WEIRTON STEEL CORP - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 2003.

or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to
____________.

COMMISSION FILE NUMBER 1-10244

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

DELAWARE 06-1075442
(State or other jurisdiction (IRS employer
of identification
incorporation or #)
organization)

400 THREE SPRINGS DRIVE, WEIRTON, WEST VIRGINIA 26062-4989
(Address of principal executive offices) (Zip Code)

(304) 797-2000
Registrant's telephone number, including area code:

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

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

The number of shares of Common Stock ($.01 par value) of the registrant
outstanding as of April 30, 2003 was 42,077,312.

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TABLE OF CONTENTS

ITEM

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The accompanying notes are an integral part of these statements.

3

WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

The accompanying notes are an integral part of these statements.

4

WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

The accompanying notes are an integral part of these statements.

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NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, OR IN MILLIONS OF DOLLARS
WHERE INDICATED)

NOTE 1

BASIS OF PRESENTATION

The Consolidated Condensed Financial Statements presented herein are
unaudited. The Consolidated Condensed Balance Sheet as of December 31, 2002 has
been derived from the audited balance sheet included in the Company's 2002
Annual Report on Form 10-K. Unless context otherwise requires, the terms
"Weirton Steel," "Weirton," the "Company," "we," "us" and "our" refer to Weirton
Steel Corporation and its consolidated subsidiaries. Entities of which the
Company owns a controlling interest are consolidated; entities of which the
Company owns a less than controlling interest are not consolidated and are
reflected in the consolidated condensed financial statements using the equity
method of accounting. All material intercompany accounts and transactions with
consolidated subsidiaries have been eliminated in consolidation.

Certain information and footnote disclosures normally prepared in
accordance with accounting principles generally accepted in the United States
have been either condensed or omitted pursuant to the rules and regulations of
the Securities and Exchange Commission. Although the Company believes that all
adjustments necessary for a fair presentation have been made, interim periods
are not necessarily indicative of the financial results of operations for a full
year. As such, these financial statements should be read in conjunction with the
audited financial statements and notes thereto included or incorporated by
reference in the Company's 2002 Annual Report on Form 10-K.

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

Certain reclassifications have been made to prior year amounts to conform
with current year presentation.

NOTE 2

REORGANIZATION UNDER CHAPTER 11 BANKRUPTCY CODE

On May 19, 2003, Weirton Steel Corporation filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of West Virginia (the "Court"). The
circumstances leading up to the filing of the petition are discussed at greater
length in Item 2 of this report and in our Current Report on Form 8-K filed on
May 19, 2003. Subsequent to filing the petition, Weirton plans to manage its
business as a debtor-in-possession. As a debtor-in-possession, management is
authorized to operate the business, but may not engage in transactions outside
the ordinary course of business without Court approval. In connection with the
filing of the Chapter 11 petition, Weirton has obtained several Court orders
that authorize us to pay certain pre-petition liabilities (such as employee
wages and benefits and certain of senior secured indebtedness) and take certain
actions that will preserve the going concern value of the business, thereby
enhancing the prospects of reorganization.

These financial statements have been prepared on a going concern basis,
which contemplates continuity of operations, realization of assets, and payment
of liabilities in the ordinary course of business. As a result of the Chapter 11
filing, there is no assurance that the carrying amounts of assets will be
realized or that liabilities will be settled for amounts recorded. In due course
and after negotiations with various parties in interest, Weirton expects to
present a plan of reorganization to the Court to reorganize the Company's
business and to restructure its obligations. This plan of reorganization could
change the amounts reported in the financial statements and cause a material
change in the carrying amount of assets and liabilities. Future financial
statements will be prepared in accordance with the AICPA's Statement of Position
90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7"). SOP 90-7 requires segregating pre-petition liabilities that
are subject to compromise and identifying all transactions and events that are
directly associated
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with the reorganization of the Company. A significant portion of the liabilities
recorded at March 31, 2003 is expected to be subject to compromise. Also in
accordance with SOP 90-7, after the filing date, interest will no longer be
accrued on any unsecured or undersecured debt.

