,849  | )        |  |         | (1,758  | )          |  |   | (2,839  | ) |  |   | (9,437  | )
|Net income (loss)   |  |                         | (32,510 | )        |  |         | (22,208 | )          |  |   | (18,730 | ) |  |   | (27,357 | )

During the three months ended April 30, 2002 the Company recorded a $1.6
million gain realized from the resolution of contract issues relating to the
sale of a third party owned coke plant adjacent to WCIs facility.

During the three months ended January 31, 2001 the Company recorded a
charge of $10,484,000 to write down the carrying value of Acme Metals 10.875% Senior Unsecured Notes
owned by WCI.

The Company recorded a charge of $3,909,000 during the three months ended
April 30, 2001 to reflect plant idling costs associated with the indefinite
idling of YSC, of which $2,982,000 represents the recognition of an impairment
in the value of the assets of the facility.

During the three months ended October 31, 2001, the Company recorded a
charge of $1,695,000 to expense certain accumulated acquisition costs related
to the Acme Steel acquisition efforts.

During the three months ended October 31, 2001 the Company recorded
inventory valuation charges totaling $2,605,000.

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INDEPENDENT AUDITORS REPORT

To the Shareholder and Board of Directors
WCI Steel, Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of WCI Steel,
Inc. and subsidiaries (a wholly owned subsidiary of Renco Steel Holdings, Inc.)
as of October 31, 2002 and 2001, and the related consolidated statements of
operations, shareholders equity (deficit), and cash flows for each of the
years in the three-year period ended October 31, 2002. These consolidated
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of WCI Steel,
Inc. and subsidiaries as of October 31, 2002 and 2001, and the results of their
operations and their cash flows for each of the years in the three-year period
ended October 31, 2002, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 2 to the consolidated financial statements, the Company has suffered recurring losses
from operations and negative cash flows that raise substantial doubt about its
ability to continue as a going concern. Managements plans in regard to these
matters are also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/S/ KPMG LLP

KPMG LLP

Cleveland, Ohio
December 3, 2002, except as to
Note 5 which is as of 
March 6, 2003

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|ITEM 9. |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|------- |  | ------------------------------------------------------------------------------------

None.

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PART III




ITEM 10.  DIRECTORS AND OFFICERS

The following table sets forth certain information regarding the directors
and executive officers of the Company:

|                  |  |     |    |          |  |                                                     
|----------------- |  | --- | -- | -------- |  | ----------------------------------------------------
|Name              |  | Age |    | Position
|                  |  |     |    |         
|Ira Leon Rennert  |  |     | 68 |          |  | Chairman of the Board and Director                  
|Edward R. Caine   |  |     | 64 |          |  | President and Chief Executive Officer               
|Patrick G. Tatom  |  |     | 52 |          |  | Executive Vice President and Chief Operating Officer
|David A. Howard   |  |     | 43 |          |  | Vice President, Commercial                          
|John P. Jacunski  |  |     | 37 |          |  | Vice President, Finance and Chief Financial Officer 
|Brian J. Mitchell |  |     | 58 |          |  | Vice President, Environmental and Engineering       

Ira Leon Rennert has been Chairman, Chief Executive Officer and principal
shareholder of WCIs indirect parent company, Renco (including predecessors),
since Rencos first acquisition in 1975, and Chairman of WCI since its
formation in 1988. Renco holds controlling interests in a number of
manufacturing and mining concerns operating in businesses not competing with
WCI, including US Magnesium LLC, AM General LLC, The Doe Run
Resources Corporation, and Renco Steel Holdings, Inc., (WCIs parent company),
for all of which he serves as Chairman of the Board of Directors (with the
exception of US Magnesium LLC and AM General LLC). Mr. Rennert also serves as Chairman of the
Board of Directors of Lodestar Holdings, Inc. in which he indirectly holds a
controlling interest and Renco Metals, Inc. Renco Metals, Inc. (effective
August 2, 2001) and Lodestar Holdings, Inc. (effective April 27, 2001) and
their respective subsidiaries are currently operating under Chapter 11 of the
U.S. Bankruptcy Code.

Edward R. Caine has been President and Chief Executive Officer since April
1, 1996. Mr. Caine was a Director of the Company from April 1, 1996 through
December 16, 1996. Prior to joining WCI, Mr. Caine had 37 years of experience
in the steel industry with U.S. Steel, most recently as General Manager of U.S.
Steels Fairfield, Alabama integrated steel operations from April 1991 to March
1996.

