TABLE OF CONTENTS

FORM 10-Q
INDEX
PART I — FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 6. EXHIBITS and REPORTS ON FORM 8-K
SIGNATURES

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

FORM 10-Q

(Mark One)

[x]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2002
		or
[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended April 30, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from to

Commission file number: 333-18019

WCI STEEL, INC. ~~(Exact name of registrant as specified in its charter)~~

(Exact name of registrant as specified in its charter)

Ohio		34-1585405
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1040 Pine Ave., S.E., Warren, Ohio		44483-6528
(Address of principal executive offices)		(Zip Code)

(330) 841-8302 (Registrant’s telephone number, including area code)


1040 Pine Ave., S.E., Warren, Ohio		44483-6528

(Address of principal executive offices)		(Zip Code)

(330) 841-8302

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Note: The Registrant files pursuant to an indenture, but is not otherwise subject to Section 13 or 15(d) filing requirements.

[ ] Yes [X] No

As of ~~March~~May 629, 2002, the registrant had 100 shares of its common stock, no no par value, $.01 stated value, outstanding.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

WCI STEEL, INC. AND SUBSIDIARIES

INDEX

PART I FINANCIAL INFORMATION

		Page No.
Item 1.	Financial Statements
	Consolidated Balance Sheets as of January 31, 2002 and October 31, 2001.	3
	Consolidated Statements of Operations for the three months ended January 31, 2002 and 2001.	4
	Consolidated Statements of Cash Flows for the three months ended January 31, 2002 and 2001.	5
	Notes to Consolidated Financial Statements.	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15

Page No.


Item 1.	Financial Statements

	Consolidated Balance Sheets as of April 30, 2002 and October 31, 2001.	3

	Consolidated Statements of Operations for the three and six months ended April 30, 2002 and 2001.	4

	Consolidated Statements of Cash Flows for the six months ended April 30, 2002 and 2001.	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	16	17
Item 6.	Exhibits and Reports on Form 8-K	16	17
	Signatures	17	18

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WCI STEEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amount)

			January 31,			October 31,
			April 30,			October 31,
			2002			2001
			(Unaudited)
ASSETS
Current assets
	Cash and cash equivalents		$	13,~~816~~882		$	32,244
	Accounts receivable, less allowance for doubtful accounts of $3,100			44,972			48,875
	Accounts receivable, less allowance for doubtful accounts of $1,200 and $3,100, respectively			62,818			48,875
	Inventories			9473,~~367~~027			87,075
	Prepaid expenses and other current assets			53,~~371~~617			1,049
		Total current assets		~~146~~143,~~526~~344			169,243
Property, plant and equipment, net				~~192~~190,~~913~~265			193,453
Intangible pension asset, net				3736,~~962~~369			39,556
Other assets, net				43,~~144~~774			4,361
		Total assets	$	~~381~~373,~~545~~752		$	406,613
LIABILITIES and SHAREHOLDER’S EQUITY
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities
	Current portion of long-term debt		$	1,~~359~~080		$	536
	Accounts payable			4236,~~475~~956			45,939
	Accrued liabilities			7585,~~721~~590			77,679
		Total current liabilities		~~119~~123,~~555~~626			124,154
Long-term debt, excluding current portion				~~310~~311,~~447~~882			301,111
Postretirement health care benefits				~~119~~121,~~885~~224			117,719
Pension benefits				2825,~~606~~822			35,000
Other liabilities				10,~~042~~017			10,063
		Total liabilities		~~588~~592,~~535~~571			588,047
Shareholder’s equity (deficit)
Shareholder’s equity (deficit) Preferred stock, par value $1,000 per share, 5,000 shares authorized, none issued				—			—
	Preferred stock, par value $1,000 per share, 5,000 shares authorized, none issued			—			—
	Common stock, no par value, stated value $.01 per share, 40,000,000 shares authorized, 100 shares issued and outstanding			—			—
	Additional paid-in capital			279			279
	Accumulated deficit			(~~207~~219,~~269~~098	)		(181,713	)
		Total shareholder’s equity (deficit)		(~~206~~218,~~990~~819	)		(181,434	)
Commitments and contingencies				—			—
		Total liabilities and shareholder’s equity (deficit)	$	~~381~~373,~~545~~752		$	406,613

See accompanying notes to consolidated financial statements.

WCI STEEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in ~~thousands~~Thousands) (Unaudited)

		Three months ended January 31,
		Three Months Ended,						Six Months Ended,
		2002			2001
		April 30,						April 30,
Net sales		$	89,604		$	98,191
		2002			2001			2002			2001
Operating costs and expenses
Net sales		$	127,678		$	99,268		$	217,282		$	197,459
	Cost of products sold		99,454			102,040
Operating costs and expenses
	Depreciation and amortization		4,711			5,705
	Cost of products sold		124,534			101,026			223,988			203,066
	Selling, general and administrative expenses		3,384			5,821
	Depreciation and amortization		4,686			5,647			9,397			11,352
	Unusual charges		—			—
	Selling, general and administrative expenses		2,043			3,722			5,427			9,543
			107,549			113,566
	Unusual charges		—			3,909			—			3,909
Operating income (loss)			(17,945	)		(15,375	)
			131,263			114,304			238,812			227,870
Other income (expense)
Operating income (loss)			(3,585	)		(15,036	)		(21,530	)		(30,411	)
	Interest expense		(8,051	)		(7,985	)
Other income (expense)
	Interest and other income (expense), net		440			(9,150	)
	Interest expense		(8,266	)		(7,983	)		(16,317	)		(15,968	)
			(7,611	)		(17,135	)
	Interest and other income (expense), net		22			811			462			(8,339	)
Income (loss) before income taxes			(25,556	)		(32,510	)
			(8,244	)		(7,172	)		(15,855	)		(24,307	)
Income tax (benefit) expense			—			—
Income (loss) before income taxes			(11,829	)		(22,208	)		(37,385	)		(54,718	)
Net income (loss)		$	(25,556	)	$	(32,510	)
Income tax (benefit) expense			—			—			—			—
Net income (loss)		$	(11,829	)	$	(22,208	)	$	(37,385	)	$	(54,718	)

See accompanying notes to consolidated financial statements.