Under bankruptcy law, actions by creditors to collect pre-petition
indebtedness owed by Weirton at the filing date are stayed and other
pre-petition contractual obligations may not be enforced against Weirton. In
addition, Weirton has the right, subject to Court approval and other conditions,
to assume or reject any pre-petition executory contracts and unexpired leases.
Parties affected by these rejections may file claims with the Court. Weirton is
in the process of submitting declarations, schedules and other materials setting
forth the Company's assets and liabilities as of the date of the petition. The
amounts of claims filed by creditors could be significantly different from their
recorded amounts. Due to material uncertainties, it is not possible to predict
the length of time Weirton will operate under Chapter 11 protection, the outcome
of the proceedings in general, whether Weirton will continue to operate under
its current organizational structure, the effect of the proceedings on Weirton's
business or the amount or nature of any recovery by creditors and equity holders
of Weirton.

NOTE 3

LIQUIDITY AND FINANCING ARRANGEMENTS

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(1) Included in the current portion of long-term debt at March 31, 2003 and
December 31, 2002, was $13.0 million and $6.0 million, respectively, in
contingent interest payments. These contingent payments are based on excess
cash flow as defined in the indentures governing the new debt securities
resulting from our 2002 exchange offers. A gain will be recognized for any
contingent payments that are not required to be made.

Senior Credit Facility -- DIP Facility

At March 31, 2003 and December 31, 2002, the Company had borrowed $144.6
million and $115.1 million, respectively, under its 2002 amended and restated
revolving senior credit facility with a syndicate of lenders (the "Senior Credit
Facility"), which is presented net of $7.9 million and $5.8 million,
respectively, of all available cash from lockboxes. At March 31, 2003 and
December 31, 2002, the Company also utilized an additional $0.5 million under
its letter of credit sub-facility. After consideration of amounts outstanding
under the letter of credit sub-facility, the Company had $13.1 million and $23.0
million, respectively, available for additional borrowing under the senior
credit facility as of March 31, 2003 and December 31, 2002.

The Company has obtained a debtor-in-possession financing facility (the
"DIP Facility") structured to provide us with up to $225.0 million of financing
during the course of our bankruptcy case. The DIP Facility

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consists of a term loan of $25.0 million and a revolving loan facility of up to
$200.0 million whose borrowing base is determined by our levels of accounts
receivable and inventory in a manner substantially similar to the Senior Credit
Facility. The DIP Facility also includes a letter of credit subfacility of up
$5.0 million. The DIP Facility revolving loan lenders consist of Fleet Capital
Corporation, Foothill Capital Corporation, The CIT Group/Business Credit, Inc.,
GMAC Commercial Finance LLC and Transamerica Business Capital Corporation, all
of whom were lenders to Weirton under the Senior Credit Facility, and the DIP
Facility term loan lender is Manchester Securities Corporation. Fleet Capital
Corporation acts as Agent for the DIP Facility lenders. The DIP Facility is
collateralized by a senior lien on our inventories, accounts receivable,
property, plant and equipment and substantially all our other tangible and
intangible assets. Priority in the plant, property and equipment collateral goes
first to the term loan lender and in all other collateral to the revolving loan
lenders. Proceeds from permitted sales of the respective types of collateral
must be used to pay down the related loan, and, in the case of revolving loans,
may become available for reborrowing. The DIP Facility is to have a term
extending through the earliest to occur of (i) November 20, 2004, (ii) the
occurrence of a Default or Event of Default (as defined in the DIP Facility), or
(iii) confirmation of a final bankruptcy reorganization plan, unless the
facility is terminated earlier as provided by its terms. However, the DIP
Facility will not become effective, and no loans are required to be made, unless
by May 23, 2003 certain conditions are satisfied, including: (i) the bankruptcy
court entering a satisfactory emergency financing order and other "first day"
orders; (ii) the Agent and Lenders receiving a satisfactory budget from the
Company; (iii) the absence of Events of Default and proceedings challenging the
DIP Facility; (iv) the Company's payment of the required fees and expenses; and
(v) the Company's delivering required documentation. On May 20, 2003, the Court
granted applications for orders satisfying the DIP Facility's requirements in
that regard, and the Company is proceeding to satisfy the remaining conditions
to effectiveness of the Facility as promptly as possible.

