WEIRTON STEEL CORP, S-3/A, 1994-08-09

WEIRTON STEEL CORP
S-3/A, 1994-08-09
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 1994.

REGISTRATION NO. 33-53797
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 3

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

WEIRTON STEEL CORPORATION
(Exact name of registrant as specified in its charter)
------------------------

<TABLE>
<S> <C> <C>
DELAWARE 3312 06-1075442
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code) Identification No.)
organization)
</TABLE>

400 THREE SPRINGS DRIVE, WEIRTON, WEST VIRGINIA 26062-4989 (304) 797-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive office)
------------------------

WILLIAM R. KIEFER, ESQ.
VICE PRESIDENT-LAW AND SECRETARY
WEIRTON STEEL CORPORATION
400 THREE SPRINGS DRIVE
WEIRTON, WEST VIRGINIA 26062-4989
(304) 797-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

COPY TO:
WINTHROP B. CONRAD, JR.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE FOLLOWING THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT.
------------------------

IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933 CHECK THE FOLLOWING BOX: [ ]
------------------------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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<PAGE> 2

EXPLANATORY NOTE

This Registration Statement relates to an offering of shares of Common
Stock, $.01 par value, in the United States and Canada and internationally as
described herein. The Prospectus for the offering in the United States and
Canada and the Prospectus for the international offering will be identical
except for the front and back cover pages, the underwriting section and a
section in the Prospectus for the international offering relating to tax
considerations. The alternate pages are marked "Alternate International Front
Cover Page", "Alternate International Back Cover Page," "Alternate International
Underwriting Section," and "Certain U.S. Federal Tax Considerations for Non-U.S.
Holders of Common Stock," respectively, and are included immediately preceding
Part II.
<PAGE> 3

PROSPECTUS

17,000,000 SHARES

WEIRTON LOGO
COMMON STOCK
($.01 PAR VALUE)
Of the 17,000,000 shares of Common Stock of Weirton Steel Corporation ("Weirton"
or the "Company") offered hereby, 15,000,000 shares are being offered by the
Company and 2,000,000 shares are being offered by Mellon Bank, N.A., as trustee
(the "Selling Stockholder") of the trust created under the Weirton Steel
Corporation Retirement Plan (the "Pension Plan"). The Company will not receive
any proceeds from the sale of shares by the Selling Stockholder. See "Selling
Stockholder."

Of the shares being offered, 14,450,000 shares are being offered in the United
States and Canada (the "U.S. Offering") and 2,550,000 shares are being offered
in a concurrent international offering outside the United States and Canada (the
"International Offering" and, collectively with the U.S. Offering, the
"Offerings"), subject to transfers between the U.S. Underwriters and the
International Underwriters. The Price to Public and the Underwriting Discount
per share will be identical for the U.S. Offering and the International
Offering. The closing of the U.S. Offering and the International Offering are
conditioned upon each other. See "Underwriting."

The Common Stock of the Company is traded on the New York Stock Exchange (the
"NYSE") under the symbol "WS." On August 8, 1994, the last sale price of
Weirton's Common Stock, as reported on the NYSE Composite Tape, was $8.875 per
share.

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE MATTERS DISCUSSED UNDER THE
CAPTION "RISK FACTORS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT COMPANY(1) STOCKHOLDER
<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
Total (2).............. $ $ $ $
- ------------------------------------------------------------------------------------------------------------
<FN>
(1) Before deduction of expenses payable by the Company estimated to be
$800,000.
(2) The Selling Stockholder has granted to the U.S. Underwriters and the
International Underwriters 30-day options to purchase up to an aggregate of
2,550,000 additional shares of Common Stock, at the Price to Public, less
the Underwriting Discount, solely to cover over-allotments, if any. The
Company may satisfy the exercise of these options up to a maximum of 300,000
shares. If the Underwriters exercise such options in full, the total Price
to Public, Underwriting Discount and Proceeds to Selling Stockholder will be
$ , $ and $ , respectively. If the Company satisfies the exercise
of such options with the maximum number of shares permitted, Proceeds to
Company and Proceeds to Selling Stockholder will be $ and $ ,
respectively. See "Underwriting."
</TABLE>

The shares of Common Stock are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the shares will be made at the office of Salomon
Brothers Inc, Seven World Trade Center, New York, New York or through the
facilities of The Depository Trust Company, on or about August , 1994.

SALOMON BROTHERS INC
LAZARD FRERES & CO.
LEHMAN BROTHERS
PAINEWEBBER INCORPORATED
The date of this Prospectus is August 9, 1994.

<PAGE> 4

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMMON STOCK OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its regional offices, 500 West Madison Street, Chicago, Illinois 60661 and Seven
World Trade Center, Thirteenth Floor, New York, New York 10048. Copies of such
materials can be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such materials also may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.

The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement and the exhibits and
schedules thereto.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed with the Commission by the Company
(File No. 1-10244) are incorporated by reference in this Prospectus:

1. The Company's Annual Report on Form 10-K for the year ended December 31,
1993.

2. The Company's Amendment No. 1 on Form 10-K/A to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.

3. The Company's Amendment No. 2 on Form 10-K/A to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.

4. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1994.

5. The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994.

6. The Company's Current Report on Form 8-K dated April 19, 1994.

7. The Company's Current Report on Form 8-K dated July 11, 1994.

8. The Company's Current Report on Form 8-K dated July 19, 1994.

9. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed May 4, 1989.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offerings shall be deemed to be incorporated by reference
into this Prospectus and to be a part of this Prospectus from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference in this Prospectus shall be deemed to be
modified or

2
<PAGE> 5

superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this Prospectus modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated in
this Prospectus by reference, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference herein or in any
incorporated document. Requests should be directed to Weirton Steel Corporation,
Secretary, 400 Three Springs Drive, Weirton, West Virginia 26062-4989
(telephone: 304-797-2000).

The following are registered trademarks of the Company and are printed in
capital letters in this Prospectus: WEIRITE, WEIRLITE, WEIRCHROME, WEIRKOTE
PLUS, AND WEIRTEC.

3
<PAGE> 6

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety by the more
detailed information and financial statements (including the notes thereto)
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information in this Prospectus assumes that the U.S. and International
Underwriters' over-allotment options will not be exercised. See "Underwriting."

WEIRTON STEEL CORPORATION

The Company is a major integrated producer of flat rolled carbon steel
which has been in the steelmaking and finishing business for more than 80 years.
The Company focuses on higher value-added products with demanding
specifications, such as tin mill products ("TMP") and coated sheet. TMP are sold
primarily to manufacturing and packaging companies for use as food, beverage and
general line cans and coated sheet is sold primarily to the construction
industry for use in a broad variety of building products. For the year 1993,
these value-added product lines accounted for approximately 70% of the Company's
revenues and 63% of its shipments. The remainder of the Company's revenues are
derived from the sale of hot and cold rolled sheet, which is used for machinery,
construction products and other durable goods. The Company believes that its
percentage of value-added products to total production is among the highest of
integrated steel producers in the United States and provides it with a
competitive advantage against both domestic producers and foreign commodity
imports.

In order to modernize operations, the Company embarked in 1988 on an
extensive capital improvement program, spending in excess of $550 million,
primarily to upgrade its steelmaking and hot rolling facilities. This program,
substantially completed in 1992, included, among other things, enhancing the
Company's capacity to make "clean" steel (steel with fewer impurities),
rebuilding its multi-strand continuous caster and upgrading its hot strip
rolling mill to be one of the most modern in the world.

The Company's strategic objective is to be a leading domestic producer of
high value-added flat rolled carbon steel products. With the completion of the
capital improvement program, the Company's strategy is to: (i) increase revenues
and margins through the development and marketing of higher value-added products
and services; (ii) achieve productivity improvements and significant reductions
in conversion costs through advanced steelmaking and rolling technology and
savings in manpower and production processes; and (iii) reduce financial
leverage and restore the Company's equity base. See "Business--Business
Strategy."

Incorporated in Delaware in November 1982, the Company acquired the
principal assets of National Steel Corporation's ("National" or "NSC") former
Weirton Steel Division (the "Division") in January 1984 through an employee
stock ownership plan (the "1984 ESOP"). In June 1989, the 1984 ESOP completed a
public offering of 4.5 million shares of Common Stock of the Company and also
sold 1.8 million shares of Convertible Voting Preferred Stock, Series A (the
"Series A Preferred Stock") to a new employee stock ownership plan (the "1989
ESOP"). Substantially all the Company's employees participate in the 1984 and
1989 ESOPs (the "ESOPs"), which, after giving effect to the above-mentioned and
certain other transactions, but prior to the proposed Offerings, own
approximately 50% of the combined issued and outstanding common and preferred
shares of the Company. This, in turn, accounts for approximately 74% of the
voting power (as calculated in accordance with certain voting restrictions) of
the Company's stock.

4
<PAGE> 7

RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY CERTAIN FACTORS RELATING TO
THE COMPANY. SEE "RISK FACTORS."

<TABLE>
THE OFFERINGS

<S> <C>
Common Stock Offered
By the Company
U.S. Offering............................. 12,750,000 shares
International Offering.................... 2,250,000 shares
------------
Total................................... 15,000,000 shares
By the Selling Stockholder
U.S. Offering............................. 1,700,000 shares
International Offering.................... 300,000 shares
------------
Total................................... 2,000,000 shares
Common Stock Outstanding(1)
Before the Offerings...................... 26,743,314 shares
After the Offerings....................... 41,743,314 shares
Use of Proceeds................................ All of the net proceeds from the Offerings
will be used to reduce obligations of the
Company, including the repurchase or
redemption of a portion of the Company's
outstanding senior indebtedness and the
reduction of the unfunded obligation under
the Pension Plan. The Company may also
utilize proceeds to redeem its Redeemable
Preferred Stock, Series B. See "Use of
Proceeds."
NYSE Symbol.................................... WS
<FN>

- ---------

(1) As of June 30, 1994; excludes 240,000 shares of Common Stock reserved for
issuance upon the exercise of currently exercisable stock options.
</TABLE>

5
<PAGE> 8

<TABLE>

SUMMARY FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND TON DATA)

<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................... $ 660.6 $ 599.1 $1,201.1 $1,078.7 $1,036.3 $1,190.9 $1,329.4
Operating costs:
Cost of sales............... 600.3 560.3 1,105.6 1,010.0 1,019.3 1,113.9 1,165.4
Selling, general and
administrative expense.... 15.6 16.2 32.5 30.5 29.1 30.4 27.6
Depreciation................ 25.3 24.4 49.1 38.6 34.3 29.0 26.7
Special items............... -- 17.3(1) 17.3(1) -- -- -- 27.0(2)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations.................. 19.4 (19.1) (3.4) (0.4) (46.4) 17.6 82.7
Unusual gain (3).............. 32.5 -- -- -- -- -- --
Net interest expense(4)....... 24.1 25.1 50.2 37.9 29.7 15.0 9.8
ESOP contributions(5)......... 1.3 1.3 2.6 2.6 2.6 1.5 36.2
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes....................... 26.5 (45.5) (56.2) (40.9) (78.7) 1.1 36.7
Income tax (provision)
benefit..................... (5.0) 8.6 13.3 4.8 4.0 (0.8) (8.1)
-------- -------- -------- -------- -------- -------- --------
Income(loss) before
extraordinary item and
cumulative effect of changes
in accounting principles.... 21.5 (36.9) (42.9) (36.1) (74.7) 0.3 28.6
Extraordinary item (6)........ -- (6.5) (6.5) -- -- -- (12.6)
Cumulative effect of changes
in accounting principles
(7)......................... -- (179.8) (179.8) 4.3 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............. $ 21.5 $ (223.2) $ (229.2) $ (31.8) $ (74.7) $ 0.3 $ 16.0
Less: Preferred stock dividend
requirement................. (1.6) (1.6) (3.1) (3.1) -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss) applicable
to common shares............ $ 19.9 $ (224.8) $ (232.3) $ (34.9) $ (74.7) $ 0.3 $ 16.0
PER COMMON SHARE DATA:
Income(loss) per common
share before extraordinary
item...................... $ 0.70 $ (1.44) $ (1.74) $ (1.57) $ (3.49) $ 0.01 $ 1.37
Income (loss) per common
share before cumulative
effect of accounting
changes................... 0.70 (1.69) (1.99) (1.57) (3.49) 0.01 0.77
Net income (loss) per common
share (8)................. 0.70 (8.47) (8.78) (1.40) (3.49) 0.01 0.77
Cash dividends paid......... -- -- -- -- -- $ 0.64 $ 0.32

BALANCE SHEET DATA
(AT END OF PERIOD):
Cash, equivalents, and
marketable securities....... $ 172.2 $ 102.3 $ 89.0 $ 61.2 $ 84.2 $ 56.2 $ 201.9
Working capital............... 317.6 271.5 262.2 237.7 273.5 264.6 373.3
Total assets.................. 1,259.9 1,120.3 1,240.7 1,005.4 1,038.0 965.2 946.4
Long term debt, incl. current
portion (9)................. 495.3 495.2 495.3 503.2 505.3 398.9 355.8
Redeemable stock (9).......... 38.0 35.5 36.7 34.2 31.0 3.9 1.3
Stockholders' equity (9)...... 18.6 6.5 (1.4) 231.3 257.3 316.5 328.1
</TABLE>

6
<PAGE> 9

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
(DOLLARS IN MILLIONS, -------------------- ----------------------------------------------------------
EXCEPT PER TON DATA) 1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA (FOR THE PERIOD,
EXCEPT WHERE NOTED):
Shipments in thousands
of tons..................... 1,358 1,232 2,431 2,102 1,939 2,206 2,499
Average sales per ton
shipped..................... $ 486 $ 486 $ 494 $ 513 $ 534 $ 540 $ 532
Average cost of sales per ton
shipped..................... $ 442 $ 455 $ 455 $ 480 $ 526 $ 505 $ 466
Gross margin per ton
shipped..................... $ 44 $ 31 $ 39 $ 33 $ 8 $ 35 $ 66
Operating income per ton
shipped before special
items....................... $ 14 $ (15) $ 6 $ -- $ (24) $ 8 $ 44
Active employees (end of
period)..................... 5,953 6,200 6,026 6,542 6,979 7,582 7,898
Employee hours per ton of hot
band produced............... 1.83 1.97 1.95 2.07 2.38 2.45 2.43
Employee hours per ton
shipped..................... 4.59 5.30 5.31 6.53 7.55 7.48 6.77
Capacity utilization.......... 90% 90% 91% 83% 68% 79% 85%
Percentage of raw steel
continuously cast........... 100% 100% 100% 100% 97% 64% 67%
Yield (raw steel to finished
production)................. 81.7% 76.8% 77.9% 72.3% 72.3% 69.7% 72.0%
EBITDA (10)................... $ 86.2 $ 29.2 $ 81.9 $ 45.7 $ (2.1) $ 60.5 $ 102.9
Capital expenditures.......... 7.3 3.3 14.4 44.6 113.9 181.9 131.1

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

(1) The Company recognized a pretax restructuring charge of $17.3 million in
the first quarter of 1993 to account for certain costs associated with an
enhanced early retirement package, which is part of the Company's ongoing
cost reduction program.

(2) Effective January 1, 1989, employee profit sharing for each fiscal year has
been set at 35% of net income before profit sharing, computed after
deducting dividends on capital stock of up to $13 million. See
"Business--Employees." A provision for profit sharing of $21.9 million was
recognized for 1989.

A one-time special bonus of $5.1 million was paid to employees in
connection with a 1989 labor contract ratification.

(3) The Company was required to recognize a new cost basis for certain
insurance recoveries related to the damage of the No. 9 Tandem which
resulted in the recognition of a pretax gain in the second quarter of 1994
in the amount of $32.5 million.

(4) Net interest expense has been reduced by capitalized interest of $0.8
million, $6.1 million, $12.8 million, $14.8 million and $4.4 million for
the years 1993 through 1989, respectively.

(5) Does not involve a net outflow of cash as these contributions are returned
to the Company in the form of payments on loans outstanding from the
Company to the ESOPs.

(6) Reflects certain costs incurred in connection with the early extinguishment
of debt.

(7) Effective January 1, 1992, the Company changed its method of accounting for
the depreciation of its steelmaking facilities from a straight-line to a
production-variable method. Effective January 1, 1993, the Company adopted
the provisions of Statement of Financial Accounting Standards ("SFAS") No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions;" SFAS No. 112, "Employers' Accounting for Postemployment
Benefits;" and SFAS No. 109, "Accounting for Income Taxes."
</TABLE>

7
<PAGE> 10
The cumulative effect of the 1993 accounting changes reflects the
collective implementation of the following accounting changes. The change
in accounting under SFAS No. 106 required the Company to recognize a
pretax charge of $303.9 million to account for the prior service cost of
retiree health care and life insurance benefits as well as an additional
noncash expense each quarter which began in the first quarter of 1993.
The Company also recorded a pretax charge of $4.0 million related to the
implementation of SFAS No. 112, and a net income tax benefit of $128.2
million, of which $115.5 million relates to the adoption of SFAS No. 106,
representing the cumulative effect of the accounting change for income
taxes in accordance with SFAS No. 109.

(8) The unaudited net income (loss) per common share for the year ended
December 31, 1993 and the six month period ended June 30, 1994 would have
been $ and $ , respectively, after giving effect to the
application of the estimated net proceeds of the Offerings, as described
under "Use of Proceeds," assuming the issuance of Common Stock pursuant to
the Offerings had been effected at the beginning of the respective period.
This pro forma per common share data does not purport to represent what the
Company's net income (loss) per common share would have been if the
foregoing had in fact occurred on such dates.

(9) See "Capitalization" for information regarding certain adjustments to give
effect to the issuance of shares of Common Stock offered hereby and the
application of the net proceeds therefrom.

(10) EBITDA represents the earnings of the Company before income taxes, net
interest expense, depreciation and amortization and other noncash items
reducing net income. This definition of EBITDA is consistent with the one
used in covenants in the Company's outstanding indebtedness. EBITDA is not
a measure of financial performance under generally accepted accounting
principles ("GAAP"). Accordingly, it does not represent net income or cash
flows from operations as defined by GAAP and does not necessarily indicate
that cash flows will be sufficient to fund cash needs. As a result, EBITDA
should not be considered as an alternative to net income as an indicator of
operating performance or to cash flows as a measure of liquidity.

8
<PAGE> 11

RISK FACTORS

Prospective investors should consider carefully the following risk factors
affecting the Company and the domestic steel industry before purchasing the
shares of Common Stock offered hereby.

FACTORS RELATING TO THE COMPANY

Recent Losses. The Company reported net losses of $229.2 million for 1993,
$31.8 million for 1992 and $74.7 million for 1991. The Company's results for
1993 were significantly affected by the net after tax effect of required changes
in certain accounting principles, primarily related to retiree healthcare and
income taxes, which totaled $179.8 million, a pretax restructuring charge of
$17.3 million, and an after tax extraordinary charge of $6.5 million. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Management attributes the losses in 1992 and 1991 to production
disruptions stemming from the Company's implementation of a $550 million capital
improvement program and to recessionary conditions affecting the industry.

Recent Major Damage to Facility. On April 6, 1994, the Company's No. 9
Tandem Mill (the "No. 9 Tandem") sustained major damage from a fire which
occurred while the unit was undergoing maintenance. This cold rolling facility
normally supplies approximately 70% to 80% of the coils required by the
Company's tin plating operations. The Company began rebuilding and repair
operations immediately to restore the No. 9 Tandem as quickly as practicable. At
this time, under the Company's accelerated repair schedule, nearly all
structural repairs to the No. 9 Tandem have been completed. Start-up of the
rebuilt facility is scheduled for mid-October 1994, and full production is
expected to resume during the fourth quarter. While the No. 9 Tandem is out of
service, the Company is increasing the cold rolling output of its remaining
facilities. The Company has also compensated for the reduction in cold rolling
capacity by increasing its sales of hot rolled products. The Company also may
seek to have its hot bands cold rolled through tolling arrangements with other
producers and acquire cold rolled product where available for further finishing.
For the year 1993, TMP accounted for approximately 46% of the Company's revenues
and 37% of its shipments. The Company believes that, during the remaining period
of the No. 9 Tandem outage, it will be able to maintain monthly TMP production
at approximately 54% of its 1993 monthly average of 66 thousand tons per month.

At this time, the Company cannot predict with certainty the extent to which
its results of operations for 1994 will be affected adversely by the outage. The
Company maintains insurance for both property damage and business interruption
applicable to the No. 9 Tandem. The policies providing these coverages are
subject to deductibles of $500,000 for property damage and $5.0 million for
business interruption. The claims process has been commenced and advances have
been collected from the insurance carrier. Since the length of time required to
restore the No. 9 Tandem to full operations and to resolve the Company's claim
has yet to be determined, the Company is not, at this time, able to estimate the
amount of recovery under its business interruption coverage. The Company does
not expect that the outage will affect its long term prospects adversely.

High Financial Leverage. Beginning in 1989, the Company incurred
substantially increased indebtedness to fund its capital improvement program. At
December 31, 1990, stockholders' equity in the Company was $316.5 million, and
its indebtedness of $398.9 million represented 55% of its capitalization. As a
result of the Company's net losses since that date (see "--Recent Losses"), its
indebtedness increased to $495.3 million and its stockholders' equity was
reduced to $18.6 million at June 30, 1994, causing its financial leverage to
increase significantly. At June 30, 1994, the Company's indebtedness and
redeemable stock comprised 90% and 7%, respectively, of its capitalization.
After giving effect to the Offerings and a use of all net proceeds as described
in "Use of Proceeds" and shown under "Capitalization," the Company's
indebtedness and redeemable stock would have been reduced to % and %,
respectively, of its capitalization at June 30, 1994, and the remaining % of
its capitalization would have represented stockholders' equity. The Company
intends to reduce its debt burden and increase its financial flexibility and has
no immediate

9
<PAGE> 12

plans to incur additional debt. From time to time, however, the Company may be
required to utilize outside financing for working capital purposes. Such
financing may involve the incurrence of debt. The Company will be permitted to
incur additional debt only if, at the time, it is able to comply with
restrictions under applicable debt instruments. Based on the tests under the
indenture governing its 11 1/2% Senior Notes due 1998 (respectively, the
"11 1/2% Indenture" and the "11 1/2% Notes"), at June 30, 1994, the Company
would not have been permitted to incur additional debt, except for "Permitted
Indebtedness," as defined in the 11 1/2% Indenture. (As defined, Permitted
Indebtedness includes debt outstanding immediately after the issuance of the
11 1/2% Notes, intercompany debt subordinated to the 11 1/2% Notes, debt under
currency, commodity and interest swap agreements, debt not to exceed $100
million (substantially all of which could be incurred if borrowing sources were
available) and renewals of all such permitted debt.) In August 1993, the
Company, through a subsidiary, instituted an accounts receivable participation
and letter of credit facility, which it believes will be sufficient for its
foreseeable working capital needs. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."

Employee Ownership and Voting Power. Prior to the proposed Offerings, the
ESOPs own 50% of the Company's outstanding shares and account for 74% of its
total voting power (as calculated in accordance with certain voting
restrictions.) Following the proposed Offerings, the ESOPs are expected to own
approximately 34% of the Company's outstanding shares and account for
approximately 53% of the Company's total voting power. Employee voting power
could increase by approximately 3% if the five million shares of Common Stock
reserved for an employee purchase program over the next five years are acquired
by employees. The participants in the ESOPs, all of whom are present or former
employees of the Company, could, if they were to act collectively in the voting
of their shares, elect a majority of the Company's directors. In addition, the
Pension Plan holds approximately 22% of the Company's outstanding Common Stock,
which represents 5% of the Company's total voting power. The fiduciary under
that plan has the duty to vote shares held in such plan in the best interest of
plan participants. The interests of ESOP and Pension Plan participants may
differ from those of public stockholders. To the extent that shares of Common
Stock are sold by the Selling Stockholder in the Offerings, employees whose
retirement benefits depend on the assets held in trust under the Pension Plan
will derive a benefit.

Reductions in Earnings from Profit Sharing. The earnings of the Company
available for the payment of dividends or which may be available for use in its
business will be reduced by amounts paid out pursuant to the Company's profit
sharing plan (the "Profit Plan"). The Profit Plan, which is effective through
1996 and covers substantially all employees, generally requires that from
33 1/3% to 35% of the Company's net income (as determined under GAAP) for each
year (adjusted to provide allowance for certain dividends on preferred stock) be
paid to employees as profit sharing. However, profit sharing is only payable to
the extent that, at the time of determination, or as a result of a
determination, profit sharing payments will not reduce the Company's net worth
below $100.0 million. The Company has not recognized a provision for profit
sharing since 1989. Completion of the Offerings will increase the Company's net
worth and, accordingly, the likelihood that, if the Company has net income in
1994, a certain amount of profit sharing will become payable in 1995 with
respect to the Company's financial performance in 1994, and that future earnings
may be reduced through payments of profit sharing. The Company believes that its
compensation structure places a heavier emphasis on profit sharing compared to
other major integrated steel producers. This tends to cause the wage portion of
the Company's employment costs to be relatively higher during periods of
profitability and relatively lower during periods of lower earnings or losses.

Limitations on Raising Equity. The Company's Restated Certificate of
Incorporation (the "Restated Certificate") imposes restrictions on the Company's
ability to raise additional equity. The authorization of shares of capital stock
under the Restated Certificate (beyond the 30.0 million shares of Common Stock
and 7.5 million shares of preferred stock originally authorized in 1989)
generally requires for approval a simple majority vote of stockholders, if such
shares are to be used only for bona fide public offerings or in connection with
certain employee benefit plans. However, if

10
<PAGE> 13

shares are to be used for any other purpose, their authorization must be
approved by the vote of 80% of total voting power (the "Super Majority Vote").
Limitations on the future use of shares, if applicable, would deny the Company
access to private markets for its shares and could deprive the Company of needed
capital at times when the permitted types of issuances are not feasible or have
less favorable terms. The increase in the Company's capitalization from 30.0
million to 50.0 million shares of Common Stock approved by stockholders at a
special meeting held on May 26, 1994 is subject to such use restrictions.

In addition, the Restated Certificate provides that the specific terms and
conditions of each issuance of capital stock by the Company, with limited
exceptions, must be approved by the vote of at least 90% of the Company's
directors. The Company's Board of Directors is required to be composed of 13
members and will be increased to 14 members after the 1994 annual meeting of
stockholders. Regardless of the increase in the number of directors, a dissent
by more than one director could prevent the Company from issuing capital stock,
even though the authorization of shares for such issuance was approved by a
Super Majority Vote of the Company's stockholders.

Lack of Dividends. The Company discontinued dividends on its Common Stock
after the fourth quarter of 1990. The Board of Directors does not anticipate
that the Company will resume payment of dividends on Common Stock in the
foreseeable future. The payment of future dividends on the Common Stock, and the
amount thereof, will be determined by the Board of Directors in light of
financial factors and certain restrictions affecting the Company.

The Company's ability to pay dividends on its stock is limited by
restrictions under an earnings related formula in the 11 1/2% Indenture. Under
the applicable formula, the receipt of proceeds from sales of certain equity
securities increases the Company's ability to pay dividends on stock.

Environmental Compliance Expenditures. The Company has made, and expects
to continue to make, expenditures to comply with environmental laws and
regulations. The Company believes that its facilities are in material compliance
with such provisions and does not believe that future compliance with such
provisions will have an adverse effect on its results of operations or financial
condition. Unlike many of its domestic integrated competitors, the Company does
not operate coke making facilities and, as such, will not be required to comply
with Clean Air Act amendment standards applicable to those types of facilities.
Nevertheless, since environmental regulations are becoming increasingly more
stringent, the Company's environmental capital expenditures and costs for
compliance may increase in the future. Furthermore, due to the possibility of
unanticipated regulatory developments, the amount and timing of future
environmental expenditures may vary from those currently anticipated. State
environmental authorities have recently issued a wastewater discharge permit to
the Company containing substantially more stringent effluent standards. The
Company believes it will not be able to ensure consistent compliance with
certain provisions contained in the permit without significant treatment
technology and/or process changes. The Company cannot estimate the cost of
installing such technology or effecting such changes, but such costs could be
material. See "Business--Environmental Control."

The site at which the Company carries on its operations has been in use for
many years and, over such time, the Company and its predecessors may have
generated, stored and disposed of wastes which may be classified as hazardous.
The Company is indemnified by National, the seller of the steelmaking business
acquired by the Company in 1984, against environmental liabilities arising from
activities prior to the acquisition. National's indemnification obligation is
not limited by the passage of time or, with certain exceptions, in amount. As a
result, the Company does not believe it will incur any material liability for
environmental conditions existing prior to the acquisition, provided that the
Company is able to recover on environmental claims from National. The ability of
the Company to collect on claims for indemnification covering environmental
matters is subject to National's continued financial viability, the nature of
future claims made by the Company, whether the parties can settle certain
differences which have arisen in their respective interpretations of
indemnification rights and the outcome of any necessary litigation between the
Company and National regarding such issues. The Company does not carry insurance
of the type that provides

11
<PAGE> 14

coverages similar to the indemnification rights provided by National. See
"Business--Environmental Control."

Customer Concentration. The TMP market served by the Company and its
competitors is characterized by a relatively small number of customers. In 1993,
one TMP customer accounted for approximately 11% of the Company's revenues and
its five largest TMP customers accounted for approximately 30% of such revenues.
See "Business--Principal Products and Markets."

Dependence on Third Parties for Certain Raw Materials. The Company's
supply of iron ore pellets and coke for its blast furnaces currently is provided
by a small number of sources; however, the Company has contracts for a majority
of its pellets through the year 2004 and coke through the year 1996. If such
contracts were interrupted in performance at a time when supplies were scarce,
the Company might not be able to obtain sufficient quantities of raw materials,
or obtain sufficient quantities of such materials at satisfactory prices which,
in either case, could adversely affect its production levels and margins. The
Company does not own, or have any interest in, extraction or production
facilities for these materials. See "Business--Raw Materials."

Antitakeover Features. Certain provisions of the Company's Restated
Certificate, the Delaware General Corporation Law, and the current ownership
structure of the Company, may have the effect of preventing a change of control
of the Company, including transactions in which stockholders could receive
premiums for their shares over prevailing market prices. For example, under the
Restated Certificate, stockholders other than certain employee plans may not
exercise more than 5% of total voting power, and extraordinary transactions,
such as mergers, consolidations, sales of substantially all assets, liquidation
and transactions with significant stockholders, require at least an 80%
affirmative vote by stockholders. The Company's Board of Directors is authorized
by the Restated Certificate to issue preferred stock in series with such
designations, rights, and preferences as may be determined by the Board. Also,
the Company's Board of Directors is classified into three classes of directors
serving staggered terms, and substantial qualification requirements exist to
serve as a director. These provisions could delay the replacement of a majority
of directors and could have the effect of making changes in the Board of
Directors more difficult than in their absence. Finally, the Company originated
from an employee buyout and was formerly wholly-owned by its employees through
the 1984 ESOP. At present, a majority of the Company's stockholder voting power
is held by employees through the ESOPs.

Limitation on Utilization of Existing Tax Attributes. Pursuant to Section
382 of the Internal Revenue Code of 1986, as amended (the "Code"), certain
ownership changes may substantially limit or prohibit the utilization of certain
existing tax attributes (such as net operating losses) subject to the
carryforward provisions under the Code. As of December 31, 1993, the Company had
available for federal income tax purposes regular net operating loss
carryforwards of approximately $194.8 million, alternative minimum tax net
operating loss carryforwards of approximately $13.6 million, an alternative
minimum tax credit of approximately $4.7 million, and general business tax
credits of approximately $14.1 million.

Under a literal reading of the Code and regulations currently in force, the
Offerings (together with other relevant prior events) would likely result in an
ownership change under Section 382 that would impose constraints on the
Company's utilization of its existing tax attributes. The Company has made a
request to the Internal Revenue Service (the "IRS") for a ruling that would
enable it to conclude that the utilization of its existing tax attributes will
not be limited as a result of the Offerings. There can be no assurance that the
IRS will rule favorably on the Company's request or when it will make such
determination. The Offerings are not conditioned upon the Company's receipt of
the ruling. If it is determined that as a result of the Offerings such an
ownership change has occurred, the Company's existing tax attributes would be
subject to limitations as determined under the Code. Based upon the Company's
estimated value prior to the Offerings, the annual limitation would be in the
approximate range of $13.0 million to $16.0 million, prior to any adjustments
for any built-in gains or losses. In addition, the amount of limitation not
utilized in any taxable year can be carried forward, thereby increasing the
limitation applicable to the next taxable year. See Note 9 to the

12
<PAGE> 15

"Notes to Financial Statements" included herein for further information
regarding the Company's existing tax attributes.

Even if the Company is able to conclude that the utilization of its
existing tax attributes is not limited as a result of the Offerings, it is
possible that other future events could occur, which may be beyond the Company's
control, that would adversely affect its ability to fully utilize such
attributes.