Patrick G. Tatom has served as Executive Vice President and Chief
Operating Officer since January 1, 2002 and as Executive Vice President from
June 1999 through December 2001, as Vice President, Commercial from November
1995 to May 1999, Vice President, Sales from February 1994 through October
1995, and General Manager of Sales from September 1988 to February 1994.

David A. Howard has served as Vice President, Commercial since June 1,
1999 and as Vice President, Sales from August 1998 through May 1999. Mr.
Howard, who has been with the company since its inception in 1988, has held
various positions within the Company, including Marketing Manager, Regional
Sales Manager and General Manager of Sales.

John P. Jacunski has served as Vice President, Finance and Chief Financial
Officer since November 1, 1999 and as Controller from May 1995 to October 1999.
Prior to joining WCI, Mr. Jacunski was a manager in an international
accounting and consulting firm in various capacities from September 1988
through April 1995.

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Brian J. Mitchell has served as Vice President, Environmental and
Engineering since June 1, 1999 and, prior to that, as General Superintendent of
Primary Operations of WCI since its inception. Mr. Mitchell retired
from the Company effective January 31, 2003.

Since December 16, 1996, Mr. Rennert has been the sole Director of the
Company.

The sole director of the Company serves at the pleasure of the Companys
sole shareholder, Renco Steel Holdings, Inc., for an unspecified term. The
executive officers of the Company serve at the pleasure of the Companys sole
director for an unspecified term.

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ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
of the named executive officers by the Company for services rendered to it in
all capacities during fiscal 2002, 2001 and 2000:

|                    |                                       |      |        |        |  |       |                            |            |                        |                 |         |        |      |   |           |         |  |   |           |           | 
|------------------- | ------------------------------------- | ---- | ------ | ------ |  | ----- | -------------------------- | ---------- | ---------------------- | --------------- | ------- | ------ | ---- | - | --------- | ------- |  | - | --------- | --------- | 
|                    |                                       |      |        |        |  |       | Summary Compensation Table
|                    |                                       |      |        |        |  |       |                           
|                    |                                       |      |        |        |  |       | Annual Compensation(1)     |            | Long Term Compensation
|                    |                                       |      |        |        |  |       |                            |            |                       
|                    |                                       |      | Fiscal |        |  |       |                            |            |                        |                 |         |        | LTIP |   | All Other
|Name and Position   |                                       | Year |        | Salary |  | Bonus |                            | Payouts(2) |                        | Compensation(3)
|                    |                                       |      |        |        |  |       |                            |            |                        |                
|Ira Leon Rennert(4) |                                       |      | 2002   |        |  | $     |                           |            |                        | $               |        |        |      | $ |          |         |  | $ | 1,200,000 |          
|                    | Chairman of the Board                 |      |        | 2001   |  |       |                            |           |                        |                 |         |       |      |   |           |        |  |   |           | 1,200,000 | 
|                    |                                       |      | 2000   |        |  |       |                           |            |                        |                 |        |        |      |   |          |         |  |   | 1,200,000 |          
|                   
|Edward R. Caine     |                                       |      | 2002   |        |  | $     | 366,629                    |            |                        | $               |        |        |      | $ | 142,500   |         |  | $ | 29,000    |          
|                    | President and Chief Executive Officer |      |        | 2001   |  |       |                            | 366,629    |                        |                 |         |       |      |   |           | 98,307  |  |   |           | 24,500    | 
|                    |                                       |      | 2000   |        |  |       | 261,883                    |            |                        |                 | 100,000 |        |      |   | 378,200   |         |  |   | 19,500    |          
|                   
|Patrick G. Tatom    |                                       |      | 2002   |        |  | $     | 200,569                    |            |                        | $               |        |        |      | $ |          |         |  | $ | 19,516    |          
|                    | Executive Vice President and Chief    |      |        | 2001   |  |       |                            | 200,569    |                        |                 |         |       |      |   |           |        |  |   |           | 20,901    | 
|                    | Operating Officer                     |      |        | 2000   |  |       |                            | 146,792    |                        |                 |         | 50,000 |      |   |           | 151,280 |  |   |           | 14,103    | 
|                   
|Dave A. Howard      |                                       |      | 2002   |        |  | $     | 182,796                    |            |                        | $               |        |        |      | $ |          |         |  | $ | 14,688    |          
|                    | Vice President, Commercial            |      |        | 2001   |  |       |                            | 182,796    |                        |                 |         |       |      |   |           |        |  |   |           | 15,223    | 
|                    |                                       |      | 2000   |        |  |       | 130,498                    |            |                        |                 | 50,000  |        |      |   | 151,280   |         |  |   | 10,938    |          
|                   
|John P. Jacunski    |                                       |      | 2002   |        |  | $     | 182,578                    |            |                        | $               |        |        |      | $ |          |         |  | $ | 13,096    |          
|                    | Vice President, Finance and Chief     |      |        | 2001   |  |       |                            | 178,319    |                        |                 |         |       |      |   |           |        |  |   |           | 12,761    | 
|                    | Financial Officer                     |      |        | 2000   |  |       |                            | 127,317    |                        |                 |         | 50,000 |      |   |           | 151,280 |  |   |           | 7,813     | 
|                   
|Brian J. Mitchell   |                                       |      | 2002   |        |  | $     | 132,494                    |            |                        | $               |        |        |      | $ |          |         |  | $ | 16,121    |          
|                    | Vice President, Environmental and     |      |        | 2001   |  |       |                            | 132,494    |                        |                 |         |       |      |   |           |        |  |   |           | 15,865    | 
|                    | Engineering                           |      |        | 2000   |  |       |                            | 132,129    |                        |                 |         | 14,035 |      |   |           | 94,550  |  |   |           | 14,063    | 



