<PAGE>

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

                                      FORM 10-K
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
     For the fiscal year ended December 31, 1996
                               -----------------
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
     For the transition period from                     to                
                                    ------------------      --------------

                          Commission file number 1-873-2
                                                 -------
                                ARMCO INC.
                  ----------------------------------------------------
                 (Exact name of registrant as specified in its charter)

               Ohio                                    31-0200500
-------------------------------          -----------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)

One Oxford Centre, 301 Grant Street, Pittsburgh, Pennsylvania      15219-1415
-------------------------------------------------------------      ----------
            (Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code: 412/255-9800

Securities registered pursuant to Section 12(b) of the Act:
                                                     Name of Each Exchange
          Title of Each Class                         on Which Registered
          -------------------                         -------------------
      Class A Preferred Stock, without par value     New York Stock Exchange
      Class B Preferred Stock, $1 par value each     New York Stock Exchange
      Common Stock, $.01 par value each/             New York Stock Exchange
      Rights to Purchase Participating Preferred
        Stock of Class A Preferred Stock             New York Stock Exchange
      Sinking Fund Debentures:                       New York Stock Exchange
          9.20%, due 2000
          8.50%, due 2001
      11.375% Notes, due 1999                        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 period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  Yes   X     No      
                                                    -----
     Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K (Section 229.405 of this chapter) 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]

     The aggregate market value of voting stock held by nonaffiliates of 
Armco Inc. (assuming solely for purposes of this Form, that all members of 
registrant's Board of Directors are "affiliates") was approximately 
$586,171,889 as of February 28, 1997.

     As of the close of business on February 29, 1996, there were 106,457,166 
shares of Common Stock outstanding.
Documents incorporated by reference herein include:

     Annual Report to Shareholders for the year ended December 31, 1996 -- 
Parts I, II, and IV of this report.
     Proxy Statement for the 1997 Annual Meeting of Shareholders filed with 
the Commission under Rule  14a-6 of the Securities Exchange Act of 1934 in 
connection with the Company's 1997 Annual Meeting of Shareholders -- Part III 
of this report.

<PAGE>

                                      PART I


ITEM 1.     BUSINESS

General


     Armco Inc. ("Armco" or the "Company") was incorporated as an Ohio 
corporation in 1917 as a successor to a New Jersey corporation incorporated in 
1899.  Based on sales revenues, Armco is the second largest domestic producer 
of stainless steels and is the largest domestic producer of electrical steels.  
Armco's Sawhill Tubular Division manufactures a wide range of steel pipe and 
tubing products for use in the construction, industrial and plumbing fields.  
The Company also owns Douglas Dynamics, L.L.C. ("Douglas Dynamics"), the 
largest North American manufacturer of snowplows for four-wheel drive pick-up 
trucks and utility vehicles.

     As part of its strategy to focus on the production of specialty flat-
rolled steel, Armco has continued to evaluate the growth potential and 
profitability of its businesses and investments, and to rationalize or divest 
those that do not represent a strategic fit or offer growth potential or 
positive cash flow.  In 1994, 1995 and 1996 Armco divested or otherwise 
rationalized certain unprofitable or nonstrategic operations.

Business Segments

     The information on the amounts of revenue, operating results and 
identifiable assets attributable to each of Armco's business segments, set 
forth in Note 7 of the Notes to Financial Statements in Armco's Annual Report 
to Shareholders for the year ended December 31, 1996, is incorporated by 
reference herein.  

     Additional information about Armco's business segments is set forth in 
Management's Discussion and Analysis in Armco's Annual Report to Shareholders 
for the year ended December 31, 1996, which is incorporated by reference 
herein.

Specialty Flat-Rolled Steels Segment

     Armco's Specialty Flat-Rolled Steels businesses produce and finish flat-
rolled stainless, electrical and carbon steels at manufacturing operations 
located in Butler, Pennsylvania, and Coshocton, Dover, Mansfield and 
Zanesville, Ohio.  The Butler and Mansfield Operations produce both semi-
finished and finished stainless and electrical steels in sheet and hot band 
form.  The Coshocton Operations finish stainless steel in strip and sheet form 
and the Zanesville Operations finish stainless and electrical strip and sheet.  
In addition, the Mansfield Operations produce commodity grades of carbon steel 
sheet, most of which is coated at a galvanizing facility at the Dover 
Operations.  The segment also includes the results of European trading 
companies that buy and sell steel and manufactured steel products.

     Under a plan to upgrade the facilities at Mansfield to enhance their 
steel production capability and improve the operating performance of both the 
Mansfield and Dover Operations, Armco installed a thin-slab caster and made 
related plant modifications at Mansfield.  The new state-of-the-art continuous 
thin-slab caster is designed to produce three different types of steels 
(stainless, electrical and carbon) with rapid switchover from one type to 
another.  The installation of the thin-slab caster, certain hot mill upgrades 
and other modifications at the Mansfield Operations were made over a 15-month 
period at a cost totaling approximately $140 million.  The casting process 
used at Mansfield helps to ensure consistently high quality because it 
eliminates intermediate production steps and reduces the amount of rolling 
required to achieve desired thickness.  The new caster can produce slabs from 
three to five inches thick, up to 50 inches wide, and up to 60 feet in length. 

     Improved results for this segment are dependent, in part, on steady 
production from the Mansfield Operations.  Based on fourth quarter 1996 
results, Mansfield has demonstrated its ability to

                                       -1-
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produce quality products at stable operating levels, providing this business 
segment with the capacity and flexibility required to meet expected market 
conditions.

     The stainless and electrical steel industry is a relatively small but 
distinct segment of the overall steel industry that represented approximately 
2% of domestic steel tonnage but accounted for approximately 10% of domestic 
steel revenues in 1996.  These steels differ from basic carbon steel by their 
metallurgical composition.  Electrical steels have properties that make them 
desirable in the generation, transportation and use of electricity.  Stainless 
steels are made with a high alloy content, which permits their use in 
environments that demand exceptional hardness, toughness, strength and 
resistance to heat, corrosion or abrasion or combinations thereof.  Unlike 
high-volume carbon steel, stainless and electrical steels are generally 
produced in relatively small quantities utilizing special processing 
techniques designed to meet more exacting specifications and tolerances.  
Stainless and electrical steel products sell at higher prices  and generate 
higher average profit margins than carbon steel products.

     Stainless steel contains elements such as chromium, nickel and molybdenum 
that give it the unique qualities of resistance to rust, corrosion and heat; 
high strength; good wear characteristics; natural attractiveness; and ease of 
maintenance.  Stainless steel is used in the automotive and aerospace 
industries, and in the manufacture of food handling, chemical processing, 
pollution control, medical and health equipment and other products where its 
combination of strength, durability and attractiveness is desirable.  
Electrical steels are iron-silicon alloys which, through special production 
techniques, possess unique magnetic properties that make them desirable for 
use as energy efficient material in such applications as electrical 
transformers, motors and generators.

     Armco expects that long-term demand for stainless steel will continue to 
be positively affected by its increasing use in the manufacture of consumer 
durable goods and industrial applications.  Per capita stainless steel usage 
in many developed countries significantly exceeds per capita usage in the 
United States and Armco believes that this is an indication of the growth 
potential of demand for stainless steel in the United States.  In addition, 
the 1990 amendments to the Clean Air Act have resulted in the increasing use 
of corrosion-resistant materials in a number of applications for which 
stainless steel is well suited, including industrial pollution control devices 
and motor vehicle exhaust systems for use in the United States, where Armco 
now has the leading market share.  Another factor that Armco believes will 
affect demand positively is the increasing issuance of new car bumper-to-
bumper warranties and the use of stainless steel in passenger restraint 
systems and other functional components.