Shares Eligible for Future Sale. Future sales of Common Stock by the
Company or its stockholders could adversely affect the prevailing market price
of the Common Stock. The Company, its officers and directors and U.S. Trust (as
defined below) have entered into lock-up agreements with the U.S. Underwriters
and International Underwriters whereby such parties have agreed not to sell any
Common Stock or securities convertible into, or exchangeable for, Common Stock
for a period of 120 days following the date of this Prospectus, without the
written consent of the U.S. Representatives and International Representatives.
In addition, under the 1984 ESOP, no distributions of Common Stock, except those
required by law, may be made to participants during any lock-up period agreed to
by the Company. After the end of the 120 day period, or earlier with the written
consent of the U.S. Representatives and International Representatives, the
Company estimates that approximately 7.8 million shares of Common Stock will be
eligible for sale by existing holders, subject where applicable, to Rule 144
promulgated under the Securities Act. Sales of substantial amounts of Common
Stock in the public market, or the perception that such sales may occur, could
have an adverse effect on the market prices for Common Stock. See "Selling
Stockholder" for a discussion of additional restrictions on the ability of the
Pension Plan to sell shares of Common Stock.

Dilution to New Investors. The public offering price per share of Common
Stock will exceed the net tangible book value per share of Common Stock.
Accordingly, the purchasers of the Common Stock offered hereby will experience
immediate dilution of $ per share. See "Dilution."

FACTORS RELATING TO THE DOMESTIC STEEL INDUSTRY

Cyclicality. The domestic steel industry is a cyclical business
characterized by intense competition. Within the industry, the first half of the
1980s was marked by significant restructurings and downsizing, unprecedented
losses and bankruptcies. Factors such as overcapacity, increased domestic and
international competition, including high levels of imported steel coupled with
a strong dollar, high labor costs, inefficient plants and reduced levels of
steel demand caused major disruptions to the industry. This was followed in the
late 1980s by increased demand, lower levels of steel imports, the decline of
the dollar, capacity reductions and increased efficiency through modernization
of plants. As a result, industry profits were substantial in 1988. However,
steel prices and demand began to decline in the latter half of 1989, and a
number of domestic producers reported losses in 1990 and 1991. These losses
continued for many producers throughout 1992. However, with stronger demand in
1993, the industry demonstrated improved performance. Although the recovery in
steel markets has continued into 1994, there can be no assurance as to its
duration or the extent of any future improvement in steel prices or industry
earnings.

Capacity Utilization and Price Sensitivity. According to the American Iron
and Steel Institute (the "AISI"), annual U.S. raw steel production capacity has
been reduced from approximately 151 million tons in 1983 to approximately 110
million tons in 1993. The reduction in domestic capacity generally has resulted
in higher utilization rates, although overcapacity remains a problem in certain
product lines and may become a problem in other product lines, particularly
coated steels. The average utilization of domestic industry capacity was 64%
from 1983 through 1986 compared to 82% from 1987 through 1992, and 89% for the
year 1993. For the first six months of 1994, capacity utilization increased to
90%. The results of operations of major domestic integrated steelmakers,
including the Company, are affected substantially by relatively small variations
in selling prices of products. Overcapacity relative to demand, particularly in
downcycles, has resulted in an extremely competitive environment which limits
the ability of producers to raise prices. Competitive pressures in the industry
could limit the ability of producers to obtain price increases or could lead to
declines

13
<PAGE> 16

in prices, both of which may have a material adverse effect on the industry
generally and on the Company specifically.

Domestic Competition. Competition among domestic steelmakers is intense
with respect to price, service and quality. Domestic integrated steel producers
have lost market share to domestic mini-mills in recent years as these mills
have expanded their product lines from commodity type items to include
larger-size structural products and flat rolled products. Mini-mills have
enjoyed certain cost advantages compared to integrated producers because of
lower costs in converting scrap to raw steel, lower employment and environmental
costs and the targeting of regional markets. In the past few years, mini-mills
also have substantially improved the quality of their products, particularly
thin cast steel, through the use of new technology which has allowed them to
retain overall conversion cost advantages. In recent years, competitive
pressures among domestic producers, including mini-mills, have extended to
higher value-added products, putting further pressure on prices and margins. In
addition, certain domestic integrated steelmakers have gone through
reorganizations under Chapter 11 of the U.S. Bankruptcy Code. Following their
reorganizations, these companies generally have reduced costs and become more
effective competitors. In addition, domestic steel producers have invested
heavily in new plant and equipment, which, combined with the implementation of
manning and other work rule changes, have enabled many domestic companies to
improve efficiency and increase productivity. Finally, demand for certain of the
industry's products continues to be under pressure from products made with
aluminum, plastics, cardboard, glass, wood, concrete and ceramics, which may
offer substitutes for steel in certain applications.

Foreign Competition. Domestic producers face competition from foreign
producers over a broad range of products. Many foreign steel producers are
owned, controlled or subsidized by their governments, making these producers
subject to influence by political and economic policy considerations as well as
the prevailing market conditions. Voluntary restraint arrangements ("VRAs")
covering 17 steel exporting nations and the European Community, which limited
steel imports into the United States market, expired on March 31, 1992. A
replacement structure to reduce subsidies and other unfair trade practices by
foreign producers has not emerged. In 1992, a number of domestic steel producers
filed extensive unfair trade cases covering imports of flat rolled carbon steel
products. These cases sought the imposition of anti-dumping and countervailing
duties on products alleged to have caused injury to domestic producers. Initial
determinations favorable to U.S. producers were overturned in July 1993, and a
number of these cases are now being appealed. Steel imports as a percentage of
domestic consumption, excluding semifinished products (primarily slabs), have
been approximately 16% in each of the last three years, below levels permitted
under the former VRAs. Attractive world export prices, favorable dollar exchange
rates and improved international competitiveness of the domestic steel industry
have contributed to these reduced import levels. In response to scheduled
outages among domestic producers, however, the importation of slabs began to
increase in early 1994. Imports have subsequently continued at this higher pace
for the first half of 1994 as a result of strong levels of domestic demand and
production.

Environmental Concerns. The facilities and operations of domestic
steelmakers are subject to a number of federal, state and local laws,
regulations and permits relating to environmental protection. The costs for
environmental compliance may serve to put domestic steelmakers at a relative
competitive disadvantage compared to foreign producers not subject to similarly
extensive regulation or producers of competitive materials which may not be
required to undergo equivalent compliance costs.

14
<PAGE> 17

THE COMPANY

The Company is a major integrated producer of flat rolled carbon steel
which has been in the steelmaking and finishing business for more than 80 years.
The Company focuses on higher value-added products with demanding
specifications, such as TMP and coated sheet. TMP are sold primarily to
manufacturing and packaging companies for use as food, beverage and general line
cans and coated sheet is sold primarily to the construction industry for use in
a broad variety of building products. For the year 1993, these value-added
product lines accounted for approximately 70% of the Company's revenues and 63%
of its shipments. The remainder of the Company's revenues are derived from the
sale of hot and cold rolled sheet, which is used for machinery, construction
products and other durable goods. The Company believes that its percentage of
value-added products to total production is among the highest of integrated
steel producers in the United States and provides it with a competitive
advantage against both domestic producers and foreign commodity imports.

Although the Company has had significant losses for the last three years,
it has improved its operating performance and the current economic recovery has
created a strong demand for its products. As a result, it had operating income
of $14.6 million and $16.5 million for the fourth quarter of 1993 and the first
quarter of 1994, respectively, and net income of $3.8 million and $2.9 million
for the respective quarters. Operating performance in the second quarter of 1994
was adversely affected by the damage to the No. 9 Tandem. The No. 9 Tandem
outage has resulted in lower shipments of TMP and higher operating costs. As a
result, the Company's operating profit of $2.9 million for the second quarter
compared unfavorably to recent performance. Based upon current pricing for its
products and assuming a mix of products consistent with that shipped in the
first quarter of 1994, the Company believes its operating performance, in the
absence of the damage to the No. 9 Tandem, would have continued to improve from
the first quarter of 1994.

CAPITAL IMPROVEMENT PROGRAM

In order to modernize operations, the Company embarked in 1988 on an
extensive capital improvement program, spending in excess of $550 million,
primarily to upgrade its steelmaking and hot rolling facilities. This program,
substantially completed in 1992, included, among other things, enhancing the
Company's capacity to make "clean" steel (steel with fewer impurities),
rebuilding its multi-strand continuous caster and upgrading its hot strip
rolling mill to be one of the most modern in the world.

BUSINESS STRATEGY

- - PRODUCT AND SERVICE EXPANSION

The Company's strategy emphasizes the production and shipment of higher
value-added products, including expanding and developing markets for those
products. Higher value-added products generally have allowed the Company to
realize higher margins. The Company's marketing initiatives are designed to
utilize the production advantages brought about by its capital improvement
program. As a result of the program, the Company has more effectively met its
customers' needs by producing coils with increased weight per inch of width,
meeting more exacting tolerances for gauge and surface quality and achieving
more precise crown control. The Company estimates that these enhanced production
capabilities allow it to serve a potential sheet market of approximately 35
million tons annually, or more than three times the size of its previous
potential market.

15
<PAGE> 18

- - PRODUCTIVITY IMPROVEMENTS AND COST REDUCTION INITIATIVES

Yield Improvements and Manning Reductions. As a result of its capital
improvement program, the Company has achieved significant operating
efficiencies, including improving its overall yields from liquid steel to
finished production. Prior to 1989, the Company's historic overall yields
averaged 74.0%. Combined with changes in product mix, the Company has increased
such yields to 81.7% in the second quarter of 1994. The Company estimates that
each full percentage point of improvement (based on the Company's standard cost
assumptions) would result in operating cost reductions of approximately $4.7
million.

Yield improvements combined with manpower reductions have significantly
increased the Company's overall productivity. In 1989, the Company required
approximately 2.5 employee hours to produce a ton of hot band and approximately
7.3 employee hours per ton of prime product shipped. For the second quarter of
1994, productivity gains had reduced these figures to approximately 1.8 employee
hours per ton of hot band and 4.6 employee hours per ton of prime product
shipped.

At December 31, 1989, following commencement of the capital improvement
program, the Company had approximately 7,900 employees. Manpower reductions,
accomplished primarily through attrition and retirement programs, have reduced
the Company's workforce to approximately 6,000 at December 31, 1993,
representing a reduction of 24.0%.

The capital improvement program as well as other cost containment measures
have strengthened the Company's competitive position in the domestic market
place. In the period from 1990 through 1993, the Company reduced its operating
costs by $50 per net ton of product shipped. The Company has several ongoing
programs to further reduce its operating costs.

Customer Service Improvements. The Company believes its sales efforts will
be strengthened by an improved customer service program. The Company continues
to simplify its management organization to provide increased responsiveness to
customer needs. The Company's total quality management practices have been
extended to cover service functions as well as production. Relations with
customers are further enhanced by providing them access to the problem-solving
capabilities of the Company's research and development facility, WEIRTEC.

- - REDUCING FINANCIAL LEVERAGE AND RESTORING THE COMPANY'S EQUITY BASE

To further accomplish its strategic financial goals, management is seeking
to reduce the Company's high leverage and financing costs and to rebuild
stockholders' equity. The Offerings of Common Stock, together with contemplated
sales of Common Stock to employees over the next five years, will assist the
Company in accomplishing that goal.

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

The Company was incorporated in Delaware in November 1982 and acquired the
assets of the Division in January 1984. The Company was wholly-owned by its
employees through the 1984 ESOP until June 1989 when the 1984 ESOP completed a
public offering of the Company's Common Stock. Since that time, the Common Stock
has been listed and traded on the NYSE. The Company's executive offices are
located at 400 Three Springs Drive, Weirton, WV 26062-4989, and its telephone
number is (304) 797-2000.

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<PAGE> 19

USE OF PROCEEDS

The net proceeds to the Company from the Offerings are estimated to be
approximately $ million, after deducting the estimated expenses and
underwriting discounts payable by the Company in connection with the Offerings.
The Company intends to use the net proceeds from the Offerings to make a
discretionary contribution to the Pension Plan of at least $20.0 million (the
"Pension Plan Contribution"). In addition, the Company will use the net proceeds
from the Offerings to (i) purchase or redeem (including premiums, if any, and
accrued interest) certain senior indebtedness, and (ii) in the event that the
Company does not reach an agreement with the holder of the Company's Redeemable
Preferred Stock, Series B (the "Series B Preferred Stock") to modify certain
provisions thereof, to purchase or redeem the Series B Preferred Stock. The
aggregate and specific amounts of senior indebtedness to be reduced will be
determined based upon market and other conditions at the time of the
consummation of the Offerings and thereafter. Such reduction of senior
indebtedness could require the payment of a premium which would result in an
extraordinary after tax charge against the Company's results of operations in
the period in which such indebtedness is redeemed or repurchased. Such charge
depends upon the amount of premium paid, if any, and the aggregate and specific
amounts of the 11 1/2% Notes and the 10 7/8% Senior Notes due 1999 (the "10 7/8%
Notes") redeemed or repurchased. Assuming an equal amount of 10 7/8% Notes and
11 1/2% Notes are repurchased and assuming further that no 11 1/2% Notes are
redeemed, under current market conditions, the Company estimates that such
charge could be $3.0 million; however there can be no assurance that the actual
amount of this charge will not exceed this estimate or that the Company will
not redeem any 11 1/2% Notes. The Company's senior indebtedness currently
consists of the 11 1/2% Notes due 1998, of which $140 million principal amount
is outstanding, and its 10 7/8% Notes due 1999, of which $300 million principal
amount is outstanding, and which rank pari passu with the 11 1/2% Notes. Up to
$50 million of the 11 1/2% Notes may be redeemed from the proceeds of sales of
equity securities at the Company's option until March 1, 1995 at 109.2% of
principal amount, plus accrued interest to the redemption date. The Series B
Preferred Stock is redeemable at any time at the Company's option without
premium for $50 per share (an aggregate of $25 million), plus unpaid dividends.
See "Description of Capital Stock."

The Company will not receive any proceeds from the sale of the shares of
Common Stock by the Selling Stockholder.

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<PAGE> 20

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is listed on the NYSE under the symbol "WS." The
table below sets forth, for the periods indicated, the high and low sales prices
of the Company's Common Stock, as reported on the NYSE Composite Tape.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1992:
First Quarter................................................. $ 5 1/2 $ 3 3/8
Second Quarter................................................ 6 3/8 4 7/8
Third Quarter................................................. 6 1/4 4
Fourth Quarter................................................ 4 3/8 3 3/8
1993:
First Quarter................................................. 7 1/4 3 7/8
Second Quarter................................................ 10 6 1/4
Third Quarter................................................. 9 1/2 5 3/8
Fourth Quarter................................................ 7 7/8 5 3/4
1994:
First Quarter................................................. 11 6 1/4
Second Quarter................................................ 10 7/8 8
Third Quarter (through August 8, 1994)........................ 10 1/8 7 1/2
</TABLE>

See the cover page of this Prospectus for a recent reported sales price of
the Company's Common Stock on the NYSE Composite Tape.

Dividends on the Common Stock are paid when and as declared by the
Company's Board of Directors. Following the initial public offering of the
Common Stock in June 1989, the Company paid a quarterly cash dividend of $0.16
per share of Common Stock. Such dividends were discontinued after the fourth
quarter of 1990. The Company's Board of Directors does not anticipate a
resumption of dividends on the Common Stock for the foreseeable future as it
intends to retain any earnings to strengthen the Company's capital base. The
payment of dividends in the future will be subject to the applicable provisions
of Delaware corporate law governing the Company and the discretion of the
Company's Board of Directors, which normally will take into consideration the
financial performance, capital requirements and financial restrictions of the
Company. The terms of the 11 1/2% Indenture limit the Company's ability to pay
dividends on its capital stock, including Common Stock, based on a formula
related to earnings and proceeds of sales of certain equity securities.

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<PAGE> 21

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1994, and as adjusted to reflect (i) the Offerings, and (ii) an assumed
application of all of the net proceeds of the Offerings to reduce indebtedness
of the Company described in "Use of Proceeds", in each case assuming no exercise
of the Underwriters' over-allotment options. The as adjusted column includes the
effect of the Pension Plan Contribution and excludes the effect of any payment
of a premium above par value to reduce the Company's indebtedness and any
resulting extraordinary charge to results of operations. In addition, the as
adjusted column assumes no portion of the net proceeds is used to redeem shares
of Series B Preferred Stock.

<TABLE>
<CAPTION>
JUNE 30, 1994
-------------------------
(DOLLARS IN THOUSANDS) ACTUAL AS ADJUSTED
--------- -----------
<S> <C> <C>
Cash..................................................... $ 172,184 $ 172,184
========= =========
CAPITALIZATION:
Current maturities of debt obligations................... $ -- $ --
Long term debt obligations............................... 495,320 (1)
Redeemable stock......................................... 37,980 37,980
Stockholders' equity:
Common stock........................................... 270
Additional paid-in capital............................. 336,785
Retained earnings...................................... (316,601) (316,601)(1)
Treasury stock and other............................... (1,886) (1,886)
--------- ---------
Total stockholders' equity.......................... 18,568
--------- ---------
Total capitalization................................ $ 551,868 $
========= =========
<FN>
- ---------

(1) The as adjusted amount of long term debt obligations will depend on the
amount of 11 1/2% Notes, if any, or 10 7/8% Notes, if any, reduced with the
net proceeds of the Offerings. The reduction of the 11 1/2% Notes and the
10 7/8% Notes could require the payment of a premium, resulting in an
extraordinary after tax charge to results of operations in the period in
which such indebtedness is retired. As a result, the as adjusted amount of
long term debt obligations shown in the table would be increased by the
amount of such premium. The amount of any such premium and the resulting
charge depends upon the amount of the 11 1/2% Notes, if any, or the 10 7/8%
Notes, if any, so reduced and the effect of any such premium and charge is
not reflected in the table. See "Use of Proceeds."
</TABLE>

DILUTION

The immediate per share equity interest dilution absorbed by purchasers of
the shares offered hereby is approximated by subtracting the Company's pro forma
tangible book value per common share, after giving effect to the Offerings, from
the per share public offering price.

<TABLE>
<CAPTION>
(IN DOLLARS PER SHARE)
<S> <C> <C>
Public offering price............................................
Tangible book value of common stock at June 30, 1994...........
Pro forma increase in tangible book value of common stock
attributable to the Offerings...............................
-----
Pro forma tangible book value of common stock after giving
effect to the Offerings.....................................
-----
Immediate dilution to purchasers based upon pro forma tangible
book value..................................................
=====
</TABLE>

19
<PAGE> 22

<TABLE>
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND TON DATA)

<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................... $ 660.6 $ 599.1 $1,201.1 $1,078.7 $1,036.3 $1,190.9 $1,329.4
Operating costs:
Cost of sales............... 600.3 560.3 1,105.6 1,010.0 1,019.3 1,113.9 1,165.4
Selling, general and
administrative expense.... 15.6 16.2 32.5 30.5 29.1 30.4 27.6
Depreciation................ 25.3 24.4 49.1 38.6 34.3 29.0 26.7
Special items............... -- 17.3(1) 17.3(1) -- -- -- 27.0(2)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations.................. 19.4 (19.1) (3.4) (0.4) (46.4) 17.6 82.7
Unusual gain(3)............... 32.5 -- -- -- -- -- --
Net interest expense(4)....... 24.1 25.1 50.2 37.9 29.7 15.0 9.8
ESOP contributions(5)......... 1.3 1.3 2.6 2.6 2.6 1.5 36.2
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes....................... 26.5 (45.5) (56.2) (40.9) (78.7) 1.1 36.7
Income tax (provision)
benefit..................... (5.0) 8.6 13.3 4.8 4.0 (0.8) (8.1)
-------- -------- -------- -------- -------- -------- --------
Income(loss) before
extraordinary item and
cumulative effect of changes
in accounting principles.... 21.5 (36.9) (42.9) (36.1) (74.7) 0.3 28.6
Extraordinary item (6)........ -- (6.5) (6.5) -- -- -- (12.6)
Cumulative effect of changes
in accounting principles
(7)......................... -- (179.8) (179.8) 4.3 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............. $ 21.5 $ (223.2) $ (229.2) $ (31.8) $ (74.7) $ 0.3 $ 16.0
Less: Preferred stock dividend
requirement................. (1.6) (1.6) (3.1) (3.1) -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss) applicable
to common shares............ $ 19.9 $ (224.8) $ (232.3) $ (34.9) $ (74.7) $ 0.3 $ 16.0
PER COMMON SHARE DATA:
Income(loss) per common
share before extraordinary
item...................... $ 0.70 $ (1.44) $ (1.74) $ (1.57) $ (3.49) $ 0.01 $ 1.37
Income (loss) per common
share before cumulative
effect of accounting
changes................... 0.70 (1.69) (1.99) (1.57) (3.49) 0.01 0.77
Net income (loss) per common
share (8)................. 0.70 (8.47) (8.78) (1.40) (3.49) 0.01 0.77
Cash dividends paid......... -- -- -- -- -- $ 0.64 $ 0.32

20
<PAGE> 23

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

A one-time special bonus of $5.1 million was paid to employees in
connection with a 1989 labor contract ratification.

(4) Net interest expense has been reduced by capitalized interest of $0.8
million, $6.1 million, $12.8 million, $14.8 million and $4.4 million for
the years 1993 through 1989, respectively.

(5) Does not involve a net outflow of cash as these contributions are returned
to the Company in the form of payments on loans outstanding from the
Company to the ESOPs.

(6) Reflects certain costs incurred in connection with the early extinguishment
of debt.

(7) Effective January 1, 1992, the Company changed its method of accounting for
the depreciation of its steelmaking facilities from a straight-line to a
production-variable method. Effective January 1, 1993, the Company adopted
the provisions of SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions;" SFAS No. 112, "Employers' Accounting for
Postemployment Benefits;" and SFAS No. 109, "Accounting for Income Taxes."
</TABLE>

21
<PAGE> 24

The cumulative effect of the 1993 accounting changes reflects the
collective implementation of the following accounting changes. The change
in accounting under SFAS No. 106 required the Company to recognize a
pretax charge of $303.9 million to account for the prior service cost of
retiree health care and life insurance benefits as well as an additional
noncash expense each quarter which began in the first quarter of 1993. The
Company also recorded a pretax charge of $4.0 million related to the
implementation of SFAS No. 112, and a net income tax benefit of $128.2
million, of which $115.5 million relates to the adoption of SFAS No. 106,
representing the cumulative effect of the accounting change for income
taxes in accordance with SFAS No. 109.

(9) See "Capitalization" for information regarding certain adjustments to give
effect to the issuance of shares of Common Stock offered hereby and the
application of the net proceeds therefrom.

(10) EBITDA represents the earnings of the Company before income taxes, net
interest expense, depreciation and amortization and other noncash items
reducing net income. This definition of EBITDA is consistent with the one
used in covenants in the Company's outstanding indebtedness. EBITDA is not
a measure of financial performance under GAAP. Accordingly, it does not
represent net income or cash flows from operations as defined by GAAP and
does not necessarily indicate that cash flows will be sufficient to fund
cash needs. As a result, EBITDA should not be considered as an alternative
to net income as an indicator of operating performance or to cash flows as
a measure of liquidity.

22
<PAGE> 25

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

The Company, as a major integrated producer of flat rolled carbon steel,
competes in a cyclical market where product demand is generally influenced by
several factors, including: the strength of the economies of the U.S. and other
major steel consuming countries; restrictions on imports by foreign producers;
fluctuating exchange rates; and worldwide production capacity. As the U.S.
economy has emerged from the latest recession, the domestic steel industry has
experienced a resurgence in product demand. As a result of this recent economic
recovery, the Company has experienced an increase in demand for its sheet
products that continued into the first half of 1994. There can be no assurance
that the demand for the Company's products will remain stable or increase from
present levels.

Historically capital intensive, the domestic integrated steel industry has
for more than 20 years been rationalizing older, less efficient production
facilities in response to the development of new steel producers and steel
product substitutes. More recently, competitive pressures have forced large
steel producers to implement more efficient production techniques and focus on
higher value-added products. The Company substantially completed a capital
improvement program in 1992, spending in excess of $550 million, primarily to
upgrade its steelmaking and hot rolling facilities. As a result of its
modernization efforts, the Company has improved its product quality and mix,
broadened its customer base, and reduced its average cost per ton of steel
shipped. In periods of changing economic conditions, the Company's refurbished
operating facilities allow it to adjust certain portions of its production to
maximize the production capabilities of its operating facilities.

Although the Company is generally influenced by the cyclical nature of the
industry and competitive pressures, its major product lines and attributes of
its particular operating facilities differentiate the Company favorably in
certain respects from other producers. The Company is a domestic industry leader
in the production of TMP, accounting for approximately a 22% share of the
domestic TMP market. TMP revenues represented 46% of the Company's total
revenues in 1993. The market for TMP is characterized by a relatively low number
of competitors and customers who make annual commitments at prices which have
been historically stable relative to pricing for other steel products. This
pricing stability is a result of the lower volatility over the past decade of
consumption of TMP in the U.S. versus other steel products. The Company believes
this is primarily due to lower sensitivity of production levels by food and
beverage producers to the general business cycle than users of other steel
products, such as automobile and appliance manufacturers, and the fact that
imports have historically represented a smaller percentage of the domestic TMP
market. The Company's financial performance compared to the industry in general
is therefore affected to a lesser degree during economic recessions and recovery
periods.

In contrast with TMP, selling prices for the Company's sheet products are
more sensitive to changes in demand due to the wide variety of end use, broad
customer base and the number of producers. In periods of high demand, the
Company is well positioned to capitalize on higher profit margins on its sheet
products. In contrast with its TMP, which are typically sold under one-year
commitments, the majority of the Company's sheet products are sold in the spot
market or under quarter-to-quarter pricing arrangements, which in the recent
environment of price increases on sheet products has allowed the Company to
realize higher margins on those products earlier than some of its competitors.
To the extent that selling prices may decline for sheet products in the future,
however, the Company is not as well protected against declines in revenue on its
sheet products as certain of its competitors whose sheet product sales are
largely made pursuant to fixed price contracts.

The Company, as well as the industry, continues to be challenged by
increasing production costs for items such as raw materials, energy,
environmental compliance and labor, including the cost of providing employee and
retiree benefits. The major raw materials and energy sources used

23
<PAGE> 26

by the Company in its production process are iron ore pellets, iron ore, coal,
coke, zinc, chrome, limestone and scrap steel. Iron ore pellets and coke are
predominantly purchased pursuant to long term agreements, through which the
Company has assured the extended availability of a portion of its major raw
material needs at competitive prices. The other raw materials are generally
purchased in the open market from various sources and their availability and
price are subject to market conditions.

In the first quarter of 1994, the Company entered into new three-year labor
agreements which it believes to be among the most competitive in the domestic
industry. Among other things, the Company expects the agreements to reduce the
Company's exposure to increased costs of providing healthcare to active
employees and retirees through a managed healthcare "point of service" program
and a cash basis cost ceiling on healthcare for future retirees. The Company
believes that these agreements place a heavier emphasis on profit sharing
compared to other major integrated steel producers. This tends to cause the wage
portion of the Company's employment costs to be relatively higher during periods
of profitability and relatively lower during periods of lower earnings or
losses.

<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------- ----------------------------
1994 1993 1993 1992 1991
----- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Shipments: (1)
Tin mill products......................... 363 439 895 890 857
Sheet products............................ 995 793 1,536 1,212 1,082
----- ----- ------ ------ ------
Total shipments........................... 1,358 1,232 2,431 2,102 1,939
Results per ton shipped:
Net sales per ton......................... $ 486 $ 486 $ 494 $ 513 $ 534
Cost of sales per ton..................... (442) (455) (455) (480) (526)
----- ----- ------ ------ ------
Gross profit per ton...................... 44 31 39 33 8
Operating profit per ton (2).............. 14 (15) 6 -- (24)
Profit margin percentages:
Gross profit margin....................... 9.1% 6.4% 8.0% 6.4% 1.6%
Operating profit margin (2)............... 2.9% (3.1)% 1.2% 0.0% (4.5)%

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

(1) In thousands of tons.

(2) Before special items.

</TABLE>

THREE MONTHS ENDED JUNE 30, 1994 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1993

In the second quarter of 1994, the Company recognized net income of $18.6
million, or $0.63 per share, compared to a net loss of $11.4 million, or $0.46
per share, for the same period in 1993.

Operating and net results for the second quarter were adversely affected by
a fire that occurred on April 6, 1994 that extensively damaged the Company's No.
9 Tandem. Nevertheless, the operating profit of $2.9 million in the second
quarter of 1994 which reflected lower shipments of TMP and higher operating
costs caused by the No. 9 Tandem outage, exceeded the operating performance for
the same quarter last year when an operating loss of $0.7 million was
recognized. Prior to the second quarter of 1994, the Company had achieved five
consecutive quarters of improved operating performance. Based upon current
pricing for its products and assuming a mix of products consistent with that
shipped in the first quarter of 1994, the Company believes its operating
performance, in the absence of the damage to the No. 9 Tandem, would have
continued to improve.

Under current accounting rules, certain property damage insurance
recoveries associated with events such as the damage to the No. 9 Tandem result
in the recognition of a new cost basis for the

24
<PAGE> 27

rebuilt facility and the requirement to recognize a gain. Based upon the nature
of the recoveries associated with the damage to the No. 9 Tandem, the Company
recognized in the second quarter of 1994 a pretax gain of $32.5 million. Without
the gain recognition, second quarter net results would have been reduced as a
result of the No. 9 Tandem outage to a net loss of $7.7 million.

Net sales in the second quarter of 1994 increased $34.1 million, or 11.3%
to $335.5 million from $301.3 million in the second quarter of 1993. Total
shipments in the second quarter of 1994 of 702.0 thousand tons represented an
increase of 12.5% over 1993's second quarter total shipments of 624.0 thousand
tons.

Demand for the Company's sheet products remained strong in the second
quarter of 1994, especially for its hot rolled products. Production scheduling
designed to minimize the effect of the No. 9 Tandem outage placed emphasis on
hot rolled production, which contributed to the significant increase in volume
of hot rolled products shipped in the second quarter of 1994 compared to the
same quarter last year. Shipments of hot rolled products increased by 116.3
thousand tons, or 67%, with volume increases to a lesser extent for both cold
rolled and galvanized products. These higher volumes resulted in total sheet
product shipments increasing by 30.3% in the second quarter of 1994 compared to
the same quarter in 1993 and resulted in an increase in revenues between the two
periods of $40.3 million.

Increased demand for the Company's sheet products resulted in the
realization of higher selling prices across the product line in general, and hot
rolled in particular. Revenues in the second quarter of 1994 were favorably
affected by $15.4 million as a result of higher selling prices compared to the
same quarter last year. Changes in customer mix also favorably affected sheet
products revenues by $5.4 million between the two periods.

The outage of the No. 9 Tandem, as noted above, has caused a shift in
production which is reflected in the lower volume of shipments of TMP in the
second quarter of 1994 compared to the second quarter of 1993. TMP shipments
were 46.2 thousand tons, or 21.7%, lower in the 1994 second quarter and resulted
in a decline in TMP revenues of $29.3 million compared to the second quarter of
1993.

Higher selling prices for TMP increased revenues by $2.7 million while
changes in customer mix lowered revenues by $0.4 million in the second quarter
of 1994 compared to the same quarter last year.

The Company continues to apply its strategic program to reduce a broad
range of production costs, lower spending and improve yields. The program
includes workforce reductions which were approximately 8% from mid-1992 through
year end 1993. The Company's goal is to further reduce its workforce over the
next three years consistent with the limitations allowed by its collective
bargaining agreements. The Company's capital improvement program has lowered the
Company's operating costs by providing greater production yields and generally
improved performance at several operating units, including its blast furnaces,
continuous caster, hot mill and sheet mill operations. Several of these units
have achieved production records since completion of the capital program. The
cost reduction and capital improvement programs have more than offset higher
energy, labor, and retiree healthcare costs. The result has been a steady
improvement in operating performance. While changes in product mix and volume
have contributed to a $10 reduction in operating costs in the second quarter of
1994 compared to the same quarter last year, the reduction also reflects the
Company's improvement in operating performance. Such lower operating costs did
not benefit from the effect of the gain recognized from the No. 9 Tandem
rebuild, and were

25
<PAGE> 28

unfavorably affected by the incremental costs caused by the outage and other one
time miscellaneous second quarter adjustments.

<TABLE>
<CAPTION>
QUARTER ENDED JUNE
30,
---------------------
(DOLLARS IN THOUSANDS, EXCEPT PER TON DATA) 1994 1993
-------- --------
<S> <C> <C>
Operating costs..................................... $332,595 $302,003
Shipments in tons................................... 702,300 623,800
Operating costs per ton............................. $ 474 $ 484
</TABLE>

In its continuing efforts to improve profit margins and operating
efficiency, the Company has focused its attention on improving the performance
of its finishing operations, specifically that of its tin mill. However, the
damage to the No. 9 Tandem has temporarily interrupted these efforts. Under the
Company's accelerated repair schedule, nearly all structural repairs to the No.
9 Tandem have been completed. Start-up of the rebuilt facility is scheduled for
mid-October 1994, and full production is expected to resume during the fourth
quarter.

