<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

(Mark One)

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
        For the fiscal year ended OCTOBER 31, 1999
                                       or
[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the transition period from _______ to _______

                         COMMISSION FILE NUMBER 333-4513

                               RENCO METALS, INC.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                 13-3724916
        (State or other jurisdiction                     (IRS Employer
             of incorporation or                      Identification No.)
                organization)

            238 NORTH 2200 WEST
            SALT LAKE CITY, UTAH                             84116
  (Address of principal executive offices)                 (Zip Code)

                                 (801) 532-2043
               Registrant's telephone number, including area code


Securities registered pursuant to Section 12(b) of the Act:      NONE

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

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

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

Number of shares outstanding of each of the registrant's classes of common
stock, as of January 27, 2000: COMMON STOCK, NO PAR VALUE: 1,000 SHARES.
Aggregate market value of the voting stock held by non-affiliates of the
registrant: $0; all shares of the voting stock of the registrant are owned by
its parent, The Renco Group, Inc.

Documents incorporated by reference:     NONE

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

<PAGE>   2

                                    FORM 10-K
                               RENCO METALS, INC.
                       FISCAL YEAR ENDED OCTOBER 31, 1999

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           PAGE
                                                                            NO.
                                                                           ----
<S>                                                                        <C>
PART I

    ITEM 1 -  Business                                                       3

    ITEM 2 -  Properties                                                     9

    ITEM 3 -  Legal Proceedings                                             10

    ITEM 4 -  Submission of Matters to a Vote of
              Security Holders                                              12

PART II

    ITEM 5 -  Market for  Registrant's  Common Equity and
              Related Stockholder Matters                                   13

    ITEM 6 -  Selected Financial Data                                       13

    ITEM 7 -  Management's Discussion and Analysis of
              Financial Condition and Results of Operations                 14


    ITEM 8 -  Financial Statements and Supplementary Data                   17

    ITEM 9 -  Changes in and Disagreements with
              Accountants on Accounting and Financial Disclosure            39


PART III

    ITEM 10 - Directors and Executive Officers of the
              Registrant                                                    39

    ITEM 11 - Executive Compensation                                        40

    ITEM 12 - Security Ownership of Certain Beneficial
              Owners and Management                                         42

    ITEM 13 - Certain Relationships and Related Transactions                42


PART IV

    ITEM 14 - Exhibits, Financial Statement Schedules,
              and Reports on Form 8-K                                       43

SIGNATURES                                                                  48
</TABLE>



                                      -2-
<PAGE>   3

                                     PART I



ITEM 1. BUSINESS.


    Renco Metals, Inc. ("Renco Metals" or the "Company") is a holding company
with two wholly-owned operating companies, Magnesium Corporation of America
("Magcorp") and Sabel Industries, Inc. ("Sabel"). Through Magcorp, the Company
is engaged in the production and sale of magnesium and magnesium alloys for
customers throughout the world. Sabel is a diversified company in the southeast
United States primarily involved in the steel service center, scrap metal and
rebar businesses. Magcorp and Sabel collectively are sometimes herein referred
to as the "Subsidiaries" or "Guarantors."

    All of the Company's issued and outstanding capital stock is owned by The
Renco Group, Inc. ("Group") which is owned by trusts established by Mr. Ira Leon
Rennert, the Chairman and Chief Executive Officer of the Company and Group, for
himself and members of his family. As a result of such ownership, Mr. Rennert
controls the Company and its Subsidiaries. Group acquired Magcorp in 1989 and
Sabel in 1987. Magcorp and Sabel became subsidiaries of Renco Metals upon its
establishment. The Company was incorporated in Delaware in 1993, and its
executive offices are located at c/o Magnesium Corporation of America, 238 North
2200 West, Salt Lake City, Utah 84116, (801) 532-2043.

    The Company classifies its operations into two operating segments: Magcorp's
operations comprise the magnesium production segment, and Sabel's operations
comprise the steel wholesaling and fabrication segment. Reference is hereby made
to Note 13 to the Financial Statements, "Segment Information," included in ITEM
8, Part II of this Form 10-K.

    Unless otherwise indicated, references to a year are to the Company's fiscal
year ended October 31. Neither Subsidiary's business is a) seasonal; b) requires
unusual working capital; c) involves significant sales order backlog; or d)
involves federal government contracting. Neither Subsidiary has foreign
operations, and substantially all export sales are attributable to Magcorp.
Reference is hereby made to Notes 2(i) and 14 to the Financial Statements,
"Research and Development Costs," and "Significant Customers and Export Sales,"
included in ITEM 8, Part II of this Form 10-K. Substantially all research costs
are attributable to Magcorp.

MAGCORP

  Overview

    Magcorp is the second largest producer of pure magnesium and magnesium
alloys outside the former Commonwealth of Independent States ("CIS") and
People's Republic of China ("PRC"). The terms "CIS," "PRC," and "western world,"
which hereinafter refers to areas of the world excluding the CIS and PRC, are
used by the magnesium industry's trade association, the International Magnesium
Association ("IMA"), to delineate shipments and production of magnesium.
Magcorp's Utah production facilities currently comprise approximately 18% of
western world production capacity, according to IMA information and Magcorp
management estimates. Magcorp participates in world magnesium markets that
represented estimated demand of 366,000 metric tons in calendar year 1999,
according to IMA information (based on nine-month statistical figures
annualized), a 1.5% increase over the prior year. Competitive conditions changed
significantly in 1999, most significantly with continued foreign import
competition and the resultant market price decline.

  Description of Products, Markets, and Competitive Conditions

    The magnesium industry has relatively few participants and is highly
competitive. Magcorp management estimates, from IMA and public information, that
four major producers, Magcorp, Norsk Hydro AS ("Norsk Hydro"), Northwest Alloys,
Inc. ("Northwest Alloys") and Dead Sea Magnesium, Ltd. ("Dead Sea Magnesium")
together account for 87% of available western world production capacity.
Magnesium imports from non-western world producers also continue to affect
competition and are more fully discussed under "--Recent Industry Developments"
below.




                                      -3-
<PAGE>   4

    Annualizing IMA nine-month statistical figures, calendar 1999 magnesium
shipments can be estimated. The seven primary western world magnesium producers
shipped an estimated 250,000 metric tons of magnesium in calendar year 1999. In
addition, an estimated 116,000 metric tons of magnesium produced in the CIS and
PRC were consumed in western world markets. The Company estimates that these
combined shipments generated revenues of approximately $1.0 billion, based on
1999 average market prices. Calendar year 1999 shipments by western and
non-western world producers represented a 3.8% decrease and 23.7% increase,
respectively, over prior year levels, demonstrating the increased presence of
non-western producers in the markets.

    Not all producers serve all end-user markets. Magcorp and Norsk Hydro market
magnesium products to all the key end-user markets, whereas Northwest Alloys
supplies an estimated 75% of its production capacity to its parent, Alcoa.
Historically, Northwest Alloys has participated primarily in the aluminum
alloying and desulfurization markets, but in 1999 has demonstrated some
involvement in the die casting market. Norsk Hydro's Canadian plant (one of
their two production facilities) has limited its participation in the U.S.
market mainly to the die casting market, which utilizes magnesium alloys, in
part due to the threat of high antidumping and countervailing duties on their
pure magnesium imports to the U.S. See "ITEM 3. Legal Proceedings--Pending Trade
Issues." Dead Sea Magnesium has publicized its commitment of one-third of their
output to Volkswagen, and Magcorp management estimates that Dead Sea Magnesium
currently produces a limited number of shapes and alloys.

    According to the IMA (based on nine month figures annualized), North
American markets account for the majority of western world consumption of
magnesium, 59% in calendar year 1999, whereas Western Europe and Asia account
for 26% and 12%, respectively. All other western world areas combined account
for the remaining 3%. North American consumption by end-use market is generally
indicative of western world consumption as a whole. The following table compiled
from IMA data presents magnesium consumption in North America, by customer
category, with the end uses of each category for the past five calendar years:

                       NORTH AMERICAN CONSUMPTION OF PRIMARY MAGNESIUM


<TABLE>
<CAPTION>
CUSTOMER CATEGORY            1999(*)   1998      1997      1996      1995                   END USES
-----------------            -------   ----      ----      ----      ----                   --------
                                      (in thousands of metric tons)
<S>                          <C>       <C>       <C>       <C>       <C>    <C>
Die Casting .............    88.1      70.9      68.6      50.6      42.7   Automotive, electronics and hand tools.

Aluminum Alloying .......    81.5      81.1      72.8      66.0      77.6   Beverage cans, truck panels, home siding, aircraft
                                                                            and marine alloys.

Desulfurization .........    18.9      32.4      31.1      26.4      22.2   Steel production from iron.

Electro-Chemical ........    10.0       6.9       5.4       6.1       6.8   Cast anodes for cathodic protection of underground
                                                                            steel pipelines.

Ductile Iron ............     4.5       5.8       6.5       6.5       6.5   Pipe production, automotive components and
                                                                            heavy-earth moving equipment.

Metal Reduction .........     2.1       3.6       3.8       3.4       2.6   Production of titanium, zirconium, beryllium and
                                                                            uranium. Uses include aerospace, chemical processing
                                                                            and nuclear products.

Others ..................     9.5      10.0       9.5       8.6       7.0   Sheet and plate and extrusion stock, gravity
                                                                            castings for aerospace applications, powder for
                                                                            flares, chemicals and exotic pharmaceuticals and
                                                                            perfumes.

    Total ...............   214.6     210.7     197.7     167.6     165.4
                            =====     =====     =====     =====     =====
</TABLE>

(*)     Based on 9 month IMA figures, annualized


    The key competitive issues in all end-use markets are pricing, long-term
supply agreements with customers, assurance of a reliable supply, flexibility of
deliveries, and shape, size and quality of product.

    As is evident in the North American consumption table above, consumption of
magnesium has grown approximately 30% from calendar year 1995 to 1999, or at an
average annual growth rate of 6% (although growth has not been uniform). This
growth is due to magnesium's inherent metallurgical properties including its
light weight, high strength-to-weight ratio, excellent corrosion resistance and
reactivity with certain elements. These metallurgical properties have helped die
casting to be the fastest growing segment of the domestic magnesium industry,
where automobile manufacturers are turning to more magnesium parts to help
lighten their vehicles. In calendar year 1999, combined consumption in all North
American end use markets increased 1.9% over prior year levels. Overall growth
in consumption in calendar 1999 was adversely affected by a sharp downturn in
the desulfurization market, brought about by the US steel industry's slump,
which is generally attributable to a surge in foreign steel import competition.
Excluding the desulfurization market, overall consumption grew 9.8% in 1999.




                                      -4-
<PAGE>   5

  Potential Magnesium Supply

    The magnesium manufacturing process is highly technical and proprietary to
each producer. Management estimates a cost of at least $500 million to establish
a facility with the same production capacity as Magcorp's facility. It is
reported that over $500 million has already been invested in the Dead Sea
Magnesium plant, located in Israel, which began commercial production in 1998,
and an additional investment of $100 million has been publicized as planned to
increase capacity above the current level of 25,000 metric tons per year.
Management estimates that North American producers, including Magcorp, operated
at an overall level of about 85% of capacity for the first nine months of
calendar year 1999.

    Numerous possible new magnesium plants have been publicized in 1999,
including plants in Canada, Australia, Tasmania, the Congo, Netherlands and
Iceland. Of these, the only plant currently under construction is Noranda,
Inc.'s 63,000 metric ton annual capacity Magnola Project in Asbestos City,
Quebec. The plant, which will use asbestos tailings as raw material feed stock,
is estimated to cost $720 million (Canadian) and startup is scheduled for
sometime in 2000. The Australian project in Queensland announced in 1997 is
reportedly in an early pilot plant stage. Pending the outcome of the operation
of the pilot plant, a 90,000 metric ton facility is being considered with
initial manufacturing intended to come on-line in the 2002 to 2004 time range.
Ford Motor Company ("Ford") has contributed financing for the Queensland pilot
plant and has a long-term contract option for metal purchases. Norsk Hydro has
not yet publicized any final approval of the 1997 announcement of their intent
to increase production capacity at their Canadian plant by 43,000 metric tons in
two phases. All other potential manufacturers have yet to complete feasibility
and/or pilot or technical studies and the likelihood of their future existence
is not known at this point.

  Recent Industry Developments

    Magnesium prices are sensitive to supply and demand conditions in all of the
end user markets served by the magnesium industry. Magnesium generally sells for
prices somewhat lower than the list price for pure magnesium, with price
dependent on market segment, chemistry, contract terms, including negotiated
discounts, and quality. No changes occurred in 1999 in North American list
prices, but increased imports adversely affected the supply-demand balance and
resulted in lower realized prices.

    Manufacturers in the PRC are significant exporters of magnesium. The Chinese
Magnesium Association has indicated total annual capacity in the PRC is 200,000
metric tons. Magcorp believes that exports from the PRC to the western world may
continue to increase; although there is also a belief that internal PRC
consumption of domestically produced magnesium may increase. Furthermore, recent
price trends for PRC magnesium may encourage the shutdown of some smaller,
higher cost facilities in the PRC, some of which have already reportedly shut
down due to low pricing. In 1999, limited amounts of PRC pure magnesium ingots
were imported into the U.S. due to the antidumping duties in place. See "ITEM 3.
Legal Proceedings--Pending Trade Issues." Duties also exist against imports of
PRC pure magnesium into Europe. Alloy magnesium from the PRC is not subject to
duties at the current time, and imports increased in 1999.

    PRC magnesium producers and magnesium grinders in other countries such as
Canada grind imported PRC magnesium ingots into chips and powders that are not
subject to the U.S. dumping duties. Imports of PRC magnesium powders are
estimated to be about 20,000 metric tons in calendar 1999, an increase of 37%
over the prior year, based on U.S. Department of Commerce ("DOC") statistics for
eleven months annualized. PRC magnesium powder imports had a strong negative
effect in 1999 on prices in the desulfurization market, where the powders are
primarily used.

    Production in the CIS is believed to be relatively unchanged in 1999.
However, 9% less CIS pure magnesium reached the U.S. in calendar year 1999 than
in calendar year 1998, while alloy imports, primarily from Russian and
Kazakhstan, increased by 110%. Calendar year 1999 imports of Russian pure and
alloy magnesium were about 11,900 and 5,100 metric tons, respectively, based on
DOC statistics for eleven months annualized. Some domestic users have entered
into long-term arrangements to obtain Russian imports, as evidenced by General
Motors and Ford entering into magnesium alloy supply agreements with Solikamsk
Magnesium Works, one of the major Russian producers. Magcorp is continuing its
efforts to maintain and increase the dumping duties against certain CIS and PRC
imports, as well as limit circumvention of the duties, but there can be no
assurance of success. See "ITEM 3. Legal Proceedings--Pending Trade Issues."




                                      -5-
<PAGE>   6

    As of September 30, 1999, the latest available date of IMA statistics,
western world magnesium producer inventories on hand were 44,100 metric tons, as
compared to 41,600 metric tons as of September 30, 1998. There is no public data
available on PRC and CIS magnesium inventories on hand at producers, traders or
consumers. Magnesium inventory levels, pricing and volume are dependent on the
overall market supply and demand, and there is no certainty that current trends
will not continue. Management expects continued strong growth in die casting,
and with a continued increase in aluminum can usage and higher usage of rolled
aluminum sheet in automobiles, it is likely that overall demand will continue to
grow. Management estimates that western world magnesium producers will continue
to operate at relatively high capacity utilization rates, but this is dependant
on the overall supply and demand balance in the coming years.

