<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-K

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[Fee Required]

For the fiscal year ended December 31, 2001

OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[No Fee Required]

For the transition period             to          Commission file number 1-12716

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

       Pennsylvania                                 25-1588399
       (State or other jurisdiction of              (I.R.S. Employer
       incorporation or organization)               Identification No.)

                              436 Seventh Avenue
                        Pittsburgh, Pennsylvania 15219
                                 412-227-2001
                  (Addresses of principal executive offices)
             (Registrant's telephone number, including area code)

          Securities Registered Pursuant to Section 12(b) of the Act:

       Title of each class             Name of each exchange on which registered
       -------------------             -----------------------------------------
  9-7/8% Senior Notes due 2007                  New York Stock Exchange
  8-1/2% Senior Notes due 2004                  New York Stock Exchange

       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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                         Yes   X    No _____
                             -----

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

  Common Stock, par value $.01, outstanding at January 31, 2002 amounted to 1.3
million shares.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
       Item                                                                             Page
       ----                                                                             ----
<S>                                                                                     <C>
                                       PART I
1.     Business.......................................................................    3
2.     Properties.....................................................................    9
3.     Legal Proceedings..............................................................   10
4.     Submission of Matters to a Vote of Security Holders............................   10

                                       PART II
5.     Market for the Registrant's Common Equity and Related Stockholder Matters......   10
6.     Selected Financial Data........................................................   11
7.     Management's Discussion and Analysis of Financial Condition
       and Results of Operations......................................................   12
7a.    Market Risk....................................................................   18
8.     Financial Statements and Supplementary Data....................................   19
9.     Changes in and Disagreements with Accountants on Accounting
       and Financial Disclosure.......................................................   19

                                       PART III
10.    Directors and Executive Officers of the Registrant.............................   19
11.    Executive Compensation.........................................................   22
12.    Security Ownership of Certain Beneficial Owners and Management.................   25
13.    Certain Relationships and Related Transactions.................................   26

                                       PART IV
14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K...............   27

                                      SIGNATURES
       Signatures.....................................................................   51
</TABLE>



                                       2
<PAGE>

PART I

ITEM 1. Business

General


  Koppers Industries, Inc. (the "Company" or "Koppers") is a global integrated
producer of carbon compounds and treated wood products for use in a variety of
markets including the railroad, aluminum, chemical, utility and steel
industries. The Company has a leading position in most of its markets. The
Company operates 39 facilities with locations in the United States, the South
Pacific (primarily Australia and New Zealand), Europe and South Africa. The
Company also maintains an indirect ownership interest in an additional facility
in the United States through its domestic joint venture KSA (as defined herein)
and has a 60% interest in an operation in China which started production in late
2001 (See "Carbon Materials & Chemicals"). The Company recorded net sales and
net income of $707.6 million and $13.3 million, respectively, for the twelve
months ended December 31, 2001. For the same period, the Company's business
segments, Carbon Materials & Chemicals and Railroad & Utility Products,
accounted for 59.3% and 40.7% of net sales, respectively.

  The Company was formed in October 1988 under the laws of the Commonwealth of
Pennsylvania by management, Beazer, Inc. and KAP Investments, Inc. ("KAP", a
subsidiary of Koppers Australia Pty. Limited) ("Koppers Australia") to
facilitate the acquisition of certain assets of Koppers Company, Inc. in a
management-led leveraged buyout that closed on December 29, 1988 (the
"Acquisition"). Koppers Company, Inc., now known as Beazer East, Inc. ("Beazer
East," but referred to herein as "Old Koppers" for periods prior to the
Acquisition) had been acquired in June 1988 by BNS Acquisitions, Inc., a wholly-
owned indirect subsidiary of Beazer PLC, now known as Beazer Limited ("Beazer
Limited").

Carbon Materials & Chemicals

  The Company's Carbon Materials & Chemicals division manufactures five
principal products: a) carbon pitch, used in the production of aluminum and
steel; b) phthalic anhydride ("PAA"), used in the production of plasticizers and
polyester resins; c) creosote, used in the treatment of wood; d) carbon black
(and carbon black feedstock), used in the manufacture of rubber tires, and e)
furnace coke, used in steel production. Carbon pitch, PAA, creosote and carbon
black are produced through the distillation of coal tar, a by-product of the
transformation of coal into coke. The Carbon Materials & Chemicals division's
profitability is impacted by its cost to purchase coal tar in relation to its
prices realized for carbon pitch, PAA, creosote and carbon black. The Company
has four tar distillation facilities in the United States, one in Australia, one
in Denmark and two in the United Kingdom, strategically located to provide
access to coal tar and to facilitate better service to its customers with a
consistent supply of high-quality products. For 2001, 2000 and 1999,
respectively, major products comprised the following percentages of net sales
for Carbon Materials & Chemicals: i) carbon pitch, 37%, 37% and 40%; ii) PAA,
12%, 14% and 14%; creosote, 9%, 9% and 11%; iv) carbon black (and carbon black
feedstock), 10%, 9% and 8%; and v) furnace coke, 8%, 9% and 11%.

  The Company believes it has a strategic advantage over its competitors based
on its ability to access coal tar from many global suppliers and subsequently
blend such coal tars to produce carbon pitch with the consistent quality
important in the manufacturing of quality anodes for the aluminum industry. The
Company's eight coal tar distillation facilities and two carbon pitch terminals
give it the ability to offer customers multiple sourcing and a consistent supply
of high quality products. In anticipation of potential reductions of United
States coke capacity, the Company has secured coal tar supply through long-term
contracts and acquisitions.

  Coal tar distillation involves the conversion of coal tar into a variety of
intermediate chemical products in processes beginning with distillation. During
the distillation process, heat and vacuum are utilized to separate coal tar into
three primary components: carbon pitch (approximately 50%), creosote oils
(approximately 30%) and chemical oils (approximately 20%).

                                       3
<PAGE>

  Over 75% of Koppers' carbon pitch is sold to the aluminum industry under long-
term contracts ranging from two to seven years. Demand for carbon pitch
generally has fluctuated with United States production of primary aluminum.
However, an excess supply of carbon pitch worldwide during the past several
years has resulted in pricing pressures in domestic markets. This situation has
negatively impacted the Company's domestic carbon pitch business in 2001 and
2000, and continued pricing pressures are anticipated in 2002. Because all coal
tar products are produced in relatively fixed proportion to carbon pitch, the
level of carbon pitch consumption generally determines the level of production
of other coal tar products. The commercial carbon industry, the second largest
user of carbon pitch, uses carbon pitch to produce electrodes and other
specialty carbon products for the steel industry. There are currently no known
viable substitutes for carbon pitch in the production of carbon anodes. However,
in 2000 the Company's largest carbon pitch customer announced that it was
actively pursuing alternative anode technology that would eliminate the need for
carbon pitch as an anode binder. Although management does not believe that this
alternative technology will be developed and used widely within the next five
years, the potential development and implementation of this new technology could
seriously impair the Company's ability to profitably market carbon pitch and
related co-products.

  Creosote is used in the wood preservation industry as a preservative for
railroad crossties and lumber, utility poles and pilings. To the extent that
creosote cannot be sold for use in treating wood products, distillate oils are
sold into the carbon black market rather than being blended to creosote
specifications.

  Approximately 41% of Koppers' domestic creosote production is sold to the
Railroad & Utility Products division, which purchases all of its creosote from
the Carbon Materials & Chemicals division. Koppers is the only competitor in
this market that is integrated in this fashion. The remainder of its creosote is
sold to railroads or to other wood treaters. The Company has one principal
competitor in the creosote market.

  Carbon black is manufactured in Australia at a carbon black facility using
both petroleum oil and coal tar based feedstocks, which are subjected to heat
and rapid cooling within a reactor. Additionally, tar based carbon black
feedstock is manufactured as a co-product of the tar distillation process and
can be produced at the Company's four domestic, one Australian and three
European tar distillation facilities. The tar distillation plant in Australia is
a major raw material supplier of coal tar based feedstock for the Company's
carbon black business.

  Chemical oils resulting from the distillation of coal tars are further refined
by the Company into naphthalene, which is the primary feedstock used by the
Company for the production of PAA. The primary markets for PAA are in the
production of plasticizers, unsaturated polyester resins and alkyd resins.

  On a worldwide basis, naphthalene and orthoxylene, a refined petroleum
derivative, are both used in the manufacturing of PAA. In the United States,
however, the Company is the only PAA producer capable of utilizing both
orthoxylene and naphthalene in its manufacturing process, with naphthalene being
a generally lower cost feedstock. The other four principal PAA competitors can
use only orthoxylene in the production of PAA. Koppers' price realizations and
profit margins for PAA have historically fluctuated with the price of
orthoxylene and its relationship to Koppers' cost to produce naphthalene;
however, due to difficult market conditions and excess supplies of PAA during
2001 and 2000, margins did not change proportionally to orthoxylene prices.
Management does not expect market conditions for PAA to improve in 2002.
Koppers' cost to produce naphthalene and PAA is primarily driven by its cost to
procure coal tar.

  Furnace coke is a carbon and fuel source required in the manufacturing of
steel. Coal, the primary raw material, is carbonized in oxygen-free ovens to
obtain the finished product. Coke manufacturers are either an integrated part of
a steel company or, as in the case of the Company, operate independently and are
known as "merchant producers."

  The Company's coke business consists of one production facility located in
Monessen, Pennsylvania (the "Monessen Facility"), which produces furnace coke.
The plant consists of two batteries with a total of 56 ovens and has a total
capacity of approximately 350,000 tons of furnace coke per year. All of the
ovens were rebuilt in 1980 and 1981, which, together with recent improvements,
make the Monessen Facility one of the most modern coking facilities in the
United States.

                                       4
<PAGE>

  The Monessen Facility qualifies for a tax credit based on its production of
coke as a non-conventional fuel and the sale thereof to unrelated third parties.
The tax credit generated per ton of coke is tied to a per-barrel of oil
equivalent determined on a British Thermal Unit ("BTU") basis and adjusted
annually for inflation. The approximate value of this tax credit per ton of coke
is approximately $28. In December 1999 the Company entered into an agreement
with a third party which resulted in substantially all tax credits generated as
a result of the production and sale of coke at the Monessen Facility being
transferred to the third party (the "Monessen Transaction"). In 2001, 2000 and
1999 the Company earned $8.2 million, $8.6 million and $0.8 million,
respectively, for the transfer of tax credits. Under current tax legislation,
the tax credits expire in 2002. Credits utilized for current and deferred tax
benefits for the years ended December 31, 2001, 2000 and 1999 were approximately
$0.1 million, $0.1 million and $10.2 million, respectively.

  An integrated steel company is the only customer for the Company's furnace
coke, with a contract to take 100% of the Company's coke production in 2002. Due
to the difficulties in the domestic steel industry, coupled with the low pricing
of domestic coke largely as a result of imports, the Company continues to review
its strategic alternatives for the coke business.

  The Company is also a 51% owner of a timber preservation chemicals business
that operates throughout Australia, Southeast Asia, Japan and South Africa.
Timber preservation chemicals are used to impart durability to timber products
used in building/construction, agricultural and heavy-duty industrial markets.
The most commonly used chemicals are creosote, copper chrome arsenates ("CCA"),
copper co-biocides, sapstain control products and light organic solvent
preservatives ("LOSP").

  Roofing pitch and refined tars are also produced in smaller quantities and are
sold into the commercial roofing and pavement sealer markets, respectively.

  The Carbon Materials & Chemicals division's ten largest customers represented
approximately 44%, 40% and 49% of the division's net sales for 2001, 2000 and
1999, respectively. The Company has one primary global competitor in the carbon
pitch market.

  Coal tar is purchased from a number of outside sources as well as from the
Monessen Facility. Primary suppliers are Bethlehem Steel Corporation, USX
Corporation ("USX"), China Steel Chemical Corporation, The Broken Hill
Proprietary Co. Limited, Corus and Wheeling-Pittsburgh Steel Corporation.

  Because of the Clean Air Act Amendments and other environmental laws, future
coal tar availability from domestic coke production is expected to decline.
Management believes that the Company's ability to source coal tar and carbon
pitch from overseas markets through its foreign operations, as well as its
research of petroleum feedstocks, will assist in securing an uninterrupted
supply of carbon pitch feedstocks.

  In 1999 the Company entered into a joint venture agreement with Tangshan Iron
& Steel Co. ("TISCO") to rehabilitate and operate a tar distillation facility in
China. The joint venture, Koppers (China) Carbon and Chemical Co., Limited
("Koppers China") is 60% owned by the Company and began production of coal tar
products in 2001. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Other Matters."

Railroad & Utility Products

  The Company markets treated wood products primarily to the railroad and public
utility markets, primarily in the United States and Australia. The Railroad &
Utility Products division's profitability is influenced by the demand for
railroad products and services by Class 1 railroads, demand for transmission and
distribution poles by electric and telephone utilities and its cost to procure
wood. Historically, sales of railroad products and services have represented
approximately three-fourths of the Railroad & Utility Products division's net
sales. Railroad products include items such as crossties, switch ties and
various types of lumber used for railroad bridges and crossings. Utility
products include transmission and distribution poles for electric and telephone
utilities and pilings used in industrial foundations, beach housing, docks and
piers. The Railroad & Utility Products division operates 20 wood treating
plants, one specialty trackwork facility, one co-generation facility and pole
distribution yards located throughout the United States and Australasia. The
Company's network of plants is strategically located near timber supplies to
enable it to access raw materials and service customers effectively. In
addition, Koppers' crosstie treating plants abut railroad customers' track
lines, and its pole distribution yards are typically located near Koppers'
utility customers.

                                       5
<PAGE>

  The Railroad & Utility Products division's largest customer base is the Class
1 railroad market, which buys 73% of all crossties produced in the United
States. Koppers has also been expanding key relationships with the approximately
500 short-line and regional rail lines. The railroad crosstie market is a mature
market with approximately 15 million replacement crossties purchased per year.
The Company currently has contracts with six of the seven North American Class 1
railroads and has enjoyed long-standing relationships, some of more than 50
years, with this important customer base. These relationships, coupled with a
growing interest on the part of railroads to outsource non-core activities and
consolidate their supplier base, have enabled the Company to position itself for
growth by offering certain products and services to railroads at a cost lower
than the railroads' internal cost. Such new services include assembling track
sections and affixing fastening devices at the treating plant rather than field
locations; fabricating specialty track items such as turnouts; and disposing of
discarded ties in an environmentally safe manner in high temperature boilers. In
2001, 2000 and 1999 approximately 12%, 11% and 10%, respectively, of Railroad &
Utility Products' net sales were derived from these types of services to
railroads. The Company intends to capitalize on its relationships with railroads
by expanding its current service offerings, including track panels, specialty
track components and railroad tie disposal.

  Historically, investment trends in track maintenance by domestic railroads
have been linked to general economic conditions in the country. During
recessions, the railroads have typically deferred track maintenance until
economic conditions improve. Recently, however, the Class 1 railroads have
increased their spending on track maintenance, which has caused an increase in
demand for railroad crossties. The increased maintenance during a recessionary
cycle can be partially attributed to merger activities that resulted in
deferrals of track maintenance over the past few years. Management believes this
increase in demand will continue for the near term as track maintenance is
accelerated.

  Hardwoods, such as oak and other species, are the major raw materials in wood
crossties. Hardwood prices, which account for approximately 62% of a finished
crosstie's cost, fluctuate with the demand from competing hardwood lumber
markets, such as oak flooring, pallets and other specialty lumber products.
Normally, raw material price fluctuations are passed through to the customer
according to the terms of the applicable contract. Weather conditions can be a
factor in the supply of raw material, as unusually wet conditions may make it
difficult to harvest timber.

  In the United States, hardwood lumber is procured by the division from
hundreds of small sawmills throughout the northeastern, midwestern, and southern
areas of the country. The crossties are shipped via rail car or trucked directly
to one of the division's twelve crosstie treating plants, all of which are on
line with a major railroad. The crossties are either air-stacked for a period of
six to twelve months or artificially dried by a process called boultonizing.
Once dried, the crossties are pressure treated with creosote, a product of
Koppers' Carbon Materials & Chemicals division.

  The Company's top ten Railroad & Utility Products accounts comprised
approximately 65%, 63% and 60% of Railroad & Utility Products' net sales for
2001, 2000 and 1999, respectively, and are serviced through long-term contracts
ranging from one to five years on a requirements basis. Koppers' sales to the
railroad industry are coordinated through its office in Pittsburgh,
Pennsylvania. The Company has one principal competitor in the railroad products
market.

                                       6
<PAGE>

  The Company believes that the threat of substitution for the wood crosstie is
low due to the higher cost of alternative materials. Concrete crossties,
however, have been identified by the railroads as a feasible alternative to wood
crossties in limited circumstances. In 1991, the Company acquired a 50%
partnership interest in KSA Limited Partnership ("KSA"), a concrete crosstie
manufacturing facility in Portsmouth, Ohio, in order to take advantage of this
growth opportunity. In 2001, an estimated one million concrete crossties, or 7%
of total tie insertions, were installed by Class 1 railroads. The Company
believes that concrete crossties will continue to command approximately this
level of market share. KSA produced approximately 140,000 concrete crossties in
2001, or 14% of the United States estimated concrete tie market. While the cost
of material and installation of a concrete crosstie is much higher than that of
a wood tie, the average life of wood and concrete crossties are similar,
although concrete generally performs better in high weight bearing, high traffic
areas and is attractive to railroads for these purposes.

  Utility poles are produced mainly from softwoods such as pine and fir, which
have been subject to steady price increases in recent years due primarily to
increased demand for softwood materials in the paper and construction
industries. The majority of the softwood used for poles is purchased from large
timber owners and individual landowners and shipped to one of the Company's
pole-peeling facilities. While crossties are treated exclusively with creosote,
the Company treats poles with a variety of preservatives including
pentachlorophenol ("Penta"), CCA, creosote and antisapstains.

  The market for utility pole products is characterized by a large number of
small, highly competitive producers selling into a price-sensitive industry. The
utility pole market is highly fragmented domestically with over 200 investor-
owned electric and telephone utilities and 2,800 smaller municipal utilities and
Rural Electric Associations ("REAs"). Approximately 2.2 million poles are
purchased annually in the United States, with a smaller market in Australia. In
recent years the Company has seen its utility pole volumes decrease due to
industry deregulation and its impact on maintenance programs. The Company
expects demand for utility poles to remain at lower levels. In Australia, the
Company markets its products primarily to the utility, agricultural, landscape
and vineyard markets.

  Pole products accounted for approximately 20%, 25% and 25% of Railroad &
Utility Products' net sales in 2001, 2000 and 1999, respectively. The Company
has three principal competitors in the utility products market. There are few
barriers to entry in the utility products market, which consists of regional
wood treating companies operating small to medium size plants and serving local
markets.

  Due to deteriorating market conditions resulting in increasing operating
losses over the past several years, in February 2001 the Company's Board of
Directors approved the closure of the utility pole facility and adjacent
cogeneration facility located in Feather River, California ("Feather River")
effective March 31, 2001. This closure resulted in total charges to earnings in
2001 of $4.6 million, which included $1.3 million of operating expenses. At
December 31, 2001 an estimated $1.6 million of additional reserves remain,
primarily for dismantling. Completion of the closure is expected by the end of
the third quarter of 2002.

Equity Investments and Related Parties

   Domestic Joint Venture: KSA

  KSA, located in Portsmouth, Ohio, produces concrete crossties, a complementary
product to the Company's treated wood crosstie business. Other interests are
held by Sherman International Corp. (24%), Abetong America, Inc. (24%) and
Sherman Abetong, Inc. (2%). KSA entered into a contract with its major customer
in 2000 to supply a minimum of 450,000 concrete ties over a period of five
years. KSA also provides concrete turnouts, used in rail traffic switching, and
used crosstie rehabilitation.

Research and Development

  As of December 31, 2001, the Company had eleven full-time employees engaged in
research and development and technical service activities. The Company's
research efforts are directed toward new product development regarding alternate
uses for coal tar and technical service efforts to promote the use of creosote.
The Company believes the research and technical efforts provided in these areas
are adequate to maintain a leadership position in the technology related to
these products. Expenditures for research and development for 2001, 2000 and
1999 were $2.7 million, $2.5 million and $2.1 million, respectively.