|(1) |  | Value of perquisites and other personal benefits did not exceed the lesser
of $50,000 or 10% of total salary and bonus per named executive officer.                                                                                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The amounts shown as LTIP Payouts in the table for each named executive
officer represent contractual payments under such officers Net Worth
Appreciation Agreement. See Net Worth Appreciation Agreement.                                                                                                                                                                                                   
|   
|(3) |  | The other compensation shown, except for Mr. Rennert for all periods (See
note 4) consists of WCI contributions to a defined contribution pension
plan.                                                                                                                                                                                                                                                           
|   
|(4) |  | Mr. Rennert receives no compensation directly from WCI. He is Chairman of
the Board and the principal stockholder of Renco which receives a management
fee from WCI pursuant to a Management Consultant Agreement. The amounts
shown as all other compensation to Mr. Rennert are the management fees paid
by WCI to Renco for each fiscal year. See Stock Ownership and Certain
relationships and Transactions.

Net Worth Appreciation Agreements

The named executive officers (with the exception of Mr. Rennert) are each
parties to Net Worth Appreciation Agreements with the Company, pursuant to
which each earns as deferred compensation a fixed percentage, ranging from
1.25% to 5%, of cumulative net income, as defined, during the term of their
employment as executive officers (excluding the period from August 1, 2000 to
October 31, 2002). Assuming all of the Companys named executive officers had
retired at October 31, 2002 and their respective maximum percentage had vested,
an aggregate of $4,108,000 would have been payable to such executive officers
pursuant to the Net Worth Appreciation Agreements.

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The Net Worth Appreciation Agreements also provide that in the event of
payment of a dividend, the active participants are entitled to receive a
percentage of the dividend equal to their full net worth percentage under their
agreement. In the event substantially all the assets of the Company are sold,
active participants are deemed to be vested and are entitled to receive a
payment equal to their percentage of the net proceeds of the sale as defined in
the agreements. The agreements also provide for payments in the event of
permanent disability or death.

Active participants are entitled to receive the balance of the vested
amount earned under their Net Worth Appreciation Agreement in 40 equal
quarterly payments commencing upon the earlier of age 62 or twenty years after
the date the participant was first employed by the Company. Receipt by each
employee of his payment is conditioned on his observance of his confidentiality
and non-compete agreement with the Company.

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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of January 31, 2003
regarding the beneficial ownership of Common Stock by each beneficial owner of
5% or more of the Common Stock, each director and each named executive officer
of the Company during the last fiscal year, and by all directors and executive
officers of the Company as a group. Except as otherwise noted, and subject to
certain terms and conditions in the Renco Steel indenture and the related
pledge agreement, the persons named in the table below have sole voting and
investment power with respect to all shares shown as beneficially owned by
them.