  Customers and Products

    Magcorp sells pure magnesium and magnesium alloys to domestic and
international customers in the key end-use markets, including the three largest
-- die casting, aluminum alloying, and desulfurization. Magcorp offers over 30
different sizes, shapes and weights of primary magnesium and magnesium alloy
products in a range of purity levels to meet customer specifications. Magcorp's
staff of three direct salespersons and four field representatives who receive
technical assistance from plant personnel handles all established and
prospective new domestic accounts. Accounts in Europe, Japan and Australia are
handled through agency arrangements.

    Approximately 90% of Magcorp's annual sales volume is sold pursuant to
contracts with select customers. During 1999, 1998 and 1997, sales to any single
customer did not exceed 10% of total consolidated revenues. Reference is hereby
made to Note 14 to the Financial Statements, "Significant Customers and Export
Sales," included in ITEM 8, Part II of this Form 10-K.

  Raw Materials

    Magcorp's source of raw material for magnesium production is brine from the
Great Salt Lake. The Great Salt Lake brine is concentrated through solar
evaporation and selective precipitation of undesirable salts until a high grade
magnesium chloride brine is produced for plant feedstock. The magnesium chloride
brine is further purified, spray dried to powder using gas turbines, and melted
to produce feed for electrolytic cells, which use direct electrical current to
separate the magnesium metal and chlorine. The magnesium metal from the
electrolytic cells is then refined and cast into the wide variety of pure
magnesium and magnesium alloy products produced by Magcorp.

    Magcorp's natural gas requirements are purchased from gas producers or
marketers, transported by a gas transportation company and delivered to the
Rowley facility by a local gas distribution company. Management has negotiated
favorable gas pricing due to the volume of Magcorp's requirements.

    Magcorp purchases its electrical requirements from a local utility pursuant
to a contract in effect until January 1, 2002. As is the case with other
industrial facilities, the terms of the contract grant the utility the right to
interrupt electrical power to Magcorp under certain limited circumstances and
with reasonable notice while providing Magcorp with advantageous electricity
rates. Additionally, Magcorp is able to produce on average 25% of its electrical
power needs through the gas turbines located at the Rowley facility.

    A variety of chloride-based by-products that are produced during the
production of magnesium metal are sold into commercial markets or are
neutralized and disposed of in compliance with environmental regulations.
Magcorp has a 50 percent investment in KemMag LLC, ("KemMag"), a joint venture
affiliate that sells ferrous chloride and ferric chloride to the waste water
treatment industry. Aggregate sales of all by-products accounted for 2% or less
of consolidated revenues in 1999, 1998 and 1997.

    Other raw materials critical to plant operations include graphite anodes,
special refractory brick, and sulfuric acid. Magcorp maintains alternative
sources of these raw materials to ensure a secure supply at competitive prices.

  Employees

    As of October 31, 1999, Magcorp had 503 employees, 152 of whom were salaried
and 351 of whom were hourly workers. Approximately 84% of the hourly employees
are represented by the United Steelworkers of America and employed under a
four-year collective bargaining contract that expires August 31, 2001 and
automatically renews for additional one-year periods (unless written notice of
termination by either party is given). Magcorp believes that its relations with
employees are satisfactory.




                                      -6-
<PAGE>   7

  Environmental Matters

    Title III of the Clean Air Act will establish, on a published schedule, new
national emission standards for hazardous air pollutants (NESHAPS). NESHAPS are
to be based on maximum achievable control technology as determined by a
comparison of installations at similar facilities in specific industry
categories. Representatives from the United States Environmental Protection
Agency (EPA) have visited Magcorp's facility in preparation for the process of
establishing NESHAPS for chlorine and hydrogen chloride emissions. It is
expected that Magcorp will be required to make substantial reductions in
chlorine emissions to meet NESHAPS for primary magnesium refineries that will be
promulgated by November 2000, with an expected three to five year timetable for
compliance following promulgation of the new standards.

    In anticipation of the new standards, Magcorp has embarked on a program to
install new electrolytic cell technology that will reduce chlorine emissions at
the source. The new cells are also expected to significantly reduce costs
because they have much higher throughput and are more energy efficient. Cell
conversion is expected to commence in late summer of 2000 and take place over
approximately two years. With respect to hydrogen chloride, Magcorp has recently
installed and is successfully operating scrubbers to reduce pertinent emissions.
Magcorp does not expect that it will be required to spend significant additional
amounts to meet the new standards for hydrogen chloride. Magcorp plans to spend
an estimated $30 to $35 million of its capital expenditure budget for 2000 and
2001, directly or indirectly, to meet environmental regulatory requirements,
primarily for NESHAPS, and for other anticipated future requirements. Prototype
cell-related project development expenses to date total $6.5 million. There can
be no assurance that Magcorp's cell conversion program will be successful, and
to the extent it is not successful, it could have a material adverse effect on
the Company's financial condition and results of operations.

    Representatives of the Utah State Department of Environmental Quality (UDEQ)
Division of Solid and Hazardous Waste visited Magcorp in 1994 regarding the
issue of whether piles of material generated in the electrolytic process, which
cover an extensive land area at Magcorp's Rowley facility, can be classified as
a hazardous or solid waste, and if so classified, what measures might be
required to investigate and address these piles. No similar material has been
classified by the State as hazardous or solid waste. The State accepted
Magcorp's written storage plan, which does not consider the piles hazardous and
under which no remediation or action by the Company is necessary. If the piles
were at some point in the future to be classified as hazardous waste, thereby
becoming subject to State regulation, corrective action could be required. The
costs of such compliance, if any, could be material; however, such costs cannot
be assessed at this time.

    Sampling conducted by Magcorp and by UDEQ in 1998 indicated a low but
measurable accumulation of chlorinated hydrocarbons in the form of dioxin/furan
compounds in soil and sediment samples from a contained and permitted process
wastewater collection and retention system used at the Magcorp plant site for
over 25 years. While Magcorp does not consider, and believes that UDEQ does not
consider, a health hazard to be associated with these preliminary sampling
results, Magcorp conducted additional sampling to determine the extent of
accumulations of these compounds. Sampling results confirmed the accumulation of
small amounts of dioxin/furan compounds in soil and sediment from the process
wastewater collection and retention system, and that facility perimeter areas
contained only background levels of the compounds. Management does not expect
magnesium refineries to become subject to new regulations regarding these
compounds in the near future. If these compounds do become subject to government
regulation, the costs of such compliance, if any, could have a material adverse
effect on the Company's financial condition and results of operations; however,
such costs cannot be assessed at this time.

    Industrial companies such as Magcorp and Sabel have in recent years become
subject to changing and increasingly demanding environmental standards imposed
by governmental laws and regulations. The Company cannot currently assess the
impact of more stringent standards on its results of operations or financial
condition.

SABEL


  Overview

Sabel, founded in 1869, is a diversified company primarily involved in the steel
service center, scrap metal and rebar fabrication businesses. Sabel's steel
service center facilities distribute and process new carbon steel for large




                                      -7-
<PAGE>   8

and small industrial accounts, as well as for the general public. Sabel's scrap
metal operations process to customer specifications and sell and transport
ferrous and non-ferrous scrap metal to mini- and integrated steel mills,
foundries and other related metal companies. Sabel's rebar fabrication operation
customizes rebar to shapes and sizes required for use in building and highway
construction. Additionally, Sabel operates a full-service wholesale center that
sells a variety of tools and plumbing, sprinkler, building and general supplies.

  Description of Products and Markets Served

    Steel Service Center. Sabel's steel service center division ("SSC") includes
five facilities located in Montgomery, Dothan, Mobile and Tuscaloosa, Alabama
and Newnan, Georgia. This geographic coverage allows Sabel to cost-effectively
service most of Alabama, the Gulf Coast, the panhandle of Florida, Southern
Mississippi, West Georgia and the Atlanta metropolitan area. In 1999, SSC
accounted for 76% of Sabel's revenues.

    SSC specializes in stocking, reprocessing and delivering hot rolled and cold
rolled carbon steel in a variety of sizes and shapes. Purchases of new steel for
reprocessing are spread across approximately 15 steel mills including both
integrated mills and mini-mills, thereby ensuring favorable prices and
availability of product. SSC processes more than 60% of the steel it sells. SSC
has an extensive list of approximately 3,000 customers ranging from large
industrial companies to small welding shops. As a result, no single customer
represents in excess of 5% of the division's total sales.

    The sales and marketing team at SSC consists of 16 direct salespeople and
six sales representatives covering the Southeast region. All orders are entered
and recorded through SSC's computerized system that facilitates order processing
and delivery. Sabel continually works to improve the efficiency of this system
to provide greater accuracy and speed in order entry.

    Scrap Metal. Management believes Sabel's 130 years of experience in the
scrap metal business has fostered a strong reputation for quality and service.
The scrap metal division of Sabel is a full-service scrap metal dealer with two
large scrap yards located in Montgomery. Scrap metal in those yards is collected
from approximately 250 suppliers, primarily industrial suppliers along with
dealers and individual consumers. The scrap metal division sells to
approximately 45 customers, including mini- and integrated steel mills,
foundries and specialized manufacturing entities. As a freight-sensitive
business, a majority of Sabel's scrap is sold to customers within its geographic
area. In 1999, the scrap metal division accounted for 12% of Sabel's revenues.

    All scrap processed in the scrap metal division is inspected prior to
shipment to ensure quality and compliance with customer specifications. As a
result, management believes Sabel enjoys a high quality reputation and has an
acceptance rate in excess of 99% for all scrap sold to customers.

    Rebar Fabrication Division. Sabel's rebar fabrication division ("RFD"), also
located in Montgomery, purchases stock 60 foot bars from various rebar
manufacturers and customizes the length, shape and bend according to
construction blueprint plans. Structural bars and wire are widely used in the
construction of buildings and highways. In 1999, RFD contributed 9% of Sabel's
revenues.

    Since its formation, RFD has focused on construction projects from dams to
driveways in its markets. Sabel's management believes RFD has established a
strong track record for accuracy of shape and size and for prompt delivery due
to the efficient design of the RFD facility. Orders for RFD's products are
affected by the levels of activity in the construction and building sectors, as
well as the conditions in the overall economy.

    Other Operations. Sabel also operates a wholesale center that sells a
variety of tools and plumbing, sprinkler, building and general supplies. The
wholesale center represented 3% of Sabel's 1999 revenues.

  Competition

    Each of the principal fields in which Sabel is engaged -- steel service
centers, scrap metal and rebar fabrication -- is highly competitive. In each
business field, Sabel competes with between five and eight other concerns, some
of which are much larger. Sabel believes that no other company in its trading
area offers the same range of services. In 1999 Sabel was unfavorably impacted
by falling steel industry prices generally attributable to a surge in foreign
steel import competition.




                                      -8-
<PAGE>   9

  Employees

    As of October 31, 1999, Sabel had 241 employees, 77 of whom were salaried
and 164 of whom were hourly workers. Of the hourly employees, 55 are represented
by the United Steelworkers of America. The current three year bargaining
contract expires June 30, 2000. Sabel believes that its relations with employees
are satisfactory.

  Environmental Matters

    The most significant long-term environmental issue at Sabel's facilities
concerns compliance with storm water regulations under the Clean Water Act that
became effective in 1991. Sabel is actively pursuing a program of compliance.
Costs of compliance to date have not been material, and it is expected that
costs associated with this program in the future will not have a material
adverse effect on the Company's financial position or on results of operations.
Environmental laws and regulations have changed rapidly in recent years, and
Sabel may be subject to more stringent environmental laws and regulations in the
future. Management cannot currently assess the impact of more stringent
standards on the Company's results of operations or financial condition.

ITEM 2.  PROPERTIES.


  Magcorp

    Magcorp's main facilities include its headquarters located in Salt Lake
City, Utah and its production plant located in Rowley, Utah, approximately 60
miles outside Salt Lake City. Magcorp's senior management, sales and marketing
and administrative functions are based at the Salt Lake City headquarters. All
production takes place at the Rowley facility. Inventory is stored at the Rowley
facility and at a third party leased warehouse space in Utah, as well as
locations throughout the world.

    Magcorp's production facilities are located on 4,525 acres of land
immediately adjacent to the Great Salt Lake, which is the long-term raw material
source. The brine from the Great Salt Lake is concentrated through one or both
of two solar pond concentrating systems, the Stansbury Basin Pond System and the
Knolls Pond System, to provide the final high grade brine feedstock for the
magnesium plant. The Stansbury System is located about 15 miles and the Knolls
System about 45 miles from the plant site. Both pond systems are capable of
providing high-grade brine feedstock to the plant to facilitate nameplate plant
production rates under normal operating conditions.

    Magcorp's production facility in Rowley, Utah was constructed in 1972, and
has a current capacity rating of nearly 43,000 metric tons per year. The
Company's operating permit with the State of Utah Department of Environmental
Quality allows annual production of up to 43,545 metric tons.

    Magcorp owns the buildings and land comprising its Salt Lake City
administrative offices and Rowley production facilities. The Knolls Pond System
is located on land leased from the State of Utah for a term expiring on December
31, 2016 and on Federal land under a right-of-way from the Bureau of Land
Management of the Department of Interior which expires in 2023. The Stansbury
Pond System is located primarily on land leased from the State of Utah for a
term expiring on March 8, 2010. Magcorp also holds other easements,
rights-of-way and water rights primarily from the Bureau of Land Management and
the State of Utah. Magcorp pays royalties to the State of Utah based on its
production of magnesium from Great Salt Lake brine. The Rowley facility is
readily accessible by truck and rail.

  Sabel

    Sabel's operations are carried out in nine facilities covering approximately
343,000 square feet across the Southeast region which include five steel service
centers, two scrap metal yards, a rebar fabricating plant and a wholesale
equipment supply center. Most of Sabel's facilities are leased from entities
controlled by the Sabel family, from which Group acquired Sabel in 1987. The
steel service centers are equipped to process steel from stock for their
customers' needs and the rebar fabricating plant is equipped to fabricate bars
to customer specifications.




                                      -9-
<PAGE>   10

ITEM 3.  LEGAL PROCEEDINGS.


  Pending Trade Issues

    Magnesium Imports from the Russian Federation, Ukraine and PRC

    In 1994, Magcorp filed an antidumping petition with the Department of
Commerce ("DOC") and the U.S. International Trade Commission ("ITC") for
imposition of antidumping duties against imports of magnesium from the Russian
Federation, Ukraine and the PRC. In its petition, Magcorp alleged that imports
of pure and alloy magnesium from producers in these countries were being sold in
the United States at less than fair value and had injured the U.S. magnesium
industry with resultant negative financial results, loss of markets, and layoffs
of workers at U.S. magnesium producers. The antidumping duties sought in the
petition generally exceeded 100%, reflecting the level of dumping and impact on
domestic producers.

    In March 1995, the DOC determined that pure magnesium imports from all three
countries were dumped in the United States, but also determined that certain
Russian producers and traders were not dumping Russian magnesium products. In
May 1995, the ITC announced its affirmative determinations that imports of pure
magnesium from those three countries were a cause of injury to the domestic
magnesium industry. The DOC and ITC decisions, taken together, resulted in the
imposition of antidumping duties against imports of pure magnesium from each of
the three countries at the following rates:

<TABLE>
<CAPTION>
                                                            PURE
<S>                                                        <C>
                    Russian Federation ............         0-100%
                    Ukraine .......................        80-104%
                    PRC ...........................           108%
</TABLE>

    No antidumping duties were imposed against magnesium alloys. These rates are
subject to revision in administrative reviews, which can be requested annually.
Such reviews could have been requested in May 1996, 1997, 1998 and 1999, but
none wer e. The next review request can be made in May 2000.

