<PAGE>   1
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark one)
[ X ]    Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 (no fee required) for the fiscal year ended
         DECEMBER 31, 1997, or

[   ]    Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 (no fee required) for the transition period from
         _________ to _________.

                        Commission file number 1-11126-60

                            J&L SPECIALTY STEEL, INC.
             (Exact name of registrant as specified in its charter)

  PENNSYLVANIA                                 25-1564186
  (State of Incorporation)                     (IRS Employer Identification No.)

  ONE PPG PLACE
  P.O. BOX 3373
  PITTSBURGH, PENNSYLVANIA                     15230-3373
  (Address of principal executive offices)     (Zip Code)

        Registrant's telephone number, including area code (412) 338-1600

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
================================================================================
         Title of each class                Name of exchange on which registered
         -------------------                ------------------------------------
Common Stock, par value $0.01 per share         New York Stock Exchange, Inc.
================================================================================

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. [ ]

As of February 27, 1998, the aggregate market value of the registrant's Common
Stock held by nonaffiliates of the registrant was approximately $162,297,000.
All directors and officers of the registrant and each person who may be deemed
to own beneficially more than 5% of the registrant's Common Stock have been
deemed affiliates.

As of February 27, 1998, there were 38,763,000 shares of Common Stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:
Specified portions of the 1997 Annual Report to Shareholders are incorporated by
reference into Parts II and IV of this report. Specified portions of the Proxy
Statement for the 1998 Annual Meeting of Shareholders are incorporated by
reference into Part III of this report.

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<PAGE>   2


                                TABLE OF CONTENTS


PART I
                                                                          PAGE
                                                                          ----
   ITEM 1.    BUSINESS...................................................    3

   ITEM 2.    PROPERTIES.................................................    7

   ITEM 3.    LEGAL PROCEEDINGS..........................................    8

   ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........    8


PART II

   ITEM 5.    MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
              SHAREHOLDER MATTERS........................................    9

   ITEM 6.    SELECTED FINANCIAL DATA....................................    9

   ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS........................    9

   ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................    9

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


PART III

   ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.........   10

   ITEM 11.   EXECUTIVE COMPENSATION.....................................   10

   ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT.............................................   10

   ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............   10


PART IV

   ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
              REPORTS ON FORM 8-K........................................   11

SIGNATURES    ...........................................................   16


                                       2
<PAGE>   3

                                     PART I


ITEM 1.  BUSINESS

OVERVIEW

         J&L Specialty Steel, Inc. (the "Company") is a leading manufacturer of
flat rolled stainless steel. Stainless steel is the Company's only product line.
The Company produces both austenitic and ferritic flat rolled stainless steels;
austenitic cold rolled stainless steel is the largest part of the domestic
stainless steel market. The Company manufactures various grades of stainless
steel in the form of cold rolled stainless steel sheet and strip, hot rolled
stainless steel sheet and strip, and continuous mill plate, as well as
semifinished stainless steel slabs and coils.

         The Company is a Pennsylvania corporation and successor by merger on
December 6, 1993, to Specialty Materials Corporation ("SMC") and J&L Specialty
Products Corporation ("Products"). Products was incorporated in 1986 to acquire
substantially all the assets of LTV Steel Specialty Products Company ("LTV
Specialty") in a management-led leveraged buyout. Prior to the asset acquisition
by Products, LTV Specialty was a subsidiary of LTV Steel and had manufactured
stainless steel for over 30 years. In 1987, SMC was incorporated in Delaware
pursuant to a corporate reorganization in order to hold all the Common Stock of
Products. In June 1990, Ugine s.a. ("Ugine"), a French corporation, acquired all
the stock of SMC from the management and other shareholders who held shares from
the 1986 leveraged buyout. At such time, Ugine became the sole shareholder of
SMC.

         In December 1993, the Company completed an initial public offering of
17,940,000 shares of its Common Stock, which resulted in 46.4% of its
outstanding Common Stock being publicly held, and the remaining 53.6% being held
by Ugine. On December 11, 1995, pursuant to a merger, Ugine became a division of
its previous majority shareholder, Usinor. As a result of the merger, Usinor
currently holds a 53.5% ownership interest in the Company's outstanding Common
Stock, with the remaining 46.5% continuing to be publicly held.

         The Company's principal executive offices are located at One PPG Place,
P. O. Box 3373, Pittsburgh, Pennsylvania 15230-3373 and its telephone number is
(412) 338-1600.


STAINLESS STEEL INDUSTRY

         Stainless steel, by containing elements such as chromium, nickel and
molybdenum, not only offers carbon steel's traditional attributes of strength,
durability and formability, but also is resistant to corrosion in many working
environments, maintains its strength at high operating temperatures and provides
an attractive, easily maintained surface appearance. Relative to carbon steel,
stainless steel sells at a higher price, but has a lower life cycle cost for
many applications. It is generally manufactured in smaller quantities, and
accounts for approximately 2% of total steel consumption in the United States.

         Stainless steel is manufactured in different types (or grades), but all
types contain at least 10% chromium along with other elements which are added to
develop specific properties. Stainless steel's resistance to many corrosive
conditions, such as exposure to water, air, food and alkalis, is provided by a
thin, transparent, protective chromium oxide film which forms on its surface.
When this film is scratched, nicked or otherwise penetrated, a fresh film
immediately forms to preserve the corrosion resistance.

         Stainless steel is a segment of the domestic specialty steel industry,
which also consists of producers of heat-resisting steels, electric steel, tool
steel and alloy steel. Demand for stainless steel sheet and strip in the United
States has increased at an average annual rate of approximately 5.7% over the
past ten years.


                                       3
<PAGE>   4


MANUFACTURING

         The Company operates three production plants located in Midland,
Pennsylvania; Louisville, Ohio; and Detroit, Michigan.

         The stainless steel manufacturing process begins in one of two electric
arc furnaces at the Company's Midland Plant. These furnaces are used to melt
carefully selected stainless steel and carbon steel scrap along with pure alloys
such as nickel and ferrochromium. After the scrap and alloys are melted in the
furnaces, the resulting liquid steel is transferred to an argon oxygen
decarburization ("AOD") vessel for refinement. The AOD process reduces the
carbon levels in the steel, improves the steel's cleanliness and metallurgical
consistency, and is utilized for final alloy additions. Following the refining
process, the liquid steel is cast into slabs having a thickness of 6-1/8 inches
or 7-1/2 inches using a continuous slab caster.

         Because the Company does not own a hot strip mill, steel slabs are
transported from the Midland Plant to one of two independent hot strip mills
owned by carbon steel producers which toll steel for the Company. At these
mills, the slabs are rolled at very high temperatures into long, thin bands
generally less than 1/2 inch in thickness, which are then wound into a coil.

         After hot rolling, coils are transported to one of the Company's
finishing facilities for further processing (some of the hot rolled coils are
shipped directly to customers). At the finishing facilities, the stainless steel
follows either a conventional processing path, or is processed on the Company's
recently completed Direct Roll Anneal and Pickle ("DRAP") Line.