WCI STEEL, INC. AND SUBSIDIARIES ~~CONDENSED~~ CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) (Unaudited)

						Three months ended January 31,
					Six months ended April 30,
					2002	~~2002~~			2001	~~2001~~
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)				$	$(37,385	~~(25,556~~)	)	$	$(54,718	~~(32,510~~)	)
	Adjustment to reconcile net income (loss) to net cash provided (used) by operating activities:
		Depreciation and amortization	~~Depreciation and amortization~~			9,397	~~4,711~~			9,868	~~4,966~~
		Amortization of deferred maintenance costs	~~Amortization of deferred maintenance costs~~			—	—			1,484	~~739~~
		Amortization of financing costs	~~Amortization of financing costs~~			689	~~338~~			645	~~323~~
		Postretirement health care benefits	~~Postretirement health care benefits~~			4,105	~~2,166~~			6,626	~~2,948~~
		Pension benefits	~~Pension benefits~~			476	~~1,473~~			3,112	~~2,019~~
		Provision for losses on accounts receivable	~~Provision for losses on accounts receivable~~			247	—			2,300	~~2,050~~
		Asset impairment and other charges	~~Asset impairment and other charges~~			—	—			14,393	~~10,484~~
		Other	~~Other~~			83	33			84	32
	Cash provided (used) by changes in certain assets and liabilities
		Accounts receivable	~~Accounts receivable~~			(14,190	~~3,903~~)			(4,079	~~428~~)
		Inventories	~~Inventories~~			14,048	~~(7,292~~	)		9,129	~~(802~~	)
		Prepaid expenses and other assets	~~Prepaid expenses and other assets~~			(2,731	~~(4,474~~)	)		(3,256	~~(3,152~~)	)
		Accounts payable	~~Accounts payable~~			(8,983	~~(3,464~~)	)		(5,377	~~(3,520~~)	)
		Accrued liabilities	~~Accrued liabilities~~			844	~~(8,231~~	)		1,574	~~(6,784~~	)
		Other liabilities	~~Other liabilities~~			(46	~~(21~~)	)		508	~~580~~
			Net cash provided (used) by operating activities	~~Net cash provided (used) by operating activities~~		(33,446	~~(36,414~~)	)		(17,707	~~(22,199~~)	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Additions to property, plant and equipment					(6,231	~~(4,173~~)	)		(4,112	~~(2,197~~)	)
			Net cash used by investing activities	~~Net cash used by investing activities~~		(6,231	~~(4,173~~)	)		(4,112	~~(2,197~~)	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net change in long-term debt						10,159				(31	)
	Net borrowings under Revolving Credit Facility					11,664				—
				Net cash provided (used) by financing activities			10,159				(31	)
	Other changes in long-term debt					(349	)			(63	)
	Net increase (decrease) in cash and cash equivalents						(30,428	)			(24,427	)
			Net cash provided (used) by financing activities			11,315				(63	)
	Cash and cash equivalents at beginning of year						32,244				89,478
	Net increase (decrease) in cash and cash equivalents					(28,362	)			(21,882	)
	Cash and cash equivalents at end of period					$	1,816			$	65,051
	Cash and cash equivalents at beginning of year					32,244				89,478
	Supplemental disclosure of cash flow information
	Cash and cash equivalents at end of period				$	3,882			$	67,596
		Cash paid for interest				$	15,208			$	15,155
	Supplemental disclosure of cash flow information
		Cash paid for income taxes					—				—
		Cash paid for interest			$	15,640			$	15,324
		Cash paid for income taxes				—				—

See accompanying notes to consolidated financial statements.

WCI STEEL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three and six months ended April 30, 2002 and 2001 (Unaudited)

~~Three~~NOTE ~~months~~1: BASIS ~~ended~~OF ~~January 31, 2002 and 2001~~PRESENTATION ~~( Unaudited )~~

~~NOTE~~ WCI 1Steel, :Inc. ~~BASIS~~(Company OFor ~~PRESENTATION~~WCI) is a wholly-owned subsidiary of Renco Steel Holdings, Inc. (Renco Steel) and an indirect wholly-owned subsidiary of The Renco Group, Inc. (Renco). The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The results of operations for the three and six months ended April 30, 2002 are not necessarily indicative of the results to be expected for the full year.

WCI Steel, Inc. (Company or WCI) is a wholly-owned subsidiary of Renco Steel Holdings, Inc. (Renco Steel) and an indirect wholly-owned subsidiary of The Renco Group, Inc. (Renco). The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The results of operations for the three months ended January 31, 2002 are not necessarily indicative of the results to be expected for the full year.

These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended October 31, 2001.

NOTE 2 : INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method. Market value is determined based on expected selling price of each product. Inventories consist of the following:

	January 31,		October 31,
	April 30,		October 31,
	2002		2001
	(Unaudited)
	(Dollars in Thousands)
Raw materials	$	3318,~~887~~606	$	33,542
Finished and semi-finished product		6054,~~386~~268		53,438
Supplies		94153		95
		94,367		87,075
		73,027		87,075
Less LIFO reserve		—		—
	$	9473,~~367~~027	$	87,075

NOTE 3 : LONG-TERM DEBT

Long-term debt consists of the following:

	January 31,		October 31,
	April 30,		October 31,
	2002		2001
	(Unaudited)
	(Dollars in Thousands)
Senior Secured Notes with interest at 10% payable semi-annually, due 2004	$	300,000	$	300,000
Senior Secured Notes with interest at 10% payable semi- annually, due 2004	$	300,000	$	300,000
Revolving Credit Facility (Revolver) with interest at prime rate plus 1.5% (6.25% at January 31, 2002) payable monthly		10,209		—
Revolving Credit Facility (Revolver) with interest at 5.63% at April 30, 2002 payable monthly		11,664		—
Other		1,~~597~~298		1,647
		311,806		301,647
		312,962		301,647
Less current portion of long-term debt		1,~~359~~080		536
	$	~~310~~311,~~447~~882	$	301,111

The $300 million 10% Senior Secured Notes due 2004 (Senior Secured Notes) are secured by a ~~second~~first priority lien on substantially all of the existing property, plant and equipment of the Company ~~which will become a first priority lien when all of the 10~~.5% ~~Senior Notes due 2002 (Senior Notes) are extinguished ($0.3 million currently outstanding).~~ A Voluntary Employee Beneficiaries Association trust fund, established to hold Company contributions to fund postretirement health care and life insurance obligations for the benefit of hourly employees, ~~also~~ holds a second priority lien on the security for the ~~Senior~~ ~~Secured Notes, which lien will remain a second priority lien even if the lien in favor of the~~ Senior Secured Notes ~~becomes a first priority lien~~.

The Company has a $100,000,000 Revolver secured by inventories and receivables and subject to eligibility requirements, as defined, reduced by any outstanding letters of credit. The Revolver is subject to a monthly service fee of $15,000 and an annual commitment fee of 0.5% of the unused balance up to $60,000,000 payable monthly. There were borrowings of $1011,~~209~~664,000 outstanding under the Revolver as of ~~January~~April 3130, 2002. The Revolver, which expires December 29, 2003, also provides for up to an aggregate amount of $20,000,000 in letters of credit. ~~The~~At April 30, 2002 the Company had borrowing availability of $6468,~~785~~156,000 based on eligible inventory and receivables ~~net~~after of deducting $1011,~~209~~664,000 of borrowings outstanding and $14,~~900~~870,000 in letters of credit outstanding or committed ~~at January 31, 2002~~ and ~~subject~~before toreflecting a $25 ~~million~~,000,000 minimum borrowing availability covenant as discussed below. The Revolver is subject to a penalty of $250,000 if terminated before October 31, 2003.