    In June 1995, one of the traders of Ukrainian magnesium appealed to the U.S.
Court of International Trade ("CIT") the ITC's determination that imports of
pure magnesium from Ukraine were a cause of injury to domestic magnesium
producers. In August 1996, the CIT affirmed the ITC's determination. The
Ukrainian trader appealed the CIT's decision to the U.S. Court of Appeals for
the Federal Circuit ("CAFC"). In December 1997, the CAFC decided that the CIT
applied an improper legal test and failed to consider certain evidence properly,
vacated the CIT's decision and remanded the case to the CIT for further
proceedings consistent with the CAFC decision. In April 1998, the CIT remanded
the case to the ITC for reconsideration of its determination in light of the
CAFC decision. In June 1998, the ITC issued a remand determination in which it
decided that the domestic industry was not injured by reason of the imports of
pure magnesium from Ukraine, and in October 1998, the CIT affirmed that remand
determination. In December 1998, Magcorp appealed the decision of the CIT to the
CAFC. Magcorp did not prevail in its appeal to the CAFC, and the 80-104%
antidumping duties on imports of Ukrainian pure magnesium have been lifted.

    In June 1995, Magcorp appealed to the CIT the DOC's determination that
certain producers and traders of Russian magnesium had not sold at less than
fair value. In December 1996, the CIT affirmed the DOC's determination, with a
required recalculation of the selling, general and administrative expenses.
Magcorp appealed the CIT's decision to the CAFC. In January 1999, the CAFC
affirmed the decision of the CIT. As a result, certain producers and traders of
Russian magnesium will continue to be excluded from the scope of the antidumping
order on pure magnesium from the Russian Federation.

    In November 1996, a PRC exporter requested a review of its U.S. export sales
of pure magnesium on the basis that it is a new shipper of magnesium from the
PRC. In January 1998, the DOC determined that the new shipper qualified for an
antidumping duty rate of 69.53%. In February 1998 the PRC exporter appealed the
DOC's determination to the CIT. In October 1999 the CIT denied the PRC
exporter's appeal, leaving the DOC's determination intact. In December 1999, the
PRC exporter notified the CIT that it wished to appeal the decision to the CAFC.
Magcorp will appear in this appeal as a Defendant-Intervener in support of the
DOC.




                                      -10-
<PAGE>   11

    Magnesium Imports from Canada

    In 1991, Magcorp filed a petition with the DOC and the ITC for imposition of
countervailing and antidumping duties against Canadian and Norwegian magnesium
producers. No duties were imposed on Norwegian imports. By November, 1993, final
duty rates on magnesium imported into the United States from Canada (except
magnesium from Timminco) were established by the DOC after appeals to panels
established by the U.S.-Canada Free Trade Agreement as follows:


<TABLE>
<S>                                                                         <C>
    Countervailing duties on pure and alloy magnesium imports ............   7.6%
    Antidumping duties on pure magnesium imports .........................  21.0%
</TABLE>

    Administrative reviews were initiated by the DOC regarding both the
antidumping order and the countervailing duty ("CVD") orders. With respect to
both the first and second antidumping review periods, which covered the period
from February 20, 1992 through July 31, 1994, the DOC made final determinations
that there had been no sales of pure magnesium by Norsk Hydro Canada Inc.
("NHCI" or "the Canadian producer") to the United States and, thus, no
antidumping duty was collectable. With respect to the third through sixth review
periods from August 1, 1994 through July 31, 1998, the DOC made a final
determination that NHCI sales to the United States were made at prices that were
not below fair value and, therefore, no antidumping duty was assessed on these
imports and the antidumping duty deposit rate for imports from NHCI in the
subsequent period was set at 0%. The seventh review, covering the August 1, 1998
through July 31, 1999 period, has been initiated.

    A respondent is permitted to request the revocation of an antidumping order
after three years of findings by the DOC of no sales at less than fair value so
long as the sales during each of those three years were made in commercial
quantities. In connection with the fifth administrative review, NHCI requested
that the antidumping order be revoked. Although the DOC found that NHCI sales to
the United States were made at prices that were not below fair value during the
third, fourth, and fifth review periods, the DOC determined that NHCI had not
made sales in "commercial quantities" during any of these review periods, and,
therefore, NHCI was not eligible for revocation. In the sixth review, the DOC
again determined that the order would not be revoked because NHCI's sales in the
fourth and fifth review periods were not in commercial quantities. The DOC did
not make a determination as to whether sales during the sixth period of review
had been made in commercial quantities. NHCI has appealed the DOC determination
in the sixth review to the CIT. Magcorp has entered an appearance at the Court
in support of the DOC's determination not to revoke the order in the sixth
review.

    The DOC and the ITC have initiated five-year "sunset reviews" of both the
antidumping order on pure magnesium from Canada and the countervailing duty
orders on pure magnesium and alloy magnesium from Canada. In a sunset review,
the DOC determines the level of dumping or subsidization that would be likely to
occur absent the orders, and the ITC determines whether revocation of the orders
would be likely to result in the continuation or recurrence of material injury
to the domestic industry. The ITC has voted to conduct a full review in the
sunset review investigations. The DOC has postponed its preliminary
determination in its aspects of the sunset reviews. An elimination of the
antidumping and countervailing duty orders as a result of adverse determinations
by the DOC or ITC could have a material adverse impact on magnesium prices,
depending upon market conditions.

    The DOC has finalized administrative reviews of the CVD orders on imports of
pure and alloy magnesium from Canada for the first six review periods, as listed
in the table below. The DOC has initiated the seventh CVD administrative review,
which covers calendar 1998, and has scheduled the release of the final
determination for that review for September 2000.

<TABLE>
<CAPTION>
                Description                 Period                Rate
                -----------                 ------                ----
<S>                                     <C>                     <C>
          Original Determination        Calendar 1991              7.61%
          1st Review                    12/6/91-12/31/92           9.86%
          2nd Review                    Calendar 1993              7.34%
          3rd Review                    Calendar 1994              4.48%
          4th Review                    Calendar 1995              3.18%
          5th Review                    Calendar 1996              2.78%
          6th Review                    Calendar 1997              2.02%
          7th Review                    Calendar 1998           Initiated
</TABLE>




                                      -11-
<PAGE>   12

  Other Legal Proceedings

    In April 1998, the United States filed a complaint against Magcorp in the
U.S. District Court for the District of Utah, alleging both statutory and common
law claims. The United States alleges that Magcorp, in operating its Knolls Pond
System, has taken magnesium out of mineral-laden ground water belonging to the
United States without a mineral lease or payment of royalties. The United States
makes these allegations even though prior to initiating its operations, Magcorp
asked for, and received, assurance that the minerals were owned by the State of
Utah. In a November 1998 disclosure statement requiring disclosure of
computation of damages, filed in accordance with Federal Rule of Civil Procedure
26(1)(C), the United States claims that it has been damaged in the amount of $90
million. Management strongly believes this claim is based on the erroneous
assumption that the magnesium produced from Knolls Pond brine came from
groundwater belonging to the United States. The United States also claims that
it is entitled to treble damages. Magcorp strongly disputes the United States'
claims, and believes that the source of the minerals processed in the Knolls
Pond System is the water pumped from the Great Salt Lake to the West Desert by
the State of Utah - not groundwater - and that the Company properly purchased
those minerals pursuant to an agreement with the State of Utah. In 1999 the
United States added the State of Utah as a defendant and asserted that the
minerals being harvested belong to the United States. The State of Utah filed
its answer to the United States' allegations, and also denies the minerals being
harvested belong to the United States. The United States has to date not
produced any evidence to support its claims or its alleged damages. Magcorp
believes that the United States' claims and its computation of damages are
without merit and is vigorously defending against them. Magcorp believes it
should prevail on its defenses to the United States' claims, and accordingly,
believes that the ultimate outcome of this uncertainty will not result in a
future loss that would be material to the Company's financial condition, results
of operations or liquidity. If the United States were to prevail, it could have
a material adverse effect on the financial condition or results of the Company,
the extent of which are not estimable at this time.

    With the exception of the trade cases and claim discussed above, neither the
Company nor its Subsidiaries is a party to any material legal proceeding other
than ordinary routine litigation incidental to its business.

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


    No matters were submitted during the fourth quarter of fiscal year 1999 to a
vote of security holders. On January 5, 2000, Group, as sole shareholder of the
Company, executed a written consent, in lieu of meeting of shareholders,
re-electing Mr. Rennert as Chairman of the Board and sole director of the
Company.




                                      -12-
<PAGE>   13

                                     PART II

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


    All of the Company's issued and outstanding common equity, 1,000 shares of
common stock, no par value, are owned by a single stockholder, Group. There is
no established public trading market for these shares.

    The Company paid to Group dividends totaling $7.2 million in 1998 and $6.6
million in 1997. No dividends were paid in 1999. The payment of and amounts of
dividends are restricted by the Company's long-term debt agreements, which
generally allow dividends of up to 50% of consolidated net income. Based on
profitability and after taking into account the Company's prospects and
liquidity needs, the Company plans to pay quarterly dividends to the extent
allowed by the Company's long-term debt agreements. As of October 31, 1999, $2.7
million was available for dividends under the terms of the Company's long-term
debt agreements.

ITEM 6. SELECTED FINANCIAL DATA.


    The following table sets forth selected financial and operating data
relating to the consolidated results of the Company as of and for each of the
years in the five-year period ended October 31, 1999. Such selected information
is qualified by and should be read in conjunction with the detailed information
and consolidated financial statements and the notes thereto appearing elsewhere
herein.




<TABLE>
<CAPTION>
                                                                               Year ended October 31,
                                                      -------------------------------------------------------------------
                                                        1999           1998          1997          1996           1995
                                                      ---------      ---------     ---------     ---------      ---------
STATEMENT OF OPERATIONS DATA:                                                   (in thousands)
<S>                                                   <C>            <C>           <C>           <C>            <C>
    Net sales                                         $ 179,613      $ 189,699     $ 191,614     $ 196,974      $ 185,806
    Cost of sales                                       127,694        125,823       129,093       116,808        121,189
    Depreciation, depletion, and amortization             9,131          8,289         7,451         6,509          5,770
    Selling, general, and administrative expenses        21,774         23,131        20,848        22,704         18,470
    Operating income                                     21,014         32,456        34,222        50,953         40,377
    Interest income                                         576          1,163         1,142         1,353            881
    Interest expense                                     18,618         18,871        18,697        13,045         10,138
    Income tax expense (benefit)                         (1,963)         4,342         4,963        13,534         11,143
    Income from continuing operations                     5,318         10,455        11,768        25,727         19,977
    Extraordinary item                                        -              -             -        (7,284)             -
    Net income                                            5,318         10,455        11,768        18,443         19,977
</TABLE>

<TABLE>
<CAPTION>
                                                                         October 31,
                                            ---------------------------------------------------------------------
                                              1999           1998           1997           1996          1995
                                            ---------      ---------      ---------      ---------      ---------
BALANCE SHEET DATA:                                                     (in thousands)
<S>                                         <C>            <C>            <C>            <C>            <C>
    Working capital                         $  59,221      $  63,174      $  54,079      $  47,677      $  58,880
    Property, plant, and equipment, net        41,862         35,385         37,715         36,613         32,014
    Total assets                              126,091        126,649        126,387        118,658        116,551
    Total debt                                153,229        154,977        155,183        154,150         78,012
    Stockholder's equity (deficit)            (60,193)       (65,611)       (68,866)       (74,034)         4,760
</TABLE>




                                      -13-
<PAGE>   14

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


    The Company is a holding company incorporated on July 19, 1993 that has two
wholly-owned operating companies, Magcorp and Sabel. Through Magcorp, the
Company is engaged in the production and sale of magnesium and magnesium alloys
for customers throughout the world. Group acquired Magcorp in August 1989. Sabel
is a diversified company in the Southeast United States primarily involved in
the steel service center, scrap metal and rebar businesses. Sabel was acquired
by Group in July 1987.

    The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the notes thereto and other financial
information included elsewhere herein. Unless otherwise indicated, references to
a year are to the Company's fiscal year ended October 31.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 Year ended October 31,
                                                    -------------------------------------------------
                                                         1999                1998                1997
                                                    ---------           ---------           ---------
                                                                      (in thousands)
<S>                                                 <C>                 <C>                 <C>
Sales by operating segment:
      Magcorp                                       $ 134,728           $ 141,333           $ 147,113
      Sabel                                            44,885              48,366              44,501
                                                    ---------           ---------           ---------
          Total sales                                 179,613             189,699             191,614
Cost of sales                                         127,694             125,823             129,093
Depreciation, depletion, and amortization               9,131               8,289               7,451
Selling, general, and administrative expenses          21,774              23,131              20,848
                                                    ---------           ---------           ---------
          Total operating income                       21,014              32,456              34,222
Interest income                                           576               1,163               1,142
Interest expense                                      (18,618)            (18,871)            (18,697)
Equity in earnings of affiliate                           383                  49                  64
                                                    ---------           ---------           ---------
Earnings before income taxes                            3,355              14,797              16,731
Income tax expense (benefit)                           (1,963)              4,342               4,963
                                                    ---------           ---------           ---------
Net income                                          $   5,318           $  10,455           $  11,768
                                                    =========           =========           =========
</TABLE>

1999 COMPARED TO 1998

    Sales for 1999 decreased 5.3% over 1998. The decrease was attributable to a
4.7% decrease in Magcorp's revenues and a 7.2% decrease in Sabel's revenues.
Magcorp's average selling price for magnesium decreased 5.0% while magnesium
shipments remained constant. Import competition from foreign producers continues
to put pressure on magnesium pricing and volumes, particularly in the steel
desulfurization segment of the magnesium business. Magnesium pricing and volume
are dependent on overall market supply and demand, and there is no certainty
that current trends will not continue. Sabel's sales decrease was due to overall
price and volume decreases affecting the U.S. steel industry.

    Cost of sales for 1999 increased 1.5% on a consolidated basis. Magcorp's
cost of sales increased 6.6% due in large part to increased processing costs
associated with increased volumes of recycled magnesium when compared to the
corresponding period in 1998. Magcorp continues to increase its participation in
die cast markets, which also requires handling and recycling of die cast
customer scrap, increasing costs and decreasing margins. The 12.5% cost of sales
decrease at Sabel is attributable to the volume and price decreases mentioned
above.

    Depreciation, depletion and amortization for 1999 increased 10.2% from 1998
primarily due to increased depreciation of property, plant and equipment as a
result of recent capital equipment additions.



                                      -14-
<PAGE>   15

    Selling, general and administrative expenses for 1999 decreased 5.9%
primarily due to decreased computer consulting costs, development costs, legal
costs, and profit-based compensation accruals when compared to the corresponding
period in 1998.

    Interest income decreased $587,000 due to cash and cash equivalent balances
on hand that decreased to a month-end average of $14.8 million in 1999 from a
month-end average of $25.7 million in 1998.

    Interest expense for 1999 decreased $253,000 due to lower long-term debt
levels than in the corresponding prior period.