         In conventional processing, the stainless steel is passed through a
primary continuous annealing furnace (to increase its ductility) and pickling
line (an acid bath designed to remove surface defects or scale formed during the
heating process). The steel is then cold rolled on a Sendzimir mill or a
reversing mill. This rolling reduces the steel's thickness and forms a cold
rolled product. The resulting cold rolled steel is then processed through a cold
annealing and pickling process to recover its ductility and to clean the steel
surface. Finishing operations, such as polishing, skin passing, leveling and
slitting, are used to provide certain product characteristics. The coils or
sheets are then packaged and shipped to the customer by common carrier.

         The state-of-the-art DRAP Line, located at the Company's Midland, Pa.
Plant, permits in-line processing of hot rolled stainless steel coils to a
finished coil on a continuous manufacturing line. This new line will reduce
processing time and improve quality over conventional processing by combining
several steel processing functions described above normally performed on
separate manufacturing processing units into a single continuous process.

SEGMENT AND PRODUCTS

         The Company operates within a single business segment, stainless steel,
and predominantly within a single geographic area, the continental United
States. Approximately 5% of the Company's shipments were exported in 1997. The
Company manufactures various grades of stainless steel in the form of cold
rolled stainless steel sheet and strip, hot rolled stainless steel sheet and
strip, and continuous mill plate, as well as stainless steel slabs. Stainless
steel sheet represents flat rolled stainless steel sheet in widths of 24 inches
and wider, and thicknesses (or gauges) of .015 to .1875 inches (in the case of
cold rolled sheet) and .091 to .500 inches (in the case of hot rolled sheet and
plate). Stainless steel strip represents flat rolled stainless steel in widths
of less than 24 inches which may be produced by slitting stainless steel sheet.
Hot rolled stainless steel sheet and continuous mill plate are distinguished on
the basis of the gauge of the steel, with continuous mill plate being thicker.
In both cases, the final rolling operation is on a hot strip mill. Cold rolled
stainless steel sheet and strip are produced from hot rolled stainless steel
sheet through additional processing steps, principally a reduction in gauge by
processing on a cold reducing mill. Most of the Company's cold and hot rolled
sheet and strip products are sold in coil form and the balance is sold cut to
length. In addition to different grades, widths and gauges, stainless steel is
also produced in various finishes as required by specific customer applications.

         The Company produces a large portion of its stainless steel in response
to specific customer orders rather than for inventory. The products manufactured
for inventory are usually in standard grades and sizes. The period from the date
of a customer order to the date of shipment is generally six to eight weeks for
cold rolled stainless steel, which requires the most processing, although in
periods of peak demand these lead times can stretch to ten to twelve weeks.
Orders which can be filled from inventory can generally be shipped in one week.
The backlog of firm orders as of December 31, 1997, was




                                       4
<PAGE>   5

$113.4 million, all of which is expected to be filled within the current year,
as compared to $120.6 million at December 31, 1996.

MARKETING AND CUSTOMERS

         The Company's stainless steel is used in a wide variety of industrial,
commercial and consumer products, including pressure vessels, chemical and
refinery equipment, environmental control equipment, cargo containers, sinks,
transportation equipment, beer kegs, fast food equipment, automated bank teller
machines, automobile trim, exhaust systems, and kitchen appliances and utensils.

         Approximately 50% of the Company's products are sold to steel service
centers. The remainder of the Company's products are sold to stainless steel
converters, manufacturers of finished industrial and consumer products, and
exporters. Steel service centers are independent distribution outlets where
steel in a variety of grades, forms, sizes and finishes is warehoused and may be
further customized to specific orders by slitting, splitting, polishing, cutting
to length and packaging in-house, and sold in smaller order quantities than by
producers. Stainless steel converters, or rerollers, purchase products from the
Company and then further process them into thinner gauge cold rolled stainless
steel sheet and strip products prior to selling to the ultimate end-user,
manufacturer or service center.

         The Company conducts its North American marketing activities through
its own personnel, who are organized into four regional districts. All sales
personnel are salaried employees. Regional sales offices are located in Atlanta,
Chicago, Los Angeles and Pittsburgh. Additional sales representatives are also
located in Detroit, Dallas, Boston and Milwaukee. The Company utilizes Uginox
Sales Corporation, a sales affiliate of Ugine, to service the export market
outside of North America. The Company believes that the terms of sales made to
and through Uginox Sales Corporation are no less favorable than the Company
could obtain in transactions with unrelated parties.

RAW MATERIALS

         The principal raw materials used to produce stainless steel are
stainless steel scrap, nickel, ferrochromium, carbon steel scrap, molybdenum,
ferrosilicon, manganese and manganese alloys. The Company purchases its
stainless steel scrap and carbon steel scrap from a number of suppliers in the
United States. The Company purchases most of its nickel requirements from
producers in Canada, Russia, Australia, the Dominican Republic and Colombia.
Ferrochromium is purchased principally from producers in the United States,
Turkey and South Africa. South Africa has approximately 80% of the known
reserves of chromite ore from which ferrochromium is produced. The Company also
purchases its low phosphorous ferromanganese requirements from producers in
South Africa, which has substantially all of the known reserves.

         The Company believes that it has adequate sources of raw materials to
support its business activity, although no prediction can be made as to the
continued availability of such raw materials or their cost in future periods.
Some of the sources of raw materials are located in countries which may be
subject to unstable political and economic conditions, which might disrupt
supplies or affect the prices of these raw materials. A continued interruption
in the supply of raw materials could have a material adverse effect on the
Company's financial condition and results of operations.

         The Company's ultra-high-powered electric arc furnaces located at its
Midland Plant consume a large amount of electricity. The Company believes it
will continue to have an adequate supply of electricity for its current and
future needs.

COMPETITION

         The Company faces vigorous competition from domestic and foreign
producers of stainless steel. Its principal United States competitors are
Allegheny Teledyne Incorporated ("ALT"); Armco, Inc.; North American Stainless
Corp., which is a majority-owned subsidiary of Acerinox, S.A. (a Spanish
stainless steel producer); and Lukens, Inc. ("Lukens"), which owns Washington
Stainless Company. Together with the Company, these companies produce
substantially all of the flat rolled stainless steel produced in the United
States. In January 1998, ALT reached an agreement with Bethlehem Steel
Corporation, party to a previously announced merger with Lukens, to purchase
certain of the melting and finishing facilities Lukens currently uses in the
manufacture of flat-rolled stainless steel. The effects of this proposed
transaction to the Company cannot be determined at this time.


                                       5
<PAGE>   6


         Based on statistics, the Company believes it is the third largest
manufacturer of stainless steel sheet and strip products in the United States
and the second largest United States producer of austenitic cold rolled
stainless steel, which is the largest part of the domestic stainless steel
market. Competition is based principally on price, product characteristics,
quality and service.

         Major foreign producers competing in the United States market include
those located in the member countries of the European Union, Japan, Mexico,
Canada, Korea and Taiwan. The market share of imported stainless steel sheet and
strip has increased significantly over the past five years. In 1992, imports
represented 17.4% of apparent United States consumption compared to 20.8% in
1997.

         In addition to competition from other stainless steel producers, the
Company faces competition from other materials which can be substituted for
stainless steel. These include plastics, composites, ceramics, aluminum and
coated carbon steel.