The Company’s Revolver and Senior Secured Notes contain certain financial and other covenants, including maintenance of specified levels of net worth as defined, working capital, and debt service and limitations on capital expenditures. Additional covenants limit the incurrence of additional indebtedness, payments affecting subsidiaries, transactions with affiliates, sale/leaseback transactions, impairment of security interest, consolidations, mergers and transfer of the Company’s assets. On January 25, 2002 the Company and its lenders under the Revolver agreed to amend the loan agreement to require the Company to maintain a minimum net worth, as defined, of not less than the following for each period indicated: negative $225 million through January 31, 2002, negative $240 million from February 1, 2002 through

April 30, 2002, negative $255 million from May 1, 2002 through July 31, 2002, and negative $260 million on August 1, 2002 and thereafter. In addition, the Company is required to maintain minimum borrowing availability under the Revolver of $25 million. This amendment also changes the interest charged from prime rate to prime rate plus 1.5% ~~which~~or isas ~~currently~~to 6Eurodollar Rate Loans, a rate of 3.255% in excess of the Adjusted Eurodollar Rate applicable for the interest period selected by the Company. The Company is permitted to declare and pay dividends, and make other transactions with affiliates provided no condition of default exists or will exist, and the accumulated amount of such transactions is no greater than fifty percent (50%) of the consolidated net income as defined (less 100% of any consolidated net loss) earned for periods subsequent to October 31, 1996 when taken as a single accounting period less management fees paid to Renco in excess of $1,200,000 annually for the same period. Under these agreements, there were no amounts available for dividends and other transactions with affiliates at ~~January~~April 3130, 2002.

NOTE 4 : ENVIRONMENTAL MATTERS ~~and~~AND OTHER CONTINGENCIES

In common with much of the steel industry, the Company’s facilities are located on sites that have been used for heavy industrial purposes for decades. The Company is and will continue to be subject to numerous federal, state and local environmental laws and regulations governing, among other things, air emissions, waste water discharge and solid and hazardous waste management. The Company has made and intends to continue to make the necessary expenditures for environmental remediation and compliance with environmental laws and regulations. Environmental laws and regulations continue to change and have generally become more stringent, and the Company may be subject to more stringent environmental laws and regulations in the future. Compliance with more stringent environmental laws and regulations could have a material adverse effect on the Company’s financial condition and results of operations.

The Company is subject to a consent decree as a result of a civil ~~action~~ action instituted by the Department of Justice (DOJ), on behalf of the ~~Environmental~~ Environmental Protection Agency (EPA). The consent decree requires the Company to complete certain supplemental environmental projects estimated to cost $1.8 million that will be expended by late 2002. These projects include sediment removal from the Mahoning River at an estimated remaining cost of $0.8 million and the installation of a liner for a surface impoundment estimated to cost approximately $1.02 million. The consent decree also provides for stipulated penalties in the event of noncompliance which the Company does not believe will be material.

As a condition of a previous Resource Conservation and Recovery Act (RCRA) operating permit, the Company is required to undertake a corrective action program with respect to historical material handling practices at the Warren facility. The Company has completed the initial phase of the first investigation step of the corrective action program, the RCRA Facility Investigation (RFI), and has submitted its report to the EPA. The Company and the EPA agreed that additional sampling would be required to complete a full RFI which is expected to be completed by the end of 2003. The RFI workplan identifies thirteen historical solid waste management units to be investigated. The final scope of corrective action required to remediate any contamination that may be present at or emanating from the Warren facility is dependent upon the completion and findings of the RFI and the development and approval of a corrective action program. Accordingly, the Company is unable at this time to estimate the final cost of the corrective action program or the period over which such costs may be incurred and there can be no assurance that any such corrective action program would not have a material adverse effect on the operating results or financial condition of the Company.

On January 23, 1996, two retired employees instituted an action against ~~the~~ the Company and the United Steelworkers of America (USWA) in the United States District Court for the Northern District of ~~Ohio alleging in substance that~~ ~~certain distributions made by the Company to employees and benefit plans~~

Ohio alleging in substance that certain distributions made by the Company to employees and benefit plans violated certain agreements, the Employee Retirement Income Security Act (ERISA), the National Labor Relations Act (NLRA) and common law. On July 31, 1997, the court granted the Company’s motion to dismiss this action and entered judgement in favor of the Company and the USWA. The Plaintiffs filed an appeal regarding the court’s decision to dismiss, which was heard in June 1998. In March 1999, the appellate court upheld the dismissal of the claims under ERISA and common law, but reversed the dismissal of the NLRA claim and remanded to the district court for further proceedings. On October 9, 2000 the court granted the Company’s motion to dismiss this action and entered judgement in favor of the Company and the USWA. The plaintiffs filed an appeal regarding the court’s decision to dismiss which was heard on April 23, 2002. ~~The~~On ~~Federal~~May ~~Appeals~~24, ~~Court~~2002 ~~has~~the ~~scheduled~~appellate ~~oral~~court ~~arguments~~affirmed ~~for~~the ~~April 23,~~decision ~~2002~~to dismiss this action.

In addition to the above-described matters, the Company is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its business. A liability has been established for an amount, which the Company believes is adequate, based on information currently available, to cover the costs to resolve the above described matters, including remediation, if any, except for any costs of corrective action that may result from the RFI for which no estimate can currently be made. The outcome of the above described matters could have a material adverse effect on the future operating results of the Company in a particular quarter or annual period; however, the Company believes that the effect of such matters will not have a material adverse effect on the Company’s consolidated financial position.

NOTE 5: OTHER MATTERS

~~WCI~~Based ~~has~~on ~~experienced~~WCI’s acurrent ~~significant increase in its~~ order intake rate and backlog, ~~beginning in December 2001 which has resulted from~~ the ~~expectation of~~Company ~~lower~~expects ~~imports~~shipping ~~due~~volume to ~~the~~be ~~pending~~approximately ~~Section 201 investigation~~335,000 ~~the~~tons ~~recent~~in ~~closure~~ each of athe ~~competitor,~~third quarter ~~a conclusion to inventory reductions by customers~~ and ~~the beginning~~fourth quarter of ~~an economic recovery~~2002. WCI’s order backlog was approximately ~~250~~ 352,000 tons at ~~January~~April 3130, 2002 compared to ~~135~~158,000 ~~tons~~ at ~~October~~April 3130, 2001. ~~With the increasing order entry rate~~ and ~~backlog~~250, the Company and most other flat rolled steel producers announced price increases effective during the second calendar quarter 2002 totaling $50 per ton on hot-rolled, $30 per ton on cold-rolled, and $20 per ton on galvanized products. Due to these factors, the Company expects shipping volume in the second quarter 2002 to be approximately 315,000 ~~tons and~~ ~~the~~at ~~third quarter 2002 to be approximately 330~~January 31,~~000~~ ~~tons~~2002. ~~WCI~~We ~~expects~~expect net sales per ton shipped to be flat in the second quarter compared to the first quarter with net selling prices rising and being offset by lower revenue from steam sales to the LTV coke plant adjacent to WCI’s facility. Net sales per ton shipped are expected to increase by approximately ~~$25~~10% induring the third quarter compared to the second quarter. ~~In addition,~~ WCI expects cost of products sold per ton shipped to ~~decline~~increase approximately 72% in the ~~second~~third quarter compared to the ~~first~~ second quarter as(excluding ~~capacity~~the ~~utilization~~favorable adjustment ~~increases~~to ~~and~~ inventory valuation reserves ~~are reduced.~~recorded ~~Despite~~in ~~these~~the ~~improvements,~~second ~~WCI expects to incur a significant net loss~~quarter ~~during~~totaling ~~fiscal 2002 for which WCI believes it has adequate availability of cash resources to maintain operations through at least fiscal 2002~~$4.7 million) ~~However,~~due ifprimarily ~~the volume or price increases expected~~ to bechanges ~~realized~~in ~~during~~product ~~the~~mix ~~second~~with ~~and third~~capacity ~~quarters~~utilization ofat ~~fiscal~~90% ~~2002 are not realized~~ or ~~sustained~~greater. ~~for~~Based ~~the~~on ~~balance~~these ~~of fiscal 2002~~expectations, itthe isCompany ~~likely that WCI will not have adequate availability under its~~believes ~~existing financing arrangements and will require additional sources of financing. WCI cannot assure~~ that it has ~~the~~adequate ~~ability~~availability ~~to obtain such additional financing, or what the terms~~ of ~~any~~cash ~~additional~~resources ~~financing might be. Failure~~ to ~~obtain~~ ~~additional~~maintain ~~financing in these circumstances would likely have a material~~operations ~~adverse~~through ~~effect~~at onleast ~~WCI’s operations. For periods beyond~~ fiscal 2002~~, further price improvements will be necessary for the Company to have sufficient cash resources to maintain its operations~~.

