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

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 July 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, 2003


[ ]		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)

Ohio		34-1585405
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)


Ohio (State or other jurisdiction of		34-1585405 (I.R.S. Employer Identification No.)
incorporation or organization)

1040 Pine Ave., S.E.,
Warren, Ohio		44483-6528
(Address of principal executive offices)		(Zip Code)


1040 Pine Ave., S.E.,
Warren, Ohio (Address of principal executive offices)		44483-6528 (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~~ 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~~ 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

[ Indicate ]by ~~Yes~~check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

As of ~~September~~May 1627, ~~2002~~2003, the registrant had 100 shares of its common stock, no par value, $.01 stated value, outstanding.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
PART I FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
	Item 1. Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
		CONSOLIDATED BALANCE SHEETS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
		CONSOLIDATED STATEMENTS OF OPERATIONS
		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
	Item 4. Controls and Procedures
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	Item 1. Legal Proceedings
	ITEM 6. EXHIBITS and REPORTS ON FORM 8-K
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Certification
EX-10.2.17 Amendment to Net Work Appreciation
EX-99.1 CFO Certification
EX-99.2 CEO Certification

WCI STEEL, INC. AND SUBSIDIARIES

INDEX

PART I FINANCIAL INFORMATION			Page No.
					Page No.
Item 1.		Financial Statements
PART I FINANCIAL INFORMATION
		Consolidated Balance Sheets as of July 31, 2002 and October 31, 2001.		3
	Item 1.		Financial Statements (Unaudited)
		Consolidated Statements of Operations for the three and nine months ended July 31, 2002 and 2001.		4
			Consolidated Balance Sheets as of April 30, 2003 and October 31, 2002			3
		Consolidated Statements of Cash Flows for the nine months ended July 31, 2002 and 2001.		5
			Consolidated Statements of Operations for the three and six months ended April 30, 2003 and 2002.			4
		Notes to Consolidated Financial Statements		6
			Consolidated Statements of Cash Flows for the six months ended April 30, 2003 and 2002.			5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
			Notes to Consolidated Financial Statements			6
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		17
	Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations			12
PART II OTHER INFORMATION
	Item 3.		Quantitative and Qualitative Disclosures About Market Risk			18
Item 1.		Legal Proceedings		18
	Item 4.		Controls and Procedures			19
Item 6.		Exhibits and Reports on Form 8-K		18
PART II OTHER INFORMATION
		Signatures		19
	Item 1.		Legal Proceedings			20
	Item 6.		Exhibits and Reports on Form 8-K			20
SIGNATURES						21
CERTIFICATIONS						22

PART I — FINANCIAL INFORMATION

~~ITEM~~ Item 1. ~~FINANCIAL~~Financial ~~STATEMENTS~~Statements (Unaudited)

WCI STEEL, INC. AND SUBSIDIARIES ~~CONSOLIDATED BALANCE SHEETS~~

CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share ~~amount~~amounts)

			July 31,			October 31,
			April 30,			October 31,
			2002			2001
			2003			2002
ASSETS			(Unaudited)
			(Unaudited)
ASSETS
Current assets
	Cash and cash equivalents		$	25,~~800~~584		$	322,~~244~~751
	Accounts receivable, less allowances for doubtful accounts of $3,326 and $3,100, respectively			58,219			48,875
	Accounts receivable, less allowance for doubtful accounts of $1,247 and $3,436, respectively			55,090			58,986
	Inventories			8374,~~525~~948			8797,~~075~~592
	Prepaid expenses and other current assets			12,~~707~~903			14,~~049~~862
		Total current assets		~~146~~138,~~251~~525			~~169~~164,~~243~~191
Property, plant and equipment, net				~~187~~179,~~794~~569			~~193~~185,~~453~~433
Intangible pension asset, net				3435,~~776~~644			3938,~~556~~831
Other assets, net				32,~~388~~548			43,~~361~~171
		Total assets	$	~~372~~356,~~209~~286		$	~~406~~391,~~613~~626
LIABILITIES and SHAREHOLDER’S EQUITY
LIABILITIES and SHAREHOLDER’S EQUITY (DEFICIT)
Current liabilities
	Current portion of long-term debt		$	125,~~309~~601		$	~~536~~3,892
	Accounts payable			4241,~~803~~049			4544,~~939~~758
	Accrued liabilities			6672,~~099~~512			7271,~~361~~382
		Total current liabilities		~~110~~139,~~211~~162			~~118~~120,~~836~~032
Long-term debt, excluding current portion				~~334~~300,~~544~~175			~~301~~332,~~111~~405
Postretirement health care benefits				121,530			117,719
Postretirement health care benefits, excluding current portion				127,807			122,932
Pension benefits				16,949			35,000
Pension benefits, excluding current portion				39,798			47,480
Other liabilities				1513,~~857~~668			15,~~381~~608
		Total liabilities		~~599~~620,~~091~~610			~~588~~638,~~047~~457
Shareholder’s equity (deficit)
	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			(~~227~~236,~~161~~775	)		(~~181~~219,~~713~~282	)
		Total shareholder’s equity (deficit)		(226,882	)		(181,434	)
	Accumulated other comprehensive loss			(27,828	)		(27,828	)
		Total shareholder’s equity (deficit)		(264,324	)		(246,831	)
Commitments and contingencies				—			—
		Total liabilities and shareholder’s equity (deficit)	$	~~372~~356,~~209~~286		$	~~406~~391,~~613~~626

See accompanying notes to consolidated financial statements.

WCI STEEL, INC. AND SUBSIDIARIES ~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands) (Unaudited)

			Three months ended,						~~Nine~~Six months ended,
			July 31,						July 31,
			April 30,						April 30,
			2002			2001			2002			2001
			2003			2002			2003			2002
Net sales	~~Net sales~~		$	~~132~~127,~~756~~379		$	~~109~~127,~~988~~678		$	~~350~~257,~~038~~262		$	~~307~~217,~~447~~282
Operating costs and expenses	~~Operating costs and expenses~~
		Cost of products sold		~~122~~124,~~322~~464			~~112~~124,~~827~~534			~~346~~241,~~310~~450			~~315~~223,~~893~~988
		Depreciation and amortization		4,~~748~~874			4,~~808~~686			149,~~145~~768			169,~~160~~397
		Selling, general and administrative expenses		53,~~514~~069			32,~~619~~043			106,~~941~~824			135,~~162~~427
		Unusual charges		—			—			—			3,909
				132,407			131,263			258,042			238,812
				132,584			121,254			371,396			349,124
Operating income (loss)				(5,028	)		(3,585	)		(780	)		(21,530	)
Operating income (loss)				172			(11,266	)		(21,358	)		(41,677	)
Other income (expense)
		Interest expense		(8,~~275~~433	)		(8,~~004~~266	)		(2417,~~592~~043	)		(2316,~~972~~317	)
		Interest and other income (expense), net		4044			~~540~~22			~~502~~330			~~(7,799~~462	)
				(8,235	)		(7,464	)		(24,090	)		(31,771	)
				(8,389	)		(8,244	)		(16,713	)		(15,855	)
Income (loss) before income taxes				(8,063	)		(18,730	)		(45,448	)		(73,448	)
Net income (loss)			$	(13,417	)	$	(11,829	)	$	(17,493	)	$	(37,385	)
Income tax (benefit) expense				—			—			—			—
Net income (loss)			$	(8,063	)	$	(18,730	)	$	(45,448	)	$	(73,448	)

See accompanying notes to consolidated financial statements.

WCI STEEL, INC. AND SUBSIDIARIES ~~CONSOLIDATED STATEMENT OF CASH FLOWS~~

CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) (Unaudited)

				Nine months ended July 31,
				Six months ended April 30,
				2002			2001
				2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)			$	(4517,~~448~~493	)	$	(7337,~~448~~385	)
	Adjustment to reconcile net income (loss) to net cash provided (used) by operating activities:
		Depreciation and amortization			149,~~145~~768			149,~~658~~397
		Amortization of deferred maintenance costs			—			1,502
		Amortization of financing costs			759			689
		Amortization of financing costs			1,040			977
		Postretirement health care benefits			5,275			4,105
		Postretirement health care benefits			5,311			9,913
		Pension benefits			(2,998	)		476
		Pension benefits			(13,758	)		3,174
		Provision for losses on accounts receivable			297			247
		Provision for losses on accounts receivable			2,373			2,450
		Other			80			83
		Asset impairment and other charges			—			14,393
		Other			134			93
	Cash provided (used) by changes in certain assets and liabilities
		Accounts receivable			~~(11~~3,~~717~~599	)		(714,~~244~~190	)
		Inventories			322,~~550~~644			514,~~258~~048
		Prepaid expenses and other assets			~~(819~~1,756	)		(32,~~319~~731	)
		Accounts payable			(3,~~136~~709	)		1(8,~~316~~983	)
		Accrued and other liabilities			(6,799	)		(5,371	)
		Accrued liabilities			(767	)		992
			Net cash provided (used) by operating activities		(55,124	)		(35,648	)
		Other liabilities			(1,940	)		(194	)
			Net cash provided (used) by operating activities		17,271			(33,446	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Additions to property, plant and equipment				(83,~~526~~917	)		(86,~~248~~231	)
	Gross proceeds from the sale of assets				—			105
			Net cash used by investing activities		(3,917	)		(6,231	)
			Net cash used by investing activities		(8,526	)		(8,143	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net borrowings under Revolving Credit Facility				34,250			—
	Net borrowings (payments) under Revolving Credit Facility				(7,900	)		11,664
	Other changes in long-term debt				(442,621	)		~~175~~(349	)
			Net cash provided (used) by financing activities		34(10,~~206~~521	)		~~175~~11,315
	Net increase (decrease) in cash and cash equivalents				~~(29~~2,~~444~~833	)		(4328,~~616~~362	)
	Cash and cash equivalents at beginning of year				322,~~244~~751			8932,~~478~~244
	Cash and cash equivalents at end of period			$	25,~~800~~584		$	453,~~862~~882
	Supplemental disclosure of cash flow information
		Cash paid for interest		$	3116,~~069~~283		$	3015,~~489~~640
		Cash paid for income taxes			—			—

See accompanying notes to consolidated financial statements.