     Armco produces flat-rolled stainless steel and electrical steel strip and 
sheet products that are used in a diverse range of consumer durables and 
industrial applications.  During the last three years, approximately 79% of 
Armco's sales of specialty flat-rolled steel has been stainless and electrical 
steels, 9% has been specialty semi-finished and 8% has been carbon steel.  The 
remaining sales in this segment of Armco's business is primarily related to 
the foreign subsidiaries that buy, warehouse, and sell specialty steel 
products.  Major markets served are industrial machinery and electrical 
equipment, automotive, construction and service centers.

     In the stainless steel market, Armco is the leading producer of chrome 
grades used primarily in the domestic market for automotive exhaust 
components.  Stainless steel, which formerly was not used in parts of the 
exhaust system other than the catalytic converter, is now used in the entire 
exhaust system from manifold to tailpipe by many auto manufacturers.  Armco 
has developed a number of specialty grades for this application.  Armco is 
also known for its "bright anneal" chrome grade finishes utilized for 
automotive and appliance trim and other chrome grades used for cutlery, 
kitchen utensils, scissors and surgical instruments.  Specialty chrome nickel 
grades produced by Armco are used in household cookware, restaurant and food 
processing equipment and medical equipment.  Other Armco stainless products 
include functional stainless steel manufactured for automotive, agricultural, 
heating, air conditioning and various industrial uses.

     Armco is the only United States manufacturer of a complete line of flat-
rolled electrical steel products.  It is also the only domestic manufacturer 
utilizing laser scribing technology.  In this process, the surface of 
electrical steel is etched with high-technology lasers that refine the 
magnetic
                                       -2-
<PAGE>

domains of the steels, resulting in superior electrical efficiency.  Major 
electrical product categories are:  Regular Grain Oriented ("RGO"), used in 
the cores of power and distribution transformers; Cold Rolled Non-Oriented 
("CRNO"), used for electrical motors, generators and lighting ballasts; and 
TRAN COR[registered tradmark]H, which is used in power transformers and is the 
only high permeability electrical steel made domestically.

     Additionally, Armco produces a full range of hot-dipped galvanized 
products primarily for use in the heating, ventilation and air conditioning 
("HVAC") market.

     Armco's order backlog for its Specialty Flat-Rolled Steels segment was 
$227.4 million at December 31, 1996, and $231.9 million at December 31, 1995.  
While substantially all of the orders on hand at year-end 1996 are expected to 
be shipped in 1997, such orders, as is customary in the industry, are subject 
to modification, extension or cancellation.

     Armco's specialty steelmaking operations are located in Pennsylvania and 
Ohio, which permits cost-efficient materials flow between plants.  Armco's 
Butler, Pennsylvania facility, which is situated on 1,300 acres with 3.2 
million square feet of buildings, continuously casts 100% of its steel.  At 
Butler, melting takes place in three 170-ton electric arc furnaces that feed 
the world's largest (175-ton) argon-oxygen decarburization unit and a 170-ton 
vacuum degassing unit for refining molten metal that, in turn, feed two double 
strand continuous casters.  The melt capacity at Butler was approximately 
945,000 cast tons by year-end 1996.  Butler operates a hot-strip mill, anneal 
and pickle units and two fully-automated tandem cold-rolling mills.  It also 
has various intermediate and finishing operations for both stainless and 
electrical steels.

     The finishing plant in Coshocton, Ohio, located on 650 acres, is housed 
in a 600,000 square-foot plant and has three Sendzimer mills, four anneal and 
pickle lines, three bright anneal lines, two 4-high mills for cold reduction 
and other processing equipment, including temper rolling, slitting and 
packaging facilities.  

     The Mansfield, Ohio plant consists of a 1.4 million square-foot facility, 
including a melt shop with two electric arc furnaces (170-ton and 120-ton), a 
120-ton argon-oxygen decarburization unit, a thin-slab continuous caster, a 
six-stand hot strip mill, a five-stand tandem cold rolling mill and a pickle 
line. 

     The Dover, Ohio plant consists of a 600,000 square foot facility 
including a galvanizing line, stack anneal furnaces and a temper mill.

     Armco's Zanesville, Ohio plant, with 508,000 square feet of buildings on 
88 acres, is a finishing plant for some of the steel produced at Butler and 
Mansfield and has a Sendzimer cold-rolling mill, anneal and pickle lines, high 
temperature box anneal and other decarburization and coating units.

     In the fourth quarter of 1994, Armco announced an extensive capital 
improvement program under which it spent $95 million over a two-year period to 
upgrade and expand its stainless and electrical steel finishing facilities.  
The program was initiated to reduce existing production constraints and 
increase specialty steel finishing capacity by approximately 180,000 tons per 
year, particularly in electrical steels, specialty strip and sheet products 
and chrome stainless.  The strategic facilities upgrades were completed during 
1996 and Armco believes that it is now positioned to operate its plants 
without major disruption throughout 1997.  Armco plans to focus on improving 
productivity and quality at its specialty steels operations and anticipates 
further cost reductions as these improvements are made.

Fabricated Products Segment

     The businesses currently included in the Fabricated Products segment are 
described below:

         --  Douglas Dynamics is the largest North American manufacturer of 
snowplows for four-wheel drive pick-up trucks and utility vehicles.  Douglas 
Dynamics, which is headquartered in
                                       -3-
<PAGE>

Milwaukee, Wisconsin, and has manufacturing plants in Rockland, Maine, 
Milwaukee, Wisconsin and Johnson City, Tennessee, sells its snowplows and ice 
control products under the names Western Products and Fisher Engineering 
through independent distributors in the United States and Canada.  

        --  Sawhill Tubular manufactures a wide range of steel pipe and 
tubular products for use in the construction, industrial and plumbing markets 
at plants in Sharon and Wheatland, Pennsylvania and Warren, Ohio.

     Armco's order backlog for its Fabricated Products segment was $34 million 
at December 31, 1996 and $16.4 million at December 31, 1995.  The segment's 
backlog increased in 1996 primarily as a result of increased demand for steel 
pipe and tubing.  While substantially all of the orders on hand at year-end 
1996 are expected to be shipped in 1997, such orders, as is customary in these 
industries, are subject to modification, extension or cancellation.

Employees

     At December 31, 1996, Armco had approximately 6,000 employees.  Most of 
Armco's domestic production and maintenance employees are represented by 
international, national or independent local unions, although some operations 
are not unionized.

     Armco has agreements with independent unions at the specialty steel 
plants in Butler, Pennsylvania and Zanesville, Ohio.  In May of 1996, members 
of the Zanesville Armco Independent Organization ratified a new four-year 
labor agreement.  In October of 1996, members of the Butler Armco Independent 
Union ratified a new five-year labor agreement.  Armco has agreements with the 
United Steelworkers of America at Sawhill Tubular plants, and in February, 
1996, employees at Sawhill's Wheatland plant ratified a new four-year 
agreement.

Competition

     Armco faces intense competition from within the domestic steel industry, 
from manufacturers of competing products other than steel, including aluminum, 
plastics, composites and ceramics, and from foreign steel producers as well as 
foreign producers of components and other products.  Many of these foreign 
producers have lower labor costs and are subsidized by their governments.  
Their decisions with regard to production and sales may be influenced more by 
political and social considerations than prevailing market forces.  Many 
foreign steel producers continue to ship into the United States market despite 
decreasing profit margins or losses.  Depending on a number of market factors, 
including the strength of the dollar, import levels, and the effectiveness of 
our nation's trade laws, pricing of the Company's products could be adversely 
affected.  Competition is based primarily on price, with factors such as 
reliability of supply, service and quality also being important in certain 
segments.