Significant uncertainty remains regarding the short-term as well as long-term condition of the steel market. Recent improvements in order intake rates and pricing could be reversed by a number of factors including increasing domestic supply through the restart of closed facilities, increases in steel imports due to rising domestic steel prices or the granting of exemptions to tariffs imposed as a result of the Section 201 investigation or the failure of an economic recovery to materialize or be sustained. If the volume or net sales prices expected to be realized by WCI during the third and fourth quarters are not realized or sustained due to these or other factors, WCI may not have adequate availability under its existing financing arrangements to sustain its operations and may require additional sources of financing. WCI cannot assure that it has the ability to obtain such additional financing or what the terms of such additional financing might be. Failure to obtain such additional financing in these circumstances would likely have a material adverse effect on WCI’s operations.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~RESULTS~~Results OFof ~~OPERATIONS~~Operations

Three months ended ~~January~~April 3130, 2002 compared to ~~the~~ three months ended ~~January 31~~April 30, 2001

Net sales for the three months ended ~~January~~April 3130, 2002 were $89127.67 million on ~~244~~on 355,~~818~~735 tons shipped, representing ana 828.76% ~~decrease~~increase in net sales and a 347.35% increase in tons shipped compared to the three months ended ~~January~~April 3130, 2001. When ~~Shipping~~the ~~volume~~second ~~for~~fiscal quarter of 2002 is compared to the ~~three~~prior ~~months~~quarter ended January 31, 2002, ~~was~~net ~~slightly~~sales ~~higher~~and shipping volume also showed significant increases of ~~than~~42.5% and 45.3%, respectively. However, net sales per ton shipped of $359 for the ~~comparable~~three ~~period~~months inended ~~2001~~April 30, ~~but~~2002 was 1312.9% lower ~~when~~than ~~compared~~the tonet ~~the~~sales per ton shipped of $412 for the comparable prior ~~quarter~~year period ended ~~October~~April 3130, 2001, aswith net ~~the~~selling ~~steel~~prices ~~market~~down ~~continued~~4.2% toin ~~suffer from~~addition ~~the~~to ~~effects~~a ofless afavorable ~~weak~~product ~~economy~~mix. Net sales per ton ~~shipped~~ decreased 11a more modest 1.69% ~~to $366~~ for the ~~three~~second ~~months~~fiscal ~~ended~~quarter ~~January 31,~~of 2002 compared to ~~$414~~the ~~for~~first ~~the~~fiscal ~~three months~~quarter ~~ended~~of ~~January 31~~2002, ~~2001,~~ with net selling prices ~~down 8~~increasing 1.5% for the second fiscal quarter. A less favorable product mix and reduced steam sales to a coke plant adjacent to WCI’s facility however offset the impact of these selling price increases. Shipments of custom carbon, alloy and electrical steels accounted for 4647.47% of total shipments for the three months ended ~~January~~April 3130, 2002 compared to 5256.38% the three months ended ~~January~~April 3130, 2001. The improvements in shipping volume and increased net selling prices in the second quarter compared to the first quarter resulted from a variety of factors including a decrease in domestic supply due to the closing of facilities during the last several years, the implementation of tariffs under a favorable Section 201 decision on certain imported steel in April 2002, a conclusion to inventory reductions by customers and a slight improvement in overall economic activity.

The table below shows the Company’s product mix for the three months ended ~~January~~April 3130, 2002 and ~~January~~April 3130, 2001.

		Net Tons Shipped				Percent of Total
		Three Months Ended				Three Months Ended
		January 31,				January 31,
		April 30,				April 30,
		2002		2001		2002			2001
CUSTOM PRODUCTS:
	Hot Rolled		69109,~~744~~797		76,~~963~~847		2830.59	%		3231.59	%
	Cold Rolled		6,~~061~~598		4,~~049~~325		21.59	%		1.78	%
	Coated products		3753,~~670~~040		4255,~~883~~610		1514.49	%		1823.1	%
Total Custom Products			113,475		123,895		46.4	%		52.3	%
TOTAL CUSTOM PRODUCTS			169,435		136,782		47.7	%		56.8	%
Total Commodity Products			~~131~~186,~~343~~300		~~113~~104,~~128~~349		5352.63	%		4743.72	%
Total Steel Products			~~244~~355,~~818~~735		~~237~~241,~~023~~131		100.0	%		100.0	%

The following table sets forth the percentage of WCI’s net tons shipped to various markets for the three months ended January 31, 2002 and January 31, 2001.

		Three Months Ended
		January 31,
Customer Category		2002			2001
	Conversion / further processing		57.8	%		52.1	%
	Steel service centers		14.3	%		22.2	%
	Construction		12.2	%		11.4	%
	Electrical equipment		4.6	%		4.9	%
	Direct automotive		5.2	%		5.1	%
	Other		5.9	%		4.3	%
Total			100.0	%		100.0	%

The following table sets forth the percentage of WCI’s net tons shipped to various markets for the three months ended April 30, 2002 and April 30, 2001.

Gross margin (loss) (sales less cost of products sold) was ($9.9) million for the three months ended January 31, 2002 compared to gross margin (loss) of ($3.8) million for the three months ended January 31, 2001. The decrease in gross margin reflects the lower transaction prices discussed above partially offset by lower production costs resulting from a higher production volume and its effect on fixed operating costs per ton. Production volume for the three months ended January 31, 2002 was approximately 77% of operating capacity compared to approximately 63% for the three months ended January 31, 2001.