RESEARCH AND DEVELOPMENT

         Effective October 1, 1993, the Company entered into a ten-year research
and technology agreement with Ugine that provides the Company with a broad
spectrum of patents, know-how and future research and development services
concerning the manufacturing and processing of flat rolled stainless steel
including, under certain circumstances, any commercially viable thin strip
casting technology developed by Ugine. Ugine, in partnership with Thyssen Stahl
AG, among others, is actively pursuing thin strip casting technology, which
takes liquid steel and casts it into hot rolled sheet in one step, thereby
eliminating the need for a continuous slab caster and hot strip mill. All
patents and know-how relating to this thin strip casting technology will be
provided to the Company without additional payment once the technology is ready
for commercialization, so long as Usinor (successor by merger to Ugine) owns a
majority of the voting stock of the Company at that time.

         Expenditures for research and development for the years ended December
31, 1997, 1996 and 1995, were $6.0 million, $6.0 million and $4.0 million,
respectively.

PATENTS AND TRADEMARKS

         Other than the trademarks Kool Line(R), Architex(R) and JL(R), the
Company does not believe any patents or trademarks it owns are material to its
business.

EMPLOYEES

         As of December 31, 1997, the Company had 1,302 full-time employees, of
whom 815 were represented by the United Steelworkers of America, AFL-CIO
("USWA"). The USWA workers located at the Company's three manufacturing
facilities are covered by separate collective bargaining agreements. These three
agreements expire on July 1, 1999. The Company also has three other collective
bargaining agreements covering 49 employees. The Company believes that its
relationship with its union employees is good. The Company has profit sharing
plans for all of its union and salaried employees.


                                       6
<PAGE>   7


ENVIRONMENTAL MATTERS

         The Company is subject to various federal, state and local
environmental laws and regulations governing, among other things, air emissions,
waste water discharge, and solid and hazardous waste disposal. The Company
believes that its business, operations and facilities are being operated in
substantial compliance with applicable environmental laws and regulations. The
Company's expenditures relating to environmental compliance during the years
ended December 31, 1997 and 1996, amounted to $16.5 million and $23.6 million,
respectively. The 1997 amount included approximately $1.0 million of capital
expenditures. Environmental-related capital expenditures are broadly estimated
to total approximately $1.2 million and $1.6 million during 1998 and 1999,
respectively. This estimate is based on identified projects; actual expenditures
may vary as the number and scope of environmental projects are revised and could
increase if additional projects are identified or additional regulatory
requirements are imposed. This does not include any environmental capital
expenditures for a steckel mill, should the Company decide to purchase such a
mill; any such capital expenditures would likely occur in the year 1999 or 2000.

         The Company anticipates that its capital expenditures in connection
with environmental matters may increase in the future as more stringent laws and
regulations are enacted or become effective. For example, the implementation of
the Great Lakes Initiative will have an impact on future water discharge
permits. Legislative reauthorization and amendments are also expected in the
next few years for the Clean Water Act and the Resource Conservation and
Recovery Act. The Company is currently unable to predict the long-term economic
effect that these new laws and regulations will have on the Company.


ITEM 2.  PROPERTIES

         The Company leases 26,500 square feet of office space at One PPG Place
in Pittsburgh, Pennsylvania, for its principal corporate offices under a lease
expiring in 2002. The Company owns its manufacturing and finishing facilities
located at Midland, Pennsylvania; Louisville, Ohio; and Detroit, Michigan.

         The Midland Plant site consists of 364 acres with building space of
approximately 4,164,000 square feet currently in use. The Midland Plant contains
melting, conditioning and various finishing facilities. This facility was
constructed by its original owner for the manufacture of both carbon and
stainless steels. Only a portion of the available square footage at the Midland
facility is used for the manufacture of flat rolled stainless steel. The Company
does not presently intend to use other dormant areas at the Midland Plant, nor
does the Company intend to utilize any portion of the facilities for the
manufacture of carbon steel.

         The Louisville Plant site consists of 270 acres containing a main
manufacturing facility and several auxiliary and office buildings totaling
644,000 square feet. It is a finishing facility and houses the Company's
computer center.

         The Detroit Plant site consists of 11 acres containing a manufacturing
facility and office building totaling 371,000 square feet. It is a finishing
facility. In October 1997, the Company announced that its intention is to close
certain production facilities at its Detroit Plant. The shutdowns of affected
equipment are expected to occur gradually during the first half of 1998 as the
DRAP Line's production capabilities increase.

         The Company believes that its facilities and equipment are adequate and
suitable for, and are in a condition which will permit them to serve, the
Company's present needs. The Company has largely completed a major capital
program designed to expand and improve its facilities to increase capacity and
lower operating costs. The key project in this program is the DRAP Line at the
Midland Plant. The Company's utilization of its production capacity varies from
month to month. For 1997, the Company's utilization of its production capacity,
excluding the DRAP Line, was approximately 85%, up 5% from the prior year.


                                       7
<PAGE>   8


ITEM 3.  LEGAL PROCEEDINGS

         On March 1, 1996, the United States filed a civil complaint against the
Company at the request of the Environmental Protection Agency ("EPA") alleging
eight claims of violations of the Clean Water Act at the Company's Louisville
Plant. The action was filed in Federal District Court in the Northern District
of Ohio and concerns various alleged violations under each claim occurring from
1990 through 1994. In March 1998, the Company executed a Consent Decree with the
EPA settling such action, which provides, among other things, for the payment of
a $200,000 fine. This Consent Decree has not yet received final court approval.
The Company is not a party to any other pending legal proceedings other than
routine litigation incidental to its business. The Company believes that the
ultimate resolution of these proceedings will not have a material adverse effect
on the Company's financial condition and results of operations.


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

         None.

EXECUTIVE OFFICERS OF THE REGISTRANT

         The names of the executive officers of the Company, and certain other
information relating to them, is set forth below.

<TABLE>
<CAPTION>
              NAME                    AGE                   POSITIONS HELD
              ----                    ---                   --------------

         <S>                          <C>        <C>
         Eugene A. Salvadore          49         Director, President and Chief Executive Officer
         Kirk F. Vincent              49         Executive Vice President, Finance and Administration
                                                   and Chief Financial Officer
         Daryl K. Fox                 48         Vice President-Human Resources
         Geoffrey S. Gibson           53         Vice President-Commercial
         Paul J. Grandy               52         Vice President-Engineering
         Gerald L. Kosko              56         Vice President-Purchasing and Traffic
         Michael F. McGuire           52         Vice President-Technology
         John A. Wallace              55         Vice President-Operations
</TABLE>

         Eugene A. Salvadore was appointed President and Chief Executive Officer
of the Company on January 1, 1998. Prior thereto, Mr. Salvadore served as
President and Chief Operating Officer from July 1, 1995 until his recent
promotion. From April 1993 through June 1995, Mr. Salvadore served as Vice
President-Operations. From June 1992 to April 1993, Mr. Salvadore was General
Manager-Operations of the Company.

         Kirk F. Vincent was appointed Executive Vice President, Finance and
Administration and Chief Financial Officer on January 1, 1998. From December
1991 until this promotion, Mr. Vincent was Vice President-Finance and Law of the
Company. Prior thereto, Mr. Vincent was Vice President, Secretary and General
Counsel of the Company.