                                       7
<PAGE>

Technology and Licensing

  In 1988, Koppers acquired certain assets from Old Koppers including the
patents, patent applications, trademarks, copyrights, transferable licenses,
inventories, trade secrets, and proprietary processes used in the businesses
acquired. The most important trademark acquired was the name "Koppers." The
association of the name with the chemical, building, wood preservation and coke
industries is beneficial to the Company, as it represents longstanding, high-
quality products. Included in the patents that were acquired by Koppers were
patents for pitch quality controls (both in tar plants and aluminum plants),
wood preservatives and additives, and tar distillation.

Environmental Matters

  The Company's operations and properties are subject to extensive federal,
state, local and foreign environmental laws and regulations, including those
concerning the treatment, storage and disposal of wastes, the investigation and
remediation of contaminated soil and groundwater, the discharge of effluents
into waterways, the emissions of substances into the air, as well as various
health and safety matters (collectively, "Environmental Laws"). Environmental
Laws are subject to frequent amendment and have historically become more
stringent. Failure to comply with Environmental Laws can result in significant
civil penalties, criminal penalties, injunctive relief and denial or loss of, or
imposition of significant restrictions on, environmental permits. In addition,
the Company could be subject to suit by third parties in connection with alleged
violations of or liability under Environmental Laws.

  For the last three years, the Company's annual capital expenditures for
environmental matters averaged approximately $4 million, and annual operating
expenses for environmental matters, excluding depreciation, averaged
approximately $10 million. The Company currently estimates that capital
expenditures in connection with matters relating to environmental control
facilities will be approximately $10 million for 2002.  The Company believes
that it will have continuing significant expenditures associated with compliance
with Environmental Laws and, to the extent not covered by insurance or available
recoveries under third party indemnification arrangements, for present and
future remediation efforts at waste and plant sites and other liabilities
associated with environmental matters.  There can be no assurance that these
expenditures will not exceed current estimates and will not have a material
adverse effect on the business, financial condition, cash flow and results of
operations of the Company.  See "Management's Discussion and Analysis of
Financial Condition and Results of Operations---Environmental and Other
Matters".

Employees and Employee Relations

  As of December 31, 2001, the Company employed 684 salaried employees and 1,401
non-salaried employees. Listed below is a breakdown of employees by business
segment, including administration.

Division                              Salaried   Non-Salaried   Total
--------                              --------   ------------   -----
Carbon Materials & Chemicals........     355           686      1,041
Railroad & Utility Products.........     238           703        941
Administration......................      91            12        103
                                         ---         -----      -----
     Total Employees................     684         1,401      2,085

  Of the Company's employees, approximately 55% are represented by 25 different
unions and covered under numerous labor contracts. The United Steelworkers of
America, covering workers at six facilities, accounts for the largest membership
with more than 300 employees. Another significant affiliation is the Paper,
Allied-Industrial, Chemical & Energy Workers' International Union, with more
than 180 employees at four facilities. Labor contracts expiring in 2002 cover
approximately 7% of total employees.

                                       8
<PAGE>

ITEM 2. Properties

  The principal fixed assets of the Company consist of its production,
treatment, and storage facilities and its transportation and plant vehicles. Its
production facilities consist of 18 Carbon Materials & Chemicals facilities and
21 Railroad & Utility Products facilities. See "Business--Carbon Materials &
Chemicals," and "Business--Railroad & Utility Products." As of December 31,
2001 the net book value of vehicles, machinery and equipment represented
approximately 31% of the Company's total assets, as reflected in its
consolidated balance sheet. The following chart sets forth information regarding
the Company's facilities:

<TABLE>
<CAPTION>
                                                                                            Description of
Segment/Primary Product Line                      Location                    Acreage      Property Interest
----------------------------                      --------                    -------      -----------------
<S>                                    <C>                                   <C>          <C>
Carbon Materials & Chemicals

Wood Preservation Chemicals            Auckland, New Zealand                     1.3              Leased
Carbon Pitch                           Clairton, Pennsylvania                     17               Owned
Carbon Pitch, Creosote, Naphthalene    Clarence, England                         120               Owned
Wood Preservation Chemicals            Fiji                                       .7               Owned
Carbon Pitch                           Follansbee, West Virginia                  32               Owned
Carbon Black                           Kurnell, New South Wales, Australia        20              Leased
Carbon Pitch                           Mayfield, New South Wales, Australia       26               Owned
Furnace Coke                           Monessen, Pennsylvania                     45               Owned
Carbon Pitch                           Nyborg, Denmark                            36        26 Owned, 10 Leased
Wood Preservation Chemicals            Penang, Malaysia                            3              Leased
Carbon Pitch                           Portland, Oregon                            6              Leased
Carbon Pitch                           Portland, Victoria, Australia             1.1              Leased
Carbon Pitch                           Scunthorpe, England                        27               Owned
Wood Preservation Chemicals            Port Shepstone, South Africa               .6              Leased
Carbon Pitch, PAA                      Stickney, Illinois                         38               Owned
PAA                                    Totten, England                             1               Owned
Wood Preservation Chemicals            Trentham, Victoria, Australia              24               Owned
Carbon Pitch                           Woodward, Alabama                          23               Owned

Railroad & Utility Products

Prefabricated Rail Sections            Alorton, Illinois                        12.2       6.6 Leased, 5.6 Owned
Utility Poles, Railroad Crossties      Bunbury, Western Australia                 26               Owned
Utility Poles, Railroad Crossties      Denver, Colorado                           64               Owned
Utility Poles, Railroad Crossties      Florence, South Carolina                  200               Owned
Utility Poles                          Gainesville, Florida                       86               Owned
Railroad Crossties                     Galesburg, Illinois                       125              Leased
Utility Poles                          Grafton, New South Wales, Australia       100               Owned
Railroad Crossties                     Green Spring, West Virginia                98               Owned
Utility Poles, Railroad Crossties      Grenada, Mississippi                      154               Owned
Railroad Crossties                     Guthrie, Kentucky                         122               Owned
Pine Products                          Hume, Australia Capital Territory           5           99 Year Lease
Utility Poles                          Logansport, Louisiana                      30               Owned
Utility Poles                          Longford, Tasmania                       16.5               Owned
Railroad Crossties                     Montgomery, Alabama                        84               Owned
Railroad Crossties                     N. Little Rock, Arkansas                  148               Owned
Railroad Crossties                     Roanoke, Virginia                          91               Owned
Railroad Crossties                     Somerville, Texas                         244               Owned
Railroad Crossties                     Superior, Wisconsin                       120               Owned
Railroad Crossties                     Susquehanna, Pennsylvania                 109               Owned
Pine Products                          Takura, Queensland, Australia              75              Leased
Utility Poles                          Thornton, New South Wales, Australia       15               Owned
</TABLE>

                                       9
<PAGE>

  The Company's corporate offices are located in approximately 60,000 square
feet of leased office space in the Koppers Building, Pittsburgh, Pennsylvania.
The office space is leased from Axiom Real Estate Management, Inc. with the
lease term expiring on December 31, 2010.

ITEM 3.   Legal Proceedings

  The Company is involved in litigation and various proceedings relating to
environmental laws and regulations and toxic tort matters. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Environmental and Other Matters."

  The Company is involved in various other proceedings incidental to the
ordinary conduct of its business. The Company believes that none of these other
proceedings will have a material adverse effect on the business, financial
condition, cash flow and results of operations of the Company.

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

  There were no matters submitted to a shareholder vote during the fourth
quarter of 2001.

PART II

ITEM 5.   Market for the Registrant's Common Equity and Related Stockholder
          Matters

  Currently, there is no established public trading market for the Company's
common stock. At December 31, 2001 the Company had 1.3 million shares of common
stock outstanding. Of the total, 1.0 million shares of common stock were owned
by approximately 200 individuals consisting of officers, directors, and current
and former employees of the Company (collectively, the "Management Investors"),
with the remainder owned by the Company's Employee Savings Plan. The terms and
conditions of ownership, including voting rights and dividends, are governed by
the Restated Articles of Incorporation of the Company and the stockholders'
agreement by and among the Company, Saratoga Partners III, L.P. ("Saratoga"),
and the Management Investors, dated as of December 1, 1997 (as amended, the
"Stockholders' Agreement"). See "Stockholders' Agreement."

  Each share of common stock has an equal and ratable right to receive dividends
to be paid from the Company's assets legally available therefor when, as, and if
declared by the Board of Directors. The declaration and payment of dividends on
the common stock are subject to (i) the Company's credit and loan agreements;
(ii) the provisions of the indenture which governs the Company's 9 7/8% Senior
Subordinated Notes due 2007 (the "Subordinated Notes"); (iii) the supermajority
vote requirements of the Stockholders' Agreement, and (iv) the provisions of any
series of preferred stock, including the senior convertible preferred stock
("preferred stock") held by Saratoga which may at the time be outstanding.  In
June 2001 the Company declared and paid a cash dividend of $4.00 per share to
all holders of common and preferred stock.

Stockholders' Agreement

  The Company is a party to the Stockholders' Agreement. The Management
Investors are a group of approximately 200 individual stockholders with various
ownership interests in the common stock and collectively comprising 80% of the
total outstanding shares of the common stock of the Company. The remaining 20%
is held indirectly by approximately 600 current and former employees through the
Company's Employee Savings Plan. Each Management Investor is an officer, Board
member or current or former employee of either Koppers or one of its
subsidiaries. Pursuant to the Stockholders' Agreement, each of the Management
Investors has appointed Walter W. Turner and Clayton A. Sweeney as the two
representatives ("Representatives") of the Management Investors and granted to
the Representatives an irrevocable proxy for the term of the Stockholders'
Agreement to vote all their shares. In November 2001 Mr. Sweeney resigned as a
Representative, and his position as Representative is currently vacant. Mr.
Sweeney remains a Director of the Company.

  The Stockholders' Agreement sets forth supermajority voting requirements for
the Board of Directors for certain matters, including the issuance of additional
stock, mergers, consolidations, acquisitions, significant asset sales, and the
incurrence of material indebtedness. Saratoga is entitled to nominate a majority
of the Board of Directors. The Stockholders' Agreement requires the Company to
redeem shares upon a Management Investor's ceasing for any reason to be employed
by the Company.

                                       10
<PAGE>

  As of December 31, 2001, Koppers was obligated to purchase approximately 0.2
million shares of common stock from Management Investors based on currently
available information.

ITEM 6.  Selected Financial Data

<TABLE>
<CAPTION>
                                                                                 Years Ended December 31,
                                                                 2001         2000        1999        1998      1997
                                                                ------       ------      ------      ------    ------
Income Statement Data:                                                   (In millions except shares figures)
<S>                                                                     <C>          <C>         <C>          <C>
Net sales.............................................          $707.6       $723.5      $664.1      $670.6    $593.1
       Cost of sales..................................           585.3        598.8       548.9       553.5     501.4
       Depreciation and amortization..................            30.4         30.0        27.1        30.6      23.5
       Selling, general and administrative............            46.3         45.4        37.4        39.9      28.1
       Restructuring charges (1)......................             3.3            -           -        (1.0)     45.4
                                                                ------       ------      ------      ------    ------
Operating profit (loss)...............................            42.3         49.3        50.7        47.6      (5.3)
Equity in earnings of affiliates......................             0.3          2.2         1.7         2.4       5.3
Other income (expense) (2)............................             8.2          8.6         0.8           -      (1.4)
Interest expense......................................            24.5         28.0        28.1        29.7      17.3
                                                                ------       ------      ------      ------    ------
Income (loss) before income tax provision (benefit),..
     minority interest and extraordinary item.........            26.3         32.1        25.1        20.3     (18.7)
Income tax provision (benefit) (3)....................            12.1         16.6         0.2        (0.3)    (19.7)
Minority interest.....................................             0.9          0.8         0.7         0.5         -
                                                                ------       ------      ------      ------    ------
Income before extraordinary item......................          $ 13.3       $ 14.7      $ 24.2      $ 20.1    $  1.0
Net income (loss) (4).................................          $ 13.3       $ 14.7      $ 24.2      $ 20.1    $ (5.7)
Preferred dividends...................................          $  9.1       $    -      $    -      $    -    $    -
                                                                ------       ------      ------      ------    ------
Net income to common stock............................          $  4.2       $ 14.7      $ 24.2      $ 20.1    $ (5.7)
Earnings per share of common stock before
     extraordinary item:
     Basic earnings per share.........................          $ 3.15       $10.64      $16.70      $12.64    $ 0.17
                                                                ======       ======      ======      ======    ======
     Diluted earnings per share.......................          $ 3.15       $ 3.83      $ 6.23      $ 4.85    $ 0.12
                                                                ======       ======      ======      ======    ======
Earnings (loss) per share of common stock:
     Basic earnings (loss) per share..................          $ 3.15       $10.64      $16.70      $12.64    $(0.92)
                                                                ======       ======      ======      ======    ======
     Diluted earnings (loss) per share................          $ 3.15       $ 3.83      $ 6.23      $ 4.85    $(0.65)
                                                                ======       ======      ======      ======    ======

Balance Sheet Data (end of period):
Working capital.......................................          $ 89.2       $107.4      $ 97.3      $104.9    $109.2
Total assets..........................................           455.2        483.9       477.7       477.6     500.2
Total debt............................................           269.0        291.5       309.8       332.7     320.7
Common stock subject to redemption (5)................            22.3         30.9        25.6        16.0      26.4
Common equity.........................................             2.8          3.7         7.8        (3.5)    (14.6)

Other Data:
Cash dividends per common share.......................          $ 4.00       $    -      $    -      $    -    $ 0.26
Capital expenditures..................................            14.6         14.8        22.5        20.2      19.8
Acquisitions and related capital expenditures (6).....             6.4         15.3         1.7         2.6      34.1
</TABLE>

(1) The 2001 charges were related to the closure of Feather River. See Note 2 of
    the Notes to Consolidated Financial Statements of the Company. The 1997
    charges were comprised of $39.9 million related to the closure of the
    Company's coke facility in Woodward, Alabama ("Woodward Coke") and $5.5
    million related to an asset impairment charge at Feather River. In 1998,
    approximately $1.0 million of plant closing reserves were credited to income
    as the result of a negotiated reduction in a contractual penalty obligation
    related to the Feather River cogeneration facility.

(2) Other income for 2001, 2000 and 1999 consists of proceeds from the
    monetization of tax credits from the Monessen Facility based on coke
    production. See Note 7 of the Notes to Consolidated Financial Statements of
    the Company. Other expense for 1997 is for the write-off of expenses related
    to an Initial Public Offering that was withdrawn in 1997.

(3) In December 1999 the Company entered into an agreement with a third party to
    transfer substantially all of the energy tax credits from the Monessen
    Facility for cash. See Note 7 of the Notes to Consolidated Financial
    Statements of the Company.

                                       11
<PAGE>

(4)  Net income for 1997 includes extraordinary loss on early extinguishment of
     debt of $6.7 million.

(5)  Represents the amount necessary to redeem stock held by Management
     Investors upon termination of their employment with the Company pursuant to
     the Stockholders' Agreement. See Note 5 of the Notes to Consolidated
     Financial Statements of the Company.

(6)  Significant acquisitions include the purchase of the remaining 50% of the
     Company's equity ownership in the European operations of Tarconord A/S
     ("Tarconord", now known as "Koppers Europe") in May 2000, and the
     acquisition of the remaining 50% of Koppers Australia in December 1997.


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



Results of Operations
     The following table sets forth certain sales and operating data, net of all
inter-segment transactions, for the Company's businesses for the periods
indicated:

<TABLE>
<CAPTION>
                                                       Years Ended December 31,
                                                        2001     2000     1999
                                                       ------   ------   ------
<S>                                                   <C>       <C>      <C>
Net sales (In millions):
   Carbon Materials & Chemicals.....................   $419.7   $421.3   $356.3
   Railroad & Utility Products......................    287.9    302.2    307.8
                                                       ------   ------   ------
    Total...........................................   $707.6   $723.5   $664.1
                                                       ======   ======   ======

Segment sales as percent of total net sales:
   Carbon Materials & Chemicals.....................     59.3%    58.2%    53.6%
   Railroad & Utility Products......................     40.7%    41.8%    46.4%
                                                       ------   ------   ------
    Total...........................................    100.0%   100.0%   100.0%

Gross margin by segment (after depreciation and
 amortization):
   Carbon Materials & Chemicals.....................     15.3%    15.8%    14.1%
   Railroad & Utility Products......................     10.2%     9.6%    12.6%
                                                       ------   ------   ------
    Total...........................................     13.0%    13.1%    13.3%

Operating margin by segment:
   Carbon Materials & Chemicals.....................      7.7%     8.6%     8.0%
   Railroad & Utility Products......................      4.1%     4.6%     7.8%
                                                       ------   ------   ------
    Total...........................................      6.0%     6.8%     7.6%
</TABLE>

 Comparison of Results of Operations for the Years Ended December 31, 2001 and
2000.

  Net Sales.  Net sales for the year ended December 31, 2001 were lower than
2000 as $41 million of additional sales as a result of the consolidation of
Koppers Europe were more than offset by approximately $50 million of reduced
sales in the United States. Eliminating the effect of Koppers Europe, net sales
for Carbon Materials & Chemicals decreased approximately $44 million compared to
the prior year period due to reductions in sales volumes for all major product
lines as a result of the recession in the United States. Net sales for Railroad
& Utility Products decreased compared to the prior year due to reductions in
sales volumes for utility poles and reductions in volumes and pricing for
railroad crossties.

                                       12
<PAGE>

  Gross Margin after Depreciation and Amortization.  As a percent of net sales,
gross profit after depreciation and amortization decreased slightly as lower
margins for Carbon Materials & Chemicals were substantially offset by higher
margins for Railroad & Utility Products. Gross margin for Carbon Materials &
Chemicals decreased primarily as a result of lower PAA and furnace coke sales
volumes in the United States. Gross margin for Railroad & Utility Products
increased due primarily to the closure of Feather River in early 2001.

  Depreciation and Amortization.  Depreciation and amortization for 2001
increased slightly compared to the prior year due to the consolidation of
Koppers Europe.

  Selling, General and Administrative Expense.   Selling, general and
administrative expense as a percent of net sales increased primarily as a result
of higher legal costs.

  Equity in Earnings of Affiliates.  Equity earnings for 2001 were lower than
the prior year due primarily to the consolidation of Koppers Europe.

  Income Taxes.   The Company's effective income tax rate for the year ended
December 31, 2001 decreased due primarily to the existence of non-deductible
losses in 2000.

  Net Income.   Net income for 2001 compared to the same period last year
decreased primarily due to the recession in manufacturing in the United States.

 Comparison of Results of Operations for the Years Ended December 31, 2000 and
1999.

  Net Sales.  Net sales for the year ended December 31, 2000 were higher than
the same period in 1999 due primarily to $56.5 million of sales as a result of
the acquisition of Koppers Europe. Eliminating the effect of Koppers Europe, net
sales for Carbon Materials & Chemicals increased compared to the prior year
period due to an increase in sales for PAA as a result of higher pricing, which
more than offset lower carbon pitch volumes and lower pricing for furnace coke.
Net sales for Railroad & Utility Products decreased compared to the prior year
due to reductions in sales volumes for utility poles and reductions in pricing
for railroad crossties.

  Gross Margin after Depreciation and Amortization.  As a percent of net sales,
gross profit after depreciation and amortization decreased slightly as higher
margins for Carbon Materials & Chemicals were offset by lower margins for
Railroad & Utility Products. Gross margin for Carbon Materials & Chemicals
increased primarily as a result of higher PAA prices. Gross margin for Railroad
& Utility Products decreased due primarily to lower prices for railroad
crossties.

  Depreciation and Amortization.  Depreciation and amortization for 2000
increased compared to the prior year due to the acquisition of Koppers Europe.

  Selling, General and Administrative Expense.   Selling, general and
administrative expense as a percent of net sales increased primarily as a result
of an increase in bad debt expense.

  Equity in Earnings of Affiliates.  Equity earnings for 2000 were higher than
the prior year primarily due to an increase in earnings for Tarconord prior to
the acquisition of Koppers Europe.

  Income Taxes. The Company's effective income tax rate for the year ended
December 31, 2000 increased due primarily to the reduction in available tax
credits as a result of the Monessen Transaction. The reduction from statutory
rates for 1999 was due primarily to tax credits related to the Monessen
Facility.