		Three Months Ended
		April 30,
Customer Category		2002			2001

	Conversion/further processing		61.7	%		47.0	%
	Steel service centers		16.4	%		20.9	%
	Construction		11.9	%		16.2	%
	Electrical equipment		2.1	%		5.5	%
	Direct automotive		3.8	%		5.1	%
	Other		4.1	%		5.3	%

Total			100.0	%		100.0	%

~~Operating~~Gross ~~income~~ margin (~~loss) was~~sales ~~($17.9)~~less ~~million,~~cost orof ~~($73~~products sold) ~~per~~was ~~ton,~~$3.1 million for the three months ended ~~January~~April 3130, 2002 compared to ~~operating~~gross ~~income~~margin (loss) of ($151.48) million, ~~or ($65) per ton,~~ for the three months ended ~~January~~April 3130, 2001. The increase in ~~operating~~gross ~~loss~~ margin reflects the increased shipping volume and lower ~~gross~~production ~~margin~~costs ~~discussed~~resulting ~~above~~from ~~offset~~a ~~somewhat~~higher byproduction ~~lower~~volume ~~depreciation~~and ~~expense~~its ~~and~~effect ~~bad~~on ~~debt~~fixed ~~expense.~~operating ~~The~~costs per ton along ~~operating~~with ~~loss~~favorable ~~for~~adjustments ~~the~~to ~~2001~~lower ~~period~~of ~~included~~cost aor ~~charge~~market inventory valuation reserves of $24.17 million toduring the second fiscal quarter based on lower ~~establish~~production acosts ~~reserve~~per ~~for~~ton ~~amounts~~and ~~due~~improved ~~from~~selling aprices, ~~financially~~partially ~~distressed~~offset ~~steel~~by ~~company.~~lower transaction prices. Excluding ~~this~~the ~~charge~~favorable inventory adjustments for the 2002 period, the ~~operating~~gross ~~loss~~margin (loss) was ($131.36) million. Production volume for the three months ended April 30, or2002 ~~($56)~~was ~~per~~approximately ~~ton~~90% of operating capacity compared to approximately 73% for the three months ended ~~January~~April 3130, 2001.

~~Interest~~Operating ~~and other~~ income (~~expense~~loss)~~, net~~ was ($03.4 6) million, or ($10) per ton, for the ~~three~~ three months ended ~~January~~April 3130, 2002 compared to operating income (loss) of ($915.20) million, or ($62) per ton, for the three months ended ~~January~~April 3130, 2001. InThe decrease in operating loss reflects the ~~2001~~improved ~~period~~gross ~~WCI~~margin ~~recorded~~discussed aabove, in ~~charge~~addition ofto a $101.5 6 million togain ~~write~~realized ~~down~~from the ~~carrying~~resolution ~~value~~ of ~~Acme~~contract issues ~~Metals,~~relating ~~Inc.~~to ~~10.875%~~the ~~Senior Unsecured~~sale ~~Notes~~of a third party owned bycoke ~~WCI.~~plant ~~Interest~~adjacent ~~income~~to ~~was~~WCI’s facility ~~$46,000~~and ~~for~~lower ~~the~~depreciation ~~three~~expense. ~~months ended~~The ~~January 31,~~operating ~~2002~~loss ~~compared~~for tothe ~~interest~~2001 ~~income~~period included a charge of $13.29 million ~~for~~associated with the ~~three~~Company’s wholly-owned ~~months~~subsidiary, ~~ended~~Youngstown ~~January~~Sinter Company, announced indefinite idling of its operating facility by July 3115, 2001. ~~The~~Excluding ~~decrease~~the gain and adjustments to inventory valuation reserves for the 2002 period and the impairment charge in the ~~interest~~2001 ~~income~~period, the operating loss was ~~due~~($9.8) ~~primarily to~~million, ~~lower~~or ~~cash~~($28) ~~balances~~per ton for the three months ended ~~January~~April 3130, 2002 compared to an operating loss of ($11.1) million, or ($46) per ton for the three months ended ~~January~~April 3130, 2001.

AsInterest aand ~~result~~other ofincome ~~the~~(expense), ~~items~~net ~~discussed~~was ~~above~~$22,000 for the ~~Company~~three ~~had~~months ended aApril 30, ~~loss~~2002 ~~before taxes~~compared ofto $250.68 million for the three months ended ~~January 31~~April 30, ~~2002~~2001. ~~compared~~This decrease was due primarily to a decrease in interest income ~~loss~~resulting ~~before~~from ~~taxes~~lower ofcash ~~$32.5 million~~balances for the three months ended ~~January~~April 3130, 2002 compared to the three months ended April 30, 2001.

As a result of the items discussed above, the Company had a loss before taxes of $11.8 million for the three months ended April 30, 2002 compared to a loss before taxes of $22.2 million for the three months ended April 30, 2001.

Effective November 1, 1998, the Company was designated as a qualified subchapter S subsidiary by Renco. Accordingly, the Company is generally not subject to income taxes.

Liquidity and Capital Resources

WCI’s liquidity requirements result from capital investments, working capital requirements, postretirement health care and pension funding, interest expense and, to a lesser extent, principal payments on its indebtedness. The Company’s primary sources of liquidity as of January 31, 2002 consisted of cash and cash equivalents of $1.8 million and available borrowing under its $100 million revolving credit agreement (Revolver).

~~The~~Six ~~Revolver~~months ~~has~~ended ~~a maximum borrowing limit of $100~~April ~~million~~30, is2002 ~~secured~~compared ~~by inventories and receivables and subject~~ to ~~eligibility~~six ~~requirements,~~months asended ~~defined therein, and expires on December~~April 2930, ~~2003~~2001. ~~As of January 31, 2002, the Company~~ ~~had borrowing availability of $65.5 million based on eligible inventories and~~ ~~receivables net of $10.2 million borrowings outstanding and $14.9 million in~~ ~~letters of credit outstanding or committed and subject to a $25 million minimum borrowing availability covenant.~~

Net sales for the six months ended April 30, 2002 were $217.3 million on 600,553 tons shipped, representing a 10.0% increase in net sales and a 25.6% increase in tons shipped compared to the six months ended April 30, 2001. Shipping volume for the 2002 period increased, predominantly in the second fiscal quarter, as a result of a variety of favorable factors that included a decrease in domestic supply due to the closing of facilities during the past several years, the implementation of tariffs under a favorable Section 201 decision on certain imported steel in April 2002, a conclusion to inventory reductions by customers and a slight improvement in overall economic activity. Net sales per ton shipped decreased 12.3% to $362 in the 2002 period compared to $413 for the 2001 period, with net selling prices down 6.2% coupled with a less favorable product mix. Shipments of custom carbon, alloy and electrical steels accounted for 47.1% of total shipments for the six months ended April 30, 2002 compared to 54.6% for the six months ended April 30, 2001.

The table below shows the Company’s product mix for the six months ended April 30, 2002 and April 30, 2001.


		Net Tons Shipped				Percent of Total

		Six Months Ended				Six Months Ended
		April 30,				April 30,
		2002		2001		2002			2001

CUSTOM PRODUCTS:
	Hot Rolled		179,541		153,810		29.9	%		32.2	%
	Cold Rolled		12,659		8,374		2.1	%		1.8	%
	Coated products		90,710		98,493		15.1	%		20.6	%

TOTAL CUSTOM PRODUCTS			282,910		260,677		47.1	%		54.6	%
Total Commodity Products			317,643		217,477		52.9	%		45.4	%

Total Steel Products			600,553		478,154		100.0	%		100.0	%

The following table sets forth the percentage of WCI’s net tons shipped to various markets for the six months ended April 30, 2002 and April 30, 2001.