         Daryl K. Fox has been Vice President-Human Resources of the Company
since June 1993. From June 1991 to May 1993, Mr. Fox was General Manager,
Industrial Relations at LTV Steel Railroads, a division of LTV Steel.

         Geoffrey S. Gibson has been Vice President-Commercial of the Company
since June 1993. Prior thereto, Mr. Gibson was General Manager-Sales of the
Company.

         Paul J. Grandy has been Vice President-Engineering of the Company since
June 1996. Prior thereto, Mr. Grandy was Vice President - Engineering at Lukens,
Inc. Mr. Grandy was Director-Engineering of the Company from 1986 to 1992, when
he left to join Lukens.

         Gerald L. Kosko has been Vice President-Purchasing and Traffic of the
Company since 1986.


                                       8
<PAGE>   9


         Michael F. McGuire has been Vice President-Technology since 1995. Prior
thereto, Mr. McGuire was Director-Technology of the Company since 1986.


         John A. Wallace has been Vice President-Operations since 1995. Prior
thereto, Mr. Wallace was Plant Manager of the Company's Midland Plant since
1986.




                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
         SHAREHOLDER MATTERS

         The information required by this item is included herein by reference
from "Stock Exchange Listing" and "Common Stock Data" on page 31 of the
Company's 1997 Annual Report.


ITEM 6.  SELECTED FINANCIAL DATA

         The information required by this item is included herein by reference
from the "Selected Financial Data" on page 27 of the Company's 1997 Annual
Report.


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

         The information required by this item is incorporated herein by
reference from "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 5 through 8 of the Company's 1997 Annual Report.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements and supplementary data required by this item
are incorporated herein by reference from the Company's 1997 Annual Report and
are listed in Item 14(a) 1. and 2. of "Exhibits, Financial Statement Schedules,
and Reports on Form 8-K" hereof.


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

         None.


                                       9
<PAGE>   10


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         In addition to the information reported in Part I of this Form 10-K
under the caption "Executive Officers of the Registrant," the information
required by this item is incorporated by reference from the caption "Election of
Directors" in the Company's Proxy Statement relating to its 1998 Annual Meeting
of Shareholders.


ITEM 11.  EXECUTIVE COMPENSATION

         The information required by this item is incorporated herein by
reference from the caption "Executive Compensation" in the Company's Proxy
Statement relating to its 1998 Annual Meeting of Shareholders.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

         The information required by this item is incorporated herein by
reference from the caption "Beneficial Ownership of Common Stock" in the
Company's Proxy Statement relating to its 1998 Annual Meeting of Shareholders.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item is incorporated herein by
reference from the caption "Certain Relationships and Related Transactions" in
the Company's Proxy Statement relating to its 1998 Annual Meeting of
Shareholders.


                                       10
<PAGE>   11


                                     PART IV


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

(a)  Documents filed as part of the Form 10-K report:

     1.  Financial Statements
         The consolidated balance sheets as of December 31, 1997 and 1996, and
         the consolidated statements of income, cash flows and shareholders'
         equity for each of the three years in the period ended December 31,
         1997, together with the report of Arthur Andersen LLP, independent
         public accountants, dated January 21, 1998, on pages 9 through 25 of
         the Company's 1997 Annual Report are incorporated herein by reference.

     2.  Financial Statement Schedules
         The financial statement schedule shown below should be read in
         conjunction with the financial statements contained in the Company's
         1997 Annual Report.

<TABLE>
<CAPTION>
                                                                                Page No. of
                                                                         This Form 10-K Report
                                                                         ---------------------

<S>                                                                                 <C>
        a.  Independent Public Accountants' Report                                  17

        b.  Financial Statement Schedule:

            II - Valuation and Qualifying Accounts for the period                   18
                 January 1, 1995 through December 31, 1997
</TABLE>


     3.  Exhibits

         The exhibits listed below are filed as a part of this Form 10-K.

   EXHIBIT NO.                                              DESCRIPTION
   -----------                                              -----------

       2.1         Merger Agreement, dated March 13, 1990, as amended as of
                   June 14, 1990, among Specialty Materials Corporation, SMC
                   Acquisition Corporation of Delaware and Ugine s.a. (formerly
                   Ugine Aciers de Chatillon et Gueugnon, S.A.). Incorporated by
                   reference to Exhibit 2.3 to the Company's Form S-1,
                   Registration No. 33-69370.

       2.2         Agreement and Plan of Merger dated December 6, 1993 by and
                   between Products and Specialty Materials Corporation and by
                   and between Specialty Materials Corporation and J&L Specialty
                   Steel, Inc. Incorporated by reference to Exhibit 2.4 to the
                   Company's Form 10-K for the fiscal year ended December 31,
                   1993.

       3.1         Articles of Incorporation of the Company. Incorporated by
                   reference to Exhibit 3.2 to the Company's Form 10-Q for the
                   fiscal quarter ended June 30, 1996.

       3.2         By-laws of the Company. Incorporated by reference to Exhibit
                   3.2 to the Company's Form 10-Q for the fiscal quarter ended
                   September 30, 1994.


                                       11
<PAGE>   12

       4.1         Agreements to furnish a copy of certain instruments which
                   relate to long-term debt not registered. Incorporated by
                   reference to Exhibit 4.8 to the Company's Report on Form 10-K
                   for the fiscal year ended September 30, 1988, to Exhibit 4.5
                   to the Company's Report on Form 10-K for the fiscal year
                   ended September 30, 1989, and to Exhibit 4.4 to the Company's
                   Amendment No. 2 to Form S-1, Registration No. 33-29398.

      10.1         Employment Agreement, dated April 28, 1986, between Claude F.
                   Kronk and Products. Incorporated by reference to Exhibit 10.1
                   to the Company's Post-Effective Amendment No. 2 to Form S-1,
                   Registration No. 33-10474 and to Exhibit 10.1 to the
                   Company's Report on Form 10-Q for the fiscal quarter ended
                   June 30, 1987.*

      10.2         Agreement Amending Employment Agreement, dated July 13, 1987,
                   between Claude F. Kronk and Products. Incorporated by
                   reference to Exhibit 10.7 to the Company's Report on Form
                   10-Q for the fiscal quarter ended June 30, 1987.*

      10.3         Amendment to Employment Agreement, dated as of October 1,
                   1989, among Products, Specialty Materials Corporation and
                   Claude F. Kronk. Incorporated by reference to Exhibit 10.2 of
                   the Company's Report on Form 10-K for the fiscal year ended
                   September 30, 1989.*

      10.4         Third Amendment to Employment Agreement, dated as of November
                   1, 1990, between Products and Claude F. Kronk. Incorporated
                   by reference to Exhibit 10.4 to the Company's Form S-1,
                   Registration No. 33-69370.*

      10.5         Second Agreement Amending Employment Agreement, dated as of
                   October 1, 1991, among Products, Specialty Materials
                   Corporation and Claude F. Kronk. Incorporated by reference to
                   Exhibit 10.5 to the Company's Form S-1, Registration No.
                   33-69370.*

      10.6         Fourth Amendment to Employment Agreement, dated as of October
                   1, 1992, between Products and Claude F. Kronk. Incorporated
                   by reference to Exhibit 10.6 to the Company's Form S-1,
                   Registration No. 33-69370.*