In the absence of default, we are required to pay interest on outstanding
amounts under the revolving portion of the DIP Facility at our option of either
(1) the prime rate announced from time to time by Fleet Bank, plus 2.25 % or (2)
LIBOR, plus 3.75%. The non-default interest rate applicable to the term portion
is 14.5% per annum. Default rates of interest on revolving loans and the term
loan under the DIP Facility are increased by 2.0% and 3.0% per annum,
respectively, over the non-default rates. To obtain and maintain the DIP
Facility we were required to pay, and will be required to pay from time to time,
certain non-refundable fees, including a facility fee, closing fee, unused line
fee, administrative fee and monitoring fee. In addition, a deferred fee will be
payable to the revolving lenders upon the earliest to occur of (i) confirmation
of a plan of reorganization, (ii) sale of substantially all our assets or (iii)
repayment in full of our obligations under the DIP Facility. Optional prepayment
of the term loan under the DIP Facility also requires a prepayment fee which
varies depending on the time of payment.

The DIP Facility contains certain representations and warranties about
Weirton and its business, affirmative and negative covenants requiring or
restricting Weirton's engaging in specified transactions and activities, and
Events of Default, many of which have been derived from similar provisions in
our former Senior Credit Facility and others which we believe are customary for
a facility of this type. As in the prior facility, amounts available for
revolving borrowings will depend on calculating Weirton's borrowing base of
eligible receivables and inventory and will be subject to certain limitations
and reserves. However, availability has been increased from the prior facility,
which required a minimum availability of $20.0 million at all times, to
requiring a minimum initial availability under the DIP Facility of $10.0
million. This "availability block" increases over time to a $20.0 million level
by July 31, 2004. The DIP Facility also contains certain performance covenants
focused on meeting financial objectives and complying with budgetary
limitations, the failure to observe which could result in one or more Events of
Default. The most important financial covenants require Weirton to attain
increasing amounts of cumulative EBITDAR (earnings before interest expense,
income taxes, depreciation and Restructuring Expenses, as defined in the DIP
Facility) for specified periods during the term of the DIP Facility and minimum
monthly EBITDAR during the last five months of the term. In addition, Weirton
may not permit Restructuring Expenses to exceed monthly budgeted amounts by more
than 10% overall and by more than 15% on a categorical basis. Beginning after
July 31, 2003, Weirton is not permitted to allow consolidated accounts payable
at the end of any month to be less than 50% of the projected budgeted amount for
that date.

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The DIP Facility Events of Default encompass a wide range of occurrences,
including, among other things: failure to pay obligations in a timely manner;
breaches of representations, warranties and covenants (subject, in some cases to
cure periods); business disruptions and other factors producing a Material
Adverse Effect (as defined in the DIP Facility) on Weirton's business, assets,
financial condition or income (other than as contemplated in our budget);
material uninsured losses to collateral; changes in control and executive
management; defaults on other indebtedness in excess of $0.5 million in the
aggregate; and a number of events potentially affecting our bankruptcy case
adversely, including our failure to file a plan of reorganization within 270
days of the petition filing date, the filing of reorganization plans
unacceptable to any DIP Facility lender, the conversion of our case into a
Chapter 7 (liquidation) proceeding, the modification of our emergency financing
order in a manner unacceptable to the DIP Facility lenders, the failure to have
a final financing order entered within 30 days of filing our petition, the
filing of certain bankruptcy pleadings, the granting of authority to Weirton to
incur certain impermissible liens or impermissible debt, the appointment of a
bankruptcy trustee with enlarged powers, or the issuance of an order lifting the
automatic stay in bankruptcy to allow persons to proceed against any of
Weirton's material property.