		Six Months Ended
		April 30,
Customer Category		2002			2001

	Conversion / further processing		60.1	%		49.5	%
	Steel service centers		15.5	%		21.6	%
	Construction		12.0	%		13.8	%
	Electrical equipment		3.1	%		5.2	%
	Direct automotive		4.4	%		5.1	%
	Other		4.9	%		4.8	%

Total			100.0	%		100.0	%

Gross margin (loss) (sales less cost of products sold) was ($6.7) million for the six months ended April 30, 2002 compared to gross margin (loss) of ($5.6) million for the six months ended April 30, 2001. The increase in gross margin (loss) reflects the lower transaction prices and less favorable product mix discussed

above partially offset by lower per ton production costs resulting from significantly higher volume and its effect on fixed operating costs per ton and higher shipping volume. The loss in the 2002 period included and was partially offset by favorable adjustments to inventory valuation reserves of $3.5 million. Excluding these favorable adjustments the gross margin (loss) was ($10.3) million for the 2002 period. Production volume during the six months ended April 30, 2002 was approximately 83% of operating capacity compared to approximately 67% in the 2001 period.

Operating income (loss) was ($21.5) million, or ($36) per ton, for the six months ended April 30, 2002 compared to operating income (loss) of ($30.4) million, or ($64) per ton, for the six months ended April 30, 2001. The decrease in operating loss reflects lower depreciation expense and the decrease in gross margin discussed above and also included significant non-recurring items for both periods. The operating loss for the 2002 period included a $1.6 million gain realized from the resolution of contract issues relating to the sale of a third party owned coke plant adjacent to WCI’s facility. The operating loss for the 2001 period included a charge of $3.9 million associated with the Company’s wholly-owned subsidiary, Youngstown Sinter Company, announced indefinite idling of its operating facility by July 15, 2001 and a charge of $2.1 million to establish a reserve for amounts due from a financially distressed steel company. Excluding the gain and adjustments to inventory valuation reserves for the 2002 period and the non-recurring charges in the 2001 period, the operating loss was ($26.7) million, or ($44) per ton for the six months ended April 30, 2002 compared to an operating loss of ($24.4) million, or ($51) per ton for the six months ended April 30, 2001.

Interest income and other income (expense), net was $0.5 million for the six months ended April 30, 2002 compared to ($8.3) million for the six months ended April 30, 2001. In the 2001 period, WCI recorded a charge of $10.5 million to write down the carrying value of Acme Metals 10.875% Senior Unsecured Notes owned by WCI.

As a result of the items discussed above, the Company had a loss before taxes of $37.4 million for the six months ended April 30, 2002 compared to a loss before taxes of $54.7 million for the six months ended April 30, 2001.

Effective November 1, 1998, the Company was designated as a qualified subchapter S subsidiary by Renco. Accordingly, the Company is generally not subject to income taxes.

Liquidity and Capital Resources

WCI’s liquidity requirements result from capital investments, working capital requirements, postretirement health care and pension funding, interest expense and, to a lesser extent, principal payments on its indebtedness. The Company’s primary sources of liquidity as of April 30, 2002 consisted of cash and cash equivalents of $3.9 million and available borrowing under its $100 million revolving credit agreement (Revolver).

The Revolver has a maximum borrowing limit of $100 million, is secured by inventories and receivables and subject to eligibility requirements, as defined therein, and expires on December 29, 2003. As of April 30, 2002, the Company had borrowing availability of $68.2 million based on eligible inventories and receivables after deducting $11.7 million of borrowings outstanding and $14.9 million in letters of credit outstanding or committed and before reflecting a $25 million minimum borrowing availability covenant.

Cash from Operations

Cash provided (used) by operating activities was ($3633.4) million for ~~the~~ ~~three~~the six months ended ~~January~~April 3130, 2002 compared to ($2217.27) million for the ~~three~~six months ended ~~January~~April 3130, 2001. The decreased operating cash flow ~~for the 2002~~ ~~period compared to the 2001 period resulted primarily from a decrease in income~~ ~~before taxes (after adjusting the 2001 period loss to exclude non-recurring, non-cash charges) and changes in working capital.~~

for the 2002 period compared to the 2001 period resulted primarily from changes in working capital primarily due to an increase in accounts receivable resulting from increased revenue and by an increase in pension funding.

Capital Expenditures

Capital expenditures were $46.2 million and $24.21 million for the ~~three~~six months ended ~~January~~April 3130, 2002 and ~~January~~April 3130, 2001, respectively. Capital expenditures are expected to be approximately $910 million for all of fiscal 2002. At ~~January~~April 3130, 2002, the Company had commitments for capital expenditures of approximately $1.8 million. The Company expects to complete a reline of its blast furnace within the next two years at an estimated cost of up to $30 million.

Debt Covenants

The Revolver and the indenture governing WCI’s 10% Senior Secured Notes due 2004 contain numerous covenants and prohibitions that limit the financial activities of the Company, including requirements that the Company satisfy certain financial ratios and limitations on the incurrence of additional indebtedness. On January 25, 2002 the Company and its lenders under the Revolver agreed to amend the loan agreement to require the Company to maintain a minimum net worth, as defined, of not less than the following for each period indicated: negative $225 million through January 31, 2002, negative $240 million from February 1, 2002 through April 30, 2002, negative $255 million from May 1, 2002 through July 31, 2002, and negative $260 million on August 1, 2002 and thereafter. In addition, the Company is required to maintain minimum availability under the Revolver of $25 million. The ability of the Company to meet its debt service requirements and to comply with such covenants will be dependent upon future operating performance and financial results of the Company, which will be subject to financial, economic, political, competitive and other factors affecting the Company, many of which are beyond its control.

Dividends

The Company paid no dividends and was not permitted to do so under the Senior Secured Notes indenture during the ~~three~~six months ended ~~January~~April 3130, 2002. ~~The~~ The Company does not expect to be permitted to pay dividends for the foreseeable future based on limitations under the Senior Secured Notes indenture.

Defined Benefit Pension Plan

The Company has a defined benefit pension plan (DBP) which covers substantially all bargained for employees. The Company expects to contribute approximately $29.6 million, (including $17.8 million during the third quarter), $26.3 million and $21.1 million to the DBP during fiscal years 2002, 2003 and 2004, respectively, which is expected to satisfy the minimum ~~funding~~ funding requirements of ERISA for those periods. This funding reflects the results of the actuarial valuation completed as of November 1, 2001. Due primarily to the reduction in the offset from the frozen defined contribution plan resulting from adverse investment experience and from changes in the status of plan participants different from assumptions, the Company’s projected benefit obligation increased from $98.7 million as reported in the Company’s 10-K as of October 31, 2001 to $114.9 million. The Company contributed $6.8 million, $7.2 million, $4.2 million and $6.7 million to the DBP during the six months ended April 30, 2002 and fiscal years ended October 31, 2001, 2000 and 1999, respectively.

assumptions the Company’s projected benefit obligation increased from $98.7 million as reported in the Company’s 10-K as of October 31, 2001 to $114.9 million and caused an increase in the minimum funding. The Company contributed $7.2 million, $4.2 million and $6.7 million to the DBP during the fiscal years ended October 31, 2001, 2000 and 1999, respectively.

Accounting Standards

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 142, Goodwill and Other Intangible Assets. Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the ~~provisions of Statement 142. The Company adopted Statement 142~~ ~~effective November 1, 2001. The adoption of Statement 142 did not have a~~ ~~material effect on either financial position or results of operation.~~

provisions of Statement 142. The Company adopted Statement 142 effective November 1, 2001. The adoption of Statement 142 did not have a material effect on either financial position or results of operation.