      10.7         Fifth Amendment to Employment Agreement, dated as of December
                   29, 1992, between Products and Claude F. Kronk. Incorporated
                   by reference to Exhibit 10.7 to the Company's Form S-1,
                   Registration No. 33-69370.*

      10.8         Agreement, dated July 13, 1987, between Claude F. Kronk and
                   Products. Incorporated by reference to Exhibit 10.7 to the
                   Company's Report on Form 10-Q for the fiscal quarter ended
                   June 30, 1987.*

      10.9         Amendment to Agreement, dated as of October 5, 1989, between
                   Products and Claude F. Kronk. Incorporated by reference to
                   Exhibit 10.14 to the Company's Report on Form 10-K for the
                   fiscal year ended September 30, 1989.*

      10.10        Letter Agreement dated September 28, 1995, between the
                   Company and Eugene A. Salvadore. Incorporated by reference to
                   Exhibit 10.2 of the Company's Form 10-Q for the fiscal
                   quarter ended September 30, 1995.*

      10.11        Employment Agreement, effective January 1, 1998, between the
                   Company and Eugene A. Salvadore. Filed herewith.*

      10.12        Employment Agreement, effective January 1, 1998, between the
                   Company and Kirk F. Vincent. Filed herewith.*

      10.13        Company's Pension Plan, as amended and restated, effective
                   January 1, 1993. Incorporated by reference to Exhibit 10.8 to
                   the Company's Form S-1, Registration No. 33-69370.*


                                       12
<PAGE>   13

      10.14        Company's Salaried Employees' Pension Plan, as amended and
                   restated, effective January 1, 1989. Incorporated by
                   reference to Exhibit 10.28 to the Company's Post-Effective
                   Amendment No. 1 to Form S-1, Registration No. 33-29398.*

      10.15        Company's First Amendment to the Pension Plan, effective as
                   of the dates noted therein, executed December 12, 1994.
                   Incorporated by reference to Exhibit 10.2 of the Company's
                   Form 10-Q for the fiscal quarter ended June 30, 1995.*

      10.16        Company's Salaried Employees' Pension Plan, as amended and
                   restated effective January 1, 1989, as amended by amendment
                   executed June 9, 1995. Incorporated by reference to Exhibit
                   10.3 of the Company's Form 10-Q for the fiscal quarter ended
                   June 30, 1995.*

      10.17        Company's Executive Benefit Plan, as amended and restated,
                   effective May 1, 1992. Incorporated by reference to Exhibit
                   10.10 to the Company's Form S-1, Registration No. 33-69370.*

      10.18        Company's Amendment to the Executive Benefit Plan, effective
                   January 1, 1998. Filed herewith.*

      10.19        Trust Agreement, dated July 21, 1987, between Products and
                   Pittsburgh National Bank for Claude F. Kronk, with a schedule
                   identifying other documents omitted and setting forth the
                   material details in which such omitted documents differ from
                   the document, a copy of which is filed. Incorporated by
                   reference to Exhibit 10.13 to the Company's Report on Form
                   10-Q for the fiscal quarter ended June 30, 1987.*

      10.20        Company's Capital Accumulation Plan, as amended and restated
                   effective July 1, 1990, as amended by amendment executed July
                   10, 1995. Incorporated by reference to Exhibit 10.1 of the
                   Company's Form 10-Q for the fiscal quarter ended June 30,
                   1995.*

      10.21        Company's Amendment to Capital Accumulation Plan, effective
                   as of January 1, 1997. Incorporated by reference to Exhibit
                   10.18 of the Company's Form 10-K filed on March 27, 1997.*

      10.22        Company's Amended and Restated Senior Management Incentive
                   Plan, dated January 1, 1992, as amended by amendment dated
                   January 1, 1993. Incorporated by reference to Exhibit 10.13
                   to the Company's Form S-1, Registration No. 33-69370.
                   Incorporated by reference to Exhibit 10.18 of the Company's
                   Form 10-K filed on March 27, 1997.*

      10.23        Company's Second Amendment to Senior Management Incentive
                   Plan, effective as of January 1, 1996. Incorporated by
                   reference to Exhibit 10.19 of the Company's Form 10-K filed
                   on March 28, 1996.*

      10.24        Company's Third Amendment to Senior Management Incentive
                   Plan, effective as of January 1, 1997. Incorporated by
                   reference to Exhibit 10.21 of the Company's Form 10-K filed
                   on March 27, 1997.*

      10.25        Company's Fourth Amendment to Senior Management Incentive
                   Plan, effective January 1, 1998. Filed herewith.*

      10.26        Settlement Agreement, made as of June 1, 1988, as amended as
                   of August 15, 1988, by and among LTV Steel Tubular Products
                   Company, LTV Steel Company, Inc., The LTV Corporation, The
                   Monongahela Connecting Railroad Company, Products and
                   Specialty Materials Corporation, including Tolling Agreement
                   attached thereto as Exhibit B. Incorporated by reference to
                   Exhibits 10.27 and 10.28 to the Company's Form 8-K filed on
                   October 20, 1988.



                                       13
<PAGE>   14


      10.27        Indemnity Trust Agreement, dated September 30, 1986, between
                   Products and Pittsburgh National Bank. Incorporated by
                   reference to Exhibit 10.27 to the Company's Post-Effective
                   Amendment No. 2 to Form S-1, Registration No. 33-10474.

      10.28        Form of Indemnification Agreement (including signature pages)
                   among the Company and certain directors, officers and
                   employees. Incorporated by reference to Exhibit 10.28 to the
                   Company's Post-Effective Amendment No. 2 to Form S-1,
                   Registration No. 33-10474, to Exhibit 10.28 to the Company's
                   Report on Form 10-K for the fiscal year ended September 30,
                   1987, and to Exhibits 10.24 and 10.31 to the Company's
                   Post-Effective Amendment No. 1 to Form S-1, Registration No.
                   33-29398.

      10.29        Amended and Restated 1993 Stock Incentive Plan of the
                   Company, effective June 10, 1987. Incorporated by reference
                   to Exhibit 10.3 to the Company's Form 10-Q filed for the
                   fiscal quarter ended June 30, 1997.*

      10.30        Lease Agreement, dated September 1, 1992, between Beaver
                   County Industrial Development Authority and Products, with
                   respect to the 6.6% pollution control revenue bonds.
                   Incorporated by reference to Exhibit 10.24 to the Company's
                   Form S-1, Registration No. 33-69370.

      10.31        Agreement of Sale, dated June 1, 1978, between Beaver County
                   Industrial Development Authority and Products (as successor
                   to Colt Industries, Inc.), with respect to the 7% pollution
                   control revenue bonds. Incorporated by reference to Exhibit
                   10.25 to the Company's Form S-1, Registration No. 33-69370.

      10.32        $100,000,000 Credit Agreement dated July 14, 1995, among the
                   Company, various banks, Mellon Bank, N.A., as agent and
                   Credit Lyonnais, Cayman Island Branch and Morgan Guaranty
                   Trust of New York, as co-agents. Incorporated by reference to
                   Exhibit 10.4 of the Company's Form 10-Q for the fiscal
                   quarter ended June 30, 1995.