The Company's financing costs remained relatively high in the second
quarter of 1994 and comparable to those experienced in the second quarter of
1993 due to the costs associated with the Company's public sale of $140 million
of 11 1/2% Notes in the first quarter of 1993, the proceeds of which were used
to reduce certain indebtedness.

The Company recognized a deferred income tax provision of $8.7 million in
the second quarter offset by a benefit of $4.4 million to adjust its deferred
tax asset valuation reserve.

SIX MONTHS ENDED JUNE 30, 1994 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1993

For the first six months of 1994, the Company reported net income of $21.5
million or $0.70 per share compared to a loss before the effect of accounting
changes for the first six months of 1993 of $43.4 million. The 1993 period also
included a pretax restructuring charge of $17.3 million. The Company's net
income for the first six months of 1994 included the $32.5 million pretax gain
associated with the No. 9 Tandem recognized in the second quarter, as described
above, as well as incrementally higher operating costs caused by the related
outage. Without the gain, results for the first six months of 1994 would have
been reduced as a result of the outage to a net loss of $4.9 million.

The Company's operating profit of $19.4 million through the second quarter
of 1994 continued to demonstrate improved operating performance. Notwithstanding
the adverse effects of the No. 9 Tandem outage, the Company's 1994 operating
results compared favorably to the first six months of 1993 when the Company had
an operating loss of $1.8 million, before the restructuring charge.

Net sales for the first six months of 1994 were $660.7 million, an increase
of $61.6 million, or 10.3%, from $599.1 million in the same 1993 period.
Reflective of the strength of demand for the Company's sheet products, total
shipments of 1,358.0 thousand tons showed a 10.2% increase over the 1,232.0
thousand tons shipped in the same period of 1993.

Demand for the Company's sheet products was strong in the first half of
1994 and, combined with the second quarter production shift driven by the No. 9
Tandem outage described above, shipments of hot rolled products increased by
170.5 thousand tons, or 53%, compared to the first half of 1993. This volume
increase together with smaller volume increases for both cold rolled and
galvanized products, contributed to an increase in revenues of $65.8 million
compared to the first half of 1993.

Higher selling prices for the Company's sheet products, hot rolled in
particular, resulted in an increase in sheet product revenues of $32.3 million
compared to the first half of 1993. Changes in customer mix added $9.2 million
in higher revenues between the two periods.

26
<PAGE> 29

The No. 9 Tandem outage in the second quarter of 1994 caused lower
shipments of TMP through the first six months of 1994 of 74.8 thousand tons
compared to the first six months of 1993. This reduction in volume caused a
$47.6 million decline in revenues between the two periods.

Generally higher TMP selling prices for the first six months of 1994
compared to the same period last year contributed $2.0 million in higher
revenues offset by $0.1 million of changes in customer mix between the two
periods.

The Company's continued application of its strategic program has lowered
its operating costs by providing greater production yields and generally
improved performance at several operating units, including its blast furnaces,
continuous caster, hot mill and sheet mill operations. Several of these units
have achieved production records since completion of the capital program. The
cost reduction and capital improvement programs have more than offset higher
energy, labor, and retiree healthcare costs. The result has been a steady
improvement in operating performance. While changes in product mix and volume
have contributed to a $16 reduction in operating costs in the first half of 1994
compared to the first half of last year, the reduction also reflects the
Company's improvement in operating performance. Such lower operating costs did
not benefit from the effect of the gain recognized from the No. 9 Tandem
rebuild, and were unfavorably affected by the incremental costs caused by the
outage and other one time miscellaneous second quarter adjustments.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------
(DOLLARS IN THOUSANDS, EXCEPT PER TON DATA) 1994 1993
-------- --------
<S> <C> <C>
Operating costs..................................... $641,230 $618,174
Restructuring charge................................ -- 17,340
-------- --------
641,230 600,834
Shipments in tons................................... 1,358,400 1,232,000
-------- --------
Operating Costs per ton before restructuring
charge............................................ $ 472 $ 488
</TABLE>

The Company's financing costs remained relatively high in the first half of
1994 and comparable to those experienced in the first half of 1993 due to the
costs associated with the Company's public sale of $140 million of 11 1/2%
Notes in the first quarter of 1993, the proceeds of which were used to reduce
certain indebtedness.

The Company recognized a deferred income tax provision of $10.1 million in
the first half of 1994 offset by a benefit of $5.0 million to adjust its
deferred tax asset valuation reserve.

1993 COMPARED TO 1992

Revenues in 1993 of $1,201 million for all products combined were
considerably higher than in 1992 and reached their highest level over the last
four years. Total revenues in 1993 increased by $122.4 million, or 11.3%, from
1992. Higher shipment levels, specifically for the Company's sheet products,
contributed $139.2 million in additional revenues in 1993. However, combined
average selling prices in the first half of 1993 followed a downward trend that
began in 1991; and although the effect of price increases announced earlier in
1993 on sheet products began to enhance revenues in the third quarter of 1993,
combined average selling prices for the full year ended below the average for
1992. Lower average selling prices, combined with a slight change in product
mix, reduced revenues by $16.8 million compared to 1992.

27
<PAGE> 30

A record 1,536 thousand tons of sheet products were shipped to trade
customers in 1993, reflecting a dramatic increase of 324 thousand tons, or
nearly 27%, compared to 1992. The demand for the Company's hot rolled and coated
products was particularly strong in 1993. Shipments of hot rolled products
increased 56% from 1992 levels and, together with an 18% shipping volume
increase for coated products, primarily galvanized, contributed $134.2 million
in higher revenues. Average selling prices for sheet products improved
throughout the year, adding $6.0 million to revenues in 1993. The higher
shipment volumes and selling prices, combined with a slight change in product
mix which decreased revenues by $2.0 million, resulted in a net increase in
revenues on sheet products of $138.2 million for 1993 over 1992.

Revenues from the sale of TMP decreased by $15.8 million in 1993 compared
to 1992. Although slightly higher volumes and a small change in product mix
accounted for a $5.5 million increase, average selling prices that were lower
than in 1992 on most TMP decreased revenues by $21.3 million.

Cost of sales in 1993 as a percentage of net sales was 92.0% compared to
93.6% for 1992 and reflected an improvement of $25 per ton in direct production
costs. Without giving effect to additional noncash charges stemming from a
change in 1993 in the Company's method of accounting for retiree healthcare,
direct production costs were $33 per ton less than they were in 1992.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER TON DATA) 1993 1992
---------- ----------
<S> <C> <C>
Cost of sales............................................. $1,105,558 $1,010,022
Additional noncash retiree healthcare charges............. (18,067) --
---------- ----------
$1,087,491 $1,010,022
Shipments in tons......................................... 2,430,600 2,102,400
Cost of sales per ton..................................... $ 447 $ 480
</TABLE>

The improvement in 1993 over the prior year was attributable primarily to
greater production yields and improved operating performance. Several operating
units throughout the Company's mill achieved production records during 1993,
including its blast furnaces, continuous caster, hot mill and sheet mill
operations. The Company's continuous caster and hot strip mill, whose
refurbishments were completed in 1992, performed with minimal disruption,
compared to 1992 when outages resulted in the loss of twelve operating days and
1991 when such outages totalled fifty-two operating days. An unscheduled two-day
outage of the tin mill in 1993 was the only significant disruption to operations
during the year. Operating yields as measured from liquid steel through finished
production improved in 1993 compared to performance levels in 1992. Additional
savings are anticipated as the Company continues to implement its cost reduction
programs. See "Business--Business Strategy."

Depreciation expense increased $10.5 million to $49.1 million in 1993 from
$38.6 million in 1992. This change reflected an increase in the Company's
depreciable asset base, as well as higher production levels experienced in 1993.
The Company's accounting policy recognizes depreciation on production equipment
primarily as a function of both production volume and the age of the equipment.

Interest expense increased $11.9 million to $52.8 million in 1993 from
$40.9 million in 1992, principally due to higher interest rates on long term
debt and lower amounts of capitalized interest. Capitalized interest declined to
$0.8 million in 1993 from $6.1 million in 1992 following the substantial
completion of the Company's capital improvement program.

In the first quarter of 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions;" SFAS No. 112,
"Employers' Accounting for Postemployment Benefits;" and SFAS No. 109,
"Accounting for Income Taxes," all of which had a material effect on the
Company's earnings and net worth.

28
<PAGE> 31

The change in accounting under SFAS No. 106 required the Company to
recognize a pretax charge of $304 million to account for the prior service cost
of retiree healthcare and life insurance benefits as well as an additional
ongoing noncash expense which amounted to $18.0 million in 1993. The Company
also recorded a pretax charge of $4.0 million related to the implementation of
SFAS No. 112 and a net income tax benefit of $128.2 million, of which $115.5
million related to the adoption of SFAS No. 106, representing the cumulative
effect of the accounting change for income taxes in accordance with SFAS No.
109.

In addition to the effect of the accounting changes, the Company also
recognized a pretax restructuring charge of $17.3 million to account for costs
associated with an enhanced early retirement package, which is part of the
Company's ongoing cost reduction program. The effect of manpower reductions on
the Company's results of operations are more fully described in "Business
- --Business Strategy--Productivity Improvements and Cost Reduction Initiatives."

An extraordinary charge of $6.5 million on an after tax basis was also
recognized by the Company in the first quarter of 1993 related to costs
associated with the prepayment of bank and institutional debt which was
refinanced in conjunction with the Company's first quarter sale of $140 million
of its 11 1/2% Notes.

The income tax benefit recognized in 1993 reflected principally the net
realizable value of additional net operating losses generated during 1993 and
net deferred tax asset carrying value adjustments related primarily to a change
in the federal statutory rate. The income tax benefit in 1992 resulted from a
$2.9 million recovery of state income taxes paid in prior years and $1.8 million
of net recoverable federal income tax adjustments.

1992 COMPARED TO 1991

Shipment levels for TMP and sheet products combined, which increased during
1992 compared to 1991, generated $78.4 million in higher revenues. However,
selling prices in 1992 that generally continued their downward trend from 1991
caused net revenues to decline by $35.7 million which combined with a slight
favorable change in product mix of $0.3 million, resulted in a net increase in
revenues in 1992 of $42.4 million, or 4.1%.

The volume of sheet product shipments increased by 129,000 tons, or 12.0%,
in 1992 compared to 1991 primarily on the strength of demand for coated products
and, in particular, galvanized sheet products. Shipments of galvanized products
increased 30.0% from 1991 levels and, together with a 2.0% shipping volume
increase for other sheet products, including secondaries, contributed $67.6
million in higher revenues. However, selling prices for sheet products that were
generally lower than in 1991 offset $30.7 million of the volume increase
achieved in 1992. In particular, selling prices for cold rolled and galvanized
sheet products on average were approximately 6.0% and 8.0% lower, respectively,
in 1992 than in 1991.

Revenues from the sale of the Company's TMP increased $5.5 million in 1992
compared to 1991. This comparison includes secondaries (products not meeting
prime specifications) which alone accounted for a $22.8 million increase on
higher volume. Selling prices that were off slightly from 1991 on prime TMP and
an 8.0% decline in shipments of WEIRCHROME were the principal factors offsetting
the increase in revenues on secondary products.

Cost of sales in 1992 as a percentage of net sales was 93.6% compared to
98.4% for 1991. The improvement over 1991 was attributable primarily to an
increase in certain production yields as operations with the newly refurbished
continuous caster and hot strip mill stabilized and outages were reduced. A
scheduled eleven-day hot strip mill outage in May 1992 and a one-day outage in
August 1992 resulted in the loss of twelve operating days in 1992, compared to
outages which totaled fifty-two operating days in 1991. Operating yields as
measured from hot metal production through slab production improved in 1992
compared to performance levels in 1991. The start-up of the Company's rebuilt
and enhanced multi-strand continuous caster in the last quarter of 1990

29
<PAGE> 32

allowed for operations in the Company's blooming mill to be suspended in the
first quarter of 1991, making the Company a 100% continuous cast producer.

Depreciation expense increased $4.3 million to $38.6 million in 1992 from
$34.3 million in 1991. This change reflected an increase in the Company's
depreciable asset base, although the increase was partially offset by the
adoption of an accounting change effective January 1, 1992. The depreciation
method of accounting for the Company's steelmaking facilities was changed from
the straight-line method to a production-variable method. The new method adjusts
straight-line depreciation to reflect actual production levels and resulted in a
decrease in depreciation expense of $4.7 million for 1992. The cumulative effect
on prior years, which was required to be recognized in the first fiscal quarter
affected by the accounting change, reduced the net loss for 1992 by $4.4
million.

Interest expense increased $8.1 million to $40.9 million in 1992 from $32.8
million in 1991, principally due to lower amounts of capitalized interest.
Capitalized interest declined to $6.1 million in 1992 from $12.8 million in 1991
following the substantial completion of the Company's capital improvement
program. In addition, certain borrowings that were incurred primarily during the
second quarter of 1991 under the Company's prior credit facilities and used to
finance a portion of the capital improvement program remained outstanding
throughout 1992.

The income tax benefit of $4.8 million recognized in 1992 resulted from a
$2.9 million recovery of state income taxes paid in prior years and $1.8 million
of net recoverable federal income tax adjustments. The $4.0 million income tax
benefit in 1991 was derived from a recovery of federal income taxes paid prior
to 1991 through utilization of alternative minimum tax net operating loss
carrybacks.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and equivalents of $172.2 million at June 30, 1994, was
considerably higher than the $89.0 million on hand at December 31, 1993 and the
$61.2 million at December 31, 1992. This increase was attributable primarily to
improved operating results, exclusive of noncash charges, a reduction in
inventories and the receipt of advances from the Company's insurance carrier
related to the No. 9 Tandem. A lower level of spending on capital items during
the first half of 1994 and the full year 1993, compared to 1992, also enhanced
the Company's cash position. Net financing activities over this same period
showed a net use of cash primarily resulting from the Company's first quarter of
1993 refinancing of certain obligations through the use of cash on hand and the
net proceeds from the public offering of $140 million of its 11 1/2% Notes.

The net proceeds from the 11 1/2% Notes offering of approximately $135.6
million, together with available cash were applied toward the repayment of the
Company's bank borrowings and its 11.45% Senior Notes due 1998 and the
repurchase of the 9.00% Senior ESOP Notes due 1999, thereby removing the
restrictive financial maintenance covenants associated with those instruments.
Although the 11 1/2% Indenture does not contain restrictive financial
maintenance covenants, it does contain other covenants that limit, among other
things, the incurrence of additional indebtedness, the declaration and payment
of dividends and distributions on the Company's capital stock, as well as
mergers, consolidations, liens, and sales of certain assets.

The application of a portion of the 11 1/2% Notes offering proceeds toward
the repayment of all of its bank borrowings resulted in the repayment of certain
term loans, a revolving credit facility and a letter of credit subfacility. To
provide a replacement facility for future working capital needs and letters of
credit, in August 1993, the Company initiated, through a new subsidiary, Weirton
Receivables, Inc., a receivables participation agreement with a group of five
banks. The facility provides for a total commitment by the banks of up to $85
million, including a letter of credit subfacility of up to $25 million. To
implement the facility, the Company sold substantially all of its accounts
receivable, and will sell additional receivables as they are generated, to the
subsidiary. The subsidiary is expected to finance its ongoing receivable
purchases from a combination of cash collections on receivables already in the
pool, short term intercompany obligations, issuances of

30
<PAGE> 33

redeemable stock and cash proceeds derived from selling interests in the
receivables to the participating banks from time to time. As of June 30, 1994,
and December 31, 1993, while no funded participation interests had been sold
under the facility, $3.1 million in letters of credit under the subfacility were
in place at such dates. Based upon the Company's available cash on hand at June
30, 1994 and the amount of cash it anticipates will be provided from operating
activities in the near term, the Company has no immediate cash requirements. As
such, it does not expect the subsidiary to sell participation interests to the
banks in the near term. At June 30, 1994 and December 31, 1993, after reduction
for amounts in place under the letter of credit subfacility, the base amount
available for cash sales was approximately $76.0 million and $64.6 million,
respectively. During the period that began with the facility's implementation
through June 30, 1994, the base amount available for cash sales ranged from
$64.3 million to $81.9 million. In addition, the Company does not have any
scheduled cash requirements related to its long term debt until 1998 when its
11 1/2% Notes become due. On August 5, 1994, the Company, the subsidiary and the
participating banks agreed to extend the receivables participation agreement for
an additional year through August 24, 1997.

The Company has gross deferred tax assets which total $184.1 million at
June 30, 1994, and represent net operating loss carryforwards and other tax
credits and net deductible temporary differences, all of which can be used to
reduce the Company's cash requirements for the payment of future federal regular
income tax. The Company may be subject to cash requirements under federal
alternative minimum tax.

The Company also expects its liquidity to improve as a direct result of its
capital improvement program and through the implementation of its current
business strategy. See "Business-- Business Strategy."

The Company's capitalization includes three main elements: long term debt
obligations, redeemable stock and stockholders' equity. The table below shows
the changes in the Company's capitalization from January 1, 1991 through June
30, 1994.

<TABLE>
<CAPTION>
JUNE 30, % OF JAN. 1, % OF
(DOLLARS IN MILLIONS) 1994 TOTAL 1991 TOTAL
--------- ----- ------- -----
<S> <C> <C> <C> <C>
Long term debt obligations, including current portion... $ 495.3 90% $ 398.9 55%
Redeemable stock........................................ 38.0 7 3.9 1
Stockholders' equity.................................... 18.6 3 316.5 44
--------- ----- ------- -----
$ 551.9 100% $ 719.3 100%
</TABLE>

The significant decline in the Company's stockholders' equity from January
1, 1991 through June 30, 1994 resulted from its net losses over this period of
$314.3 million (which include a pretax restructuring charge of $17.3 million and
an after tax extraordinary charge of $6.5 million, both of which were recognized
in 1993) and the net after tax effect of required changes in certain accounting
principles primarily related to retiree healthcare and income taxes that reduced
stockholders' equity by $175.4 million. See "--Results of Operations" and "Risk
Factors--Factors Relating to the Company--Recent Losses."

INVESTMENT IN FACILITIES

In order to modernize operations, the Company embarked in 1988 on an
extensive capital improvement program, spending in excess of $550 million,
primarily to upgrade its steelmaking and hot rolling facilities. See
"Business--Capital Improvement Program." This program, substantially completed
in 1992, included, among other things, enhancing the Company's capacity to make
clean steel, rebuilding its multi-strand continuous caster, and upgrading its
hot strip rolling mill to be one of the most modern hot mills in the world.
These improvements have enabled the Company to continuously cast 100% of its
steel requirements versus 62% in prior years (and an average of approximately
85% for the industry as a whole) and have increased the Company's yield from raw
steel to finished production. As a result of its modernization efforts, the
Company has improved its

31
<PAGE> 34

product quality and mix, enhanced its ability to broaden its customer base, and
reduced its average cost per ton of steel shipped.

Following the completion of the capital improvement program, capital
spending was reduced to $14.4 million in 1993. Spending for capital improvements
in the first half of 1994 totalled $7.3 million, with anticipated spending for
the remainder of the year estimated to be approximately $34.0 million (excluding
any additional expenditures the Company considers appropriate associated with
rebuilding the No. 9 Tandem) primarily for its finishing operations. At present,
cash provided from operating activities, together with cash on hand, is expected
to be sufficient to fund this capital budget and meet any near term working
capital requirements. To the extent that near term operating activities do not
generate an adequate amount of cash, the Company expects that any cash shortfall
would be financed from its receivables participation facility.

The Company does not anticipate the recent damage to its No. 9 Tandem will
adversely affect its short term or long term liquidity. See "Risk
Factors--Factors Relating to the Company--Recent Major Damage to Facility."

32
<PAGE> 35

BUSINESS
INTRODUCTION

The Company is a major integrated producer of flat rolled carbon steel
which has been in the steelmaking and finishing business for more than 80 years.
The Company focuses on higher value-added products with demanding
specifications, such as TMP and coated sheet. TMP are sold primarily to
manufacturing and packaging companies for use as food, beverage and general line
cans and coated sheet is sold primarily to the construction industry for use in
a broad variety of building products. For the year 1993, these value-added
product lines accounted for approximately 70.0% of the Company's revenues and
63.0% of its shipments. The remainder of the Company's revenues are derived from
the sale of hot and cold rolled sheet, which is used for machinery, construction
products and other durable goods. The Company believes that its percentage of
value-added products to total production is among the highest of integrated
steel producers in the United States and provides it with a competitive
advantage against both domestic producers and foreign commodity imports.

The Company's strategic objective is to be a leading domestic producer of
high value-added flat rolled carbon steel products concentrating on those
products with demanding specifications and precise tolerances. The Company
believes that it is well positioned to achieve this objective through its
strategic business program that builds on the achievements of its capital
improvement program completed in 1992.

CAPITAL IMPROVEMENT PROGRAM

In order to modernize operations, the Company embarked in 1988 on an
extensive capital improvement program, spending in excess of $550 million
primarily to upgrade its steelmaking and hot rolling facilities. This program,
substantially completed in 1992, included, among other things, enhancing the
Company's capacity to make "clean" steel (steel with fewer impurities),
rebuilding its multi-strand continuous caster and upgrading its hot strip
rolling mill to be one of the most modern hot mills in the world. These
improvements have enabled the Company to continuously cast 100% of its raw steel
production, versus 62.0% in prior years (and an average of approximately 85.0%
for the industry as a whole), and to increase its yield from raw steel to
finished production from 72.0% in 1989 to 81.7% in the second quarter of 1994.
As a result of its modernization efforts, the Company has improved its product
quality and mix, broadened its customer base and reduced its average cost per
ton of steel shipped. The Company spent an additional $14 million on capital
improvements in 1993 and anticipates spending approximately $41.0 million in
1994 (excluding any additional expenditures the Company considers appropriate
associated with rebuilding the No. 9 Tandem), primarily for its finishing
operations.

The following table shows the total amounts expended by the Company
(including those capitalized) under the capital improvement program by area of
operations:

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
PROJECT TOTAL 1992 1991 1990 1989 1988
- -------------------------------------------------- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Primary iron and steelmaking...................... $ 54 $ 7 $ 16 $ 11 $ 7 $13
Continuous caster rebuild......................... 64 -- 3 26 34 1
Hot strip mill.................................... 326 34 80 129 49 34
Finishing operations and product development...... 19 2 12 2 -- 3
Environmental and safety.......................... 42 1 1 7 10 23
General operating services and miscellaneous...... 71 6 13 19 18 15
----- ---- ---- ---- ---- ----
$576 $50 $125 $194 $118 $89
</TABLE>

See "--Steelmaking Process" and "--Properties and Facilities" for
additional descriptions of specific capital improvement program projects and
improvements.

33
<PAGE> 36

BUSINESS STRATEGY

The Company's strategic objective is to be a leading producer of high
value-added flat rolled carbon steel products. With the completion of the
capital improvement program, the Company's strategy is to: (i) increase revenues
and margins through the development and marketing of higher value-added products
and services; (ii) achieve productivity improvements and significant reductions
in conversion costs through advanced steelmaking and rolling technology and
savings in manpower and production processes; and (iii) reduce financial
leverage and restore the Company's equity base.

PRODUCT AND SERVICE EXPANSION

The Company's strategy emphasizes the production and shipment of higher
value-added products, including expanding and developing markets for those
products. For the year 1993, the Company's product mix by prime tons of high
value-added products (TMP, galvanized and other coated sheet) was 63% compared
to an average (weighted by tons) of approximately 32% among the Company's
integrated competitors, and its mix of low and medium value-added products (hot
rolled and cold rolled) was 37% compared to such competitors' average of
approximately 68%. Higher value-added products generally have allowed the
Company to realize higher margins.

The Company's marketing initiatives are designed to utilize the production
advantages brought about by its capital improvement program. Prior to the
program, the Company was limited to supplying coils with a maximum weight of 650
pounds per inch of width ("PIW"). The Company's enhanced casting and hot rolling
facilities can now produce 1,000 pound PIW coils, a size preferred by many
customers to promote their manufacturing efficiency. The Company's computer
controlled, state-of-the-art hot rolling facilities also enable it to meet
exacting tolerances for gauge and precise crown control on its products. Prior
to the capital improvement program, the Company's limitations on gauge ran from
.072" to .200", without crown control. The Company's hot rolling facilities can
now deliver gauges as light as .054" and as heavy as .750", which the Company
believes to be the widest range of gauges available within the industry. Crown
control as low as .001" can also now be consistently achieved. The Company
estimates that these enhanced production capabilities allow it to serve a
potential sheet market of approximately 35 million tons annually, or more than
three times the size of its previous potential market.

The Company constantly seeks to open up new markets for its high quality
products. Recently, the Company has begun to market high carbon, high strength
low alloy steels and heavy gauge coil plate primarily for the pipe and tube and
construction businesses. The Company also has intensified marketing efforts for
its proprietary Galfan coated product, WEIRKOTE PLUS, in construction and
highway applications, such as roofing, framing, doors and signage, where
formability and paintability are important considerations in addition to
superior anti-corrosive properties.

The Company has utilized the research and development expertise of its
well-known WEIRTEC facility to improve Weirton's product lines and expand their
markets. WEIRTEC has pioneered new uses for Weirton's light gauge products in
the technology of thin-walled food and beverage containers and lids and provides
on-going efforts to the Company and its customers in developing alternative uses
for coated sheet products. WEIRTEC has played a central role in reducing steel
beverage can weights by more than 30% since 1980 and is continuing its efforts
to achieve additional can weight reductions. These developments, together with
the Company's leading efforts in promoting can recycling and consumer
awareness, have helped to improve the competitive position of steel food,
general packaging and beverage cans. However, to date, the Company's efforts to
promote the use of steel beverage cans have not resulted in increased demand
for steel cans, primarily due to lower raw material costs for beverage cans
made of aluminum.

Recently, the Company's marketing initiatives have extended to conversion
services, including programs involving the tolling of stainless steel slabs of
specialty steelmakers. The Company believes that development of these services
could provide additional utilization of its enhanced hot rolling facilities.

34
<PAGE> 37

PRODUCTIVITY IMPROVEMENTS AND COST REDUCTION INITIATIVES

Yield Improvements and Manning Reductions. As a result of its capital
improvement program, the Company has achieved significant operating
efficiencies, including improving its overall yields from liquid steel to
finished production. Prior to 1989, the Company's historic overall yields
averaged 74.0%. Combined with changes in product mix, the Company has increased
such yields to approximately 81.7% in the second quarter of 1994. The Company
estimates that each full percentage point of improvement (based on the Company's
standard cost assumptions) would result in operating cost reductions of
approximately $4.7 million.

Yield improvements combined with manpower reductions have significantly
increased the Company's overall productivity. In 1989 the Company required
approximately 2.5 employee hours to produce a ton of hot band and approximately
7.3 employee hours per ton of prime product shipped. For the second quarter of
1994, productivity gains had reduced these figures to approximately 1.8 employee
hours per ton of hot band produced and 4.6 employee hours per ton of prime
product shipped. The Company believes these productivity figures are superior to
the domestic industry average for hot bands and for finished products, given the
Company's greater proportion of highly processed products.

As part of its business strategy, the Company is continuing to reduce its
workforce over the next few years, primarily through retirement programs and
attrition. At the commencement of its capital improvement program in 1989, the
Company had approximately 7,900 employees, and at year-end 1993 it had
approximately 6,000 employees representing a reduction of 24.0%. The Company's
goal is to achieve additional workforce reductions by 1997 of about 15.0% from
the 1993 year-end level.

Other Operating and Cost Improvements. Improved blast furnace operating
practices have allowed the Company to operate a two furnace configuration and to
raise average hot metal production per furnace from 2,172 tons per day in 1989
(utilizing three furnaces) to 3,242 tons per day in 1993 (utilizing two
furnaces). This has permitted the Company to maintain its required hot metal
production while keeping a third furnace on standby, instead of requiring a
fourth standby furnace as the Company had operated in prior years. At the same
time, the Company has lowered its conversion costs by reducing its blast furnace
coke consumption rates per ton of hot metal.

The Company's renovated hot strip mill achieved average per turn operating
rates of almost 3,500 tons of enhanced product in the second quarter of 1994
compared to rates approximating 3,000 tons per turn prior to the capital
improvement program. Moreover, through improved production scheduling, average
operating delays for the hot mill have been reduced by more than 20.0% from 1988
levels.

The capital improvement program, as well as other cost containment
measures, have strengthened the Company's competitive position in the domestic
market place. Among North American steel producers, the Company believes its
operating cost per ton of hot band is below the industry average. Moreover, the
Company has reduced its cost of sales per net ton of product shipped from $505
in 1990 (the first full year of a new labor contract) to $455 in 1993. While
changes in product mix and volume have played a part in this achievement, the
Company believes the capital improvement program was the major contributor to
the improvement. These factors, together with improved pricing for its products,
have positioned the Company to further enhance its operating results.

The Company is seeking additional savings primarily through lower energy
consumption and costs and supply costs, including more efficient repair and
maintenance procedures, combined with improved yields and productivity. Specific
efforts have been initiated to evaluate alternative energy supplies, improve
individual unit yields and reduce spending on consumables. Based on more
efficient production techniques and improved performance from operating units,
the Company also believes that there are substantial opportunities to further
reduce its inventories.

35
<PAGE> 38

The Company has initiated programs to contain inflationary cost increases
in healthcare benefits, and in some cases to reduce costs while improving
coverage, through new collective bargaining agreements effective through 1996.
The Company believes its new labor agreements are among the most competitively
structured in the domestic industry.

Customer Service and Information Management Improvements. The Company
believes its sales efforts will be strengthened by an improved customer service
program. The Company continues to simplify its management organization to
provide increased responsiveness to customer needs. The Company's total quality
management practices have been extended to cover service functions as well as
production. New information systems have assisted the Company in identifying
order status so that customers can be kept informed regarding production,
shipment and delivery schedules. Finally, relations with customers are being
enhanced by providing them access to the problem solving resources of the
Company's WEIRTEC facility.

The Company has introduced a computer-controlled integrated management
information system, IMIS, which provides Company-wide order and inventory
related information. The Company contemplates linking this system with logistics
and integrated scheduling (L&IS), a state-of-the-art computer system, which it
expects to utilize by late 1995 or early 1996 for integrated production
scheduling throughout the mill.

REDUCING FINANCIAL LEVERAGE AND RESTORING THE COMPANY'S EQUITY BASE

Since 1989, the Company's stockholders' equity has been substantially
reduced by losses, restructuring and other charges and the effects of changes in
certain accounting practices. See "Risk Factors--Factors Relating to the
Company--Recent Losses" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Results of Operations." The Company's
initial financial strategy, in order to gain financial flexibility, was to
replace its variable interest rate debt and other instruments having financial
maintenance covenants with fixed rate obligations having lesser restrictions.
This was accomplished in 1993. See Note 6 to the Consolidated Financial
Statements. To further accomplish its strategic financial goals, management is
seeking to reduce the Company's high leverage and financing costs and to rebuild
stockholders' equity. The Offerings of Common Stock, together with contemplated
sales of Common Stock to employees over the next five years, will assist the
Company in accomplishing that goal. See "Capitalization."

PRINCIPAL PRODUCTS AND MARKETS

The Company is a major integrated producer of flat rolled carbon steels
with principal product lines consisting of TMP and sheet products. The Company
offers a full range of sheet products that include hot and cold rolled sheet
steel up to 48" wide and both hot-dipped and electrolytic galvanized products.
TMP includes tin plate, chrome coated and black plate. Historically, the
Company's products have emphasized the narrow to medium widths reflective of its
rolling and finishing equipment and covered a broad range of gauges, finishes
and performance specifications. Such ranges have been enhanced by the Company's
capital improvement program. See "--Capital Improvement Program."

36
<PAGE> 39

The Company's sales of TMP and sheet products as a percentage of its total
revenues and the comparative percentages of tons shipped for each year in the
period 1989 through 1993 are shown in the following tables.

<TABLE>
<CAPTION>
(Percentage of revenues) 1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Tin mill products.......................... 46 % 52 % 54 % 47 % 42 %
Sheet products............................. 54 48 46 53 58
---- ---- ---- ---- ----
100 % 100 % 100 % 100 % 100 %
===== ===== ===== ===== =====
(Percentage of tons shipped)
Tin mill products.......................... 37 % 42 % 44 % 40 % 36 %
Sheet products............................. 63 58 56 60 64
---- ---- ---- ---- ----
100 % 100 % 100 % 100 % 100 %
===== ===== ===== ===== =====
</TABLE>

- ---------

The above tables include "secondary" products, principally those not meeting
prime specifications. Semi-finished products have been included in sheet
products.

The following table shows the percentage of total net tons of steel
products shipped for each year in the period 1989 through 1993 by the Company to
each of its principal markets.

<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Food and beverage.......................... 37 % 41 % 44 % 42 % 40 %
Service centers............................ 30 24 21 20 20
Pipe and tube.............................. 12 11 9 10 10
Construction............................... 9 8 7 8 9
Consumer durables.......................... 4 6 8 4 5
Other...................................... 8 10 11 16 16
---- ---- ---- ---- ----
100 % 100 % 100 % 100 % 100 %
===== ===== ===== ===== =====
</TABLE>

A substantial portion of the Company's revenues are derived from long-time,
steady customers, although the Company actively seeks new customers and
constantly seeks new markets for its products. A substantial share of the
Company's TMP and sheet products are shipped to customers located in the eastern
portion of the United States. The Company's products are sold through salaried
Company representatives who operate from 12 district sales offices. Sales orders
taken in the field are subject to home office approval.