    Equity in earnings of affiliate reflects undistributed equity in earnings of
Magcorp's investment in KemMag, a joint venture more fully described in Note 6
to the consolidated financial statements in ITEM 8.

    Income taxes reflects the Company's change in taxable status effective
November 1, 1998 described in Note 2(g) to the consolidated financial statements
in ITEM 8. Accordingly, the Company recognized an income tax benefit of $2.0
million that includes the elimination of net deferred tax liabilities recorded
as of October 31, 1998.



1998 COMPARED TO 1997

    Sales for 1998 decreased 1.0% over 1997. The decrease was attributable to a
3.9% decrease in Magcorp's revenues, which was offset by an 8.7% increase in
Sabel's revenues. Magcorp's average selling price for magnesium decreased 1.8%
and magnesium shipments decreased 3.5%. Foreign import competition put pressure
on magnesium volumes and pricing in 1998, particularly in the steel
desulfurization segment of the magnesium business. Magnesium pricing and volume
are dependent on overall market supply and demand, and there is no certainty
that current trends will not continue. Sabel's sales increase was primarily due
to the opening of a new steel service center in Newnan, Georgia in November
1997, offset by decreases in steel industry pricing in general. Sabel sales
volume and prices were adversely affected by imports during the final quarter.

    Cost of sales for 1998 decreased 2.5% from 1997 on a consolidated basis.
Magcorp's cost of sales decreased 6.2% due primarily to decreases in acquired
energy costs when compared to the corresponding period in 1997. Unit costs of
electricity decreased 32% over 1997 levels, reflects an amended utility contract
that became effective January 1998. Magcorp's cost of sales is highly sensitive
to acquired energy costs and levels of production. The cost of sales at Sabel
increased 9.4%, which is primarily due to the opening of a new steel service
center in Newnan, Georgia in November 1997.

    Depreciation, depletion and amortization for 1998 increased 11.2% from 1997
primarily due to increased depreciation of property, plant and equipment as a
result of recent capital equipment additions.

    Selling, general and administrative expenses for 1998 increased 11.0% from
1997 due to in large part to increased costs associated with the new steel
service center at Sabel and increased development costs and computer software
consulting costs at Magcorp. Development costs increased 14.8% in 1998 due to
magnesium process enhancement piloting at Magcorp.

    Interest income for 1998 increased $21,000 from 1997 due to cash and cash
equivalent balances on hand that increased to a month-end average of $25.7
million in the current period from a month-end average of $23.5 million in the
corresponding prior period.

    Interest expense for 1998 increased $174,000 due primarily to higher
revolving credit borrowings at Sabel in 1998. This increase was offset by a
decrease in interest expense attributable to the redemption on July 15, 1998 of
the remaining $1.5 million of 12% Senior Notes due 2000.

    Income taxes are estimated at statutory rates, including estimates of
available credits, for both years presented.

LIQUIDITY AND CAPITAL RESOURCES


    The Company's liquidity needs arise from working capital requirements,
capital investments and interest payment obligations. The Company's primary
source of liquidity has historically been cash provided by operating activities.
The Company also has available $40.0 million in revolving credit facilities that
provide for advances by the lender based on specified percentages of eligible
accounts receivable and inventories to a maximum of



                                      -15-
<PAGE>   16

$33.0 million for Magcorp and $7.0 million for Sabel, net of outstanding letters
of credit. As of October 31, 1999, the unused amounts available to Magcorp and
Sabel were approximately $29.7 million and $4.2 million, respectively. During
the year ended October 31, 1999, Sabel repaid a net amount of $1.7 million under
its revolving credit facility. With planned capital expenditures and declining
margins, both discussed below, Magcorp anticipates it will utilize its revolving
credit facility beginning in 2000.

    Cash provided by operating activities was $4.1 million for the year ended
October 31, 1999 compared to $8.6 million provided by operations for the
corresponding prior period. The $4.5 million decrease in cash provided by
operations resulted primarily from decreased operating income. Magcorp is
increasing inventory levels to accommodate decreases in production that are
planned to take place during the period of conversion to new electrolytic cell
technology discussed below. The increase in inventories is also due to increased
volumes on hand of recycled die cast magnesium to be processed by third parties
or already processed by third parties. The reduced operating income is
attributable to lower sales volume and pricing from increased import competition
in both the magnesium and steel operations and by lower margins on increased
sales of die cast market products. Pricing and volume are dependent on the
overall market supply and demand, and there is no assurance that current trends
will not continue.

    Capital expenditures were $15.7 million for the year ended October 31, 1999,
of which approximately $7.3 million is related to the new magnesium direct-chill
caster. The new caster was put into service in September 1999 and is expected to
improve product quality, reduce labor requirements and permit Magcorp to produce
certain customer-specified sizes, shapes and weights of magnesium ingots at
lower cost.

    Capital expenditures are budgeted at approximately $23 million for 2000, $13
million for 2001, and $3 million for 2002. Of these projected capital
expenditure amounts, an estimated total of $31 million is related to new
electrolytic cell technology that is expected to improve manufacturing
efficiencies and ensure compliance with future environmental standards. Original
plans for complete plant conversion have been scaled back to allow some
flexibility due to reduced cash flow from operations caused by worsened market
conditions. Prototype work is essentially complete on the new electrolytic
cells, and certain long acquisition lead-time components have been designed
and/or ordered. Conversion of the cells is expected to commence in late summer
of 2000 and take place over a period of approximately two years. Associated cost
reductions and related manufacturing efficiencies will occur gradually as
conversion progresses, but will not be fully realized in the Company's operating
results until 2002.

    Management anticipates that existing cash balances and cash generated from
operations and availability under its revolving credit facilities will be
sufficient to finance the Company's liquidity needs for the foreseeable future.
However, if magnesium market conditions further deteriorate, in order to fund
its planned capital expenditures through 2001, the Company may need to consider
additional sources of liquidity or further scale back Magcorp's cell conversion
project.

    The Company's long-term debt agreements contain numerous covenants and
prohibitions that limit the financial activities of the Company, including
requirements that the Company satisfy certain financial ratios and limitations
on additional indebtedness. The ability of the Company to meet its debt service
requirements and to comply with such covenants will be dependent upon future
operating performance and financial results of the Company, which will be
subject to financial, economic, political, competitive and other factors
affecting the Company, many of which are beyond its control.

YEAR 2000 READINESS


    We have not experienced any operational problems as a result of Year 2000
issues. Replacements of mainframe-based information technology systems began in
1994 and were planned with Year 2000 compliance in mind. Since 1994, the Company
has expensed approximately $1.1 million in information technology and process
control maintenance or modification costs and capitalized approximately
$700,000. No additional Year 2000 costs are anticipated.



                                      -16-
<PAGE>   17

ENVIRONMENTAL MATTERS


    The Company and its operations are subject to an increasing number of
federal, state and local environmental laws and regulations governing, among
other things, air emissions, waste water discharge and solid and hazardous waste
disposal. Environmental laws and regulations continue to change rapidly and it
is likely that the Company will be subject to increasingly stringent
environmental standards. Compliance with such laws and regulations is a
significant factor in the Company's operations as it is with all domestic
industrial facilities. The Company believes that it has to date materially
complied with all federal, state and local environmental regulations and is
committed to maintaining its compliance with these laws. See "ITEM 1.
Business--Environmental Matters."

FORWARD-LOOKING STATEMENTS


    This report includes "forward-looking statements," which involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such risks, uncertainties and other important
factors include, among others: general economic and business conditions;
industry capacity; demand; industry trends; competition; currency fluctuations;
the loss of any significant customers; availability of qualified personnel;
changes in environmental regulations; successful completion of planned
installation of new technology; major equipment failures, import and customs
regulations, and outcome of litigation. These forward-looking statements speak
only as of the date of this report. The Company expressly disclaims any
obligation or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such forward-looking statement is based.

ITEM 8. FINANCIAL STATEMENTS.


    Financial statements follow immediately and are listed in ITEM 14 of Part IV
of this report.



                                      -17-
<PAGE>   18

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholder
Renco Metals, Inc. and Subsidiaries:


We have audited the accompanying consolidated balance sheets of Renco Metals,
Inc. and subsidiaries as of October 31, 1999 and 1998, and the related
consolidated statements of income, stockholder's deficit, and cash flows for
each of the years in the three-year period ended October 31, 1999. In
conjunction with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Renco Metals, Inc.
and subsidiaries as of October 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended October 31, 1999, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.


                                                       KPMG LLP





Salt Lake City, Utah
December 3, 1999



                                      -18-
<PAGE>   19

                       RENCO METALS, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                            October 31, 1999 and 1998
                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                            ASSETS                            1999                1998
                                                                           ---------           ---------
<S>                                                                        <C>                 <C>
Current assets:
     Cash and cash equivalents                                             $   8,448              21,690
     Accounts receivable, less allowance for doubtful
         accounts of  $532 in 1999 and $514 in 1998                           25,478              26,411
     Inventories, net                                                         44,979              36,525
     Prepaid expenses and other current assets                                 1,678                 999
                                                                           ---------           ---------
                       Total current assets                                   80,583              85,625

     Property, plant, and equipment, net                                      41,862              35,385
     Other assets, net                                                         3,646               5,639
                                                                           ---------           ---------
                                                                           $ 126,091             126,649
                                                                           =========           =========

                            LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
     Current installments of long-term debt                                $      25                  23
     Accounts payable                                                          7,043               7,279
     Accrued expenses                                                         14,294              15,052
     Deferred income taxes                                                        --                  97
                                                                           ---------           ---------
                       Total current liabilities                              21,362              22,451

Long-term debt, excluding current installments                               153,204             154,954
Postretirement medical benefits                                                6,779               6,773
Deferred income taxes                                                             --               1,966
Other liabilities                                                              4,939               6,116
                                                                           ---------           ---------
                       Total liabilities                                     186,284             192,260
                                                                           ---------           ---------

Stockholder's deficit:
     Common stock, no par value.  Authorized, issued, and
         outstanding 1,000 shares                                                  1                   1
     Additional paid-in capital                                                  600                 500
     Accumulated deficit                                                     (60,794)            (66,112)
                                                                           ---------           ---------
                       Net stockholder's deficit                             (60,193)            (65,611)

Commitments and contingencies
                                                                           ---------           ---------
                                                                           $ 126,091             126,649
                                                                           =========           =========
</TABLE>

See accompanying notes to consolidated financial statements.




                                      -19-
<PAGE>   20

                       RENCO METALS, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                  Years ended October 31, 1999, 1998, and 1997
                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                               1999                1998                1997
                                                            ---------           ---------           ---------
<S>                                                         <C>                 <C>                 <C>
Sales                                                       $ 179,613             189,699             191,614
Costs and expenses:
     Cost of sales                                            127,694             125,823             129,093
     Depreciation, depletion, and amortization                  9,131               8,289               7,451
     Selling, general, and administrative expenses             21,774              23,131              20,848
                                                            ---------           ---------           ---------

                       Income from operations                  21,014              32,456              34,222

Interest income                                                   576               1,163               1,142
Interest expense                                              (18,618)            (18,871)            (18,697)
Equity in earnings of affiliate                                   383                  49                  64
                                                            ---------           ---------           ---------

                       Income before income taxes               3,355              14,797              16,731

Income tax expense (benefit)                                   (1,963)              4,342               4,963
                                                            ---------           ---------           ---------

                       Net income                           $   5,318              10,455              11,768
                                                            =========           =========           =========
</TABLE>



See accompanying notes to consolidated financial statements.



                                      -20-
<PAGE>   21

                       RENCO METALS, INC. AND SUBSIDIARIES
                Consolidated Statements of Stockholder's Deficit
                  Years ended October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                                           NET
                                                      ADDITIONAL         ACCUM-           STOCK-
                                      COMMON           PAID-IN          ULATED            HOLDER'S
                                       STOCK           CAPITAL          DEFICIT           DEFICIT
                                      -------          -------          -------           -------
<S>                                   <C>              <C>              <C>               <C>
Balances at October 31, 1996          $     1              500          (74,535)          (74,034)

     Dividends                             --               --           (6,600)           (6,600)

     Net income                            --               --           11,768            11,768
                                      -------          -------          -------           -------

Balances at October 31, 1997                1              500          (69,367)          (68,866)

     Dividends                             --               --           (7,200)           (7,200)

     Net income                            --               --           10,455            10,455
                                      -------          -------          -------           -------

Balances at October 31, 1998                1              500          (66,112)          (65,611)

     Capital contribution                  --              100               --               100

     Net income                            --               --            5,318             5,318
                                      -------          -------          -------           -------

Balances at October 31, 1999          $     1              600          (60,794)          (60,193)
                                      =======          =======          =======           =======
</TABLE>


See accompanying notes to consolidated financial statements.



                                      -21-
<PAGE>   22

                       RENCO METALS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                  Years ended October 31, 1999, 1998, and 1997
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                1999               1998               1997
                                                                              --------           --------           --------
<S>                                                                           <C>                <C>                <C>
Cash flows from operating activities:
     Net income                                                               $  5,318             10,455             11,768
     Adjustments to reconcile net income to net
         cash provided by operating activities:
            Depreciation, depletion, and amortization                            9,131              8,289              7,451
            Amortization of financing fees                                         980                989                989
            Loss (gain) on disposal of equipment                                   (30)                43                 29
            Deferred income taxes                                               (2,063)              (175)              (187)
            Provision for bad debts                                                180                 37                163
            Postretirement and deferred compensation plans                         245                118                476
            Other                                                                 (283)                11                (64)
            Decrease (increase) in operating assets:
               Accounts receivable                                                 753              1,463             (3,065)
               Inventories                                                      (8,454)            (9,532)               224
               Prepaid expenses and other assets                                  (699)               (45)             1,410
            Increase (decrease) in operating liabilities:
               Accounts payable                                                   (236)              (983)               468
               Accrued expenses                                                   (758)            (4,399)               (35)
               Other liabilities                                                    50              2,280                350
                                                                              --------           --------           --------
                      Net cash provided by operating activities                  4,134              8,551             19,977
                                                                              --------           --------           --------
Cash flows from investing activities:
     Capital expenditures                                                      (15,671)            (6,014)            (8,604)
     Proceeds from sale of equipment                                                93                 12                 22
                                                                              --------           --------           --------
                      Net cash used in investing activities                    (15,578)            (6,002)            (8,582)
                                                                              --------           --------           --------
Cash flows from financing activities:
     Net borrowings (repayments) under revolving credit agreements              (1,725)             1,311              1,052
     Repayment of long-term debt                                                   (23)            (1,517)               (19)
     Financing fees and tender offer premiums paid                                 (50)               (60)                --
     Dividends to Group                                                             --             (7,200)            (6,600)
                                                                              --------           --------           --------
                      Net cash used in financing activities                     (1,798)            (7,466)            (5,567)
                                                                              --------           --------           --------

Increase (decrease) in cash and cash equivalents                               (13,242)            (4,917)             5,828
Cash and cash equivalents, beginning of year                                    21,690             26,607             20,779
                                                                              --------           --------           --------
Cash and cash equivalents, end of year                                        $  8,448             21,690             26,607
                                                                              ========           ========           ========

Supplemental disclosures of cash flow information:
     Cash paid during the year for interest                                   $ 17,638             17,934             17,708
     Cash paid during the year for income taxes                                    286              4,617              3,815

Supplemental schedule of noncash investing and financing activities:
     Minimum pension liability adjustment to other assets                     $ (1,083)                23                806
     Minimum pension liability adjustment to other liabilities                  (1,083)                23                806
</TABLE>

See accompanying notes to consolidated financial statements.