      10.33        Amendment No. 1 to Credit Agreement dated as of December 10,
                   1995, among the Company, various banks, Mellon Bank, N.A. as
                   agent and Credit Lyonnais, Cayman Island Branch and Morgan
                   Guaranty Trust of New York, as co-agents. Incorporated by
                   reference to Exhibit 10.29 to the Company's Form 10-K filed
                   on March 28, 1996.

      10.34        $125,000,000 Term Loan Agreement dated July 14, 1995, among
                   the Company, various banks, Mellon Bank, N.A., as agent and
                   Credit Lyonnais, Cayman Island Branch and Morgan Guaranty
                   Trust of New York, as co-agents. Incorporated by reference to
                   Exhibit 10.5 of the Company's Form 10-Q filed on June 30,
                   1995.

      10.35        Amendment No. 1 to Term Loan Agreement, dated as of December
                   10, 1995, among the Company, various banks, Mellon Bank, N.A.
                   as agent and Credit Lyonnais, Cayman Island Branch and Morgan
                   Guaranty Trust of New York, as co-agents. Incorporated by
                   reference to Exhibit 10.31 to the Company's Form 10-K filed
                   on March 28, 1996.

      10.36        $125 Million Credit Agreement dated June 30, 1997, among the
                   Company, various banks, Mellon Bank, N.A., as agent.
                   Incorporated by reference to Exhibit 10.1 to the Company's
                   Form 10-Q for the fiscal quarter ended June 30, 1997.

      10.37        $125 Million Term Loan Agreement dated June 30, 1997, among
                   the Company, various banks, Mellon Bank, N.A., as agent.
                   Incorporated by reference to Exhibit 10.2 to the company's
                   Form 10-Q for the fiscal quarter ended June 30, 1997.

      10.38        Research and Technology Agreement, dated as of October 1,
                   1993, between the Company and Usinor Sacilor (successor by
                   merger to Ugine s.a.). Incorporated by reference to Exhibit
                   10.26 to the Company's Form 10-K for the fiscal year ended
                   December 31, 1993.


                                       14
<PAGE>   15


      10.39        Indemnification Agreement dated August 1, 1995 between the
                   Company and John A. Wallace. Incorporated by reference to
                   Exhibit 10.4 of the Company's Form 10-Q filed on September
                   30, 1995.

      10.40        Form of Indemnification Agreement between the Company and
                   each of Pierre F. de Ravel d'Esclapon, Michael J. Hiemstra
                   and Jennings R. Lambeth. Incorporated by reference to Exhibit
                   10.32 to the Company's Form S-1, Registration No. 33-69370.

      13.1         The following portion of the 1997 Annual Report to
                   Shareholders: pages 5 through 27 inclusive, and the sections
                   entitled "Common Stock Data" and "Stock Exchange Listing" on
                   page 31. Such Annual Report, except for those portions
                   thereof which are expressly incorporated in this Form 10-K by
                   reference, is not deemed "filed" with the Securities and
                   Exchange Commission.

      22.1         List of Subsidiaries. Incorporated by reference to Exhibit
                   22.1 to the Company's Form 10-K filed on March 27, 1997.

      23.2         Consent of Arthur Andersen LLP. Filed herewith.

      27.1         Financial Data Schedule. Filed herewith.

         * Management contract or compensatory plan, contract or arrangement
required to be filed by Item 601(b)(10)(iii) of Regulation S-K.

         The Company agrees to furnish to the Commission upon request copies of
all instruments not listed above which define the rights of holders of long-term
debt of the Company and its subsidiaries.

         Copies of the exhibits filed as part of this Form 10-K are available at
a cost of $.20 a page to any shareholder of record upon written request to the
Assistant Treasurer, J&L Specialty Steel, Inc., One PPG Place, P.O. Box 3373,
Pittsburgh, Pennsylvania 15230-3373.

(b) The following report on Form 8-K was filed:

               None



                                       15
<PAGE>   16

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized as of March 27, 1998.

                                      J&L SPECIALTY STEEL, INC.


                                      /s/ EUGENE A. SALVADORE
                                      -------------------------------------
                                      Eugene A. Salvadore
                                      President and Chief Executive Officer

         Pursuant to requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of March 27, 1998.


/s/ GUY R. DOLLE                               /s/ JENNINGS R. LAMBETH
-----------------------------------            ---------------------------------
Guy R. Dolle                                   Jennings R. Lambeth
Chairman, Board of Directors                   Director

/s/ EUGENE A. SALVADORE                        /s/ MICHEL LE PAGE
-----------------------------------            ---------------------------------
Eugene A. Salvadore                            Michel Le Page
President, Chief Executive Officer             Director
and Director

/s/ CLAUDE F. KRONK
-----------------------------------            ---------------------------------
Claude F. Kronk                                Michel J. Longchampt
Vice Chairman, Board of Directors              Director

/s/ KIRK F. VINCENT                            /s/ GERARD MARTEL
-----------------------------------            ---------------------------------
Kirk F. Vincent                                Gerard Martel
Executive Vice President, Finance and          Director
Administration and Chief Financial Officer

/s/ JOSEPH F. BROZICK                          /s/ FRANCIS MER
-----------------------------------            ---------------------------------
Joseph F. Brozick                              Francis Mer
Controller and Chief Accounting Officer        Director

                                               /s/ GERARD PICARD
-----------------------------------            ---------------------------------
Jean Didier Dujardin                           Gerard Picard
Director                                       Director

/s/ ROBERT HUDRY                               /s/ PIERRE F. DE RAVEL D'ESCLAPON
-----------------------------------            ---------------------------------
Robert Hudry                                   Pierre F. de Ravel d'Esclapon
Director                                       Director

                                               /s/ JOHN J. SHEEHAN
                                               ---------------------------------
                                               John J. Sheehan
                                               Director




                                       16
<PAGE>   17










                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

                         ON FINANCIAL STATEMENT SCHEDULE





To the Board of Directors of
J&L Specialty Steel, Inc:

We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in J&L Specialty Steel, Inc.'s 1997
Annual Report incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 21, 1998. Our audits were made for the purpose of
forming an opinion on those basic financial statements taken as a whole. The
schedule listed in the index in Item 14(a)2 of the Form 10-K is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not a part
of the basic financial statements. The schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.







                                                 /s/ Arthur Andersen LLP
                                                 ARTHUR ANDERSEN LLP


Pittsburgh, Pennsylvania,
January 21, 1998


                                       17
<PAGE>   18



                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                            J&L SPECIALTY STEEL, INC.
            FOR THE PERIOD JANUARY 1, 1995 THROUGH DECEMBER 31, 1997
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          ADDITIONS
                                                               --------------------------------
                                                    BALANCE                                                          BALANCE
                                                      AT           CHARGED        CHARGED                               AT
                                                   BEGINNING         TO           TO OTHER                            END OF
                  DESCRIPTION                      OF PERIOD       EXPENSE      ACCOUNTS (A)     DEDUCTIONS (B)       PERIOD
-------------------------------------------------------------------------------------------------------------------------------

<S>                                               <C>              <C>            <C>               <C>               <C>
Year ended December 31, 1995:
   Allowances for accounts receivable             $4,779           $ 500          $1,416            $2,359            $4,336
                                                  ======           =====          ======            ======            ======
Year ended December 31, 1996:
   Allowances for accounts receivable             $4,336           $  --          $1,316            $1,783            $3,869
                                                  ======           =====          ======            ======            ======
Year ended December 31, 1997:
   Allowances for accounts receivable             $3,869           $  --          $1,268            $1,254            $3,883
                                                  ======           =====          ======            ======            ======
</TABLE>



(A) Allowance for cash discounts charged against sales.
(B) Includes cash discounts taken and uncollectible accounts written off.