Beneficial Ownership
as of January 31, 2003

|                                                |  |              |     |         |  |  |       |  
|----------------------------------------------- |  | ------------ | --- | ------- |  |  | ----- | -
|Name of Beneficial Owners and Address           |  | Shares of    |     |         |  | 
|of 5% Beneficial Owners                         |  | Common Stock |     | Percent
|                                                |  |              |     |        
|Renco Steel Holdings, Inc                       |  |              | 100 |         |  |  | 100.0 | %
|1040 Pine Avenue, S.E                           |  |              |     |         |  |  |       |  
|Warren, OH 44483                                |  |              |     |         |  |  |       |  
|                                               
|The Renco Group, Inc.(1)                        |  |              | 100 |         |  |  | 100.0 | %
|30 Rockefeller Plaza, Suite 4225                |  |              |     |         |  |  |       |  
|New York, NY 10112                              |  |              |     |         |  |  |       |  
|                                               
|Ira Leon Rennert (1)                            |  |              | 100 |         |  |  | 100.0 | %
|c/o The Renco Group, Inc.                       |  |              |     |         |  |  |       |  
|30 Rockefeller Plaza, Suite 4225                |  |              |     |         |  |  |       |  
|New York, NY 10112                              |  |              |     |         |  |  |       |  
|                                               
|All directors and executive officers as a group |  |              | 100 |         |  |  | 100.0 | %
|(7 persons)                                     |  |              |     |         |  |  |       |  



---

|(1) |  | Renco is deemed to beneficially own the Common Stock of the Company owned
by Renco Steel due to the ownership by Renco of all the outstanding shares
of Common Stock of Renco Steel, and Mr. Rennert is deemed to beneficially
own the Common Stock of the Company deemed owned by Renco due to the
ownership through trusts established by him for himself and members of his
family of all of the outstanding Common Stock of Renco.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

By virtue of Renco Steels ownership of all the outstanding shares of
Common Stock of WCI and Rencos ownership of all the outstanding shares of
Common Stock of Renco Steel, and Mr. Rennerts ownership of a majority of the
Common Stock of Renco, Mr. Rennert is in position to control actions that
require the consent of a majority of the holders of the Companys outstanding
shares of Common Stock, including the election of the Board of Directors.

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ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Under a Management Consultant Agreement, effective October 1, 1992, as
amended, between Renco and WCI, WCI pays a monthly fee of $100,000 to Renco.
The Management Consultant Agreement provides that WCI shall not make any
payment thereunder which would violate any of its agreements with respect to
any of its outstanding indebtedness. The Management Consultant Agreement
extends to October 31, 2004 and thereafter shall continue for additional terms
of three years each unless sooner terminated by either party by giving six
months prior written notice. In the year ended October 31, 2002, WCI incurred
management fees in the amount of $1,200,000.

Under the terms of a tax sharing agreement, between WCI and Renco Steel,
income taxes are allocated to WCI on a separate return basis except that
transactions for the purchase of goods and services between WCI and its
subsidiaries and Renco and its other subsidiaries are accounted for on a cash
basis rather than on an accrual basis and WCI does not receive the benefit of
net operating tax loss carryforwards, unless such tax losses were generated by
the net tax timing differences between WCIs financial reporting and tax return
treatment in calculating the allocation of income taxes. Renco Steel has
agreed to indemnify WCI for any tax imposed on or paid by WCI in excess of the
amount payable by WCI and its subsidiaries under the tax sharing agreement. On
January 15, 1999 Renco elected subchapter S tax treatment effective November 1,
1998. At the same time, Renco elected for the Company to be treated as a
qualified subchapter S subsidiary (QSSS). While in this status, the activity
within the tax sharing agreement will be applicable only to prior years audit
adjustments and/or current and future year state filings where QSSS is not
recognized and multiple Renco subsidiaries operate.