The DIP Facility replaces our Senior Credit Facility, of which
approximately $160.6 million was outstanding on the petition filing date. The
DIP Facility provides that, during an initial period commencing with the
issuance by the bankruptcy court of an emergency financing order, the maximum
revolving credit amount will be limited to our pre-petition obligations
outstanding, plus $7.5 million. Following the initial period, which ends on the
earlier of (i) the entry by the bankruptcy court of a final financing order or
(ii) 30 days after the filing of the petition, the maximum revolving credit
amount will be $200.0 million. Initial borrowings under the DIP Facility, of
which the term loan facility of $25.0 million must be drawn down, are to be used
to repay outstanding amounts under the Senior Credit Facility. Although funded
initially, the term loan proceeds are to be held in a cash collateral account
pending their release following issuance of the final financing order and
delivery of title insurance policies covering agreed upon parcels of the real
property collateral. At that time, the net term loan proceeds are to be applied
to reduce the amount of outstanding DIP Facility revolving loans.

The description of the DIP Facility provided in this report is qualified by
the full text of that document filed as Exhibit 10.1 to this report.

NOTE 4

PENSIONS

During February 2003, the Company's unionized employees ratified new labor
agreements which, among other things, provided for a freeze of further benefit
accruals under the Company's defined benefit pension plan as of April 30, 2003.
The Company applied the same freeze to its non-unionized workforce. In
accordance with SFAS No. 88, "Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits," the
Company recognized a pension curtailment charge of $38.8 million. The
curtailment charge reflects the full recognition of the unrecognized prior
service cost and transition obligation, since all benefit accrual associated
with expected future years of service has been eliminated. Because the pension
plan freeze constituted a significant event, the Company remeasured its pension
plan assets and liabilities as of February 28, 2003. The accounting rules
provide that if, at any plan measurement date, the fair value of plan assets is
less than the plan's accumulated benefit obligation ("ABO"), the sponsor must
establish a liability at least equal to the amount by which the ABO exceeds the
fair value of plan assets. The liability must be offset by the recognition of an
intangible asset and/or a charge against stockholders' deficit. Even though the
freeze operates to moderate the Company's long term funding burden with respect
to the plan, because the Company was required to recognize all prior service
cost and transition obligation with the pension curtailment, the difference
between the ABO and plan assets at February 28, 2003 was taken as a direct
charge to stockholders' deficit.

The Company had applied to the Internal Revenue Service (the "IRS") for
waivers regarding its pension plan funding obligations for 2002 and 2003. In
April 2003, the IRS granted the Company contingent funding waivers for the 2002
plan year and the first quarterly 2003 plan year contributions. The effect of
the waivers would have been to allow Weirton to stretch out its required funding
for the plan over a five year period. The

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waivers were granted contingent upon the Company providing "adequate security"
for its rescheduled obligations within 90 days of issuance. The DIP Facility and
Court orders applicable to the Company in connection with its bankruptcy case
will prevent the Company from providing security to the PBGC.

NOTE 5

INVENTORIES

Inventories consisted of the following:

NOTE 6

EARNINGS PER SHARE

For the three months ended March 31, 2003 and 2002, basic and diluted
earnings per share were the same; however, securities totaling 1,463,801 and
1,495,679, respectively, were excluded from both the basic and diluted earnings
per share calculations due to their anti-dilutive effect.

For the three months ended March 31, 2003 and 2002, there were an
additional 1,603,333 and 1,798,000 options, respectively, outstanding for which
the exercise price was greater than the average market price.

NOTE 7

STOCK BASED COMPENSATION

At March 31, 2003, the Company has two stock-based employee compensation
plans. The Company accounts for those plans under the recognition and
measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to
Employees." No stock-based employee compensation cost is reflected in the
Company's net loss, as all options granted under those plans had an exercise
price equal to the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on the Company's net loss and
earnings per share if the Company had applied the fair value recognition
provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation,"
to stock-based employee compensation.

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NOTE 8

CLAIMS AND ALLOWANCES

The Company's policy is to fully reserve for claims that have been or may
be incurred on all products that have been shipped. The reserve is calculated
based on claims that have been submitted but not settled. The calculation also
considers anticipated claims based on historical performance. The reserve for
claims and allowances is netted against accounts receivable for financial
reporting purposes.