     Foreign imports of stainless strip and sheet and electrical steels 
accounted for approximately 20% of apparent consumption of these products in 
1996 and 1995.

     In 1995, led by the Specialty Steel Industry of North America, the 
industry's trade organization, a major initiative was begun with European 
specialty steel producers to attempt to reach a consensus on a Multilateral 
Specialty Steel Agreement ("MSSA") for specialty steel producers only.  During 
1996, framework terms for the MSSA were agreed to by U.S. specialty steel 
producers and specialty steel producers in Europe.  The outline of the 
agreement has been submitted to the respective governments which are 
attempting to negotiate the terms of the final agreement, although there can 
be no assurance that a final agreement can be achieved.

     Competition is also presented by North American producers, including the 
so-called "mini-mills", which generally have smaller, non-unionized workforces 
and are relatively free of many of the employee, environmental and other 
obligations that traditionally have burdened steel producers.  In 1995, Nucor 
Corporation, a mini-mill steel company, entered the automotive chrome 
stainless steel business, with the addition of an argon-oxygen decarburization 
(AOD) vessel at its Crawfordsville, Indiana melt shop.  Nucor produced 16,000 
tons and approximately 35,000 tons in 1995 and 1996

                                       -4-
<PAGE>

respectively of automotive exhaust stainless.  Nucor's entry will intensify 
competition in the automotive exhaust stainless market, which totals about 
400,000 tons per year.  Competition is also presented, to a lesser degree, by 
foreign producers.  Armco is currently the leading U.S. producer of automotive 
exhaust stainless steel.

Raw Materials and Energy Sources

     Raw materials represent a major component of production costs in the 
steel industry.  The principal raw materials used by Armco in the production 
of steels are iron and carbon steel scrap, chrome and nickel and their 
ferroalloys, stainless steel scrap, silicon, molybdenum and zinc.  These 
materials are purchased in the open market from various outside sources.  
Since much of this purchased raw material is not covered by long-term 
contracts, availability and price are subject to world market conditions.  
Chrome, nickel and certain other materials in mined alloy form, can be 
acquired only from foreign sources, many of them located in developing 
countries that may be subject to unstable political and economic conditions 
that might disrupt supplies or affect the price of these materials.  A 
significant portion of the chrome and nickel requirements, however, is 
obtained from stainless steel scrap rather than mined alloys.  While certain 
raw materials have been in short supply from time to time, Armco currently is 
not experiencing and does not anticipate any problems obtaining appropriate 
materials in amounts sufficient to meet its production needs.  Armco also uses 
large amounts of electricity and natural gas in the manufacture of its 
products.  It is expected that such energy sources will continue to be 
reasonably available in the foreseeable future.  

Environmental Matters

     Armco, in common with other United States manufacturers, is subject to 
various federal, state and local requirements for environmental controls 
relating to its operations.  Armco has devoted, and will continue to devote, 
significant resources to control air and water pollutants, to dispose of 
wastes, and to remediate sites of past waste disposal.  Armco estimates 
capital expenditures for pollution control in its manufacturing operations 
will aggregate about $20 million for the years 1997-2001, with the largest 
expenditures being made in the Specialty Flat-Rolled Steels segment.  
Approximately $7.5 million is related to control of air pollution pursuant to 
regulations currently promulgated under the Clean Air Act, as amended, and 
corresponding state laws.  These projections, which have been prepared 
internally and without independent engineering or other assistance, reflect 
Armco's current analysis of probable required capital projects for pollution 
control.  During the period 1991 through 1996, Armco's capital expenditures 
for pollution control projects aggregated approximately $35.8 million, 
including $7.7 million in 1996.  Statutory and regulatory requirements in this 
area continue to evolve and, accordingly, the type and magnitude of 
expenditures may change.  

     Armco has been named as a defendant, or identified as a potentially 
responsible party, in various governmental proceedings regarding cleanup of 
certain past waste disposal sites.  Armco is also a defendant in various 
private lawsuits alleging property damage and personal injury from waste 
disposal sites.  Joint and several liability could be imposed on Armco or 
other parties for these matters; thus, theoretically, one party could be held 
liable for all costs related to a site.  While such governmental and private 
actions are being contested, the outcome of individual matters cannot be 
predicted with assurance.  However, based on its experience with such cases 
and a review of current claims, Armco expects that in most cases any ultimate 
liability will be apportioned between Armco and other financially viable 
parties.  

     From time to time, Armco has been and may be subject to penalties or 
other requirements as a result of administrative actions by regulatory 
agencies and to claims for indemnification for properties it has previously 
owned or leased.  In addition, environmental exit costs may be incurred if 
Armco decides to dispose of additional properties.  It is Armco's policy not 
to accrue such costs until a decision is made to dispose of a property.

     Based on current facts and circumstances known to Armco, Armco's 
experience with site remediation, an understanding of current environmental 
laws and regulations, environmental assessments, the existence of other 
financially viable parties, expected remediation methods and the years in 
which Armco is expected to make payments toward each remediation (which range 
from the
                                       -5-
<PAGE>

current year to 30 years or more in the future), Armco believes that the 
ultimate liability for environmental remediation matters identified to date 
will not materially affect its consolidated financial condition or liquidity.  
However, it is possible that, due to fluctuations in Armco's results, future 
developments with respect to such matters could have a material effect on the 
results of operations of future interim or annual periods.  

     Furthermore, the identification of additional sites, changes in known 
circumstances with respect to identified sites, the failure of other parties 
to contribute their share of remediation costs, decisions to dispose of 
additional properties and other changed circumstances may result in increased 
costs to Armco, which could have a material effect on its consolidated 
financial condition, liquidity and results of operations in future interim or 
annual periods.  However, it is not possible to determine whether additional 
loss, due to changed circumstances, will occur or to reasonably estimate the 
amount or range of any potential additional loss.

     Statutes and regulations relating to the protection of the environment 
have resulted in higher operating costs and capital investments by the 
industries in which Armco operates.  Although it cannot predict precisely how 
changes in environmental requirements will affect its businesses, Armco does 
not believe such requirements would adversely affect its competitive position.

Research and Development

     Armco carries on a broad range of research and development activities 
aimed at improving its existing products and manufacturing processes and 
developing new products and processes.  Armco's research and development 
activities are carried out primarily at a central technology center located in 
Middletown, Ohio.  This center is engaged in applied materials research 
related to iron and steel, non-ferrous materials and new materials.  In 
addition, the materials and metallurgy departments at each operating unit 
develop and implement improvements to products and processes that are directly 
connected with the activities of such operating unit.  Armco spent $13.1 
million, $14 million, and $12 million, respectively, on research in the years  
1996, 1995 and 1994.

Other Investments

North American Stainless ("NAS")

     Armco and Acerinox S.A. of Spain each previously owned a 50% partnership 
interest in NAS through their respective subsidiaries, First Stainless, Inc. 
and Stainless Steel Invest, Inc.  In 1994, Armco's subsidiary sold 90% of its 
50% equity interest in NAS to its partner for $73 million in cash.  Armco 
maintains a small limited partnership interest in NAS.  In connection with the 
transaction, Armco entered into an annual supply contract with NAS to provide 
the former joint venture with semi-finished stainless steel at market prices.