                                      -22-
<PAGE>   23

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(1)   PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

      Renco Metals, Inc. (Renco Metals) is a holding company incorporated in
      Delaware in July 1993, and is a 100 percent owned subsidiary of The Renco
      Group, Inc. (Group).

      The accompanying consolidated financial statements include the accounts of
      Renco Metals and its wholly-owned subsidiaries, Magnesium Corporation of
      America (Magcorp) and Sabel Industries, Inc. (Sabel) (collectively the
      Company). Intercompany transactions and balances have been eliminated.
      Magcorp's 50 percent-owned affiliate is accounted for under the equity
      method.

      Renco Metals is a holding company that has no independent operations, and
      its only assets are cash and its investments in Magcorp and Sabel. Magcorp
      owns and operates a magnesium production plant on the Great Salt Lake at
      Rowley, Utah, and sells pure magnesium and magnesium alloys to domestic
      and international customers. Sabel is a diversified company in the
      southeast United States primarily involved in the steel service center,
      scrap metal, and rebar businesses.

      Renco Metal's senior notes are unconditionally and fully guaranteed,
      jointly and severally, by both of its subsidiaries, Magcorp and Sabel (the
      Guarantors). Separate financial statements of the Guarantors are not
      presented because, in management's opinion, such financial statements
      would not be material to investors. Summarized financial information on
      the combined Guarantors is presented below:

               SUMMARIZED COMBINED GUARANTOR FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                    YEARS ENDED OCTOBER 31,
                                                          --------------------------------------------
                                                            1999              1998              1997
                                                          --------          --------          --------
<S>                                                       <C>               <C>               <C>
Combined Guarantor statement of operations data:
   Net sales                                              $179,613           189,699           191,614
   Cost of sales                                           127,694           125,823           129,093
   Net income                                                5,222            10,452            11,748

                                                                 OCTOBER 31,
                                                          --------------------------
                                                            1998              1999
                                                          --------          --------
Combined Guarantor balance sheet data:
   Current assets                                         $ 78,701            84,349
   Noncurrent assets                                        45,508            41,024
   Current liabilities                                      14,701            16,300
   Noncurrent liabilities                                   14,922            19,809
</TABLE>



                                      -23-
<PAGE>   24

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (a)  CASH AND CASH EQUIVALENTS

           For purposes of reporting cash flows, the Company considers all
           highly liquid financial instruments purchased with an original
           maturity to the Company of three months or less to be cash
           equivalents. Cash equivalents consist of the following:

<TABLE>
<CAPTION>
                                                        1999             1998
                                                     -------          -------
<S>                                                 <C>              <C>
           Money market funds                        $ 1,314           10,787
           Certificates of deposit                       211              203
                                                     -------          -------
                                                     $ 1,525           10,990
                                                     =======          =======
</TABLE>

      (b)  INVENTORIES

           Inventories are stated at the lower of cost or market, using either
           weighted average, last-in, first-out (LIFO), or first-in, first-out
           (FIFO).


      (c)  PROPERTY, PLANT, AND EQUIPMENT

           Property, plant, and equipment are carried at cost. Depreciation is
           computed primarily on the straight-line method over the estimated
           useful lives of the related assets. Expenditures for normal repairs
           and maintenance are charged to expense as incurred.


      (d)  OTHER ASSETS

           Other assets include financing costs associated with long-term debt.
           The costs are being amortized using the straight-line method over the
           period of the related long-term debt. Other assets consist of the
           following:

<TABLE>
<CAPTION>
                                                         1999            1998
                                                       ------          ------
<S>                                                    <C>             <C>
           Loan origination and financing fees         $6,550           6,680
           Unrecognized pension prior service cost        149           1,232
           Deposits and other                              48              29
                                                       ------          ------
                                                        6,747           7,941
           Less accumulated amortization                3,101           2,302
                                                       ------          ------
                                                       $3,646           5,639
                                                       ======          ======
</TABLE>



                                      -24-
<PAGE>   25

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


      (e)  DEFERRED COMPENSATION

           Magcorp and Sabel each have deferred compensation agreements with
           certain key employees in the form of net worth appreciation
           participation agreements. The deferred compensation is based on the
           cumulative net income, as defined in the agreement, of the respective
           company from a specified date. The aforementioned agreements have
           been accounted for as deferred compensation in the accompanying
           consolidated financial statements.

      (f)  OTHER LIABILITIES

           POSTRETIREMENT HEALTH CARE BENEFITS

           Magcorp provides postretirement health care benefits to substantially
           all of its salaried employees. The liability is accrued over the
           employee's estimated period of employment based on actuarially
           determined amounts. Benefits are funded as costs are actually
           incurred.

           ENVIRONMENTAL COMPLIANCE COSTS

           Industrial companies such as Magcorp and Sabel have in recent years
           become subject to increasingly demanding environmental standards
           imposed by federal, state, and local environmental laws and
           regulations. It is the policy of the Company to endeavor to comply
           with applicable environmental laws and regulations. The Company
           considers current information, environmental laws and regulations,
           and adjusts its related accruals as considered necessary.

      (g)  INCOME TAXES

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



                                      -25-
<PAGE>   26

                       RENCO METALS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


      (h)  USE OF ESTIMATES IN PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

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

      (i)  RESEARCH AND DEVELOPMENT COSTS

           Research and development costs, included in selling, general, and
           administrative expenses in the accompanying consolidated financial
           statements, are expensed as incurred and totaled $1,863, $2,599, and
           $2,263 for 1999, 1998, and 1997, respectively.

      (j)  FINANCIAL INSTRUMENTS

           The carrying value of accounts receivable, accounts payable, and
           accrued expenses approximates their estimated value due to the
           relative short maturity of these instruments.

      (k)  COMPREHENSIVE INCOME

           The Company adopted Statement of Financial Accounting Standard No.
           130 ("SFAS 130"), Reporting Comprehensive Income, effective November
           1, 1998. SFAS 130 establishes standards for reporting and display of
           comprehensive income and its components in financial statements. For
           each of the years in the three-year period ended October 31, 1999,
           comprehensive income was equal to the net income presented in the
           accompanying consolidated statements of income.

      (l)  RECLASSIFICATIONS

           Certain reclassifications have been made to the 1998 and 1997
           consolidated financial statements to conform to the 1999
           presentation.

(3)   INVENTORIES

<TABLE>
<CAPTION>
      Inventories consist of the following:
                                                         1999             1998
                                                      -------          -------
<S>                                                   <C>              <C>
           Finished goods                             $34,985           24,906
           Brine in ponds                               1,228            1,100
           Spare parts and supplies                     9,076           10,310
           Raw materials and work-in-process              963              743
                                                      -------          -------
                                                       46,252           37,059
           Less LIFO reserve                            1,273              534
                                                      -------          -------
                                                      $44,979           36,525
                                                      =======          =======
</TABLE>



                                      -26-
<PAGE>   27

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)




(4)   PROPERTY, PLANT, AND EQUIPMENT

      Property, plant, and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                                           DEPRECIABLE
                                                              LIVES        1999        1998
                                                           ------------  ----------  ---------
<S>                                                        <C>          <C>          <C>
          Land                                                  -       $      719         519
          Buildings                                             30           7,587       6,232
          Equipment                                            7-15         87,455      73,935
          Leasehold improvements                               3-5             970         859
          Construction-in-process                               -            5,415       5,828
                                                                         ----------  ---------
                                                                           102,146      87,373
          Less     accumulated     depreciation     and                     60,284      51,988
                amortization
                                                                         ----------  ---------
                                                                        $   41,862      35,385
                                                                         ==========  =========
(5)   LONG-TERM DEBT

      Long-term debt is summarized as follows:

                                                                            1999       1998
                                                                         ----------  ---------
           For Renco Metals:
              11.5% senior notes (a)                                    $  150,000     150,000
           For Magcorp:
              Revolving credit facility (b)                                      -           -
           For Sabel:
              Revolving credit facility (b)                                  2,813       4,538
              9.7% mortgage note                                               416         439
                                                                         ----------  ---------
                    Total long-term debt                                   153,229     154,977
           Less current installments                                            25          23
                                                                         ----------  ---------
                    Long-term debt, excluding current installments      $  153,204     154,954
                                                                         ==========  =========
</TABLE>

      The aggregate maturities of long-term debt for each of the twelve-month
      periods subsequent to October 31, 1999 are as follows: 2000, $25; 2001,
      $28; 2002, $2,843; 2003, $150,333; and thereafter, none.



                                      -27-
<PAGE>   28

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


      As of October 31, 1999, the fair value of the 11.5% Senior Notes was
      approximately $122,000, based on estimates obtained from brokers. The
      carrying values of the revolving credit facility and mortgage note are not
      materially different from the estimated fair value.

      (a)  11.5% SENIOR NOTES

           In July of 1996, Renco Metals issued $150,000 aggregate principal
           amount of 11.5% Senior Notes due July 1, 2003 (the Notes). The Notes
           are general unsecured obligations of Renco Metals, and are
           unconditionally and fully guaranteed, jointly and severally, by the
           Guarantors. Secured indebtedness of the Guarantors, including
           borrowings under the Revolving Credit Facilities described below, is
           senior in right of payments to the Notes with respect to the assets
           securing such indebtedness. Interest on the Notes is payable
           semiannually on January 1 and July 1 of each year.

           Except under certain circumstances defined in the indenture governing
           the Notes, the Notes are not redeemable prior to July 1, 2000.
           Thereafter, the Notes are redeemable in whole or part, at the option
           of Renco Metals, at redemption prices ranging from 105.75 percent to
           100 percent of the principal amount, depending on the date of
           redemption. The indenture governing the Notes contains certain
           covenants, that, among others, limit the type and amount of
           additional indebtedness that may be incurred by Renco Metals and
           impose limitations on investments, loans, advances, the payment of
           dividends and making of certain other payments, the creation of
           liens, certain transactions with affiliates, and certain mergers. At
           October 31, 1999, Renco Metals was in compliance with all applicable
           covenants.

      (b)  REVOLVING CREDIT FACILITIES

           Magcorp and Sabel each have revolving credit facility agreements that
           provide for advances by the lender based on specified percentages of
           eligible accounts receivable and inventories to a maximum of $33,000
           for Magcorp and $7,000 for Sabel. Advances bear interest at the prime
           rate plus three quarters of one percent, payable monthly, and are
           secured primarily by all receivables and inventories of the borrower.
           In addition, the lender may extend up to $5,000 and $1,500 of letter
           of credit accommodations to Magcorp and Sabel, respectively, within
           the limits set forth above. Outstanding letters of credit under the
           agreements at October 31, 1999 total $1,621 for Magcorp and none for
           Sabel. Based on these criteria as of October 31, 1999, the unused
           amounts available to Magcorp and Sabel were approximately $29,700 and
           $4,200, respectively. The revolving credit facilities will continue
           until August 2002 and from year to year thereafter, provided that
           either Magcorp or Sabel, as the case may be, or the lender may
           terminate either of the facilities as of August 31, 2002, or any
           subsequent anniversary date on 60 days advance written notice.

           The revolving credit facilities contain various covenants and
           restrictions including financial covenants, which specify that
           Magcorp and Sabel maintain specified ratios or minimum financial
           amounts with regard to net worth and working capital, as well as
           restrictions regarding additional indebtedness, liens, loans,
           dividends, and transactions with affiliates. At October 31, 1999,
           Magcorp and Sabel were in compliance with all applicable covenants.



                                      -28-
<PAGE>   29

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(6)   INVESTMENT IN AFFILIATE

      Magcorp has a 50 percent investment in KemMag LLC, (KemMag), a joint
      venture that sells iron salts. Sales and cost of sales of Magcorp include
      iron salts supplied to KemMag at cost, in the amount of $1,569 in 1999,
      $1,703 in 1998, and $1,626 in 1997. Condensed unaudited financial
      statement information of KemMag follows:

<TABLE>
<CAPTION>
                                                     YEARS ENDED OCTOBER 31,
                                                -------------------------------
                                                  1999       1998       1997
                                                --------   --------   --------
<S>                                             <C>         <C>        <C>
          Income statement information:
             Sales                              $  5,143      4,558      4,442
             Net income                              760         96        170

                                                    OCTOBER 31,
                                                -------------------
                                                  1999       1998
                                                --------   --------
          Balance sheet information:
             Current assets                    $     943        645
             Current liabilities                   1,635      2,097
                                                --------   --------
                   Net deficit                 $    (692)    (1,452)
                                                ========   ========
</TABLE>


      Magcorp has historically provided financial support to KemMag and intends
      to continue this practice. Accordingly, the Company has recognized
      cumulative losses in excess of its investment. The carrying value of
      Magcorp's investment is included in other liabilities in the accompanying
      consolidated balance sheets and is calculated as follows:

<TABLE>
<CAPTION>
                                                  1999       1998
                                                --------   --------
<S>                                             <C>        <C>
           Investment                           $      1          1
           Advances                                    -         50
           Equity in losses of KemMag               (347)      (727)
                                                --------   --------
                                                    (346)      (676)
                                                ========   ========
</TABLE>




                                      -29-
<PAGE>   30

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(7)   INCOME TAXES

      As a result of the change in tax status described in note 1(g), the
      Company recognized a net income tax benefit of $1,963 during 1999, which
      includes the elimination of the net deferred tax liability recorded as of
      October 31, 1998, partially offset by a $100 charge related to the LIFO
      reserve recapture. A corresponding amount has been presented as a capital
      contribution in the accompanying consolidated financial statements, since
      Group paid the tax on behalf of the Company. As of October 31, 1999, the
      Company's book bases in its assets and liabilities exceeded its tax bases
      by approximately $3,200.

      The provision for income tax expense for the years ended October 31, 1998
      and 1997 is comprised of the following:

<TABLE>
<CAPTION>
                                          1998              1997
                                        --------          --------
<S>                                     <C>               <C>
               Federal:
                  Current               $  3,715             4,317
                  Deferred                    10               (64)
                                        --------          --------
                     Total                 3,725             4,253
                                        ========          ========
               State:
                  Current                    802               833
                  Deferred                  (185)             (123)
                                        --------          --------
                     Total              $    617               710
                                        ========          ========
</TABLE>

      The statutory federal income tax rate is reconciled to the effective
      income tax rate for 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                          1998              1997
                                        --------          --------
<S>                                     <C>               <C>
              Computed "expected"
               tax expense              $  5,179             5,856
              State and local tax,
               net of federal benefit        402               523
              Depletion                   (1,060)           (1,374)
              Change in deferred tax
               asset valuation allowance     (66)                -
              Other                         (113)              (42)
                                        --------          --------
                 Income tax provision   $  4,342             4,963
                                        ========          ========
</TABLE>

      Deferred income taxes result from temporary differences in the book basis
      and tax basis of assets and liabilities. Total deferred tax assets and
      deferred tax liabilities amounted to approximately $3,117 and $4,353,
      respectively, as of October 31, 1998. The most significant items
      comprising the deferred tax assets were postretirement benefits of $1,106
      and compensation accruals of $870 while deferred tax liabilities consisted
      primarily of deferred taxes on inventory of $827 and fixed assets of
      $3,526. The Company had a valuation allowance of $827 for realization of
      deferred tax assets as of October 31, 1998.