The following is a rollforward of the Company's claims and allowances
activity for the first quarter of 2003:

Beginning Balance at December 31, 2002:..................... $4,521
Additions to Reserve...................................... 3,468
Settled Claims............................................ (3,858)
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Ending Balance at March 31, 2003:........................... $4,131
======

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

This discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with and are qualified in
their entirety by the unaudited consolidated condensed financial statements of
the Company and notes thereto. The unaudited consolidated condensed financial
statements of Weirton Steel Corporation include the accounts of its wholly and
majority owned subsidiaries. Unless context otherwise requires, the terms
"Weirton," "the Company," "we," "us" and "our" refer to Weirton Steel
Corporation and its consolidated subsidiaries.

INDUSTRY OVERVIEW

Since the beginning of the steel import crisis in 1998, domestic companies
and unions lobbied Congress and the White House for action to deal with the
record surge of foreign imports, especially those that violated U.S. trade laws.
Among these efforts, in January 2002, a steel industry executive group made
recommendations for governmental steps believed necessary to deal with the
continuing industry crisis and to encourage industry consolidation and capacity
rationalization. This included trade measures, such as tariffs, and legislative
and regulatory relief from the industry's legacy issues, specifically its
surging liabilities for accrued, unfunded pensions and retiree healthcare
benefits. In March 2002, the Bush Administration initiated a three-year, stepped
tariff program providing substantial trade relief. Subsequent to the imposition
of the tariffs, a large number of tariff exclusion applications were filed. The
tariff program is subject to an upcoming mid term review. Furthermore, no
legislative changes have been implemented to address the industry's legacy
issues. As a result, the domestic steel industry has been left to deal with
consolidation prospects and legacy liabilities primarily through a largely
unpredictable bankruptcy process. The Pension Benefit Guaranty Corporation (the
"PBGC"), the federal agency insuring pension benefits, generally has moved to
terminate the underfunded plans of bankrupt companies relieving them of future
accruals for pension service.

Consolidations of production assets are now reshaping the competitive
structure of the domestic steel industry. A pattern has emerged whereby
steelmaking assets of bankrupt producers are being acquired free of legacy
liabilities in connection with the liquidation, instead of reorganization, of
those bankrupt companies, with the result that the acquirer can operate at a
lower cost than other producers with such costs. In February 2002, a new entity,
International Steel Group ("ISG"), purchased substantially all the integrated
production facilities of bankrupt LTV Steel Corp. in a Chapter 7 liquidation
auction. ISG subsequently restarted a portion of those facilities in addition to
purchasing and restarting the idled assets of another bankrupt company, Acme
Steel. In addition to operating without the burden of predecessor legacy costs,
ISG forged an agreement with the United Steelworkers of America (the "USWA")
that represents a significant departure from the traditional USWA contract. The
new agreement contains higher productivity benchmarks, incentives linked to
profits and major changes to work rules, pay classifications and general
operating language. The structure of this type of agreement could leave steel
companies with traditional contract language at a significant competitive
disadvantage. On

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March 13, 2003, ISG entered into a definitive agreement with Bethlehem Steel
Corporation ("Bethlehem"), the second largest integrated steelmaker, which had
filed for Chapter 11 bankruptcy protection in October 2001, to purchase
substantially all of Bethlehem's assets. After reaching a similar labor
agreement with the USWA covering the Bethlehem facilities, ISG announced that it
had completed the acquisition on May 7, 2003.

On April 9, 2003, United States Steel Corporation ("US Steel"), the largest
domestic producer, announced that it too had reached a broad labor agreement
with the USWA, the implementation of which would be subject to its successful
acquisition of National Steel Corporation ("National"), which had filed for
Chapter 11 bankruptcy protection in March 2002. In the first quarter of 2003,
National became the subject of a bidding contest between US Steel and AK Steel
Corporation ("AK"). However, on April 21, 2003, after AK was unable to reach an
accord with the USWA, the court supervising National's bankruptcy approved US
Steel's bid, and the parties signed a definitive asset acquisition agreement
which they have announced is expected to close by the end of the second quarter
of 2003. Weirton's management believes that it is likely that, similar to the
ISG situation, the acquired National assets will operate with no predecessor
legacy liabilities, and US Steel will be seeking to achieve greater synergies
not only from the acquired assets, but also from the application of its broad
USWA labor agreement to its other facilities. With the acquisition of the
National and Bethlehem assets, US Steel and ISG, respectively, will become the
largest and second largest domestic producers and between them will account for
an estimated annual capacity of approximately 37 million tons of raw steel or
30% of domestic market share. In narrower lines such as tin mill products where
Weirton is a major competitor with the second largest market share of
approximately 24%, US Steel's acquisition of National's tin mill facilities
(following its acquisition of the former LTV Steel tin operations in 2001) will
result in US Steel having an estimated tin market share of approximately 41%.