  Net Income. Net income for 2000 compared to the same period last year
decreased primarily due to higher income tax expense as a result of the Monessen
Transaction.

                                       13
<PAGE>

Liquidity and Capital Resources

  The Company's liquidity needs are primarily for debt service, capital
maintenance and acquisitions. The Company believes that its cash flows from
operations and available borrowings under its bank credit facilities will be
sufficient to fund its anticipated liquidity requirements for at least the next
twelve months. In the event that the foregoing sources are not sufficient to
fund the Company's expenditures and service its indebtedness, the Company would
be required to raise additional funds.

  As of December 31, 2001 the Company had $5.2 million of cash and cash
equivalents and $22.3 million of unused revolving credit availability for
working capital purposes after restrictions by various debt covenants and letter
of credit commitments. As of December 31, 2001, $9.9 million of commitments were
utilized by outstanding standby letters of credit.

  Substantially all of the Company's assets, including the assets of significant
subsidiaries other than the Danish operations of Koppers Europe, are pledged as
collateral for the Company's credit facilities. The credit facilities contain
certain covenants that limit capital expenditures by the Company and restrict
its ability to incur additional indebtedness, create liens on its assets, enter
into leases, pay dividends and make investments or acquisitions. In addition,
such covenants give rise to events of default upon the failure by the Company to
meet certain financial ratios.

  Cash provided by operating activities increased in spite of lower earnings in
2001 as significant reductions in working capital were achieved, primarily in
trade accounts receivable. Cash provided by operating activities in 2000
decreased from 1999 due to lower earnings and higher working capital
requirements as compared to the prior year.

  Capital expenditures excluding acquisitions were consistent with the prior
year as the Company continues to focus on required maintenance and environmental
projects. For fiscal year 2002 the Company anticipates capital expenditures of
$21.5 million excluding acquisitions. This amount includes environmental capital
expenditures of approximately $10 million, with the remainder for capital
maintenance and improvements. The Company expects to finance 2002 capital
expenditures primarily through cash flow generated from operations. The
Company's projection of 2002 capital expenditures is based on a continuation of
the Company's program to maintain and modernize existing manufacturing capacity
and to comply with existing environmental regulations. The actual level of
capital expenditures may be higher in the event of unforeseen breakdowns of
equipment or changes in environmental requirements, or lower in the event of
inadequate cash flow from operations.

  Cash used for financing activities in 2001 was comprised of term debt
repayments of $21.1 million ($6.8 million of which was unscheduled repayments),
$14.6 million of dividends and $5.9 million of common stock redemptions. Cash
used for financing activities in 2000 was due primarily to term debt repayments
of $24.0 million, $9.2 million of which was unscheduled repayment. Cash used in
1999 was due primarily to net term debt repayments of $23.1 million, $15.6
million of which was unscheduled repayment.

  Restructuring Charges. In February 2001 the Company's Board of Directors
approved the closure of the utility pole facility located in Feather River,
California effective March 31, 2001. This resulted in a charge of $3.3 million
in the first quarter of 2001. Completion of the closure is expected by the end
of the third quarter of 2002. At December 31, 2001 $1.6 million of reserves
remain for final dismantling and remediation costs. Substantially all of the
charges were cash charges.

  Pension Funding. Due primarily to depressed equity securities markets in 2001
and 2000, the Company anticipates significant increases in its level of required
pension contributions for the next several years. Additionally, pension expense
is expected to increase by approximately $0.7 million in 2002.

  Dividends. In 2001 the Company paid a dividend in the amount of $14.6 million
to common and preferred shareholders. The Company is limited by its current
lending covenants regarding the payment of dividends. For 2002 this limitation
is approximately $10 million.

  Operating Lease Commitments. Commitments during the next five years under
operating leases aggregate to approximately $83 million, ranging from $19.7
million in 2002 to $10.9 million in 2006.

                                       14
<PAGE>

  Pending Litigation. The Company is currently a defendant in several toxic tort
lawsuits, one of which went to trial in January 2002 and the other which has a
trial date of March 2002 (see "Environmental and Other Matters"). Although the
Company believes it has a strong legal position and intends to defend these
cases vigorously, there can be no assurance that an unfavorable outcome in
either or both matters would not have a material adverse effect on the business,
financial condition, cash flow and results of operations of the Company.

  Stock Redemptions. In 2002, anticipated stock redemptions for retirees amount
to $3.5 million.

  Impact of Deferred Taxes. Energy tax credits from the Monessen Facility
provided tax benefits to Koppers of approximately $0.1 million, $0.1 million and
$10.2 million in 2001, 2000 and 1999, respectively. The Company entered into the
Monessen Transaction to monetize substantially all of these tax credits. Based
on the Company's earnings history, along with the implementation of various tax
planning strategies, the Company believes the deferred tax assets on the
Consolidated Balance Sheet at December 31, 2001 are realizable.

  Revenue Recognition. The Company recognizes revenue from product sales at the
time of shipment. Shipping and handling costs are included as a component of net
sales.

  Accrued Insurance. The Company is insured for property, casualty and workers'
compensation insurance up to various stop loss coverages. Losses are accrued
based upon the Company's estimates of the liability for the related deductibles
for claims incurred using certain actuarial assumptions followed in the
insurance industry and based on Company experience.

  Accounts Receivable. The Company maintains allowances for doubtful accounts
for estimated losses resulting from the inability of its customers to make
required payments. In circumstances where the Company becomes aware of a
specific customer's inability to meet its financial obligations to Koppers, a
specific reserve for bad debts is recorded against amounts due. If the financial
condition of the Company's customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.

  Foreign Operations and Foreign Currency Transactions. The Company is subject
to foreign currency translation fluctuations due to its foreign operations.
Exchange rate fluctuations in 2001 and 2000 resulted in charges to comprehensive
income of $4.2 million and $11.2 million, respectively.

  Seasonality; Effects of Weather. The Company's quarterly operating results
fluctuate due to a variety of factors that are outside Koppers' control,
including inclement weather conditions, which in the past have affected
operating results. Operations at several of Koppers' facilities have been halted
for short periods of time during the winter months. Moreover, demand for some of
Koppers' products declines during periods of inclement weather. As a result of
the foregoing, the Company anticipates that it may experience material
fluctuations in quarterly operating results.

Impact of Recently Issued Accounting Standards

  Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued in June 1998. The Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments imbedded in other contracts, and for hedging activities. It requires
an entity to recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
accounting for changes in the fair value of a derivative (i.e., gains and
losses) depends on the intended use of the derivative and the resulting
designation. Statement No. 133 is effective for fiscal years beginning after
June 15, 2000. The Company adopted Statement No. 133 on January 1, 2001; the
impact of the adoption of this statement was not material.

  In June 2001 the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill will no longer be amortized but
will be subject to annual impairment tests in accordance with the Statements.
Other intangible assets will continue to be amortized over their useful lives.
The Company will apply the new rules on accounting for goodwill beginning in the
first quarter of 2002. Application of the nonamortization provisions of the
Statement is expected to result in an increase in net income of $0.8 million
($0.21 per share) per year. The Company performed the first of the required
impairment tests of goodwill as of January 1, 2002 and has determined that there
is no impact on the earnings or financial position of the Company as of the date
of adoption.

  In July 2001 the Financial Accounting Standards Board issued Statement No.
143, Accounting for Asset Retirement Obligations, effective for fiscal years
beginning after June 15, 2002. The Statement provides accounting requirements
for retirement obligations associated with tangible long-lived assets. The
obligations affected are those for which there is a legal

                                       15
<PAGE>

obligation to settle as a result of existing or enacted law. The Company has not
yet determined the effect, if any, of the adoption of this Statement.

  In October 2001 the Financial Accounting Standards Board issued Statement No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets, effective
for fiscal years beginning after December 15, 2001. The new rules on asset
impairment supersede FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provide a
single accounting model for long-lived assets to be disposed of. The Company has
performed an analysis and determined that the adoption of this Statement will
have no effect on the earnings or financial position of the Company as of the
date of adoption.

Environmental and Other Matters

  The Company is subject to federal, state, local and foreign laws and
regulations and potential liabilities relating to, among other things, the
treatment, storage and disposal of wastes, the discharge of effluent into
waterways, the emission of substances into the air and various health and safety
matters. The Company expects to incur substantial costs for ongoing compliance
with such laws and regulations. The Company may also face governmental or third-
party claims for cleanup or for injuries resulting from contamination at sites
associated with past and present operations. The Company accrues for
environmental liabilities when a determination can be made that they are
probable and reasonably estimable. Total environmental reserves at December 31,
2001 and 2000 were approximately $12.6 million and $12.2 million, respectively,
which include provisions for fines, remediation and the cleaning and disposal of
residues from tanks and tank cars.

   Environmental and Other Liabilities Retained or Assumed by Others

  The Company has agreements with former owners of certain of its operating
locations under which the former owners retained or assumed and agreed to
indemnify the Company against certain environmental and other liabilities. The
most significant of these agreements was entered into at the Company's inception
in 1988 with Beazer East. Under the purchase agreement executed at the
Acquisition (the "Asset Purchase Agreement"), Beazer East assumed the
responsibility for and indemnified the Company against certain liabilities,
damages, losses and costs, to the extent attributable to acts or omissions
occurring prior to the Acquisition, including, with certain limited exceptions,
liabilities and costs of compliance with environmental laws (the "Indemnity").
Beazer Limited unconditionally guaranteed Beazer East's performance of the
Indemnity pursuant to a guarantee (the "Guarantee"). Beazer Limited became a
wholly-owned indirect subsidiary of Hanson PLC on December 4, 1991. In 1998
Hanson PLC signed an agreement under which the funding and risk of certain
liabilities, including environmental, relating to the former Koppers Company,
Inc. operations of Beazer PLC (which includes locations purchased from Beazer
East by the Company) are underwritten by subsidiaries of two of the world's
largest reinsurance companies, Centre Solutions (a member of the Zurich Group)
and Swiss Re.

  The Indemnity provides four different mechanisms by which Beazer East is to
indemnify Koppers with regard to environmental claims or environmental cleanup
liabilities. First, if the claim or liability involves hazardous substances that
were generated at facilities owned or operated before the Acquisition and
disposed of at third-party locations before the Acquisition, then Beazer East is
required to indemnify Koppers regardless of when the claim or liability is
asserted. Second, if the claim involves a personal injury and is asserted by an
employee as a result of exposure to toxic substances in the workplace and the
extent to which the claim arises from conditions occurring or existing before
the Acquisition cannot be readily determined, then the claim is allocated in
proportion to the length of time the employee worked for each party. Third, if
the claim involves costs for disposal of contaminated soil from facilities owned
or operated before the Acquisition and generated as a result of a voluntary
decision by Koppers, then Beazer East is required to indemnify Koppers for
ninety percent (90%) of all disposal costs over $0.1 million in any single year.
Fourth, if the claim or cleanup liability involves investigation, response,
removal, or remedial costs at facilities owned or operated before the
Acquisition and for conditions occurring or existing prior to the Acquisition,
then Beazer East is required to indemnify Koppers if the claim or liability is a
pre-Acquisition environmental claim or a pre-Acquisition environmental cleanup
liability. A claim or liability can have pre-Acquisition status in one of two
ways.  It can be asserted by a third party (someone other than Koppers) before
December 29, 2000, or Beazer East must have received (including from Koppers)
"specific and particularized notice with respect to acts, omissions, conditions
or circumstances that may give rise" to the claim or liability before December
29, 2000. The Company believes that it has taken appropriate steps to satisfy
these conditions.

  Five sites owned and/or operated by Koppers are listed on the National
Priorities List ("NPL") promulgated under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"). The
sites include the recently closed Feather River; the Gainesville, Florida wood
treating facility; the Galesburg, Illinois wood treating facility; the Florence,
South Carolina wood treating facility; and the Follansbee, West Virginia carbon
materials and

                                       16
<PAGE>

chemicals facility. In addition, many Koppers sites are or have been operated
under Resource Conservation and Recovery Act ("RCRA") permits, and RCRA remedial
and closure activities are being conducted on several of these sites. Currently,
at the properties acquired from Beazer East (which include all of the NPL sites
and all but one of the RCRA-permitted sites), substantially all investigative,
cleanup and closure activities are being conducted and paid for by Beazer East
pursuant to the terms of the Indemnity.

  To date, the parties that retained, assumed or agreed to indemnify the Company
against the liabilities referred to above have performed their obligations in
all material respects. However, disputes have arisen with such parties as to the
obligation of such parties to indemnify in certain cases. The Company believes
that for the last three years amounts paid by Beazer East that are the subject
of the environmental remediation portion of the Indemnity have averaged
approximately $9 million per year. If for any reason (including disputed
coverage or financial incapability) one or more of such parties failed to
perform their obligations and the Company were held liable for or otherwise
required to pay all or part of such liabilities without reimbursement, the
Company may be unable to do so, and the imposition of such liabilities on the
Company would have a material adverse effect on the Company's business,
financial condition, cash flow and results of operations. In addition, if the
Company were required to record a liability with respect to all or a portion of
such matters on its balance sheet, the amount of its total liabilities could
exceed the book value of its assets by an amount that could be significant.

  The Company has been named in a toxic tort action, along with other
defendants, arising from the operation of the Company's wood treating facility
in Green Spring, West Virginia ("Green Spring"). Allegations include personal
injury and property damage related to the operations of Green Spring from the
mid-1940's through 1992. As a result of litigation among CSX Transportation,
Inc. ("CSX"), Beazer East and the Company, CSX has assumed a portion of Beazer
East's obligations under the Indemnity in connection with Green Spring.  A trial
date has been set for March 2002. Although management believes that some of the
matters associated with this claim are within the scope of the Indemnity, there
can be no assurance that an unfavorable outcome would not have a material
adverse effect on the business, financial condition, cash flow and results of
operations of the Company.

  The Company has also been named in a toxic tort action that arises from
operations at its wood treating facility in North Little Rock, Arkansas.
Allegations include personal injury and property damage related to plant
operations for an unspecified period of time. This case went to trial in January
2002 and is currently proceeding. There can be no assurance that an unfavorable
outcome would not have a material adverse effect on the business, financial
condition, cash flow and results of operations of the Company.

  Other Environmental Matters

  In October 1996 the Company received a Clean Water Act information request
from the United States Environmental Protection Agency ("EPA"). This information
request asked for comprehensive information on discharge permits, applications
for discharge permits, discharge monitoring reports, and the analytical data in
support of the reports and applications. The EPA subsequently alleged that the
Company violated various provisions of the Clean Water Act. In July 2000 the
Company received a settlement demand from the EPA requesting $4.5 million in
settlement of alleged civil violations of the Clean Water Act. Additionally,
during a Company-initiated investigation at Woodward Coke prior to its closure
in January 1998, it was discovered that certain environmental records and
reports related to the discharge of treated process water contained incomplete
and inaccurate information. Corrected reports were submitted to the State of
Alabama and the EPA. The United States Department of Justice and the EPA have
been investigating this matter, which led to a settlement demand in February
2001 of $5 million and certain admissions. The Company has entered into
negotiations regarding possible settlement of these matters. There can be no
assurance that the outcome of either or both of these matters would not have a
material adverse effect on the business, financial condition, cash flow and
results of operations of the Company.

Other Matters

  There are currently no known viable substitutes for carbon pitch in the
production of carbon anodes. However, in 2000 the Company's largest carbon pitch
customer announced that it was actively pursuing alternative anode technology
that would eliminate the need for carbon pitch as an anode binder. Although
management does not believe that this alternative technology will be developed
and used widely within the next five years, the potential development and
implementation of this new technology could seriously impair the Company's
ability to profitably market carbon pitch and related co-products. Over 75% of
Koppers' carbon pitch is sold to the aluminum industry under long-term contracts
ranging from two to seven years.

                                       17
<PAGE>

  An excess supply of carbon pitch during the past several years has resulted in
pricing pressures in domestic markets. This situation has negatively impacted
the Company's domestic carbon pitch business in 2001 and 2000, and continued
pricing pressures are anticipated in 2002. Because of the Clean Air Act
Amendments and other environmental laws, future coal tar availability from
domestic coke production is expected to decline. Management believes that the
Company's ability to source coal tar and carbon pitch from overseas markets
through its foreign operations, as well as its research of petroleum feedstocks,
will assist in securing an uninterrupted supply of carbon pitch feedstocks.

  Koppers' price realizations and profit margins for PAA have historically
fluctuated with the price of orthoxylene and its relationship to Koppers' cost
to produce naphthalene; however, due to excess supplies of PAA during 2001 and
2000, margins did not change proportionally despite high levels for orthoxylene
prices. Management does not expect market conditions for PAA to improve in 2002.

  In 1999 the Company entered into a joint venture agreement with TISCO to
rehabilitate and operate a tar distillation facility in China. The joint venture
agreement also includes a tar supply contract with TISCO, which will serve to
ensure the long-term supply of coal tar products in its Australasian markets.
Koppers will participate in the international marketing of carbon pitch products
for the joint venture. Koppers China is 60% owned by the Company and began
production of coal tar products in 2001. Total contributions of cash,
engineering services and acquisition costs for the joint venture totaled $10.5
million as of December 31, 2001.

   In June 2001 the Company entered into an agreement with TISCO whereby TISCO
has assumed control of Koppers China through December 31, 2003. During this
period TISCO bears all responsibility for the operations and management of the
facility, as well as the net income or loss, except for Koppers' pro rata share
of depreciation, amortization and income taxes of the joint venture.
Accordingly, the Company changed its method of accounting from consolidation to
the equity method effective June 2001 to reflect this change in its ability to
control Koppers China. TISCO has guaranteed a bank loan of Koppers China; the
Company has issued a cross guarantee to TISCO in the amount of approximately
$1.5 million, representing 60% of the loan amount.

  An integrated steel company is the only customer for the Company's furnace
coke, with a contract to take 100% of the Company's coke production in 2002. Due
to the difficulties in the domestic steel industry, coupled with the low pricing
of domestic coke largely as a result of imports, the Company continues to review
its strategic alternatives for the coke business.

  Over the last several years, utility pole demand has dropped as utilities in
the United States and Australia have reduced spending due to competitive
pressures arising from deregulation. It is expected that deregulation will
continue to negatively affect both new and replacement pole installation
markets.

ITEM 7a.   Market Risk

  Like other global companies, Koppers is exposed to market risks relating to
fluctuations in interest rates and foreign currency exchange rates. The
objective of financial risk management at Koppers is to minimize the negative
impact of interest rate and foreign exchange rate fluctuations on the Company's
earnings, cash flows and equity.

  To manage the interest rate risks, the Company uses a combination of fixed and
variable rate debt. This reduces the impact of short-term fluctuations in
interest rates. To manage foreign currency exchange rate risks, the Company
enters into foreign currency debt instruments that are held by its foreign
subsidiaries. This reduces the impact of fluctuating currencies on net income
and equity.  The Company also uses forward exchange contracts to hedge firm
commitments up to twelve months. Forward exchange contracts are utilized to
hedge these transactions, and all such contracts are marked to market with the
recognition of a gain or loss at each reporting period.

  As required by the Securities and Exchange Commission rules, the following
analyses present the sensitivity of the market value, earnings and cash flows of
the Company's financial instruments and foreign operations to hypothetical
changes in interest and exchange rates as if these changes occurred at December
31, 2001. The range of changes chosen for these analyses reflect the Company's
view of changes which are reasonably possible over a one-year period. Market
values are the present values of projected future cash flows based on the
interest rate and exchange rate assumptions. These forward-looking statements
are selective in nature and only address the potential impacts from financial
instruments and foreign operations. They do not include other potential effects
that could impact the Company's business as a result of these changes.

  Interest Rate and Debt Sensitivity Analysis. The Company's exposure to market
risk for changes in interest rates relates primarily to the Company's debt
obligations. As described in Note 4 of the Notes to Consolidated Financial
Statements of the Company, the Company has both fixed and variable rate debt to
manage interest rate risk and to minimize borrowing costs.

                                       18
<PAGE>

  At December 31, 2001 the Company had $191.1 million of fixed rate debt and
$77.9 million of variable rate debt, reflecting the Company's strategy of
maintaining variable rate debt at 25%-50% of total debt. For fixed rate debt,
interest rate changes affect the fair market value but do not impact earnings or
cash flows. For variable rate debt, interest rate changes generally do not
affect the fair market value but do impact future earnings and cash flows,
assuming other factors are held constant.