During 2002, Renco purchased certain insurance coverage for its
subsidiaries, including the Company, and the actual cost of such insurance,
without markup, was reimbursed by the covered subsidiaries. The major areas of
the Companys insurance coverage obtained under the Renco programs were
property, business interruption, general, product and auto liability, workers
compensation (other than Ohio for which the Company is self insured) and
casualty umbrella. The premiums for director and officer, fidelity, fiduciary,
property, business interruption, and casualty umbrella were allocated by Renco
substantially as indicated in the underlying policies. General and product
liability, auto liability and workers compensation coverage (excluding the
Ohio self-insured program) were loss sensitive programs with both fixed and
variable premium components. The fixed premium component for this coverage was
allocated to each insured Renco subsidiary based on factors that include
historical guaranteed cost premium, the overall growth of each subsidiary and
an assessment of risk based on loss experience. The fixed component is subject
to revision resulting from the insurance carriers audit of actual premium
factors. As claims (the variable component) are paid, each insured within the
loss sensitive program is charged for its claims up to a maximum amount and
subject to an overall maximum for all insured subsidiaries. Each insured Renco
subsidiary has been assigned an individual maximum cost based on historical
guaranteed cost premiums. The overall and individual subsidiary maximums are
subject to revision based on audit of actual premium factors. If an insured
Renco subsidiary reaches its individual maximum cost, the other insured
subsidiaries are required to share proportionately in the excess cost of the
subsidiary which has reached its individual maximum. WCI has not been required
to make any payments under this provision since the start of the program in
1994.

In fiscal 2002, 2001 and 2000, the Company incurred costs of approximately
$6.3 million, $2.3 million and $2.0 million, respectively, under the Renco
insurance program. The increased cost in 2002 is due, in part, to severe
capacity constraints and excessive price increases by both property insurers
and reinsurers following the September 2001 terrorist attacks.

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During 2002, the Company purchased approximately $0.7 million of zinc and
other alloys from Doe Run Peru S.R. Ltd., an indirect subsidiary of Renco. The
Company believes that such purchases were on an arms length basis at a price
no less favorable than at which the Company could obtain from unaffiliated
entities. Also during 2002, the Company sold approximately $40,000 of flat
rolled steel products on an arms length basis to UNARCO Material Handling
Inc., a direct subsidiary of Renco.

The Company amended its revolving credit facility in March 2003. Simultaneous
with the execution of the amendment to the Companys revolving credit facility, Renco agreed to participate in this facility by
agreeing to fund $15 million with such participation being subordinated in right of payment to that of the other lenders.




ITEM 14.  DISCLOSURE CONTROLS
AND PROCEDURES AND INTERNAL CONTROLS

Disclosure Controls

Within
90 days before filing this report, we evaluated the effectiveness of
the design and operation of our disclosure controls and procedures.
Our disclosure controls and procedures are the controls and other
procedures that we designed to ensure that information required to be
disclosed in reports that we file or submit to the SEC is: (1)
accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, to allow timely
decisions regarding required disclosures and is (2) recorded,
processed, summarized and reported within the time periods specified
in applicable law and regulations. Based on this evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that,
as of the date of their evaluation, our disclosure controls and
procedures were effective.

Internal Controls

Since
the date of the evaluation described above, there have not been any
significant changes in our internal accounting controls or in other
factors that could significantly affect those controls.

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ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

(a)  Documents Filed as a Part of This Report.



|1. |  | Consolidated Financial Statements.                                                                                                      
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The consolidated financial statements listed below together with the report
thereon of the independent auditors dated December 3, 2002. 
|  
|   |  | Consolidated Balance Sheets at October 31, 2002 and 2001.                                                                               
|  
|   |  | Consolidated Statements of Operations for the fiscal years ended October 31,
2002, 2001 and 2000.                                       
|  
|   |  | Consolidated Statements of Shareholders Equity (Deficit) for the fiscal
years ended October 31, 2002, 2001 and 2000.                   
|  
|   |  | Consolidated Statements of Cash Flows for the fiscal years ended October 31,
2002, 2001 and 2000.                                       
|  
|   |  | Notes to Consolidated Financial Statements.                                                                                             
|  
|   |  | Independent Auditors Report.                                                                                                           
|  
|2. |  | Financial Statement Schedule.                                                                                                           
|  
|   |  | Independent Auditors Report on Financial Statement Schedule.                                                                           
|  
|   |  | Schedule II  Valuation and Qualifying Accounts.                                                                                        
|  
|3. |  | Exhibits Required to be Filed by Item 601 of Regulation S-K.                                                                            
|  
|   |  | The information called for by this paragraph is contained in the Exhibit
Index of this report which is incorporated herein by reference.

(b)  Reports on Form 8-K.

None.