WCI STEEL, INC. AND SUBSIDIARIES ~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~ ~~Three and nine months ended July 31, 2002 and 2001~~ ~~( Unaudited )~~

~~NOTE~~NOTES 1TO :CONSOLIDATED ~~BASIS~~FINANCIAL OFSTATEMENTS ~~PRESENTATION~~(UNAUDITED) Three and six months ended April 30, 2003

~~WCI~~NOTE ~~Steel,~~1: ~~Inc.~~BASIS ~~(Company~~OF ~~or WCI) is a wholly-owned subsidiary of Renco~~PRESENTATION ~~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. Certain reclassifications of prior year data have been made to conform to the 2002 classifications. The results of operations for the three and nine months ended July 31, 2002 are not necessarily indicative of the results to be expected for the full year.

~~These~~ WCI ~~interim~~Steel, ~~consolidated~~Inc. ~~financial~~(Company ~~statements~~or ~~should~~WCI) beis ~~read~~a ~~in conjunction~~wholly-owned ~~with~~subsidiary ~~the~~of ~~consolidated~~Renco Steel ~~financial~~Holdings, ~~statements~~Inc. (Renco Steel) and ~~notes~~an ~~thereto~~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 ~~Company’s~~opinion ~~Form 10-K~~of management, necessary for a fair statement of results for the ~~fiscal~~interim ~~year~~periods. The results of operations for the three and six months ended ~~October~~April 3130, ~~2001~~2003 are not necessarily indicative of the results to be expected for the full year.

~~NOTE~~ These 2interim :consolidated ~~INVENTORIES~~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, 2002.

~~Inventories~~NOTE ~~are~~2: ~~stated at the lower of cost or market. Cost is~~INVENTORIES ~~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:~~

	July 31,			October 31,
	2002			2001
	(Unaudited)
	(Dollars in Thousands)
Raw materials	$	23,372		$	33,542
Finished and semi-finished product		60,331			53,438
Supplies		176			95
		83,879			87,075
Less LIFO reserve		(354	)		—
	$	83,525		$	87,075

Inventories are stated at the lower of cost or market. Over the past two years, the cost of inventories determined under the last-in, first-out (LIFO) inventory valuation method have been the same as the cost as determined under the first-in, first-out (FIFO) method which has resulted in the Company having no LIFO inventory valuation reserve as of October 31, 2001 or 2002. In addition, the Company has experienced deflation in the cost of its inventories over the past two years and, as such, believes that the FIFO method better matches current production costs with amounts recognized in cost of goods sold. Therefore, effective November 1, 2002, WCI changed its method of accounting for inventory to determine cost by the FIFO method instead of the LIFO method. This change had no impact on the Company’s financial position, results of operations or cash flows for any periods presented. However, in its 2003 Form 10-K for the fiscal year ended October 31, 2003, the Company will restate its financial statements for the fiscal year ended October 31, 2001 whereby beginning equity will be increased by $3.6 million and net income for the year will be decreased by $3.6 million. Financial statements for fiscal years 2002 and 2003 will not be impacted by this change. Market value is determined based on expected selling price of each product. Inventories consist of the following:


	April 30,		October 31,
	2003		2002

	(Unaudited)
	(Dollars in Thousands)
Raw materials	$	20,660	$	30,215
Finished and semi-finished product		54,180		67,247
Supplies		108		130

	$	74,948	$	97,592

NOTE 3 : LONG-TERM DEBT

Long-term debt ~~consists~~consist of the following:

	July 31,		October 31,
	April 30,		October 31,
	2002		2001
	2003		2002
	(Unaudited)
	(Dollars in Thousands)
Senior Secured Notes with interest at 10% payable semi- annually, due December 1, 2004	$	300,000	$	300,000
Senior Secured Notes with interest at 10% payable semi-annually, due December 1, 2004	$	300,000	$	300,000
Revolving Credit Facility (Revolver) with interest at 5.87% at July 31, 2002 payable monthly		34,250		—
Revolving Credit Facility (Revolver) with interest at 5.37% at April 30, 2003 payable monthly		24,186		32,086
Other		1,~~603~~590		14,~~647~~211
		335,853		301,647
		325,776		336,297
Less current portion of long-term debt		125,~~309~~601		~~536~~3,892
	$	~~334~~300,~~544~~175	$	~~301~~332,~~111~~405

The $300 million 10% Senior Secured Notes due December 1, 2004 (Senior Secured Notes) are secured by a first priority lien on substantially all of the ~~existing~~ property, plant and equipment of the Company. 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, holds a second priority lien on the ~~security~~same ~~for~~security as the Senior Secured Notes.

The Company has a $100~~,000,000~~ million Revolver secured by inventories and receivables and subject to eligibility requirements, as defined,. ~~reduced~~The ~~by any~~Revolver ~~outstanding~~expires ~~letters~~June 30, of2004 ~~credit.~~and ~~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~~ million payable monthly. There were borrowings of $~~34,250,000~~24.2 million outstanding under the Revolver as of ~~July~~April 3130, ~~2002~~2003. The Revolver, ~~which expires December 29, 2003,~~ also provides for up to an aggregate amount of $20~~,000,000 in letters of credit. On September~~ ~~13,~~million ~~2002 the Company and its lenders under the Revolver agreed to amend the loan agreement as described below. At July 31, 2002, assuming this amendment had been~~ in ~~place, the Company had borrowing availability of $51,836,000 based on eligible inventory and receivables after deducting $34,250,000 of borrowings outstanding and $14,870,000 in~~ letters of ~~credit~~ ~~outstanding and before reflecting a $20,000,000 minimum borrowing availability covenant as discussed below~~credit. ~~The Revolver is subject to a penalty~~ ~~of $250,000 if terminated before October 31, 2003.~~

~~The~~ As ~~Company’s~~of ~~Revolver~~April 30, ~~and~~2003, ~~Senior~~the ~~Secured~~Company ~~Notes~~had ~~contain~~net ~~certain financial~~borrowing ~~and~~availability ~~other covenants, including maintenance~~ of ~~specified levels of net~~$46.9 ~~worth~~million asbased ~~defined,~~on ~~working~~eligible ~~capital,~~inventory and ~~debt~~receivables ~~service~~after ~~and~~deducting ~~limitations on capital expenditures~~$24. ~~Additional covenants limit the incurrence of additional~~2 ~~indebtedness,~~million ~~payments affecting subsidiaries, transactions with affiliates, sale/leaseback transactions, impairment~~ of ~~security~~borrowings ~~interest~~outstanding, ~~consolidations, mergers and transfer of the Company’s assets~~$11. ~~On January~~9 ~~25,~~million ~~2002~~in ~~the~~letters ~~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~~credit ~~following~~outstanding ~~for~~and ~~each period indicated: negative~~ $~~225~~5.0 million ~~through~~minimum ~~January 31, 2002,~~availability ~~negative $240 million from February 1, 2002 through~~requirement.

As of April 30, 2003, WCI violated the earnings before interest, taxes, depreciation and amortization (EBITDA) covenant in its Revolver resulting in amounts due under the Revolver being classified as current. WCI is discussing the granting of a waiver of the covenant violation with its lenders. If the Company is unable to obtain a waiver of its covenant violation or reach an understanding with its lenders regarding their not taking any action on account of such default and is otherwise unable to secure additional financing sources to allow the Company to meet its financial obligations, it’s liquidity may be adversely affected and it may be required to seek bankruptcy protection. The Company is hopeful that its discussions with its lenders will yield a positive result but no assurance can be given that this will be the case.