Discontinued Operations

National-Oilwell 

     Armco, through a wholly owned subsidiary, had a 50% partnership interest 
in National-Oilwell, which was formed in 1987 when Armco and USX Corporation 
each contributed their oil field equipment operations to National-Oilwell in 
exchange for equal interests in the new partnership.  On January 16, 1996, 
Armco sold its partnership interest in National-Oilwell to an entity formed by 
Duff & Phelps/Inverness and First Reserve Funds along with certain members of 
National-Oilwell's management.  Armco received $77 million in cash and 
receivables with a face value of $13 million.  The receivables were recorded 
at a discounted value of $10.6 million.

     The terms of the NAS and National-Oilwell transactions described in 
"Other Investments" and "Discontinued Operations", above, were the result of 
arm's-length negotiation among the parties.


                                       -6-
<PAGE>

Armco Financial Services Group ("AFSG")

     AFSG consists of insurance companies that have ceased writing new 
business and are being runoff.  These companies have not written any new 
business for retention except for an immaterial amount of guaranteed renewable 
accident and health business since 1986.  The number of policyholders of this 
business has decreased from approximately 4,000 at December 31, 1986 to 1,007 
at December 31, 1995 and 870 at December 31, 1996.

     Claims are paid by using AFSG's investment portfolio and the related 
investment income from such portfolio.  The portfolio had a market value of 
$172.3 million at December 31, 1996.  The runoff companies believe the 
existing invested assets, related future income and other assets will provide 
sufficient funds to meet all future claims payments.  

     AFSG estimates that 60% of future claims will be paid in the next five 
years and that substantially all of the claims will be paid by the year 2017.  
The ultimate amount of the claims as well as the timing of the claims payments 
are estimated based on the annual review of loss reserves performed by AFSG's 
independent and consulting actuaries.  While there have been no charges 
recorded with respect to these companies since 1990, in the future there may 
be further adverse developments with respect to the AFSG companies, which, if 
not otherwise offset through favorable commutations or other actions, will 
require additional charges to income.  Armco does not believe  that any such 
charges would have a material adverse effect on its liquidity or financial 
condition.

ITEM 2.     PROPERTIES

     Armco owns and leases property primarily in the United States.  This 
property includes manufacturing facilities, offices and undeveloped property.  
The locations of Armco's principal plants and materially important physical 
properties are described in ITEM 1. "BUSINESS".  Armco believes that all its 
operating facilities are being adequately maintained and are in good operating 
condition.

ITEM 3.     LEGAL PROCEEDINGS

     There are various claims pending against Armco and its subsidiaries 
involving product liability, reinsurance and insurance arrangements, 
environmental, antitrust, employee benefits and other matters arising out of 
the conduct of the business of Armco.

     Reserve Mining Litigation.  In August 1992, an action styled Warner, 
     --------------------------                                   ------
Donovan, et al. v. Armco was filed in the U.S. District Court, District of 
------------------------
Minnesota by members of the United Steelworkers of America ("USWA") who 
declined to participate in the USWA v. Armco settlement.  The complaint
                               -------------
alleges breaches of the Basic Labor Agreement, Supplemental Unemployment 
Benefit Plan, Insurance Agreement, Pension Agreement and Program of Hospital-
Medical Benefits for Pensioners and Surviving Spouses and seeks an unspecified 
amount of damages.  On February 17, 1993, the Court granted Armco's motion to 
dismiss plaintiffs' state law claims.  The plaintiffs' claims based on the 
labor agreements remain pending.  Plaintiffs filed an amended complaint, in 
response to which Armco filed a motion to dismiss certain claims therein.  On 
October 22, 1993, the Court granted Armco's motion.  On November 8, 1993, 
Armco filed an answer to the allegations in the amended complaint not subject 
to the motion to dismiss.

     On April 25, 1994, an action entitled Larry B. Ricke, Trustee v. Armco
                                           --------------------------------
was filed in the United States District Court for the District of Minnesota by 
the Trustee appointed by the Pension Benefit Guaranty Corporation ("PBGC") for 
the purpose of recovering from Reserve Mining Company ("Reserve") assets to 
satisfy Reserve's liability for pension benefit entitlements which are in 
addition to those guaranteed by the PBGC.  The complaint alleges that Armco is 
liable for the unfunded nonguaranteed benefits under the Pension Plan of 
Reserve in the amount of $9.2 million plus interest.  The pension benefits 
which are the subject of this action were part of the class settlement of USWA
                                                                          ----
 v. Armco.  Approximately fifteen hundred members of the class signed
---------
individual releases (19 members who did not are plaintiffs in Warner, Donovan,
                                                              ---------------
et al. v. Armco Inc.) releasing Armco from
--------------------

                                       -7-
<PAGE>

all claims, liabilities, etc. based upon or which arise out of any Reserve 
Employee Pension Benefit Plan.  Armco filed a motion to dismiss the complaint 
on the basis of said releases, which the court denied on March 28, 1995.  
Armco filed a motion seeking interlocutory appellate review.  This motion was 
granted on June 6, 1995.  The U.S. Court of Appeals affirmed the District's 
Court's decision denying Armco's motion for summary judgment on August 13, 
1996.  Armco filed a petition for rehearing on September 26, 1996, which was 
denied on October 21, 1996.

     A joint pretrial conference with counsel for Armco and Ricke and Warner
                                                            -----     ------
plaintiffs was held on November 27, 1996.  All pretrial discovery for Ricke
                                                                      -----
and Warner will be done on a consolidated basis and must be completed by
    ------
December 31, 1997.  The court further ordered that the claims of the Warner
                                                                     ------
plaintiffs for pension benefits in addition to those guaranteed by the PBGC 
may be brought only in the Ricke case.  Further, as a result of the Court's
                           -----
decision in Ricke concerning non-PBGC guaranteed pension benefits, the only
            -----
claims remaining in Warner are for welfare benefits (e.g. medical benefits,
                    ------
SUB benefits, life insurance benefits, vacation pay, etc.) under collective 
bargaining agreements.

      Eastern Stainless Corporation ("Eastern") Shareholder Litigation.  On or
      -----------------------------------------------------------------
about March 13, 1995, an action styled Pension Benefit Guaranty Corporation v.
                                       ---------------------------------------
Armco Inc. and Eastern Stainless Corporation was filed in the United States
--------------------------------------------
District Court for the Southern District of Ohio by the PBGC as a Class B 
shareholder of Eastern.  The complaint was captioned as a shareholder 
derivative and class action on behalf of all Class B shareholders.  The 
plaintiff alleged breach of fiduciary duty as well as certain other claims 
arising from Armco's status as a majority shareholder of Eastern.  The damages 
were alleged to be in excess of $12 million.  The Class B shares were 
redeemable by Eastern Stainless for $1 a share, or approximately $13 million.  
On March 15, 1995, Eastern was dissolved without any shareholder distribution.  
In accordance with Virginia corporation law, a special independent committee 
of the Board of Directors of Eastern ("Committee") was appointed to evaluate 
the merits of plaintiff's derivative claims.  Armco filed a motion to dismiss 
the direct claims, stay the derivative claims and stay discovery pending 
completion of the Committee's investigation.  Plaintiff filed a motion for 
class certification.  The court denied Armco's motion to dismiss the direct 
claims and stay discovery, and granted Armco's motion to stay the derivative 
claims and plaintiff's motion for class certification.  Armco filed an answer 
to the complaint.