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INDEPENDENT AUDITORS REPORT ON FINANCIAL STATEMENT SCHEDULE

To the Shareholder and Board of Directors
WCI Steel, Inc. and Subsidiaries:

Under date of December 3, 2002 except as to Note 5 which is as of March 6, 2003, we reported on the consolidated balance
sheets of WCI Steel, Inc. and subsidiaries as of October 31, 2002 and 2001, and
the related consolidated statements of operations, shareholders equity
(deficit), and cash flows for each of the years in the three-year period ended
October 31, 2002, which are contained as part of this report herein. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedule (Schedule
II  Valuation and Qualifying Accounts) also contained as part of this report
herein. This financial statement schedule is the responsibility of the
Companys management. Our responsibility is to express an opinion on the
financial statement schedule based on our audits.

In our opinion, the related 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.

The audit report on the consolidated financial statements of WCI Steel,
Inc. and subsidiaries referred to above contains an explanatory paragraph that
states that the Companys recurring losses from operations and negative cash
flows raise substantial doubt about the entitys ability to continue as a going
concern. The financial statement schedule does not include any adjustments
that might result from the outcome of this uncertainty.

/S/ KPMG LLP

KPMG LLP

Cleveland, Ohio
December 3, 2002

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WCI STEEL, INC. AND SUBSIDIARIES
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts
For the Years Ended October 31, 2002, 2001, and 2000
(Dollars in Thousands)

|                                                                 |  |            |       |            |  |            |       |               |  |            |   |     |  |  |       |  |  |   |       | 
|---------------------------------------------------------------- |  | ---------- | ----- | ---------- |  | ---------- | ----- | ------------- |  | ---------- | - | --- |  |  | ----- |  |  | - | ----- | 
|                                                                 |  |            |       |            |  | Additions  |       |               |  |            |   |     |  | 
|                                                                 |  | Balance at |       |            |  |            |       |               |  | Balance at
|                                                                 |  | Beginning  |       | Charged to |  | Charges to |       |               |  |            |   | End
|CLASSIFICATION                                                   |  | of Year    |       | Expense(b) |  | Other      |       | Deductions(c) |  | of Year   
|                                                                 |  |            |       |            |  |            |       |               |  |           
|ALLOWANCE
FOR DOUBTFUL ACCOUNTS (a):
Year ended October 31, 2002 |  | $          | 3,100 |            |  |            | 2,483 |               |  |            |  |     |  |  | 2,147 |  |  | $ | 3,436 | 
|                                                                
|Year ended October 31, 2001                                      |  |            | 750   |            |  |            | 2,603 |               |  |            |  |     |  |  | 253   |  |  |   | 3,100 | 
|                                                                
|Year ended October 31, 2000                                      |  |            | 874   |            |  |            | 37    |               |  |            |  |     |  |  | 161   |  |  |   | 750   | 



---

|(a) |  | Allowance for doubtful accounts is shown as a reduction of accounts receivable in the Companys Consolidated Financial Statements.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Charges (credits) to expense for the provision for doubtful accounts.                                                             
|   
|(c) |  | Net of trade receivables
written-off and recoveries of prior year writeoffs                                                       

52



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##### Table of Contents






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 on the 6th day of
March 2003.

WCI STEEL, INC.

|    |  |     |  |                                                      
|--- |  | --- |  | -----------------------------------------------------
|By: |  | /S/ |  | EDWARD R.
CAINE                                      
|    |  |    
|    |  |     |  | Edward R. Caine
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 6th day of March 2003.

| |  |     |  |                                                                                                                  
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------
| |  | /S/ |  | IRA LEON RENNERT                                                                                                 
| |  |    
| |  |     |  | Ira Leon Rennert
Chairman of the Board and Director                                                              
|
| |  | /S/ |  | EDWARD R. CAINE                                                                                                  
| |  |    
| |  |     |  | Edward R. Caine
President and Chief Executive officer
(principal executive officer                               
|
| |  | /S/ |  | JOHN P. JACUNSKI                                                                                                 
| |  |    
| |  |     |  | John P. Jacunski
Vice President, Finance and Chief Financial Officer
(principal financial and accounting officer)

Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.

No annual report to security holders covering the registrants last fiscal
year and no proxy statement, form of proxy or other proxy soliciting material
with respect to any annual or other meeting of security holders has been or
will be sent to security holders.