In August 2001, the FASB issued Statement No. 143, Accounting for Asset Retirement Obligations. Statement 143 applies to legal obligations associated with the retirement of certain long-lived assets. It requires companies to record the fair value of the liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the company capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. Statement 143 is required to be adopted in fiscal years beginning after June 15, 2002. WCI has not yet determined the effect, if any, that adopting Statement 143 will have on future earnings and financial position.

In August 2001, the FASB issued Statement No. 144, Accounting for Impairment or Disposal of Long-Lived Assets. This statement establishes a single accounting model for long-lived assets to be disposed of by sale and provides additional implementation guidance for assets to be held and used and assets to be disposed of other than by sale. WCI adopted the Statement effective November 1, 2001. There was no financial implication related to the adoption of Statement No. 144, and the guidance will be applied on a prospective basis.

Outlook

During the last four years steel imports into the U.S. have adversely affected shipping volume and ~~has~~have contributed significantly to ~~the depressed~~ pricing ~~environment in the current market~~ volatility. During this period, WCI and the steel industry have filed various trade cases against hot-rolled and cold-rolled carbon steel flat products from various countries ~~(certain of which are pending before the ITC)~~ in response to this increase in imports. While various duties have been imposed on these products from certain countries, to date these duties have been ineffective in reducing overall steel imports to the U.S.

AsIn aresponse ~~result~~to ofthe surging imports, in June 2001 the ~~distortion~~U.S. Trade Representative, at the direction of ~~steel~~President ~~supply~~Bush, ~~created~~requested an investigation by the ~~surge~~International Trade Commission under Section 201 of ~~imports~~ the Trade Act of ~~flat~~1974 to ~~rolled~~determine whether steel ~~products~~is ~~and~~being imported into the ~~lower~~U.S. ~~demand~~in ~~for~~such ~~steel~~quantities ~~products~~as ~~during~~to ~~2001~~be ~~due~~a substantial cause of serious injury to the ~~slumping~~U.S. ~~economy,~~steel ~~competition~~industry. ~~has~~This request ~~intensified~~included in the ~~Company’s~~ ~~high~~investigation of carbon and alloy ~~product~~flat ~~markets,~~rolled ~~particularly~~products among ~~from~~other ~~minimills~~products. ~~This~~ ~~increased~~On ~~competition~~October 22, ~~has~~2001 ~~influenced~~ the ~~pricing~~ITC ~~structure~~determined ofthat ~~these~~the requisite ~~products~~injury had been demonstrated related to carbon and ~~has~~alloy ~~reduced~~slabs, ~~the~~hot-rolled, cold-rolled ~~premium~~and ~~WCI~~coated isproducts. ~~currently~~These ~~able~~determinations pertain to ~~receive~~imports ~~on these~~from ~~products~~all ~~compared~~countries except Canada. On December 19, 2001 the ITC forwarded its remedy recommendations to ~~commodity~~President ~~products~~Bush.

InOn ~~response~~March 5, to2002 ~~the~~President ~~surging~~Bush ~~imports,~~issued inhis ~~June~~remedy ~~2001~~regarding the USection 201 investigation.S. ~~Trade~~This remedy includes a tariff rate quota on carbon and alloy ~~Representative,~~slabs atof ~~the~~30% ~~direction~~in excess of ~~President~~5.4 million ~~Bush,~~tons ~~requested~~per anyear ~~investigation~~adjusting over a three year byperiod ~~the~~to ~~International~~18% ~~Trade~~on ~~Commission~~imports ~~under~~in ~~Section 201~~excess of ~~the~~6.4 million ~~Trade~~tons ~~Act~~and ofa ~~1974~~30% tariff on tohot-rolled, ~~determine~~cold-rolled ~~whether~~and ~~steel~~coated issheet ~~being~~and ~~imported~~strip ~~into~~declining ~~the~~over Ua three year period to 18%.S. inThese ~~such~~remedies ~~quantities~~pertain as to beimports afrom all countries except Canada, Mexico, Jordan, Israel and certain developing countries. A significant number of exemption requests have been filed by various countries regarding the tariffs imposed which the Bush administration is considering.

13 For the longer term, the shipping levels and realized selling prices of WCI products will be influenced by the levels of imported steel, the strength of the manufacturing sector of the domestic economy and production capacity changes by domestic competitors. Domestic flat rolled steel production capacity has been reduced by the closing of seven producers during the past several years with total hot strip mill capacity of 16.7 million

~~substantial~~tons. ~~cause~~This ofhas ~~serious~~contributed ~~injury~~ to the ~~U.S.~~recent ~~steel~~increases ~~industry.~~in ~~This~~product ~~request included~~pricing ~~the investigation of carbon~~ and ~~alloy flat rolled products among other~~order ~~products~~intake. OnA ~~October 22,~~portion ~~2001~~of ~~the~~this ~~ITC~~capacity ~~determined~~is ~~that~~expected ~~the~~to ~~requisite~~be ~~injury~~restarted ~~had~~at potentially ~~been~~significantly ~~demonstrated~~lower ~~related~~production tocosts ~~carbon~~during ~~and~~the ~~alloy~~next ~~slabs,~~six ~~hot-rolled,~~months ~~cold-rolled~~ and ~~coated~~ ~~products.~~as ~~These~~a ~~determinations pertain to imports from all countries~~result ~~except~~the ~~Canada.~~impact Onof ~~December 19,~~this ~~2001~~closed ~~the~~capacity ~~ITC~~may ~~forwarded~~be ~~its~~reversed ~~remedy~~in ~~recommendations to President Bush~~part.

OnBased ~~March 5,~~on ~~2002~~WCI’s ~~President~~current ~~Bush~~order ~~issued~~intake ~~his~~rate ~~remedy~~and ~~regarding~~backlog, the ~~Section 201~~Company ~~investigation.~~expects ~~This~~shipping ~~remedy~~volume ~~includes~~to abe ~~tariff~~approximately ~~rate~~335,000 ~~quota~~tons onin ~~carbon~~each ~~and~~of ~~alloy~~the third ~~slabs~~quarter ofand ~~30%~~fourth inquarter ~~excess~~ of 52002.~~4 million~~ ~~tons~~WCI’s ~~per~~order ~~year~~backlog ~~adjusting~~was ~~over~~approximately 352,000 atons ~~three~~at ~~year period~~April 30, 2002 compared to ~~18%~~158,000 onat ~~imports~~April 30, in2001 ~~excess~~and of250,000 at ~~6.4~~January ~~million~~31, ~~tons~~2002. ~~and~~We aexpect ~~30%~~net ~~tariff~~sales onper ton shipped to increase ~~hot-rolled,~~approximately ~~cold-rolled~~10% ~~and~~during ~~coated~~the ~~sheet~~third ~~and~~quarter ~~strip~~compared ~~declining~~to ~~over~~the asecond ~~three~~quarter. ~~year~~WCI ~~period~~expects cost of products sold per ton shipped to 18increase approximately 2%. ~~These~~in the ~~remedies~~third ~~pertain~~quarter compared to ~~imports~~the ~~from~~second ~~all~~quarter ~~countries~~(excluding ~~except~~the favorable ~~Canada,~~adjustment ~~Mexico,~~to ~~Jordan,~~inventory ~~Israel~~valuation ~~and~~reserves ~~certain~~recorded ~~developing~~in ~~countries~~the ~~and~~second isquarter) ~~expected~~due primarily to bechanges ~~effective~~in onproduct mix with capacity utilization remaining at 90% or ~~about~~greater. ~~March 20~~Based on these expectations, the Company believes that it has adequate availability of cash resources to maintain operations through at least fiscal 2002.