RECENT DEVELOPMENTS

As part of an announced $120 million cost reduction and margin improvement
program initiated early in the first quarter of 2003, the Company's unionized
employees ratified new labor agreements which, among other things, provided for
a freeze of further benefit accruals under the Company's defined benefit pension
plan and a 5% wage reduction and other benefit reductions. The Company applied
the same freeze and wage reduction to its non-unionized work force. Secondly,
retired employees of Weirton were requested to contribute to their health care
costs through co-payment and voluntary changes to their health care benefit
plan. These solicited changes to retiree healthcare were not implemented.

The Company had applied to the Internal Revenue Service (the "IRS") for
waivers regarding its pension plan funding obligations for 2002 and 2003. In
April 2003, the IRS granted the Company contingent funding waivers for the 2002
plan year and the first quarterly 2003 plan year contributions. The effect of
the waivers would have been to allow Weirton to stretch out its required funding
for the plan over a five year period. The waivers were granted contingent upon
the Company providing "adequate security" for its rescheduled obligations within
90 days of issuance. The DIP Facility and Court orders applicable to the Company
in connection with its bankruptcy case will prevent the Company from providing
security to the PBGC.

Notwithstanding these cost reduction and liquidity improvement steps, since
March 2003 markedly weaker domestic steel industry markets for Weirton's
products, in particular its commodity sheet products, have resulted in
significantly lower than anticipated product prices and shipment and order
levels, which have adversely affected Weirton's current operating results and
financial position as well as its anticipated results and liquidity position in
the second quarter of 2003.

REORGANIZATION UNDER CHAPTER 11 BANKRUPTCY CODE

On May 19, 2003, Weirton Steel Corporation filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of West Virginia (see Note 2 in the
accompanying financial statements). Although the petition was "voluntary," the
underlying causes leading to it have stemmed from circumstances which many
others in our industry face and who have also filed. Despite having achieved
nearly $115 million in net cost reductions across a broad front from labor and
employment concessions, outside debt restructuring and production efficiencies
since the beginning of 2001, we

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have been unable to overcome the injury caused by record levels of unfairly
traded steel imports and a slowing economy that have severely reduced prices,
shipments and production and the significant cost disadvantages that we operate
under compared to reconstituted steel mills as it relates to legacy liabilities.
The resulting sustained operating losses and negative cash flow have heavily
damaged our financial condition to the point that we will be unable to recover
by further voluntary actions. Furthermore, recent developments in our industry,
including a pattern of consolidation of capacity by and into larger entities,
have significantly frustrated our announced strategic objectives to grow our
business through targeted acquisitions. At the same time, these developments
have presented us with the prospect of competing against reorganized capacity
which will be operating to a great extent free of the heavy legacy costs which
we have been carrying and cannot reduce further without bankruptcy intervention.

Following our filing, we intend to manage our business as a
"debtor-in-possession." As a debtor-in-possession, management is authorized to
operate the business, but may not engage in transactions outside the ordinary
course of business without Court approval. In connection with the filing of the
Chapter 11 petition, Weirton obtained several Court orders that authorized us to
pay certain pre-petition liabilities, which has allowed our business to continue
without significant interruption.