                                      -30-
<PAGE>   31

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(8)   RELATED PARTY TRANSACTIONS

      Group provides management services to the Company under a management
      agreement. Such services include operational consulting, budget review,
      income tax consulting, and contracting for insurance under master
      policies. Pursuant to the agreement, Group provides such services to the
      Company for an annual management fee of $1,200. The management agreement
      extends to October 31, 2000, and continues thereafter for additional
      three-year terms unless sooner terminated by either party giving six
      months prior written notice. The Company paid management fees to Group of
      $1,200 for each of the years in the three-year period ended October 31,
      1999.

      Magcorp has $318 payable to Group at October 31, 1999 and 1998 that is
      noninterest bearing. The payable is included in other liabilities in the
      accompanying consolidated balance sheets and is subordinated to the
      liabilities described in note 5.

      During 1998 and 1997, the Company paid to Group dividends totaling $7,200
      and $6,600, respectively.

(9)   EMPLOYEE BENEFIT PLANS

      Magcorp

      Hourly Defined Benefit Pension Plan and Salaried Postretirement Medical
      Plan

      Pension benefits under Magcorp's defined benefit plan for hourly employees
      are generally based on a flat dollar amount times years of credited
      service. Magcorp's funding policy is to contribute amounts sufficient to
      satisfy regulatory funding standards, based upon independent actuarial
      valuations.

      Magcorp's self-insured, fee-for-service postretirement medical benefit
      plan provides health care benefits to salaried retirees who retire from
      active employment status on or after age 65 with ten or more years of
      service. Qualified retirees receive lifetime benefits for themselves. The
      retiree's spouse also receives coverage that continues for one year after
      the retiree's death. Employees who retire on or after age 55 with less
      than ten years but at least five years or more of service receive benefits
      only after age 65.



                                      -31-
<PAGE>   32

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


      The following provides a reconciliation of benefit obligations, plan
      assets, and funded assets of the plans:

<TABLE>
<CAPTION>
                                                                                     OTHER
                                                              PENSION           POSTRETIREMENT
                                                              BENEFITS             BENEFITS
                                                         ------------------   -------------------
                                                          1999       1998      1999       1998
                                                         ------    -------   -------     -------
<S>                                                    <C>         <C>       <C>         <C>
      Change in benefit obligation:
          Beginning of year                            $  6,765      5,919     2,925       2,563
          Service cost                                      303        292       119         106
          Interest cost                                     471        427       204         185
          Actuarial (gain) loss                          (1,072)       214       (19)        112
          Benefits paid                                    (154)       (87)      (76)        (41)
                                                         -------   --------   -------    -------
          End of year                                     6,313      6,765     3,153       2,925
      Change in plan assets:
          Fair value at beginning of year                 5,511      4,555
          Actual return on plan assets                      371        514
          Employer contributions                              -        530
          Benefits paid                                    (155)       (88)
                                                         -------   --------
          Fair value at end of year                       5,727      5,511
      Reconciliation of funded status:
          Funded status                                    (586)    (1,254)   (3,153)     (2,925)
          Unrecognized actuarial gain                    (1,275)      (300)   (3,626)     (3,848)
          Unrecognized prior service cost                 1,424      1,532         -           -
                                                         -------   --------   -------    -------
          Net amount recognized                            (437)       (22)   (6,779)     (6,773)
                                                                              =======    =======
      Amounts recognized in the consolidated balance
       sheets:
          Accrued benefit liability                        (586)    (1,254)
          Intangible asset                                  149      1,232
                                                         -------    ------
          Net amount recognized                         $  (437)       (22)
                                                         =======    ======
      Assumptions (weighted average):
          Discount rate                                    7.75%      7.00%     7.75%       7.00%
          Expected return on plan assets                   8.25%      8.25%
</TABLE>

      For measurement purposes, a 7.5 percent annual rate of increase in the per
      capita cost of covered health care benefits was assumed for 1999. The rate
      was assumed to decrease gradually to 4.5 percent over ten years and remain
      at that level.



                                      -32-
<PAGE>   33

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


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

<TABLE>
<CAPTION>
                                                                    ONE-PERCENTAGE-POINT
                                                                   ----------------------
                                                                    INCREASE    DECREASE
                                                                    --------    --------
<S>                                                                <C>          <C>
      Effect on total of service and interest cost components      $      32         (34)
      Effect on postretirement benefit obligation                        294        (304)
</TABLE>

      Net periodic pension and other postretirement benefit costs include the
      following components:

<TABLE>
<CAPTION>
                                                                                OTHER
                                                      PENSION               POSTRETIREMENT
                                                      BENEFITS                 BENEFITS
                                               ----------------------   ----------------------
                                               1999     1998    1997    1999     1998    1997
                                               -----   ------  ------   -----   ------  ------
<S>                                          <C>       <C>     <C>      <C>     <C>     <C>
      Components of net periodic benefit
            cost
          Service cost                       $   303     292     202      118     106     166
          Interest cost                          471     427     314      204     185     239
          Expected return on assets             (467)   (384)   (306)       -       -       -
          Amortization of unrecognized
            net gain                               -       -       -     (240)   (270)   (202)
          Amortization of prior year
            service cost                         108     108      38        -       -       -
                                               -----   ------  ------   -----   ------  ------
          Net periodic benefit cost          $   415     443     248       82      21     203
                                               =====   ======  ======   =====   ======  ======
</TABLE>

      The unrecognized net gain in the postretirement medical plan is being
      amortized over a period of approximately fifteen years, which represents
      the average future working lifetime of the plan participants.

      Thrift Plans and Salary Defined Contribution Plan

      Magcorp has a salaried thrift plan and an hourly thrift plan that qualify
      under the Internal Revenue Code Section 401(k). The plans are available to
      substantially all employees. Magcorp may make discretionary matching
      contributions of 50 percent of each hourly employee's contribution, and 75
      percent of each salaried employee's contribution, up to the first six
      percent of the employee's compensation. Matching contributions were $474,
      $447, and $442 for 1999, 1998, and 1997, respectively.

      Contributions for Magcorp's defined contribution plan are based upon age,
      years of service, and gross compensation for each salaried employee, and
      totaled approximately $813, $735, and $557, for 1999, 1998, and 1997,
      respectively.



                                      -33-
<PAGE>   34

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


      Sabel

      Under an agreement with the United Steelworkers' Union, which covers
      certain production employees, Sabel contributes to a pension plan based on
      a set amount per hour worked for covered employees. The contributions to
      the plan were $84, $90, and $82 for 1999, 1998, and 1997, respectively.

      Sabel has a noncontributory profit sharing plan for management and
      administrative employees. The amount of the annual contribution, if any,
      is at the discretion of Sabel and is not to exceed 15 percent of the
      compensation of the eligible employees. Contributions to the plan were
      $115 in 1999. No contributions were made in 1998 or 1997.

(10)  LEASES

      The Company has several noncancelable operating leases, primarily for
      office and warehouse space, and machinery and equipment. These leases
      generally contain renewal options. Future minimum lease payments under
      noncancelable operating leases (with initial or remaining lease terms in
      excess of one year) as of October 31, 1999 are listed below:

<TABLE>
<CAPTION>
          YEAR ENDING OCTOBER 31:
<S>                                                                 <C>
             2000                                                   $  1,928
             2001                                                      1,583
             2002                                                      1,046
             2003                                                        556
             2004                                                        352
             Thereafter                                                   91
                                                                      -------
                   Total minimum lease payments                     $  5,556
                                                                      =======
</TABLE>

      Rent expense aggregated $2,628, $4,101, and $2,412 for 1999, 1998, and
      1997, respectively. Included in rental expense was contingent rental
      expense of approximately $152, $118, and $73 for 1999, 1998, and 1997,
      respectively. Additionally, included in rental expense are leases of
      certain office and warehouse space from entities in which the president of
      Sabel holds an indirect material interest. Rent expense for such leases
      aggregated approximately $383, $383, and $336 for 1999, 1998, and 1997,
      respectively.



                                      -34-
<PAGE>   35

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(11)  COMMITMENTS AND CONTINGENCIES

      (a)   LITIGATION

           In April 1998, the United States filed a complaint against Magcorp in
           the U.S. District Court for the District of Utah, seeking damages,
           including treble damages, in alleging that Magcorp has taken
           magnesium out of mineral-laden ground water belonging to the United
           States without a mineral lease or payment of royalties. Management
           strongly believes this claim is based on the erroneous assumption
           that the disputed minerals came from groundwater belonging to the
           United States. Management strongly disputes the United States'
           claims, and believes that the source of the disputed minerals is the
           water pumped from the Great Salt Lake to the West Desert by the State
           of Utah - not groundwater - and that the Company properly purchased
           those minerals pursuant to an agreement with the State of Utah. In
           1999 the United States added the State of Utah as a defendant. Like
           Magcorp, the State of Utah denies the allegations in the United
           States' complaint. The United States has to date not produced any
           evidence to support its claims. Management is vigorously defending
           against the claims and in the opinion of management, after consulting
           with legal counsel, the ultimate resolution of this uncertainty will
           not result in a future loss that would be material to the Company's
           financial condition, results of operations, or liquidity.

           The Company and its subsidiaries are involved in other litigation
           arising in the normal course of business. It is not possible to state
           the ultimate liability, if any, in these matters. In the opinion of
           management, based upon the advice of outside counsel, such litigation
           will not have any material effect on the Company.

      (b)  OTHER AGREEMENTS

           Magcorp and Sabel both have net worth appreciation participation
           agreements with certain executives wherein these individuals are
           entitled to receive a specified percentage of cumulative net income,
           less any common stock dividends, of their respective companies
           commencing at specified dates in the agreements, through the date of
           the individual's termination based on a specified vesting schedule.
           Payment will be made in 40 equal quarterly installments, without
           interest, commencing three months after termination of employment. If
           Magcorp or Sabel pays any cash dividend on its common stock during
           the term of the employment of the applicable executives, the
           respective company will make a cash payment to such executives equal
           to the total amount of the cash dividend multiplied by their
           applicable fully-vested participation percentage. Amounts are accrued
           as earned.



                                      -35-
<PAGE>   36

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


      (c)  ENVIRONMENTAL MATTERS

           The Company is and will continue to be subject to numerous federal
           and state environmental laws and regulations governing, among other
           things, air emissions, waste water discharge, and solid and hazardous
           waste disposal. The Company believes that it has made and intends to
           continue to make the necessary expenditures for compliance with
           environmental laws and regulations. Environmental laws and
           regulations have changed rapidly in recent years, and the Company may
           be subject to more stringent environmental laws and regulations in
           the future. The Company cannot currently assess the impact of more
           stringent standards on its results of operations or financial
           condition. Magcorp plans to spend a minimum of $30,000 of its capital
           expenditure budget for 2000 and 2001, in an electrolytic cell
           conversion program designed to meet environmental regulatory
           requirements, and for anticipated other future requirements. There
           can be no assurance that Magcorp's program will be successful, and to
           the extent it is not successful, it could have a material adverse
           effect on the Company's financial condition and results of
           operations.

(12)  ACCRUED EXPENSES

      Accrued expenses consist of:

<TABLE>
<CAPTION>
                                                                     1999        1998
                                                                  --------      -------
<S>                                                               <C>           <C>
          Utilities                                               $  3,075        1,854
          Salaries, bonuses, vacation, and other related accruals    1,917        3,131
          Interest                                                   5,750        5,750
          Taxes, other than income                                     579          581
          Other                                                      2,973        3,736
                                                                  --------      -------
                                                                  $ 14,294       15,052
                                                                  ========      =======
</TABLE>



                                      -36-
<PAGE>   37

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(13)  SEGMENT INFORMATION

      The Company classifies its operations into two operating segments:
      magnesium production and steel wholesaling and fabrication. The accounting
      policies of the segments are the same as those described in the summary of
      significant accounting policies (note 2). Management evaluates a segment's
      performance based upon operating income. There are no intersegment sales,
      allocated costs, or jointly used assets. Summarized financial information
      by operating segment follows.

<TABLE>
<CAPTION>
                                                                  1999       1998       1997
                                                                --------   --------  --------
<S>                                                           <C>          <C>       <C>
       Revenues:
           Magnesium                                          $  134,728    141,333   147,113
           Steel                                                  44,885     48,366    44,501
                                                                --------   --------  --------
                Consolidated revenues                         $  179,613    189,699   191,614
                                                                ========   ========  ========
       Profit or loss:
         Income from operations:
           Magnesium                                          $   19,056     30,921    32,825
           Steel                                                   2,044      1,640     1,444
                                                                --------   --------  --------
                Total reportable segments                         21,100     32,561    34,269
                                                                --------   --------  --------
         Other income (expense), net                             (17,745)   (17,764)  (17,538)
                                                                --------   --------  --------

                Consolidated income before income taxes      $     3,355     14,797    16,731
                                                                ========   ========  ========
       Assets:
           Magnesium                                          $  108,340    108,034   107,460
           Steel                                                  15,869     16,926    16,124
                                                                --------   --------  --------
                Total reportable segments                        124,209    124,960   123,584
                                                                --------   --------  --------
          Other assets                                             1,882      1,689     3,247
                                                                --------   --------  --------
                Consolidated assets                           $  126,091    126,649   126,831
                                                                ========   ========  ========
       Capital expenditures:
           Magnesium                                          $   15,146      5,827     7,492
           Steel                                                     525        187     1,112
                                                                --------   --------  --------
                Consolidated capital expenditures             $   15,671      6,014     8,604
                                                                ========   ========  ========
       Depreciation, depletion, and amortization:
           Magnesium                                          $    8,678      7,838     7,054
           Steel                                                     453        451       397
                                                                --------   --------  --------
                Consolidated depreciation,
                  depletion, and amortization                 $    9,131      8,289     7,451
                                                                ========   ========  ========
</TABLE>



                                      -37-
<PAGE>   38

                       RENCO METALS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        October 31, 1999, 1998, and 1997
                             (Dollars in thousands)


(14)  SIGNIFICANT CUSTOMERS AND EXPORT SALES

      During 1999, 1998, and 1997, sales to any single customer did not exceed
      ten percent of total consolidated revenues. All of the Company's
      long-lived assets are located in the United States. However, the Company
      sells and ships products to many foreign countries. The following table
      summarizes export sales to various geographic areas:

<TABLE>
<CAPTION>
                                    1999             1998             1997
                                 -------          -------          -------
<S>                              <C>              <C>              <C>
      Net export sales:
         Germany                 $ 6,134            3,495            3,832
         Canada                    2,747            1,389            1,165
         Japan                     1,156            1,442            2,132
         France                    1,108            1,030            1,218
         Other                       781            1,562            1,420
                                 -------          -------          -------
                                 $11,926            8,918            9,767
                                 =======          =======          =======
</TABLE>




                                      -38-
<PAGE>   39

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 certain information regarding the directors
and executive officers of the Company, Magcorp and Sabel:

<TABLE>
<CAPTION>
              NAME              AGE              POSITION
<S>                            <C>    <C>
         Ira Leon Rennert.......65    Chairman,  Director and Chief  Executive  Officer
                                      of the Company, Chairman of Magcorp and Sabel
         Roger L. Fay...........54    Vice President, Finance of the Company
         Michael H. Legge.......53    President and Chief Executive Officer of Magcorp
         Keith Sabel............50    Director,  President and Chief  Executive  Office
                                      of Sabel
         Justin W. D'Atri.......72    Director of Sabel
         Howard I. Kaplan.......55    Vice President of Sales and Marketing of Magcorp
         Ron L. Thayer..........40    Vice President of Operations of Magcorp
         Lee R. Brown...........53    Vice President of Public and Governmental Affairs
                                      of Magcorp
         Todd R. Ogaard.........44    Vice President of Finance and Administration
                                      of Magcorp
         Phillip B. Brown.......52    Vice President of Finance and Treasurer of Sabel
         Frederick F. Callahan..49    Vice President of Sabel
</TABLE>

   IRA LEON RENNERT has been the Chairman, Chief Executive Officer and sole
member of the Board of Directors of the Company since its inception and has been
the Chairman, CEO and principal shareholder of Group since its first acquisition
in 1975. Group holds controlling interests in a number of manufacturing and
distribution concerns operating in businesses not competing with the Company,
including WCI Steel, Inc. and its parent company, Renco Steel Holdings, Inc., AM
General Corporation, The Doe Run Resources Corporation, and Lodestar Holdings,
Inc., for all of which Mr. Rennert serves as a Director.