Trade orders on hand for the Company's products at December 31, 1993, 1992,
and 1991 amounted to approximately 449 thousand tons, 308 thousand tons, and 307
thousand tons, respectively. Substantially all orders on hand at any time are
expected to be filled within a twelve month period. Since the Company produces
steel in response to orders primarily of established grades and specifications,
resulting in short order processing time and relatively rapid inventory
turnover, it does not believe that order backlog is a material aspect of its
business.

Tin Mill Products. The Company has enjoyed substantial market share and a
widely held reputation as a high quality producer of TMP. TMP comprise a wide
variety of light gauge coated steels. Tin plate and black plate products are
sold under the Company name and under such trademarks as WEIRITE and WEIRLITE.
In addition to tin plate and black plate, the Company produces electrolytic
chromium coated steel (also known as "tin free" steel) under the trademark
WEIRCHROME.

Based upon the Company's share of the domestic market for TMP, which has
remained relatively constant in recent years, the Company believes it is one of
the largest domestic producers of TMP. In 1993, the Company accounted for
approximately 22.0% of the TMP market, a slight decrease from the 23.0% market
share it held in 1992. (For 1994, the Company expects that its share of the TMP
market will decline as a result of the No. 9 Tandem outage. See "Risk Factors--

37
<PAGE> 40

Factors Relating to the Company--Recent Major Damage to Facility.") TMP
shipments on an industry-wide basis have remained relatively steady over the
same period even as aluminum, plastic, composites and other materials competed
for potential growth in some applications. The TMP market is now primarily
directed at food, beverage, and general line cans. The majority of the Company's
TMP sales have been to can manufacturing and packaging companies, a substantial
amount of whose annual requirements are established in advance. The TMP market
is characterized by a relatively low number of manufacturers. During 1993,
shipments to ten major can manufacturers accounted for approximately 90.0% of
the Company's TMP sales and its five largest TMP customers accounted for
approximately 29.6% of total revenues. One customer, Crown Cork & Seal Company,
a major can manufacturer, accounted for approximately 11.0% of total revenues.
The balance of the TMP output is sold to other can manufacturers, manufacturers
of caps and closures and specialty products ranging from film cartridges,
lighting fixtures and battery jackets to cookie sheets and curtain rods. As a
result of predictable sales patterns for TMP, the Company is able to gauge in
advance a significant portion of its production requirements which allows the
Company to operate its production facilities more efficiently and adjust its
marketing and production efforts for other products.

The following table, based on AISI information, shows the Company's
historical share of the domestic TMP market.
<TABLE>
TIN MILL PRODUCTS
HISTORICAL MARKET SHARE

<CAPTION>
(IN THOUSANDS OF TONS) 1993 1992 1991 1990 1989
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
TMP industry shipments(1)............... 4,123 3,927 4,040 4,032 4,116
Company shipments(1).................... 895 890 857 874 894
Company market share.................... 22% 23% 21% 22% 22%
<FN>
- ---------

(1) Includes secondaries.
</TABLE>

Steelmaking and hot rolling improvements derived from the Company's capital
improvement program have allowed for the production of sufficient quantities of
clean steel to fill anticipated TMP orders for the near term. Expansion of
annealing and tempering capacity, however, would be necessary before large TMP
production increases could be effected. The Company's facilities and expertise
also allow it to produce the lightest gauges of tin plate, enhancing the
manufacturing efficiencies of the Company's customers and promoting the use of
its steel in advanced steelmaking and rolling technology products such as
thin-walled containers.

A 1.1 million square foot finished products warehouse with storage and
staging areas for TMP has been located near the Company's mill to facilitate
"just in time" production and delivery to a number of the Company's customers
who are located in adjoining or nearby manufacturing facilities. Steel coils,
when needed by customers' operations, are moved from the adjoining central
storage areas and loaded directly on to their production lines. This arrangement
provides significant savings for the Company and its customers.

Sheet Products. Hot rolled products are sold directly from the hot strip
mill as "hot bands," or are further processed using hydrochloric acid to remove
surface scale and are sold as "hot rolled pickled." Hot rolled sheet is used for
unexposed parts in machinery, construction products and other durable goods.
Most of the Company's sales of hot rolled have been to pipe and tube
manufacturers and converters and, to a lesser extent, steel service centers. In
1993, the Company sold 658 thousand tons of hot rolled sheet, which accounted
for 17.8% of its total revenues.

Cold rolled sheet, which requires further processing consisting of
additional rolling, annealing and tempering to enhance ductility and surface
characteristics, is used in the construction, steel service center, commercial
equipment and container markets, primarily for exposed parts where appearance
and surface quality are important considerations. In 1993, the Company sold 169

38
<PAGE> 41

thousand tons of cold rolled sheet, which accounted for 6.6% of its total
revenues. The Company's sales of cold rolled products in recent years have been
constrained by limitations in available cold rolling capacity not committed for
higher value-added products and by some customer migration to higher surface
quality hot rolled products.

Galvanized (hot-dipped and electrolytic sheet), which is coated primarily
with zinc compounds to provide extended anti-corrosive properties, is sold to
the electrical, construction, automotive, container, appliance and steel service
center markets. In 1993, the Company sold 642 thousand tons of galvanized
products, which accounted for 28.7% of total revenues.

Generally, the Company's more highly processed sheet products provide
higher profit margins.

The following table, based on AISI information, shows the Company's
historical share of the domestic sheet products market.

<TABLE>
SHEET PRODUCTS
HISTORICAL MARKET SHARE

<CAPTION>
(IN THOUSANDS OF TONS) 1993 1992 1991 1990 1989
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Industry shipments................ 41,616 38,099 35,590 38,039 39,581
Company shipments(1).............. 1,536 1,206 1,082 1,285 1,480
Company market share.............. 3.7% 3.2% 3.0% 3.4% 3.7%
<FN>
- ---------

(1) Includes secondaries, but excludes hot metal produced for sale.
</TABLE>

While the Company does not consider its presence in the overall sheet
market to be significant, the Company has concentrated on offering more highly
processed products and developed greater production capacity to provide the
larger coils favored by most of its customers. The Company's goals for
development of its sheet business are focused on increasing its percentage of
coated products, such as galvanized products, while capitalizing on developing
specialty markets such as construction where the Company believes that its
enhanced galvanized product, Galfan, has potential in a number of applications
including roofing and framing. As part of its sheet marketing strategy, the
Company also is making efforts to enhance high quality end use of its products
marketed through steel service centers, as well as developing the hot rolled
products for heavier gauge and higher carbon applications for all markets.

STEELMAKING PROCESS

In primary steelmaking, iron ore pellets, iron ore, coke, limestone and
other raw materials are consumed in blast furnaces to produce molten iron or
"hot metal." The Company then converts the hot metal into raw or liquid steel
through its basic oxygen furnaces where impurities are removed, recyclable scrap
is added and metallurgy for end use is determined on a batch by batch basis. The
Company's basic oxygen process shop ("BOP") is one of the largest in North
America, employing two vessels, each with a steelmaking capacity of 360 tons per
heat. Liquid steel from the BOP is then formed into slabs through the process of
continuous casting. The Company operates a multi-strand continuous caster,
rebuilt in 1990, which allows the Company to cast 100% of the steel it produces.
The slabs are then reheated, reduced and finished by extensive rolling, shaping,
tempering and, in many cases, by the application of plating or coating. Finished
products are normally shipped to customers in the form of coils. The Company
believes that its hot rolling mill, with two walking beam reheat furnaces,
reversing rougher and millstand drive and control improvements, represents a
world-class facility that greatly enhances the Company's competitive
capabilities. In addition, the Company has linked its steelmaking and rolling
equipment with computer-control systems and is in the process of installing an
integrated manufacturing control system to coordinate production and sales
activities.

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<PAGE> 42

The following chart shows the configuration of the Company's major
production facilities:

[ADD FLOWCHART that shows the processes from raw materials to
finished products produced by the Company]

PRODUCTION AND SHIPMENTS

The following table sets forth annual production capacity, utilization
rates and shipment information for the Company and the domestic steel industry
(as reported by the AISI) for the periods shown below.

<TABLE>
<CAPTION>
PRODUCTION AND SHIPMENTS
------------------------------------------------------------
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- -----------------------------------------
(IN MILLIONS OF TONS)
1994 1993 1993 1992 1991 1990 1989
---- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Company
Raw steel production............... 1.4 1.4 2.7 2.5 2.3 2.7 2.9
Capacity........................... 1.5(1) 1.5(1) 3.0(1) 3.0(1) 3.4 3.4 3.4
Utilization........................ 90% 90% 91% 83% 68% 79% 85%
Shipments.......................... 1.4 1.2 2.4 2.1 1.9 2.2 2.5
Shipments as a percent of
industry total.................. 3.0%(2) 2.7% 2.7% 2.6% 2.4% 2.6% 3.0%
Industry
Raw steel production............... 48.4 48.4 97.9 92.9 87.9 98.9 97.9
Capacity........................... 45.2 54.9 109.9 113.1 117.6 116.7 115.9
Utilization........................ 90% 89% 89% 82% 75% 85% 85%
Shipments.......................... 45.4(2) 44.3 89.0 82.2 78.9 84.9 84.1

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

(1) Reduction from prior years reflects the discontinuation of ingot teeming and
reduction operations.

(2) Projection based on data as of March 31, 1994, the latest available from the
AISI.
</TABLE>

40
<PAGE> 43

In 1991, after three years of close to 100 million tons of raw steel
production per year, the domestic steel industry's raw steel production fell to
87.9 million tons and shipments declined to 78.9 million tons. However, starting
with December 1991 and continuing through 1993, the steel industry experienced
an increase in both production and shipments. Steel production for 1993 was up
approximately 6.5% to 97.9 million tons compared to 1992, while shipments
increased by approximately 8.1% to 89.0 million tons. Similarly, capacity
utilization which had dropped to 74.0% in 1991 rebounded to 89.1% in 1993.

During 1991 and 1992 in particular, the Company's production, and
consequently its ability to sell steel products, was constrained by facilities
outages stemming from the Company's capital improvement program. See "--Capital
Improvement Program" for a more complete discussion of the Company's capital
improvement program. Although these factors for the most part affected the
Company's primary steelmaking and first stage finishing facilities, other
operations were also affected. In many instances, with the cooperation of its
customers, the Company limited orders it would accept for finished products,
rather than take orders it could not fill.

The Company seeks to maximize the utilization of its production capacity.
Until the Company began implementing its capital improvement program in 1989,
historically it had exceeded the industry average in that regard. However,
during 1990 and 1991, outages and complications from several installations
adversely affected the Company's relative position in the industry at a time
when the industry itself was operating at near recessionary levels. Facilities
outages, both planned and unplanned, which interrupted operations during
installation phases became less frequent throughout the break-in period for new
equipment and, in 1993, were reduced to only one two-day unscheduled outage due
to flood water damage.

RAW MATERIALS

The Company purchases iron ore pellets, iron ore, coal, coke, zinc, chrome,
limestone, scrap and other necessary raw material in the open market.
Substantially all the Company's raw material needs are available through
multiple sources where the primary concern is price and quality rather than
availability of supply; however, the Company continues to explore potential new
sources of raw materials.

In October 1991, the Company entered into a contract with a subsidiary of
Cleveland-Cliffs Inc ("Cliffs") to purchase a substantial part of the Company's
standard and/or flux grade iron ore pellet requirements for a twelve year period
which began in 1992. The contract provides for a minimum tonnage of pellets to
be supplied based on the production capacity of the mining source during the
contract periods, and for additional tonnages of pellets in specified
circumstances. Purchase prices established under the contract formulas may vary
depending on whether the Company's Series B Preferred Stock, acquired by Cliffs
at the time the supply agreement was entered into, has been redeemed. See
"Description of Capital Stock" and Note 10 to the Company's Financial Statements
for a more complete discussion of the Series B Preferred Stock. The Company also
has other contracts for iron ore pellets and iron ore through 1994.

Unlike many of the other major integrated producers, the Company does not
have its own coke making facilities. From time to time, the Company has
considered rebuilding the former coke making facilities of its predecessor
business; however, in view of the availability of metallurgical coke, its price
and the emergence of alternative non-coking technologies for ironmaking, the
Company does not believe an investment to rebuild those facilities is justified
at this time. In July 1993, the Company entered into an agreement with USX
Corporation to purchase blast furnace coke. The agreement provides for tonnages
of 750,000 per calendar year in 1994 through 1996, or the actual annual
requirements of the Company if less than the stated amount. The price is to be
the prevailing market price for blast furnace coke determined each October prior
to the delivery year, in each case subject to upper and lower limitations on
price. The Company and other steelmakers are installing technology calculated to
achieve some reduction in the consumption of coke in blast furnace

41
<PAGE> 44

operations. However, if coke making capacity available to the industry declines,
future coke prices may be subject to significant increases.

In 1990, the Company's continuous caster was rebuilt and placed back in
service with enhanced capacity. Since that time, the rebuilt caster has achieved
production levels which enable it to provide substantially all the Company's
requirements for slabs. The increased capacity of the caster allowed the Company
to close its ingot teeming and reduction operations in 1991. The Company's
requirements for slabs have from time to time exceeded its caster's production
ability and it has purchased, and may continue to purchase, slabs from other
sources in order to meet the demand for its products and to maximize the overall
production efficiency of its entire operations. In general, the Company does not
expect to have undue difficulty in purchasing slabs as and when needed. However,
in times of high capacity utilization, slabs of certain required specifications
may not be available from other producers.

The primary sources of energy used by the Company in its steel
manufacturing process are natural gas, oil, coal and electricity. The Company
generates a significant amount of electricity and steam for processing
operations from a mixture of excess blast furnace gas and natural fuels. The
Company continually attempts to conserve and reduce the consumption of energy in
its steelmaking operations. A number of the Company's facilities have alternate
fuel burning capability.

In recent years, due to the increased availability and sources of natural
gas, the Company has entered into natural gas purchase contracts with gas
suppliers and transportation contracts with transmission companies in an effort
to reduce prices paid for gas. A substantial increase in the Company's energy
costs or a shortage in the availability of its sources could have an adverse
effect on the Company.

Management believes that the Company's long term raw materials contracts
are at competitive terms over the course of a business cycle.

RESEARCH AND DEVELOPMENT

The Company engages in research and development for the improvement of
existing products, the development of new products and product applications and
the discovery of more efficient operating techniques. During 1993, 1992 and
1991, respectively, the Company spent approximately $5.4 million, $4.7 million,
and $5.3 million for Company-sponsored research and development activities.
Expenditures for customer-sponsored research have not been material to the
Company. The Company operates WEIRTEC, its research and development center
specializing in the advancement of steel food and beverage packaging and steel
manufacturing processes. WEIRTEC maintains research and prototype steel
packaging manufacturing facilities and analytical laboratory facilities located
in Weirton. The facilities are engaged in improving the Company's production and
finishing processes for TMP and sheet products. In recent years, WEIRTEC has
played a central role in the development of thin-wall, two piece beverage can
technology and other products seeking to capitalize on the Company's production
expertise, particularly in coated products. The Company believes that the
facilities and the scientists, engineers and technicians at WEIRTEC enhance the
Company's technical excellence, product quality and customer service.

The Company owns a number of patents that relate to a wide variety of
products and applications and steel manufacturing processes, has pending a
number of patent applications, and has access to other technology through
agreements with other companies. The Company believes that none of its patents
or licenses, which expire from time to time, or any group of patents or licenses
relating to a particular product or process, is of material importance in its
overall business. The Company also owns a number of registered trademarks for
its products which, unlike patents and licenses, do not expire when they are
continued in use and are properly protected.

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<PAGE> 45

COMPETITION AND OTHER INDUSTRY FACTORS

The domestic steel industry is a cyclical business with intense competition
among producers. Manufacturers of products other than steel, including aluminum,
plastics, cardboard, ceramics, wood, concrete and glass, have made substantial
competitive inroads into traditional steel markets. During recessionary periods,
the industry's high level of production capacity relative to demand levels has
resulted in a lack of ability to achieve satisfactory selling prices across a
broad range of products.

Integrated steelmakers also face increased competition from mini-mills.
Mini-mills are relatively efficient, low-cost producers that generally produce
steel from scrap in electric furnaces, utilize new technologies, have lower
employment costs and target regional markets. Mini-mills historically have
produced lower profit margin bars, rods, wire and other commodity-type steel
products not produced by the Company. Recently developed thin cast technology
has allowed mini-mills to enter certain of the sheet markets supplied by
integrated producers, and certain mini-mills have built, or are building,
facilities to do so. Two such facilities have been placed in operation and are
competing in the hot rolled, cold rolled and galvanized marketplace. Escalating
prices for scrap (the basic raw material used in melting operations and on which
mini-mills are more dependent than integrated producers) have increased the
operating costs of mini-mills, particularly during the past year. In response,
some mini-mills have begun to develop scrap substitution technologies.

During the past decade, a number of domestic steelmakers have gone through
reorganization under Chapter 11 of the United States Bankruptcy Code, including
several of the Company's major competitors. Reorganization under Chapter 11
generally has enabled bankrupt companies to reduce operating and financing
costs, making them more efficient competitors.

In response to increased competition, domestic steel producers have
invested heavily in new plant and equipment, which has improved efficiency and
increased productivity. Many of these improvements are in active service and,
together with the achievement of other production efficiencies such as manning
and other work rule changes, have tended to lower competitors' costs. The
Company has responded to technological pressures through its capital improvement
program and strategies for future operating efficiencies.

Foreign competition also remains a major concern. The VRAs covering 17
steel exporting nations and the European Community, which limited steel imports
into the United States market, expired on March 31, 1992, and negotiations among
governments in 36 countries to achieve a global multilateral steel agreement to
reduce subsidies and other unfair trade practices by foreign producers have not
yet resulted in any agreement being reached. The Company believes the prospects
of such an agreement being reached in the near future are not good. During 1993,
steel imports were approximately 18% of total domestic steel consumption.
Imports represented a slightly smaller percentage of consumption of sheet
products and TMP, amounting to 13% and 11% of such consumption, respectively, in
1993. As a result of anti-dumping cases brought by domestic steelmakers, the
Commerce Department, earlier in 1993, imposed tariffs averaging approximately
36.5% on imported, flat-rolled carbon steel from a number of countries. On July
27, 1993, however, the U.S. International Trade Commission (the "ITC") found
that the domestic industry had sustained no injury from imports of hot rolled
sheet, and no injury from 9 of 12 importing countries on cold rolled sheet.
Several domestic producers have filed appeals of the ITC rulings. The ITC did
affirm that the domestic industry had sustained injury from imports of coated
sheet products. The findings of the ITC regarding coated sheet products have
been followed by a reduction in imports of the same and consequently improved
domestic coated sheet pricing and volume.

The Company's primary competitors in sheet products consist of
substantially the entire steel industry. The Company's primary TMP competitors
in recent years have been USX Corporation, LTV Corporation, Bethlehem Steel
Corporation, National Steel Corporation, Wheeling-Pittsburgh Steel Corporation
and USS-POSCO Industries.

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<PAGE> 46

The Company experiences strong competition in all its principal markets
with respect to price, service and quality. The Company believes that it
competes effectively in all these categories by focusing its marketing efforts
on high quality products and strong customer relationships.

EMPLOYEES

At December 31, 1993, the Company had 6,026 employees, of whom 4,542 were
engaged in the manufacture of steel products, 779 in support services, 71 in
sales and marketing activities and 634 in management and administration. The
number of employees at December 31, 1993 represented an 8% reduction compared to
the prior year end. The Company continues to implement a program as part of its
business strategy designed to reduce its workforce primarily through retirement
programs and attrition.

The Company has collective bargaining agreements effective through
September 25, 1996 with the Independent Steelworkers Union (the "ISU"), which
represents 4,966 employees in bargaining units covering production and
maintenance workers, clerical workers, nurses, and with the Independent Guard
Union, which represents 39 employees. The Company believes that its compensation
structure places a heavier emphasis on profit sharing compared to other major
integrated steel producers. This tends to cause the wage portion of the
Company's employment costs to be relatively higher during periods of
profitability and relatively lower during periods of lower earnings or losses.

The Company's current labor agreements provide for the payment of bonuses
totalling $3,500 per employee, paid in installments over the life of the
contracts, but do not provide for wage increases. During the term of the new
agreements, the Company's Profit Plan, which covers substantially all employees,
provides for participants to share in the Company's profits each year at a rate
equal to 1/3 of the Company's "adjusted net earnings" for that year as defined
under the plan, provided its net worth exceeds $100 million. (Net worth, for
purposes of the Profit Plan, includes redeemable stocks.) If, however, payment
of the full profit sharing amount would reduce the Company's net worth below
$100 million, payments are reduced to an amount necessary to maintain the $100
million threshold. If the Company's net worth is in excess of $250 million, the
profit sharing rate increases to 35%. However, if payment of the full profit
sharing amount would reduce the Company's net worth below $250 million, payments
at this rate would be limited as necessary to maintain the $250 million
threshold and the remainder of the payment would be made at the 1/3 rate. The
agreements limit the Company's exposure to increased costs of healthcare while
providing increased medical coverages through a mandatory managed healthcare
"point of service" program and a ceiling on the Company's cash basis cost of
healthcare for future retirees. Although there can be no assurances that such
savings can be obtained, the Company anticipates a savings of approximately $24
million over three years as a result of these healthcare programs. The
agreements also contain limitations on the Company's ability to reduce its
workforce by layoffs, with exceptions for adverse financial, operational and
business circumstances. In addition, the parties have agreed to certain
improvements in the Pension Plan, which the Company anticipates will increase
costs on an annual basis by approximately $7.5 million.

From January 1984 until June 1989, the Company was owned in its entirety by
its employees through the 1984 ESOP. In June 1989, the 1984 ESOP completed a
public offering of 4.5 million shares of Common Stock of the Company, which
security is now listed and traded on the NYSE. In connection with the public
offering of Common Stock, the Company also sold 1.8 million shares of Series A
Preferred Stock to the 1989 ESOP. Each share of Series A Preferred Stock is
entitled to ten times the number of votes of the Common Stock into which it is
convertible.

Substantially all of the Company's employees participate in the two ESOPs
which, after giving effect to the above-mentioned and certain other
transactions, but prior to the proposed Offerings, own approximately 50% of the
combined issued and outstanding common and preferred shares of the Company at
June 30, 1994. This, in turn, accounts for approximately 74% of the voting power
(as calculated in accordance with certain voting restrictions) of the Company's
voting stock.

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<PAGE> 47

ENVIRONMENTAL CONTROL

Compliance. The Company's business operations are affected by extensive
federal, state and local laws and regulations governing discharges into the air
and water, as well as the handling and disposal of solid and hazardous wastes.
The Company is also subject to federal and state requirements governing the
remediation of environmental contamination associated with past releases of
hazardous substances. In recent years, environmental control regulations have
been marked by increasingly strict compliance standards. Governmental
authorities have the power to enforce compliance with these requirements, and
violators may be subject to civil or criminal penalties, injunctions or both.
Third parties also may have the right to sue to enforce compliance.

Expenditures for environmental control facilities were approximately $1.0
million in 1993, $1.0 million in 1992, and $2.0 million in 1991. For 1994, the
Company has budgeted approximately $3.3 million in capital expenditures toward
environmental control facilities. Given the nature of the steelmaking industry,
it can be expected that substantial additional capital expenditures will be
required from time to time to permit the Company to remain in compliance with
environmental regulations.

In the past, the Company has entered into consent decrees with certain
environmental authorities pursuant to which it has paid various fines and
penalties relating to violations, or alleged violations, of laws and regulations
in the environmental control area. Those payments have not been material to the
Company's financial position or its cash flows. The Company believes that,
except as discussed under "Environmental Control--Waste Sites and Proceedings"
with respect to a draft consent order dated July 29, 1994, at the present time,
it is in substantial compliance with the various environmental control consent
orders and agreements applicable to it and does not anticipate any material
problems in taking required actions to remain in substantial compliance with
such orders and agreements, including such draft consent order. The Company does
not operate coke making facilities and, accordingly, has not been affected by
the stringent Clean Air Act limitations imposed on those installations.

The Company's near-term focus for environmental compliance centers on
procedures to achieve ambient air quality and water pollution control standards.
In addition to improving its monitoring and study programs, the Company
anticipates taking affirmative action to reduce sulfur dioxide and particulate
emissions primarily by changing operating policies and by improving the quality
of maintenance procedures. In an effort to improve its water pollution discharge
compliance performance, the Company initiated in 1993 a round-the-clock
environmental control supervisory function and is seeking to create a mobile
maintenance group dedicated to environmentally safe operation. See the
discussion below for recent developments involving the Company's water discharge
permit.

Waste Sites and Proceedings. Under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), and
similar state statutes, the Environmental Protection Agency (the "EPA") and
state regulators generally have authority to impose joint and several liability
on waste generators, owners, operators and others with respect to superfund
sites as potentially responsible parties ("PRPs"), regardless of fault or the
legality of the original disposal activity. The Company is entitled to
indemnification from National for certain environmental liabilities, including
those relating to CERCLA and similar statutes, as more fully described below.
The Company believes that National has registered a number of sites as required
by CERCLA, some of which had been used by the Division prior to its sale to the
Company, and two of which subsequently became the property of the Company. The
Company understands that National has been involved, at the request of the EPA
or state agencies, in voluntary remedial activities with respect to some sites;
National has declined to participate with respect to some sites; National has
declined to participate with respect to others (because its records do not
indicate any involvement with those sites); and National has not been notified
with respect to other sites. Insofar as any of those sites involve liabilities
under CERCLA or other environmental laws or regulations for prior Division
activities, the Company believes it is fully indemnified by National.

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<PAGE> 48

The Company and its predecessors have been conducting steel manufacturing
and related operations at numerous locations, including the Company's current
plant site, for over eighty years. Although the Company and its predecessors
utilized operating practices that were standard in the industry at the time,
hazardous materials may have been released on or under these sites.
Consequently, the Company potentially may be required to remediate contamination
at some of these sites. None of these sites are the subject of any pending or
threatened proceeding. The Company does not have sufficient information to
estimate its potential liability in connection with any potential future
remediation. However, the Company believes that if any such remediation is
required, it will occur over an extended period of time. In addition, the
Company believes that many of these sites may also be subject to indemnities by
National to the Company.

In March 1988 and September 1989, respectively, the Pennsylvania Department
of Environmental Resources and/or the EPA notified the Company that it was
considered to be among a number of PRPs for the dumping of wastes at the
Municipal and Industrial Disposal Company site near Elizabeth, Pennsylvania and
at the Tex Tin site near Texas City, Texas, and requested the Company's
voluntary participation in certain remedial actions. The Company's records do
not indicate any involvement with either site by the Company. The Company
believes that National would be responsible for any remedial actions, if there
had been prior involvement by the Division. The Company has given all required
notices to National for the purpose of facilitating its response to this matter.

During February 1991, the Company received notification under CERCLA that
it may incur or may have incurred a liability as a PRP with respect to a drum
site located near Avenue H in Weirton, West Virginia. According to Company
records, the drum site is on property owned, but never used, by the Company.
Following consultation with appropriate agencies, the Company initiated a
voluntary remediation program at the site, which program has been substantially
completed. The Company has entered into negotiations with the EPA to resolve all
remaining issues raised by the notification. The Company believes that National,
under its agreements with the Company, is responsible for any environmental
liabilities involving the site, including reimbursement for the total cost of
the remediation program. National has reimbursed the Company for the $761,000
spent by the Company to date on the remediation program at this site. On June
30, 1994, the Company received an invoice from the EPA seeking payment for
oversight and response costs incurred by the EPA with regard to this site in the
approximate amount of $12,000. The Company believes that this sum represents the
final expenditure related to this remediation program.

In May 1992, the Company received notice from the Pennsylvania Department
of Environmental Resources that it was considering a closure plan and
post-closure plan for a solid waste landfill facility in Hanover Township,
Pennsylvania (the "Hanover Site") operated by Starvaggi Industries Inc. From at
least the 1960's through mid-1983, National and, after mid-1983, the Division
and the Company disposed of solid wastes at the facility. The Company believes
that certain of the solid wastes disposed of at the facility by National were
classified as hazardous wastes under applicable law. The Company believes that
while it disposed of various materials which were residual to the steelmaking
industry, such materials were not classified as hazardous wastes under
applicable law. At this time, definitive closure plans and post-closure care
plans have not been adopted. National's liability to the Company under the
indemnification agreements for liabilities which may result from the closure of
this facility is limited to $1.0 million. However, the Company does not believe
that any costs associated with these plans for which it would be responsible
would exceed that amount.

In October 1992, the Company entered into a consent order with the West
Virginia Division of Environmental Protection (the "DEP") that provided for
administrative fines and penalties to be assessed against the Company for
asserted spills of various substances under provisions of the Federal Clean
Water Act administered by such agency. The consent order required the payment of
an administrative settlement in the amount of $99,000, as well as the
application of $40,000 to a "best management practices" plan to reduce or
eliminate the frequency of spills at the tin mill which plan is being
implemented. The consent order also provides for stipulated penalties upon the

46
<PAGE> 49

occurrence of future spills. The Company is seeking to improve its operating
practices to minimize the occurrence of spills.

In January 1993, the Company received a notification from the DEP that four
ground water monitoring wells situated at the Division's former coke making
facilities on Brown's Island in Hancock County, West Virginia tested in excess
of maximum contaminant levels established by the EPA and DEP for certain
elements specified in the notice. The DEP requested the Company to supply it
with additional data regarding the site and stated that additional
investigation, and possible remediation, would be required. The Company and the
DEP are discussing the implementation of an enhanced ground water monitoring
program for the area and for other areas of the Company's operations. As
required by the relevant indemnification agreements, the Company has given
notice to National of the DEP communication. As described more fully below, the
Company believes that National will be responsible for any required remediation.

In December 1993, the Company was informed by the DEP that the EPA was
considering initiating a "multimedia" enforcement action against the Company
during 1994. Multimedia actions involve coordinated enforcement proceedings
related to water, air and/or waste-related issues stemming from a number of
federal statutes and rules. The DEP further indicated that it informed the EPA
that it preferred first to issue a new National Pollutant Discharge Elimination
System ("NPDES") water discharge permit to the Company and then monitor
compliance by the Company before making any recommendation to the EPA concerning
a federal enforcement action. No assurance can be given that future compliance
by the Company under a new NPDES water discharge permit or any recommendation by
West Virginia environmental authorities to the EPA not to initiate such a
proceeding will result in avoiding commencement of a multimedia enforcement
action by the EPA. In recent years, such actions have resulted in penalties and
other commitments being obtained from many of the Company's competitors.

The DEP issued a final NPDES permit to the Company on June 30, 1994. The
Company believes it will not be able to ensure consistent compliance with
certain provisions contained in the NPDES permit without significant treatment
technology and/or process changes. The Company cannot estimate the cost of
installing such technology or effecting such changes, but such costs could be
material. In conjunction with the NPDES permit, the DEP issued an administrative
compliance order which provides the Company with interim effluent limitations
for a three year period which the Company believes it is able to meet. The
Company is considering whether it will pursue an administrative appeal and/or
other appropriate action to obtain relief from objectionable provisions
contained in the NPDES permit, although no assurance can be given that such
efforts by the Company will be successful.

On July 29, 1994, the Company received a draft consent order from the DEP
proposing to settle certain alleged violations of West Virginia hazardous waste
regulations and underground storage tank requirements that occurred prior to
1994. The draft consent order would require the Company to initiate a number of
steps to remedy the alleged violations and to pay civil penalties of
approximately $170,000 for the alleged hazardous waste violations and
approximately $79,000 for the alleged underground storage tank violations. The
Company disagrees with and intends to appeal the DEP's proposed penalties. The
Company does not believe that the outcome of this proceeding will have a
material adverse effect on its financial condition or results of its operations.

Indemnification. According to the agreements by which the Company acquired
its assets from National, the parties determined to apportion their respective
responsibilities for environmental liability claims based on two dates, May 1,
1983 (the "Purchase Date"), and January 11, 1984 (the "Closing Date"). In
general, the Company is entitled to indemnification from National for
liabilities, including governmental and third-party claims, arising from
violations prior to the Purchase Date, and National is entitled to
indemnification from the Company for such items after the Purchase Date. In
addition, the Company, subject to the $1.0 million limitation applicable to the
Hanover Site described above, is entitled to reimbursement for clean-up costs
related to facilities, equipment or areas involved in the management of solid or
hazardous wastes of the Division ("Waste Sites"), as

47
<PAGE> 50

long as the Waste Sites were not used by the Company after the Closing Date.
Third-party liability claims relating to Waste Sites are likewise covered by
National's and the Company's respective indemnification undertakings, in each
case based on whether the particular site was used by the Company after the
Closing Date.