~~For~~Significant uncertainty remains regarding the ~~longer~~short-term as well as long-term, ~~the~~condition ~~shipping~~of ~~levels~~the ~~and~~steel ~~realized~~market. ~~selling~~Recent ~~prices~~improvements ofin ~~WCI~~order intake ~~products~~rates ~~will~~and pricing could be ~~influenced~~reversed by a number of factors including increasing domestic supply through the ~~levels~~restart of ~~imported~~closed ~~steel~~facilities, increases in steel imports due to rising domestic steel prices or the ~~strength~~granting of ~~the~~exemptions to ~~manufacturing~~tariffs ~~sector~~imposed as a result of the ~~domestic~~Section 201 ~~economy~~investigation ~~and~~or ~~production~~the ~~capacity~~failure ~~changes by~~of ~~domestic~~an ~~competitors.~~economic ~~Domestic~~recovery ~~flat~~to ~~rolled~~materialize ~~steel~~or ~~production~~be ~~capacity~~sustained. ~~has~~If ~~been~~the volume or net sales ~~reduced~~prices byexpected ~~the~~to ~~closing~~be ofrealized ~~seven~~by ~~producers~~WCI during the ~~past~~third ~~two~~and ~~years~~fourth ~~with~~quarters ~~total~~are ~~hot~~not ~~strip~~realized ~~mill~~or ~~capacity~~sustained ofdue ~~16.7 million~~to ~~tons.~~these ~~This~~or ~~has~~other ~~contributed~~factors, toWCI ~~the~~may ~~recent~~not have ~~increase~~adequate inavailability ~~order~~under ~~intake~~its ~~discussed~~existing ~~below.~~financing ~~The~~arrangements ~~impact~~to sustain its operations and may require additional sources of ~~this~~financing. ~~closed~~WCI ~~capacity~~cannot ~~may~~assure bethat ~~reversed~~it ifhas the ~~facilities~~ability ~~are~~to ~~restarted~~obtain assuch ~~has~~additional ~~frequently~~financing ~~happened~~or ~~with~~what the terms of ~~idled~~such ~~steel~~additional ~~capacity~~financing might be. Failure to obtain such additional financing in ~~the~~these ~~past~~circumstances would likely have a material adverse effect on WCI’s operations.

WCI has experienced a significant increase in its order intake rate and backlog beginning in December 2001 which has resulted from the expectation of lower imports due to the pending Section 201 investigation, the recent closure of a competitor, a conclusion to inventory reductions by customers and the beginning of an economic recovery. WCI’s order backlog was approximately 250,000 tons at January 31, 2002 compared to 135,000 tons at October 31, 2001. With the increasing order entry rate and backlog, the Company and most other flat rolled steel producers announced price increases effective during the second calendar quarter 2002 totaling $50 per ton on hot-rolled, $30 per ton on cold-rolled, and $20 per ton on galvanized products. Due to these factors, the Company expects shipping volume in the second quarter 2002 to be approximately 315,000 tons and the third quarter 2002 to be approximately 330,000 tons. WCI expects net sales per ton shipped to be flat in the second quarter compared to the first quarter with net selling prices rising and being offset by lower revenue from steam sales to the LTV coke plant adjacent to WCI’s facility. Net sales per ton shipped are expected to increase by approximately $25 in the third quarter compared to the second quarter. In addition, WCI expects cost of products sold per ton to decline approximately 7% in the second quarter compared to the first quarter as capacity utilization increases and inventory valuation reserves are reduced. Despite these improvements, WCI expects to incur a significant net loss during fiscal 2002 for which WCI believes it has adequate availability of cash resources to maintain operations through at least fiscal 2002. However, if the volume or price increases expected to be realized during the second and third quarters of fiscal 2002 are not realized or sustained for the balance of fiscal 2002, it is likely that WCI will not have adequate availability under its existing financing arrangements and will require additional sources of financing. WCI cannot assure that it has the ability to obtain such additional financing, or what the terms of any additional financing might be. Failure to obtain additional financing in these circumstances would likely have a material adverse effect on WCI’s operations. For periods beyond fiscal 2002, further price improvements will be necessary for the Company to have sufficient cash resources to maintain its operations.

Forward-Looking Statements

This report includes “forward-looking statements” which involve known ~~and~~ and unknown risks, uncertainties and other important factors that could cause ~~the~~ the actual results, performance or achievements of the Company to differ ~~materially~~ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other ~~important~~ important factors include, among others: general economic and business conditions; demand for Company products; changes in industry capacity and levels of imports of steel or steel products; effectiveness of the Section 201 remedies; industry trends, including product pricing; competition; currency fluctuations; the loss of any significant customers; availability of qualified personnel; major equipment failures; changes in, or the failure or inability to comply with, government regulation, including, without limitation, environmental regulations; and the outcome of legal matters. These forward-looking statements speak only as of the date of this report. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

economic and business conditions; demand for Company products; changes in industry capacity and levels of imports of steel or steel products; outcome of Section 201 investigation; industry trends, including product pricing; competition; currency fluctuations; the loss of any significant customers; availability of qualified personnel; major equipment failures; changes in, or the failure or inability to comply with, government regulation, including, without limitation, environmental regulations; and the outcome of legal matters. These forward-looking statements speak only as of the date of this report. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to commodity price risk with respect to natural gas and zinc. The Company uses forward purchase contracts to manage the volatility related to the exposure. No contracts are entered into for speculative purposes. The Company’s market risk has not changed materially from that reported in the Company’s 10-K for the fiscal year ended October 31, 2001.

1516

PART II — OTHER INFORMATION

WCI STEEL, INC.

ITEM 1. LEGAL PROCEEDINGS

For information as to the environmental matters ~~and as to the employee litigation~~ described in the Company’s Form 10-K for the year ended October 31, 2001, see Part I, Item 3.

~~ITEM~~ Williams 6/ Reber v. ~~EXHIBITS~~WCI ~~and~~Steel, ~~REPORTS ON FORM 8-K~~Inc.

	(a)		Exhibits:
			None
	(b)		Reports on Form 8-K:
			None

Reference is made to the description of this action instituted by two retired employees contained in the Company’s annual report on Form 10-K, Part I, Item 3 for the year ended October 31, 2001 and as described in Note 4 to the consolidated financial statements herein. The plaintiffs filed an appeal regarding the court’s decision to dismiss, which was heard on April 23, 2002. On May 24, 2002 the appellate court affirmed the decision to dismiss this action.

16ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

None

(b) Reports on Form 8-K:

None

WCI STEEL, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WCI STEEL, INC.
(registrant)

Date: ~~March~~May 730, 2002 /S/ JOHN P. JACUNSKI John P. Jacunski Vice President and Chief Financial Officer (principal financial officer)

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