   ROGER L. FAY has been Vice President, Finance for the Company since its
inception and has been Vice President, Finance for Group since 1983. Mr. Fay is
a certified public accountant. Before joining Group, Mr. Fay served for twelve
years as a controller of one of Group's subsidiaries.

   MICHAEL H. LEGGE was appointed President and Chief Executive Officer of
Magcorp on January 1, 1993. He was previously Vice President of Operations at
the Rowley facility and has served in several managerial and technical positions
since joining NL Industries, Inc., a predecessor of Magcorp, in 1979.

   KEITH SABEL has served in his present position as President and Chief
Executive Officer of Sabel since 1990 and is also a director of Sabel. Mr. Sabel
has been with Sabel in various positions since 1973.

   JUSTIN W. D'ATRI, a practicing attorney in New York, New York from 1952 until
his retirement in June 1996, has been Secretary and a director of, and legal
counsel for, Group since its inception and is now a consultant to Group, and has
been Secretary of the Company since its incorporation. Mr. D'Atri has been the
Secretary and a director of Sabel since 1987 and Secretary of Magcorp since
August 1989.

   HOWARD I. KAPLAN has served in his present position as Vice President of
Sales and Marketing of Magcorp since 1986. Dr. Kaplan joined AMAX Magnesium, a
predecessor of Magcorp, in 1981 and served as Manager of Technical Market
Development, Process Control Superintendent and Electrolytics and Cast House
Superintendent. Dr. Kaplan has a Ph.D. from the University of Pennsylvania in
Metallurgy and Materials Science.



                                      -39-
<PAGE>   40

   RON L. THAYER has served in his present position since January 1, 1993. He
was previously Operations Superintendent at the Rowley facility and has served
in several managerial and technical positions since joining AMAX Magnesium, a
predecessor of Magcorp, in 1988. Prior to joining AMAX Magnesium, Mr. Thayer was
with Williams Resources, a chemical company in Denver, Colorado.

   LEE R. BROWN has been Vice President of Human Resources at Magcorp since
1984. Mr. Brown joined NL Industries, Inc., a predecessor of Magcorp, in 1978.
Prior to joining NL Industries, he spent two years with Kennecott Copper.

   TODD R. OGAARD joined Magcorp in February 1994 and assumed Vice President of
Finance responsibilities effective February 1995. Mr. Ogaard is a certified
public accountant. Prior to joining Magcorp, he was a Senior Manager with the
accounting and consulting firm of KPMG LLP and had been with that firm in
various capacities from September 1981 through January 1994.

   PHILLIP B. BROWN joined Sabel in 1975. He has served as comptroller since
1977, and assumed Vice President of Finance and Treasurer responsibilities in
1999.

   FREDERICK F. CALLAHAN served as purchasing agent manager at Sabel from 1988
to 1992. After five years in other employment, Mr. Callahan rejoined Sabel in
1997 as sales manager, and assumed Vice President responsibilities in 1999.

ITEM 11. EXECUTIVE COMPENSATION.

   The following table sets forth certain information concerning compensation of
the named executive officers by the Company for services rendered to it in all
capacities during fiscal 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                                                Long-term
                                                                                                 Compen-
                                                                                                  sation
                  Name and                                        Annual Compensation (1)       -----------       All Other
                  Principal                                       ----------------------          LTIP             Compen-
                  Position                             Year        Salary         Bonus         Payouts (3)         sation
------------------------------------------------       -----      --------       -------        -----------      --------------
<S>                                                    <C>        <C>            <C>            <C>              <C>
Ira Leon Rennert (2)                                    1999      $      -       $     -        $        -       $1,200,000 (2)
Chairman and Chief Executive Officer                    1998             -             -                 -        1,200,000 (2)
                                                        1997             -             -                 -        1,200,000 (2)

Michael H. Legge                                        1999       220,756       200,000                 -           29,531 (4)
President and Chief Executive Officer of Magcorp        1998       153,333       250,000           216,000           24,419 (4)
                                                        1997       120,756       250,000           198,000           24,139 (4)

Keith Sabel                                             1999       188,525        20,000                 -            5,401 (5)
President and Chief Executive Officer of Sabel          1998       135,887        50,000                 -                -
                                                        1997       131,915        50,000                 -                -

Howard I. Kaplan                                        1999       120,000        75,000                 -           25,460 (4)
Vice President of Sales and Marketing of Magcorp        1998       103,149       110,000            72,000           24,915 (4)
                                                        1997        94,723       100,000            66,000           22,026 (4)

Ron L.Thayer                                            1999       120,756       100,000                 -            8,018 (4)
Vice President of Operations of Magcorp                 1998        96,592       130,000            72,000            6,400 (4)
                                                        1997        85,550       100,000            66,000            5,850 (4)
------------------------------------------------
</TABLE>

(1) Value of perquisites per individual did not exceed the lesser of $50,000 or
    10% of total salary and bonus per named executive officer.

(2) Mr. Rennert receives no cash compensation directly from the Company. He is
    Chairman of the Board. All of the Company's issued and outstanding capital
    stock is owned by Group, which is owned through trusts established by him
    for himself and members of his family. Group receives a management fee from
    the Company pursuant to a management agreement. The amount shown includes
    the $1.2 million annual management fee paid by the Company to Group for each
    fiscal year. See "ITEM 13. Certain Relationships and Related Transactions."

(3) The amounts shown as "LTIP Payouts" in the table for each named executive
    officer represent contractual payments under such officer's Net Worth
    Appreciation Agreement. See "--Net Worth Appreciation Agreements" below.



                                      -40-
<PAGE>   41

(4) The other compensation shown consists of employer contributions to a defined
    contribution pension plan and matching contributions under Magcorp's 401(k)
    savings plan.

(5) Consists of employer contributions to a noncontributory profit sharing plan.

Compensation Committee Interlocks and Insider Participation

    The Company had no compensation committee during fiscal 1999. The sole
member of the Board of Directors was Mr. Rennert. The compensation for the
executive officers is fixed by negotiations between such executive officers and
Mr. Rennert acting on behalf of Group.

    During 1999, no executive officer of the Company served (a) as a member of
the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served on the
Company's board of directors, (b) as a director of another entity, one of whose
executive officers served on the Company's board of directors or (c) as a member
of the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served as a
Director of the Company.

Employment Agreements

    Mr. Legge is employed by Magcorp pursuant to an employment agreement
effective as of January 1, 1993 and as amended July 22, 1998, which continues
until December 31, 2000 and for additional one-year periods thereafter unless
terminated by either party by written notice given 30 days prior to the then
current expiration date. Pursuant to such employment agreement, Mr. Legge will
receive a base minimum annual salary of $220,000 and a bonus of at least $35,000
for each year in which Magcorp is profitable.

    Dr. Kaplan is employed by Magcorp pursuant to an employment agreement
effective as of June 1, 1994 and as amended July 22, 1998, which continues until
October 31, 2000 and for additional one-year periods thereafter unless
terminated by either party by written notice given six months prior to the then
current expiration date. Pursuant to such employment agreement, Mr. Kaplan will
receive a base minimum annual salary of $120,000 and a bonus of at least $25,000
for each year in which Magcorp is profitable.

    Mr. Thayer is employed by Magcorp pursuant to an employment agreement
effective as of January 1, 1993 and as amended July 22, 1998, which continues
until December 31, 2000 and for additional one-year periods unless terminated by
either party by written notice given 30 days prior to the then current
expiration date. Pursuant to such employment agreement, Mr. Thayer will receive
a base minimum annual salary of $120,000 and a bonus of at least $20,000 for
each year in which Magcorp is profitable.

Net Worth Appreciation Agreements

    Mr. Legge, Dr. Kaplan, Mr. Thayer, Mr. Brown and Mr. Ogaard are each parties
to Net Worth Appreciation Agreements ("NWAP Agreements") with Magcorp, under
which each will be entitled to receive a fixed percentage of the increase in the
cumulative net income of Magcorp from August 1, 1996 until the end of the fiscal
quarter preceding the date of the termination of his employment or, if the
employee leaves voluntarily, following the expiration of 30 days after his
giving notice of resignation. Such amount is payable without interest in 40
equal quarterly installments commencing on the employee's termination, or, if
later, the earlier of June 11, 2011 or his attaining the age 62 (or his prior
death or disability), and so long as he has not engaged in any business
competitive with that of Magcorp subsequent to leaving his employment. The
maximum aggregate percentage payable to the five executives is 7% of such
increase in the cumulative net income of Magcorp.

    Mr. Sabel and Mr. Brown are each parties to NWAP Agreements with Sabel
entitling them upon leaving the employment of Sabel to receive a fixed
percentage of the increase in the net income of Sabel, as defined in the
agreements, from August 1, 1993 until the end of the fiscal quarter preceding
the date of termination, payable without interest in 40 quarterly installments.

    Assuming all of the Company's executive officers had retired at October 31,
1999, an aggregate of $935,000 would have been payable to such executive
officers pursuant to the NWAP Agreements.

    The NWAP Agreements also provide that, if while employed by Magcorp or
Sabel, the respective company pays certain cash dividends on its common stock,
the respective company will make a cash payment to the applicable executive
officer equal to the total amount of the cash dividend multiplied by their
applicable fully vested participation percentage. In conjunction with the
Company's dividends to Group, Magcorp's Board of Directors



                                      -41-
<PAGE>   42

declared and paid to Renco Metals dividends totaling $7.2 million in 1998 and
$6.6 million in 1997. Accordingly, an aggregate of $504,000 in 1998 and $462,000
in 1997 was paid to the five Magcorp executive officers covered by Magcorp's
NWAP Agreements.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    The following table sets forth the beneficial ownership of the outstanding
equity securities of the Company as of January 27, 2000:


<TABLE>
<CAPTION>
                               NAME AND ADDRESS OF             AMOUNT AND NATURE OF         PERCENT
       TITLE OF CLASS           BENEFICIAL OWNER               BENEFICIAL OWNERSHOF          CLASS
       --------------           ----------------               --------------------          -----
<S>                          <C>                               <C>                          <C>
Common  stock,  no  par      The Renco Group, Inc.             1,000 shares, Direct           100%
value...................     (1)

                             Ira Leon Rennert(2)
                             c/o The Renco Group               1,000 shares                   100%
                             Inc.(1)

                             All directors and
                             executive officers as             1,000 shares                   100%
                             a group(2)
</TABLE>

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

(1) The address of Group is 30 Rockefeller Plaza, Suite 4225, New York, NY
    10112.
(2) All of the Company's issued and outstanding capital stock is owned by Group,
    which is owned through trusts established by Mr. Rennert for himself and
    members of his family. Mr. Rennert may be deemed to be the beneficial owner
    of the Company's capital stock. Roger L. Fay, Vice President, Finance of the
    Company, is Vice President, Finance and a director of Group. Justin W.
    D'Atri, Secretary of the Company and the Subsidiaries, is Secretary and a
    director of Group and one of the trustees of the trusts mentioned in above.
    No other executive officer of the Company or the Subsidiaries has any
    interest in Group. By virtue of Group's ownership of all the outstanding
    shares of capital stock of the Company, and. the ownership by Mr. Rennert's
    trusts of the capital stock of Group, Mr. Rennert is in a position to
    control actions that require the consent of a majority of the holders of the
    Company's outstanding shares of capital stock, including the election of the
    board of directors.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


  Management Agreement

    Group provides management services to the Company under a management
agreement (the "Management Agreement"). Such services include operational
consulting, budget review, income tax consulting and contracting for insurance
under master policies. Pursuant to the Management Agreement, Group provides such
services to the Company for an annual management fee equal to $1.2 million. The
Management Agreement extends to October 31, 2000, and continues thereafter for
additional three-year terms unless sooner terminated by either party by giving
six months prior written notice. The Company paid management fees of $1.2
million to Group for each of the years in the three year period ended October
31, 1999. The Company believes that the cost of obtaining the type and quality
of services rendered by Group under the Management Agreement was, and continues
to be, no less favorable than that at which the Company could obtain such
services from unaffiliated entities.

  Insurance Sharing Program

    To obtain the advantages of volume, Group purchases certain insurance
coverage for its subsidiaries, including the Company, and the actual cost of
such insurance, without markup, is reimbursed by the covered subsidiaries. The
major areas of the Company's insurance coverage obtained under the Group
programs are property, business interruption, general, product and auto
liability, casualty umbrella, fidelity, fiduciary and workers' compensation. The
premiums for fidelity, fiduciary, property, business interruption, auto
liability and casualty umbrella are allocated by Group substantially as
indicated in the underlying policies. General and product liability and workers'
compensation coverages are loss sensitive programs with both fixed and variable
premium components. The fixed premium component for this coverage is allocated
to each insured Group subsidiary based on factors that include historical
guaranteed cost premium, the overall growth of each subsidiary and an assessment
of risk based on loss experience. The fixed component is subject to revision
resulting from the insurance carrier's audit of actual premium factors. As
claims (the variable component) are paid, each insured within the loss sensitive
program is charged for its claims up to a maximum amount and subject to an
overall maximum for all insured subsidiaries.



                                      -42-
<PAGE>   43

Each insured Group subsidiary has been assigned an individual maximum cost based
on historical guaranteed cost premiums. The overall and individual subsidiary
maximums are subject to revision based on audit of actual premium factors. If an
insured Group subsidiary reaches its individual maximum cost, the other insured
subsidiaries are required to share proportionately in the excess cost of the
subsidiary that has reached its individual maximum. In 1999, the Company
incurred costs of approximately $1.2 million under the Group insurance program.
The Company believes that its insurance costs under this program were less than
it would have incurred if it had obtained its insurance directly.

  Tax Sharing Agreement

    Pursuant to a tax sharing agreement between the Company and Group, the
Company pays to Group an amount equal to the amount the Company would have been
required to pay for taxes on a stand-alone basis to the Internal Revenue Service
and the applicable state taxing authority, as the case may be, except that the
Company will not have the benefit of any of its tax loss carryforwards unless
such tax losses were a result of timing differences between the Company's
accounting for tax and financial reporting purposes, which agreement also
provides that transactions between the Company and Group and its other
subsidiaries are accounted for on a cash basis and not on an accrual basis. On
January 15, 1999, Group filed an election with the consent of its shareholders
with the Internal Revenue Service to change its taxable status from that of a
subchapter C corporation to that of a subchapter S corporation, effective
November 1, 1998. At the same time, Group elected for the Company to be treated
as a qualified subchapter S subsidiary (QSSS). Most states in which the Company
operates will follow similar tax treatment. QSSS status requires the ultimate
shareholders to include their pro rata share of the Company's income or loss in
their individual tax returns. The Company will continue to provide for state and
local income taxes for the taxing jurisdictions that do not recognize QSSS
status, however, management believes this is not material to the Company.
However, under the "built in gains" provisions of the tax law, federal and state
taxes may become payable and would be charged to the Company's statement of
income. Such taxes are measured by the excess of the fair market value of assets
over their tax bases on the effective date of the subchapter S subsidiary
election if the associated assets are disposed of within the ten-year
post-election period. It is not management's present intention to trigger any
taxes under the built-in-gain provisions of the tax law.