Until 1993, National had performed in accordance with its responsibilities
under the applicable agreements with the Company. However, in July 1993,
National indicated that it would not reimburse the Company for approximately
$210,000 expended by the Company in cleaning out tar and other bottom sludge
sediments from a lagoon at National's former Brown's Island Coke Plant (acquired
by the Company on the Closing Date, but never operated). The Company performed
this remediation in 1990 to avoid the facility becoming an unpermitted hazardous
waste disposal site, but did not submit a final invoice until February 1993.
National has indicated its belief that the Company was not entitled to
reimbursement for remediation at this site. The Company believes that National's
interpretation of the relevant agreements as applied to this site is erroneous.
On July 20, 1994, National proposed a settlement with respect to this matter,
which the Company is considering. Regardless of whether a settlement is reached,
the Company's ability to obtain future reimbursement or indemnification relating
to environmental claims from National depends, in addition to National's
continued financial viability, on the nature of future claims made by the
Company, and the outcome of any necessary litigation between the Company and
National regarding such issues.

Although it is possible that the Company's future results of operations, in
particular quarterly or annual periods, could be materially affected by the
future costs of environmental compliance, the Company does not believe the
future costs of environmental compliance will have a material adverse effect on
its financial position or on its competitive position with respect to other
integrated domestic steelmakers that are subject to the same environmental
requirements. The prices obtainable for the Company's products are generally
governed by prevailing market conditions. Accordingly, the Company, like its
competitors, normally lacks the ability to pass on to customers cost increases
specifically resulting from compliance with environmental regulations.

PROPERTIES AND FACILITIES

The Company owns approximately 2,500 acres in the Weirton, West Virginia
area which are devoted to the production and finishing of steel products,
research and development, storage, support services and administration. The
Company owns trackage and railroad rolling stock for materials movement, water
craft for barge docking, power generation facilities and numerous items of heavy
industrial equipment. The Company has no material leases for property. The
Company's mill and related facilities are accessible by water, rail and road
transportation. The Company believes that its facilities are suitable to its
needs and are adequately maintained.

The Company's operating facilities include four blast furnaces; however,
its current operating strategy employs a two blast furnace configuration with an
annual hot metal capacity of approximately 2.5 million tons. One currently
employed operating furnace is nearing the end of its campaign which is estimated
to be in late 1995 and at which time, the Company will undertake a major reline
of that furnace. The Company estimates that the cost of such reline will be in
the range of approximately $45.0 million to $60.0 million. One currently idled
furnace is being refurbished to serve as a replacement. Although the Company
does not anticipate operating a three blast furnace configuration in the near
term, under this operating scenario, its annual hot metal capacity could be
increased to 3.2 million tons. The Company's primary steelmaking facilities also
include a sinter plant, and a two vessel BOP with an annual capacity of 3.0
million tons of raw steel based on a two blast furnace operation. During
December 1993, the Company began the installation of a new vessel in its BOP
shop, replacing one that had been in service for nearly 20 years. The new vessel
was placed in service in early February 1994. The Company's primary steelmaking
facilities also include a CAS-OB facility, two RH degassers, and a four strand
continuous caster with an annual slab production capacity of up to 3.0 million
tons. The Company's downstream operations include a hot strip mill with a design
capacity of 3.8 million tons, two continuous picklers, three tandem cold
reduction mills (including the No. 9 Tandem), three hot dip galvanize lines, one
electro-galvanize

48
<PAGE> 51

line, two tin platers, one chrome plater, one bi-metallic chrome/tin plating
line and various annealing, temper rolling, shearing, cleaning and edge slitting
lines, together with packaging, storage and shipping and receiving facilities.
The Company's facilities include a 1.1 million square foot finished products
warehouse which stores and feeds coils to satellite customer manufacturing
operations. See "--Production and Shipments" for additional information
regarding production capacity and utilization rates.

49
<PAGE> 52

MANAGEMENT

Executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE OFFICE
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Herbert Elish............................. 61 President, Chairman and Chief Executive
Officer; Director
William C. Brenneisen..................... 52 Vice President--Human Resources
James B. Bruhn............................ 53 Vice President--Tin Mill Products
Business; Director
Craig T. Costello......................... 46 Vice President--Operations
Thomas W. Evans........................... 57 Vice President--Materials Management
David M. Gould............................ 55 Vice President--Sales and Marketing--
Sheet Products
William R. Kiefer......................... 44 Vice President--Law and Secretary
Dennis R. Mangino......................... 50 Vice President--Product Quality and
WEIRTEC
Narendra M. Pathipati..................... 37 Treasurer
Richard K. Riederer....................... 50 Vice President and Chief Financial
Officer; Director
Mac S. White, Jr. ........................ 61 Vice President--Engineering
Robert J. D'Anniballe, Jr. ............... 37 Director
Mark G. Glyptis........................... 43 Director
Gordon C. Hurlbert........................ 70 Director
Phillip A. Karber......................... 47 Director
F. James Rechin........................... 70 Director
Richard F. Schubert....................... 57 Director
Harvey L. Sperry.......................... 64 Director
Thomas R. Sturges......................... 50 Director
David I.J. Wang........................... 61 Director
</TABLE>

Unless otherwise indicated, the executive officers and directors of the
Company have held the positions described below for at least the last five
years.

Herbert Elish has been Chairman of the Board of Directors, President and
Chief Executive Officer of the Company since July 1987. He has been a director
of the Company since 1983. Mr. Elish also serves as a director of Hampshire
Group, Limited.

William C. Brenneisen has served as the Company's Vice President--Human
Resources since February, 1988. From September 1985 through February 1988, he
was the Director of Industrial Relations for the Company.

James B. Bruhn has been the Company's Vice President--Tin Mill Products
Business since November 1992. From July 1987 through November 1992, he served as
Vice President--Sales and Marketing--Tin Mill Products. He has been a director
of the Company since May 1990.

Craig T. Costello was elected Vice President--Operations in October 1993.
Mr. Costello, a 28-year employee with the Company, served most recently as
General Manager--Operations and prior to that was responsible for the design,
building and operation of the Hot Mill Rebuild.

Thomas W. Evans has been Vice President--Materials Management since
February 1988. From April 1986 to February 1988, he was Vice
President--Purchasing and Traffic.

David M. Gould has served as the Company's Vice President--Sales and
Marketing--Sheet Products since 1983. He was a director of the Company from
February 1989 to May 1990. Mr. Gould has been employed by the Company and its
predecessor for over 30 years.

50
<PAGE> 53

William R. Kiefer has been the Company's Vice President--Law and Secretary
since May 1990. From March 1988 to May 1990, he was Director--Legal Affairs and
Secretary. From February 1985 to March 1988, he was Corporate Attorney and
Assistant Secretary.

Dennis R. Mangino has served as the Company's Vice President--Product
Quality and WEIRTEC since October 1989. From February 1986 to October 1989, Mr.
Mangino was employed by Enichem America where he served as Director--Corporate
Development and General Manager-- Electrical Materials Division.

Narendra M. Pathipati has served as Treasurer of the Company since August
1991. From February 1990 to July 1991, he served as Director of Financial
Planning & Analysis for the Company. Mr. Pathipati served as Treasurer for
Century II, Inc., a multi-national capital goods company, from April 1988 to
January 1990. Prior to that, he was responsible for financial planning at
Harnischfeger Industries, Inc.

Richard K. Riederer has been Vice President and Chief Financial Officer of
the Company since January 1989. From March 1986 to December 1988, he served as
Vice President and Treasurer of Harnischfeger Industries, Inc., a producer of
manufacturing equipment. Mr. Riederer was elected to the Board as a director in
October 1993. Mr. Riederer is also a director of Portico Funds Inc.

Mac S. White, Jr. has been Vice President--Engineering of the Company since
May 1992. From April 1989 to April 1992, Mr. White was Director of Engineering
for the Company. Prior to that, he was Director of Project Management for
Italimpianti, Spa., a steel mill equipment builder.

Robert J. D'Anniballe, Jr. has been a director of the Company since 1990.
Mr. D'Anniballe has been a partner in the law firm of Alpert, D'Anniballe &
Visnic since 1983 and General Counsel to the ISU since 1985.

Mark G. Glyptis has been a director of the Company since 1991. Mr. Glyptis
has been President of the ISU since August 1991 and was employed by the Company
in its Operations Services Department prior to August 1991.

Gordon C. Hurlbert has been a director of the Company since 1983. Mr.
Hurlbert is President and Chief Executive Officer of GCH Management Services, a
business consulting firm, and Chairman of the Board of Directors of CSC
Industries, Inc. He is a director of Carolina Power & Light Co., Urenco, Inc.
and Kerr Group, Inc. In November 1993, CSC Industries filed a petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Phillip A. Karber has been a director of the Company since 1992. Mr. Karber
is currently Corporate Vice President and Director of the Center for Technology
and Public Policy of BDM International, Inc. He also serves on advisory boards
at Texas A&M and for the Center for Strategic and International Studies.

F. James Rechin has been a director of the Company since 1983. Mr. Rechin
is President and Chief Executive Officer of Searchlight Corporation, a
consulting firm. He is a former Executive Vice President and a former
controlling stockholder of Brittany Corporation, a manufacturing and holding
company. He was also formerly Group Vice President of TRW, Inc., a manufacturer
of jet engine parts. Mr. Rechin is a major stockholder of Providence Group,
Inc., a holding company in the refrigeration supply business.

Richard F. Schubert has been a director of the Company since 1983. Mr.
Schubert is President and Chief Executive Officer of The Points of Light
Foundation. He is the Chairman of Biorelease, Inc., a biotechnology firm, and
the immediate past President of American Red Cross. He is a director of National
Allowance of Business and Management Training Corp. and a former Vice Chairman,
President and a director of Bethlehem Steel Corporation. He is past Chairman of
AISI Committee on International Trade and was formerly Under Secretary of Labor.

Harvey L. Sperry has been a director of the Company since 1983. Mr. Sperry
is a partner in the law firm of Willkie Farr & Gallagher. He is a director of
Kerr Group, Inc. and Hampshire Group,

51
<PAGE> 54

Limited. Mr. Sperry, whose term of office expires at the 1994 Annual Meeting,
will not be a candidate for re-election because he will not meet the
qualifications for an Independent Director, as defined below, since the law firm
of which he is a member performs legal services for the Company.

Thomas R. Sturges has been a director of the Company since 1986. Mr.
Sturges is Executive Vice President of The Harding Group, Inc., a private
investment and management firm. He was Special Associate Director in the
Corporate Finance Department of Bear, Stearns & Co. Inc. from 1986 to February
1990.

David I.J. Wang has been a director since 1992. Mr. Wang was Executive Vice
President-- Timber Distribution & Specialty Business from 1987 until his
retirement in 1991 and was a member of the International Paper Co. Board of
Directors. He is director of UGI Corp., Joy Technologies, Inc. and of several
privately held companies. He also serves on Advisory Boards of Georgia Institute
of Technology, the University of Texas and Hampton University.
------------------------

The Restated Certificate provides for a Board of Directors of 14 members
divided into three classes, designated as Class I, Class II and Class III,
respectively. Each class serves a three-year term, and the terms are staggered
so that the term of one class expires at each year's annual meeting of
stockholders. At each annual meeting of stockholders, therefore, a different
class of directors is elected.

The Restated Certificate also provides for certain qualifications among the
Company's directors. Specifically, at least three members of the Board of
Directors (the "Union Directors") must be designated by the Company's primary
recognized collective bargaining agent (the "Union"), currently the ISU,
provided the Union meets certain requirements. One of the Union Directors must
be the president of the Union and the other two are designated by certification
of the executive committee of the Union. The Restated Certificate further
provides that three members of the Board of Directors must consist of the Chief
Executive Officer of the Company and two of the Company's employees designated
by the Chief Executive Officer. Seven directors (the "Independent Directors")
must not be, nor ever have been, employees of the Company or its predecessor, or
the Union, and may not be affiliated with persons having certain substantial
business relationships with the Company. One director is the "ESOP Director" who
is required to be nominated by the Board of Directors pursuant to a
certification by a nominating committee elected by the 1984 and 1989 ESOP
participants.

SELLING STOCKHOLDER

The Selling Stockholder is Mellon Bank, N.A., as trustee under the trust
established pursuant to the Pension Plan. The shares of Common Stock held in
such trust are managed by U.S. Trust Company of California, N.A. ("U.S. Trust"),
pursuant to an investment management agreement. In accordance with terms of the
investment management agreement, U.S. Trust is responsible for the management
and disposition of the shares of Common Stock of the Company held by the Pension
Plan and is a fiduciary of the Pension Plan. U.S. Trust, in exercising its
fiduciary duty, will direct the Selling Stockholder to sell the shares of Common
Stock offered hereby. At the date of this Prospectus, the Pension Plan owned
5,870,968 shares of Common Stock, representing approximately 22% of the
Company's outstanding shares. 2,000,000 shares of Common Stock are to be sold by
the Pension Plan pursuant to these Offerings, and assuming that all such shares
are sold, the Pension Plan will own approximately 9% of the outstanding shares
of Common Stock after the Offerings. The remaining shares of Common Stock held
by the Pension Plan are entitled to registration rights which, pursuant to an
agreement with the Company, may not be exercised without the Company's consent
under specified circumstances. Under the agreement between the Company and U.S.
Trust, shares held by the Pension Plan subject to Underwriters' over-allotment
options described under "Underwriting" which are not sold in the Offerings (the
"Unsold Allotment") may be sold by the Pension Plan pursuant to Rule 144 under
the Securities Act at any time after the 120 day lock-up period referred to
under "Underwriting" expires, but may not be sold

52
<PAGE> 55

pursuant to a registration statement until February 6, 1995. Shares not
constituting the Unsold Allotment may not be sold pursuant to a registration
statement until at least 20 months from the expiration of the 120 day lock-up
period. However, such shares may be sold after such 120 day lock-up period,
with the Company's consent, pursuant to volume limitations based on those set
forth in Rule 144.

The Selling Stockholder has granted over-allotment options to the several
Underwriters of up to 2,550,000 shares of Common Stock. The Selling Stockholder
and the Company have agreed that the Company may supply shares to satisfy
exercises of the over-allotment options up to a maximum of 300,000 shares. If
the Underwriters exercise the over-allotment options, the Pension Plan
thereafter will hold approximately 3% of the Company's outstanding shares, or
approximately 4% if the Company supplies the maximum number of shares it is
permitted to satisfy such options.

Prohibited transactions under Title I of the Employee Retirement Income
Security Act of 1974 ("ERISA") and Section 4975 of the Code could arise if,
absent an available exemption, a person or entity which is a "party in
interest," as defined under ERISA, or a "disqualified person," as defined under
the Code, were to purchase any of the Common Stock being offered by the Pension
Plan. Any such potential purchaser should consult with counsel in order to
determine whether an exemption is available with respect to any such purchase.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 50.0 million shares of
Common Stock, par value $.01 per share, and 7.5 million shares of preferred
stock, par value $.10 per share. Of such shares of Common Stock, 15.0 million
are restricted to sales in bona fide public offerings and 5.0 million to use in
connection with employee plans as defined in the Restated Certificate.

COMMON STOCK

As of June 30, 1994, there were 26,743,314 shares of Common Stock
outstanding, held of record by 2,770 persons, including the 1984 ESOP which held
12,384,498 shares on behalf of 9,610 participants.

Holders of Common Stock are entitled to one vote per share on all matters
submitted to a vote of the stockholders voting together with Series A Preferred
Stock as a single class. Shares held of record by the 1984 and 1989 ESOPs are
voted by the respective trustee according to confidential written instructions
received by participants. There is no cumulative voting. The Board of Directors
is divided into three classes as described under "Management," which could make
it more difficult for another person or entity to gain control of the Company's
Board. See "--Certain Voting Provisions."

Subject to any preferences of outstanding preferred stock, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor, and in the
event of liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to share ratably in all assets remaining after payment
to all creditors and payments required to be made in respect of any outstanding
preferred stock. The rights of holders of Common Stock may in effect be limited
by the rights, powers and preferences of holders of preferred stock. Such
limitations may occur, among other things, in respect of the voting power,
entitlement to dividends and entitlement to assets of preferred stock relative
to the Common Stock. See "--Preferred Stock" for a description of the two series
of preferred stock of the Company currently outstanding.

Holders of Common Stock have no preemptive rights and have no rights to
convert their shares of Common Stock into any other securities. All outstanding
shares of Common Stock are, and the shares of Common Stock being offered by the
Company and the Pension Plan hereby will be, fully paid and nonassessable.

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<PAGE> 56

Approval of 90% of the Board of Directors is generally required for any
issuance of shares of Common Stock, except for shares issued to the two ESOPs or
pursuant to other Company sponsored employee benefit plans approved in
accordance with the Restated Certificate.

PREFERRED STOCK

The Board of Directors is authorized to issue preferred stock in various
series from time to time, with each series to have such rights, powers,
privileges, and limitations as the Board may determine. Approval of 90% of the
Board of Directors is generally required for any issuance of shares of preferred
stock, except for shares issued to the two ESOPs or pursuant to other Company
sponsored employee benefit plans approved in accordance with the Restated
Certificate.

As of June 30, 1994, there were 1,767,037 shares of Series A Preferred
Stock outstanding, held of record by 238 persons, including the 1989 ESOP which
held 1,761,049 shares on behalf of 8,361 participants.

Holders of Series A Preferred Stock are entitled to ten times the number of
votes (currently ten votes per share) of the Common Stock into which such Series
A Preferred Stock is convertible on all matters submitted to a vote of the
stockholders voting together with the Common Stock as a single class. Each share
of Series A Preferred Stock is convertible at the option of the holder into one
share of Common Stock subject, in certain instances, to anti-dilution
adjustments, including the issuance of rights or warrants to purchase Common
Stock, the declaration of a dividend or other distribution in the form of stock
of the Company and the occurrence of a stock-split or a reverse stock-split. The
Series A Preferred Stock may only be held by qualified holders, which term is
limited to the 1989 ESOP and employees. Transfers to non-qualified holders
results in a conversion into Common Stock. The Company has recently amended the
1989 ESOP to provide that shares of Series A Preferred Stock acquired by the
Company from participants will be contributed again to the 1989 ESOP.

The Series A Preferred Stock is entitled to receive dividends, when and as
declared by the Board of Directors, at the same rate as payable on the number of
shares of Common Stock into which the Series A Preferred Stock is convertible.
In the event the Company is liquidated, the holders of Series A Preferred Stock
will be entitled to a liquidation preference, prior to any payment on the Common
Stock, of $5.00 per share plus any unpaid dividends.

As of June 30, 1994, there were 500,000 shares of Series B Preferred Stock
outstanding held by one holder of record. The Series B Preferred Stock is
entitled to annual cumulative preferential dividends of $6.25 per share and a
liquidation preference of $50 per share. The Company is required to redeem all
outstanding shares of Series B Preferred Stock by December 31, 2003 for a total
of $25 million, plus any accrued and unpaid dividends. Holders of Series B
Preferred Stock do not generally vote on stockholder matters. However, the
Series B Preferred Stock is entitled to a class vote on certain matters,
including combination transactions involving the Company and the issuance of
senior equity securities. The Series B Preferred Stock may be redeemed by the
Company optionally at any time at the mandatory redemption price, plus accrued
and unpaid dividends. Under certain circumstances, the holders of the Series B
Preferred Stock are entitled to exchange their shares for securities being
offered by the Company in a public offering. In addition, the Company may be
required to repurchase shares of Series B Preferred Stock upon the occurrence of
events specified in the agreement pursuant to which such stock was issued.

Subject to the limitations of applicable law and the provisions of the
Restated Certificate, the Company has the capacity to issue additional shares of
preferred stock. The issuance of preferred stock could be utilized as a method
of discouraging, delaying or preventing a change in control of the Company.
Under circumstances where it might be perceived that preferred stock could be
issued for such purposes, the existence of authorized but unissued shares of
preferred stock could have a depressive effect on the market for the Company's
Common Stock. The capacity to issue such stock, including the effect of its
voting power, together with other factors such as the Company's classified Board
of Directors could have the effect of discouraging certain potential

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<PAGE> 57

bidders from offering stockholders a premium for their shares. See "Risk
Factors--Factors Relating to the Company--Antitakeover Features."

CERTAIN VOTING PROVISIONS

The Restated Certificate provides that, with the exception of certain types
of employee benefit plans, no stockholder, or group of stockholders acting in
concert (a "Significant Stockholder"), who beneficially owns in excess of 5% of
the total voting power of the Company's voting stock (as measured in relation to
the shares entitled to vote in the election of directors) (the "Total Voting
Power") is entitled to vote any share of the Company's stock which, when
combined with all other shares of the Company's stock beneficially owned by such
Significant Stockholder, would exceed 5% of the Total Voting Power. Under these
provisions, the ability of the Pension Plan to vote its entire holdings of
Common Stock has been limited.

The Restated Certificate also provides that certain corporate transactions
must be approved by the holders of shares representing not less than 80% of the
Total Voting Power of the Company's capital stock not restricted from voting by
the 5% Significant Stockholder provision referred to above. Transactions
requiring an 80% vote include, inter alia, certain types of mergers, the sale or
transfer of substantially all of the Company's assets, the liquidation or
dissolution of the Company, certain reclassifications of the Company's
securities and certain transactions involving the Company and a Significant
Stockholder.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Society National
Bank of Cleveland, Ohio.

55
<PAGE> 58

UNDERWRITING

Subject to the terms and conditions set forth in the U.S. Underwriting
Agreement, the Company and the Selling Stockholder have agreed to sell to each
of the Underwriters named below (the "U.S. Underwriters") for whom Salomon
Brothers Inc, Lazard Freres & Co., Lehman Brothers Inc. and PaineWebber
Incorporated are acting as representatives (the "U.S. Representatives"), and
each of the Underwriters has severally agreed to purchase from the Company and
the Selling Stockholder, the total number of shares of Common Stock set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
U.S. UNDERWRITERS TO BE PURCHASED
-------------------------------------------------------------------- ----------------
<S> <C>
Salomon Brothers Inc................................................
Lazard Freres & Co. ................................................
Lehman Brothers Inc. ...............................................
PaineWebber Incorporated............................................
--------------
Total..................................................... 14,450,000
==============
</TABLE>

In the U.S. Underwriting Agreement, the several U.S. Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
the shares of Common Stock set forth in the table above, if any such shares are
purchased. In the event of a default by any U.S. Underwriter, the U.S.
Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the nondefaulting U.S. Underwriters may be increased or the U.S.
Underwriting Agreement may be terminated.

The Company and the Selling Stockholder have been advised by the U.S.
Representatives that the several U.S. Underwriters propose initially to offer
such shares to the public at the public offering price set forth on the cover
page of this Prospectus, and to certain dealers at such price less a concession
not in excess of $ per share. The U.S. Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to other
dealers. After this public offering, the public offering price and such
concessions may be changed.

The Selling Stockholder has granted to the U.S. Underwriters an option
exercisable during the 30-day period after the date of this Prospectus to
purchase up to 2,167,500 additional shares of Common Stock at the same price per
share as the initial 14,450,000 shares of Common Stock to be purchased by the
U.S. Underwriters. The U.S. Underwriters may exercise such option only to cover
over-allotments in the sale of the shares of Common Stock that the U.S.
Underwriters have agreed to purchase. To the extent that the U.S. Underwriters
exercise such option, each U.S. Underwriter will have a firm commitment, subject
to certain conditions, to purchase the same proportion of the option shares as
the number of shares of Common Stock to be purchased and offered by such U.S.
Underwriter in the above table bears to the total number of shares of Common
Stock initially purchased by the U.S. Underwriters. The U.S. Underwriting
Agreement provides that the Company, in its sole discretion, will be permitted
to supply up to 255,000 shares of Common Stock toward satisfaction of the
exercise of the option.

The Company and the Selling Stockholder have also entered into an
International Underwriting Agreement with the International Underwriters named
therein, for whom Salomon Brothers International Limited, Lazard Brothers & Co.,
Limited, Lehman Brothers International (Europe) and PaineWebber International
(U.K.) Ltd. are acting as representatives (the "International Representatives"),
providing for the concurrent offer and sale of 2,550,000 shares of Common Stock
outside of the United States and Canada and providing the International
Underwriters an option, exercisable during the 30-day period after the date of
this Prospectus, to purchase up to 382,500 additional shares at the same price
per share as the initial 2,550,000 shares of Common Stock to be purchased by the
International Underwriters. The International Underwriting Agreement provides
that the Company, in its sole discretion, will be permitted to supply up to
45,000 shares of Common Stock toward satisfaction of the exercise of the option.

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<PAGE> 59

The offering price and underwriting discounts for the U.S. Offering and the
International Offering will be identical. The closing of the U.S. Offering is
conditioned upon the closing of the International Offering, and the closing of
the International Offering is conditioned upon the closing of the U.S. Offering.

Each U.S. Underwriter has severally agreed that, as part of the U.S.
Offering, (a) it is not purchasing any shares of Common Stock for the account of
anyone other than a United States or Canadian Person, and (b) it has not offered
or sold, and will not offer or sell, directly or indirectly, any shares of
Common Stock or distribute this Prospectus to any person outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Each International Underwriter has severally agreed that, as part of the
International Offering, (a) it is not purchasing any shares of Common Stock for
the account of any United States or Canadian Person, and (b) it has not offered
or sold, and will not offer or sell, directly or indirectly, any shares of
Common Stock or distribute any Prospectus relating to the International Offering
to any person within the United States or Canada or to any United States or
Canadian Person. The foregoing limitations do not apply to stabilization
transactions or to certain other transactions specified in the agreement between
the U.S. Underwriters and the International Underwriters. "United States or
Canadian Person" means any person who is a national or resident of the United
States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada, or any political
subdivision thereof, any estate or trust the income of which is subject to
United States or Canadian federal income taxation, regardless of the source of
its income (other than a foreign branch of any United States or Canadian
Person), and includes any United States or Canadian branch of a person other
than a United States or Canadian Person.

Each U.S. Underwriter that will offer or sell shares of Common Stock in
Canada as part of the distribution has severally agreed that such offers and
sales will be made only pursuant to an exemption from the prospectus
requirements in each jurisdiction in Canada in which such offers and sales are
made.

Pursuant to the agreement between the U.S. Underwriters and the
International Underwriters, sales may be made between the U.S. Underwriters and
the International Underwriters of such number of shares of Common Stock as may
be mutually agreed. The price of any shares of Common Stock so sold shall be the
initial public offering price, less an amount not greater than the concession to
securities dealers. To the extent that there are sales between the U.S.
Underwriters and the International Underwriters, pursuant to the agreement
between the U.S. Underwriters and the International Underwriters, the number of
shares initially available for sale by the U.S. Underwriters or by the
International Underwriters may be more or less than the amount indicated on the
cover page of this Prospectus.

The Company, its officers and directors and U.S. Trust have agreed not to
sell, or otherwise dispose of, directly or indirectly, or announce the offering
of, any shares of Common Stock, or any securities convertible into, or
exchangeable for, shares of Common Stock, except those offered in the Offerings
or in connection with certain employee benefit plans or labor agreements, for a
period of 120 days from the date hereof without the prior consent of the U.S.
Representatives and the International Representatives.

In the ordinary course of business, certain of the Underwriters have
provided financial advisory services to the Company and may do so in the future.

The U.S. Underwriting Agreement and the International Underwriting
Agreement each provide that the Company will indemnify the U.S. Underwriters and
the International Underwriters, respectively, against certain liabilities,
including liabilities under the Securities Act, or contribute to payments the
U.S. Underwriters and the International Underwriters, as the case may be, may be
required to make in respect thereof.

57
<PAGE> 60

LEGAL MATTERS

Certain legal matters in connection with the securities offered hereby will
be passed upon for the Company by Willkie Farr & Gallagher and for the
Underwriters by Davis Polk & Wardwell. Harvey L. Sperry, a member of the firm of
Willkie Farr & Gallagher, is a director of the Company. Mr. Sperry owns 23,947
shares of Common Stock of the Company.

EXPERTS

The financial statements and schedules of the Company included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.

58
<PAGE> 61

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 62

<TABLE>
INDEX TO FINANCIAL STATEMENTS

<CAPTION>
PAGE
----
<S> <C>
Consolidated Condensed Statements of Income for the three and six month periods
ended June 30, 1994 and Condensed Statements of Income for the three and six
month periods ended June 30, 1993.............................................. F-2
Consolidated Condensed Balance Sheets as of June 30, 1994 and
December 31, 1993.............................................................. F-3
Consolidated Condensed Statements of Cash Flows for the six month periods ended
June 30, 1994 and 1993......................................................... F-4
Notes to Consolidated Condensed Financial Statements............................. F-5
Report of Independent Public Accountants......................................... F-7
Consolidated Statement of Income for the year ended December 31, 1993 and
Statements of Income for the years ended December 31, 1992 and 1991............ F-8
Consolidated Balance Sheet as of December 31, 1993 and Balance Sheet as of
December 31, 1992.............................................................. F-9
Consolidated Statement of Cash Flows for the year ended December 31, 1993 and
Statements of Cash Flows for the years ended December 31, 1992 and 1991........ F-10
Consolidated Statement of Changes in Stockholders' Equity for the year ended
December 31, 1993 and the Statements of Changes in Stockholders' Equity for the
years ended December 31, 1992 and 1991......................................... F-11
Notes to Financial Statements.................................................... F-12
</TABLE>

F-1
<PAGE> 63

<TABLE>
WEIRTON STEEL CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
UNAUDITED
(Dollars in thousands, except per share data)

<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED JUNE
JUNE 30, 30,
-------------------- ---------------------
1994 1993 1994 1993
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
NET SALES............................................. $335,488 $301,341 $660,652 $ 599,059
OPERATING COSTS:
Cost of sales....................................... 311,856 280,403 600,301 560,276
Selling, general and administrative expense......... 7,689 8,376 15,595 16,160
Depreciation........................................ 13,050 13,224 25,334 24,398
Restructuring charge................................ -- -- -- 17,340
-------- -------- -------- ---------
Total operating costs........................... 332,595 302,003 641,230 618,174
-------- -------- -------- ---------
INCOME (LOSS) FROM OPERATIONS......................... 2,893 (662) 19,422 (19,115)
-------- -------- -------- ---------
UNUSUAL ITEM
Adjustment to carrying value of damaged facility.... 32,543 -- 32,543 --
OTHER INCOME (EXPENSE):
Interest expense.................................... (12,964) (13,280) (26,047) (26,262)
Interest income..................................... 1,189 549 1,926 1,127
-------- -------- -------- ---------
Net other expense............................... (11,775) (12,731) (24,121) (25,135)
-------- -------- -------- ---------
INCOME (LOSS) BEFORE ESOP CONTRIBUTION................ 23,661 (13,393) 27,844 (44,250)
ESOP contribution................................... 652 652 1,305 1,305
-------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES..................... 23,009 (14,045) 26,539 (45,555)
Income tax provision (benefit)...................... 4,372 (2,669) 5,043 (8,656)
-------- -------- -------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............... 18,637 (11,376) 21,496 (36,899)
Loss on early extinguishment of debt................ -- -- -- (6,549)
-------- -------- -------- ---------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES.................................. 18,637 (11,376) 21,496 (43,448)
Cumulative effect on prior years of accounting
changes........................................... -- -- -- (179,803)
-------- -------- -------- ---------
NET INCOME (LOSS)..................................... $ 18,637 $(11,376) $ 21,496 $(223,251)
======== ======== ======== =========
LESS: PREFERRED STOCK DIVIDEND REQUIREMENT............ 781 781 1,562 1,562
-------- -------- -------- ---------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES......... $ 17,856 $(12,157) $ 19,934 $(224,813)
======== ======== ======== =========
PER SHARE DATA:
Weighted average number of common shares and
equivalents......................................... 28,515 26,578 28,469 26,529
Income (loss) per common share before extraordinary
item................................................ $ 0.63 $ (0.46) $ 0.70 $ (1.44)
Extraordinary item.................................. -- -- -- (0.25)
-------- -------- -------- ---------
Income (loss) per common share before cumulative
effect of accounting changes........................ 0.63 (0.46) 0.70 (1.69)
Cumulative effect of accounting changes............. -- -- -- (6.78)
-------- -------- -------- ---------
NET INCOME (LOSS) PER COMMON SHARE.................... $ 0.63 $ (0.46) $ 0.70 $ (8.47)
======== ======== ======== =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-2
<PAGE> 64

<TABLE>

WEIRTON STEEL CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED
(Dollars in thousands, except per share amount)

<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
---------- ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and equivalents, includes restricted cash of $1,224
and $602, respectively.................................... $ 172,184 $ 89,002
Receivables, less allowances of $6,949 and $5,719,
respectively.............................................. 133,804 129,004
Inventories.................................................. 172,550 242,659
Other current assets......................................... 54,192 29,589
---------- ----------
Total current assets.................................... 532,730 490,254
---------- ----------
Property, plant and equipment, net............................. 507,050 523,728
Intangible assets.............................................. 91,289 91,289
Deferred income taxes.......................................... 112,231 117,273
Other assets and deferred charges.............................. 16,607 18,170
---------- ----------
TOTAL ASSETS................................................... $1,259,907 $1,240,714
========== ==========
LIABILITIES, REDEEMABLE STOCK AND
STOCKHOLDERS' EQUITY:
LIABILITIES:
Current liabilities............................................ $ 215,107 $ 228,038
Long term debt obligations..................................... 495,320 495,252
Long term pension obligation................................... 147,815 142,894
Postretirement benefits other than pensions.................... 321,374 308,985
Other long term liabilities.................................... 23,743 30,188
---------- ----------
TOTAL LIABILITIES....................................... 1,203,359 1,205,357
REDEEMABLE STOCK............................................... 37,980 36,721
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 50,000,000 shares authorized;
27,116,797 and 26,719,752 shares issued, respectively........ 270 267
Additional paid-in capital..................................... 336,785 335,776
Retained earnings.............................................. (316,601) (336,535)
Other stockholders' equity..................................... (1,886) (872)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT).................... 18,568 (1,364)
---------- ----------
TOTAL LIABILITIES, REDEEMABLE STOCK AND
STOCKHOLDERS' EQUITY......................................... $1,259,907 $1,240,714
========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE> 65

<TABLE>

WEIRTON STEEL CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
(Dollars in thousands)

<CAPTION>
SIX MONTHS ENDED JUNE
30,
----------------------
1994 1993
-------- ---------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES........................... $ 95,406 $ 58,053
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment.................... (7,257) (3,313)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in term debt............................................. -- 140,000
Reduction in term debt............................................ -- (148,114)
Debt issuance fees................................................ -- (3,611)
Dividends paid.................................................... (1,562) (1,562)
Other, principally net book overdrafts............................ (3,405) (313)
-------- ---------
NET CASH USED BY FINANCING ACTIVITIES............................... (4,967) (13,600)
-------- ---------
NET CHANGE IN CASH AND EQUIVALENTS.................................. $ 83,182 $ 41,140
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD......................... 89,002 61,195
-------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD............................... $172,184 $ 102,335
======== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of interest capitalized........................ $ 25,824 $ 21,974
Income taxes paid................................................. -- --
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE> 66

WEIRTON STEEL CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(In thousands of dollars, or in millions of dollars where indicated)

NOTE 1.
BASIS OF PRESENTATION

For the period ended June 30, 1994, the Consolidated Financial Statements
herein include the accounts of Weirton Steel Corporation and its wholly-owned
subsidiary, Weirton Receivables, Inc. (on and after August 26, 1993). Prior to
such date, the Financial Statements include only the accounts of Weirton Steel
Corporation. Weirton Steel Corporation and/or Weirton Steel Corporation together
with its subsidiary are hereafter referred to as the "Company."