     On January 31, 1996, the Committee issued a report on its review and 
evaluation of the derivative claims, which concluded that the Class B 
shareholders were treated fairly by Armco and Eastern and that there was no 
set of circumstances or assumptions under which the maintenance of the 
litigation could serve the interests of Eastern or its Class B Shareholders.  
Eastern filed on March 18, 1996, a motion to dismiss the derivative claims on 
the basis of the Committee's findings.  At a hearing on May 29, 1996, the 
Court deferred ruling on Armco's and Eastern's motion to dismiss the 
derivative claims and granted plaintiff 90 days to perform discovery regarding 
the Committee's investigation.  In November 1996, Armco renewed its motion to 
dismiss the derivative claims and filed a motion for summary judgment with 
respect to the direct claims.  The Court denied the motion for summary 
judgment and reserved ruling on the motion to dismiss the derivative claims.  
On February 3, 1997, the parties agreed on a settlement of all claims, subject 
to approval of the Court.  Armco expects that the Court will approve the 
settlement at a fairness hearing at a future date to be set by the Court.

     Cornerstones Litigation.  An action was filed by Cornerstones Municipal
     ------------------------
Utility District ("Cornerstones") and William St. John, as representative of a 
class of owners of real property situated within Cornerstones, in the District 
Court of Harris County, Texas, in July 1989, seeking damages in excess of $40 
million for allegedly defective pipe supplied by Armco Construction Products 
for a sanitary sewer system in three residential subdivisions.  In May 1991, 
the Cornerstones plaintiffs amended their petition to add owners of some 1,500
    ------------
residences within the Kingsbridge Municipal Utility District ("Kingsbridge").  
Subsequently, the Kingsbridge claims were severed into a separate action.  In
                  -----------
January 1992, the trial court granted Armco's motion for summary judgment, 
dismissing all claims asserted by the Cornerstones plaintiffs as barred by the
                                      ------------
statute of limitations.  In January 1993, the Court of Appeals reversed the 
dismissal.  Upon Armco's petition, the Supreme Court of Texas reversed and 
summary judgment in favor of Armco was reinstated by the Court of Appeals in 
November 1994.  In March 1995, the Cornerstones plaintiffs sought writ of
                                   ------------
error to the Supreme
                                       -8-
<PAGE>

Court of Texas.  On May 11, 1995, the Supreme Court of Texas denied 
plaintiffs' application for writ of error, concluding the Cornerstones matter
                                                          ------------
in favor of Armco.  On February 22, 1996, the District Court of Harris County 
granted summary judgment in favor of Armco in the severed Kingsbridge action.
                                                          -----------
On April 10, 1996, an amended summary judgment order was entered by the 
District Court clarifying that summary judgment had been granted in favor of 
Armco and against only the claims of Kingsbridge and John Kepplinger, 
individually.  A motion for class certification was denied by the court with 
respect to the claims of the remaining homeowners in the Kingsbridge District.  
The Kingsbridge homeowners have filed an appeal, which is currently pending 
before the Court of Appeals in Houston, Texas.

     In addition, there are three multiple-party homeowners actions that 
remain pending on behalf of property owners in the Cornerstones Municipal 
Utility District.  The first of these actions, Vincent and Linda Adduci, et
                                               ----------------------------
 al. v. Armco Steel Corporation, et al., was filed in the 127th District Court
---------------------------------------
of Harris County, Texas on or about April 3, 1992, by approximately 87 
residents, including the lead plaintiffs, against the same defendants as in 
the Cornerstones case.  On or about September 11, 1992, Harris W. Arthur and
    ------------
other plaintiff homeowners commenced a similar action, styled Harris W.
                                                              ---------
Arthur, et al. v. Monsanto Company, et al., in the 133rd Judicial District
------------------------------------------
Court of Harris County.  On or about March 22, 1993, a third action, captioned 
William C. Irons, et al. v. Turner, Collie & Braden, Inc., et al., was filed
-----------------------------------------------------------------
in the 152nd Judicial District Court of Harris County by the lead plaintiff 
and approximately 100 additional residents.  All three cases are substantially 
based upon the same theories as the Cornerstones case and were separately
                                    ------------
filed after an effort to have the Cornerstones complaints certified as a class 
                                  ------------
action was denied by the court.  These three actions each seek an unspecified 
amount of damages.  Arthur and Adduci have been consolidated into one case 
                    ------     ------
before the 127th District Court.  On January 28, 1997, a majority of the 
homeowners in Irons were nonsuited and dismissed their claims against Armco.
              -----

     Environmental Proceedings.  Most environmental actions involving Armco
     --------------------------
relate to alleged contamination at off-site treatment and disposal sites.  In 
many of these cases, Armco is one of several hundred companies who have been 
identified as potentially responsible parties ("PRPs").  In a few instances, 
Armco is one of only a few parties or is alleged to be solely liable.  It is 
routinely asserted that joint and several liability will be applied in such 
cases; thus, a single party could be held liable for all costs related to a 
site. However, Armco's experience has been that liability is apportioned on 
the basis of volume and/or toxicity of materials sent to a site and Armco 
expects that any ultimate liability will be apportioned among Armco and other 
financially viable parties.  Other claims sometimes arise from contractual 
obligations for properties Armco previously owned or leased and from 
regulatory actions.  Armco intends to assert all meritorious legal and 
equitable defenses that are available to it with respect to environmental 
matters.  See "Item 1- BUSINESS--Environmental Matters".  The following 
paragraphs provide information about unresolved environmental matters that 
have been reported in previous Form 10-K or Form 10-Q filings and certain new 
matters.

     Armco has been one of four defendants in the case styled, Rosa Ann
                                                               --------
Barrett, et al. v. Atlantic Richfield Company, et al., which was filed in
-----------------------------------------------------
January 1993, in the United States District Court for the Southern District of 
Texas, Houston Division on behalf of certain residents near the French Limited 
Site.  In 1994, the court granted summary judgment against the plaintiffs, 
with the exception of one property damage claim which is pending separately 
before the trial court.  The Barrett plaintiffs appealed to the Fifth Circuit
                             -------
which in a September 1996 opinion upheld the lower court's judgment against 
them.  Based on its experience to date with resolution of claims in this 
matter, Armco does not believe its liability, if any, with regard to the 
remaining claim will be material.

     On July 21, 1995, the Department of Justice ("DOJ") filed a complaint in 
the U.S. District Court for the Southern District of Ohio alleging Armco's 
liability for remediation costs at the Fultz Landfill Superfund Site in 
Byesville, Ohio.  In late 1996 Armco filed a third-party complaint against 
eight other PRPs.  Discovery is continuing.  The DOJ submitted a settlement 
proposal under which three of the companies initially identified as PRPs by 
the USEPA (Armco is not among them), plus their successors and certain other 
companies, have agreed to undertake remediation of the site, which is 
estimated to cost approximately $13 million.  If this settlement is approved 
by the Court, it is expected that the USEPA will continue to seek about $6 
million in past costs from non-settling parties.  Armco will not oppose the 
settlement if the settling parties would be precluded from filing

                                       -9-
<PAGE>

future contribution actions against Armco and other non-settling parties.  No 
estimate of Armco's proportionate liability can be made at this time.

     On July 22, 1993, Armco received a request from the Kansas Department of 
Health and Environment ("KDHE") for information regarding a former Armco 
Construction Products Division plant located in Topeka, Kansas and now owned 
by Contech Construction Products, Inc. ("Contech").  Armco answered KDHE's 
information request in August 1993.  KDHE indicated it would pursue Contech 
and two other parties regarding this matter, but to Armco's knowledge, no 
action has been filed.  Contech claims that Armco has an indemnification 
obligation under the agreement conveying the property to Contech.  Based on 
the type of contamination at issue and the presence of other PRPs, Armco does 
not believe its liability, if any, will be material.