  Holding other variables constant (such as debt levels and foreign exchange
rates) a one percentage point decrease in interest rates would increase the
unrealized fair market value of the fixed rate debt by approximately $11.2
million. The earnings and cash flows for the next year assuming a one percentage
point increase in interest rates would decrease approximately $0.8 million,
holding other variables constant.

  Exchange Rate Sensitivity Analysis.   The Company's exchange rate exposures
result primarily from its investment and ongoing operations in Australia,
Denmark and the United Kingdom. Holding other variables constant, if there were
a ten percent reduction in all relevant exchange rates, the effect on earnings
of the Company, based on actual earnings from foreign operations in 2001, would
be a reduction of approximately $1.3 million.

ITEM 8.   Financial Statements and Supplementary Data

  The financial statements and supplementary data required by Item 8 are
included in this Annual Report on Form 10-K beginning on page 27 and are listed
in Item 14 hereof.

ITEM 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure
  None

PART III

ITEM 10.  Directors and Executive Officers of the Registrant

  The following table sets forth the names and ages of the executive officers
and Directors of the Company as of January 31, 2002 and the positions that they
hold. Directors hold their positions until the annual meeting of the
stockholders at which their term expires or until their respective successors
are elected and qualified. Executive officers hold their positions until the
annual meeting of the Board of Directors or until their respective successors
are elected and qualified.

<TABLE>
<CAPTION>
Name.......................      Age            Position with the Company
----                             ---            -------------------------
<S>                              <C>       <C>
Robert Cizik...............       70       Non-Executive Chairman and Director
Walter W. Turner...........       55       President and Chief Executive Officer and Director
Clayton A. Sweeney.........       70       Director
N. H. Prater...............       73       Director
Christian L. Oberbeck......       41       Director
David M. Hillenbrand.......       54       Director
Donald E. Davis............       45       Vice President and Chief Financial Officer
Steven R. Lacy.............       46       Vice President, General Counsel and Corporate Secretary
Thomas D. Loadman..........       47       Vice President and General Manager, Railroad Products & Services
Kevin J. Fitzgerald........       49       Vice President and General Manager, Carbon Materials & Chemicals
Ernest S. Bryon............       56       Vice President, Australasian Operations
David Whittle..............       59       Vice President, European Operations
Randall D. Collins.........       49       Vice President, Safety, Health & Environmental Affairs
Joseph E. Boan.............       54       Vice President, Human Resources
Robert H. Wombles..........       50       Vice President, Technology
M. Claire Schaming.........       48       Treasurer and Assistant Secretary
</TABLE>

                                       19
<PAGE>

  Mr. Cizik was elected Non-Executive Chairman in July 1999. He has been a
Director of Koppers since January 1999. Mr. Cizik retired from Cooper
Industries, Inc. where he served as President, Chief Executive Officer and
Chairman of the Board from 1973 to 1996. He currently serves as a Director of
Temple-Inland Inc. and Advisory Director of Wingate Partners. He previously
served as a Director of Harris Corporation from 1988 until November 1999 and Air
Products and Chemicals, Inc. from 1992 until January 2002.

  Mr. Turner was elected President and Chief Executive Officer and Director in
February 1998. Mr. Turner had been appointed Vice President and General Manager,
Carbon Materials & Chemicals division in early 1995. Mr. Turner had been elected
Vice President and Manager, Marketing & Development, Industrial Pitches and
Related Products in February 1992. Mr. Turner was Marketing Manager, Industrial
Pitches and Creosote Oils prior to that time.

  Mr. Sweeney has been a Director of Koppers since January 1989. Mr. Sweeney is
counsel to Schnader Harrison Segal & Lewis LLP. He had been the President and a
member of Sweeney Metz Fox McGrann & Schermer L.L.C from 1998 to 2000. Mr.
Sweeney had been a shareholder and Director of Dickie, McCamey & Chilcote, P.C.
since 1987 and served as Managing Director from 1988 to September 1993. Mr.
Sweeney previously served as Executive Vice President, Chief Administrative
Officer, Vice Chairman, and a Director of Allegheny International, Inc., as
Senior Vice President and a Director of Allegheny Ludlum Industries, and as a
Director of Wilkinson Sword Group, Ltd. U.K., Landmark Savings and Loan
Association, Halbouty Energy Company and Liquid Air Corporation. Mr. Sweeney
also served as a Director of Schaefer Manufacturing Inc. and Schaefer Equipment,
Inc., and as Chairman of the Boards of St. Francis Health System and St. Francis
Medical Center.

  Mr. Prater has been a Director of Koppers since May 1989. Mr. Prater retired
from Mobay Corporation, where he served as the President and Chief Executive
Officer from July 1986 to July 1990. He served as a visiting Professor at the
University of Virginia after retiring and currently serves as a Director of
Calgon Carbon Corporation. He is a member of the Board of Trustees of Robert
Morris College and the Georgia Institute of Technology, and is a special trustee
of the University of Pittsburgh.

  Mr. Oberbeck has been a Director of Koppers since October 1997. Mr. Oberbeck
is one of the founders of Saratoga Partners where he has been Managing Director
since its formation as an independent entity in September 1998. Prior to that
time Mr. Oberbeck was a Managing Director of Warburg Dillon Read Inc. and its
predecessor entity Dillon, Read & Co. Inc. where he was a Managing Director
responsible for the management of the Saratoga funds. Mr. Oberbeck is a Director
of Equality Specialties, Inc., EUR Systems, Inc., Scovill Fasteners Inc. and
Wireless Services Holding Corporation.

  Dr. Hillenbrand was elected as a Director of Koppers in February 1999. Dr.
Hillenbrand has been the President and Chief Executive Officer of Bayer, Inc.
since 1994. Prior to 1994, Dr. Hillenbrand was Senior Vice President and Elkhart
General Site Manager, Miles Inc. (now Bayer Corporation). In that position, he
was responsible for the administration services and operations at Bayer's
largest North American site, which included chemical manufacturing facilities.
Dr. Hillenbrand is a member of the Board of Directors of Bayer Inc. and is a
member of the Board of Representatives of the Gustafson Partnership. In addition
he is Chairman of the Board of Directors of the Canadian Chemical Producers
Association (CCPA).

  Mr. Davis was elected Vice President and Chief Financial Officer of Koppers in
November 1994. Mr. Davis had been General Manager of Koppers' Recovery Resources
Group from June 1992 to March 1996 and served as Treasurer from 1988 until 1992.
He is also a Director of Koppers-Arch (formerly Koppers-Hickson). Mr. Davis is a
certified public accountant.

  Mr. Lacy was elected Vice President, General Counsel and Corporate Secretary
in July 2001. Mr. Lacy had worked in the corporate legal department for
Wheeling-Pittsburgh Steel Corporation from July 1998 through November 2000, most
recently as Vice President, General Counsel and Secretary. Prior to that time,
he was employed by the Bethlehem Lukens Plate Division of Bethlehem Steel
Corporation as Division Counsel.

  Mr. Loadman was elected Vice President and General Manager, Railroad Products
& Services in November 1994. After serving as plant manager of the Susquehanna,
Pennsylvania treating and cogeneration plants from 1985 to 1988, Mr. Loadman was
appointed Railroad Plants Operations Manager of the Railroad & Utility Products
division in January 1989. Mr. Loadman is a Director of KSA and is a member of
the Railway Tie Association and American Wood Preservers Association.

                                       20
<PAGE>

  Mr. Fitzgerald was elected Vice President and General Manager, Carbon
Materials & Chemicals division in March 1998. After serving as plant manager of
the Stickney, Illinois Carbon Materials & Chemicals plant in 1996 and 1997, Mr.
Fitzgerald was appointed Vice President and Manager, Carbon Materials &
Chemicals in January 1998. He was Product Manager Industrial Pitches from 1991
to 1995.  Mr. Fitzgerald is a Director of Koppers China and is a Director of the
Coke & Coal Chemicals Institute.

  Mr. Bryon was elected Vice President, Australasian Operations on October 1,
1998. Mr. Bryon had served as General Manager of Koppers Coal Tar Products Pty.
Ltd. (a subsidiary of Koppers Australia) since 1993. Mr. Bryon is a Director of
Koppers-Arch and Koppers China.

  Dr. Whittle was elected Vice President, European Operations in May 2000. Dr.
Whittle had served as Managing Director of the United Kingdom operations of
Tarconord since the acquisition of Bitmac, Ltd. by Tarconord in 1996. From 1986
until 1996 Dr. Whittle had been Managing Director and Chief Executive Officer of
Bitmac Ltd. Dr. Whittle is active in industry associations and has served as
president of the International Tar Association and Lincolnshire Iron & Steel
Institute, and was until recently president of the Coke Oven Managers'
Association.

  Mr. Collins was elected Vice President, Safety, Health and Environmental
Affairs in November 1994, and had been Corporate Secretary from January 1989
until July 2001. His responsibilities include establishing policy and assuring
regulatory compliance for environmental, safety and health matters.

  Mr. Boan was elected Vice President, Human Resources in January 1989.

  Mr. Wombles joined Koppers in June 1997 at which time he was elected Vice
President, Technology. Prior to joining Koppers, Mr. Wombles was Vice President,
Research, Applications and Development for Ashland Petroleum Company. Mr.
Wombles' area of expertise is the chemistry and processing of high molecular
weight hydrocarbons. He is the author of several technical publications in this
area and has been granted ten United States patents in the area of hydrocarbon
processing.

  Ms. Schaming was elected Treasurer and Assistant Secretary in May 1992. Her
previous position was Assistant Treasurer and Manager of Cash Operations. Ms.
Schaming is a certified cash manager.

                                       21
<PAGE>

ITEM 11.   Executive Compensation

Summary of Cash and Certain Other Compensation

  The following table sets forth information concerning the compensation for
services in all capacities to the Company, including options and stock
appreciation rights ("SARS"), for the years ended December 31, 2001, 2000 and
1999, of those persons who were at December 31, 2001 the current Chief Executive
Officer and each of the other four most highly compensated executive officers of
the Company who earned more than $100,000 in salary and bonus in 2001
(collectively, the "Named Executive Officers").

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                           Long-Term
                                        Annual Compensation (1)          Compensation (4)
                                       -------------------------         ----------------
                                                                              Awards
                                                                              ------
             (a)                      (b)       (c)             (d)            (g)                (i)
                                                                            Securities         All Other
                                                                            Underlying       Compensation
Name and Principal Position           Year    Salary         Bonus (3)     Options/SARS (#)         (5)
-------------------------------------------------------------------------------------------------------------
<S>                                  <C>     <C>            <C>            <C>                <C>
Walter W. Turner                      2001   $363,720       $        -                 -       $163,389
President and Chief Executive         2000    352,440          199,000             6,000         49,647
Officer                               1999    325,000          148,080                 -         85,276

Donald E. Davis                       2001    226,200                -                 -        102,721
Vice President and Chief              2000    216,600          102,000             3,000         32,542
Financial Officer                     1999    201,820           79,876                 -         51,820

David Whittle                         2001    192,240                -                 -              -
Vice President, European              2000    107,400(2)        56,592             2,000              -
Operations

Thomas D. Loadman                     2001    189,420                -                 -         86,185
Vice President and General            2000    181,200           52,258             2,000         28,266
Manager, Railroad Products            1999    170,400           83,883                 -         47,131
& Services

Kevin J. Fitzgerald                   2001    176,400                -                 -         83,267
Vice President and General            2000    160,200           73,525             8,000         25,849
Manager, Carbon Materials             1999    138,000           46,680                 -         50,929
& Chemicals
</TABLE>

(1) Column (e) "Other Annual Compensation" has been omitted since there are no
amounts to report. The aggregate amount of perquisites and other personal
benefits for any Named Executive Officer does not exceed $50,000 or 10% of the
total of annual salary and bonus for any such Named Executive Officer.

(2) Consists of seven months of salary for 2000.

(3) The allocation for the bonus amounts for 2001 have not been determined at
the time of filing. For the individuals named above, the range of allocations,
subject to approval by the Company's Board of Directors, will be zero to
$150,000.

(4) Columns (f) "Restricted Stock Awards" and (h) "LTIP Payouts" have been
omitted because there are no amounts to report.

                                       22
<PAGE>

(5) All other compensation consists of regular and supplemental matches to the
Company's 401(k) plan and earned credit for the Company's Supplemental Executive
Retirement Plan ("SERP"). For Mr. Turner, 401(k) matches for 2001, 2000 and 1999
were $3,400, $4,654 and $6,483, respectively, and SERP credits for 2001, 2000
and 1999 were $159,989, $44,993 and $78,793, respectively. For Mr. Davis, 401(k)
matches for 2001, 2000 and 1999 were $3,400, $4,654 and $6,483, respectively,
and SERP credits for 2001, 2000 and 1999 were $99,321, $27,888 and $45,337,
respectively. For Mr. Loadman, 401(k) matches for 2001, 2000 and 1999 were
$3,400, $4,654 and $6,483, respectively, and SERP credits for 2001, 2000 and
1999 were $82,785, $23,612 and $40,648, respectively. For Mr. Fitzgerald, 401(k)
matches for 2001, 2000 and 1999 were $3,400, $4,654 and $5,592, respectively,
and SERP credits for 2001, 2000 and 1999 were $79,867, $21,195 and $45,337,
respectively.

Stock Options

  There were no grants of stock options during 2001 under the Company's stock
option plan to any of the executive officers named in the Summary Compensation
Table.

Option Exercises and Fiscal Year-End Values

  Shown below is information with respect to stock options exercised during 2001
and unexercised options at the end of the fiscal year under the Company's stock
option plans. No SARS were granted to any of the Named Executive Officers and
none of the Named Executive Officers held any unexercised SARS at the end of the
fiscal year.

              Aggregated Option/SAR Exercises in Last Fiscal Year
                     and Fiscal Year-End Option/SAR Values

<TABLE>
<CAPTION>
                          Number of
                          Securities                     Number of Securities        Value of Unexercised
                          Underlying                    Underlying Unexercised       In-the-money Options/
                         Options/SARS      Value      Options/SARS at FY-End (#)    SARS at FY-End ($) (1)
                                                      --------------------------    ----------------------
  Name                     Exercised    Realized ($)   Exercisable  Unexercisable  Exercisable  Unexercisable
  ----                     ---------    ------------   -----------  -------------  -----------  -------------
<S>                      <C>           <C>            <C>          <C>            <C>          <C>
  Walter W. Turner.....      44,200       $662,788          3,000       10,800       $ 33,000      $90,000
  Donald E. Davis......      26,700        512,586          3,000        8,400         33,000       78,000
  David Whittle........           -              -            600        2,400          3,000       12,000
  Thomas D. Loadman....       3,100         67,913         19,500        7,600        282,167       74,000
  Kevin J. Fitzgerald..       1,600          8,000          8,500       10,400        101,000       76,000
</TABLE>

  (1) The value of unexercised in-the-money options was calculated by
      subtracting the exercise price from the adjusted fair value as of December
      31, 2001 as determined by the Board of Directors pursuant to the
      provisions of the Stockholders' Agreement.

Benefit Plans

  Pension Plan. All executive officers of the Company are covered by the
Retirement Plan of Koppers Industries, Inc. and Subsidiaries for Salaried
Employees (the "Salaried Plan"). The following table contains approximate
retirement benefits payable under the Salaried Plan, assuming retirement at age
65, payments made on the straight-life annuity basis and no election of a co-
annuitant option. Annual retirement benefits are computed at the rate of 1.2% of
Terminal Salary (as defined below) not in excess of $16,000, plus 1.6% of
Terminal Salary in excess of $16,000, all multiplied by years of Credited
Service (as defined below). Terminal Salary is determined based on the average
annual salary (defined as salary plus one half of any incentive payments) for
the five highest consecutive years of the last ten years of credited service, or
during all years of such credited service if less than five. Credited Service
includes all accumulated service as a salaried employee of the Company except
for any period of layoff or leave of absence. In 1998 the Company amended the
Salaried Plan to provide a minimum pension equal to 1.2% of Terminal Salary
multiplied by years of Credited Service up to 35 years reduced by any pension
benefit paid by the pension plan of Old Koppers.

                                       23
<PAGE>

Estimated Annual Retirement Benefit Under the Salaried Retirement Plan

                    Years of Credited Service at Retirement
                    ---------------------------------------
TERMINAL
SALARY           5          10         15          20          25          30
----------    -------    -------    --------    --------    --------    --------
$100,000      $ 7,680    $15,360    $ 23,040    $ 30,720    $ 38,400    $ 46,080
 150,000       11,680     23,360      35,040      46,720      58,400      70,080
 200,000       15,680     31,360      47,040      62,720      78,400      94,080
 250,000       19,680     39,360      59,040      78,720      98,400     118,080
 300,000       23,680     47,360      71,040      94,720     118,400     142,080
 350,000       27,680     55,360      83,040     110,720     138,400     166,080
 400,000       31,680     63,360      95,040     126,720     158,400     190,080
 450,000       35,680     71,360     107,040     142,720     178,400     214,080
 500,000       39,680     79,360     119,040     158,720     198,400     238,080

  The following describes the Terminal Salary and Years of Service,
respectively, accrued as of December 31, 2001 for each participating Named
Executive Officer: Walter W. Turner, $307,595 and 13 years of service; Donald E.
Davis, $221,382 and 13 years of service; Thomas D. Loadman, $185,832 and 13
years of service; and Kevin J. Fitzgerald, $143,733 and 13 years of service.

  Effective December 1, 1997 the Board of Directors established a Supplemental
Executive Retirement Plan for each participating Named Executive Officer and all
other officers of the Company. The SERP will pay an annual benefit equal to 2%
of final pay multiplied by years of service up to 35 years, reduced by the sum
of: i) pension benefits received from the Company; ii) pension benefits received
from Old Koppers; iii) one half of any Social Security benefits; and iv) the
value of Company paid common stock in the individual's Employee Savings Plan
account.

Director Compensation

  Koppers does not pay compensation to Directors who are also employees. Each
Director who is not an employee is paid a fee of $22,000 per year, except the
Saratoga Directors are paid under the advisory and consulting agreement between
Koppers and Saratoga in lieu of Director fees. See "Certain Relationships and
Related Transactions."

Compensation Committee Interlocks and Insider Participation

  Mr. Oberbeck, a principal for Saratoga, serves on the Human Resources and
Compensation Committee of the Board of Directors of the Company, which
establishes compensation levels for the Company's three most highly paid
executive officers. Koppers also has an advisory and consulting agreement with
Saratoga pursuant to which the Company pays a management fee of $150,000 per
quarter to Saratoga in lieu of Director's fees to Mr. Oberbeck. In addition,
Saratoga provides the Company with advisory services in connection with
significant business transactions, such as acquisitions, for which the Company
pays Saratoga compensation comparable to compensation paid for such services by
similarly situated companies.

                                       24
<PAGE>

ITEM 12.   Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock and preferred stock as of January 31,
2002 by (i) each person known to the Company to beneficially own more than 5% of
the outstanding shares of either common stock or preferred stock; (ii) each
Director of the Company; (iii) each Named Executive Officer; and (iv) all
officers and Directors of the Company as a group.

<TABLE>
<CAPTION>
                                                                                                 Senior Convertible
                                                                 Voting Common Stock             Preferred Stock (2)
                                                                --------------------             -------------------
                                                            Shares              Percentage          Shares             Percentage
                                                          Beneficially         Beneficially      Beneficially         Beneficially
Name of Beneficial Owner                                   Owned (1)             Owned (1)           Owned               Owned
------------------------                                  ------------         ------------      ------------            -----
<S>                                                   <C>                   <C>                  <C>                  <C>
Saratoga (3)........................................                                               2,288,481          100.0%
Management Investors (4)(5).........................        1,435,854              100.0%
Robert K. Wagner (6)................................          130,665                9.1%
Walter W. Turner (7)................................           48,562                3.4%
Clayton A. Sweeney (8)..............................           75,347                5.2%
N. H. Prater (9)....................................           30,105                2.1%
Christian L. Oberbeck (3)...........................                -                  *           2,288,481          100.0%
Robert Cizik (10)...................................           55,294                3.9%
David M. Hillenbrand (11)...........................            7,000                  *
Donald E. Davis (12)................................           46,056                3.2%
David Whittle (13)..................................              600                  *
Thomas D. Loadman (14)..............................           37,486                2.6%
Kevin J. Fitzgerald (15)............................           19,796                1.4%
All Directors and officers as a group (16 persons)..          479,332               33.4%
Total shares outstanding, including vested options..        1,435,854              100.0%          2,288,481          100.0%
*    1% or less.
</TABLE>

(1)  Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission, and includes voting and/or investment
     power with respect to the shares shown as beneficially owned.