The Consolidated Condensed Financial Statements presented herein are
unaudited. Certain information and footnote disclosures normally prepared in
accordance with generally accepted accounting principles have been either
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. Although the Company believes that all adjustments
necessary for a fair presentation have been made, interim periods are not
necessarily indicative of the results of operations for a full year. As such,
these financial statements should be read in conjunction with the financial
statements and notes thereto included or incorporated by reference in the
Company's 1993 Annual Report on Form 10-K.

Certain portions of the prior period's financial statements have been
reclassified where necessary to conform to the presentation used in the current
period.

NOTE 2.
INVENTORIES

Inventories consisted of the following at June 30, 1994 and December 31,
1993:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
-------- ------------
<S> <C> <C>
Raw materials................................... $ 42,223 $ 74,766
Work-in-process................................. 61,153 74,109
Finished goods.................................. 69,174 93,784
-------- --------
$172,550 $242,659
======== =========
</TABLE>

NOTE 3.
ESOP ACCOUNTING

The contributions of $0.7 million for the three months ended June 30, 1994
and 1993 and $1.3 million for the six months ended June 30, 1994 and 1993
represent a provision for contributions to the 1989 Employee Stock Ownership
Plan (the "1989 ESOP"), net of any preferred stock dividends used to reduce debt
service for the 1989 ESOP. The 1994 and 1993 contributions were required to be
increased because Convertible Voting Preferred Stock, Series A (the "Series A
Preferred") dividends normally payable quarterly were omitted. The Series A
Preferred stock ranks equally with the Company's common stock as to the payment
of dividends. Accordingly, unpaid dividends on the Series A Preferred are not
cumulative.

NOTE 4.
EARNINGS (LOSS) PER SHARE

The weighted average number of common and equivalent shares used in the
computations of earnings (loss) per share were 28,515,033 and 26,577,733 for the
three months ended June 30, 1994 and 1993, and 28,468,635 and 26,528,628 for the
six months ended June 30, 1994 and 1993,

F-5
<PAGE> 67

respectively. The shares of Series A Preferred were excluded from the 1993
calculations due to their antidilutive effect.

NOTE 5.

AUTHORIZED COMMON STOCK

On May 26, 1994, stockholders approved a proposal amending, among other
things, the Company's Restated Certificate of Incorporation increasing the
number of shares comprising its authorized common stock, from 30.0 million
shares to 50.0 million shares. The amendment provides that 15.0 million shares
of such increase are to be issued only in one or more public offerings of the
Company's common stock and that up to 5.0 million shares of such increase are to
be issued only pursuant to employee benefit plans. The Company has filed with
the Securities and Exchange Commission a registration statement with respect to
the common stock offered hereby, 15.0 million shares of which are newly
authorized.

NOTE 6.

RECENT MAJOR DAMAGE TO FACILITY

On April 6, 1994, the Company's No. 9 Tandem Mill (the "No. 9 Tandem")
sustained major damage from a fire which occurred while the unit was undergoing
maintenance. This cold rolling facility normally supplies approximately 70% to
80% of the coils required by the Company's tin plating operations. The Company
began rebuilding and repair operations immediately to restore the No. 9 Tandem
as quickly as practicable. At this time, the repair work to repair No. 9 Tandem
is proceeding on schedule; however, the Company does not believe the unit can be
returned to full operations before the fourth quarter of 1994. While the No. 9
Tandem is out of service, the Company is increasing the cold rolling output of
its remaining facilities. The Company has also compensated for the reduction in
cold rolling capacity by increasing its sales of hot rolled products. The
Company may also seek to have its hot bands cold rolled through tolling
arrangements with other producers and acquire cold rolled product where
available for further finishing. For the year 1993, TMP accounted for
approximately 46% of the Company's revenues and 37% of its shipments.

The Company maintains insurance for both property damage and business
interruption applicable to the No. 9 Tandem. The policies providing these
coverages are subject to deductibles of $0.5 million for property damage and
$5.0 million for business interruption. The claims process has been commenced
and advances have been collected from the insurance carrier. Insurance
recoveries for property damage associated with events of this type require the
recognition of a new cost basis for the rebuilt facility. As a result, the
Company recognized a pretax gain of $32.5 million in the second quarter of 1994.
Since the length of time required to restore the No. 9 Tandem to full operations
and to resolve the Company's claim has yet to be determined, the Company is
not, at this time, able to estimate the amount of recovery under its business
interruption coverage.

NOTE 7.

ACCOUNTING CHANGES

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", SFAS No. 109, "Accounting for Income Taxes", and
SFAS No. 112, "Employers' Accounting for Postemployment Benefits". Previously,
postretirement and postemployment benefits were accounted for by the Company on
the cash basis and the Company followed the provisions of Accounting Principles
Board Opinion No. 11 in accounting for income taxes. The cumulative effect of
these accounting changes was recognized during the first quarter of 1993, as
reflected in the Company's statement of income for the six month period ended
June 30, 1993.

F-6
<PAGE> 68

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Weirton Steel Corporation:

We have audited the accompanying consolidated balance sheets of Weirton
Steel Corporation (a Delaware corporation) and subsidiary as of December 31,
1993 and 1992, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Weirton Steel
Corporation and subsidiary as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.

As discussed in Notes 7, 8 and 9 to the consolidated financial statements,
effective January 1, 1993, the Company changed its method of accounting for
postretirement benefits other than pensions, postemployment benefits and income
taxes.

Arthur Andersen & Co.
Pittsburgh, Pennsylvania
January 24, 1994
(except with respect to the matters discussed in
Note 17, as to which the date is April 6, 1994)

F-7
<PAGE> 69
<TABLE>

WEIRTON STEEL CORPORATION

STATEMENTS OF INCOME
(Dollars in thousands, except per share data)

<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1993 1992 1991
-------------- ---------- ----------
<S> <C> <C> <C>
(CONSOLIDATED)
NET SALES........................................... $1,201,093 $1,078,691 $1,036,335
OPERATING COSTS:
Cost of sales..................................... 1,105,558 1,010,022 1,019,280
Selling, general and administrative expense....... 32,458 30,470 29,148
Depreciation...................................... 49,113 38,617 34,335
Restructuring charge.............................. 17,340 -- --
------------ ---------- ----------
Total operating costs........................... 1,204,469 1,079,109 1,082,763
------------ ---------- ----------
LOSS FROM OPERATIONS................................ (3,376) (418) (46,428)
OTHER INCOME (EXPENSE):
Interest expense.................................. (52,802) (40,921) (32,833)
Interest income................................... 2,626 3,073 3,156
------------ ---------- ----------
Net other expense............................... (50,176) (37,848) (29,677)
------------ ---------- ----------
LOSS BEFORE ESOP CONTRIBUTION....................... (53,552) (38,266) (76,105)
ESOP contribution................................. 2,610 2,610 2,610
------------ ---------- ----------
LOSS BEFORE INCOME TAXES............................ (56,162) (40,876) (78,715)
Income tax benefit................................ (13,272) (4,763) (4,000)
------------ ---------- ----------
LOSS BEFORE EXTRAORDINARY ITEM...................... (42,890) (36,113) (74,715)
Loss on early extinguishment of debt.............. 6,549 -- --
------------ ---------- ----------
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES........................................... (49,439) (36,113) (74,715)
Cumulative effect on prior years of accounting
changes......................................... (179,803) 4,356 --
------------ ---------- ----------
NET LOSS............................................ $ (229,242) $ (31,757) $ (74,715)
============ ========== ==========
Less: Preferred stock dividend requirement.......... 3,125 3,125 --
------------ ---------- ----------
NET LOSS APPLICABLE TO COMMON SHARES................ $ (232,367) $ (34,882) $ (74,715)
============ ========== ==========
PER SHARE DATA:
Weighted average number of common shares and
equivalents....................................... 26,473 24,914 21,406
Loss per common share before extraordinary Item..... $ (1.74) $ (1.57) $ (3.49)
Extraordinary item.............................. (0.25) -- --
------------ ---------- ----------
Loss per common share before cumulative
effect on prior years of accounting changes....... (1.99) (1.57) (3.49)
Cumulative effect of accounting changes......... (6.79) 0.17 --
------------ ---------- ----------
NET LOSS PER COMMON SHARE........................... $ (8.78) $ (1.40) $ (3.49)
============ ========== ==========
PRO FORMA PER SHARE DATA:
Net loss applicable to common shares assuming change
in method of depreciation is applied
retroactively..................................... $ (39,238) $ (68,231)
Net loss per common share........................... $ (1.57) $ (3.19)
</TABLE>

The accompanying notes are an integral part of these statements.

F-8
<PAGE> 70
<TABLE>

WEIRTON STEEL CORPORATION

BALANCE SHEETS
(Dollars in thousands, except per share data)

<CAPTION>
DECEMBER 31,
------------------------------
1992
1993 ----------
--------------
(CONSOLIDATED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and equivalents, includes restricted cash of $602 and $491,
respectively............................................................. $ 89,002 $ 61,195
Receivables, less allowances of $5,719 and $5,545, respectively............ 129,004 123,894
Inventories................................................................ 242,659 244,566
Deferred income taxes...................................................... 25,732 --
Other current assets....................................................... 3,857 8,182
------------ ----------
Total current assets................................................... 490,254 437,837
------------ ----------
Property, plant and equipment, net........................................... 523,728 559,074
Intangible assets............................................................ 91,289 --
Deferred income taxes........................................................ 117,273 --
Other assets and deferred charges............................................ 18,170 8,535
------------ ----------
TOTAL ASSETS................................................................. $1,240,714 $1,005,446
============ ===========
LIABILITIES:
Current liabilities:
Current maturities of debt obligations..................................... $ -- $ 11,964
Payables................................................................... 109,937 88,139
Employment costs........................................................... 66,519 41,102
Pension liability.......................................................... 20,394 28,698
Taxes other than income taxes.............................................. 17,433 17,784
Income taxes............................................................... -- 3,068
Other...................................................................... 13,755 9,379
------------ ----------
Total current liabilities.............................................. 228,038 200,134
Long term debt obligations................................................... 495,252 491,277
Long term pension obligations................................................ 142,894 32,231
Postretirement benefits other than pensions.................................. 308,985 --
Other long term liabilities.................................................. 30,188 16,334
------------ ----------
TOTAL LIABILITIES...................................................... 1,205,357 739,976
------------ ----------
REDEEMABLE STOCK:
Preferred stock, 7,500,000 shares authorized:
Preferred stock, Series A, $0.10 par value; 1,800,000 shares authorized;
1,797,231 and 1,798,503 shares issued; 1,779,468 and 1,794,104
subject to put........................................................... 26,084 26,090
Less: Preferred Treasury Stock Series A, at cost, 17,763 and 4,399
shares................................................................... (130) (25)
Deferred ESOP compensation................................................. (13,812) (16,422)
Preferred stock, Series B, $0.10 par value; 675,000 shares authorized;
500,000 shares issued.................................................... 24,579 24,559
------------ ----------
TOTAL REDEEMABLE STOCK................................................. 36,721 34,202
------------ ----------
STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $0.10 par value; 2,769 and 1,497 shares issued;
not subject to put......................................................... 16 10
Common stock, $0.01 par value; 30,000,000 shares authorized; 26,719,752 and
26,419,705 shares issued................................................. 267 264
Additional paid-in capital................................................... 335,776 334,834
Common shares issuable, 397,049 and 365,421 shares........................... 1,327 1,153
Retained earnings............................................................ (336,535) (104,168)
Less: Common treasury stock, at cost, 381,405 and 208,353 shares............. (2,215) (825)
------------ ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)................................... (1,364) 231,268
------------ ----------
TOTAL LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY................. $1,240,714 $1,005,446
============ ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-9
<PAGE> 71
<TABLE>

WEIRTON STEEL CORPORATION

STATEMENTS OF CASH FLOWS
(Dollars in thousands)

<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1992 1991
--------- -------- --------
(CONSOLIDATED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS............................................. $(229,242) $(31,757) $(74,715)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Provision for contribution to ESOP and repayment of
note.............................................. 2,610 2,610 2,610
Depreciation......................................... 49,113 38,617 34,335
Amortization of debt discount........................ 125 113 101
Amortization of deferred compensation................ -- 50 410
Amortization of other noncurrent assets.............. 1,840 1,056 1,513
Deferred income taxes................................ (13,272) -- --
Restructuring charge................................. 17,340 -- --
Cumulative effect of accounting changes.............. 179,803 (4,356) --
Loss from early extinguishment of debt............... 6,549 -- --
Cash provided (used) by working capital items:
Receivables....................................... (5,110) 769 (7,466)
Inventories....................................... 1,907 11,940 47,152
Other current assets.............................. 4,325 6,219 (5,714)
Payables.......................................... 24,986 (9,248) (17,582)
Other current liabilities......................... 18,070 (10,907) 10,187
Long term pension obligations........................ 19,374 6,272 8,017
Other................................................ (8,963) 1,944 4,268
--------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.............. 69,455 13,322 3,116
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment....... (13,324) (44,610) (113,881)
--------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES.................. (13,324) (44,610) (113,881)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt obligations....................... (148,114) (2,171) (2,715)
Proceeds from issuance of debt obligations........... 140,000 -- 109,000
Debt issuance fees................................... (13,520) -- --
Proceeds from issuance of common stock............... -- 8,250 15,000
Proceeds from issuance of preferred stock............ -- -- 25,000
Dividends paid....................................... (3,125) (3,125) --
Common shares issuable............................... 1,119 1,074 1,132
Purchase of common treasury stock.................... (1,455) (568) (255)
Other, principally net book overdrafts............... (3,229) 4,860 (8,406)
--------- -------- --------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES....... (28,324) 8,320 138,756
--------- -------- --------
NET CHANGE IN CASH AND EQUIVALENTS..................... 27,807 (22,968) 27,991
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD............ 61,195 84,163 56,172
--------- -------- --------
CASH AND EQUIVALENTS AT END OF PERIOD.................. $ 89,002 $ 61,195 $ 84,163
========= ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of interest capitalized........... $ 47,311 $ 40,937 $ 31,068
Income tax refunds................................... 1,779 11,009 --
</TABLE>

The accompanying notes are an integral part of these statements.

F-10
<PAGE> 72
<TABLE>
WEIRTON STEEL CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands, except per share data)
<CAPTION>

COMMON
COMMON STOCK ADDITIONAL SHARES ISSUABLE
------------------- PAID-IN ------------------- RETAINED
SHARES AMOUNT CAPITAL SHARES AMOUNT EARNINGS
---------- ------ -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY AT DECEMBER 31, 1990..... 19,949,118 $199 $308,958 271,641 $ 1,638 $ 6,210
Net loss.................................... -- -- -- -- -- (74,715)
Issuance of common stock.................... 3,870,968 39 14,961 -- -- --
Purchase of treasury stock.................. -- -- -- -- -- --
Conversion of preferred stock............... -- -- -- -- -- --
Reclassification of preferred Series A not
subject to put............................ -- -- -- -- -- --
Employee stock purchase plan:
Shares issued............................. 271,641 3 1,635 (271,641) (1,638) --
Shares issuable........................... -- -- -- 352,542 1,132 --
Dividends payable ($1.56 per preferred
share, Series B).......................... -- -- -- -- -- (781)
Amortization of deferred compensation....... -- -- -- -- -- --
---------- ------ -------- -------- -------- ---------
STOCKHOLDERS' EQUITY AT DECEMBER 31, 1991..... 24,091,727 241 325,554 352,542 1,132 (69,286)
Net loss.................................... -- -- -- -- -- (31,757)
Issuance of common stock.................... 2,000,000 20 8,230 -- -- --
Purchase of treasury stock.................. -- -- -- -- -- --
Conversion of preferred stock............... -- -- -- -- -- --
Reclassification of preferred Series A not
subject to put............................ -- -- -- -- -- --
Employee stock purchase plan:
Shares issued............................. 327,978 3 1,050 (327,978) (1,053) --
Shares issuable........................... -- -- -- 340,857 1,074 --
Dividends payable ($6.25 per preferred
share, Series B).......................... -- -- -- -- -- (3,125)
Amortization of deferred compensation....... -- -- -- -- -- --
---------- ----- -------- -------- -------- ---------
STOCKHOLDERS' EQUITY AT DECEMBER 31, 1992..... 26,419,705 264 334,834 365,421 1,153 (104,168)
Net loss.................................... -- -- -- -- -- (229,242)
Purchase of treasury stock.................. -- -- -- -- -- --
Conversion of preferred stock............... -- -- -- -- -- --
Reclassification of preferred Series A not
subject to put............................ -- -- -- -- -- --
Employee stock purchase plan:
Shares issued............................. 300,047 3 942 (300,047) (945) --
Shares issuable........................... -- -- -- 331,675 1,119 --
Dividends payable ($6.25 per preferred
share, Series B).......................... -- -- -- -- -- (3,125)
---------- ------ -------- -------- -------- ---------
CONSOLIDATED STOCKHOLDERS' EQUITY AT
DECEMBER 31, 1993........................... 26,719,752 $267 $335,776 397,049 $ 1,327 $(336,535)
========== ===== ======== ======== ======== ==========

<CAPTION>
PREFERRED
COMMON SERIES A
TREASURY NOT SUBJECT TO
STOCK PUT
------------------ DEFERRED --------------- STOCKHOLDERS'
SHARES AMOUNT COMPENSATION SHARES AMOUNT EQUITY
-------- ------- ------------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY AT DECEMBER 31, 1990..... 369 $ (4) $ (460) -- $ -- $ 316,541
Net loss.................................... -- -- -- -- -- (74,715)
Issuance of common stock.................... -- -- -- -- -- 15,000
Purchase of treasury stock.................. 78,363 (256) -- -- -- (256)
Conversion of preferred stock............... (174) 1 -- -- -- 1
Reclassification of preferred Series A not
subject to put............................ -- -- -- 625 6 6
Employee stock purchase plan:
Shares issued............................. -- -- -- -- -- --
Shares issuable........................... -- -- -- -- -- 1,132
Dividends payable ($1.56 per preferred
share, Series B).......................... -- -- -- -- -- (781)
Amortization of deferred compensation....... -- -- 410 -- -- 410
-------- ------- ------ ------ ------ ----------
STOCKHOLDERS' EQUITY AT DECEMBER 31, 1991..... 78,558 (259) (50) 625 6 257,338
Net loss.................................... -- -- -- -- -- (31,757)
Issuance of common stock.................... -- -- -- -- -- 8,250
Purchase of treasury stock.................. 130,056 (568) -- -- -- (568)
Conversion of preferred stock............... (261) 2 -- -- -- 2
Reclassification of preferred Series A not
subject to put............................ -- -- -- 872 4 4
Employee stock purchase plan:
Shares issued............................. -- -- -- -- -- --
Shares issuable........................... -- -- -- -- -- 1,074
Dividends payable ($6.25 per preferred
share, Series B).......................... -- -- -- -- -- (3,125)
Amortization of deferred compensation....... -- -- 50 -- -- 50
------- ------- ------ ----- ----- -----------
STOCKHOLDERS' EQUITY AT DECEMBER 31, 1992..... 208,353 (825) -- 1,497 10 231,268
Net loss.................................... -- -- -- -- -- (229,242)
Purchase of treasury stock.................. 181,200 (1,455) -- -- -- (1,455)
Conversion of preferred stock............... (8,148) 65 -- -- -- 65
Reclassification of preferred Series A not
subject to put............................ -- -- -- 1,272 6 6
Employee stock purchase plan:
Shares issued............................. -- -- -- -- -- --
Shares issuable........................... -- -- -- -- -- 1,119
Dividends payable ($6.25 per preferred
share, Series B).......................... -- -- -- -- -- (3,125)
-------- ------- ------ ----- ------ -----------
CONSOLIDATED STOCKHOLDERS' EQUITY AT
DECEMBER 31, 1993........................... 381,405 $(2,215) $ -- 2,769 $ 16 $ (1,364)
======= ======= ======== ====== ===== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-11
<PAGE> 73

WEIRTON STEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars, except per share amounts, or in millions of dollars
where indicated)

NOTE 1.
BASIS OF PRESENTATION

For the periods ended and as of December 31, 1993, the financial statements
herein include the accounts of Weirton Steel Corporation and its wholly-owned
subsidiary, Weirton Receivables, Inc. Prior to August 26, 1993, the financial
statements include only the accounts of Weirton Steel Corporation. Weirton Steel
Corporation and/or Weirton Steel Corporation together with its subsidiary are
hereafter referred to as the "Company."

Certain portions of the prior periods' financial statements have been
reclassified where necessary to conform to the presentation used in the current
period.

NOTE 2.
ORGANIZATION AND BACKGROUND

The Company and its predecessor companies have been in the business of
making and the finishing of steel products for more than eighty years. From
November 1929 to January 1984, the Company's business had been operated as a
division of National Steel Corporation ("NSC"). Incorporated in Delaware in
November 1982, the Company acquired the principal assets of NSC's former Weirton
Steel Division in January 1984. In connection with the asset purchase, NSC
retained liability for claims and litigation arising out of the operation of its
former Weirton Steel Division based on occurrences prior to May 1, 1983,
principally related to pension benefits for active employees based upon service
prior to the sale and pension benefits, life insurance and health care for
retired employees.

From January 1984 until June 1989, the Company was owned in its entirety by
its employees through an Employee Stock Ownership Plan (the "1984 ESOP"). In
June 1989, the 1984 ESOP completed a public offering of 4.5 million shares of
common stock of the Company, which security is now listed and traded on the New
York Stock Exchange.

In connection with the public offering of common stock, in June 1989, the
Company also sold 1.8 million shares of Convertible Voting Preferred Stock,
Series A (the "Series A Preferred") to a new Employee Stock Ownership Plan (the
"1989 ESOP"). Each share of Series A Preferred is convertible at any time into
one share of common stock, subject to adjustment, and is entitled to ten times
the number of votes of the common stock into which it is convertible.

In October 1991, in connection with an iron ore pellet supply agreement,
the Company issued .5 million shares of Redeemable Preferred Stock, Series B
(the "Series B Preferred") to Cleveland-Cliffs Inc for a purchase price equal to
the aggregate redemption amount of $25 million. Holders of the Series B
Preferred do not generally vote on stockholder matters.

In September 1991, the Company issued to its defined benefit pension plan
(the "Pension Plan") 3,870,968 shares of its common stock (the "1991 Pension
Plan Shares") having an aggregate fair value of $15.0 million. In September
1992, the Company issued 2.0 million shares of its common stock (the "1992
Pension Plan Shares") having an aggregate fair value of $8.25 million to the
Pension Plan in a substantially similar transaction.

Substantially all of the Company's employees participate in the two ESOPs
which, after giving effect to the above-mentioned transactions, own
approximately 52% of the combined issued and outstanding common and preferred
shares of the Company at December 31, 1993. This, in turn, accounts for
approximately 75% of the voting power of the Company's voting stock.

F-12
<PAGE> 74

NOTE 3.
SIGNIFICANT ACCOUNTING POLICIES

Cash

The liability representing outstanding checks written on a zero-balance
general disbursement bank account that is funded as the checks clear the bank
are included in accounts payable for financial statement presentation. Such
amounts were $5,092, $8,281 and $3,410 at December 31, 1993, 1992 and 1991,
respectively.

Cash Equivalents

Cash equivalents, which consist primarily of certificates of deposit,
commercial paper and time deposits, are stated at cost, which approximates fair
value. For purposes of the statements of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of 90 days or less
to be cash equivalents.

Inventories

Inventories are stated at the lower of first-in, first-out (FIFO) cost or
market. Inventory costs include materials, labor and manufacturing overhead.

Property, Plant and Equipment

Property, plant and equipment is valued at cost. Major additions are
capitalized, while the cost of maintenance and repairs which did not improve or
extend the lives of the respective assets is charged to expense in the year
incurred. Interest costs applicable to facilities under construction are
capitalized. Gains or losses on property dispositions are credited or charged to
income.

The Company changed its method of accounting for depreciation of its
steelmaking facilities effective January 1, 1992, from the straight-line method
to a production-variable method which adjusts straight-line depreciation to
reflect actual production levels. The Company believes the production-variable
method of depreciation is preferable to the method previously used because it
recognizes that depreciation of steelmaking facilities is related substantially
to both physical wear and the passage of time. Moreover, this method of
depreciating steelmaking facilities is an accepted industry practice which,
accordingly, allows for a meaningful comparison of the Company's operations to
that of its competitors. The cost of relining blast furnaces is amortized over
the estimated life of the lining based upon production.

Postretirement Benefits Other Than Pensions

Effective January 1, 1993, the Company changed its method of accounting for
the costs of postretirement benefits other than pensions from the cash method to
an accrual method pursuant to the provisions of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."

Postemployment Benefits

Effective January 1, 1993, the Company adopted the provisions of SFAS No.
112, "Employers' Accounting for Postemployment Benefits." Under the Company's
previous method of accounting, certain employee benefits covered by this new
standard were accounted for on the cash method, while certain other benefits
were accounted for on an accrual method. Effective with the adoption of the new
standard, the value of all such benefits is actuarially determined and
recognized on an accrual method.

ESOP Accounting

The Company recognizes ESOP expense based upon required contributions to
the plan. The resulting compensation expense approximates the cost of shares
allocated for the period. Shares allocable to participants for a given year are
determined based on the ratio of the current year's debt service payment to
total estimated debt service. Shares to be allocated to individual participants
are based on the participants' relative compensation.

F-13
<PAGE> 75

Research and Development

Research and development costs related to improvement of existing products,
development of new products and the development of more efficient operating
techniques are charged to expense as incurred and totaled $5,430, $4,686 and
$5,305 in 1993, 1992 and 1991, respectively.

Income Taxes

Effective January 1, 1993, the Company changed its method of accounting for
income taxes for financial reporting by adopting the provisions of SFAS No. 109,
"Accounting for Income Taxes." The Company had previously accounted for income
taxes pursuant to the provisions of Accounting Principles Board Opinion ("APBO")
No. 11, "Accounting for Income Taxes." Under the new method, deferred income tax
assets and liabilities are recognized to reflect the future income tax
consequences of carryforwards and differences between the tax bases and
financial accounting bases of assets and liabilities.

NOTE 4.
INVENTORIES

Inventories consisted of the following at December 31, 1993 and 1992:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
<S> <C> <C>
Raw materials............................................. $ 74,766 $ 78,017
Work-in-process........................................... 74,109 74,950
Finished goods............................................ 93,784 91,599
--------- ---------
$ 242,659 $ 244,566
========= =========
</TABLE>

NOTE 5.
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at December 31,
1993 and 1992:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
<S> <C> <C>
Land...................................................... $ 810 $ 810
Buildings................................................. 7,918 7,918
Machinery,equipment and other............................. 685,863 649,679
Construction-in-progress.................................. 62,391 84,982
--------- ---------
756,982 743,389
Less: Allowances for depreciation......................... (233,254) (184,315)
--------- ---------
$ 523,728 $ 559,074
========= =========
</TABLE>

Capitalized interest costs applicable to facilities under construction for
the years ended December 31, 1993, 1992 and 1991 amounted to $0.8 million, $6.1
million and $12.8 million, respectively.

The change in accounting method for depreciation of steelmaking facilities
resulted in a decrease in depreciation expense of $4.7 million in 1992, with a
cumulative effect on the years prior to the change which decreased the net loss
in 1992 by $4.4 million.

F-14
<PAGE> 76

NOTE 6.
FINANCING ARRANGEMENTS

Debt Obligations

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
<S> <C> <C>
Revolving Credit due 6/30/93........................................ $ -- $ 59,000
Term Loans due 6/30/93.............................................. -- 50,000
11 1/2% Senior Notes due 3/1/98..................................... 140,000 --
11.45% Senior Notes due 10/15/98.................................... -- 25,000
9.00% Senior ESOP Notes due 6/30/99................................. -- 14,114
10 7/8% Senior Notes due 10/15/99................................... 300,000 300,000
8 5/8% Pollution Control Bonds due 11/1/2014........................ 56,300 56,300
-------- --------
496,300 504,414
Less: Unamortized debt discount..................................... 1,048 1,173
Less: Current maturities of debt obligations -- 11,964
-------- --------
Long term debt obligations..................................... $495,252 $491,277
======== ========
</TABLE>

On October 17, 1989, the Company completed a public offering of its senior
notes in the principal amount of $300 million. These unsecured senior notes bear
interest at 10 7/8%, mature October 15, 1999, are senior to all the Company's
subordinated obligations and equal to the Company's other senior indebtedness.
The indenture governing these senior notes provides for an option, in the event
certain "qualifying downgrades" occur in the rating of the senior notes
following the occurrence of certain designated events related to changes in
control of the Company, whereby noteholders will have the option to cause the
Company to repurchase the senior notes at 100% of principal plus accrued
interest.

On November 1, 1989, the Company refinanced two previous pollution control
bond issues having an aggregate principal amount of $56.3 million. The 1989
pollution control bonds bear interest at 8 5/8%, mature November 1, 2014, and
are subject to an option similar to that governing the 10 7/8% senior notes.

On March 4, 1993, the Company completed a public offering of $140 million
of its senior notes. These unsecured senior notes bear interest at 11 1/2% per
annum, mature March 1, 1998, are senior to all subordinated obligations of the
Company and equal to the Company's other senior indebtedness. The senior notes
are not redeemable prior to maturity, except that prior to March 1, 1995, the
Company has the option to redeem up to $50 million in principal amount at a
redemption price of 109.2% with the proceeds from the issuances of certain
capital stock. The indenture governing the senior notes does not contain
restrictive financial maintenance covenants, but does contain other covenants
similar to those normally associated with this type of financing that limit,
among other things, the incurrence of additional indebtedness, the declaration
and payment of dividends and distributions on the Company's capital stock, as
well as mergers, consolidations, liens, and sales of certain assets. Under
covenants affecting the Company's ability to pay dividends on its common stock,
the Company is limited as to the payment of aggregate dividends after March 31,
1993, to the greater of (i) $5.0 million or (ii) $5.0 million plus one-half of
the Company's cumulative consolidated net income since March 31, 1993, plus the
net proceeds from future issuances of certain capital stock less certain
allowable payments. As of December 31, 1993, pursuant to this covenant, the
Company's ability to pay dividends on its common stock was limited to $5.0
million. Upon the occurrence of a change in control, as defined under the
indenture, holders of the senior notes will have the option to cause the Company
to repurchase their senior notes at 101% of the principal amount, plus accrued
interest to the date of repurchase.

The net proceeds of approximately $135.6 million resulting from the senior
notes offering, together with available cash, were applied toward the repayment
of borrowings under the Company's former credit agreement, term loans and 11.45%
Senior Notes due 1998 and the repurchase

F-15
<PAGE> 77

of the 9.00% Senior ESOP Notes due 1999, thereby relieving the Company from
certain restrictive financial covenants associated with those financing sources.