                                       18
<PAGE>   19
                                  EXHIBIT INDEX
                                  -------------

   EXHIBIT NO.                           DESCRIPTION
   -----------                           -----------


       2.1         Merger Agreement, dated March 13, 1990, as amended as of June
                   14, 1990, among Specialty Materials Corporation, SMC
                   Acquisition Corporation of Delaware and Ugine s.a. (formerly
                   Ugine Aciers de Chatillon et Gueugnon, S.A.). Incorporated by
                   reference to Exhibit 2.3 to the Company's Form S-1,
                   Registration No. 33-69370.*

       2.2         Agreement and Plan of Merger dated December 6, 1993 by and
                   between Products and Specialty Materials Corporation and by
                   and between Specialty Materials Corporation and J&L Specialty
                   Steel, Inc. Incorporated by reference to Exhibit 2.4 to the
                   Company's Form 10-K for the fiscal year ended December 31,
                   1993.*

       3.1         Articles of Incorporation of the Company. Incorporated by
                   reference to Exhibit 3.2 to the Company's Form 10-Q for the
                   fiscal quarter ended June 30, 1996.*

       3.2         By-laws of the Company. Incorporated by reference to Exhibit
                   3.2 to the Company's Form 10-Q for the fiscal quarter ended
                   September 30, 1994.*

       4.1         Agreements to furnish a copy of certain instruments which
                   relate to long-term debt not registered. Incorporated by
                   reference to Exhibit 4.8 to the Company's Report on Form 10-K
                   for the fiscal year ended September 30, 1988, to Exhibit 4.5
                   to the Company's Report on Form 10-K for the fiscal year
                   ended September 30, 1989, and to Exhibit 4.4 to the Company's
                   Amendment No. 2 to Form S-1, Registration No. 33-29398.*

      10.1         Employment Agreement, dated April 28, 1986, between Claude F.
                   Kronk and Products. Incorporated by reference to Exhibit 10.1
                   to the Company's Post-Effective Amendment No. 2 to Form S-1,
                   Registration No. 33-10474 and to Exhibit 10.1 to the
                   Company's Report on Form 10-Q for the fiscal quarter ended
                   June 30, 1987.*

      10.2         Agreement Amending Employment Agreement, dated July 13, 1987,
                   between Claude F. Kronk and Products. Incorporated by
                   reference to Exhibit 10.7 to the Company's Report on Form
                   10-Q for the fiscal quarter ended June 30, 1987.*

<PAGE>   20

      10.3         Amendment to Employment Agreement, dated as of October 1,
                   1989, among Products, Specialty Materials Corporation and
                   Claude F. Kronk. Incorporated by reference to Exhibit 10.2 of
                   the Company's Report on Form 10-K for the fiscal year ended
                   September 30, 1989.*

      10.4         Third Amendment to Employment Agreement, dated as of November
                   1, 1990, between Products and Claude F. Kronk. Incorporated
                   by reference to Exhibit 10.4 to the Company's Form S-1,
                   Registration No. 33-69370.*

      10.5         Second Agreement Amending Employment Agreement, dated as of
                   October 1, 1991, among Products, Specialty Materials
                   Corporation and Claude F. Kronk. Incorporated by reference to
                   Exhibit 10.5 to the Company's Form S-1, Registration No.
                   33-69370.*

      10.6         Fourth Amendment to Employment Agreement, dated as of October
                   1, 1992, between Products and Claude F. Kronk. Incorporated
                   by reference to Exhibit 10.6 to the Company's Form S-1,
                   Registration No. 33-69370.*

      10.7         Fifth Amendment to Employment Agreement, dated as of December
                   29, 1992, between Products and Claude F. Kronk. Incorporated
                   by reference to Exhibit 10.7 to the Company's Form S-1,
                   Registration No. 33-69370.*

      10.8         Agreement, dated July 13, 1987, between Claude F. Kronk and
                   Products. Incorporated by reference to Exhibit 10.7 to the
                   Company's Report on Form 10-Q for the fiscal quarter ended
                   June 30, 1987.*

      10.9         Amendment to Agreement, dated as of October 5, 1989, between
                   Products and Claude F. Kronk. Incorporated by reference to
                   Exhibit 10.14 to the Company's Report on Form 10-K for the
                   fiscal year ended September 30, 1989.*

      10.10        Letter Agreement dated September 28, 1995, between the
                   Company and Eugene A. Salvadore. Incorporated by reference to
                   Exhibit 10.2 of the Company's Form 10-Q for the fiscal
                   quarter ended September 30, 1995.*

      10.11        Employment Agreement, effective January 1, 1998, between the
                   Company and Eugene A. Salvadore. Filed herewith.

      10.12        Employment Agreement, effective January 1, 1998, between the
                   Company and Kirk F. Vincent. Filed herewith.

      10.13        Company's Pension Plan, as amended and restated, effective
                   January 1, 1993. Incorporated by reference to Exhibit 10.8 to
                   the Company's Form S-1, Registration No. 33-69370.*

<PAGE>   21

      10.14        Company's Salaried Employees' Pension Plan, as amended and
                   restated, effective January 1, 1989. Incorporated by
                   reference to Exhibit 10.28 to the Company's Post-Effective
                   Amendment No. 1 to Form S-1, Registration No. 33-29398.*

      10.15        Company's First Amendment to the Pension Plan, effective as
                   of the dates noted therein, executed December 12, 1994.
                   Incorporated by reference to Exhibit 10.2 of the Company's
                   Form 10-Q for the fiscal quarter ended June 30, 1995.*

      10.16        Company's Salaried Employees' Pension Plan, as amended and
                   restated effective January 1, 1989, as amended by amendment
                   executed June 9, 1995. Incorporated by reference to Exhibit
                   10.3 of the Company's Form 10-Q for the fiscal quarter ended
                   June 30, 1995.*

      10.17        Company's Executive Benefit Plan, as amended and restated,
                   effective May 1, 1992. Incorporated by reference to Exhibit
                   10.10 to the Company's Form S-1, Registration No.
                   33-69370.*

      10.18        Company's Amendment to the Executive Benefit Plan, effective
                   January 1, 1998. Filed herewith.