(2)  On December 1, 1997 2,117,952 shares of voting common stock and 27,672
     shares of non-voting common stock held by Saratoga were converted into
     2,145,624 shares of preferred stock, entitling Saratoga to elect a majority
     of the Board of Directors of the Company and to exercise a majority of the
     voting power over all outstanding stock of the Company with respect to all
     matters subject to a stockholder vote. The preferred stock has voting
     (except as described below) and dividend rights equal to voting common
     stock, and has a liquidation preference equal to par value. The preferred
     stock is convertible into common stock at any time on a one-for-one basis.
     The holders of the preferred stock vote as a separate series from all other
     classes of stock, and are entitled to elect a majority of the Board of
     Directors.

(3)  With respect to 142,857 of these shares, Saratoga has voting power with
     respect to such shares and Koppers has been informed that Brown University
     Third Century Fund has dispositive directive power with respect to such
     shares subject to the terms of the Stockholders' Agreement. Saratoga is a
     private investment fund. The address for Saratoga is 535 Madison Avenue,
     New York, NY 10022. Saratoga has generally authorized Mr. Oberbeck, a
     Director of the Company, to vote the shares of the Company held by
     Saratoga. Mr. Oberbeck disclaims beneficial ownership of the preferred
     stock owned by Saratoga. Saratoga is entitled to elect a majority of the
     Board of Directors and to exercise a majority of the voting power of all
     outstanding stock of the Company.

(4)  Pursuant to the Stockholders' Agreement, Mr. Turner was appointed as
     Representative of the approximately 200 Management Investors and granted
     irrevocable proxies to vote the shares of common stock owned by the
     Management Investors for the term of the Stockholders' Agreement. See
     "Market for the Registrant's Common Equity and Related Stockholder
     Matters---Stockholders' Agreement". The address for Mr. Turner is Koppers
     Industries, Inc., 436 Seventh Avenue, Pittsburgh, PA 15219.

(5)  Includes vested options held by the Management Investors to acquire 150,777
     shares of common stock, which are exercisable at any time.

                                       25
<PAGE>

(6)  Pursuant to the Stockholders' Agreement, Mr. Wagner has granted an
     irrevocable proxy to the Representative of the Management Investors to vote
     the shares owned by him. Mr. Wagner resigned from the Board of Directors in
     February 2000. The Company redeemed 65,418 shares of common stock held by
     Mr. Wagner in February 2001 for approximately $1.8 million. The redemption
     represented the second payment of 25% of Mr. Wagner's total shares at the
     date of resignation; the remaining shares held by Mr. Wagner will be
     redeemed in equal amounts of shares over the next two years at the fair
     value on each redemption date.

(7)  Mr. Turner, as Representative of the Management Investors pursuant to the
     Stockholders' Agreement, has the authority to vote 1,285,077 shares held by
     the Management Investors and consequently may be deemed to have voting
     control of such shares (which include 45,562 shares directly owned by Mr.
     Turner).

(8)  Pursuant to the Stockholders' Agreement, Mr. Sweeney has granted an
     irrevocable proxy to the Representative of the Management Investors to vote
     the shares owned by him. In November 2001 the Company redeemed 25,116
     shares owned by Mr. Sweeney for a total of $0.7 million. The redemption
     represented 25% of Mr. Sweeney's shares; the remaining shares held by Mr.
     Sweeney will be redeemed in equal amounts of shares over the next three
     years at the fair value at each redemption date.

(9)  Pursuant to the Stockholders' Agreement, Mr. Prater has granted an
     irrevocable proxy to the Representative of the Management Investors to vote
     the shares owned by him.

(10) Includes 14,118 restricted shares. Mr. Cizik financed 35,294 of his shares
     in 1999 through a loan from the Company. The financed shares vest at a rate
     of 20% per year according to Mr. Cizik's compensation arrangement. See
     "Certain Relationships and Related Transactions-Consulting Agreements".

(11) Includes vested options to purchase 6,000 shares. Pursuant to the
     Stockholders' Agreement, Dr. Hillenbrand has granted an irrevocable proxy
     to the Representative of the Management Investors to vote the shares owned
     by him.

(12) Includes vested options to purchase 3,000 shares. Pursuant to the
     Stockholders' Agreement, Mr. Davis has granted an irrevocable proxy to the
     Representative of the Management Investors to vote the shares owned by him.

(13) Consists of vested options to purchase 600 shares. Pursuant to the
     Stockholders' Agreement, Dr. Whittle has granted an irrevocable proxy to
     the Representative of the Management Investors to vote the shares owned by
     him.

(14) Includes vested options to purchase 19,500 shares. Pursuant to the
     Stockholders' Agreement, Mr. Loadman has granted an irrevocable proxy to
     the Representative of the Management Investors to vote the shares owned by
     him.

(15) Includes vested options to purchase 8,500 shares. Pursuant to the
     Stockholders' Agreement, Mr. Fitzgerald has granted an irrevocable proxy to
     the Representative of the Management Investors to vote the shares owned by
     him.

ITEM 13.   Certain Relationships and Related Transactions

     Schnader Harrison Segal & Lewis LLP provided counsel to the Company during
2001. Clayton A. Sweeney, a shareholder and Director of the Company, is also
counsel to Schnader Harrison Segal & Lewis LLP. During 2001, the Company paid a
total of $0.7 million in legal fees to this firm. Additionally, in November 2001
the Company redeemed 25% of Mr. Sweeney's common stock for a total of $0.7
million. Also, Mr. Sweeney was one of two Representatives of the Management
Investors appointed pursuant to the Stockholders' Agreement until his
resignation as Representative in 2001. See "Market for the Registrant's Common
Equity and Related Stockholder Matters--Stockholders' Agreement."

     Consulting Agreements

     The Company entered into a consulting agreement with Mr. Cizik in 1999 in
which the Company pays a fee of $12,500 per month to Mr. Cizik for consulting
services. The agreement also includes a provision which allowed Mr. Cizik to
purchase 20,000 shares of common stock for $17.00 per share, which purchase was
made in October 1999 when the fair value per share was $17.25. Additionally, the
agreement provides for a $0.6 million interest free loan from the Company for
the purchase of 35,294 shares of restricted common stock at a price of $17.00
per share. Mr. Cizik purchased these shares in October 1999 by signing a
promissory note to the Company for $0.6 million. The note, which is 70%
collateralized by the value of the related shares and 30% by Mr. Cizik's
personal assets, is due in 2009, or immediately in the event Mr. Cizik is no
longer Non-

                                       26
<PAGE>

Executive Chairman of the Board of Directors. The shares are restricted, with a
vesting period of five years; at December 31, 2001 14,118 of the shares were
restricted. In the event Mr. Cizik is no longer Non-Executive Chairman of the
Board of Directors of Koppers, the Company will redeem any non-vested shares at
cost and all other shares at fair value.

     Koppers has an advisory and consulting agreement with Saratoga pursuant to
which the Company pays a management fee of $150,000 per quarter to Saratoga in
lieu of Director's fees to Mr. Oberbeck. In addition, Saratoga provides the
Company with advisory services in connection with significant business
transactions, such as acquisitions, for which the Company pays Saratoga
compensation comparable to compensation paid for such services by similarly
situated companies.

PART IV

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

(a) 1.  Financial Statements

        The following financial statements of Koppers Industries, Inc. are
included in Item 8:

<TABLE>
<CAPTION>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                 Page
                                                                                                                           ----
<S>                                                                                                                        <C>
Koppers Industries, Inc.
    Consolidated Financial Statements for the Years Ended December 31, 2001, 2000 and 1999
       Report of Independent Auditors...................................................................................    28
       Consolidated Statement of Operations for the Years Ended December 31, 2001, 2000 and 1999........................    29
       Consolidated Balance Sheet at December 31, 2001 and 2000.........................................................    30
       Consolidated Statement of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999........................    32
       Consolidated Statement of Stockholders' Equity for the Years Ended December 31, 2001, 2000 and 1999..............    33
       Notes to Consolidated Financial Statements.......................................................................    34

    2. Schedules for the Years Ended December 31, 2001, 2000 and 1999

       Schedule II -Valuation and Qualifying Accounts...................................................................    54
       All other schedules for which provision is made in the applicable accounting regulations of the
       Securities and Exchange Commission are not required under the related instructions or are inapplicable,
        and therefore have been omitted.
</TABLE>

    3. See Exhibit Index on page 52 hereof.

(b) Reports on Form 8-K.

    There were no reports on Form 8-K filed in the fourth quarter of 2001.

(c) Exhibits.

    The response to this portion of Item 14 is submitted as a separate section
    of this report.

(d) Financial Statement Schedules.

    The response to this portion of Item 14 is submitted as a separate section
    of this report.

                                       27
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Koppers Industries, Inc.

  We have audited the accompanying consolidated financial statements and
schedule of Koppers Industries, Inc. listed in the accompanying Index to
Consolidated Financial Statements [Item 14(a)]. These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

  We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 listed in the
accompanying Index to Consolidated Financial Statements present fairly, in all
material respects, the consolidated financial position of Koppers Industries,
Inc. at December 31, 2001 and 2000, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects, the information set forth
therein.


                                                         /s/ ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 25, 2002

                                       28
<PAGE>

                           KOPPERS INDUSTRIES, INC.

                     CONSOLIDATED STATEMENT OF OPERATIONS
                    (In millions except per share figures)

<TABLE>
<CAPTION>
                                                                 Years Ended December 31,
                                                            2001          2000           1999
                                                           ------        ------         ------
<S>                                                        <C>           <C>            <C>
Net sales.............................................     $707.6        $723.5         $664.1
Operating expenses:
  Cost of sales.......................................      585.3         598.8          548.9
  Depreciation and amortization.......................       30.4          30.0           27.1
  Selling, general and administrative.................       46.3          45.4           37.4
  Restructuring charges...............................        3.3             -              -
                                                           ------        ------         ------
     Total operating expenses.........................      665.3         674.2          613.4
                                                           ------        ------         ------
Operating profit......................................       42.3          49.3           50.7
Equity in earnings of affiliates......................        0.3           2.2            1.7
Other income..........................................        8.2           8.6            0.8
                                                           ------        ------         ------

Income before interest expense, income tax provision
  and minority interest...............................       50.8          60.1           53.2
Interest expense......................................       24.5          28.0           28.1
                                                           ------        ------         ------
Income before income tax provision and minority
  interest............................................       26.3          32.1           25.1
Income tax provision..................................       12.1          16.6            0.2
Minority interest.....................................        0.9           0.8            0.7
                                                           ------        ------         ------
Net income............................................     $ 13.3        $ 14.7         $ 24.2
                                                           ======        ======         ======
Earnings per share of common stock:

     Basic earnings per share.........................     $ 3.15        $10.64         $16.70
                                                           ======        ======         ======
     Diluted earnings per share.......................     $ 3.15        $ 3.83         $ 6.23
                                                           ======        ======         ======
</TABLE>

                            See accompanying notes.

                                       29
<PAGE>

                           KOPPERS INDUSTRIES, INC.

                          CONSOLIDATED BALANCE SHEET
                                 (In millions)

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                        2001           2000
                                                                                       -------        -------
<S>                                                                                    <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................................           $   5.2        $   6.8
  Accounts receivable less allowance for doubtful accounts
     of $1.0 in 2001 and $0.9 in 2000.......................................              84.3           97.9

  Inventories:
     Raw materials..........................................................              53.8           56.6
     Work in process........................................................               3.7            3.8
     Finished goods.........................................................              58.0           57.2
     LIFO reserve...........................................................              (9.3)         (11.9)
                                                                                       -------        -------
       Total inventories....................................................             106.2          105.7
  Deferred tax benefit......................................................               6.2            7.7
  Other.....................................................................               4.0            3.8
                                                                                       -------        -------
       Total current assets.................................................             205.9          221.9

Equity in non-consolidated investments......................................              12.2            5.7

Fixed assets:
  Land......................................................................               6.7            7.2
  Buildings.................................................................              14.7           15.3
  Machinery and equipment...................................................             368.4          370.4
                                                                                       -------        -------
                                                                                         389.8          392.9
     Less: accumulated depreciation.........................................            (230.5)        (217.1)
                                                                                       -------        -------
       Net fixed assets.....................................................             159.3          175.8
Goodwill, net of accumulated amortization of $7.1 in 2001 and $5.6 in 2000..              27.0           28.9
Deferred tax benefit........................................................              35.3           34.2
Other assets................................................................              15.5           17.4
                                                                                       -------        -------
       Total assets.........................................................           $ 455.2        $ 483.9
                                                                                       =======        =======
</TABLE>

                            See accompanying notes.

                                       30
<PAGE>

                           KOPPERS INDUSTRIES, INC.

                          CONSOLIDATED BALANCE SHEET
                    (In millions except per share figures)

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                                    2001          2000
                                                                                   ------        ------
<S>                                                                                <C>           <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.............................................................    $ 57.8        $ 54.3
  Payroll and compensation costs...............................................      10.2          10.7
  Accrued liabilities..........................................................      35.5          35.2
  Current portion of term loans................................................      13.2          14.3
                                                                                   ------        ------
     Total current liabilities.................................................     116.7         114.5

Long-term debt:
  Revolving credit.............................................................      10.2          11.1
  Term loans...................................................................      59.5          80.0
  Senior Subordinated Notes due 2007...........................................     175.0         175.0
  Senior Notes due 2004........................................................      11.1          11.1
                                                                                   ------        ------
     Total long-term debt......................................................     255.8         277.2

Product warranty and insurance reserves........................................      16.6          18.0
Accrued other postretirement benefits obligation...............................      17.4          18.3
Other..........................................................................      23.6          16.5
                                                                                   ------        ------
     Total liabilities.........................................................     430.1         444.5

Commitments and contingencies-See Note 10
Minority interest..............................................................       4.7           4.8
Common stock subject to redemption.............................................      22.3          30.9

Senior convertible preferred stock, $.01 par value;
  10.0 shares authorized; 2.3 shares issued in 2001 and 2000...................         -             -
Common stock, $.01 par value:
  37.0 shares authorized, 2.8 shares issued in 2001 and 2.6 shares in 2000.....         -             -
Capital in excess of par value.................................................      12.4           9.1
Receivable from Director for purchase of common stock..........................      (0.6)         (0.6)
Retained earnings..............................................................      40.6          33.3
Accumulated other comprehensive loss:
  Foreign currency translation adjustment......................................     (24.3)        (20.1)
  Minimum pension liability, net of tax........................................      (4.1)            -
                                                                                   ------        ------
     Total accumulated other comprehensive loss................................     (28.4)        (20.1)

Treasury stock, at cost, 1.5 shares in 2001 and 1.2 shares in 2000.............     (25.9)        (18.0)
                                                                                   ------        ------

     Total liabilities and stockholders' equity................................    $455.2        $483.9
                                                                                   ======        ======
</TABLE>

                            See accompanying notes.

                                       31
<PAGE>

                           KOPPERS INDUSTRIES, INC.

                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In millions)

<TABLE>
<CAPTION>
                                                                                Years Ended December 31,
                                                                            2001          2000          1999
                                                                          --------      --------      --------
<S>                                                                       <C>           <C>           <C>
Cash provided by operating activities:
  Net income...........................................................    $  13.3       $  14.7        $ 24.2
  Adjustments to reconcile net income to net cash provided
   by operating activities, net of acquisitions:
     Depreciation and amortization.....................................       30.4          30.0          27.1
     Bad debt expense..................................................        2.3           3.4           0.1
     Deferred income taxes.............................................        4.8           6.9          (5.3)
     Equity income of affiliated companies,
     net of dividends received.........................................        0.6          (1.4)          0.6
  Restructuring reserves...............................................        0.6          (0.8)         (1.6)
  Increase in reserves.................................................        0.4           3.7           0.3
  Other................................................................       (1.7)          1.0           0.2
  (Increase) decrease in working capital, net of acquisitions:
     Accounts receivable...............................................       11.2         (12.6)         (3.7)
     Inventories.......................................................       (2.3)         (8.7)          4.3
     Accounts payable..................................................        4.0          (2.4)         (4.7)
     Payroll and compensation costs....................................       (0.5)         (0.5)          3.1
     Accrued liabilities...............................................       (3.5)          2.9           5.8
     Other working capital items.......................................       (0.1)          0.5           0.1
                                                                           -------       -------        ------
       Net cash provided by operating activities.......................       59.5          36.7          50.5
                                                                           -------       -------        ------
Cash used in investing activities:
  Acquisitions and related costs, net of cash acquired.................       (6.4)        (15.3)         (1.7)
  Capital expenditures.................................................      (14.6)        (14.8)        (22.5)
  Other................................................................        2.7           0.5           1.0
                                                                           -------       -------        ------
       Net cash used in investing activities...........................      (18.3)        (29.6)        (23.2)
                                                                           -------       -------        ------
Cash provided by (used in) financing activities, net of acquisitions:
  Borrowings of revolving credit.......................................      165.7         122.3          58.7
  Repayments of revolving credit.......................................     (165.7)       (112.9)        (59.0)
  Proceeds from long-term debt.........................................          -             -           5.0
  Repayments on long-term debt.........................................      (21.1)        (24.0)        (28.1)
  Purchases of common stock............................................       (5.9)         (2.6)         (2.6)
  Dividends paid.......................................................      (14.6)            -             -
  Sales of common stock................................................          -             -           0.4
                                                                           -------       -------        ------
       Net cash (used in) financing activities.........................      (41.6)        (17.2)        (25.6)
                                                                           -------       -------        ------
Effect of exchange rates on cash.......................................       (1.2)         (1.4)            -
                                                                           -------       -------        ------
Net increase (decrease) in cash and cash equivalents...................       (1.6)        (11.5)          1.7
Cash and cash equivalents at beginning of year.........................        6.8          18.3          16.6
                                                                           -------       -------        ------
Cash and cash equivalents at end of year...............................    $   5.2       $   6.8        $ 18.3
                                                                           =======       =======        ======
Supplemental disclosure of cash flow information:
  Cash paid during the year for:
     Interest..........................................................    $  25.0       $  26.6        $ 28.8
     Income taxes......................................................    $   8.6       $   9.4        $  0.3
</TABLE>

                            See accompanying notes.

                                       32
<PAGE>

                           KOPPERS INDUSTRIES, INC.