     In December 1993, Armco and one other company received a notice of 
nonbinding preliminary allocation of proportionate responsibility from the 
Pennsylvania Department of Environmental Protection ("PADEP") for the William 
Taylor Estate site.  In December, 1996, PADEP filed an action against two 
other parties for recovery of about $400,000 in past costs.  Armco has been 
requested by the two named defendants to voluntarily join in a settlement of 
this matter and to participate in investigation and remediation of the site.  
Based on current information about the type of contamination and the presence 
of other PRPs, Armco does not expect its liability, if any, to be material.

     On September 9, 1994, four parties who signed a USEPA Administrative 
Order on Consent ("AOC") for cleanup of the Granville Solvent site in Ohio, 
initiated a contribution action in the U.S. District Court for the Southern 
District of Ohio against all PRPs, including Armco, who did not sign the AOC.  
In 1996 decisions, the court denied plaintiffs' claim for their costs related 
to litigation or negotiation of the AOC and limited their action to one for 
contribution rather than joint and several liability.  Based on these 
decisions, and on current information about remediation costs, Armco does not 
expect its liability, if any, to be material.  Trial has not been scheduled, 
but is expected sometime in 1997.

     On  February 27, 1995, the Ohio Environmental Protection Agency issued a 
Notice of Violation ("NOV") to Armco's  Zanesville, Ohio operations alleging 
noncompliance with both a 1993 Order and various state regulations regarding 
hazardous waste management.  Armco has instituted appropriate corrective 
measures.  No proposed penalties were included in the NOV and Armco cannot 
reasonably estimate potential penalties, if any, based on current information.

     On December 27, 1996, the Southern Ohio Port Authority filed a complaint 
against Armco and 23 other defendants seeking an estimated $3 million to 
recover costs of investigation and remediation at the former Empire-Detroit 
facility in Portsmouth, Ohio.  Armco is preparing its answer to the complaint.  
Based on the estimated costs and the presence of other PRPs. Armco does not 
expect its liability, if any, to be material.

     In the opinion of management, the ultimate liability, if any, resulting 
from the claims described in the preceding paragraphs in this "Legal 
Proceedings" section will not materially affect the consolidated financial 
position or liquidity of Armco and its subsidiaries; however, it is possible 
that, due to fluctuations in Armco's operating results, future developments 
with respect to such matters could have a material effect on its financial 
condition, liquidity and results of operations in future interim or annual 
periods.

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

     There were no matters submitted to a vote of the security holders of 
Armco during the fourth quarter of the year ended December 31, 1996.

                                       -10-
<PAGE>


Executive Officers of Armco

     The executive officers of Armco as of March 14, 1997, were as follows:
<TABLE>
<CAPTION>
                                                                                Years
                   Age as of                                   Tenure in      of Service
Name             March 14, 1997          Office                Office (1)     with Armco
----             --------------          ------                -----------    -----------
<S>                  <C>          <C>                            <C>               <C>
James F. Will         58          Chairman, President and 
                                  Chief Executive Officer (2)    1994 (2)           5

Jerry W. Albright     60          Vice President and             1997 (3)           0
                                  Chief Financial Officer

James L. Bertsch      53          Vice President and Treasurer   1989              31

John B. Corey         53          Vice President                 1994              18

John N. Davis         38          Vice President and Controller  1996 (4)           5

Gary R. Hildreth      58          Vice President, General Counsel
                                  and Secretary                  1993              26

Gary L. McDaniel      50          Vice President - Operations    1996               4

M. Dennis McGlone     47          Vice President - Commercial    1996               5

Pat J. Meneely        45          Vice President - Information
                                  and Organizational 
                                  Effectiveness                  1995               2

Daniel E. Smigielski  47          Vice President - Purchasing &
                                  Traffic                        1996               4
-------------------------

<FN>


  (1)  All officers are elected annually by the Board of Directors and hold 
office until their successors are elected and qualified.  Each of the officers 
named above has held responsible positions with Armco or its subsidiaries 
during all of the past five years, with the exceptions of Messrs. Albright, 
McDaniel, Meneely and Smigielski.  Prior to joining Armco, Mr. Albright was a 
consultant and small business owner.  Prior to that he was Assistant to the 
President of Armco Inc. and prior to that Mr. Albright was Vice President and 
Chief Financial Officer of Cyclops Industries, Inc.   Prior to joining Armco, 
Mr. McDaniel was Division Manager of Maintenance and Services at the Indiana 
Harbor Works of LTV Steel Company (producer of flat-rolled and tubular carbon 
steel products).  Immediately prior to joining Armco, Mr. Meneely worked as an 
executive consultant and held executive positions with Sara Lee Hosiery (a 
manufacturer of hosiery) and Wheeling-Pittsburgh Steel Corporation (a 
manufacturer of steel).  Mr. Smigielski was Director, Purchasing and Traffic 
at Armco's Butler Operations.  Prior to that, Mr. Smigielski was Project 
Director at Krupp GMBH (an engineering company specializing in steel industry 
equipment and processing facilities).

  (2)  Effective February 1, 1996, Mr. Will was elected Chairman of the Board 
in addition to the positions of President and Chief Executive Officer.

  (3)  Effective January 1, 1997, Mr. Albright was elected Vice President and 
Chief Financial Officer.  Mr. Albright was employed with Armco from 1966 until 
1988, and held numerous financial positions.

  (4)  Effective August 1, 1996, Mr. Davis was elected Vice President and 
Controller.

</TABLE>


                                       -11-
<PAGE>

                                      PART II


ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY
          AND RELATED STOCKHOLDER MATTERS

     Armco's common stock is sold principally on the New York Stock Exchange.  
At February 28, 1997, there were 22,641 common stock shareholders of record.  
Other information required by this item is incorporated herein by reference 
from pages 32 and 37 of the Annual Report to Shareholders for the year ended 
December 31, 1996.

ITEM 6.      SELECTED FINANCIAL DATA

<TABLE>

(In millions, except per share amounts)
<CAPTION>
 
                                           1996      1995      1994     1993    1992(2)
                                           ----      ----      ----     ----    ------- 
<S>                                    <C>       <C>       <C>       <C>       <C>
Net sales                              $1,724.0  $1,559.9  $1,437.6  $1,664.0  $1,673.2
Special charges - net (3)                 (8.8)        --    (35.0)   (165.5)   (185.1)
Income (loss) from continuing 
   operations                              26.0      23.5      65.8   (247.5)   (402.2)
Income (loss) from continuing operations
    per common share                       0.08      0.05      0.46    (2.56)    (4.17)
Total assets (4)                        1,867.8   1,896.6   1,934.9   1,904.7   1,869.9
Long-term debt and lease obligations      344.3     361.6     363.8     379.7     401.0
Long-term employee benefit 
    obligations (4)                     1,200.2   1,165.9   1,221.9   1,249.9     541.6
Class B common stock of subsidiary (5)       --        --        --       9.7       9.3

-----------------------------------
<FN>

  (1)  The information in this Item should be read in conjunction with 
Armco's financial statements and the notes thereto, which are incorporated 
by reference in Item 8.

  (2)  In April 1992, Armco acquired Cyclops Industries, Inc. in a 
transaction accounted for as a purchase.

  (3)  Special charges primarily relate to the shutdown, sale and/or 
rationalization of operating facilities.  

  (4)  In 1993, Armco adopted SFAS Nos. 106 and 109 which increased long-
term employee benefit obligations and total assets. 

  (5)  The Class B common stock was issued by Eastern Stainless prior to 
Armco's acquisition of this 84%-owned former subsidiary of Cyclops 
Industries, Inc.  In 1994, Eastern Stainless reached a decision to sell 
substantially all of its assets and, as a result, Armco stopped 
consolidating the results of Eastern Stainless.  The asset sale was 
completed on March 14, 1995.
</TABLE>

                                       -12-
<PAGE>




ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

     Certain information required by this Item is incorporated herein by 
reference from pages 16-21 following the caption "Management's Discussion and 
Analysis" of the Consolidated Financial Statements in the Annual Report to 
Shareholders for the year ended December 31, 1996. 