The Company incurred certain costs in the first quarter of 1993 in
connection with the prepayment of the bank and institutional debt which
approximated $6.5 million on an after-tax basis. This amount is recognized as an
extraordinary item in the Company's consolidated statement of income.

As a result of this refinancing, the Company does not have any scheduled
principal payments until 1998 when the $140 million principal amount of the
11 1/2% senior notes becomes due.

Credit Facilities

The Company entered into an agreement dated as of June 1, 1990, with six
banks (the "Credit Agreement") that provided a $100 million unsecured revolving
credit facility. The agreement included a $20 million letter of credit
subfacility. Interest options included prime rate, Eurodollar, CD or money
market loan rates.

On September 27, 1990, and November 20, 1990, the Company entered into
agreements for term loans (the "Term Loans") with two banks. Each agreement had
provided the Company with $25 million on an unsecured, floating rate term basis.

The Credit Agreement and Term Loans contained certain similar restrictive
financial covenants. At December 31, 1992, $109 million was borrowed and $18.6
million in letters of credit were in place under these facilities. Effective
December 29, 1992, the Company and its bank lenders agreed to amend the credit
facilities in a number of respects. In connection with the amendments, the
Company's borrowing capacity under the revolving bank credit facility was
limited to amounts already outstanding; the bank term loans were shortened in
maturity from September 30, 1993, to June 30, 1993; outstanding loans that bore
interest on a LIBOR basis were shifted to a "prime plus" basis; and the
effective interest rates on such loans generally were increased. The Company
also agreed to apply the proceeds from its offering of senior notes, described
above, toward payment of all bank debt. Substantially similar amendments were
made to financial covenants under the Company's remaining institutional debt
represented by its 11.45% Senior Notes due 1998 and 9.00% Senior ESOP Notes due
1999.

Receivables Participation Agreement

On August 26, 1993, the Company initiated, through a new subsidiary, a
receivables participation agreement with a group of five banks. The facility
provides for a total commitment by the banks of up to $85 million, including a
letter of credit subfacility of up to $25 million. To implement the facility,
the Company sold substantially all of its accounts receivable, and will sell
additional receivables as they are generated, to its wholly-owned subsidiary
known as "Weirton Receivables, Inc." The subsidiary is expected to finance its
ongoing receivables purchases from a combination of cash collections on
receivables already in the pool, short term intercompany obligations, issuances
of redeemable stock, and cash proceeds derived from selling interests in the
receivables to the participating banks from time to time. As of December 31,
1993, while no funded participation interests had been sold under the facility,
$3.1 million in letters of credit under the subfacility were in place at such
date. The amount of participation interests committed to be purchased by the
banks will fluctuate depending upon the amounts and nature of future receivables
generated by the Company which are sold into the program and certain financial
tests applicable to them. With respect to the receivables comprising the pool at
December 31, 1993, and the financial tests applicable to such, and after
reduction for amounts in place under the letter of credit subfacility, the base
amount available for cash sales was approximately $64.6 million. During the
period beginning August 26, 1993, through December 31, 1993, the base amount
available for cash sales ranged from $64.3 million to $81.8 million.

Funded purchases of participation interests by the banks under the facility
are generally available on a revolving basis for three years, subject to
extension as agreed to by the banks. Weirton Steel Corporation will continue to
act as servicer of the assets sold into the program and will

F-16
<PAGE> 78

continue to make billings and collections in the ordinary course of business
according to its established credit practices. Except for warranties given by
Weirton Steel Corporation concerning the eligibility of receivables sold to
Weirton Receivables, Inc. under the program, the transactions under the facility
are generally nonrecourse. Weirton Receivables, Inc.'s commitments to the banks,
which do not include warranties as to collectibility of the receivables, but do
include those typical of sellers of similar property, are secured by its
interest in the receivables and related security. Weirton Receivables, Inc. is
subject to certain restrictions regarding its indebtedness, liens, asset sales
not contemplated by the facility, guarantees, investments, other transactions
with its affiliates, including Weirton Steel Corporation, and the maintenance of
a minimum net worth of not less than the greater of $5.0 million or 10% of the
outstanding receivables. At December 31, 1993, Weirton Receivables, Inc. had a
net worth of $116.5 million and outstanding receivables of $112.3 million. The
banks and other creditors of Weirton Receivables, Inc. have priority claim on
all assets of Weirton Receivables, Inc. prior to those assets becoming available
to any of Weirton Steel Corporation's creditors.

Leases

The Company also uses certain lease arrangements to supplement its
financing activities.

Rental expense under operating leases was $7,346, $6,419 and $6,486 for the
years 1993, 1992 and 1991, respectively. The minimum future lease payments under
noncancelable operating leases are $6,427, $2,893, $1,932, $1,660 and $1,092 for
1994 through 1998 and $82 after 1998.

NOTE 7.
EMPLOYEE RETIREMENT BENEFITS

Pensions

The Company's Pension Plan covers substantially all employees. The Pension
Plan provides benefits that are based generally upon years of service and
compensation during the final years of employment.

The Company's funding policy is influenced by its general cash requirements
but, at a minimum, complies with the funding requirements of Federal laws and
regulations. During the calendar years of 1993, 1992 and 1991, the Company
contributed $25,648, $28,790 and $26,488, respectively, to the Pension Plan. In
1992 and 1991, a portion of the Company's contributions was made in the form of
the Company's common stock.

In September 1992, the Company issued to the Pension Plan the 1992 Pension
Plan Shares having an aggregate fair value of $8.25 million. Under the governing
agreement with the independent fiduciary of the Pension Plan, the Pension Plan
obtained the right, which was not transferable with the stock, to require the
Company to reimburse the Pension Plan for certain realized losses it may incur
upon disposition of the shares below their issuance value of $4.125 per share.
Under the terms of the agreement, the Pension Plan's right to reimbursement
following disposition of the shares arose only in the event the trading price of
the common stock fell below 80% of the per share issuance value and expired
after the trading price equalled or exceeded $8.00 per share for 60 consecutive
trading days. In September 1991, the Company issued the 1991 Pension Plan Shares
having an aggregate fair value of $15 million in a substantially similar
transaction at an issuance value of $3.875 per share. The Company's
reimbursement obligations with respect to the 1991 and 1992 Pension Plan Shares
were secured by letters of credit totaling $15.5 million. During the second and
third quarters of 1993, the trading price of the Company's common stock equalled
or exceeded $8.00 per share for 60 consecutive trading days. As a result, the
fiduciary's right to require the Company to reimburse the Pension Plan expired.

The Pension Plan's assets are held in trust, the investments of which
consist primarily of common stocks, including the above-mentioned 5.9 million
common shares of the Company with market values of $37.4 million and $22.0
million at December 31, 1993 and 1992, respectively, fixed income securities and
short term investments.

F-17
<PAGE> 79

Following are the components of the Company's net pension cost recognized
in 1993, 1992 and 1991:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Service cost............................................ $ 10,192 $ 11,645 $ 13,592
Interest cost on projected benefit obligation........... 41,714 34,135 32,107
Actual return on plan assets............................ (30,300) (11,036) (50,698)
Net amortization and deferral........................... 15,112 (8,592) 39,846
-------- -------- --------
$ 36,718 $ 26,152 $ 34,847
======== ======== ========
</TABLE>

The following table reconciles the funded status of the Company's plan to
the accrued pension obligation recognized in the balance sheets at December 31,
1993 and 1992:

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation:
Vested......................................................... $461,449 $273,494
Nonvested...................................................... 40,324 49,798
-------- --------
501,773 323,292
Effect of projected compensation increases.......................... 81,516 113,645
-------- --------
Actuarial present value of projected benefit obligation............. 583,289 436,937
Plan assets at fair value........................................... 338,485 304,076
-------- --------
Projected benefit obligation in excess of plan assets............... 244,804 132,861
Items not yet recognized in the balance sheet:
Actuarial gains (losses)....................................... (51,433) 26,704
Remaining net obligation at transition......................... (67,912) (75,302)
Prior service cost............................................. (53,460) (23,334)
Additional minimum liability........................................ 91,289 --
-------- --------
Accrued pension obligation..................................... $163,288 $ 60,929
======== ========
</TABLE>

The accrued pension obligation is classified in the balance sheets at
December 31, 1993 and 1992 as follows:

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Pension liability, a component of current liabilities............... $ 20,394 $ 28,698
Long term pension obligation........................................ 142,894 32,231
-------- --------
$163,288 $ 60,929
======== ========
</TABLE>

The Company's projected, accumulated and vested pension obligations and
expense have been actuarially measured through the use of certain significant
assumptions in accordance with SFAS No. 87, "Employers' Accounting for
Pensions."

The table below depicts the assumptions used to measure the Company's
pension obligations and expense.

<TABLE>
<CAPTION>
1993 1992 1991
------------ -------- --------
<S> <C> <C> <C>
Weighted average interest rate used to discount the
projected, accumulated and vested benefit
obligations to present value....................... 7.5% 8.75% 9.25%
Expected rate of return on plan assets............... 8.75% 9.25% 9.25%
Assumed increase in compensation levels.............. 2% 5% 5%
for three annually annually
years and 4%
thereafter
</TABLE>

F-18
<PAGE> 80

The assumed weighted average interest rate used to discount the pension
obligations to present value is based upon the rates of return on high-quality,
fixed-income investments currently available matched against expected benefit
cash flows, thereby reflecting a rate at which the obligations could be
effectively settled.

The significant increase in the Company's pension obligations as of
December 31, 1993, compared to the prior year end reflects, in part, the recent
trend of declining rates of return on long term investments. The accumulated
pension benefit obligation as of December 31, 1993, exceeds assets available for
plan benefits and unfunded accrued obligations by $91.3 million, resulting in
the Company recognizing an additional minimum liability and an intangible asset
of an equal amount.

Benefits Other Than Pensions

Substantially all of the Company's retirees are covered under medical and
life insurance plans. Retirees who have not yet reached age 65 are entitled to
medical benefits that provide for first-dollar coverage on certain hospital and
surgical services, major medical coverage that contains retiree-paid deductibles
and co-insurance requirements, and a prescription drug program under which a
majority of the cost is paid by the Company. Retirees who have reached age 65
are covered by the same plan, except they are not eligible for the prescription
drug program and the payment of plan benefits is coordinated with Medicare on a
nonduplication basis.

Coverage under the medical plan is extended to spouses and unmarried
children with certain age restrictions. Eligibility for benefits continues
beyond the death of the retiree or active employee eligible to retire.

Life insurance benefits provided to retirees are generally based upon
annual basic pay at retirement for salaried employees and specific amounts for
hourly employees.

The Company does not prefund retiree medical and life insurance benefits
and does not anticipate doing so in the future. The amount of cash used by the
Company to pay for these benefits was $9.9 million and $6.2 million for 1992 and
1991, respectively. Through December 31, 1992, these amounts were charged to
operations on the cash basis in accordance with the Company's accounting policy
in effect up to that date.

Effective January 1, 1993, the Company adopted the provisions of SFAS No.
106. This new accounting method requires the accrual of the estimated cost of
retirees' medical and other benefits over the period during which employees
render the service that qualifies them for such benefits. The provisions of the
new standard allow for the "transition obligation," representing benefits earned
in prior periods by both retirees and current employees, to be recognized in the
period in which the new standard is adopted or amortized prospectively over a
period of up to 20 years. The Company elected to recognize immediately its
transition obligation which at January 1, 1993, was actuarially determined to be
$303.9 million.

The amount of net periodic expense for postretirement health care and life
insurance benefits recognized in 1993 is comprised of the following:

<TABLE>
<S> <C>
Service cost-benefits earned during period........................ $11,833
Interest cost on accumulated postretirement benefit obligation.... 18,548
-------
Net periodic expense......................................... $30,381
=======
</TABLE>

The net periodic expense in 1993 for retiree medical and life insurance
benefits actuarially determined in accordance with SFAS No. 106 exceeded the
$12.4 million cash outlay for providing such benefits by approximately $18.0
million.

F-19
<PAGE> 81

The following table sets forth the components of the accumulated
postretirement benefit transition obligation and the reconciliation of amounts
recognized in the Company's balance sheet as of December 31, 1993:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1993 1993
---------- ------------
<S> <C> <C>
Accumulated postretirement benefit obligation attributable to:
Retirees and beneficiaries................................ $135,278 $131,494
Active employees fully eligible for benefits.............. 69,975 75,142
Other active participants................................. 98,665 118,671
-------- --------
Total accumulated postretirement benefit obligation............ 303,918 325,307
Actuarial loss not yet recognized.............................. -- (3,322)
-------- --------
Accrued postretirement benefit............................ $303,918 $321,985
======== ========
</TABLE>

The accrued postretirement benefit obligation as of December 31, 1993, is
recognized in the Company's consolidated balance sheet as follows:

<TABLE>
<S> <C>
Accrued postretirement benefits, a component of accrued employment costs......... $ 13,000
Postretirement benefits other than pensions...................................... 308,985
--------
$321,985
========
</TABLE>

The accumulated postretirement benefit transition obligation recognized as
of January 1, 1993, was actuarially determined using a method that applied
specific interest rates to future cash flows when discounting the obligation to
its present value. For purposes of measuring the transition obligation, the
interest rates associated with future cash flows began at 6% and graded up to
8.5% for years after 1996. The medical cost trend rate for retirees who had not
yet reached age 65 were 11.0% (16.2% for major medical) in 1993, grading down to
an ultimate rate of 5.5% in 2003. Rates for retirees 65 and older began at 9.0%
in 1993 and graded down to an ultimate rate of 5.5% in 2003. For purposes of
measuring life insurance benefits as of January 1, 1993, increases in
compensation levels were assumed to be 5.0%. The recent decline in long term
interest rates, as described above affecting the measurement of the Company's
pension obligations, also affects the measurement of the Company's accumulated
obligation for retiree health care and life insurance benefits, albeit to a
lesser degree. The interest rate associated with future cash flows and used to
discount the accumulated postretirement benefit obligation to present value as
of December 31, 1993, was also adjusted downward to 7.5%. The medical cost trend
rates for retirees who have not yet reached age 65 is 10% (14.4% for major
medical) in 1994, grading down to an ultimate rate of 4.5% in 2003. Rates for
retirees 65 and older begin at 8.5% in 1994, and grade down to an ultimate rate
of 4.5% in 2003. For purposes of measuring life insurance benefits, increases in
compensation levels were assumed to be 2% for the next three years and 4%
thereafter. A one percentage point increase in the assumed health care trend
rates for each future year would have increased the aggregate of the service and
interest cost components of the 1993 net periodic expense by $4.8 million and
would have increased the accumulated postretirement benefit obligation as of
December 31, 1993, by $40.5 million.

Other

As part of the Company's organization, NSC agreed to retain liability for
pension service and the cost of life and health insurance for employees of the
Company's predecessor business who retired through May 1, 1983. NSC also
retained the liability for pension service through May 1, 1983, for employees of
the predecessor business who became active employees of the Company.

Restructuring Charge

In the first quarter of 1993, the Company recognized a pretax restructuring
charge of $17.3 million to account for the costs associated with implementing an
enhanced retirement package. The early retirement package is part of the
Company's ongoing cost reduction program.

F-20
<PAGE> 82

NOTE 8.
POSTEMPLOYMENT BENEFITS

Effective January 1, 1993, the Company adopted the provisions of SFAS No.
112. This new standard requires the Company to recognize on its balance sheet
the present value of its obligation to provide certain benefits to former or
inactive employees who are not yet eligible for retirement. Liabilities
associated with (i) workers' compensation, (ii) severance programs which include
medical coverage continuation and (iii) sickness and accident protection, which
includes medical and life insurance benefits, are the major items comprising the
Company's obligation for postemployment benefits.

For purposes of actuarially measuring the Company's postemployment
obligation as of January 1, 1993, an interest rate of 8.5% was used to discount
the obligation to its present value. Consistent with the basis that was used to
measure the Company's accumulated obligations for pensions and retiree health
care and life insurance benefits, the interest rate used to discount the
accumulated postemployment obligation to present value as of December 31, 1993
was adjusted downward to 7.5%. Other actuarial assumptions and demographic data
used to value this obligation as of December 31, 1993 and at transition were
consistent with those used to value pension or other postretirement benefits as
the case may be.

Upon determination as of January 1, 1993, of the accumulated postemployment
transition obligation, and after considering amounts already accrued, the
Company was required to recognize a cumulative accounting charge of $4.0 million
to fully recognize its postemployment obligation as of January 1, 1993.

NOTE 9.
INCOME TAXES

Effective January 1, 1993, the Company adopted the provisions of SFAS No.
109. The Company previously accounted for income taxes pursuant to the
provisions of APBO No. 11. Under this new method, deferred income tax assets and
liabilities are recognized which reflect the future tax consequences of net
operating loss and tax credit carryforwards and differences between the tax and
financial reporting bases of assets and liabilities. As a result of implementing
the change in accounting principle, a net deferred tax asset of $11.9 million
was recognized relating to net operating loss carryforwards and other tax
attributes existing as of January 1, 1993. In addition, the effect of the new
income tax method as applied to the Company's adoption of SFAS Nos. 106 and 112
as of January 1, 1993, was the recognition of additional deferred tax assets of
$115.5 million and $.8 million, respectively. The combined effect of these items
resulted in the recognition of a $128.2 million net deferred tax asset and a net
income tax benefit of an equal amount.

F-21
<PAGE> 83

The components of the Company's deferred income tax assets and liabilities
arising under SFAS No. 109 are as follows:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1993 1993
---------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss and tax credit carryforwards........... $ 76,150 $ 94,988
Deductible temporary differences:
Inventories.......................................... 15,388 13,696
Property, plant and equipment........................ 11,140 11,619
Pensions and other long term liabilities............. 20,209 36,499
Postretirement benefits other than pensions.......... 115,520 125,732
Other deductible temporary differences............... 10,260 9,331
Valuation allowance....................................... (38,835) (50,768)
-------- --------
209,832 241,097
Deferred tax liabilities:
Accumulated depreciation.................................. (81,635) (98,092)
-------- --------
Net deferred tax asset.................................... $128,197 $143,005
======== ========
</TABLE>

As of December 31, 1993, the Company had available for Federal and state
income tax purposes regular net operating loss carryforwards of approximately
$194.8 million expiring in 2006 through 2008; alternative minimum tax net
operating loss carryforwards of approximately $13.6 million which expire in
2007; an alternative minimum tax credit of approximately $4.7 million; and
general business tax credits of approximately $14.1 million.

As of January 1, 1993, deferred tax liabilities associated with existing
taxable temporary differences exceeded deferred tax assets from future
deductible temporary differences, excluding those attributable to SFAS No. 106,
by approximately $24.6 million. The recognition by the Company as of January 1,
1993, of the entire transition obligation related to adopting the provisions of
SFAS No. 106 resulted in the recognition of a $115.5 million deferred tax asset.
Future operating costs under SFAS No. 106 are expected to exceed deductible
amounts for income tax purposes for many years. In addition, under current
Federal tax regulations, should the Company incur tax losses in future periods,
such losses may be carried forward to offset taxable income for a period of up
to 15 years. Based upon the length of the period during which the SFAS No.
106-generated deferred tax asset can be utilized, and the Company's expectations
regarding its ability to generate taxable earnings over the long term, the
Company believes that it is more likely than not that future taxable income will
be sufficient to fully offset these future deductions. The Company believes its
potential to generate sustained taxable earnings over the long term and its
ability to further utilize existing net operating loss carryforwards and tax
credits, is supported primarily through the future productivity benefits of its
recent capital improvement program and current business strategy which calls for
certain cost reductions and other opportunities. Under its capital improvement
program, which was substantially completed in 1992, the Company spent in excess
of $550 million to upgrade its steelmaking and hot rolling facilities. As a
result of the program, the Company's enhanced production capabilities have
allowed it to achieve significant operating efficiencies, including improving
its overall yields from liquid steel to finished production and expanding its
potential sheet market to more than three times the size of its previous
potential market. Manpower reductions and improved operating practices have also
increased the Company's productivity; and in the first quarter of 1994, it
entered into new collective bargaining agreements which, among other things,
limit the Company's exposure to increased costs of providing health care to its
work force while providing increased medical coverages. The length of time
associated with the carryforward period available to utilize existing net
operating losses and certain tax credits is more definite. A significant portion
of the Company's net operating losses is attributable to the realization of
differences between tax and financial reporting bases of the Company's fixed
assets. In the aggregate, such differences, including depreciation, are expected
to reverse within the allowable carryforward periods. The Company believes its
ability to utilize its deferred tax attributes in the near term will be

F-22
<PAGE> 84

favorably affected by its capital improvement program and business strategy. In
addition, certain tax planning strategies that include, but are not limited to,
changes in methods of depreciation for tax purposes, adjustments to employee
benefit plan funding strategies, and potential sale lease back arrangements,
could be employed to avoid expiration of the attributes. Notwithstanding the
Company's expectations, it has conservatively provided a valuation allowance to
reduce the carrying value of its recognized deferred tax assets.

As of January 1, 1993, a valuation reserve of $38.8 million was recognized
as a component of its cumulative accounting adjustment which provided for a
reduction in the carrying value of the Company's gross deferred tax assets of
approximately 15%, a reduction in the carrying value of its net deferred tax
assets of approximately 25%, and a reduction equal to approximately 50% of the
carrying value associated with the Company's net operating loss carryforwards
and tax credits. During 1993, the Company generated additional net operating
losses and throughout the year recognized adjustments to its valuation reserve
that would result in net carrying values for the components of its deferred
taxes on a basis consistent with valuation adjustments established as of January
1, 1993.

The elements of the Company's deferred income tax benefit associated with
its loss before extraordinary items and cumulative effect of accounting changes
along with the allocation of deferred taxes to other income statement items are
as follows:

<TABLE>
<CAPTION>
1993
--------
<S> <C>
Deferred income taxes:
Federal............................................. $ 21,421
State............................................... 2,248
Provision for valuation allowance........................ (10,397)
--------
Deferred income tax benefit.................... 13,272
Other components of the Company's total deferred income
tax benefit are allocated to the consolidated statement
of income as follows:
Deferred income tax benefit allocated to
extraordinary item................................ 1,536
Deferred income tax benefit allocated to cumulative
effect on prior years of accounting changes....... 128,197
--------
Total deferred income tax benefit.............. $143,005
========
</TABLE>

During August 1993, the statutory rate applicable to Federal income taxes
increased to 35% from 34% retroactive to January 1, 1993, thereby increasing the
realizable value of the Company's unutilized deferred tax assets. Net carrying
values were adjusted accordingly in the fourth quarter of 1993 along with the
recognition of certain other charges applicable to prior years' tax attributes
and unfavorable post-filing adjustments. As such, the total income tax benefit
recognized by the Company in 1993 reconciles to that computed under the Federal
statutory corporate rate as follows:

<TABLE>
<CAPTION>
CUMULATIVE
LOSS EFFECT
BEFORE OF
INCOME EXTRAORDINARY ACCOUNTING
TAXES ITEM CHANGES TOTAL
-------- ------------- -------- --------
<S> <C> <C> <C> <C>
Federal income tax benefit computed at
statutory rate of 34%..................... $ 19,095 $ 2,748 $149,450 $171,293
State income taxes net of Federal income tax
effect.................................... 2,248 324 17,582 20,154
Effect of retroactive change in Federal
statutory rate to 35% and other
adjustments............................... 2,326 -- -- 2,326
Provision for valuation allowance........... (10,397) (1,536) (38,835) (50,768)
-------- ------- -------- --------
$ 13,272 $ 1,536 $128,197 $143,005
======== ======= ======== ========
</TABLE>

F-23
<PAGE> 85

As noted above, prior to January 1, 1993, the Company accounted for income
taxes in accordance with APBO No. 11. The disclosures regarding the Company's
income taxes for periods prior to January 1, 1993, are as follows:

<TABLE>
<CAPTION>
1992 1991
-------- -------
<S> <C> <C>
Income tax benefit:
Federal.................................................... $ 1,779 $ 4,000
State...................................................... 2,984 --
-------- -------
Total income tax benefit................................ $ 4,763 $ 4,000
======== ========
Sources of deferred income taxes:
Depreciation............................................... $ 18,964 $16,772
Inventories................................................ (508) (2,380)
Pension.................................................... (536) (2,467)
Effect of net operating losses on deferred taxes........... (20,174) (8,121)
Vacation reserve........................................... -- (1,741)
Other...................................................... 2,254 (2,063)
-------- -------
Total deferred income taxes............................. $ -- $ --
======== ========
</TABLE>

The income tax benefit differs from that computed under the applicable
Federal statutory corporate rate as follows:

<TABLE>
<CAPTION>
1992 1991
-------- --------
<S> <C> <C>
Income tax benefit based on Federal statutory rate of
34%.................................................... $ 13,898 $ 26,763
State income taxes, net of Federal income tax effect...... 2,984 --
Limitation of utilization of net operating loss
carrybacks............................................. (12,119) (22,763)
-------- --------
Total income tax benefit............................... $ 4,763 $ 4,000
======== ========
</TABLE>

NOTE 10.
REDEEMABLE STOCKS

In June 1989, the Company sold 1.8 million shares of the Series A Preferred
to the 1989 ESOP, which financed the purchase by issuing to the Company a $26.1
million promissory note, payable ratably over a ten-year period. Each share of
Series A Preferred is convertible at any time into one share of common stock,
subject to adjustment, is entitled to ten times the number of votes of the
common stock into which it is convertible, and has a preference on liquidation
over common stock of $5 per share. The Series A Preferred has no preference over
common stock as to dividends. The Series A Preferred is not intended to be
readily tradable on an established market. Accordingly, shares of Series A
Preferred distributed to 1989 ESOP participants following termination of service
will be subject to a right, exercisable for limited periods prescribed by law,
to cause the Company to repurchase the shares at fair value. The Company also
has a right of first refusal upon proposed transfers of distributed shares of
Series A Preferred which it has agreed, to the extent it is permitted, to
exercise and to contribute or sell reacquired shares to the 1989 ESOP. If not
repurchased by the Company or reacquired by the 1989 ESOP, shares of Series A
Preferred automatically convert into common stock upon transfer by a
distributee.

In October 1991, the Company issued .5 million shares of the Series B
Preferred to Cleveland-Cliffs Inc for a purchase price equal to the aggregate
redemption amount of $25 million. The Series B Preferred is entitled to annual
dividends of $6.25 per share, subject to increase to $7.50 per share if the
Company's authorized common stock is not increased by approximately 4.3 million
shares by May 31, 1994, is redeemable by the Company at any time, has a
liquidation preference over common stock and is subject to mandatory redemption
on December 31, 2003, in each case at $50 per share. The Company is obliged to
repurchase shares of Series B Preferred Stock at the option of the holders under
specified conditions; the holders of Series B Preferred are entitled to exchange
their stock in the event of future equity offerings by the Company; and the
Company has a

F-24
<PAGE> 86

right to consent to certain proposed future private dispositions of shares of
Series B Preferred, and a right of first refusal over dispositions proposed to
be made at less than $47.50 per share. In connection with this transaction, the
Company entered into a supply agreement with a subsidiary of Cleveland-Cliffs to
furnish the Company with the major part of its iron ore pellets for a
twelve-year period which began in 1992.

NOTE 11.
STOCK PLANS

The Company has a stock option plan (the "1987 Stock Option Plan") which
provides for 750,000 shares of the Company's common stock to be available for
the granting of options. No stock options were granted in 1993, 1992 or 1991.
The options outstanding for each period presented had been previously granted
under employment contracts with certain executive officers at an exercise price
of $8.33 per share. The excess of the option's fair value at the date of grant
over the proceeds to be received upon exercise is being amortized over the terms
of the employment contracts.

There were 510,000 shares available for future grant at December 31, 1993.

Activity under the 1987 Stock Option Plan is summarized below:

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Options outstanding at beginning of period............. 240,000 240,000 240,000
Granted................................................ -- -- --
Exercised.............................................. -- -- --
------- ------- -------
Outstanding at end of period........................... 240,000 240,000 240,000
Exercisable at end of period........................... 240,000 230,000 119,998
Available for future grant............................. 510,000 510,000 510,000
</TABLE>

In October 1989, the Company registered 1.5 million shares of common stock
to be offered over a five-year period to eligible employees through payroll
deductions under its 1989 Employee Stock Purchase Plan.

During 1991, the Company adopted a Deferred Compensation Plan to permit
members of its Board of Directors to receive shares of common stock in lieu of
cash payments for total compensation or a portion thereof for services they
provided.

Both the Employee Stock Purchase Plan and the Directors' Deferred
Compensation Plan provide for respective participants to purchase the Company's
common stock at 90% of the lesser of the stock's trading price at the beginning
or the end of each year. At December 31, 1993, 299,971 shares valued at
approximately $1.0 million were issuable in accordance with the Employee Stock
Purchase Plan. These shares were issued during January 1994. At December 31,
1993, 97,078 shares valued at $0.3 million were issuable to the Directors who
selected deferred compensation.

NOTE 12.
ESOP FINANCING

The purchase by the 1989 ESOP of the Series A Preferred was financed
through the issuance of a $26.1 million promissory note to the Company payable
ratably over a ten-year period. The Company's contribution to the 1989 ESOP for
the principal and interest components of debt service was immediately returned.
As such, the respective interest income and expense on the ESOP notes were
entirely offset within the Company's net financing costs.

Effective November 1, 1990, the 1989 ESOP entered into a refinancing, which
was guaranteed by the Company, under which $19 million of 9.0% ESOP notes were
sold to certain institutional investors. Following this refinancing, the net
interest expense component of the Company's ESOP

F-25
<PAGE> 87

contribution in the amounts of $653 and $708 for 1992 and 1991, respectively,
was included in interest expense.

In connection with the Company's public offering of $140 million of its
senior notes in March 1993, the Company repurchased the balance of the
outstanding 9.0% senior ESOP notes which had been reduced to the principal
amount of $14.1 million. Following this repurchase, the Company was
reestablished as the sole lender to the 1989 ESOP and, as such, the ESOP note
interest income and expense are offset within the Company's net financing costs.

NOTE 13.
EARNINGS PER SHARE

The weighted average number of common and common equivalent shares used in
the calculation of the loss per share was 26,472,907, 24,914,026 and 21,405,729
for the years 1993, 1992 and 1991, respectively. The shares of Series A
Preferred were excluded from each year's calculation due to their antidilutive
effect. The assumed exercise of stock options would not result in significant
dilution in any such periods.

NOTE 14.
COMMITMENTS AND CONTINGENCIES

The Company, in the ordinary course of business, is the subject of, or
party to, various pending or threatened legal and environmental actions. The
Company believes that any ultimate liability resulting from these actions will
not have a material adverse effect on its financial position or results of its
operations.

In October 1991, the Company entered into a twelve-year iron ore pellet
supply agreement with a subsidiary of Cleveland-Cliffs Inc to provide the
majority of tonnage needed beginning in 1992.

In July 1993, the Company entered into an agreement with USX Corporation to
purchase blast furnace coke during the remainder of 1993 through December 1996.
The agreement provides for tonnages of 750,000 per calendar year in 1994 through
1996, or the actual annual requirements of the Company if less than the stated
amount. The price is to be the prevailing market price for blast furnace coke
determined each October prior to the delivery year.

On August 7, 1992, an action entitled Larry G. Godich, et. al. v. Herbert
Elish, et. al. was commenced in the West Virginia Circuit Court for Hancock
County against ten current members of the Company's Board of Directors, certain
officers of the Company, former Board members, the Company's outside counsel,
and the Company. The suit purports to be brought derivatively by stockholders on
behalf of the Company and seeks a recovery on its behalf. The plaintiffs'
complaint alleges that the defendants were negligent or grossly negligent in the
selection and supervision of contractors engaged by the Company to design and
construct reheat furnaces for the hot mill project under the capital improvement
program, thereby breaching their respective fiduciary and other duties to the
Company and, as a result, that the Company incurred substantial cost overruns in
connection with the specific project. The complaint seeks compensatory damages,
jointly and severally, against all defendants in the amount of $30 million. The
suit has been scheduled for trial in the second quarter of 1994. Since the suit
is on behalf of the Company, if the plaintiffs prevail, the Company would
receive the net benefit of any recovery.

NOTE 15.
LINE OF BUSINESS INFORMATION

The Company operates a single line of business, the making and finishing of
steel products including carbon sheet and tin products. During 1993, 1992 and
1991, one customer accounted for 11%, 12% and 13% of net sales, respectively.

F-26
<PAGE> 88

NOTE 16.
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

Cash and Short Term Investments

The carrying amount approximates fair value because of the short maturity
of those investments.

Redeemable Preferred Stock

The market value of the Series A Preferred was determined based upon an
independent appraisal done as of December 31, 1993. The market value of the
Series B Preferred was estimated based upon quoted market prices for the same or
similar issues.

Long Term Debt

The fair values of the Company's long term debt obligations are estimated
based upon quoted market prices.