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                    (In millions except per share figures)

<TABLE>
<CAPTION>
                                Common  |                                       Loan               Accumulated
                                Stock   | Convertible   Voting   Capital In  Receivable               Other       Compre-
                              Subject to|  Preferred    Common   Excess of      From     Retained  Compehensive   hensive  Treasury
                              Redemption|    Stock       Stock   Par Value    Director   Earnings  Income (Loss)  Income     Stock
                              ----------|    -----       -----   ---------    --------   --------  -------------  ------     -----
<S>                           <C>         <C>           <C>      <C>         <C>         <C>       <C>            <C>      <C>
Balance at December 31,                 |
 1998......................      $21.1  |     $  -       $   -     $ 8.2       $    -     $  4.2     $  (7.8)                $(13.2)
Net income for 1999........          -  |        -           -         -            -       24.2           -      $ 24.2          -
Foreign currency                        |
 translation...............          -  |        -           -         -            -          -        (1.1)       (1.1)         -
                                        |                                                                         ------
Comprehensive income.......             |                                                                         $ 23.1
                                        |                                                                         ======
Net change in common stock              |
 subject to redemption.....        4.5  |        -           -         -            -       (4.5)          -                      -
Treasury stock purchases,               |
 0.1 shares................          -  |        -           -         -            -          -           -                   (2.6)
Treasury stock sales, 0.1               |
 shares....................          -  |        -           -         -         (0.6)         -           -                    1.0
                                 -----  |     ----       -----     -----       ------     ------     -------                 ------
Balance at December 31,                 |
 1999......................       25.6  |        -           -       8.2         (0.6)      23.9        (8.9)                 (14.8)
Net income for 2000........          -  |        -           -         -            -       14.7           -      $ 14.7          -
Foreign currency                        |
 translation...............          -  |        -           -         -            -          -       (11.2)      (11.2)         -
                                        |                                                                         ------
Comprehensive income.......             |                                                                         $  3.5
                                        |                                                                         ======
Net change in common stock              |
 subject to redemption.....        5.3  |        -           -         -            -       (5.3)          -                      -
Options exercised, 0.1                  |
 shares....................          -  |        -           -       0.9            -          -           -                      -
Treasury stock purchases,               |
 0.1 shares................          -  |        -           -         -            -          -           -                   (3.2)
                                 -----  |     ----       -----     -----       ------     ------     -------                 ------
Balance at December 31,                 |
 2000......................       30.9  |        -           -       9.1         (0.6)      33.3       (20.1)                 (18.0)
Net income for 2001........          -  |        -           -         -            -       13.3           -      $ 13.3          -
Foreign currency                        |
 translation...............          -  |        -           -         -            -          -        (4.2)       (4.2)         -
Minimum pension liability               |
 adjustment................          -  |        -           -         -            -          -        (4.1)       (4.1)         -
                                        |                                                                         ------
Comprehensive income.......             |                                                                         $  5.0
                                        |                                                                         ======
Net change in common stock              |
subject to redemption......       (8.6) |        -           -         -            -        8.6           -                      -
Options exercised, 0.2                  |
 shares....................          -  |        -           -       3.3            -          -           -                      -
Treasury stock purchases,               |
 0.3 shares................          -  |        -           -         -            -          -           -                   (7.9)
Dividends paid ($4.00 per               |
 share)....................          -  |        -           -         -            -      (14.6)          -                      -
                                 -----  |     ----       -----     -----       ------     ------     -------                 ------
Balance at December 31,                 |
 2001......................      $22.3  |     $  -       $   -     $12.4       $ (0.6)    $ 40.6     $(28.4)                 $(25.9)
                                 =====  |     ====       =====     =====       ======     ======     ======                  ======
</TABLE>
                            See accompanying notes.

                                       33
<PAGE>

                           KOPPERS INDUSTRIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Significant Accounting Policies

    Business

    Koppers Industries, Inc. (the "Company" or "Koppers") is a global integrated
producer of carbon compounds and treated wood products for use in a variety of
markets including the railroad, aluminum, chemical, utility and steel
industries. The Company's business is managed as two business segments, Carbon
Materials & Chemicals and Railroad & Utility Products.

    The Company's Carbon Materials & Chemicals division is a supplier of a)
carbon pitch, which is used primarily by the aluminum industry as a binder in
the manufacture of anodes; b) phthalic anhydride ("PAA"), used in the
manufacture of plasticizers, unsaturated polyester resins, alkyd resins and dye
making; c) creosote and chemicals, used in the protection of timber against
termites, fungal decay and weathering; d) carbon black (and carbon black
feedstock), used in the production of rubber tires; and e) furnace coke, used in
the manufacture of steel.

    The Company's Railroad & Utility Products division a) provides various
products and services to railroads, including crossties (both wood and
concrete), track and switch pre-assemblies, and disposal services; b) supplies
treated wood poles to electric and telephone utilities; and c) provides products
to, and performs various wood treating services for, vineyards, construction and
other commercial applications.

    Basis of Financial Statements

    The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries for which the Company is deemed to exercise
control over operations. All significant intercompany transactions have been
eliminated.

    The Company's investments in 20% to 50% owned companies in which it has the
ability to exercise significant influence over operating and financial policies
are accounted for on the equity method. Accordingly, the Company's share of the
earnings of these companies is included in the accompanying consolidated
statement of operations.

    Use of Estimates

    The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes.  Actual results could differ from those
estimates.

    Cash Equivalents

    The Company considers all liquid investments with a maturity of 90 days or
less to be cash equivalents.

    Inventories

    In the United States, Carbon Materials & Chemicals and Railroad & Utility
Products inventories are valued at the lower of cost, utilizing the last-in,
first-out ("LIFO") basis, or market. Market represents replacement cost for raw
materials and net realizable value for work in process and finished goods. LIFO
inventories constituted approximately 55% and 59% of the first-in, first-out
("FIFO") inventory value at December 31, 2001 and 2000, respectively.
Liquidation of LIFO inventories resulted in $2.6 million of pretax income for
the year ended December 31, 2001.

                                       34
<PAGE>

    Revenue Recognition

    The Company recognizes revenue from product sales at the time of shipment.
Shipping and handling costs are included as a component of net sales.

    Investments

    The following describes activity related to the Company's significant equity
investments as included in the consolidated statement of operations as of and
for each of the years ended December 31:

Tarconord A/S (Tarconord)

    Prior to its acquisition in May 2000, the Company held a 50% equity interest
in Tarconord.

                                Equity Income       Dividends Received
                                -------------       ------------------
                                         (In millions)
       2000...................          $0.9                 $0.0
       1999...................           0.9                  0.0

KSA Limited Partnership (KSA)

          The Company holds a 50% investment in KSA, a concrete crosstie
operation located in

                                Equity Income       Dividends Received
                                -------------       ------------------
                                         (In millions)
       2001...................          $0.6                 $0.9
       2000...................           0.9                  0.8
       1999...................           0.5                  2.0

Koppers (China) Carbon & Chemical Co. Ltd. (Koppers China)

    The Company holds a 60% ownership interest in Koppers China but accounts for
this investment under the equity method as described in Note 3.


                                Equity Income       Dividends Received
                                -------------       ------------------
                                         (In millions)
       2001                            ($0.3)                $0.0

    Depreciation and Amortization

    Buildings, machinery, and equipment are recorded at purchased cost and
depreciated over their estimated useful lives (5 to 20 years) using the
straight-line method.

    Accrued Insurance

    The Company is insured for property, casualty and workers' compensation
insurance up to various stop loss coverages. Losses are accrued based upon the
Company's estimates of the liability for the related deductibles for claims
incurred using certain actuarial assumptions followed in the insurance industry
and based on Company experience.

    Disclosures About Fair Value of Financial Instruments

    Cash and short-term investments: The carrying amount approximates fair value
because of the short maturity of those instruments.

    Long-term debt: The fair value of the Company's long-term debt is estimated
based on the quoted market prices for the same or similar issues or on the
current rates offered to the Company for debt of the same remaining maturities.

    Research and Development

    Research and development costs, which are included in selling, general and
administrative expenses, amounted to $2.7 million for 2001, $2.5 million for
2000 and $2.1 million for 1999.

                                       35
<PAGE>

    Goodwill

    Goodwill is the excess of the acquisition cost of businesses over the fair
value of the identifiable net assets acquired and for the financial statements
presented is amortized on a straight-line basis over periods ranging from 15 to
25 years. The Company assesses the impairment of goodwill related to
consolidated subsidiaries whenever events or changes in circumstances indicate
that the carrying value may not be recoverable. A determination of impairment
(if any) is made based upon estimates of future undiscounted cash flows. In
instances where goodwill has been recorded for assets that are subject to an
impairment loss, the carrying amount of goodwill is eliminated before any
reduction is made to the carrying amounts of impaired long-lived assets and
identifiable intangibles. In June 2001 the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets, effective for
fiscal years beginning after December 15, 2001. Under the new rules, goodwill
will no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. The Company will apply the new rules on
accounting for goodwill beginning in the first quarter of 2002. Application of
the nonamortization provisions of the Statement is expected to result in an
increase in net income of $0.8 million ($0.21 per share) per year. During 2002
the Company performed the first of the required impairment tests of goodwill as
of January 1, 2002 and has determined that there is no impact on the earnings or
financial position of the Company as of the date of adoption.

    Derivatives

    The Company hedges certain firm commitments denominated in foreign
currencies for periods up to twelve months, depending on the anticipated
settlement dates of the related transactions. Forward exchange contracts are
utilized to hedge these transactions, and all such contracts are marked to
market with the recognition of a gain or loss at each reporting period.
Therefore, at December 31, 2001 and 2000 there were no deferred gains or losses
on hedging of foreign currencies. The fair value of derivatives of $0.3 million
is included in Other Current Assets and Other Current Liabilities. For the year
ended December 31, 2001 $0.2 million of gains on forward exchange contracts are
included in cost of sales. Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, was issued in June 1998. The Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments imbedded in other contracts, and for
hedging activities. It requires an entity to recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. The accounting for changes in the fair value of a
derivative (i.e., gains and losses) depends on the intended use of the
derivative and the resulting designation. Statement No. 133 is effective for
fiscal years beginning after June 15, 2000. The Company adopted Statement No.
133 on January 1, 2001; the impact of the adoption of this statement was not
material.

    Environmental Liabilities

    The Company accrues for environmental liabilities when a determination can
be made that they are probable and reasonably estimable. Total environmental
reserves at December 31, 2001 and 2000 were approximately $12.6 million and
$12.2 million, respectively, which includes provisions for fines, remediation
and the cleaning and disposal of residues from tanks and tank cars.

    Reclassification

    Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform to the current year presentation. Such
reclassification had no effect on net income.

    Impact of Other Recently Issued Accounting Standards

    In July 2001 the Financial Accounting Standards Board issued Statement No.
143, Accounting for Asset Retirement Obligations, effective for fiscal years
beginning after June 15, 2002. The Statement provides accounting requirements
for retirement obligations associated with tangible long-lived assets. The
obligations affected are those for which there is a legal obligation to settle
as a result of existing or enacted law. The Company has not yet determined the
effect, if any, of the adoption of this Statement.

                                       36
<PAGE>

    In October 2001 the Financial Accounting Standards Board issued Statement
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
effective for fiscal years beginning after December 15, 2001. The new rules on
asset impairment supersede FASB Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provide a
single accounting model for long-lived assets to be disposed of. The Company has
performed an analysis and determined that the adoption of this Statement will
have no effect on the earnings or financial position of the Company at the date
of adoption.


2.  Restructuring Charges

    Due to deteriorating market conditions resulting in increasing operating
losses over the past several years, in February 2001 the Company's Board of
Directors approved the closure of the utility pole facility and adjacent
cogeneration facility located in Feather River, California ("Feather River")
effective March 31, 2001. This closure resulted in total charges to earnings in
2001 of $4.6 million, which included $1.3 million of operating expenses.
Expenditures of approximately $1.7 million during 2001 were primarily for
dismantling costs. At December 31, 2001 an estimated $1.6 million of additional
reserves remain, primarily for dismantling. Completion of the closure is
expected by the end of the third quarter of 2002.

3.  Acquisitions

    In May 2000 the Company purchased the remaining 50% of Tarconord A/S from
the Company's joint venture partner for a cash purchase price of approximately
$13 million and the assumption of certain liabilities. Tarconord (now known as
Koppers Europe) thus became a wholly-owned subsidiary. The acquisition was
accounted for as a purchase, and the excess purchase price paid over the fair
value of the net assets acquired was approximately $3 million and has been
recorded as goodwill, which has been amortized on a straight-line basis over 20
years. Prior to the purchase, the results of operations for Koppers Europe are
included in the Company's results as a component of equity in earnings of
affiliates due to the Company's 50% ownership interest prior to the acquisition.
The following table presents the pro forma results of the Company as if the
Koppers Europe acquisition had taken place on January 1, 1999:

<TABLE>
<CAPTION>
                                                          Years ended December 31,
                                                          ------------------------
                                                           2000             1999
                                                          ------           ------
                                                    (Millions except earnings per share)
       <S>                                                <C>              <C>
       Revenues as reported........................       $723.5           $664.1
       Revenues pro forma..........................        766.2            752.3
       Net income as reported......................         14.7             24.2
       Net income pro forma........................         15.5             25.0
       Basic earnings per share as reported........        10.64            16.70
       Basic earnings per share pro forma..........        11.25            17.28
       Diluted earnings per share as reported......         3.83             6.23
       Diluted earnings per share pro forma........         4.05             6.45
</TABLE>

    In 1999 the Company entered into a joint venture agreement with Tangshan
Iron & Steel Co. ("TISCO") to rehabilitate and operate a tar distillation
facility in China. The joint venture agreement also includes a tar supply
contract with TISCO, which will serve to ensure the long-term supply of coal tar
products in its Australasian markets. Koppers will participate in the
international marketing of carbon pitch products for the joint venture. The
joint venture, Koppers (China) Carbon and Chemical Co., Limited ("Koppers
China") is 60% owned by the Company and began production of coal tar products in
2001. Total contributions of cash, engineering services and acquisition costs
for the joint venture totaled $10.5 million as of December 31, 2001.

    In June 2001 the Company entered into an agreement with TISCO whereby TISCO
has assumed control of Koppers China through December 31, 2003. During this
period TISCO bears all responsibility for the operations and management of the
facility, as well as the net income or loss, except for Koppers' pro rata share
of depreciation, amortization and income taxes for the joint venture.
Accordingly, the Company changed its method of accounting from consolidation to
the equity method effective June 2001 to reflect this change in its ability to
control Koppers China. TISCO has guaranteed a bank loan of Koppers China; the
Company has issued a cross guarantee to TISCO in the amount of approximately
$1.5 million, representing 60% of the loan amount.

                                       37
<PAGE>

4.  Debt

                                                 December 31,
                                              2001         2000
                                             ------       ------
                                                (In millions)
    Revolving credit.......................  $ 10.2       $ 11.1
    Term loans.............................    72.7         94.3
    Senior Subordinated Notes due 2007.....   175.0        175.0
    Senior Notes due 2004..................    11.1         11.1
                                             ------       ------
                                             $269.0       $291.5
                                             ======       ======
    Unscheduled Term Debt Repayments

    In 2001, 2000 and 1999 the Company made unscheduled term debt repayments
totaling $6.8 million, $9.2 million and $15.6 million, respectively.

    Monessen Transaction

    As part of the Monessen Transaction (as defined and described in Note 7),
the Company executed a $5.0 million loan that is scheduled to be repaid over
three years at an interest rate of 9% based on the cash flows of the coke
operations. The outstanding balance on this loan at December 31, 2001 amounted
to $4.1 million.

    Credit Facilities

    The Company has credit facilities of $275.0 million with UBS Warburg and
Mellon Bank, N.A. that are syndicated among several lenders. The credit
facilities provide for term loans totaling $135.0 million and revolving credit
facilities of $140.0 million (the "Revolving Credit Facility"), subject to
sublimits of $20.0 million aggregate for standby and trade letters of credit and
up to $40.0 million and $20.0 million for the Australian Term Letter of Credit
(as defined below) and the Australian Revolving Letter of Credit (as defined
below), respectively. National Australia Bank, Limited provided an Australian
dollar ("A$") denominated term loan to Koppers Australia and certain of its
subsidiaries in an aggregate principal amount equivalent to US$40 million. An A$
denominated letter of credit (the "Australian Term Letter of Credit") was issued
under the Revolving Credit Facility to such Australian lender in the amount of
A$59.3 million. National Australia Bank, Limited provided an A$ denominated
revolving loan facility for the benefit of Koppers Australia and certain of its
subsidiaries with availability of up to the equivalent of US$10 million. An A$
denominated letter of credit (the "Australian Revolving Letter of Credit") was
issued under the Revolving Credit Facility to such Australian lender currently
in the amount of A$33.9 million. To the extent that currency fluctuations cause
the face amount of the Australian Term Letter of Credit or the Australian
Revolving Letter of Credit to exceed on a US$ equivalent basis their respective
subfacility limits, availability will be correspondingly reduced under the
Revolving Credit Facility. Commitment fees ranging from 0.2% to 0.5% per annum
are required on the undrawn portions of the Revolving Credit Facility and the
term loans.

    The credit facilities provide for a $70.0 million Term Loan A, $13.3 million
of which was outstanding at December 31, 2001 and a $65.0 million Term Loan B,
$46.5 million of which was outstanding at December 31, 2001. In addition, $8.8
million was outstanding on the A$ denominated term loan at December 31, 2001.

    The term loans and the Revolving Credit Facility under the credit facilities
provide for interest at variable rates. At December 31, 2001 the effective rates
on the term loans were 3.80% for Term Loan A, 4.08% for Term Loan B and 4.40%
for the Australian term loan. The Revolving Credit Facility, Term Loan A and the
Australian term loan expire November 30, 2003, and Term Loan B expires November
30, 2004.

    Substantially all of the Company's assets, including the assets of
significant subsidiaries other than the Danish operations of Koppers Europe, are
pledged as collateral for the credit facilities. The credit facilities contain
certain covenants that limit capital expenditures by the Company and restrict
its ability to incur additional indebtedness, create liens on its assets, enter
into leases, pay dividends and make investments or acquisitions. In addition,
such covenants give rise to events of default upon the failure by the Company to
meet certain financial ratios.

                                       38
<PAGE>

  At December 31, 2001 the aggregate debt maturities for the next five years are
as follows (in millions):

                         2002               $13.2
                         2003                34.4
                         2004                41.6
                         2005                   -
                         2006                   -

  At December 31, 2001 the Company had $9.9 million of standby letters of credit
outstanding, with terms ranging from one to two years.

  Senior Subordinated Notes Due 2007 and Senior Notes Due 2004

  The Company has $175.0 million of Senior Subordinated Notes Due 2007 (the
"Subordinated Notes"). The Subordinated Notes bear interest at 9-7/8% per annum,
with interest payable on June 1 and December 1 of each year. The Subordinated
Notes are unsecured and rank junior to all existing and future senior debt of
the Company, and are effectively subordinated to all secured obligations to the
extent of the assets securing such obligations.

  The Subordinated Notes are redeemable, at the Company's option, at any time on
or after December 1, 2002 and prior to maturity, at redemption prices ranging
from 104.938% of the principal amount in 2002 to 100.0% of the principal amount
in 2005. Deferred financing costs associated with the credit facilities and the
issuance of the Subordinated Notes totaled approximately $16.0 million and are
being amortized over the life of the related debt.

  The Company also has $11.1 million of Senior Notes due 2004. The Senior Notes
bear interest at a rate of 8.5%, payable on February 1 and August 1 of each
year.

  Deferred financing costs (net of accumulated amortization of $8.2 million at
December 31, 2001, $6.2 million at December 31, 2000 and $4.2 million at
December 31, 1999) were $8.4 million, $10.4 million and $12.4 million at
December 31, 2001, 2000 and 1999, respectively, and are included in other
assets.


5.  Stock Activity

  The Stockholders' Agreement provides for annual stock redemptions at the
Company's option, provided that all relevant covenants with the Company's
lenders and noteholders are met.

  Common Stock Subject to Redemption

  The Stockholders' Agreement requires the Company, subject to cash payment
limitations under the terms of existing debt covenants, to redeem certain shares
of common stock owned by members of management upon a "termination event"
relative to a management employee. A termination event is defined as retirement,
death, disability or resignation. At December 31, 2001 and 2000 the maximum
redemptions that could be paid under the Stockholders' Agreement, subject to
existing debt covenants, were $22.3 million and $30.9 million, respectively. The
value of shares subject to redemption under the terms of the Stockholders'
Agreement is segregated from other common stock on the face of the balance
sheet. There were approximately 1.1 million shares of Common Stock at December
31, 2001 subject to the redemption provisions of the Stockholders' Agreement.

  In 2001 the Company redeemed 25% of a Director's shares at the current value
for a total of approximately $0.7 million, with the remainder scheduled to be
redeemed in an equal amount of shares (at each year's current value) in 2002,
2003 and 2004. In 2000, a former Director resigned from the Company's Board of
Directors. The Company has redeemed 50% of the Director's shares for a total of
approximately $3.3 million, with the remainder scheduled to be redeemed in an
equal amount of shares (at each year's current value) in 2002 and 2003.

  In October 1999, a Director of the Company purchased 55,294 shares of common
stock of the Company for $0.9 million; 35,294 of the shares were financed
through an interest-free loan from the Company in the amount of $0.6 million due
in 2009. The shares related to the loan are restricted and vest at a rate of 20%
per year. At December 31, 2001 14,118 of such shares were restricted. In the
event that the Director no longer serves on the Board of Directors, the loan
must be repaid.