53



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##### Table of Contents






Certification

I, John P. Jacunski, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of WCI Steel, Inc.;                                                                                                                                                                                                                                                                                                            
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;                                                       
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                                                                          
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                      
|  
|   |  | a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;                                                                                
|  
|   |  | b) Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                                                                                                  
|  
|   |  | c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                        
|  
|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):                                                                                                                                
|  
|   |  | a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                              
|  
|   |  | b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls; and                                                                                                                                                                                                                      
|  
|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.



|Date: March 6, 2003 | /S/ JOHN P. JACUNSKI
John P. Jacunski
Vice President, Finance and Chief Financial Officer
|------------------- | -----------------------------------------------------------------------------------------

54



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##### Table of Contents






Certification

I, Edward R. Caine, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of WCI Steel, Inc.;                                                                                                                                                                                                                                                                                                            
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;                                                       
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                                                                          
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                      
|  
|   |  | a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;                                                                                
|  
|   |  | b) Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                                                                                                  
|  
|   |  | c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                                                                                        
|  
|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):                                                                                                                                
|  
|   |  | a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                              
|  
|   |  | b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls; and                                                                                                                                                                                                                      
|  
|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.



|Date: March 6, 2003 | /S/ EDWARD R. CAINE
Edward R. Caine
President and Chief Executive Officer
|------------------- | -------------------------------------------------------------------------

55



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##### Table of Contents






Exhibit Index

|               |  |                                                                                                                                                                                                                                                                                                                                                                     
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT        |  |                                                                                                                                                                                                                                                                                                                                                                     
|NO.            |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                     
|              
|3.1            |  | Articles of Incorporation of the Registrant, filed April 13, 1988 and Articles of
Amendment filed May 18, 1988, July 15, 1988, November 29, 1991,
December 14, 1993 and July 13, 1994.(3)                                                                                                                                                                           
|              
|3.2            |  | Code of Regulations of the Registrant, as amended December 16, 1996.(4)                                                                                                                                                                                                                                                                                             
|              
|4.1            |  | [Intentionally Omitted]                                                                                                                                                                                                                                                                                                                                             
|              
|4.2            |  | Indenture, dated as of November 27, 1996, between the Registrant, as
issuer, and Fleet National Bank, as trustee, relating to the 10% Senior
Secured Notes due 2004, Series A, and the 10% Senior Secured Notes due
2004, Series B of the Registrant (containing, as exhibits, specimens of
the Series A Senior Secured Notes and Series B Senior Secured Notes).(4)
|              
|10.1 to
10.2.8 |  | [Intentionally Omitted]                                                                                                                                                                                                                                                                                                                                             
|              
|10.2.9         |  | Net Worth Appreciation Agreement, effective June 1, 1999, between the Registrant and John P. Jacunski. (6)                                                                                                                                                                                                                                                          
|              
|10.2.10        |  | Amended and Restated Net Worth Appreciation Participation Agreement, as of January 15, 1999, Between the Registrant and Edward R. Caine.(8)                                                                                                                                                                                                                         
|              
|10.2.11        |  | Amended and Restated Net Worth Appreciation Participation Agreement, as of January 15, 1999, Between the Registrant and Patrick G. Tatom.(8)                                                                                                                                                                                                                        
|              
|10.2.13        |  | Amended and Restated Net Worth Appreciation Participation Agreement, as of January 15, 1999, Between the Registrant and Brian J. Mitchell.(8)                                                                                                                                                                                                                       
|              
|10.2.14        |  | Amended and Restated Net Worth Appreciation Participation Agreement, as
of January 15, 1999, Between the Registrant and David A. Howard.(8)                                                                                                                                                                                                                         
|              
|10.2.15        |  | Amendment to Net Worth Appreciation Participation Agreements, as of
August 1, 2000, between Participants and Registrant. (10)                                                                                                                                                                                                                                       
|              
|10.2.16        |  | Amendment to Net Worth Appreciation Participation Agreements, as of
November 1, 2001, between Participants and Registrant. (10)                                                                                                                                                                                                                                     
|              
|10.2.17        |  | Amendment to Net Worth Appreciation Participation Agreements, as of
August 1, 2002, between Participants and Registrant.                                                                                                                                                                                                                                            
|              
|10.3           |  | Management Consultant Agreement, dated October 1, 1992, between
Registrant and The Renco Group, Inc.(1)                                                                                                                                                                                                                                                             
|              
|10.3.1         |  | Amendment No. 1, dated April 22, 1994, to Management Consultant Agreement.(2)                                                                                                                                                                                                                                                                                       
|              
|10.4.11        |  | Intercreditor Agreement, dated November 27, 1996, between Fleet
National Bank and Congress Financial Corporation.(4)                                                                                                                                                                                                                                                
|              
|10.4.12        |  | Second Amended and Restated Loan and Security Agreement between
Registrant, its subsidiaries and Congress Financial Corporation dated July 30, 1999.(7)                                                                                                                                                                                                             
|              
|10.4.13        |  | Guarantee by Registrant, WCI Steel Production Control Services Inc.,
WCI Steel Metallurgical Services Inc. and Niles Properties, Inc. in favor
of Congress Financial Corporation and Security Pacific Business Credit,
Inc., dated October 31, 1997. (5)                                                                                                            
|              
|10.4.14        |  | Guarantee by WCI Steel Production Control Services Inc., WCI Steel Metallurgical
Services Inc. and WCI Steel Sales L.P. in favor of Congress Financial
Corporation and Security Pacific Business Credit, Inc., dated October 31, 1997. (5)                                                                                                                          