The estimated fair values of the Company's financial instruments are as
follows at December 31, 1993 and 1992:

<TABLE>
<CAPTION>
1993 1992
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and short term investments................ $ 89,002 $ 89,002 $ 61,195 $ 61,195
Redeemable preferred stock, Series A and B..... 50,533 36,122 50,624 31,266
Long term debt................................. 496,300 516,378 504,414 458,824
</TABLE>

Significant Group Concentrations of Credit Risk

As of December 31, 1993 and 1992, the Company had trade receivables
outstanding of $18,958 and $15,006, respectively, from customers who had been
acquired in leveraged transactions.

NOTE 17.
SUBSEQUENT EVENTS

In March 1994, the Company entered into new collective bargaining
agreements with the Independent Steelworkers Union, which represents 4,966
employees in bargaining units covering production and maintenance workers,
clerical workers, nurses, and the Independent Guard Union, which represents 39
employees. The new agreements, which run through September 25, 1996, provide for
the payment of bonuses in the gross amount of $3,500 per employee, paid in
installments, but do not provide for wage increases. Through the end of the new
agreements, the Company's profit sharing plan, which covers substantially all
employees, provides for participants to share in the Company's profits each year
at a rate equal to 1/3 of the Company's "adjusted net earnings" for that year as
defined under the plan, provided its net worth exceeds $100 million. If,
however, payment of the full profit sharing amount would reduce the Company's
net worth below $100 million, payments are reduced to an amount necessary to
maintain the $100 million threshold. If the Company's net worth is in excess of
$250 million, the profit sharing rate increases to 35%. However, if payment of
the full profit sharing amount would reduce the Company's net worth below $250
million, payments at this rate would be limited as necessary to maintain the
$250 million threshold and the remainder of the payment would be made at the
1/3 rate. The agreements limit the Company's exposure to increased costs of
healthcare while providing increased medical coverages through a managed
healthcare "point of service" program and a ceiling on the Company's cash

F-27
<PAGE> 89

basis cost of healthcare for future retirees. The agreements also contain
limitations on the Company's ability to reduce its workforce by layoffs, with
exceptions for adverse financial, operational, and business circumstances. In
addition, the parties have agreed to certain improvements in the Company's
Pension Plan.

On April 6, 1994, the Company experienced a fire which caused extensive
damage to its No. 9 Tandem Mill, a cold rolling facility which supplies steel
coils to its tin mill for further processing. The Company does not believe this
unit can be restored to operation prior to the fourth quarter of 1994. The
Company is adjusting its production on other units and seeking alternate
sourcing for certain products in an attempt to minimize the effect of the tandem
mill outage. The outage has caused a need for reduced manpower which has
resulted in temporary force reductions at the Company's cold rolling and tin
mill operations. The Company intends to review the situation on a weekly basis
and make adjustments to its production and manpower situation accordingly.
Efforts to repair the tandem mill and to assess the financial effects of the
outage are under way. The Company maintains insurance coverage for both property
damage and business interruption. As a result of the length of time anticipated
to restore the tandem mill to full operations, total anticipated recoveries and
unrecoverable costs have not yet been determined.

F-28
<PAGE> 90

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES, OR AN OFFER TO OR SOLICITATION OF ANY PERSON IN
ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain
Documents by Reference............. 2
Prospectus Summary................... 4
Risk Factors......................... 9
The Company.......................... 15
Use of Proceeds...................... 17
Price Range of Common Stock
and Dividend Policy................ 18
Capitalization....................... 19
Dilution............................. 19
Selected Financial Data.............. 20
Management's Discussion and
Analysis of Financial Condition
and Results of Operations.......... 23
Business............................. 33
Management........................... 50
Selling Stockholder.................. 52
Description of Capital Stock......... 53
Underwriting......................... 56
Legal Matters........................ 58
Experts.............................. 58
Index to Financial Statements........ F-1
</TABLE>

17,000,000 SHARES

WEIRTON
STEEL CORPORATION

COMMON STOCK
($.01 PAR VALUE)

SALOMON BROTHERS INC
LAZARD FRERES & CO.
LEHMAN BROTHERS
PAINEWEBBER INCORPORATED
PROSPECTUS

DATED AUGUST 9, 1994

<PAGE> 91

[ALTERNATE INTERNATIONAL FRONT COVER PAGE]

PROSPECTUS

17,000,000 SHARES

Of the shares being offered, 2,550,000 shares are being offered outside of the
United States and Canada (the "International Offering") and 14,450,000 shares
are being offered in a concurrent offering in the United States and Canada (the
"U.S. Offering" and, collectively with the International Offering, the
"Offerings"), subject to transfers between the International Underwriters and
the U.S. Underwriters. The Price to Public and the Underwriting Discount per
share will be identical for the International Offering and the U.S. Offering.
The closing of the International Offering and the U.S. Offering are conditioned
upon each other. See "Underwriting."

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE MATTERS DISCUSSED UNDER THE
CAPTION "RISK FACTORS."

<CAPTION>
- ------------------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT COMPANY(1) STOCKHOLDER
<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
Total (2).............. $ $ $ $
- ------------------------------------------------------------------------------------------------------------
<FN>
(1) Before deduction of expenses payable by the Company estimated to be
$800,000.
(2) The Selling Stockholder has granted to the International Underwriters and
the U.S. Underwriters 30-day options to purchase up to an aggregate of
2,550,000 additional shares of Common Stock at the Price to Public, less the
Underwriting Discount, solely to cover over-allotments, if any. The Company
may satisfy the exercise of these options up to a maximum of 300,000 shares.
If the Underwriters exercise such options in full, the total Price to
Public, Underwriting Discount and Proceeds to Selling Stockholder will be
$ , $ and $ , respectively. If the Company satisfies the exercise
of such options with the maximum number of shares permitted, Proceeds to
Company and Proceeds to Selling Stockholder will be $ and $ ,
respectively. See "Underwriting."
</TABLE>

SALOMON BROTHERS INTERNATIONAL LIMITED
LAZARD BROTHERS & CO., LIMITED
LEHMAN BROTHERS
PAINEWEBBER INTERNATIONAL
The date of this Prospectus is August 9, 1994.

<PAGE> 92

[Alternate International Underwriting Section]

UNDERWRITING

Subject to the terms and conditions set forth in the International
Underwriting Agreement, the Company and the Selling Stockholder have agreed to
sell to each of the Underwriters named below (the "International Underwriters")
for whom Salomon Brothers International Limited, Lazard Brothers & Co., Limited,
Lehman Brothers International (Europe) and PaineWebber International (U.K.) Ltd.
are acting as representatives (the "International Representatives"), and each of
the Underwriters has severally agreed to purchase from the Company and the
Selling Stockholder, the total number of shares of Common Stock set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
INTERNATIONAL UNDERWRITERS TO BE PURCHASED
------------------------------------------------------------------ ----------------
<S> <C>
Salomon Brothers International Limited............................
Lazard Brothers & Co., Limited....................................
Lehman Brothers International (Europe)............................
PaineWebber International (U.K.) Ltd. ............................
-------------
Total................................................... 2,550,000
=============
</TABLE>

In the International Underwriting Agreement, the several International
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all the shares of Common Stock set forth in the table above, if any
such shares are purchased. In the event of a default by any International
Underwriter, the International Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting International
Underwriters may be increased or the International Underwriting Agreement may be
terminated.

The Company and the Selling Stockholder have been advised by the
International Representatives that the several International Underwriters
propose initially to offer such shares to the public at the public offering
price set forth on the cover page of this Prospectus, and to certain dealers at
such price less a concession not in excess of $ per share. The
International Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to other dealers. After this public
offering, the public offering price and such concessions may be changed.

The Selling Stockholder has granted to the International Underwriters an
option exercisable during the 30-day period after the date of this Prospectus to
purchase up to 382,500 additional shares of Common Stock at the same price per
share as the initial 2,550,000 shares of Common Stock to be purchased by the
International Underwriters. The International Underwriters may exercise such
option only to cover over-allotments in the sale of the shares of Common Stock
that the International Underwriters have agreed to purchase. To the extent that
the International Underwriters exercise such option, each International
Underwriter will have a firm commitment, subject to certain conditions, to
purchase the same proportion of the option shares as the number of shares of
Common Stock to be purchased and offered by such International Underwriter in
the above table bears to the total number of shares of Common Stock initially
purchased by the International Underwriters. The International Underwriting
Agreement provides that the Company, in its sole discretion, will be permitted
to supply up to 45,000 shares of Common Stock toward satisfaction of the
exercise of the option.

The Company and the Selling Stockholder have also entered into a U.S.
Underwriting Agreement with the U.S. Underwriters named therein, for whom
Salomon Brothers Inc, Lazard Freres & Co., Lehman Brothers Inc., and PaineWebber
Incorporated are acting as representatives (the "U.S. Representatives"),
providing for the concurrent offer and sale of 14,450,000 shares of Common Stock
in the United States and Canada and providing the U.S. Underwriters an option,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to 2,167,500 additional

56
<PAGE> 93

shares at the same price per share as the initial 14,450,000 shares of Common
Stock to be purchased by the U.S. Underwriters. The U.S. Underwriting Agreement
provides that the Company, in its sole discretion, will be permitted to supply
up to 255,000 shares of Common Stock toward satisfaction of the exercise of the
option.

The offering price and underwriting discounts for the U.S. Offering and the
International Offering will be identical. The closing of the International
Offering is conditioned upon the closing of the U.S. Offering, and the closing
of the U.S. Offering is conditioned upon the closing of the International
Offering.

Each International Underwriter has severally agreed that, as part of the
International Offering, (a) it is not purchasing any shares of Common Stock for
the account of any United States or Canadian Person, and (b) it has not offered
or sold, and will not offer or sell, directly or indirectly, any shares of
Common Stock or distribute this Prospectus to any person within the United
States or Canada or to any United States or Canadian Person. Each U.S.
Underwriter has severally agreed that, as part of the U.S. Offering, (a) it is
not purchasing any shares of Common Stock for the account of anyone other than a
United States or Canadian Person, and (b) it has not offered or sold, and will
not offer or sell, directly or indirectly, any shares of Common Stock or
distribute any Prospectus related to the U.S. Offering to any person outside the
United States or Canada or to anyone other than a United States or Canadian
Person. The foregoing limitations do not apply to stabilization transactions or
to certain other transactions specified in the agreement between U.S.
Underwriters and International Underwriters. "United States or Canadian Person"
means any person who is a national or resident of the United States or Canada,
any corporation, partnership or other entity created or organized under the laws
of the United States or Canada, or of any political subdivision thereof, any
estate or trust the income of which is subject to United States or Canadian
federal income taxation, regardless of the source of its income (other than a
foreign branch of any United States or Canadian Person), and includes any United
States or Canadian branch of a person other than a United States or Canadian
Person.

Each International Underwriter has severally represented and agreed that:
(a) it has not offered or sold and will not offer or sell in the United Kingdom
by means of any document any shares of Common Stock other than to persons whose
ordinary business it is to buy or sell shares or debentures (whether as
principal or agent) or in circumstances which do not constitute an offer to the
public within the meaning of the Companies Act 1985; (b) it has complied and
will comply with all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the shares of Common Stock
in, from or otherwise involving the United Kingdom; and (c) it has only issued
or passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of the shares of Common
Stock if that person is of a kind described in Article 9(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988 (as
amended by Article 6(c) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1992) or is a person to whom the document may
otherwise lawfully be issued or passed on.

Pursuant to the agreement between the International Underwriters and the
U.S. Underwriters, sales may be made between the International Underwriters and
the U.S. Underwriters of such number of shares of Common Stock as may be
mutually be agreed. The price of any shares of Common Stock so sold shall be the
initial public offering price, less an amount not greater than the concession to
securities dealers. To the extent that there are sales between the International
Underwriters and the U.S. Underwriters, pursuant to the agreement between the
International Underwriters and the U.S. Underwriters, the number of shares
initially available for sale by the International Underwriters or by the U.S.
Underwriters may be more or less than the amount indicated on the cover page of
this Prospectus.

In the ordinary course of business, certain of the Underwriters have
provided financial advisory services to the Company and may do so in the future.

57
<PAGE> 94

The Company, its officers and directors and U.S. Trust have agreed not to
sell, or otherwise dispose of, directly or indirectly, or announce the offering
of, any shares of Common Stock, or any securities convertible into, or
exchangeable for, shares of Common Stock, except those offered in the Offerings
or in connection with certain employee benefit plans or labor agreements, for a
period of 120 days from the date hereof without the prior consent of the
International Representatives and the U.S. Representatives.

The International Underwriting Agreement and the U.S. Underwriting
Agreement each provide that the Company will indemnify the International
Underwriters and the U.S. Underwriters, respectively, against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the International Underwriters and the U.S. Underwriters, as the case
may be, may be required to make in respect thereof.

CERTAIN U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
"Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity that, for U.S.
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership, or a non-resident fiduciary of a foreign
estate or trust. In the case of a member of a foreign partnership, however (and
in some circumstances the beneficiary of a foreign estate or trust), the actual
tax imposed may depend on the status (including in some cases the ability to
claim a tax treaty) of the member or beneficiary. Any U.S. tax withheld may be
credited against the actual tax imposed and, to the extent that it exceeds such
tax, may be refunded upon application.

This discussion is based on the Code and administrative interpretations as
of the date hereof, all of which may be changed either retroactively or
prospectively. This discussion does not address all aspects of U.S. federal
income and estate taxation that may be relevant to Non-U.S. Holders in light of
their particular circumstances and does not address any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction.

Prospective holders should consult their tax advisors with respect to the
particular consequences to them of holding and disposing of Common Stock.

DIVIDENDS

Subject to the discussion below, dividends paid to a Non-U.S. Holder of
Common Stock generally will be subject to withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. For purposes
of determining whether tax is to be withheld at a 30% rate or at a reduced rate
as specified by an income tax treaty, the Company ordinarily will presume that
dividends paid to an address in a foreign country are paid to a resident of such
country absent knowledge that such presumption is not warranted. However, under
proposed U.S. Treasury regulations which have not yet been put into effect, to
claim the benefits of a tax treaty, a Non-U.S. Holder of Common Stock would be
required to file certain forms accompanied by a statement from a competent
authority of the treaty country.

Dividends paid to a Non-U.S. Holder at an address within the United States
may be subject to backup withholding at a rate of 31% if the Non-U.S. Holder
fails to establish that it is entitled to an exemption or to provide a correct
taxpayer identification number and other information to the payor.

Upon the filing of an IRS Form 4224 with the payor, there will be no
withholding tax on dividends that are effectively connected with the Non-U.S.
Holder's conduct of a trade or business within the United States. Instead, the
effectively connected dividends will be subject to regular U.S. income tax in
the same manner as if the Non-U.S. Holder were a U.S. resident. A Non-U.S.
corporation receiving effectively connected dividends also may be subject to an
additional "branch profits tax" which is imposed, under certain circumstances,
at a rate of 30% (or such lower rate as may be specified by an applicable
treaty) of the earnings withdrawn from such business.

58
<PAGE> 95

In general, the Company must report to the U.S. Internal Revenue Service
the amount of dividends paid, the name and address of the recipient, and the
amount, if any, of tax withheld. A similar report is sent to the holder.
Pursuant to tax treaties or other agreements, the U.S. Internal Revenue Service
may make its reports available to tax authorities in the recipient's country of
residence.

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of Common Stock
unless (i) the gain is effectively connected with a trade or business of such
holder in the United States or (ii) the holder owns more than five percent of
the Common Stock and the Company is or has been a "U.S. real property holding
corporation" within the meaning of Section 897(c)(2) of the Code at any time
within the shorter of the five-year period preceding such disposition or such
holder's holding period.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF
COMMON STOCK

Under current U.S. federal income tax law, information reporting and backup
withholding imposed at a rate of 31% will apply to the proceeds of a disposition
of Common Stock paid to or through a U.S. office of a broker unless the
disposing holder certifies its non-U.S. status or otherwise establishes an
exemption. Generally, U.S. information reporting and backup withholding will not
apply to a payment of disposition proceeds if the payment is made outside the
United States through a non-U.S. office of a non-U.S. broker. However, U.S.
information reporting requirements (but not backup withholding) will apply to a
payment of disposition proceeds outside the United States if (A) the payment is
made through an office outside the United States of a broker that is either (i)
a U.S. person, (ii) a foreign person which derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States or (iii) a "controlled foreign corporation" for U.S. federal income tax
purposes and (B) the broker fails to maintain documentary evidence that the
holder is a Non-U.S. Holder and that certain conditions are met, or that the
holder otherwise is entitled to an exemption.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the U.S.
Internal Revenue Service.

FEDERAL ESTATE TAX

An individual Non-U.S. Holder who is treated as the owner of or has made
certain lifetime transfers of an interest in the Common Stock will be required
to include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.

LEGAL MATTERS

EXPERTS

59
<PAGE> 96

[ALTERNATE INTERNATIONAL BACK COVER PAGE]

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain
Documents by Reference............. 2
Prospectus Summary................... 4
Risk Factors......................... 9
The Company.......................... 15
Use of Proceeds...................... 17
Price Range of Common Stock
and Dividend Policy................ 18
Capitalization....................... 19
Dilution............................. 19
Selected Financial Data.............. 20
Management's Discussion and
Analysis of Financial Condition
and Results of Operations.......... 23
Business............................. 33
Management........................... 50
Selling Stockholder.................. 52
Description of Capital Stock......... 53
Underwriting......................... 56
Certain Federal Tax Considerations
for Non-U.S. Holders of
Common Stock....................... 58
Legal Matters........................ 59
Experts.............................. 59
Index to Financial Statements........ F-1
</TABLE>

17,000,000 SHARES

WEIRTON
STEEL CORPORATION

COMMON STOCK
($.01 PAR VALUE)

SALOMON BROTHERS
INTERNATIONAL LIMITED

LAZARD BROTHERS & CO.,
LIMITED

LEHMAN BROTHERS
PAINEWEBBER INTERNATIONAL
PROSPECTUS

DATED AUGUST 9, 1994

<PAGE> 97

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid in connection with the sale
of the Shares being registered, all of which will be paid by the registrant. All
amounts are estimates except the registration fee and the NASD filing fee (which
have been rounded to the nearest dollar).

<TABLE>
<S> <C>
Registration Fee......................................................... $ 58,888
NASD Filing Fee.......................................................... 17,577
Blue Sky Fees and Expenses............................................... 20,000
Listing Fees............................................................. 62,300
Accounting Fees and Expenses............................................. 150,000
Legal Fees and Expenses.................................................. 350,000
Transfer Agent and Registrar Fees........................................ 5,000
Printing................................................................. 100,000
Miscellaneous............................................................ 36,235
--------
Total............................................................... $800,000
=========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of Delaware provides that a
corporation may indemnify directors and officers against liabilities and
expenses they may incur in such capacities provided certain standards are met,
including good faith and the belief that the particular action is in or not
opposed to the best interests of the corporation. Article IX of the registrant's
By-laws provides as follows:

Section 1. Each current or former director, officer, employee or agent of
the Corporation, or any person who may have served at its request as a director
or officer of another corporation in which it owns stock or of which it is a
creditor (or in a comparable position in another form of entity in which the
Corporation owns an equity interest or with which it is a joint venturer or of
which it is a creditor), and such person's heirs, executors, and administrators
(each, an "Indemnitee"), shall be indemnified by the Corporation against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), to
which he or she may be made a party by reason of any alleged acts or omissions
in such capacity if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, such person
had no reasonable cause to believe his or her conduct was unlawful.

Section 2. Each Indemnitee shall be indemnified by the Corporation against
all expenses (including attorneys' fees) actually and reasonably incurred by him
or her in connection with any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by reason
of any alleged acts or omissions in such capacity if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation, and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been finally adjudged to be liable to the Corporation unless and only to
the extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that
despite the adjudication of liability but in view of all of the circumstances of
the case, such person is fairly and

II-1
<PAGE> 98

reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.

Section 3. Expenses incurred by an Indemnitee in defending any civil or
criminal action may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Indemnitee to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Corporation.

Section 4. The foregoing rights of indemnification and advancement of
expenses shall be in addition to and not exclusive of any and all other rights
to which such Indemnitee might be entitled as a matter of law.

ITEM 16. EXHIBITS

(a) Exhibits

<TABLE>
<S> <C>
Exhibit 1.1 Form of U.S. Underwriting Agreement.
Exhibit 1.2 Form of International Underwriting Agreement.
Exhibit 3.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1
filed May 3, 1989, Commission File No. 33-28515).
Exhibit 3.2 By-laws of the Company (incorporated by reference to Exhibit 3.3 to the
Company's Registration Statement on Form S-1 filed May 3, 1989, Commission
File No. 33-28515).
Exhibit 3.3 Certificate of the Designation, Powers, Preferences and Rights of the
Convertible Voting Preferred Stock, Series A (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 on Form 10-K filed March 28, 1990,
Commission File No. 1-10244).
Exhibit 3.4 Certificate of Designation, Powers, Preferences and Rights of the Redeemable
Preferred Stock, Series B (incorporated by reference to Exhibit 4.1 to the
Company's Current Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 8-K filed October 9, 1991, Commission File No.
1-10244).
Exhibit 4.1 Indenture dated October 17, 1989 between the Company and First Bank (N.A.) as
Trustee, pursuant to which the 10 7/8% Senior Notes due October 15, 1999
Notes were issued (incorporated by reference to Exhibit 4.1 to the Company's
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 on Form 10-K filed March 28, 1990, Commission File No. 1-10244).
Exhibit 4.2 Form of Notes (included as Exhibit A to Exhibit 4.1).
Exhibit 4.3 Indenture dated March 1, 1993 between the Company and Bankers Trust Company
as Trustee, pursuant to which the 11 1/2% Senior Notes due March 1, 1998 were
issued (incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-2 filed February 25, 1993, Commission File
No. 33-53476).
Exhibit 4.4 Form of Notes (incorporated by reference to pages 1 through 7 of the preamble
to Exhibit 4.3).
Exhibit 5.1 Opinion of Willkie Farr & Gallagher.*
Exhibit 10.1 Pellet Sale Agreement dated June 25, 1991, between USX Corporation and the
Company (incorporated by reference to Exhibit 10.2 to the Company's Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
on Form 10-K filed March 27, 1992, Commission File No. 1-10244).
</TABLE>

II-2
<PAGE> 99

<TABLE>
<S> <C>
Exhibit 10.2 1984 Employee Stock Ownership Plan, as amended and restated (incorporated by
reference to Exhibit 10.3 to the Company's Annual Report pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K filed March
28, 1990, Commission File No. 1-10244).
Exhibit 10.3 1989 Employee Stock Ownership Plan (incorporated by reference to Exhibit 10.4
to the Company's Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 10-K filed March 28, 1990, Commission
File No. 1-10244).
Exhibit 10.4 1987 Stock Option Plan (incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-1 filed May 3, 1989, Commission
File No. 33-28515).
Exhibit 10.5 Employment Agreement between Herbert Elish and the Company dated as of July
1, 1990 (incorporated by reference to Exhibit 10.6 to the Company's Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
on Form 10-K, filed April 1, 1991, Commission File No. 1-10244).
Exhibit 10.6 Employment Agreement between Warren E. Bartel and the Company (incorporated
by reference to Exhibit 10.8 to the Company's Registration Statement on Form
S-1 filed May 3, 1989, Commission File No. 33-28515).
Exhibit 10.7 Employment Agreement between James B. Bruhn and the Company (incorporated by
reference to Exhibit 10.11 to the Company's Registration Statement on Form
S-1 filed May 3, 1989, Commission File No. 33-28515).
Exhibit 10.8 Employment Agreement between Thomas W. Evans and the Company dated April 21,
1987 (incorporated by reference to Exhibit 10.8 of the Company's Annual
Report on Form 10-K filed March 30, 1994).
Exhibit 10.9 Employment Agreement between Richard K. Riederer and the Company
(incorporated by reference to Exhibit 10.12 to the Company's Registration
Statement on Form S-1 filed May 3, 1989, Commission File No. 33-28515).
Exhibit 10.10 Stock Purchase and Contribution Agreement dated September 27, 1991 among the
registrant and U.S. Trust Company of California, N.A., as investment manager
(incorporated by reference to Exhibit 10.1 to the Company's Current Report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on
Form 8-K filed October 9, 1991, Commission File No. 1-10244).
Exhibit 10.11 Preferred Stock Purchase Agreement dated as of September 30, 1991 between the
registrant and Cleveland-Cliffs Inc (incorporated by reference to Exhibit
10.2 to the Company's Current Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 8-K filed October 9, 1991, Commission
File No. 1-10244).
Exhibit 10.12 Registration Rights Agreement dated October 2, 1991 between the registrant
and Cleveland-Cliffs Inc (incorporated by reference to Exhibit 10.3 to the
Company's Current Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 8-K filed October 9, 1991, Commission File No.
1-10244).
Exhibit 10.13 Redacted Pellet Sale and Purchase Agreement dated as of September 30, 1991
between the Cleveland-Cliffs Iron Company and the Company (incorporated by
reference to Exhibit 10.18 to the Company's Quarterly Report pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-Q filed
August 14, 1992, Commission File No. 1-10244).
Exhibit 10.14 Deferred Compensation Plan for Directors effective as of January 1, 1991, for
all directors who are not officers or other employees of the Company
(incorporated by reference to Exhibit 10.19 of the Company's Annual Report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on
Form 10-K filed April 1, 1991, Commission File No. 1-10244).
</TABLE>

II-3
<PAGE> 100

<TABLE>
<S> <C>
Exhibit 10.15 Registration Rights Agreement dated September 30, 1991, between the Company
and U.S. Trust Company of California, N.A. (incorporated by reference to
Exhibit 1 to the Company's Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 on Form 10-Q filed November 14, 1991,
Commission File No. 1-10244).
Exhibit 10.16 Amendment No. 1 dated September 30, 1992, to the Registration Rights
Agreement dated September 30, 1991, among the Company and U.S. Trust Company
of California, N.A. (incorporated by reference to Exhibit 10.34 of Amendment
2 to the Company's Registration Statement on Form S-2 filed February 9, 1993,
Commission File No. 33-53476).
Exhibit 10.17 Stock Contribution Agreement dated September 30, 1992, between the Company
and U.S. Trust Company of California, N.A., as investment manager
(incorporated by reference to Exhibit 10.36 of Amendment 2 to the Company's
Registration Statement on Form S-2 filed February 9, 1993, Commission File
No. 33-53476).
Exhibit 10.18 Coke Sale Agreement dated January 1, 1993 and signed July 13, 1993 between
the Company and USX Corporation (incorporated by reference to Exhibit 10.30
to the Company's quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 filed August 13, 1993, Commission File
No. 1-10244).
Exhibit 10.19 Employment Agreement between Craig T. Costello and the Company dated July 20,
1993 (incorporated by reference to Exhibit 10.19 of the Company's annual
report on Form 10-K filed March 30, 1994).
Exhibit 10.20 Employment Agreement between William R. Kiefer and the Company dated July 21,
1993 (incorporated by reference to Exhibit 10.20 of the Company's annual
report on Form 10-K filed March 30, 1994).
Exhibit 10.21 Employment Agreement between Dennis R. Mangino and the Company dated July 26,
1993 (incorporated by reference to Exhibit 10.21 of the Company's annual
report on Form 10-K filed March 30, 1994).
Exhibit 10.22 Employment Agreement between John H. Walker and the Company dated July 21,
1993 (incorporated by reference to Exhibit 10.22 of the Company's annual
report on Form 10-K filed March 30, 1994).
Exhibit 10.23 Employment Agreement between Narendra M. Pathipati and the Company dated
December 16, 1993 (incorporated by reference to Exhibit 10.23 of the
Company's annual report on Form 10-K filed March 30, 1994).
Exhibit 10.24 Employment Agreement between Mac S. White and the Company dated July 28, 1993
(incorporated by reference to Exhibit 10.24 of the Company's annual report on
Form 10-K filed March 30, 1994).
Exhibit 10.25 Amendment dated August 5, 1993 to the Employment Agreement dated July 1, 1990
between Herbert Elish and the Company (incorporated by reference to Exhibit
10.25 of the Company's annual report on Form 10-K filed March 30, 1994).
Exhibit 10.26 Amendment dated July 19, 1993 to the Employment Agreement dated June 8, 1987
between David M. Gould and the Company (incorporated by reference to Exhibit
10.26 of the Company's annual report on Form 10-K filed March 30, 1994).
Exhibit 10.27 Amendment dated July 21, 1993 to the Employment Agreement dated June 8, 1987
between William C. Brenneisen and the Company (incorporated by reference to
Exhibit 10.27 of the Company's annual report on Form 10-K filed March 30,
1994).
</TABLE>

II-4
<PAGE> 101

<TABLE>
<S> <C>
Exhibit 10.28 Amendment dated July 19, 1993 to the Employment Agreement dated April 21,
1987 between Thomas W. Evans and the Company (incorporated by reference to
Exhibit 10.28 of the Company's annual report on Form 10-K filed March 30,
1994).
Exhibit 13.1 1993 Annual Report to Stockholders of Weirton Steel Corporation (incorporated
by reference to Exhibit 13.1 of the Company's annual report on Form 10-K
filed March 30, 1994).
Exhibit 22.1 Subsidiaries of the Company (incorporated by reference to Exhibit 22.1 of the
Company's annual report on Form 10-K filed March 30, 1994).
Exhibit 24.1 Consent of Willkie Farr & Gallagher (included in the opinion filed as Exhibit
5.1).
Exhibit 24.2 Consent of Arthur Andersen & Co., independent public accountants.
Exhibit 25.2 Certified Resolution of the Company's Board of Directors Authorizing Power of
Attorney

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

* Filed herewith.
</TABLE>

ITEM 17. UNDERTAKINGS

Pursuant to Regulation S-K, Item 512, the following undertakings are
furnished:

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(h) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions (see Item 15), or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

(i) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 102

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to its
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Weirton, West Virginia on August 8, 1994.

WEIRTON STEEL CORPORATION

By /s/ HERBERT ELISH
---------------------------------
Chairman of the Board, President,
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment
has been signed by the following persons on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ------------------------------ ---------------
<S> <C> <C>
* Chairman and August 8, 1994
- ------------------------------------------ Chief Executive Officer
Herbert Elish

* Director August 8, 1994
- ------------------------------------------
James B. Bruhn

Director
- ------------------------------------------
Robert J. D'Anniballe, Jr.

Director
- ------------------------------------------
Mark G. Glyptis

* Director August 8, 1994
- ------------------------------------------
Gordon C. Hurlbert

* Director August 8, 1994
- ------------------------------------------
Phillip A. Karber

* Director August 8, 1994
- ------------------------------------------
F. James Rechin

/s/ RICHARD K. RIEDERER Director; Vice President and August 8, 1994
- ------------------------------------------ Chief Financial Officer
Richard K. Riederer (Principal Accounting Officer)

* Director August 8, 1994
- ------------------------------------------
Richard F. Schubert

* Director August 8, 1994
- ------------------------------------------
Harvey L. Sperry

* Director August 8, 1994
- ------------------------------------------
Thomas R. Sturges

* Director August 8, 1994
- ------------------------------------------
David I. J. Wang

*By /s/ RICHARD K. RIEDERER
-------------------------------------
Attorney-in-Fact, pursuant to powers
of attorney filed as part of the
registration statement
</TABLE>

II-6

<PAGE> 1

EXHIBIT 5.1

[LETTERHEAD OF WILLKIE FARR & GALLAGHER]

August 8, 1994

Weirton Steel Corporation
400 Three Springs Drive
Weirton, West Virginia 26062-4989

Re: Weirton Steel Corporation
Registration Statement on Form S-3
Securities Act File No. 33-53797

Dear Sirs:

We have acted as counsel to Weirton Steel Corporation, a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), of a registration statement on Form S-3 (the "Registration
Statement") with respect to the proposed offering of the Company's Common Stock,
$.01 par value (the "Common Stock") by the Company and by the trustee under the
Company's qualified defined benefit pension plan (the "Selling Stockholder").

In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements, documents
and other instruments, and of certificates or comparable documents of public
officials and of officers and representatives of the Company and the Selling
Stockholder and have made such inquiries of such officers and representatives as
we have deemed relevant and necessary as the basis for the opinion hereinafter
set forth. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to authentic originals of documents submitted to us as certified
or reproduced copies.

Based upon the foregoing, we are of the opinion that the shares of Common Stock
being registered pursuant to the Registration Statement have been duly
authorized and will, when sold as provided in the Registration Statement, be
validly issued, fully paid, and non-assessable shares of the Company's Common
Stock.

We hereby consent (i) to being named in the Registration Statement and in the
related Prospectuses under the caption "Legal Matters" as counsel for the
Company as to certain legal matters in connection with the Common Stock offered
thereby and (ii) to the inclusion of this opinion as an exhibit to the
Registration Statement.

We are members of the bar of the State of New York and express no opinion as to
the laws of jurisdictions other than the federal law of the United States and
the General Corporation Law of the State of Delaware.

Very truly yours,

WILLKIE FARR & GALLAGHER

<PAGE> 1

EXHIBIT 24.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated January 24,
1994 included (or incorporated by reference) in Weirton Steel Corporation's Form
10-K for the year ended December 31, 1993 and to all references to our Firm
included in this registration statement.

Arthur Andersen & Co.

Pittsburgh, Pennsylvania

August 8, 1994