                                       39
<PAGE>

  The aggregate redemption amounts under the Stockholders' Agreement for the
next three years based on termination events of which the Company is aware are
as follows:

          2002............................       $3.5 million
          2003............................       $3.5 million
          2004............................       $1.2 million

  Senior Convertible Preferred Stock

  The senior convertible preferred stock ("preferred stock") has voting rights
(except as noted below) and dividend rights equal to common stock, and has a
liquidation preference equal to par value ($.01 per share). The preferred stock
is convertible into common stock at any time on a one-for-one basis. The holders
of the preferred stock vote as a separate series from all other classes of
stock, and are entitled to elect a majority of the Board of Directors of the
Company.

  Dividends

   In 2001 the Company paid a dividend of $4.00 per share totaling $14.6 million
to common and preferred shareholders. The Company is limited by its current
lending covenants regarding the payment of dividends. For 2002 this limitation
is approximately $10 million.


6.   Pension and Other Postretirement Benefit Plans

<TABLE>
<CAPTION>
                                                                           Pension Benefits    Other Benefits
                                                                            2001      2000     2001     2000
                                                                           ------    ------   ------   ------
                                                                           (In millions)      (In millions)
<S>                                                                      <C>       <C>       <C>      <C>
Change in benefit obligation:
  Benefit obligation at beginning of year..............................   $116.8    $ 85.6   $ 11.3   $ 13.4
  Service cost.........................................................      5.1       3.7      0.2      0.2
  Interest cost........................................................      7.9       5.9      0.8      0.8
  Amendments...........................................................      0.9       0.9        -        -
  Actuarial (gains) losses.............................................     (0.9)     (1.2)     0.5     (2.2)
  Benefits paid........................................................     (6.2)     (4.6)    (0.9)    (0.9)
  Acquisitions.........................................................        -      26.5        -        -
                                                                          ------    ------   ------   ------
Benefit obligation at end of year......................................   $123.6    $116.8   $ 11.9   $ 11.3
                                                                          ======    ======   ======   ======
Change in plan assets:
  Fair value of plan assets at beginning of year.......................   $103.4    $ 75.7   $    -   $    -
  Actual return on plan assets.........................................     (9.3)      1.1        -        -
  Employer contribution................................................      4.0       1.4      0.9      0.9
  Plan participants' contributions.....................................      0.3         -        -        -
  Benefits paid........................................................     (6.0)     (4.6)    (0.9)    (0.9)
  Acquisitions.........................................................        -      29.8        -        -
                                                                          ------    ------   ------   ------
Fair value of plan assets at end of year...............................   $ 92.4    $103.4   $  0.0   $  0.0
                                                                          ======    ======   ======   ======
Funded status of the plan..............................................   $(31.2)   $(13.4)  $(11.9)  $(11.3)
Unrecognized transitional (asset)/obligation...........................     (3.2)     (3.3)       -        -
Unrecognized actuarial (gain) loss.....................................     18.1       2.5     (3.7)    (4.6)
Unrecognized prior service cost........................................      2.1       1.7     (2.3)    (2.9)
                                                                          ------    ------   ------   ------
Net amount recognized..................................................   $(14.2)   $(12.5)  $(17.9)  $(18.8)
                                                                          ======    ======   ======   ======

Disclosures:
Amounts recognized in the statement of financial position consist of:
Prepaid pension benefit................................................   $  1.5    $    -   $    -   $    -
Accrued benefit liability..............................................    (24.3)    (12.5)   (17.9)   (18.8)
Intangible asset.......................................................      1.8         -        -        -
Minimum pension liability adjustment-reduction of
   shareholders' equity................................................      6.8         -        -        -
                                                                          ------    ------   ------   ------
Net amount recognized..................................................   $(14.2)   $(12.5)  $(17.9)  $(18.8)
                                                                          ======    ======   ======   ======
</TABLE>

  The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $61.6 million, $57.7 million and $42.6 million,
respectively, as of December 31, 2001, and $56.6 million, $52.7 million and
$47.2 million, respectively, as of December 31, 2000.

                                       40
<PAGE>

<TABLE>
<S>                               <C>    <C>    <C>    <C>
Weighted-average assumptions as of December 31:
Discount rate...................  7.00%  7.25%  7.00%  7.25%
Expected return on plan assets..  9.00%  9.00%
Rate of compensation increase...  4.00%  4.00%
Initial medical trend rate......                8.50%  8.00%
</TABLE>

The 2001 initial medical trend rate was assumed to decrease gradually to 5.0% in
2008 and remain at that level thereafter.

<TABLE>
<CAPTION>
                                                  Pension Benefits  Other Benefits
                                                    2001    2000     2001     2000
                                                   -----   -----    -----    -----
                                                   (In millions)     (In millions)
<S>                                               <C>      <C>      <C>      <C>
Components of net periodic benefit cost:
  Service cost............................         $ 5.2   $ 3.7    $ 0.2    $ 0.2
  Interest cost...........................           7.9     5.9      0.8      0.8
  Expected return on plan assets..........          (8.2)   (6.5)       -        -
  Amortization of prior service cost......             -     0.5     (1.0)    (0.9)
                                                   -----   -----    -----    -----
Net periodic benefit cost.................         $ 4.9   $ 3.6    $   -    $ 0.1
                                                   =====   =====    =====    =====
</TABLE>

  The Company has two nonpension postretirement benefit plans. Health care
benefits are contributory. The contributions for health benefits are adjusted
annually; the life insurance plan is noncontributory. The accounting for the
health care plan anticipates future cost-sharing changes to the written plan
that are consistent with the Company's expressed intent to increase retiree
contributions each year by 50%-100% of any increases in premium costs.

  The Company recognizes a minimum pension liability for underfunded plans. The
minimum liability is equal to the excess of the accumulated benefit obligation
over plan assets. A corresponding amount is recognized either as an intangible
asset, to the extent of previously unrecognized prior service cost, or a
reduction of shareholders' equity. The Company recorded an additional liability
of $8.6 million as of December 31, 2001. An intangible asset of $1.8 million and
a stockholders' equity reduction, net of income taxes, of $4.1 million were
recorded as of December 31, 2001.

  The assumed health care cost trend rate has a significant effect on the
amounts reported. A one-percentage-point change in the assumed health care cost
trend rate would have the following effects:

<TABLE>
<CAPTION>
                                                                     1% Increase  1% Decrease
                                                                     -----------  -----------
<S>                                                                  <C>          <C>
Effect on total of service and interest cost components in 2001          $0.1       ($0.1)
Effect on postretirement benefit obligation as of December 31, 2001      $0.5       ($0.5)
</TABLE>

  Incentive Plan-  The Company has established management incentive plans based
on established target award levels for each participant if certain Company
performance and individual goals are met. The charge to operating expense for
this Plan was $2.0 million in 2001, $2.5 million in 2000 and $3.2 million in
1999.

  Employee Savings Plan-  The Company has established an employee savings plan
for all eligible salaried employees that conforms to Section 401(k) of the
Internal Revenue Code. Under the plan, participating employees can elect to
contribute up to 16% of their salaries with a regular Company matching
contribution equivalent to 100% of the first 1% plus 50% of the next 2% of
contributions.

  The Company's regular contributions amounted to $0.5 million in 2001 and $0.6
million in 2000 and 1999. The Company may also make a supplemental contribution
at the end of each Plan Year subject to approval by the Board of Directors.
Expense for supplemental contributions amounted to $0.2 million, $0.2 million,
and $0.4 million in 2001, 2000 and 1999, respectively.

                                       41
<PAGE>

7.  Income Taxes

   Monessen Transaction

   In December 1999 the Company entered into an agreement to transfer
substantially all future non-conventional fuel tax credits generated as a result
of the production and sale of coke at the coke facility in Monessen,
Pennsylvania (the "Monessen Facility") to a third party (the "Monessen
Transaction"). For the years ended December 31, 2001, 2000 and 1999 the Company
received $8.2 million, $8.6 million and $0.8 million, respectively, for the
transfer of tax credits, which is recorded as other income. The tax credits
expire at the end of 2002. Prior to the Monessen Transaction, the Company earned
these credits. Credits utilized for current and deferred tax benefits for the
years ended December 31, 2001, 2000 and 1999 amounted to $0.1 million, $0.1
million and $10.2 million, respectively.

   Components of the Company's income tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
                                                     Years Ended December 31,
                                                   2001        2000      1999
                                                  -----       -----      -----
                                                           (In millions)
<S>                                               <C>         <C>       <C>
Current:
     Federal....................................  $ 0.4       $ 1.8      $ 1.3
     State......................................      -           -        0.2
     Foreign....................................    6.9         7.9        4.0
                                                  -----       -----      -----
        Total current tax provision.............    7.3         9.7        5.5
Deferred:
     Federal....................................    5.0         6.7       (5.8)
     State......................................   (0.1)        0.3       (0.6)
     Foreign....................................   (0.1)       (0.1)       1.1
                                                  -----       -----      -----
        Total deferred tax provision (benefit)..    4.8         6.9       (5.3)
                                                  -----       -----      -----
Total income tax provision......................  $12.1       $16.6      $ 0.2
                                                  =====       =====      =====
</TABLE>

  Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                                  December 31,
                                                                  2001    2000
                                                                 -----   -----
                                                                 (In millions)
     <S>                                                         <C>     <C>
     Deferred tax assets:
       Alternative minimum tax credits.....................      $13.6   $14.0
       Other postretirement benefits obligation............       13.2     9.6
       Reserves, including insurance and product warranty..       11.9    14.3
       Book/tax inventory accounting.......................        2.8     3.1
       Accrued vacation....................................        2.3     2.6
       Excess tax basis on Koppers Australia assets........       12.5    13.7
       Monessen Transaction................................        3.1     3.5
       Other...............................................        3.0     2.8
                                                                 -----   -----
          Total deferred tax assets........................       62.4    63.6
                                                                 -----   -----
     Deferred tax liabilities:
       Tax over book depreciation and amortization.........       16.4    17.0
       Other...............................................        4.5     4.7
                                                                 -----   -----
          Total deferred tax liabilities...................       20.9    21.7
                                                                 -----   -----
               Net deferred tax assets.....................      $41.5   $41.9
                                                                 =====   =====
</TABLE>

  Income before income taxes for 2001 and 2000 included $21.2 million and $21.4
million, respectively, from foreign operations.

  The provision (benefit) for income taxes is reconciled with the federal
statutory rate as follows:

                                       42
<PAGE>

                                                     Years Ended December 31,
                                                     2001     2000       1999
                                                    ------   ------     ------
Federal........................................      35.0%     35.0%      35.0%
     State, net of federal tax benefit.........      (0.6)      0.5       (1.0)
     Equity in earnings of foreign affiliates..         -      (0.9)      (1.2)
     Foreign taxes.............................      12.6      12.6       11.8
     Section 29 credits........................      (0.4)     (0.3)     (40.5)
     Non-deductible environmental fines........         -       5.2          -
     Other.....................................      (0.6)     (0.4)      (3.5)
                                                    -----     -----     ------
                                                     46.0%     51.7%       0.6%
                                                    =====     =====     ======

     The Company has not provided any U.S. tax on undistributed earnings of
foreign subsidiaries or joint ventures that are reinvested indefinitely. At
December 31, 2001 consolidated retained earnings of the Company included
approximately $10 million of undistributed earnings from these investments. The
Company has an alternative minimum tax credit carryforward of approximately
$13.6 million. The credit has no expiration date.

8.   Earnings Per Share

     Basic earnings per common share are based on the weighted average number of
common shares outstanding in each year after preferred stock dividends. Diluted
earnings per common share assume that any dilutive preferred shares outstanding
at the beginning of the year were converted at those dates, with dividend
requirements and outstanding common shares adjusted accordingly. It also assumes
that outstanding common shares were increased by shares issuable upon exercise
of stock options for which fair value exceeds exercise price, and shares that
could have been purchased by the Company with related proceeds. The senior
convertible preferred stock and employee stock options were not included in the
computation of diluted earnings per share for 2001 since it would have resulted
in an antidilutive effect.

     The following table sets forth the computation of basic and diluted
earnings per common share:

<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                                                   2001             2000             1999
                                                                  ------           ------           ------
                                                                    (In millions except per share figures)
<S>                                                                <C>             <C>              <C>
Numerator for basic and diluted:
  Net income from continuing operations......................      $13.3           $ 14.7           $ 24.2
  Preferred stock dividend...................................       (9.1)               -                -
                                                                   -----           ------           ------
     Numerator for basic earnings per common share...........        4.2             14.7             24.2
Denominators:
  Weighted-average common shares.............................        1.3              1.4              1.4
Effect of dilutive securities:
  Convertible preferred stock................................        2.3              2.3              2.3
  Employee stock options.....................................        0.1              0.1              0.2
                                                                   -----           ------           ------
Dilutive potential common shares.............................        2.4              2.4              2.5
Denominators for diluted earnings per common share-adjusted
weighted-average shares and assumed conversions..............        3.7              3.8              3.9

Net income per common share:
  Basic earnings per common share............................      $3.15           $10.64           $16.70
  Diluted earnings per common share..........................      $3.15           $ 3.83           $ 6.23
</TABLE>

                                       43
<PAGE>

9.   Stock Options

     The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and, accordingly, recognizes no compensation expense for stock option
grants. In 2001, 2000 and 1999 the Company recognized $0.3 million, $0.3 million
and $0.2 million, respectively, of expense related to the redemption of stock
options by terminated employees. Included in capital in excess of par value, the
Company also recorded tax benefits of approximately $1.4 million and $0.6
million for stock option exercises in 2001 and 2000, respectively, for active
employees.

     The pro forma effect on net income and diluted earnings per share for 2001,
2000 and 1999 of the fair value method required by Statement No. 123,
"Accounting for Stock-Based Compensation" was immaterial. There were no options
granted in 2001. The fair value for options granted in 2000 and 1999 was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted-average assumptions: Risk-free interest rate of 5.56%,
dividend yield of 0.0%, volatility factor of .2 and an expected option life of
10 years.

     Approximately 0.2 million options were outstanding at December 31, 2001 to
purchase shares of common stock to certain key executives at various exercise
prices. All options granted have 10-year terms; all vest and become fully
exercisable ratably over a period of five years of continued employment, except
for options granted before 1997, which have a vesting period of three years.

     A summary of the Company's stock option activity and related information
for the years ended December 31 follows:

<TABLE>
<CAPTION>
                                                          2001                         2000                          1999
                                               -------------------------    --------------------------    -------------------------
                                                            Weighted-                     Weighted-                    Weighted-
                                               Options       Average        Options        Average        Options       Average
                                                (000)     Exercise Price     (000)      Exercise Price     (000)     Exercise Price
                                                -----     --------------     -----      --------------     -----     --------------
<S>                                            <C>        <C>               <C>         <C>               <C>        <C>
Outstanding at beginning of year..........       470           $10            510            $10             511          $10
Granted...................................         -             -             55             23              15           17
Exercised.................................      (233)            9            (95)             4             (16)           4
Forfeited.................................        (2)           20              -              -               -            -
                                               -----                        -----                          -----
Outstanding at end of year................       235           $16            470            $13             510          $10
                                               =====                        =====                          =====
Exercisable at end of year................       151           $14            321            $10             379          $ 8
                                               =====                        =====                          =====

Weighted-average fair value of
options granted during the year...........         -                        $   7                          $   5
</TABLE>

     Exercise prices for options outstanding as of December 31, 2001 ranged from
$3.57 to $28.00, and the weighted-average remaining contractual life of those
options was approximately six years. The following table indicates the number of
options outstanding for each respective exercise price (options in thousands):


                                           Options outstanding
          Exercise Price                   at December 31, 2001
          --------------                   --------------------
              $ 3.59                                 6
                3.57                                 7
               10.56                                19
               14.00                                50
               17.00                                89
               17.25                                17
               23.00                                44
               28.00                                 3
                                                   ---
                                                   235
                                                   ===

                                       44
<PAGE>

10.  Commitments and Contingencies

General

     From time to time lawsuits, claims and proceedings are asserted against the
Company relating to the conduct of its business, including those pertaining to
product liability, warranties, employment and employee benefits. While the
outcome of litigation cannot be predicted with certainty, and some of these
lawsuits, claims or proceedings may be determined adversely to the Company,
management does not believe that the disposition of any such pending matters is
likely to have a material adverse effect on the Company's financial condition or
liquidity, although the resolution in any reporting period of one or more of
these matters could have a material adverse effect on the Company's results of
operations for that period.

Environmental and Other Matters

     The Company is subject to federal, state, local and foreign laws and
regulations and potential liabilities relating to, among other things, the
treatment, storage and disposal of wastes, the discharge of effluent into
waterways, the emission of substances into the air and various health and safety
matters. The Company expects to incur substantial costs for ongoing compliance
with such laws and regulations. The Company may also face governmental or third-
party claims for cleanup or for injuries resulting from contamination at sites
associated with past and present operations.

     Environmental and Other Liabilities Retained or Assumed by Others

     The Company has agreements with former owners of certain of its operating
locations under which the former owners retained or assumed and agreed to
indemnify the Company against certain environmental and other liabilities. The
most significant of these agreements was entered into at the Company's inception
in 1988 with Beazer East, Inc. ("Beazer East").  Under the terms of the
agreement, Beazer East retained the liability for and indemnified the Company
against cleanup liabilities for past contamination occurring prior to the
purchase date at properties acquired from Beazer East, as well as against third-
party claims arising from such past contamination and claims (including toxic
tort claims) relating to operations conducted at those properties prior to the
formation of the Company (the "Indemnity"). Beazer Limited unconditionally
guaranteed Beazer East's performance of the Indemnity pursuant to a guarantee
(the "Guarantee"). Beazer Limited became a wholly-owned indirect subsidiary of
Hanson PLC in 1991. In 1998 Hanson PLC signed an agreement under which the
funding and risk of certain liabilities, including environmental, relating to
the former Koppers Company, Inc. operations of Beazer PLC (which includes
locations purchased from Beazer East by the Company) are underwritten by
subsidiaries  of two of the world's largest reinsurance companies, Centre
Solutions (a member of the Zurich Group) and Swiss Re.

     The Indemnity provides four different mechanisms by which Beazer East is to
indemnify Koppers with regard to environmental claims or environmental cleanup
liabilities. First, if the claim or liability involves hazardous substances that
were generated at facilities owned or operated before the Acquisition and
disposed of at third-party locations before the Acquisition, then Beazer East is
required to indemnify Koppers regardless of when the claim or liability is
asserted. Second, if the claim involves a personal injury and is asserted by an
employee as a result of exposure to toxic substances in the workplace and the
extent to which the claim arises from conditions occurring or existing before
the Acquisition cannot be readily determined, then the claim is allocated in
proportion to the length of time the employee worked for each party. Third, if
the claim involves costs for disposal of contaminated soil from facilities owned
or operated before the Acquisition and generated as a result of a voluntary
decision by Koppers, then Beazer East is required to indemnify Koppers for
ninety percent (90%) of all disposal costs over $0.1 million in any single year.
Fourth, if the claim or cleanup liability involves investigation, response,
removal, or remedial costs at facilities owned or operated before the
Acquisition and for conditions occurring or existing prior to the Acquisition,
then Beazer East is required to indemnify Koppers if the claim or liability is a
pre-Acquisition environmental claim or a pre-Acquisition environmental cleanup
liability. A claim or liability can have pre-Acquisition status in one of two
ways. It can be asserted by a third party (someone other than Koppers) before
December 29, 2000, or Beazer East must have received (including from Koppers)
"specific and particularized notice with respect to acts, omissions, conditions
or circumstances that may give rise" to the claim or liability before December
29, 2000. The Company believes that it has taken appropriate steps to satisfy
these conditions.

     Five sites owned and/or operated by Koppers are listed on the National
Priorities List ("NPL") promulgated under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"). The
sites

                                       45
<PAGE>

include the recently closed Feather River, California wood treating facility
("Feather River"); the Gainesville, Florida wood treating facility; the
Galesburg, Illinois wood treating facility; the Florence, South Carolina wood
treating facility; and the Follansbee, West Virginia carbon materials and
chemicals facility. In addition, many Koppers sites are or have been operated
under Resource Conservation and Recovery Act ("RCRA") permits, and RCRA remedial
and closure activities are being conducted on several of these sites. Currently,
at the properties acquired from Beazer East (which include all of the NPL sites
and all but one of the RCRA-permitted sites), substantially all investigative,
cleanup and closure activities are being conducted and paid for by Beazer East
pursuant to the terms of the Indemnity.