~~April 30,~~ The ~~2002,~~Company’s ~~negative~~Revolver ~~$255 million~~and ~~from~~Senior ~~May 1~~Secured Notes contain certain financial and other covenants, ~~2002~~including ~~through~~maintenance ~~July 31~~of specified levels of net worth as defined, ~~2002~~EBITDA, and ~~negative~~debt ~~$260 million~~service and limitations on ~~August 1~~capital expenditures. Additional covenants limit the incurrence of additional indebtedness, ~~2002~~payments affecting subsidiaries, transactions with affiliates, sale/leaseback transactions, impairment of security interest, consolidations, mergers and transfer ~~thereafter~~of the Company’s assets. InUnder ~~addition~~the Revolver, the Company ~~was~~is required to maintain a minimum ~~borrowing~~net ~~availability~~worth ~~under~~excluding ~~the~~accumulated other comprehensive ~~Revolver~~income or loss related to the Company’s defined benefit pension plan of not less than negative $25260 million. A minimum cumulative EBITDA covenant has been established for each month through October 2003 at which point it becomes a rolling twelve-month covenant. The minimum cumulative EBITDA covenant is $8.0 million for the three months ended January 31, ~~amendment~~2003, ~~also~~$12.5 million ~~changes~~for the ~~interest~~six months ~~charged~~ended April 30, 2003, $19.1 million for the nine months ended July 31, ~~from~~2003 ~~prime~~and ~~rate~~$26.9 million tofor the twelve months ended October 31, 2003. After October 2003 the minimum EBITDA covenant is $26.9 million over the previous twelve month period. Interest is charged on the Revolver at prime rate plus 1.5% or as to Eurodollar Rate Loans, a rate of 3.5% in excess of the Adjusted Eurodollar Rate applicable for the interest period selected by the Company. ~~On September 13~~In addition, ~~2002~~if the Company ~~and~~is ~~its lenders~~unable ~~under the Revolver further agreed~~ to ~~reduce~~meet ~~the~~certain minimum ~~borrowing~~cumulative EBITDA ~~availability~~targets, ~~requirement~~then ~~from $25 million to $20 million provided~~ the Company is ~~able~~ required to ~~meet~~maintain ~~certain~~ minimum ~~cumulative earnings before interest, taxes,~~borrowing ~~depreciation~~availability ~~and~~of ~~amortization (EBITDA)~~$5 ~~targets~~million. A minimum cumulative EBITDA target has been established for each month ~~from~~through ~~August~~October ~~2002~~2003 toat ~~December~~which ~~2003~~point ~~and totals~~it ~~$73.0 million~~becomes ~~with~~a rolling ~~monthly~~twelve-month ~~increments~~requirement. ofThe ~~not~~minimum ~~more~~cumulative ~~than~~EBITDA ~~$5.5 million~~related ~~and~~to the ~~not~~minimum ~~less~~availability ~~than~~requirement is $48.07 million. Inas ~~addition~~of January 31, ~~while~~2003, ~~loans~~$13.4 million ~~and~~as ~~letters~~ of ~~credit continue~~April 30, to2003, ~~be subject to a~~ $~~100~~20.3 million ~~maximum,~~as ~~WCI~~of ~~can use up to $105~~July ~~million of~~31, ~~qualifying~~2003 ~~inventories~~ and ~~receivables based on established~~$28.6 ~~advance~~million ~~rates~~as inof ~~determining~~October 31, ~~availability~~2003 ~~with respect~~and ~~to the minimum availability covenant~~thereafter. 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~~ such transactions is no greater than fifty percent (50%) of the consolidated ~~net~~ net income as defined (less 100% of any consolidated net loss) earned for ~~periods~~ 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~~.2 million annually for the same period. Under these agreements, there were no amounts available for dividends and other transactions with affiliates at ~~July~~April 3130, ~~2002~~2003.

NOTE 4: ENVIRONMENTAL MATTERS 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~~Work ~~consent~~required ~~decree~~under ~~requires~~ the ~~Company to~~consent ~~complete~~decree ~~certain~~was ~~supplemental environmental projects with a remaining~~completed ~~estimated~~in ~~cost~~January ~~of $2~~2003.~~0 million~~ that will be expended by late 2002. These projects include sediment removal from the Mahoning River at an estimated cost of $0.8 million and the installation of a liner for a surface impoundment estimated to cost approximately $1.2 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~~ action program with respect to ~~historical~~on-site ~~material~~waste ~~handling~~management practices at the ~~Warren~~ Warren facility. The ~~Company~~workplan ~~has~~for ~~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

the corrective action program, the RCRA Facility Investigation (RFI), identifies thirteen solid waste management units to be investigated. The Company has completed and submitted its RFI Phase 1 report to the EPA. The Company has also completed human health and ecological risk assessments, the results of which will be used to identify whether any further investigative steps are required to complete the RFI. The Company submitted its risk assessment reports to the EPA, and is currently in discussions with the EPA regarding their content. Any additional investigative steps, such as sampling, would then be undertaken in 2003 and 2004 as phase two of the RFI. The final scope of corrective action required to address any contamination that may be present at or emanating from the solid waste management units at the Warren facility, including the potential for remediation, 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 The ~~January 23,~~EPA ~~1996,~~issued ~~two~~a ~~retired~~unilateral ~~employees~~administrative ~~instituted~~order an(Order) ~~action~~to ~~against~~ the Company pursuant ~~and~~to ~~the~~Section 7003 ~~United~~of ~~Steelworkers~~RCRA, ofeffective ~~America~~on ~~(USWA)~~September in24, ~~the~~2002. ~~United~~The ~~States~~Order ~~District~~asserts ~~Court~~that ~~for~~ the ~~Northern~~Company’s ~~District~~handling of ~~Ohio~~solid ~~alleging~~waste in ~~substance~~various ~~that~~impoundment areas ~~certain~~presents ~~distributions~~an ~~made~~imminent byand ~~the~~substantial ~~Company~~endangerment to ~~employees~~health ~~and~~or ~~benefit~~the ~~plans~~environment ~~violated~~by ~~certain~~virtue ~~agreements,~~of ~~the~~potential ~~Employee~~harm ~~Retirement~~to ~~Income~~wildlife, ~~Security~~including ~~Act (ERISA)~~migratory birds, that may land on or enter the ~~National~~areas. ~~Labor~~The ~~Relations~~Order ~~Act~~required the Company, among other things, to (~~NLRA~~i) ~~and~~take ~~common~~immediate ~~law.~~measures Onto ~~July 31,~~deter and discourage wildlife from ~~1997,~~landing ~~the~~on ~~court~~or ~~granted~~entering the ~~Company’s~~areas, ~~motion~~(ii) remove toall ~~dismiss~~oily ~~this~~wastes ~~action~~from the impoundments, and ~~entered judgement~~(iii) remove inall ~~favor~~remaining ofoily sludge from the ~~Company~~banks and bottoms of the ~~USWA~~impoundments. ~~The~~RCRA ~~Plaintiffs~~provides ~~filed~~for ancivil ~~appeal regarding~~penalties ~~the~~of ~~court’s~~up ~~decision~~ to ~~dismiss~~$5,500 per ~~which~~day ~~was~~for ~~heard~~noncompliance inwith ~~June~~the ~~1998~~Order. In ~~March~~ ~~1999~~written comments, the ~~appellate~~Company raised ~~court~~several ~~upheld~~concerns and objected to both the ~~dismissal~~issuance of the ~~claims~~Order ~~under ERISA~~ and ~~common law~~its scope, ~~but~~including ~~reversed~~portions of the ~~dismissal~~Order calling for removal of all oily material from the ~~NLRA~~impoundments. ~~claim~~The ~~and~~Company ~~remanded~~also submitted a draft work plan to the EPA ~~district~~setting ~~court~~forth ~~for~~a ~~further~~number ~~proceedings.~~of Onactivities ~~October 9,~~that ~~2000~~ the ~~court~~Company ~~granted~~considers ~~the~~reasonably ~~Company’s~~necessary ~~motion~~ to ~~dismiss~~abate ~~this~~any ~~action~~alleged endangerment, and ~~entered~~began ~~judgement~~implementing the draft work plan in ~~favor~~fall 2002. In January 2003, the EPA approved portions of the ~~Company~~draft work plan and ~~the~~disapproved ~~USWA~~other portions. The ~~plaintiffs~~EPA ~~filed~~also issued an ~~appeal~~Amended Order, ~~regarding~~dated January 21, 2003 requiring the ~~court’s decision~~Company to ~~dismiss~~continue ~~which~~implementing its ~~was~~immediate ~~heard~~deterrent onmeasures. ~~April 23,~~For ~~2002.~~impoundments Onthat ~~May 24~~are a required part of the Company’s ongoing operations, ~~2002~~the Amended Order requires the Company to ~~appellate~~either ~~court~~install ~~affirmed~~a netting system over the ~~decision~~impoundments toor ~~dismiss~~remove ~~this~~all ~~action~~oily material. NoFor ~~appeal~~the ~~has~~inactive ~~been~~areas, the Amended Order requires that all oily ~~filed~~material ~~regarding~~be removed. The Company submitted a written response to the ~~decision~~amended order offering some revisions to the draft workplan and questioning the feasibility ~~time~~of ~~frame~~the ~~for~~EPA’s ~~filing~~demands, anincluding ~~appeal~~timing ~~has~~and available options for ~~expired~~responding to the Amended Order.