Other

     Certain statements made or incorporated by reference in this Form 10-K, 
or made in press releases or in oral presentations made by Company employees, 
reflect the Company's estimates and beliefs and are intended to be, and are 
hereby identified as, 'forward looking statements' for the purposes of the 
safe harbor provisions of the Private Securities Litigation Reform Act of 
1995.  These include statements in the paragraphs entitled "Outlook" in the 
section entitled "Management's Discussion & Analysis" of the Annual Report to 
Shareholders, incorporated herein by reference.

     The Company cautions readers that such forward looking statements involve 
risks and uncertainties that could cause actual results to differ materially 
from those expected by the Company or expressed in the Company's forward 
looking statements.  These factors include, but are not limited to, the 
following: (1) risks of downturns in economic conditions generally, and in the 
steel industry (a highly cyclical industry) specifically; (2) changes in 
customer demand for the Company's products, particularly demand from the 
automobile industry; (3) unplanned plant outages or equipment failures at the 
Company's facilities; (4) collective bargaining agreement negotiations, 
strikes, labor stoppages or other labor difficulties (as described further in 
Item 1 "Business - Employees"); (5) actions by the Company's competitors, (as 
described further in Item 1 "Business - Competition"), including domestic 
steel producers and foreign steel producers (many of whom have lower labor 
costs and are subsidized by their governments); (6) U.S. trade policy, 
including U.S. government action with respect to importers of products 
competitive with the Company's (as described further in Item 1 "Business - 
Competition"); (7) unforeseen material adverse developments in insurance 
runoff (as described further in Item 1 "Business - Discontinued Operations" 
and Item 8 - Note 11 to the Consolidated Financial Statements); (8) disruption 
in the supply of raw materials needed by the Company, such as iron and carbon 
steel scrap, chrome and nickel, stainless steel scrap, silicon, molybdenum and 
zinc, or changes in the pricing of such raw materials; and (9) changes in the 
application and scope of environmental regulations applicable to the Company.

	Readers are cautioned not to place undue reliance on forward looking 
statements made or incorporated by reference in this Form 10-K, or made in 
press releases or in oral presentations.  Such forward looking statements 
reflect management's analysis only as of the date such statements are made and 
the Company undertakes no obligation to revise publicly these forward looking 
statements to reflect events or circumstances that arise subsequently.  
Readers should carefully review the risk factors set forth above and described 
elsewhere in this document and in other documents the Company files from time 
to time with the Securities and Exchange Commission.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


     The information required by this Item is incorporated herein by reference 
from pages 22-37 of the Annual Report to Shareholders for the year ended 
December 31, 1996. 


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

	None. 

                                       -13-
<PAGE>




                                     PART III


ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this item as to executive officers of Armco 
is contained in Part I of this report under "Executive Officers of Armco" and 
is incorporated herein by reference.  The information required as to directors 
is incorporated herein by reference from the information set forth under the 
caption "ELECTION OF DIRECTORS" in the registrant's Proxy Statement for the 
1997 Annual Meeting of Shareholders filed with the Securities and Exchange 
Commission pursuant to Rule 14a-6 of the Securities Exchange Act of 1934, as 
amended (the "Proxy Statement").


ITEM 11.     EXECUTIVE COMPENSATION

     The information required by this item is incorporated herein by reference 
from the information set forth in the Proxy Statement under the caption 
"EXECUTIVE COMPENSATION".


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT

     The security ownership in Armco stock of directors, certain executive 
officers and directors and executive officers as a group and of persons known 
by Armco to be the beneficial owners of more than five percent of any class of 
Armco's voting securities is incorporated herein by reference from the 
information set forth in the Proxy Statement under the caption "MISCELLANEOUS 
-- Stock Ownership".

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

	None.



                                     PART IV

ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
             ON FORM 8-K

I.     Documents Filed as a Part of this Report


A.  Financial Statements and Financial Statement Schedules               Page

1.  Statement of Consolidated Operations for the Years Ended 
    December 31,1996, 1995 and 1994                                       *

2.  Statement of Consolidated Financial Position as of 
    December 31, 1996 and 1995                                            *

3.  Statement of Consolidated Cash Flows for the Years Ended
    December 31, 1996, 1995 and 1994                                      *

4.  Notes to Financial Statements                                         *

5.  Independent Auditors' Report                                          *

6.  Independent Auditors' Report                                         19

                                       -14-
<PAGE>

7.  Financial Statement Schedule for the Years Ended
    December 31, 1996, 1995 and 1994

      II-- Valuation and Qualifying Accounts                             20

8.  Responsibility for Financial Reporting                               *

----------------------

  *  Incorporated in this Annual Report on Form 10-K by reference to 
pages 22-37 of the Annual Report to Shareholders for the year ended 
December 31, 1996.

Financial Statements and Financial Statement Schedules Omitted

     The financial statements and financial statement schedules for Armco Inc. 
and subsidiaries, other than those listed above, are omitted because of the 
absence of conditions under which they are required, or because the 
information is set forth in the notes to financial statements.

     B.     Exhibits

     The following is an index of the exhibits included in the Annual Report 
on Form 10-K.

        3(a).  Articles of Incorporation of Armco Inc., as amended as of April
               4, 1996 (1)

        3(b).  Regulations of Armco Inc. (2)

        4.     Armco hereby agrees to furnish to the Securities and Exchange 
Commission, upon its request, a copy of each instrument defining the rights of 
holders of long-term debt of Armco and its subsidiaries, omitted pursuant to 
Item 601(b)(4)(iii) of Regulation S-K.

10(a). Deferred Compensation Plan for Directors*

10(b). 1993 Long-Term Incentive Plan of Armco Inc. (3)*

10(c). Severance Agreements (4)*

10(d). 1988 Restricted Stock Plan (5)*

10(e). Executive Supplemental Deferred Compensation Plan Trust (6)*

10(f). Executive Supplemental Deferred Compensation Plan (7)*

10(g). Pension Plan for Outside Directors (8)*

10(h). Key Management Severance Policy (9)*

10(i). Minimum Pension Plan (10)*

10(j). Stainless Steel Toll Rolling Services Agreement (11)

10(k). Equity Exchange Agreement (12)

10(l). Stock Purchase Agreement among Armco Inc., Armco Financial Services 
Corporation and Vik Brothers Insurance, Inc. dated as of August 2, 1994 (13)

                                       -15-
<PAGE>

10(m). Asset Sale Agreement By and Among Armco Inc., Eastern Stainless 
Corporation, Avesta Sheffield East, Inc. and Avesta Sheffield Holding Co. 
dated as of February 9, 1995 (14)

10(n). Purchase Agreement, as amended, among Oilwell, Inc., National Supply 
Company, Inc., USX Corporation, Armco Inc. and NOW Holdings, Inc. (15)

10(o). Rights Agreement dated as of February 23, 1996 between Armco Inc. and 
Fifth Third Bank (16)

11. Computation of Income (Loss) Per Share

13. Annual Report to Shareholders for the year ended December 31, 1996.  
(Filed for information only, except for those portions that are specifically 
incorporated in this Form 10-K Annual Report for the year ended December 31, 
1996.)