     To date, the parties that retained, assumed or agreed to indemnify the
Company against the liabilities referred to above have performed their
obligations in all material respects. However, disputes have arisen with such
parties as to the obligation of such parties to indemnify in certain cases. The
Company believes that for the last three years amounts paid by Beazer East that
are the subject of the Indemnity have averaged approximately $9 million per
year. If for any reason (including disputed coverage or financial incapability)
one or more of such parties failed to perform their obligations and the Company
were held liable for or otherwise required to pay all or part of such
liabilities without reimbursement, the Company may be unable to do so, and the
imposition of such liabilities on the Company would have a material adverse
effect on the Company's business, financial condition, cash flow and results of
operations. In addition, if the Company were required to record a liability with
respect to all or a portion of such matters on its balance sheet, the amount of
its total liabilities could exceed the book value of its assets by an amount
that could be significant.

     The Company has been named in a toxic tort action, along with other
defendants, arising from the operation of the Company's wood treating facility
in Green Spring, West Virginia ("Green Spring"). Allegations include personal
injury and property damage related to the operations of Green Spring from the
mid-1940's through 1992. As a result of litigation among CSX Transportation,
Inc. ("CSX"), Beazer East and the Company, CSX has assumed a portion of Beazer
East's obligations under the Indemnity in connection with Green Spring. A trial
date has been set for March 2002. Although management believes that some of the
matters associated with this claim are within the scope of the Indemnity, there
can be no assurance that an unfavorable outcome would not have a material
adverse effect on the business, financial condition, cash flow and results of
operations of the Company.

     The Company has also been named in a toxic tort action that arises from
operations at its wood treating facility in North Little Rock, Arkansas.
Allegations include personal injury and property damage related to plant
operations for an unspecified period of time. This case went to trial in January
2002 and is currently proceeding. There can be no assurance that an unfavorable
outcome would not have a material adverse effect on the business, financial
condition, cash flow and results of operations of the Company.

     Other Environmental Matters

     In October 1996 the Company received a Clean Water Act information request
from the United States Environmental Protection Agency ("EPA"). This information
request asked for comprehensive information on discharge permits, applications
for discharge permits, discharge monitoring reports, and the analytical data in
support of the reports and applications. The EPA subsequently alleged that the
Company violated various provisions of the Clean Water Act. In July 2000 the
Company received a settlement demand from the EPA requesting $4.5 million in
settlement of alleged civil violations of the Clean Water Act. Additionally,
during a Company-initiated investigation at the Company's coke facility in
Woodward, Alabama ("Woodward Coke") prior to its closure in January 1998, it was
discovered that certain environmental records and reports related to the
discharge of treated process water contained incomplete and inaccurate
information. Corrected reports were submitted to the State of Alabama and the
EPA. The United States Department of Justice and the EPA have been investigating
this matter, which has led to a settlement demand in February 2001 of $5 million
and certain admissions. The Company has entered into negotiations regarding
possible settlement of these matters. There can be no assurance that the outcome
of either or both of these matters would not have a material adverse effect on
the business, financial condition, cash flow and results of operations of the
Company.

     Rents

     Rent expense including operating leases for 2001, 2000 and 1999 was $24.4
million, $19.9 million and $19.6 million, respectively. Commitments during the
next five years under operating leases aggregate to approximately $83 million,
ranging from $19.7 million in 2002 to $10.9 million in 2006.

                                       46
<PAGE>

11.  Operations By Business Segment

     Description of the Types of Products and Services From Which Each
Reportable Segment Derives Its Revenues. The Company's Carbon Materials &
Chemicals division is a supplier of a) carbon pitch, which is used primarily by
the aluminum industry as a binder in the manufacture of anodes; b) PAA, used in
the manufacture of plasticizers, unsaturated polyester resins, alkyd resins and
dye making; c) creosote and chemicals, used in the protection of timber against
termites, fungal decay and weathering; d) carbon black (and carbon black
feedstock), used in the production of rubber tires; and e) furnace coke, used in
the manufacture of steel.

     The Company's Railroad & Utility Products division a) provides various
products and services to railroads, including crossties (both wood and
concrete), track and switch pre-assemblies, and disposal services; b) supplies
treated wood poles to electric and telephone utilities; and c) provides products
to, and performs various wood treating services for, vineyards, construction and
other commercial applications.

     Measurement of Segment Profit or Loss and Segment Assets.
     The Company evaluates performance and allocates resources based on profit
or loss from operations before interest and income taxes. The accounting
policies of the reportable segments are the same as those described in the
summary of significant accounting policies.

     Factors Management Used to Identify the Company's Reportable Segments.
     The Company's reportable segments are business units that offer different
products. The reportable segments are each managed separately because they
manufacture and distribute distinct products with different production
processes. The business units have been aggregated into two reportable segments
since management believes the long-term financial performance of these
reportable segments is affected by similar economic conditions.

<TABLE>
<CAPTION>
                                                Business Segments
                                            -------------------------
                                              Carbon        Railroad
                                             Materials      & Utility
                                            & Chemicals     Products       All Other     Total
                                            -----------     ---------     ----------    -------
                                                                 (In millions)
<S>                                         <C>             <C>           <C>            <C>
Year ended December 31, 2001:
Revenues from external customers..            $419.7          $287.9         $   -       $707.6
Intersegment revenues.............              18.9               -             -         18.9
Depreciation and amortization.....              20.3             8.0           2.1         30.4
Operating profit (loss)...........              32.3            11.7          (1.7)        42.3
Segment assets....................             278.6           126.2          50.4        455.2
Capital expenditures..............              15.6             5.0           0.4         21.0

Year ended December 31, 2000:
Revenues from external customers..            $421.3          $302.2         $   -       $723.5
Intersegment revenues.............              16.9               -             -         16.9
Depreciation and amortization.....              19.8             8.0           2.2         30.0
Operating profit (loss)...........              36.3            13.9          (0.9)        49.3
Segment assets....................             305.8           127.4          50.7        483.9
Capital expenditures..............              23.3             6.5           0.3         30.1

Year ended December 31, 1999:
Revenues from external customers..            $356.2          $307.7         $ 0.2       $664.1
Intersegment revenues.............              12.0               -             -         12.0
Depreciation and amortization.....              16.7             8.0           2.4         27.1
Operating profit (loss)...........              28.6            24.0          (1.9)        50.7
</TABLE>

                                       47
<PAGE>

<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                                  2001           2000         1999
                                                                 ------         ------       ------
                                                                            (In millions)
<S>                                                              <C>            <C>          <C>
Profit or Loss
Operating profit for reportable segments...................      $ 44.0         $ 50.2       $ 52.6
Corporate depreciation and amortization....................        (2.1)          (2.2)        (2.4)
Equity in earnings of affiliates...........................         0.3            2.2          1.7
Other......................................................         8.6            9.9          1.3
                                                                 ------         ------       ------
     Income before interest expense, income tax provision
       and minority interest...............................      $ 50.8         $ 60.1       $ 53.2
                                                                 ======         ======       ======

Assets
Total assets for reportable segments.......................      $404.8         $433.2
Deferred financing.........................................         8.4           10.4
Deferred taxes.............................................        41.5           41.7
Fixed assets...............................................         1.7            1.6
Other, including equity investments........................        13.8            7.3
Cash and short-term investments............................         1.2            0.4
Elimination of intercompany receivables....................       (16.2)         (10.7)
                                                                 ------         ------
     Total consolidated assets.............................      $455.2         $483.9
                                                                 ======         ======

Geographic Information
United States:
Revenues from external customers...........................      $502.1         $551.3
Long-lived assets..........................................       191.0          200.3
Australia and Pacific Rim:
Revenues from external customers...........................      $107.9         $115.7
Long-lived assets..........................................        42.9           44.8
Europe:
Revenues from external customers...........................      $ 97.6         $ 56.5
Long-lived assets..........................................        15.4           16.9
</TABLE>

                                       48
<PAGE>

12.  Financial Information for Subsidiary Guarantors

     The Company's payment obligations under the 9-7/8% Senior Subordinated
Notes due 2007 (the "Notes") are fully and unconditionally guaranteed on a joint
and several basis by Koppers Industries, Inc. (parent), Koppers Industries
International Trade Corporation, Koppers Australia Pty. Limited, Koppers
Industries of Delaware, Inc. and Koppers Industries B.W., Inc. (collectively,
the "Guarantor Subsidiaries"). The Notes have not been guaranteed by KHC
Assurance, Inc., Koppers Europe, and KSA Limited Partnership (collectively, the
"Non-Guarantor Subsidiaries"). The principal elimination entries eliminate
investments in subsidiaries and intercompany balances and transactions.

                  Summarized Condensed Financial Information
                     For the Year Ended December 31, 2001

<TABLE>
<CAPTION>

                                              Guarantor   Non-Guarantor
                                    Parent  Subsidiaries  Subsidiaries   Eliminations   Consolidated
                                    ------  ------------  ------------  --------------  ------------
<S>                                 <C>     <C>           <C>           <C>             <C>
Current assets                      $160.5        $100.4        $192.4        $(247.4)        $205.9
Non-current assets                   264.3          47.2         125.9         (188.1)         249.3
Current liabilities                  239.1          24.5         101.6         (248.5)         116.7
Non-current liabilities              289.6           4.9          19.1           (0.2)         313.4
Net sales                            466.7         118.6         163.2          (40.9)         707.6
Gross profit (after depreciation      51.0          41.3          14.8          (18.5)          88.6
     and amortization)
Net income (loss)                      1.7          18.3           9.0          (15.7)          13.3
</TABLE>

                  Summarized Condensed Financial Information
                     For the Year Ended December 31, 2000

<TABLE>
<CAPTION>

                                               Guarantor   Non-Guarantor
                                    Parent   Subsidiaries  Subsidiaries   Eliminations   Consolidated
                                    -------  ------------  ------------  --------------  ------------
<S>                                 <C>      <C>           <C>           <C>             <C>

Current assets                      $170.3         $107.3        $170.5        $(226.2)        $221.9
Non-current assets                   267.5           46.7          49.1         (101.3)         262.0
Current liabilities                  219.9           28.7          92.5         (226.6)         114.5
Non-current liabilities              244.1           18.0          76.0           (3.3)         334.8
Net sales                            526.7          127.4          93.5          (24.1)         723.5
Gross profit (after depreciation      51.3           45.2           9.6          (11.4)          94.7
     and amortization)
Net income (loss)                     (3.5)          20.4           6.5           (8.7)          14.7
</TABLE>

                  Summarized Condensed Financial Information
                     For the Year Ended December 31, 1999

<TABLE>
<CAPTION>

                                                  Guarantor   Non-Guarantor
                                        Parent  Subsidiaries  Subsidiaries    Eliminations   Consolidated
                                        ------  ------------  -------------  --------------  ------------
<S>                                     <C>     <C>           <C>            <C>             <C>

Current assets                          $163.4        $103.9        $123.0         $(196.0)        $194.3
Non-current assets                       253.7          53.1          42.0           (65.4)         283.4
Current liabilities                      218.4          29.5          45.1          (196.0)          97.0
Non-current liabilities                  300.4          29.5          17.4               -          347.3
Net sales                                550.4         122.5           8.9           (17.7)         664.1
Gross profit (after depreciation,         53.7          45.5          (5.4)           (5.7)          88.1
  amortization and restructuring)
Net income (loss)                         10.6          22.7          (6.1)           (3.0)          24.2
</TABLE>

                                       49
<PAGE>

13. Selected Quarterly Financial Data (Unaudited)

     The following is a summary of the quarterly results of operations for the
years ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>

                                                     1st Quarter     2nd Quarter       3rd Quarter      4th Quarter
                                                    2001    2000    2001     2000     2001     2000    2001     2000
                                                   ------  ------  ------   ------   ------   ------  ------   ------
                                                             (In millions, except per share  figures)
<S>                                                <C>     <C>     <C>       <C>     <C>      <C>     <C>      <C>
Net sales...................................       $174.7  $160.9   $189.3   $179.8  $176.7   $194.9  $166.9   $187.9
Operating profit............................       $  4.0  $  8.0   $ 15.0   $ 15.7  $ 12.9   $ 15.6  $ 10.4   $ 10.0
Net income..................................       $  0.6  $  2.1   $  5.7   $  6.0  $  4.6   $  5.8  $  2.4   $  0.8
Net income (loss) to common stock...........       $  0.6  $  2.1   $ (3.4)  $  6.0  $  4.6   $  5.8  $  2.4   $  0.8
Earnings (loss) per share of common stock:
  Basic earnings (loss) per share...........       $ 0.45  $ 1.49   $(2.61)  $ 4.39  $ 3.42   $ 4.19  $ 1.80   $ 0.58
  Diluted earnings (loss) per share.........       $ 0.16  $ 0.54   $(2.61)  $ 1.58  $ 1.25   $ 1.51  $ 0.65   $ 0.21

</TABLE>

                                       50
<PAGE>

SIGNATURES

     Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, as amended, Koppers Industries, Inc. has duly caused this
annual report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                         Koppers Industries, Inc.


                                         By: /s/ Donald E. Davis
                                             -----------------------------------
                                                Donald E. Davis,
                                                Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this annual report on Form 10-K has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the date
indicated.

<TABLE>
<S>                             <C>                                           <C>
 /s/ Robert Cizik               Non-Executive Chairman and Director           February 8, 2002
-------------------------------
  Robert Cizik


/s/ Walter W. Turner            President, Chief Executive                    February 8, 2002
-------------------------------
  Walter W. Turner              Officer and Director
                                (Principal Executive Officer)

/s/ Donald E. Davis             Chief Financial Officer                       February 8, 2002
------------------------------
  Donald E. Davis               (Principal Financial Officer,
                                Principal Accounting Officer)

/s/ Clayton A. Sweeney          Director                                      February 8, 2002
-------------------------------
  Clayton A. Sweeney

/s/ Christian L. Oberbeck       Director                                      February 8, 2002
-------------------------------
  Christian L. Oberbeck

/s/ N.H. Prater                 Director                                      February 8, 2002
-------------------------------
 N.H. Prater

/s/  David M. Hillenbrand        Director                                      February 8, 2002
-------------------------------
  David M. Hillenbrand
</TABLE>

                                       51
<PAGE>

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

The following exhibits have been filed previously where noted, or else are filed
herewith.

3.1     Restated and Amended Articles of Incorporation of the Company
        (Incorporated by reference from Exhibit 4.1 of the Company's Form S-8
        Registration Statement filed December 22, 1997).

3.2     Restated and Amended By-Laws of the Company (Incorporated by reference
        from Exhibit 4.2 of the Company's Form S-8 Registration Statement filed
        December 22, 1997).

4.1     Indenture between the Company and Integra Trust Company, National
        Association, as Trustee (Incorporated by reference to respective
        exhibits to the Company's Form 10-K for the year ended December 31,
        1993).

4.2     Indenture, dated as of December 1, 1997 between the Company and PNC
        Bank, National Association, as Trustee (Incorporated by reference to
        respective exhibits to the Company's Form S-4 Registration Statement
        filed December 22, 1997 in connection with an Exchange Offer for $175
        million of 9-7/8% Senior Subordinated Notes due 2007).

9.2     Stock Subscription Agreement dated as of December 26, 1988 (Incorporated
        by reference to respective exhibits to the Company's Prospectus filed
        February 7, 1994 pursuant to Rule 424(b) of the Securities Act of 1933,
        as amended, in connection with the offering of the 8-1/2% Senior Notes
        due 2004).

9.3     Stockholders' Agreement by and among Koppers Industries, Inc., Saratoga
        Partners III, L. P. and the Management Investors referred to therein,
        dated December 1, 1997 (Incorporated by reference from Exhibit 4.3 of
        the Company's Form S-8 Registration Statement filed December 22, 1997).

10.1    Asset Purchase Agreement, dated as of December 28, 1988, between the
        Company and Koppers Company, Inc. (Incorporated by reference to
        respective exhibits to the Company's Prospectus filed February 7, 1994
        pursuant to Rule 424(b) of the Securities Act of 1933, as amended, in
        connection with the offering of the 8-1/2% Senior Notes due 2004).

10.2    Asset Purchase Agreement Guarantee, dated as of December 28, 1988,
        provided by Beazer PLC (Incorporated by reference to respective exhibits
        to the Company's Prospectus filed February 7, 1994 pursuant to Rule
        424(b) of the Securities Act of 1933, as amended, in connection with the
        offering of the 8-1/2% Senior Notes due 2004).

*10.6   Retirement Plan of Koppers Industries, Inc. and Subsidiaries for
        Salaried Employees (Incorporated by reference to respective exhibits to
        the Company's Prospectus filed February 7, 1994 pursuant to Rule 424(b)
        of the Securities Act of 1933, as amended, in connection with the
        offering of the 8-1/2% Senior Notes due 2004).

*10.7   Koppers Industries, Inc. Non-contributory Long Term Disability Plan for
        Salaried Employees (Incorporated by reference to respective exhibits to
        the Company's Prospectus filed February 7, 1994 pursuant to Rule 424(b)
        of the Securities Act of 1933, as amended, in connection with the
        offering of the 8-1/2% Senior Notes due 2004).

*10.8   Koppers Industries, Inc. Employee Savings Plan (Incorporated by
        reference to respective exhibits to the Company's Prospectus filed
        February 7, 1994 in connection with the offering of the 8-1/2% Senior
        Notes due 2004).

*10.10  Koppers Industries, Inc. Survivor Benefit Plan (Incorporated by
        reference to respective exhibits to the Company's Prospectus filed
        February 7, 1994 pursuant to Rule 424(b) of the Securities Act of 1933,
        as amended, in connection with the offering of the 8-1/2% Senior Notes
        due 2004).

*10.19  Employment Contract for Robert K. Wagner dated February 29, 1996
        (Incorporated by reference to respective exhibits to the Company's Form
        10-K for the year ended December 31, 1995).

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<PAGE>

*10.25  Restated and Amended Employee Stock Option Plan (Incorporated by
        reference to respective exhibits to the Company's Amendment No. 1 to
        Form S-1 Registration Statement filed June 18, 1996 in connection with
        the offering of 7,001,922 shares of Common Stock).

10.27   Volume Treatment Agreement CSX-Koppers dated as of January 30, 1997
        (Incorporated by reference to respective exhibits to the Company's Form
        10-K for the year ended December 31, 1996).

10.28   Credit Agreement, dated as of December 1, 1997 by and among the Company,
        the Banks from time to time parties thereto and Swiss Bank Corporation
        and Mellon Bank, N.A. (Incorporated by reference to respective exhibits
        to the Company's Form S-4 Registration Statement filed December 22, 1997
        in connection with an Exchange Offer for $175 million of 9-7/8% Senior
        Subordinated Notes due 2007).

10.29   Advisory Services Agreement between the Company and Saratoga Partners
        III, L.P. (Incorporated by reference to respective exhibits to the
        Company's Form S-4 Registration Statement filed December 22, 1997 in
        connection with an Exchange Offer for $175 million of 9-7/8% Senior
        Subordinated Notes due 2007).

*10.30  Compensation contracts and Promissory Note for Robert Cizik
        (Incorporated by reference to respective exhibits to the Company's Form
        10-K for the year ended December 31, 1999).

*10.31  Koppers Industries, Inc. 1997 Stock Option Plan, filed herewith.

*10.32  Koppers Industries, Inc. 1998 Stock Option Plan, as Restated and Amended
        as of November 9, 1999, filed herewith.

*10.33  Koppers Industries, Inc. 2001 Senior Management Incentive Plan, filed
        herewith.

  21.1  Amended List of Subsidiaries of the Company, filed herewith.

  23.1  Consent of Ernst & Young LLP, filed herewith.


*  Management contract or compensatory plan arrangement

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<PAGE>

                           KOPPERS INDUSTRIES, INC.

                 SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
                                 (In millions)
                              For the years ended
                       December 31, 2001, 2000 and 1999


                                   Balance at  Additions               Balance
                                   beginning    charged                at close
                                    of year    to Expense  Deductions  of year
                                   ----------  ----------  ----------  --------

2001
Allowance for doubtful accounts...    $0.9        $2.3        $2.2       $1.0
                                      ====        ====        ====       ====

2000
Allowance for doubtful accounts...    $1.1        $3.3        $3.5       $0.9
                                      ====        ====        ====       ====

1999
Allowance for doubtful accounts...    $1.2        $0.1        $0.2       $1.1
                                      ====        ====        ====       ====


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