In addition ~~to the above-described matters~~, the Company isreceived ~~contingently liable~~correspondence ~~with~~dated ~~respect~~December 27, to2002 from ~~lawsuits~~the ~~and~~U.S. ~~other~~Attorney’s ~~claims~~office ~~incidental~~on tobehalf ~~the ordinary course~~ of ~~its~~the ~~business.~~United AStates ~~liability~~Fish ~~has~~& ~~been~~Wildlife Service ~~established~~alleging ~~for~~that ~~an amount, which~~ the Company ~~believes~~has isviolated ~~adequate,~~Section 703(a) ~~based~~of onthe ~~information~~Migratory Bird ~~currently~~Treaty ~~available,~~Act ~~to cover~~(a ~~the~~misdemeanor). ~~costs~~The toCompany ~~resolve~~and ~~the~~its ~~above~~legal ~~described~~counsel ~~matters,~~met ~~including remediation,~~with ifrepresentatives ~~any,~~of ~~except~~the ~~for~~U.S. ~~any~~Attorney’s ~~costs~~office ofin ~~corrective~~February ~~action~~and ~~that~~April ~~may~~2003 ~~result~~to discuss ~~from~~possible ~~the~~resolutions ~~RFI~~ for ~~which~~this nomatter, ~~estimate~~and ~~can~~those ~~currently~~discussions ~~be made~~are ongoing. The ~~outcome~~Company ofbelieves ~~the~~that ~~above~~it ~~described matters~~will ~~could~~resolve ~~have~~this amatter ~~material adverse effect on the future operating results of the Company~~ in a ~~particular quarter or annual period; however, the Company~~manner ~~believes~~ that ~~the effect of such matters~~ will not have a material adverse effect on the Company’s ~~consolidated~~ financial position or results of operations.

~~NOTE~~ In 5:addition ~~OTHER~~to ~~MATTERS~~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

Based on WCI’s current order intake rate and backlog, the Company expects shipping volume to be approximately 330,000 tons in the fourth quarter of 2002. WCI’s order backlog was approximately 293,000 tons at July 31, 2002 compared to 158,000 at July 31, 2001 and 352,000 at April 30, 2002. We expect net sales per ton shipped to increase approximately 10% during the fourth quarter compared to the third quarter. WCI expects cost of products sold per ton shipped to increase approximately 2% in the fourth quarter compared to the third quarter due primarily to changes in product mix with capacity utilization remaining at approximately 90% or greater. During the fourth quarter of 2002, the Company expects its working capital needs to increase by approximately $15 million as a result of increasing iron ore pellet inventories prior to the end of the shipping season and due to increased accounts receivable resulting from increasing revenues. Assuming no change in the U.S. economy or level of steel imports, WCI expects shipping volume during the first fiscal quarter of 2003 to decline approximately 5% compared to the fourth quarter of 2002 with net sales and cost of goods sold per ton remaining flat. Based on these expectations, the Company believes that it has adequate availability of cash resources to maintain operations and meet its debt service requirements into 2003 and if current market conditions persist, the Company expects to generate significant free cash flow both from operations and working capital in the first half of 2003.

Significant uncertainty remains regarding the direction of the U.S. economy and the short-term as well

asCompany ~~long-term condition of the steel market. Improvements~~ in ~~order intake rates and pricing realized during 2002 could be reversed by~~ a ~~number~~particular ofquarter ~~factors including increasing domestic supply through the restart of closed facilities, increases in steel imports due to rising domestic steel prices~~ or ~~the~~annual ~~granting~~period; ofhowever, ~~exemptions to tariffs imposed as a result of~~ the ~~Section 201~~Company ~~investigation~~believes or the failure of an economic recovery to materialize or be sustained in the U.S. If the volume or net sales prices expected to be realized by WCI during the fourth quarter are not sustained in subsequent quarters 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~~effect ~~to obtain such additional financing or what the terms~~ of such ~~additional~~matters ~~financing~~will ~~might~~not ~~be. Failure to obtain such additional financing in these circumstances would likely~~ have a material adverse effect on ~~WCI~~the Company’s ~~operations~~consolidated financial position.

~~ITEM~~ WCI 2has historically been self-insured for workers’ compensation. ~~MANAGEMENT~~The Company has been notified by the Ohio Bureau of Workers’S ~~DISCUSSION~~Compensation ~~AND~~that ~~ANALYSIS~~its self-insured OFstatus ~~FINANCIAL~~has ~~CONDITION~~been ~~AND~~denied. The Company has appealed this decision ~~RESULTS~~and OFis ~~OPERATIONS~~awaiting notification of the scheduling of a hearing to review the matter. The Company’s workers’ compensation expense for fiscal year 2002 and the six months ended April 30, 2003 was $1.9 million and $.7 million, respectively. If the decision to deny self-insured status is upheld and the Company is required to participate in the State of Ohio program, it is estimated that the Company’s expense would increase to approximately $6.5 million per year.

~~Results~~NOTE of5: ~~Operations~~OTHER MATTERS

~~Three~~ The ~~months~~accompanying ~~ended~~consolidated ~~July 31~~financial statements have been prepared assuming that the Company will continue as a going concern. As discussed below, ~~2002~~the ~~compared~~Company has incurred recurring losses from operations and negative cash flows that raise substantial doubt about its ability to ~~three~~continue ~~months~~as ~~ended~~a going ~~July 31,~~concern. ~~2001~~Management has completed a comprehensive assessment of its business and has developed a plan to address these issues as described below. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Net~~ The ~~sales~~Company ~~for~~and the ~~three~~industry ~~months~~continue ~~ended~~to ~~July 31,~~face ~~2002~~difficult ~~were~~and ~~$132.8 million~~volatile onmarket ~~334,367~~conditions. ~~tons~~During ~~shipped,~~2000 ~~representing~~and a2001 ~~20.7%~~there ~~increase~~was inintense ~~net~~downward ~~sales~~pressure ~~and a 20.0%~~on ~~increase~~steel inprices ~~tons~~due ~~shipped compared~~ to the ~~three~~surge ~~months ended July 31, 2001. When the third fiscal quarter~~ of ~~2002~~imports isinto ~~compared to~~ the ~~prior~~United ~~quarter~~States. ~~ended~~This ~~April~~resulted ~~30,~~in ~~2002,~~the ~~net~~Company ~~sales~~incurring ~~showed~~ a ~~more~~net ~~modest~~loss ~~increase~~ of 4$100.~~0%,~~8 million ~~however~~in ~~tons shipped decreased by 6~~2001.~~0%.~~ ~~Net~~Order ~~sales~~entry rates ~~per~~and ~~ton~~steel ~~shipped~~prices ofincreased ~~$397~~significantly ~~for~~during ~~the~~2002 ~~three~~as ~~months~~a ~~ended~~result of ~~July 31,~~significant ~~2002~~capacity ~~was~~reductions ~~0.5%~~caused ~~higher~~by ~~than~~ the ~~net~~closing ~~sales~~of ~~per~~a ~~ton~~number ~~shipped~~ of ~~$395~~steel producers ~~for~~and the ~~comparable~~ ~~prior~~effects ~~year~~of ~~period~~the ~~ended~~implementation ~~July 31,~~of ~~2001,~~the ~~with~~Section 201 ~~net~~tariffs. ~~selling prices up~~As ~~6.0%~~a ~~offset~~result byof ~~changes~~the toincreased ~~product~~shipping ~~mix.~~volume ~~Net~~and ~~sales~~prices, ~~per~~the ~~ton~~Company ~~increased~~returned ~~10.6%~~to profitability ~~for~~during the ~~third~~ ~~fiscal~~fourth quarter of 2002. ~~compared~~However, tofor the ~~second~~full ~~fiscal~~year ~~quarter~~ of 2002, ~~with net~~the ~~selling~~Company ~~prices~~incurred ~~increasing~~a ~~9.4%.~~net ~~Shipments~~loss of ~~custom~~$37.6 million ~~carbon, alloy~~ and ~~electrical~~ ~~steels~~a ~~accounted~~loss ~~for 47.4%~~ of ~~total shipments for the three months ended July 31, 2002 compared to 52~~$17.~~4% for the three months ended July 31, 2001~~5 ~~and~~million ~~47.6%~~ for the ~~three~~six months ended April 30, ~~2002~~2003. ~~The~~In ~~improvements~~addition ~~in shipping volume and increased net selling prices in the third quarter 2002 compared~~ to ~~the third quarter 2001 resulted from a variety of factors including~~incurring asignificant ~~decrease~~losses ~~in domestic supply due to the closing of facilities~~ during the last ~~several~~ two years, the ~~implementation~~Company ofhad ~~tariffs~~negative ~~under a favorable Section 201~~cash ~~decision~~flows ~~on certain imported steel~~ which ~~became~~have ~~effective~~reduced ~~for imports entering~~ the ~~U.S.~~cash onresources oravailable ~~after March 20, 2002, a conclusion~~ to ~~inventory~~support ~~reductions by~~its ~~customers and a slight improvement in overall economic activity~~operations.

~~The~~ Many ~~table~~of ~~below~~the ~~shows~~steel companies shut down in the ~~Company~~past two years have been restarted by other companies with cost structures significantly lower than WCI’s. ~~product~~This ~~mix~~low ~~for~~cost capacity returning to the ~~three~~market ~~months~~coupled with continued ~~ended~~high ~~July 31,~~levels ~~2002~~of imports and ~~July 31~~a slowing manufacturing sector has resulted in reduced volume and pricing expectations for the second half of 2003. As a result, ~~2001~~the Company expects to incur a net loss for 2003.

The Company’s liquidity depends on its operating performance and borrowing availability under its revolving credit facility. As discussed in Note 3, the Company violated a financial covenant under the Revolver as of April 30, 2003. While the Company is seeking a waiver of this violation, if the Company is unable to obtain such waiver or secure additional financing sources to fund expected operating losses, it’s liquidity may be adversely affected and it may be required to seek bankruptcy protection. .