  Transactions with Sabel Family

    Sabel leases certain of its facilities from an affiliate of the Sabel family
under a lease running to July 31, 2002, which may be extended for an additional
term of five years. Total rent payments during 1999 were $383,000.


                                     PART IV

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


<TABLE>
<CAPTION>
<S>                                                                                          <C>
    A.  Documents filed as part of this Form 10-K:

        1. Financial Statements (included in Part II, ITEM 8):

            Independent Auditors' Report                                                      18

            Consolidated Balance Sheets - October 31, 1999 and 1998                           19

            Consolidated  Statements of Income - Years ended October 31, 1999,  1998 and
               1997                                                                           20

            Consolidated  Statements of Stockholder's  Deficit - Years ended October 31,
               1999, 1998 and 1997                                                            21

            Consolidated  Statements of Cash Flows - Years ended October 31, 1999,  1998
               and 1997                                                                       22

            Notes to Consolidated Financial Statements                                        23

        2. Financial Statement Schedules  (included in Part IV):

           Schedule II       Valuation and Qualifying Accounts                                47
</TABLE>

Schedules not listed above have been omitted because the information required to
be set forth therein is not applicable or is included in the consolidated
financial statements or notes thereto.



                                      -43-
<PAGE>   44

        3.  Exhibits

<TABLE>
<CAPTION>
          EXHIBIT NO.                      IDENTIFICATION OF EXHIBITS
          -----------                      --------------------------
<S>                     <C>                                                             <C>
             3.1    --  Certificate of Incorporation of Renco Metals, Inc.              (1)

             3.2    --  Certificate  of  Incorporation  of  Magnesium  Corporation  of  (1)
                        America

             3.3    --  Certificate of Incorporation of Sabel Industries, Inc.          (1)


             3.4    --  By-laws of Renco Metals, Inc.                                   (1)

             3.5    --  By-laws of Magnesium Corporation of America                     (1)

             3.6    --  By-laws of Sabel Industries, Inc.                               (1)

             4.1    --  Indenture dated as of July 1, 1996 among Renco Metals,          (6)
                        Inc., Issuer, Magnesium Corporation of America and Sabel
                        Industries, Inc., Guarantors, and State Street Bank and
                        Trust, successor Trustee, relating to 11-1/2% Senior
                        Notes Due 2003 (with form of Note and form of guarantee
                        annexed)

            10.1    --  Employment   Agreements   between  Magnesium   Corporation  of
                        America and:
                        a) Michael H. Legge, dated September 24, 1992 effective         (1)
                           January 1, 1993
                        b) Ron L. Thayer effective June 1, 1994                         (2)
                        c) Howard I. Kaplan dated June 10, 1994                         (2)
                        d) Lee R. Brown, dated September 1, 1989                        (1)
                        e) Todd R. Ogaard, dated December 1, 1994                       (2)

           10.1.1   --  Amendments to Employment Agreements between Magnesium
                        Corporation of America and:
                        a) Michael H. Legge                                            (10)
                        b) Ron L. Thayer                                               (10)
                        c) Howard I. Kaplan                                            (10)
                        d) Lee R. Brown                                                (10)
                        e) Todd R. Ogaard                                              (10)

            10.2    --  Net Worth Appreciation Agreements between Magnesium
                        Corporation of America and:
                        a) Michael H. Legge, dated September 24, 1992                   (1)
                        b) Ron L. Thayer, dated September 24, 1992                      (1)
                        c) Lee R. Brown, dated July 30, 1993                            (1)
                        d) Howard I. Kaplan, dated June 10, 1994                        (2)
                        e) Todd R. Ogaard, dated May 19, 1995                           (3)

            10.3    --  Amendments to Net Worth Appreciation Agreements between
                        Magnesium Corporation of America and:
                        a) Michael H. Legge                                             (8)
                        b) Ron L. Thayer                                                (8)
                        c) Lee R. Brown                                                 (8)
                        d) Todd R. Ogaard                                               (8)
                        e) Howard I. Kaplan                                             (8)

            10.4    --  Management Consultant Agreement dated August 4, 1993 between    (1)
                        The Renco Group, Inc. and Renco Metals, Inc.

            10.5    --  Amendment No. 1 to Management Consultant Agreement dated May    (5)
                        17, 1996 between The Renco Group, Inc. and Renco Metals, Inc.

            10.6    --  Amended and Restated Loan and Security Agreement between        (1)
                        Congress Financial Corporation and Magnesium  Corporation
                        of America dated August 4, 1993

            10.7    --  Amendment No. 1 dated January 31, 1996 to Amended and           (4)
                        Restated Loan and Security Agreement dated as of August
                        4, 1993, between Congress Financial Corporation and
                        Magnesium Corporation of America, extending the term
                        thereof to August 4, 1998

            10.8    --  Amendment No. 2 dated July 3, 1996 to Amended and               (8)
                        Restated Loan and Security Agreement dated as of August
                        4, 1993, between Congress Financial Corporation and
                        Magnesium Corporation of America

           10.8.1   --  Amendment No. 3 dated August 28, 1997 to Amended and            (9)
                        Restated Loan and Security Agreement dated as of August
                        4, 1993, between Congress Financial Corporation and
                        Magnesium Corporation of America

           10.8.2   --  Amendment No. 4 dated January 19, 1999 to Amended and          (11)
                        Restated Loan and Security Agreement dated as of August
                        4, 1993, between Congress Financial Corporation and
                        Magnesium Corporation of America

           10.8.3   --  Amendment No. 5 dated August 10, 1999 to Amended and           (12)
                        Restated Loan and Security Agreement dated as of August
                        4, 1993, between Congress Financial Corporation and
                        Magnesium Corporation of America
</TABLE>



                                      -44-
<PAGE>   45

<TABLE>
<CAPTION>
         EXHIBIT NO.                      IDENTIFICATION OF EXHIBITS
         --  --  ---                      --  --  --  --  --  --  --
<S>                     <C>                                                            <C>
            10.9    --  Loan and Security Agreement between Congress Financial          (1)
                        Corporation and Sabel Industries, Inc. dated August 4,
                        1993

            10.10   --  Amendment No. 1 dated January 31, 1996 to Loan and              (4)
                        Security Agreement dated as of August 4, 1993, between
                        Congress Financial Corporation and Sabel Industries,
                        Inc., extending the term thereof to August 4, 1998

            10.11   --  Amendment No. 2 dated July 3, 1996 to Loan and Security         (8)
                        Agreement dated as of August 4, 1993, between Congress
                        Financial Corporation and Sabel Industries, Inc.

           10.11.1  --  Amendment No. 3 dated August 28, 1997 to Loan and               (9)
                        Security Agreement dated as of August 4, 1993, between
                        Congress Financial Corporation and Sabel Industries,
                        Inc.

           10.11.2  --  Amendment No. 4 dated January 19, 1999 to Loan and             (11)
                        Security Agreement dated as of August 4, 1993, between
                        Congress Financial Corporation and Sabel Industries,
                        Inc.

           10.11.3  --  Amendment No. 5 dated August 10, 1999 to Loan and              (12)
                        Security Agreement dated as of August 4, 1993, between
                        Congress Financial Corporation and Sabel Industries,
                        Inc.

             10.12  --  Agreement dated July 31, 1969 between the State of Utah,        (1)
                        acting by and through the State Land Board, and National
                        Lead Company, as amended by Addendum dated March 7,
                        1970, Second Addendum dated March 7, 1972 and Assignment
                        to Amax Magnesium Corporation dated October 31, 1980 (ML
                        18779)

             10.13  --  Special Use Lease Agreement 711 dated July 14, 1987             (1)
                        between the State of Utah, Division of State Lands and
                        Forestry and Amax Magnesium Corporation

             10.14  --  Amended Rights of Way No. U-54897, dated June 21, 1993          (1)
                        issued by the United States Department of the Interior
                        Bureau of Land Management, Salt Lake District Office to
                        Magnesium Corporation of America

             10.15  --  Lease dated May 13, 1991 between Sabel Industries, Inc.         (1)
                        as tenant and Janis Sabel, the Estate of Mark Sabel,
                        Marcelle Sabel Moers a/k/a Marcel Sabel Moers, Dorothy
                        Anne Bell and Lee Altheimer as successors to the Estate
                        of Dorothy Altheimer with respect to premises known as
                        Theodore Highway 90, County of Mobile, Alabama

             10.16  --  Lease dated July 1, 1977 between Dewey Emfinger and his         (1)
                        wife, Bea Emfinger, to Sabel Steel Service Incorporated
                        with respect to premises known at 599 Ross Clark Circle,
                        Dothan, Alabama and the sublease thereof to Sabel
                        Industries, Inc. then known as Ren Alabama Inc. dated
                        July 30, 1987

             10.17  --  Lease dated July 30, 1987 between Mark Sabel, Janis             (1)
                        Sabel, Marcel Moers and Dorothy Altheimer, owner of an
                        undivided 50% interest and Ted Cohen, owner of an
                        undivided 50% interest, all as tenants in common, to
                        Sabel Industries, Inc. (name subsequently changed to
                        JiMark Investment Company, Inc.) with respect to
                        premises known as 2811 Day Street, Montgomery, Alabama
                        and the sublease thereof to Sabel Industries, Inc., then
                        known as Ren Alabama Inc., dated July 30, 1987. Note:
                        Sabel Industries, Inc. subsequently purchased the
                        undivided 50% interest of Mr. Cohen

             10.18  --  Master Lease Indenture dated July 30, 1987 between Sabel        (1)
                        Land Company, a tenancy in common, comprised of Mark
                        Sabel, Janis Sabel, Marcel Moers and Dorothy Altheimer
                        and Sabel Industries, Inc. then known as Ren Alabama
                        Inc. covering premises known as Railroad Street, West
                        Lafayette Street, East Lafayette Street, 749 North Court
                        Street and 589 North Court Street, all in Montgomery,
                        Alabama (other premises covered by this original lease
                        are no longer used by Sabel Industries, Inc.)

             10.19  --  Brine Supply Agreement dated August 3, 1993 between AZKO        (1)
                        Salt Inc. and Magnesium Corporation of America

             10.20  --  Net Worth Appreciation Agreements between Sabel Industries,
                        Inc. and:
                        a) Keith Sabel, dated January 24, 1994                          (2)
                        b) Phillip Brown, dated January 24, 1994                        (2)

           10.20.1  --  Amendment to Net Worth Appreciation Agreements between Sabel
                        Industries, Inc. and:
                        a) Keith Sabel, dated January 15, 1999                         (13)
                        b) Phillip Brown, dated January 15, 1999                       (13)

             10.21  --  Waiver of "Additional Fees" through October 31, 1995 dated      (3)
                        January 11, 1996 between The Renco Group, Inc. and Renco
                        Metals, Inc.

             21.1   --  Subsidiaries of Renco Metals, Inc.                             (1)

              27    --  Financial Data Schedule
</TABLE>

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

    (1) Previously filed and incorporated herein by reference from the
        Registrants' Registration Statement on Form S-4 (file no. 33-68230) as
        declared effective by the Securities and Exchange Commission on December
        3, 1993.

    (2) Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-K for the fiscal year ended October 31, 1994 (File No.
        33-68230).



                                      -45-
<PAGE>   46

    (3) Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-K for the fiscal year ended October 31, 1995 (File No.
        33-68230).

    (4) Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-Q for the quarterly period ended January 31, 1996 (File
        No. 33-68230).

    (5) Previously filed and incorporated herein by reference from the
        Registrants' Registration Statement on Form S-1 (File no. 333-4513) as
        declared effective by the Securities and Exchange Commission on June 27,
        1996.

    (6) Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 8-K, filed July 17, 1996 (File No. 333-4513).

    (7) Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-Q for the quarterly period ended July 31, 1996 (Files No.
        33-68230 and 333-4513).

    (8) Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-K for the fiscal year ended October 31, 1996 (Files No.
        33-68230 and 333-4513).

    (9) Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-K for the fiscal year ended October 31, 1997 (File No.
        333-4513)..

    (10)Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-Q for the quarterly period ended July 31, 1998 (File No.
        333-4513).

    (11)Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-K for the fiscal year ended October 31, 1998 (File No.
        333-4513).

    (12)Previously filed and incorporated herein by reference from Renco Metals,
        Inc.'s Form 10-Q for the quarterly period ended July 31, 1999 (File No.
        333-4513).

    (13)Filed herewith electronically


    B.  No reports on Form 8-K were issued subsequent to the Registrant's
        Quarterly Report on Form 10-Q for the quarter ended July 31, 1999.



                                      -46-
<PAGE>   47


                                                                     Schedule II
                       RENCO METALS, INC. AND SUBSIDIARIES

                        Valuation and Qualifying Accounts

                  Years ended October 31, 1999, 1998, and 1997

                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                    Balance     Additions
                                                       at        charged   Deductions-
                                                   beginning    to costs    write-offs   Balance
                                                       of         and        against     at end
                                                      year      expenses    allowance    of year
                                                   ---------    --------    ----------  --------
<S>                                                <C>          <C>         <C>         <C>
Year ended October 31, 1999:
  Applied against asset accounts:
      Allowance for doubtful accounts               $    514         180         (162)      532
      Allowance for inventory obsolescence               442         295         (176)      561
Year ended October 31, 1998:
  Applied against asset accounts:
      Allowance for doubtful accounts               $    514          37          (37)      514
      Allowance for inventory obsolescence               442           -            -       442
Year ended October 31, 1997:
  Applied against asset accounts:
      Allowance for doubtful accounts               $    514         163         (163)      514
      Allowance for inventory obsolescence               442           -            -       442
</TABLE>



                                      -47-
<PAGE>   48

                                   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.


                                             RENCO METALS, INC.
                                             (Registrant)



Date:      January 27, 2000                  By   /s/ Ira Leon Rennert
-------------------------------------          ---------------------------------
                                                  Ira Leon Rennert
                                                  Chairman of the Board 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 and on the dates indicated.






Date:      January 27, 2000                       /s/ Ira Leon Rennert
-------------------------------------          ---------------------------------
                                                  Ira Leon Rennert
                                                  Chairman of the Board, sole
                                                  Director, and Chief Executive
                                                  Officer (Principal Executive
                                                  Officer)



Date:      January 27, 2000                       /s/ Roger L. Fay
-------------------------------------          ---------------------------------
                                                  Roger L. Fay
                                                  Vice President, Finance
                                                  (Principal Financial and
                                                  Accounting Officer)






              SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
                 FILED PURSUANT TO SECTION 15(d) OF THE ACT BY
            REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT
                            TO SECTION 12 OF THE ACT

    No annual report to security holders covering the registrant's last fiscal
year and no proxy statement, form of proxy or other proxy soliciting material
with respect to any annual or other meeting of security holders has been nor
will be sent to security holders.



                                      -48-