During the Chapter 11 process and subsequent to negotiations with parties
in interest, we intend to develop and submit to the Court a plan of
reorganization to return us to sustained profitability. Under our DIP Facility,
we are required to propose such a plan within 270 days of filing our petition
and to achieve its confirmation within 18 months. We believe key objectives of
the plan must include finding a responsible solution to our accrued legacy
obligations, restructuring burdensome contracts, working with our principal
union, the Independent Steelworkers Union (the "ISU"), to further increase
productivity and reduce costs (particularly employment and healthcare costs) so
that we are not disadvantaged relative to our reorganized competitors, and
simplifying and improving our capital and governance structure. We also intend
to continue working with governmental sources to remedy unfair trade practices
and promote efficient domestic steel industry consolidation consistent with the
best interests of our stakeholders and the traditions of our Company as a
steelmaker in the Upper Ohio Valley for more than 90 years.

LIQUIDITY AND CAPITAL RESOURCES

Total liquidity from cash and financing facilities amounted to $21.4
million at March 31, 2003 as compared to $29.0 million at December 31, 2002. As
of May 9, 2003, our liquidity from cash and financing facilities was $15.1
million. These calculations are based on our then effective Senior Credit
Facility. Our liquidity has continued to decline primarily as a result of
operating losses from prolonged adverse market conditions.

As of March 31, 2003, the Company had cash and equivalents of $0.4 million
compared to $0.2 million as of December 31, 2002. The Company's statements of
cash flows for the three months ended March 31 are summarized below:

The $27.8 million net cash outflow from operating activities resulted from
adverse market conditions prevailing in the domestic steel industry. Accounts
payable decreased during the first quarter of 2003 due to a constriction in our
trade credit. To help offset the difficult market conditions, we undertook
various measures during 2002 and 2001 to enhance our operating cash flow by
reducing overall operating costs and net working capital investment.

Net cash used by investing activities primarily included $1.7 million and
$1.8 million of capital expenditures for the quarters ended March 31, 2003 and
2002, respectively.

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The $28.8 million in net cash provided by financing activities in the first
quarter of 2003 consisted of $29.5 million in borrowings under our Senior Credit
Facility. Cash provided by financing activities in the first three months of
2002 consisted of $14.3 million in cash received under vendor financing
arrangements we implemented in 2001.

At March 31, 2003 and December 31, 2002, the Company had borrowed $144.6
million and $115.1 million, respectively, under the Senior Credit Facility,
which is presented net of $7.9 million and $5.8 million, respectively, of all
available cash from lockboxes. At March 31, 2003 and December 31, 2002, the
Company also utilized an additional $0.5 million under the Senior Credit
Facility's letter of credit sub-facility. After consideration of amounts
outstanding under the letter of credit sub-facility, the Company had $13.1
million and $23.0 million, respectively, available for additional borrowing
under the Senior Credit Facility as of March 31, 2003 and December 31, 2002.

The Company has obtained a debtor-in-possession financing facility
structured to provide us with up to $225.0 million of financing during the
course of our bankruptcy case. The DIP Facility comprises a term loan facility
of $25.0 million and a revolving loan facility of up to $200.0 million whose
borrowing base is determined by our levels of accounts receivable and inventory
in a manner substantially similar to the Senior Credit Facility. The DIP
Facility also includes a letter of credit subfacility of up $5.0 million. The
DIP Facility is to have a term extending through the earliest to occur of (i)
November 20, 2004, (ii) the occurrence of a Default or Event of Default (as
defined in the DIP Facility), or (iii) confirmation of a final bankruptcy
reorganization plan, unless the facility is terminated earlier as provided by
its terms. However, the DIP Facility will not become effective, and no loans are
required to be made, unless by May 23, 2003 certain conditions are satisfied,
including: (i) the bankruptcy court entering a satisfactory emergency financing
order and other "first day" orders; (ii) the Agent and Lenders receiving a
satisfactory budget from the Company; (iii) the absence of Events of Default and
proceedings challenging the DIP Facility; (iv) the Company's payment of the
required fees and expenses; and (v) the Company's delivering required
documentation. On May 20, 2003, the Court granted applications for orders
satisfying the DIP Facility's requirements in that regard, and the Company is
proceeding to satisfy the remaining conditions to effectiveness of the Facility
as promptly as possible.