The Company has attempted to conserve cash by reducing operating costs and deferring capital spending. However, these measures have not and are not expected to allow the Company to generate positive cash flow on a sustained basis in the current operating environment. As a result, the Company, during its second fiscal quarter, completed a comprehensive assessment of its business including its equipment and facilities, organizational structure, labor practices and utilization, vendor relationships and capital structure. From this assessment, WCI has developed a restructuring plan that addresses WCI’s cost competitiveness in the industry and ensures that the Company has adequate resources to fund its operations and capital expenditure needs. The key features of the restructuring plan include a reduction in the aggregate principal amount

		Net Tons Shipped				Percent of Total
		Three Months Ended				Three Months Ended
		July 31,				July 31,
		2002		2001		2002			2001
CUSTOM PRODUCTS:
	Hot Rolled		104,156		75,747		31.1	%		27.2	%
	Cold Rolled		5,537		5,193		1.7	%		1.9	%
	Coated products		48,740		64,899		14.6	%		23.3	%
TOTAL CUSTOM PRODUCTS			158,433		145,839		47.4	%		52.4	%
Total Commodity Products			175,934		132,713		52.6	%		47.6	%
Total Steel Products			334,367		278,552		100.0	%		100.0	%

outstanding of the Company’s Senior Secured Notes, a revised labor agreement and a significant cash infusion. The Company has initiated discussions with certain holders of the Senior Secured Notes and has also held initial meetings with the United Steelworkers of America to discuss revising the existing labor agreement. In addition, The Renco Group, Inc. has indicated that it is receptive to making the substantial cash infusion required by the restructuring plan. No assurances can be given that the restructuring discussions or negotiations will be successful. While the Company believes it has adequate liquidity to implement its restructuring plan, if market conditions continue to deteriorate or the restructuring plan cannot be implemented in a timely manner, the Company’s liquidity may be substantially reduced and the Company may be required to seek bankruptcy protection.

~~The~~ Based ~~following~~on ~~table~~WCI’s ~~sets~~current ~~forth~~order intake rate and backlog, the ~~percentage~~Company expects shipping volume in the third quarter of 2003 to be approximately 250,000 tons. WCI’s ~~net~~order ~~tons~~backlog ~~shipped~~was toapproximately ~~various~~133,000 ~~markets~~tons ~~for~~at ~~the~~April 30, ~~three~~2003 compared ~~months~~to ~~ended~~352,000 ~~July~~at April 3130, 2002 and ~~July~~195,000 at October 31, ~~2001~~2002. Excluding semifinished product shipments, net sales per ton shipped in the third quarter 2003 is expected to decline approximately 3% from the second quarter of 2003 with cost of goods sold per ton increasing slightly compared to the second quarter due to lower capacity utilization rates. As a result, WCI expects to incur a net loss during the third quarter of 2003.

		Three Months Ended
		July 31,
Customer Category		2002			2001
	Conversion / further processing		55.9	%		51.6	%
	Steel service centers		20.0	%		16.5	%
	Construction		12.0	%		18.2	%
	Electrical equipment		3.2	%		4.4	%
	Direct automotive		5.1	%		4.8	%
	Other		3.8	%		4.5	%
Total			100.0	%		100.0	%

Gross margin (sales less cost of products sold) was $10.4 million for the three months ended July 31, 2002 compared to gross margin (loss) of ($2.8) million for the three months ended July 31, 2001. The increase in gross margin reflects the increased shipping volume and 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 July 31, 2002 was approximately 89% of operating capacity compared to approximately 82% for the three months ended July 31, 2001.

Operating income was $0.2 million, or $1 per ton, for the three months ended July 31, 2002 compared to operating income (loss) of ($11.3) million, or ($40) per ton, for the three months ended July 31, 2001. The increase in operating income reflects the improved gross margin discussed above partially offset by a charge of $2.1 million in the 2002 period to establish a reserve for amounts due from a financially distressed customer.

Interest and other income (expense), net was $40,000 for the three months ended July 31, 2002 compared to $0.5 million for the three months ended July 31, 2001. This decrease was due primarily to a decrease in interest income resulting from lower cash balances for the three months ended July 31, 2002 compared to the three months ended July 31, 2001.

As a result of the items discussed above, the Company had a loss before taxes of $8.1 million for the three months ended July 31, 2002 compared to a loss before taxes of $18.7 million for the three months ended July

~~31, 2001~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

~~Nine~~Three months ended ~~July~~April 3130, ~~2002~~2003 compared to ~~nine~~three months ended ~~July~~April 3130, ~~2001~~ 2002

Net sales for the ~~nine~~three months ended ~~July~~April 3130, ~~2002~~2003 were $~~350~~127.04 million on ~~934~~on 320,~~920~~233 tons shipped (including 34,810 tons of semifinished steel), representing a 130.92% ~~increase~~decrease in net sales and a 2310.60% ~~increase~~ decrease in tons shipped compared to the ~~nine~~three months ended ~~July~~April 3130, ~~2001~~2002. Net sales per ton shipped ~~Shipping~~of ~~volume~~$398 for ~~2002~~the ~~began~~three tomonths ~~increase~~ended ~~more~~April 30, ~~substantially~~2003 ~~during~~was 10.9% higher than the ~~second~~net ~~fiscal~~sales ~~quarter~~per ~~and~~ton ~~has~~shipped ~~leveled~~of ~~off~~$359 tofor ~~more~~the ~~historical~~comparable ~~levels~~prior ~~during~~year ~~the~~period ~~third~~ended April ~~fiscal~~30, ~~quarter.~~2002, ~~This~~with isnet aselling ~~result~~prices ofup a13.1% ~~variety~~partially ofoffset ~~favorable~~by ~~factors~~changes ~~that included~~to aproduct ~~decrease~~mix. inExcluding ~~domestic~~semifinished ~~supply~~product ~~due~~sales, tonet ~~the~~sales ~~closing~~per ofton ~~facilities~~was ~~during~~$419. Shipments ~~the~~of ~~past several~~custom ~~years~~carbon, ~~the~~alloy ~~implementation~~and ofelectrical ~~tariffs~~steels ~~under~~accounted afor ~~favorable~~43.2% ~~Section 201~~of ~~decision~~total onshipments ~~certain~~for ~~imported~~the ~~steel~~three ~~which~~months ~~became~~ended ~~effective~~April 30, ~~for~~2003 ~~imports~~compared ~~entering the~~to U47.S.6% onfor the orthree ~~after~~months ~~March~~ended April 2030, 2002,. ~~and~~The decline in shipping volume resulted from a ~~conclusion~~slow manufacturing sector due to ~~inventory~~a ~~reductions~~continuing byweak economic climate, the ~~customers~~return of steel production capacity to the market that had been previously shuttered and a ~~slight~~continued ~~improvement~~high inlevel ~~overall~~of ~~economic~~imports ~~activity.~~despite ~~Net~~the ~~sales~~implementation ~~per~~of ~~ton~~tariffs ~~shipped~~under ~~decreased 7~~Section 201.9% toThe ~~$374~~increase in net selling prices for the ~~2002~~three months ~~period~~ended April 30, 2003 compared to ~~$406~~the ~~for~~three ~~the 2001~~months ~~period~~ended April 30, ~~with~~2002 resulted ~~net~~from ~~selling~~a ~~prices~~variety ~~down~~of 1factors.9% ~~coupled~~The ~~with~~depressed aconditions ~~less~~in ~~favorable~~the steel ~~product~~market ~~mix.~~during ~~Shipments~~the offirst ~~custom~~quarter ~~carbon,~~of ~~alloy~~2002 ~~and~~abated ~~electrical~~somewhat ~~steels~~throughout ~~accounted~~fiscal 2002 ~~for~~primarily ~~47.2%~~as a result of ~~total~~reduced ~~shipments~~production ~~for~~capacity due to plant shutdowns and the ~~nine~~effects ~~months~~of ~~ended~~tariffs ~~July~~under Section ~~31,~~201 ~~2002~~allowing ~~compared~~product-pricing toimprovements 53into the early part of the first fiscal quarter of 2003.7% However, price instability and declines were experienced for the ~~nine~~remainder ~~months~~of the first half ended ~~July~~April 3130, ~~2001~~2003 due to the volume related circumstances discussed above.

The table below shows the Company’s product mix for the ~~nine~~three months ~~ended~~ ~~July~~ended April 3130, ~~2002~~2003 and ~~July~~April 3130, ~~2001~~2002.

		Net Tons Shipped				Percent of Total
		Nine Months Ended				Nine Months Ended
		Three Months Ended				Three Months Ended
		July 31,				July 31,
		April 30,				April 30,
		2002		2001		2002			2001
		2003		2002		2003			2002
CUSTOM PRODUCTS:
	Hot Rolled		~~283~~86,~~697~~356		~~229~~109,~~557~~797		3027.40	%		30.38	%
	Cold Rolled		188,~~196~~155		136,~~567~~598		12.95	%		1.89	%
	Coated products		~~139~~43,~~450~~892		~~163~~53,~~392~~040		1413.97	%		2114.69	%
TOTAL CUSTOM PRODUCTS			~~441~~138,~~343~~403		~~406~~169,~~516~~435		4743.2	%		5347.76	%
Total Commodity Products			~~493~~181,~~577~~830		~~350~~186,~~190~~300		5256.8	%		4652.34	%
Total Steel Products			~~934~~320,~~920~~233		~~756~~355,~~706~~735		100.0	%		100.0	%

The following table sets forth the percentage of WCI’s net tons shipped to various markets for the ~~nine~~ three months ended ~~July~~April 3130, ~~2002~~2003 and ~~July~~April 3130, ~~2001~~2002.