      10.19        Trust Agreement, dated July 21, 1987, between Products and
                   Pittsburgh National Bank for Claude F. Kronk, with a schedule
                   identifying other documents omitted and setting forth the
                   material details in which such omitted documents differ from
                   the document, a copy of which is filed. Incorporated by
                   reference to Exhibit 10.13 to the Company's Report on Form
                   10-Q for the fiscal quarter ended June 30, 1987.*

      10.20        Company's Capital Accumulation Plan, as amended and restated
                   effective July 1, 1990, as amended by amendment executed July
                   10, 1995. Incorporated by reference to Exhibit 10.1 of the
                   Company's Form 10-Q for the fiscal quarter ended June 30,
                   1995.*

      10.21        Company's Amendment to Capital Accumulation Plan, effective
                   as of January 1, 1997. Incorporated by reference to Exhibit
                   10.18 of the Company's Form 10-K filed on March 27, 1997.*

      10.22        Company's Amended and Restated Senior Management Incentive
                   Plan, dated January 1, 1992, as amended by amendment dated
                   January 1, 1993. Incorporated by reference to Exhibit 10.13
                   to the Company's Form S-1, Registration No. 33-69370.
                   Incorporated by reference to Exhibit 10.18 of the Company's
                   Form 10-K filed on March 27, 1997.*

<PAGE>   22

      10.23        Company's Second Amendment to Senior Management Incentive
                   Plan, effective as of January 1, 1996. Incorporated by
                   reference to Exhibit 10.19 of the Company's Form 10-K filed
                   on March 28, 1996.*

      10.24        Company's Third Amendment to Senior Management Incentive
                   Plan, effective as of January 1, 1997. Incorporated by
                   reference to Exhibit 10.21 of the Company's Form 10-K filed
                   on March 27, 1997.*

      10.25        Company's Fourth Amendment to Senior Management Incentive
                   Plan, effective January 1, 1998. Filed herewith.

      10.26        Settlement Agreement, made as of June 1, 1988, as amended as
                   of August 15, 1988, by and among LTV Steel Tubular Products
                   Company, LTV Steel Company, Inc., The LTV Corporation, The
                   Monongahela Connecting Railroad Company, Products and
                   Specialty Materials Corporation, including Tolling Agreement
                   attached thereto as Exhibit B. Incorporated by reference to
                   Exhibits 10.27 and 10.28 to the Company's Form 8-K filed on
                   October 20, 1988.*

      10.27        Indemnity Trust Agreement, dated September 30, 1986, between
                   Products and Pittsburgh National Bank. Incorporated by
                   reference to Exhibit 10.27 to the Company's Post-Effective
                   Amendment No. 2 to Form S-1, Registration No. 33-10474.*

      10.28        Form of Indemnification Agreement (including signature pages)
                   among the Company and certain directors, officers and
                   employees. Incorporated by reference to Exhibit 10.28 to the
                   Company's Post-Effective Amendment No. 2 to Form S-1,
                   Registration No. 33-10474, to Exhibit 10.28 to the Company's
                   Report on Form 10-K for the fiscal year ended September 30,
                   1987, and to Exhibits 10.24 and 10.31 to the Company's
                   Post-Effective Amendment No. 1 to Form S-1, Registration No.
                   33-29398.*

      10.29        Amended and Restated 1993 Stock Incentive Plan of the
                   Company, effective June 10, 1987. Incorporated by reference
                   to Exhibit 10.3 to the Company's Form 10-Q filed for the
                   fiscal quarter ended June 30, 1997.*

      10.30        Lease Agreement, dated September 1, 1992, between Beaver
                   County Industrial Development Authority and Products, with
                   respect to the 6.6% pollution control revenue bonds.
                   Incorporated by reference to Exhibit 10.24 to the Company's
                   Form S-1, Registration No. 33-69370.*

<PAGE>   23


      10.31        Agreement of Sale, dated June 1, 1978, between Beaver County
                   Industrial Development Authority and Products (as successor
                   to Colt Industries, Inc.), with respect to the 7% pollution
                   control revenue bonds. Incorporated by reference to Exhibit
                   10.25 to the Company's Form S-1, Registration No. 33-69370.*

      10.32        $100,000,000 Credit Agreement dated July 14, 1995, among the
                   Company, various banks, Mellon Bank, N.A., as agent and
                   Credit Lyonnais, Cayman Island Branch and Morgan Guaranty
                   Trust of New York, as co-agents. Incorporated by reference to
                   Exhibit 10.4 of the Company's Form 10-Q for the fiscal
                   quarter ended June 30, 1995.*

      10.33        Amendment No. 1 to Credit Agreement dated as of December 10,
                   1995, among the Company, various banks, Mellon Bank, N.A. as
                   agent and Credit Lyonnais, Cayman Island Branch and Morgan
                   Guaranty Trust of New York, as co-agents. Incorporated by
                   reference to Exhibit 10.29 to the Company's Form 10-K filed
                   on March 28, 1996.*

      10.34        $125,000,000 Term Loan Agreement dated July 14, 1995, among
                   the Company, various banks, Mellon Bank, N.A., as agent and
                   Credit Lyonnais, Cayman Island Branch and Morgan Guaranty
                   Trust of New York, as co-agents. Incorporated by reference to
                   Exhibit 10.5 of the Company's Form 10-Q filed on June 30,
                   1995.*

      10.35        Amendment No. 1 to Term Loan Agreement, dated as of December
                   10, 1995, among the Company, various banks, Mellon Bank, N.A.
                   as agent and Credit Lyonnais, Cayman Island Branch and Morgan
                   Guaranty Trust of New York, as co-agents. Incorporated by
                   reference to Exhibit 10.31 to the Company's Form 10-K filed
                   on March 28, 1996.*

      10.36        $125 Million Credit Agreement dated June 30, 1997, among the
                   Company, various banks, Mellon Bank, N.A., as agent.
                   Incorporated by reference to Exhibit 10.1 to the Company's
                   Form 10-Q for the fiscal quarter ended June 30, 1997.*

      10.37        $125 Million Term Loan Agreement dated June 30, 1997, among
                   the Company, various banks, Mellon Bank, N.A., as agent.
                   Incorporated by reference to Exhibit 10.2 to the company's
                   Form 10-Q for the fiscal quarter ended June 30, 1997.*

      10.38        Research and Technology Agreement, dated as of October 1,
                   1993, between the Company and Usinor Sacilor (successor by
                   merger to Ugine s.a.). Incorporated by reference to Exhibit
                   10.26 to the Company's Form 10-K for the fiscal year ended
                   December 31, 1993.*

<PAGE>   24

      10.39        Indemnification Agreement dated August 1, 1995 between the
                   Company and John A. Wallace. Incorporated by reference to
                   Exhibit 10.4 of the Company's Form 10-Q filed on September
                   30, 1995.*

      10.40        Form of Indemnification Agreement between the Company and
                   each of Pierre F. de Ravel d'Esclapon, Michael J. Hiemstra
                   and Jennings R. Lambeth. Incorporated by reference to Exhibit
                   10.32 to the Company's Form S-1, Registration No. 33-69370.*

      13.1         The following portion of the 1997 Annual Report to
                   Shareholders: pages 5 through 27 inclusive, and the sections
                   entitled "Common Stock Data" and "Stock Exchange Listing" on
                   page 31. Such Annual Report, except for those portions
                   thereof which are expressly incorporated in this Form 10-K by
                   reference, is not deemed "filed" with the Securities and
                   Exchange Commission.

      22.1         List of Subsidiaries. Incorporated by reference to Exhibit
                   22.1 to the Company's Form 10-K filed on March 27, 1997.*

      23.2         Consent of Arthur Andersen LLP. Filed herewith.

      27.1         Financial Data Schedule. Filed herewith.

         *Incorporated by reference.