56



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##### Table of Contents



|        |  |                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                   
|NO.     |  | DESCRIPTION                                                                                                                       
|        |  |                                                                                                                                   
|       
|       
|10.4.15 |  | Amendment No. 1 dated April 30, 2001 to the Second Amended and Restated
Loan and Security Agreement dated July 30, 1999. (9)      
|       
|10.4.16 |  | Amendment No. 2 dated January 25, 2002 to the Second Amended and
Restated Loan and Security Agreement dated July 30, 1999. (10)   
|       
|10.4.17 |  | Amendment No. 3 dated September 13, 2002 to the Second Amended and
Restated Loan and Security Agreement dated July 30, 1999.      
|       
|10.4.18 |  | Amendment No. 4 dated March 6, 2003 to the Second Amended and
Restated Loan and Security Agreement dated July 30, 1999.           
|       
|10.5.1  |  | Intercreditor Agreement, dated November 27, 1996, among Fleet National Bank,
Bank One Trust Company, N.A. and the Registrant.(4)  
|       
|10.5.2  |  | Indemnification Agreement, dated as of November 27, 1996, between the Registrant
and Bank One Trust Company, N.A. (4)             
|       
|10.8    |  | Agreement, dated June 11, 1990, between the City of Youngstown, Ohio and
Youngstown Sinter Company (with UDAG Grant Agreement).(1)
|       
|21      |  | List of Subsidiaries of Registrant.(5)                                                                                            
|       
|99.1    |  | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                           
|       
|99.2    |  | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                           



---

|(1)  |  | Incorporated by reference to the same-numbered exhibit filed with the
Companys Registration Statement on Form S-4, as amended (File No. 33-58648),
originally filed with the Commission on February 23, 1993.   
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Incorporated by reference to same-numbered exhibit filed with the Companys
Pre-Effective Amendment No. 2 to Registration Statement on Form S-1 (File
No. 33-75722), filed with the Commission on April 28, 1994.
|    
|(3)  |  | Incorporated by reference to the Companys Form 10-K for the fiscal year
ended October 31, 1994 (File No. 1-13028).                                                                                              
|    
|(4)  |  | Incorporated by reference to same-numbered exhibit filed with the Companys
Registration Statement on Form S-4, as amended (File No. 333-18019),
originally filed with the Commission on December 17, 1996.      
|    
|(5)  |  | Incorporated by reference to the Companys Form 10-K for the fiscal year
ended October 31, 1997 (File No. 333-18019).                                                                                            
|    
|(6)  |  | Incorporated by reference to the Companys Form 10-K for the fiscal year
ended October 31, 1999 (File No. 333-18019).                                                                                            
|    
|(7)  |  | Incorporated by reference to the Companys Form 10-Q for the quarterly
period ended July 31, 1999.                                                                                                               
|    
|(8)  |  | Incorporated by reference to the Companys Form 10-Q for the quarterly
period ended April 30, 2000.                                                                                                              
|    
|(9)  |  | Incorporated by reference to the Companys Form 10-Q for the quarterly
period ended April 30, 2001.                                                                                                              
|    
|(10) |  | Incorporated by reference to the Companys Form 10-K for the fiscal year
ended October 31, 2001 (File No. 333-18019).                                                                                            

57