		Nine Months Ended
		Three Months Ended
		July 31,
		April 30,
Customer Category		~~2002~~2003			~~2001~~2002
	Conversion / further processing		5863.64	%		5061.37	%
	Steel service centers		1714.1	%		1915.76	%
	Construction		129.08	%		1511.49	%
	Electrical equipment		32.15	%		42.98	%
	Direct automotive		45.62	%		53.08	%
	Other		45.60	%		4.72	%
Total			100.0	%		100.0	%

Gross margin (sales less cost of products sold) was $32.79 million for the three ~~nine~~ months ended ~~July~~April 3130, ~~2002~~2003 compared to gross margin ~~(loss)~~ of ($83.4) million for the ~~nine~~three months ended ~~July~~April 3130, ~~2001~~2002. The ~~increase~~decrease in gross margin ~~reflects~~ ~~the~~is ~~lower~~due primarily ~~per~~to ~~ton~~significant ~~production~~increases ~~costs~~in ~~resulting~~raw ~~from~~material ~~significantly higher volume~~ and ~~its~~energy ~~effect on fixed operating~~ costs ~~per ton~~ and ~~higher~~the decrease in shipping volume ~~partially~~ offset somewhat by ~~lower~~higher ~~transaction~~selling prices. ~~and~~In addition, ~~less~~during ~~favorable~~the ~~product mix~~second ~~discussed~~quarter ~~above.~~of ~~The~~ 2002 ~~period~~the ~~included~~Company ~~favorable~~recorded ~~adjustments~~a ~~to inventory valuation reserves of~~ $4.~~1 million.~~7 ~~Excluding these favorable adjustments the~~benefit ~~gross~~to ~~margin~~reduce ~~(loss) was~~inventory ~~($0.4)~~valuation ~~million for the 2002 period~~reserves. Production volume ~~during~~ for the ~~nine~~three months ended ~~July~~April 3130, 2003 and April 30, 2002 was approximately 8584% ofand ~~operating capacity compared to approximately 73~~90% inof operating ~~the~~capacity, ~~2001 period~~respectively.

Operating income (loss) was ($215.40) million, or ($2316) per ton, for the ~~nine~~three months ended ~~July~~April 3130, ~~2002~~2003 compared to operating income (loss) of ($413.76) million, or ($5510) per ton, for the ~~nine~~three months ended ~~July~~April 3130, ~~2001~~2002. The ~~decrease~~ decrease in operating ~~loss~~income reflects ~~lower depreciation expense and~~ the ~~increase~~lower in gross margin discussed above and ~~also~~increased ~~included~~selling, ~~significant~~general ~~non-recurring~~and ~~items~~administrative ~~for both~~costs ~~periods~~in 2003. ~~The~~During ~~operating~~the second ~~loss~~quarter ~~for~~2002 the ~~2002~~Company ~~period~~realized ~~included~~ a $1.6 million gain ~~realized~~ from the resolution of contract issues ~~relating~~related to the sale of a third party ~~owned~~ coke plant adjacent to WCI’s facility ~~and a charge of $2~~.1 ~~million to establish a reserve for amounts due from a financially distressed~~ customer. 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 both the 2002 and 2001 periods, the operating loss was ($25.0) million, or ($27) per ton for the nine months ended July 31, 2002 compared to an operating loss of ($35.7) million, or ($47) per ton for the nine months ended July 31, 2001.

Interest ~~income and other income (~~expense), ~~net~~ was $08.54 million for the ~~nine~~three months ended ~~July~~April 3130, 2003 ~~2002~~ compared to (interest expense of $7.8) .3 million for the ~~nine~~ three months ended ~~July~~ April 3130, ~~2001. Declining cash balances during the~~ 2002 ~~period resulted in a decrease in interest income~~. InThe ~~the~~increased ~~2001~~expense ~~period,~~is ~~WCI~~attributable ~~recorded a charge of $10.5 million~~ to ~~write~~higher ~~down~~borrowing levels on the ~~carrying~~Company’s ~~value~~revolving ofcredit ~~Acme Metals 10~~facility.~~875%~~ ~~Senior Unsecured Notes owned by WCI.~~

As a result of the items discussed above, the Company had a net loss ~~before taxes~~ of $4513.4 million for the ~~nine~~three months ended ~~July~~April 3130, ~~2002~~2003 compared to a ~~loss~~ ~~before~~net ~~taxes~~ loss of $7311.48 million for the ~~nine~~three months ended ~~July~~April 3130, ~~2001~~2002.

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.

Six months ended April 30, 2003 compared to six months ended April 30, 2002

Net sales for the six months ended April 30, 2003 were $257.3 million on 623,719 tons shipped (including 55,621 tons of semifinished steel), representing a 18.4% increase in net sales and a 3.9% increase in tons shipped compared to the six months ended April 30, 2002. Net sales per ton shipped of $412 for the six months ended April 30, 2003 was 13.8% higher than the net sales per ton shipped of $362 for the comparable prior year period ended April 30, 2002, with net selling prices up 15.9% partially offset by changes to product mix. Excluding semifinished product sales, net sales per ton was $431. Shipments of custom carbon, alloy and electrical steels accounted for 45.9% of total shipments for the six months ended April 30, 2003 compared to 47.1% for the six months ended April 30, 2002. The improvements in shipping volume and increased net

selling prices for the six months ended April 30, 2003 compared to the six months ended April 30, 2002 resulted from a variety of factors. The depressed conditions in the steel market during the first quarter of 2002 abated somewhat throughout fiscal 2002 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 which became effective for imports entering the U.S. on or after March 20, 2002, and a conclusion to inventory reductions during the first quarter of 2002 by customers. These conditions allowed product-pricing improvements into the early part of the first fiscal quarter of 2003. However, price instability and declines were experienced for the remainder of the first half ending April 30, 2003. This decline in shipping volume resulted from a slow manufacturing sector due to a continuing weak economic climate, the return of steel production capacity to the market that had been previously shuttered and a continued high level of imports despite the implementation of tariffs under Section 201.

The table below shows the Company’s product mix for the six months ended April 30, 2003 and April 30, 2002.


		Net Tons Shipped				Percent of Total

		Six Months Ended				Six Months Ended
		April 30,				April 30,
		2003		2002		2003			2002

CUSTOM PRODUCTS:
	Hot Rolled		190,172		179,549		30.5	%		29.9	%
	Cold Rolled		15,362		12,659		2.5	%		2.1	%
	Coated products		80,568		90,710		12.9	%		15.1	%

TOTAL CUSTOM PRODUCTS			286,102		282,918		45.9	%		47.1	%
Total Commodity Products			337,617		317,635		54.1	%		52.9	%

Total Steel Products			623,719		600,553		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, 2003 and April 30, 2002.


		Six Months Ended
		April 30,
Customer Category		2003			2002

	Conversion / further processing		61.4	%		60.1	%
	Steel service centers		16.7	%		15.5	%
	Construction		8.6	%		12.0	%
	Electrical equipment		3.0	%		3.1	%
	Direct automotive		5.0	%		4.4	%
	Other		5.3	%		4.9	%

Total			100.0	%		100.0	%

Gross margin (sales less cost of products sold) was $15.8 million for the six months ended April 30, 2003 compared to gross margin (loss) of ($6.7) million for the six months ended April 30, 2002. The increase in gross margin is due primarily to the increased shipping volume and transaction prices discussed above offset in part by higher energy and raw material costs. In addition, during the 2003 period the Company recorded a charge of $1.6 million to increase inventory valuation reserves compared to a benefit of $3.5 million in the 2002 period. Production volume for the six months ended April 30, 2003 and April 30, 2002 was approximately 81% and 83% of operating capacity, respectively.

Operating income (loss) was ($0.8) million, or ($1) per ton, for the six months ended April 30, 2003 compared to operating income (loss) of ($21.5) million, or ($36) per ton, for the six months ended April 30, 2002. The increase in operating income reflects the improved gross margin discussed above offset somewhat by higher selling, general and administrative costs in the 2003 period. During the second quarter 2002 the Company realized a $1.6 million gain from the resolution of contract issues related to the sale of a third party coke plant adjacent to WCI’s facility.

Interest expense was $17.0 million for the six months ended April 30, 2003 compared to interest expense of $16.3 million for the six months ended April 30, 2002. The increased expense is primarily attributable to higher borrowing levels on the Company’s revolving credit facility.

As a result of the items discussed above, the Company had a net loss of $17.5 million for the six months ended April 30, 2003 compared to a net loss of $37.4 million for the six months ended April 30, 2002.