21. List of subsidiaries of Armco Inc.

23. Independent Auditors' Consents

27. Financial Data Schedule

99. Description of Armco Capital Stock

     The annual reports (Form 11-K) for the year ended December 31, 1996 for 
the Armco Inc. Retirement and Savings Plan and the Armco Inc. Thrift Plan for 
Hourly Employees will be filed by amendment as exhibits hereto, as permitted 
under Rule 15d-21.

   *  Management contract or compensatory plan or arrangement required to be 
filed as an exhibit to the Annual Report on Form 10-K pursuant to Item 14(c) 
of Form 10-K.

---------------------

(1)  Incorporated by reference from Exhibit 3.1 to Armco's Quarterly Report on 
Form 10-Q for the quarter ended March 31, 1993.

(2)  Incorporated by reference from Exhibit 3.2 to Armco's Quarterly Report on 
Form 10-Q for the quarter ended March 31, 1994.

(3)  Incorporated by reference from Exhibit 10 to Armco's Quarterly Report on 
Form 10-Q for the quarter ended March 31, 1993.

(4)  Incorporated by reference from Exhibit 10(a) to Armco's Quarterly Report 
on Form 10-Q for the quarter ended June 30, 1988 (SEC File No. 001-00873).

(5)  Incorporated by reference from Exhibit 10(i) to Armco's Annual Report on 
Form 10-K for the year ended December 31, 1988 (SEC File No. 001-00873).

(6)  Incorporated by reference from Exhibit 10(b) to Armco's Quarterly Report 
on Form 10-Q for the quarter ended June 30, 1988 (SEC File No. 001-00873).

(7)  Incorporated by reference from Exhibit 10(c) to Armco's Quarterly Report 
on Form 10-Q for the quarter ended June 30, 1988 (SEC File No. 001-00873).

(8)  Incorporated by reference from Exhibit 10(p) to Armco's Annual Report on 
Form 10-K for the year ended December 31, 1989 (SEC File No. 001-00873).

                                       -16-
<PAGE>

(9)  Incorporated by reference from Exhibit 10(p) to Armco's Annual Report on 
Form 10-K for the year ended December 31, 1990.

(10)  Incorporated by reference from Exhibit 10(r) to Armco's Annual Report on 
Form 10-K for the year ended December 31, 1991.

(11)  Incorporated by reference from Exhibit 10(s) to Armco's Annual Report on 
Form 10-K for the year ended December 31, 1993.

(12)  Incorporated by reference from Exhibit 2 to Armco's Form 8-K dated April 
7, 1994.

(13)  Incorporated by reference from Exhibit 10 to Armco's Quarterly Report on 
Form 10-Q for the quarter ended June 30, 1994.

(14)  Incorporated by reference from Exhibit 2 to Armco's Form 8-K dated March 
14, 1995.

(15)  Incorporated by reference from Exhibit 2 to Armco's Form 8-K dated 
January 16, 1996.

(16)  Incorporated by reference from Exhibit 10(p) to Armco's Form 10-K for 
the year ended December 31, 1995.

------------------------


II.   Reports on Form 8-K

      No reports on Form 8-K were filed by Armco since September 30, 1996.

                                       -17-
<PAGE>




                                     SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES 
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED 
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED AS OF MARCH 21, 
1997.

                                     ARMCO INC.


                                     By	JAMES F. WILL
                                     -----------------------------------------
                                          James F. Will
                                          Chairman of the Board, President and
                                          Chief Executive Officer

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS 
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE 
REGISTRANT AND IN THE CAPACITIES INDICATED AS OF MARCH 21, 1997.

By     JAMES F. WILL                          By     DAVID A. DUKE
--------------------------------------       -------------------------------
       James F. Will                               John C. Haley
Chairman of the Board, President,                     Director
      Chief Executive Officer
        and Director



By        JERRY W. ALBRIGHT                   By     JOHN C. HALEY
--------------------------------------       ------------------------------
          Jerry W. Albright                           John C. Haley
         Vice President and                             Director
       Chief Financial Officer



By        JOHN N. DAVIS                       By    BRUCE E. ROBBINS
-------------------------------------       ------------------------------
          John N. Davis                            Bruce E. Robbins
    Vice President and Controller                     Director
	


By                                            By    BURNELL R. ROBERTS
-------------------------------------       ------------------------------
          John J. Burns, Jr.                       Burnell R. Roberts
              Director                                  Director



By     PAULA H.J. CHOLMONDELEY              By   JOHN D. TURNER
--------------------------------------      ------------------------------
       Paula H.J. Cholmondeley                    John D. Turner
              Director                               Director


                                       -18-
<PAGE>


Armco Inc.:

We have audited the consolidated financial statements of Armco Inc. and 
subsidiaries as of December 31, 1996 and 1995, and for each of the three years 
in the period ended December 31, 1996, and have issued our report thereon 
dated February 5, 1997.  Such consolidated financial statements and report are 
included in Armco's 1996 Annual Report to Shareholders and are incorporated 
herein by reference.  Our audits also included the consolidated financial 
statement schedule of Armco Inc. and subsidiaries, listed in Item 14.  This 
consolidated financial statement schedule is the responsibility of the 
Company's management.  Our responsibility is to express an opinion based on 
our audits.  In our opinion, such consolidated financial statement schedule, 
when considered in relation to the basic consolidated financial statements 
taken as a whole, presents fairly in all material respects the information set 
forth therein.  


DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania
February 5, 1997

                                       -19-
<PAGE>


<TABLE>
                                                                               SCHEDULE II
                          ARMCO INC. AND CONSOLIDATED SUBSIDIARIES
                       VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                  (Dollars in Millions)
<CAPTION>
==========================================================================================
         Column A                Column B   Column C     Column D             Column E
------------------------------------------------------------------------------------------
                                                       Deductions
                                                      from Reserves
                                           Additions  for Purposes
                                Balance at Charged to   for which
                                Beginning  Costs and  Reserves were  Other   Balance at
       Description               of Year    Expenses    Provided    Changes  End of Year
------------------------------------------------------------------------------------------
<S>                               <C>         <C>        <C>        <C>          <C>
For the Year Ended 
     December 31, 1994:

Allowance for doubtful accounts   $ 4.0       $0.8       $0.4       $(0.3)(B)    $ 4.1

Allowance for impairment of
  investments                      20.0        0.1        1.4         --          18.7
------------------------------------------------------------------------------------------
For the Year Ended 
     December 31, 1995:

Allowance for doubtful accounts   $ 4.1       $0.3       $1.0       $ 0.6 (A)    $ 4.4
                                                                      0.3 (B)
                                                                      0.1 (C)

Allowance for impairment of
  investments                      18.7        --         2.0         --          16.7
------------------------------------------------------------------------------------------
For the Year Ended 
     December 31, 1996:

Allowance for doubtful accounts   $ 4.4       $1.4       $1.2       $(0.1)(A)    $ 3.8
                                                                     (0.7)(B)

Allowance for impairment of
  investments                      16.7        2.3        --         (6.3)(A)     12.7
------------------------------------------------------------------------------------------
<FN>
NOTES:

(A)  Written off to the income statement.
(B)  Net balances of consolidated subsidiaries purchased (divested).
(C)  Collections on bad debt items.
</TABLE>

                                       -20-
<PAGE>

                            EXHIBIT INDEX

     The following is an index of the exhibits included in the Annual Report 
on Form 10-K.


11. Computation of Income (Loss) Per Share

13. Annual Report to Shareholders for the year ended December 31, 1996.  
(Filed for information only, except for those portions that are specifically 
incorporated in this Form 10-K Annual Report for the year ended December 31, 
1996.)

21. List of subsidiaries of Armco Inc.

23. Independent Auditors' Consents

27. Financial Data Schedule

99. Description of Armco Capital Stock

------------------------