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~~operating losses, 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 ~~July 31~~April 30, ~~2002~~2003 consisted of cash and cash equivalents of $25.86 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 by inventories and receivables and is subject to eligibility requirements, as defined therein~~, and expires on December 29, 2003~~. ~~On September 13, 2002 the Company and its lenders under the Revolver agreed to amend the loan agreement as described below.~~ As of ~~July~~April 3130, ~~2002~~2003, ~~assuming this amendment had been in place,~~ the Company had ~~borrowing~~net ~~availability of $51.8 million based on eligible inventories and receivables after deducting $34.3 million of~~ borrowings outstanding ~~and~~of $1424.92 million ~~in letters of credit outstanding and before reflecting a $20 million minimum borrowing availability covenant~~.

As of April 30, 2003, WCI had net borrowing availability of $46.9 million based on eligible inventories and receivables after deducting $24.2 million of borrowings outstanding, $11.9 million in letters of credit outstanding and $5.0 million minimum availability requirement.

The Company and the industry continue to face difficult and volatile market conditions. During 2000 and 2001 there was intense downward pressure on steel prices due to the surge of imports into the United States. This resulted in the Company incurring a net loss of $100.8 million in 2001. Order entry rates and steel prices increased significantly during 2002 as a result of significant capacity reductions caused by the closing of a number of steel producers and the effects of the implementation of the Section 201 tariffs. As a result of the increased shipping volume and prices, the Company returned to profitability during the fourth quarter of 2002. However, for the full year of 2002 the Company incurred a net loss of $37.6 million and a loss of $17.5 million for the six months ended April 30, 2003. In addition to incurring significant losses during the last two years, the Company had negative cash flows which have reduced the cash resources available to support its operations.

Many of the steel companies shut down in the past two years have been restarted by other companies with cost structures significantly lower than WCI’s. This low cost capacity returning to the market coupled with continued high levels of imports and a slowing manufacturing sector has resulted in reduced volume and pricing expectations for the second half of 2003. As a result, the Company expects to incur a net loss for 2003.

The Company’s liquidity depends on its operating performance and borrowing availability under its revolving credit facility. As discussed in Note 3 to the consolidated financial statements, the Company violated the EBITDA covenant under the Revolver as of April 30, 2003. While the Company is seeking a waiver of the violation, if the Company is unable to obtain such waiver or reach an understanding with its lenders regarding their not taking any action on account of such default and is otherwise unable to secure additional financing sources to fund expected operating losses, it’s liquidity may be adversely affected and it may be required to seek bankruptcy protection. The Company is hopeful that its discussions with its lenders will yield a positive result , but no assurance can be given that this will be the case.

The Company announced on May 13, 2003 that it would not make the $15 million interest payment due June 1, 2003 on its Senior Secured Notes and that payment of this interest during the 30-day grace period provided for in the indenture governing the Senior Secured Notes is dependent upon the outcome of ongoing discussions with the Company’s lenders, as well as, the Company’s independent assessment of the feasibility of such payment in light of its liquidity. Failure of the Company to make the interest payment prior to the expiration of the 30-day grace period will result in a default under the indenture governing the Senior Secured Notes and could result in the entire principal amount thereunder becoming immediately due and payable in full. As the Company announced on May 13, 2003 and as discussed in Note 5 herein, the Company is proceeding with the restructuring of its cost and debt structures and, to this end, has initiated discussions with certain holders of the Senior Secured Notes and has also held initial meetings with the United Steelworkers of America to discuss revising the existing labor agreement. In addition, The Renco Group, Inc. has indicated that it is receptive to making the substantial cash infusion required by the restructuring plan. No assurances can be given that the restructuring discussions or negotiations will be successful. While the Company believes it has adequate liquidity to implement its restructuring plan, if market conditions continue to deteriorate or the restructuring plan can not be implemented in a timely manner, the Company’s liquidity may be substantially reduced and the Company may be required to seek bankruptcy protection.

Cash from Operations

Cash provided ~~(used)~~ by operating activities was ($5517.1) 3 million for the ~~nine~~six months ended ~~July~~April 3130, ~~2002~~2003 compared to (cash used of $3533.6) 4 million for the ~~nine months~~six months ended ~~July~~April 3130, ~~2001~~2002. The ~~decreased~~improved operating cash flow ~~for~~in the ~~2002 period~~2003 period compared to the ~~2001~~2002 period resulted primarily from ~~changes~~a insignificant ~~working~~reduction in ~~capital~~net ~~due~~loss toand anchanges ~~increase~~ in ~~accounts~~working ~~receivable~~capital ~~resulting~~primarily ~~from~~due ~~increased revenue~~to ~~and~~fluctuations ~~by an increase~~ in accounts ~~pension~~receivable ~~funding~~caused ~~partially offset~~ by achanging ~~reduction~~volume ~~in net~~and ~~loss~~selling prices.

Capital Expenditures

Capital expenditures were $83.59 million and $86.2 million for the ~~nine months~~six months ended ~~July~~April 3130, ~~2002~~2003 and ~~July~~April 3130, ~~2001~~2002, respectively. Capital expenditures are expected to be approximately $108 million for all of fiscal ~~2002~~2003. At ~~July 31,~~April ~~2002~~30, 2003, the Company had commitments for capital expenditures of approximately ~~$1.5~~ ~~million. The Company expects to complete a reline of its blast furnace within the next two years at an estimated cost of up to~~ $300.4 million.

Debt Covenants

The Revolver and the indenture governing WCI’s 10% Senior Secured Notes due December 1, 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~~ additional indebtedness. OnThe ~~January 25, 2002 the~~ Company ~~and~~is ~~its~~required ~~lenders under the Revolver agreed~~ to ~~amend the loan agreement to require the Company to~~ maintain a minimum ~~net~~ net worth, asexcluding ~~defined,~~accumulated ofother ~~not~~comprehensive ~~less~~income ~~than~~or ~~the following for each period indicated: negative $225 million through January 31~~loss, ~~2002,~~of ~~negative~~not ~~$240 million from~~less ~~February 1,~~than ~~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~~. InA ~~addition, the Company was required to maintain~~ minimum ~~availability~~ under the Revolver of $25 million. On September 13, 2002 the Company and its lenders under the Revolver further agreed to reduce the minimum borrowing availability requirement from $25 million to $20 million provided the Company is able to meet certain minimum cumulative ~~earnings before interest, taxes, depreciation and amortization (~~EBITDA~~) targets.~~ Acovenant ~~minimum cumulative EBITDA target~~ has been established for each month ~~from~~through ~~August~~October ~~2002 to December~~ 2003 ~~and~~at ~~totals~~which ~~$73.0 million~~point ~~with~~it ~~monthly~~becomes ~~increments of not more than $5.5~~a ~~million~~rolling ~~and~~twelve ~~not~~month ~~less than $4~~covenant.~~0 million.~~ InAs ~~addition~~discussed above, ~~while~~the ~~loans~~Company ~~and~~violated ~~letters of~~this ~~credit~~covenant ~~continue~~effective ~~to be subject to a $100~~April ~~million maximum~~30, ~~WCI can use up to $105 million of qualifying inventories and receivables based on established advance rates in determining availability with respect to the minimum availability covenant~~2003. The

1416

~~ability~~minimum ofcumulative EBITDA covenant was $8.0 million for the ~~Company~~three tomonths ~~meet~~ended ~~its~~January 31, ~~debt~~2003, ~~service~~$12.5 million ~~requirements~~for the six months ended April 30, 2003, $19.1 million for the nine months ended July 31, 2003 and to$26.9 million ~~comply~~for ~~with~~the twelve months ended October 31, 2003. After ~~such~~October ~~covenants~~2003 ~~will~~the beminimum ~~dependent~~EBITDA ~~upon~~covenant ~~future~~is ~~operating~~$26.9 million ~~performance~~over ~~and~~the ~~financial~~previous ~~results~~twelve month period. In addition, the Company is required to maintain minimum borrowing availability of $5 million if the Company, is unable to meet certain minimum cumulative EBITDA targets. A minimum cumulative EBITDA target has been established for each month through October 2003 at which ~~will~~point beit ~~subject~~becomes a rolling twelve month requirement. The minimum cumulative EBITDA related to ~~financial,~~the minimum ~~economic~~availability requirement is $8.7 million as of January 31, ~~political~~2003, $13.4 ~~competitive~~million ~~and~~as ~~other~~of ~~factors~~April 30, ~~affecting~~2003, ~~the~~$20.3 million ~~Company~~as of July 31, ~~many~~2003 and $28.6 million as of ~~which~~October 31, ~~are~~2003 ~~beyond its~~and ~~control~~thereafter.

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 ~~nine~~three months ended ~~July~~April 3130, ~~2002~~2003. ~~The~~ The Company does not expect to be permitted to pay dividends for the ~~foreseeable~~ 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 $2927.65 million, $2624.35 million and $2118.16 million to the DBP during fiscal years ~~2002~~2003, ~~2003~~2004 and ~~2004~~2005, respectively, which is expected to satisfy ~~the~~ the minimum funding requirements of ERISA for those periods. ~~This funding reflects~~Contributions ~~the~~during ~~results~~2003 ofwere ~~the actuarial valuation completed as of November~~$5.0 1,million ~~2001.~~during ~~Due primarily to~~ the ~~reduction~~first inquarter ~~the offset from the frozen defined contribution plan resulting from adverse investment experience~~ and ~~from~~$5.4 million ~~changes in~~ during the ~~status of~~second ~~plan participants different from assumptions~~quarter, ~~the~~and ~~Company’s~~will ~~projected~~be ~~benefit obligation increased from~~ $9811.7 million asduring ~~reported in~~ the ~~Company’s~~third ~~10-K~~quarter asand of$5.4 ~~October 31,~~million ~~2001~~during tothe ~~$114~~fourth quarter.~~9 million.~~ The Company contributed $2429.6 million, $7.2 million, and $4.2 million ~~and $6.7 million~~ to the DBP during the ~~nine months ended July 31, 2002 and~~ fiscal years ended October 31, 2002, 2001, ~~2000~~ and ~~1999~~2000, 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 operations.

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.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This statement requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. The statement is to be applied prospectively to exit or disposal activities initiated after December 31, 2002, and is not expected to have a significant impact on our financial position and results of operations.

15 In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure requirements for Guarantees, Including Indirect Guarantees of the Indebtedness of Others”. Interpretation No. 45 expands on the accounting guidance of Statements No. 5, “Accounting for Contingencies,” No. 57, “Related Party Disclosures,” and No. 107, “Disclosures about Fair Value of Financial Instruments” and incorporates without change the provisions of Interpretation No. 34, “Disclosure in Indirect Guarantees of Indebtedness of Others an Interpretation of FASB Statement No. 5” which is being superceded. Interpretation No. 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time any entity issues a guarantee, the entity must recognize an initial liability for the fair value, or market value, of the obligations it assumes under the guarantee and must disclose that information in its interim and annual financial statements. The initial recognition and measurement provisions of Interpretation No. 45 apply on a prospective basis to guarantees issued or modified after

December 31, 2002, regardless of an entity’s year end. The disclosure requirements of Interpretation No. 45 are effective for financial statements of interim or annual periods ending after December 15, 2002. Accordingly, the Company adopted the disclosure requirements of Interpretation No. 45 for the quarter ended January 31, 2003. The adoption of Interpretation No. 45 did not have a material impact on the Company’s results of operations or financial position.

In January 2003, The FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities”. Interpretation No. 46 addresses consolidation by business enterprises of variable interest entities and requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risk among parties involved. It is based on the concept that companies that control another entity through interests other than voting interests should consolidate the controlled entity. Adoption of Interpretation No. 46 did not have a material impact on the Company’s results of operations or financial position.

Outlook

~~During~~ WCI’s ~~the~~order ~~last~~backlog ~~four~~was ~~years~~approximately ~~steel~~133,000 ~~imports~~tons ~~into~~at ~~the~~April 30, U2003, 195,000 tons at October 31, 2002 and 352,000 tons at April 30, 2002.S. ~~have~~Volume ~~adversely~~for ~~affected~~the ~~shipping~~third ~~volume~~quarter ~~and~~of ~~have~~2003 ~~contributed~~is ~~significantly~~expected to ~~pricing volatility~~be approximately 250,000 tons. Excluding ~~During~~semifinished ~~this~~product ~~period~~shipments, ~~WCI~~net ~~and~~sales ~~the~~per ~~steel~~ton ~~industry~~shipped ~~have~~in ~~filed various~~the ~~trade~~third ~~cases~~quarter ~~against~~of ~~hot-rolled~~2003 ~~and~~is ~~cold-rolled~~expected ~~carbon~~to ~~steel~~decline ~~flat~~approximately ~~products~~3% from the second ~~various~~quarter ~~countries~~of in2003 ~~response~~with tocost ~~this~~of ~~increase~~goods insold ~~imports.~~per ~~While~~ton ~~various~~increasing ~~duties~~slightly compared to ~~have~~the ~~been~~second ~~imposed~~quarter ondue ~~these~~to ~~products~~lower ~~from~~capacity ~~certain~~utilization ~~countries,~~rates. toAs ~~date~~a ~~these~~result, ~~duties~~WCI ~~have~~expects ~~been~~to ~~ineffective~~incur ina ~~reducing~~net ~~overall~~loss ~~steel~~during ~~imports~~the tothird ~~the~~quarter Uof 2003.S.

In response to the surging imports, in June 2001 the U.S. Trade Representative, at the direction of President Bush, requested an investigation by the International Trade Commission under Section 201 of the Trade Act of 1974 to determine whether steel is being imported into the U.S. in such quantities as to be a substantial cause of serious injury to the U.S. steel industry. This request included the investigation of carbon and alloy flat rolled products among other products. On October 22, 2001 the ITC determined that the requisite injury had been demonstrated related to carbon and alloy slabs, hot-rolled, cold-rolled and coated products. These determinations pertain to imports from all countries except Canada. On December 19, 2001 the ITC forwarded its remedy recommendations to President Bush.

On March 5, 2002 President Bush issued his remedy regarding the Section 201 investigation which became effective for imports entering the U.S. on or after March 20, 2002. This remedy includes a tariff rate quota on carbon and alloy slabs of 30% in excess of 5.4 million tons per year adjusting over a three year period to 18% on imports in excess of 6.4 million tons and a 30% tariff on hot-rolled, cold-rolled and coated sheet and strip declining over a three year period to 18%. These remedies pertain to imports from 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 and granted by the U.S. government with a significant number of exemption requests still pending.

For the longer term, the shipping levels and realized selling prices of WCI products will continue to 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 tons. This has contributed to the recent increases in product pricing and order intake. A portion of this capacity has been or is expected to be restarted at potentially significantly lower production costs during the next six months and as a result the impact of this closed capacity may be reversed in part.

Significant uncertainty remains regarding the direction of the U.S. economy and the short-term as well as long-term condition of the steel market. Improvements in order intake rates and pricing realized during fiscal 2002 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 in the U.S. If the volume or net sales prices expected to be realized by WCI during the fourth quarter are not sustained in subsequent quarters 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.

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; the status of any ongoing restructuring discussions or negotiations; industry trends, including product pricing; competition; ~~currency~~ currency fluctuations; the loss of any significant customers; availability of ~~qualified~~ qualified personnel; major equipment failures; changes in, or the failure or inability to comply with, government regulation, including, without limitation, ~~environmental~~ 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~~ Item 3. ~~QUANTITATIVE~~Quantitative ~~AND~~and ~~QUALITATIVE~~Qualitative ~~DISCLOSURES~~Disclosures ~~ABOUT~~About ~~MARKET~~Market ~~RISK~~Risk

The Company is exposed to commodity price risk with respect to natural ~~gas~~ gas and zinc. The Company uses forward purchase contracts to manage the ~~volatility~~ volatility related to the exposure. No contracts are entered into for ~~speculative~~ speculative purposes. Based on the Company’s commodity hedge exposure at April 30, 2003 and 2002, a hypothetical 10 percent change in market rates applied to the fair value of the contracts would have no material impact on our earnings, cash flow, or financial position. 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~~2002.

1718

~~PART~~Item 4. IIControls —and ~~OTHER INFORMATION~~Procedures

Disclosure Controls

Within 90 days before filing this report, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Our disclosure controls and procedures are the controls and other procedures that we designed to ensure that information required to be disclosed in reports that we file or submit to the SEC is: (1) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and is (2) recorded, processed, summarized and reported within the time periods specified in applicable law and regulations. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the date of their evaluation, our disclosure controls and procedures were effective.

Internal Controls

Since the date of the evaluation described above, there have not been any significant changes in our internal accounting controls or in other factors that could significantly affect those controls.

PART II - OTHER INFORMATION

WCI STEEL, INC.

~~ITEM~~ Item 1. ~~LEGAL~~Legal ~~PROCEEDINGS~~Proceedings

~~For~~There ~~information~~have asbeen tono material changes in the ~~environmental~~legal matters ~~described~~reported in ~~the~~Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, ~~2001, see Part I, Item 3~~2002.

~~Williams~~Item 6. /Exhibits ~~Reber~~and v.Reports ~~WCI~~on ~~Steel, Inc.~~Form 8-K

~~Reference~~(a) isThe ~~made~~following toexhibits ~~the~~are ~~description~~filed ofwith 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. No appeal has been filed regarding the decision and the time frame for filing an appeal has expired.

ITEM 6. EXHIBITS and REPORTS ON FORM 8-K


	Exhibit 10.2.17		Amendment to Net Worth Appreciation Participation Agreements, as of February 1, 2003 between Participants and Registrant.

	Exhibit 99.1		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	Exhibit 99.2		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

(b)

The Company did not file a report on Form 8-K during the three months ended April 30, 2003, however did file a report on Form 8-K on May 13, 2003.

1820

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)


		WCI STEEL, INC. (registrant)

Date: May 28, 2003		/s/ JOHN P. JACUNSKI John P. Jacunski
		Vice President, Finance and Chief Financial Officer
		(principal financial officer)

Date: September 16, 2002		/S/ JOHN P. JACUNSKI
		John P. Jacunski
		Vice President and Chief Financial Officer (principal financial officer)

19 Table of Contents

Certification

I, Edward R. Caine, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of WCI Steel, Inc.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


	a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;


	b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and


	c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):


	a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and


	b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


Date: May 28, 2003

		/s/ EDWARD R. CAINE Edward R. Caine
		President and Chief Executive Officer

Certification

I, John P. Jacunski, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of WCI Steel, Inc.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


	a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;


	b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and


	c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and


	b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


Date: May 28, 2003

		/s/ JOHN P. JACUNSKI John P. Jacunski
		Vice President, Finance and Chief Financial Officer

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