In the absence of default, we are required to pay interest on outstanding
amounts under the revolving portion of the DIP Facility at our option of either
(1) the prime rate announced from time to time by Fleet Bank, plus 2.25 % or (2)
LIBOR, plus 3.75%. The non-default interest rate applicable to the term portion
is 14.5% per annum. Default rates of interest on revolving loans and the term
loan under the DIP Facility are increased by 2.0% and 3.0% per annum,
respectively, over the non-default rates. To obtain and maintain the DIP
Facility we were required to pay, and will be required to pay from time to time,
certain non-refundable fees, including a facility fee, closing fee, unused line
fee, administrative fee and monitoring fee. In addition, a deferred fee will be
payable to the revolving lenders upon the earliest to occur of (i) confirmation
of a plan of reorganization, (ii) sale of substantially all our assets or (iii)
repayment in full of our obligations under the DIP Facility. Optional prepayment
of the term loan under the DIP Facility also requires a prepayment fee which
varies depending on the time of payment.

As in the prior facility, amounts available for revolving borrowings will
depend on calculating Weirton's borrowing base of eligible receivables and
inventory and will be subject to certain limitations and reserves. However,
availability has been increased from the prior facility, which required a
minimum availability of $20.0 million at all times, to requiring a minimum
initial availability under the DIP Facility of $10.0 million. This "availability
block" increases over time to a $20.0 million level by July 31, 2004. The DIP
Facility also contains certain performance covenants focused on meeting
financial objectives and complying with budgetary limitations, the failure to
observe which could result in one or more Events of Default. The most important
financial covenants require Weirton to attain increasing amounts of cumulative
EBITDAR (earnings before interest expense, income taxes, depreciation and
Restructuring Expenses, as defined in the DIP Facility) for specified periods
during the term of the DIP Facility and minimum monthly EBITDAR during the last
five months of the term. In addition, Weirton may not permit Restructuring
Expenses to exceed monthly budgeted amounts by more than 10% overall and by more
than 15% on a categorical basis. Beginning after July 31, 2003, Weirton is not
permitted to allow consolidated accounts payable at the end of any month to be
less than 50% of the projected budgeted amount for that date.
14

The DIP Facility replaces our Senior Credit Facility, of which
approximately $160.6 million was outstanding on the petition filing date. The
DIP Facility provides that, during an initial period commencing with the
issuance by the bankruptcy court of an emergency financing order, the maximum
revolving credit amount will be limited to our pre-petition obligations
outstanding, plus $7.5 million. Following the initial period, which ends on the
earlier of (i) the entry by the bankruptcy court of a final financing order or
(ii) 30 days after the filing of the petition, the maximum revolving credit
amount will be $200.0 million. Initial borrowings under the DIP Facility, of
which the term loan facility of $25.0 million must be drawn down, are to be used
to repay outstanding amounts under the Senior Credit Facility. Although funded
initially, the term loan proceeds are to be held in a cash collateral account
pending their release following issuance of the final financing order and
delivery of title insurance policies covering agreed upon parcels of the real
property collateral. At that time, the net term loan proceeds are to be applied
to reduce the amount of outstanding DIP Facility revolving loans.

Depending upon general business conditions and the Company's ability to
obtain additional cost savings and build satisfactory trade credit, we estimate
that the DIP Facility provides initially sufficient liquidity to allow for the
payment of post-petition delivery of goods and services and permit operations to
continue to meet customer needs.

THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS
ENDED MARCH 31, 2002

In the first quarter of 2003, the Company recognized a net loss of $74.8
million or $1.78 per diluted share compared to a net loss of $44.6 million or
$1.06 per diluted share for the same period in 2002. During the first quarter of
2003, the Company recognized a pension curtailment charge of $38.8 million in
relation to the freeze of its defined benefit pension plan.

Net sales in the first quarter of 2003 were $259.9 million, an increase of
$23.8 million or 10% from the first quarter of 2002. Total shipments in the
first quarter of 2003 were 553 thousand tons compared to the first quarter of
2002 shipments of 566 thousand tons.

Tin mill product net sales for the first quarter of 2003 were $128.3
million, an increase of $8.0 million from the first quarter of 2002. Shipments
of tin mill product in the first quarter of 2003 were 217 thousand tons compared
to 201 thousand tons in the first quarter of 2002. The increase in tin mill
product revenue is due to changes in volume and mix.

Sheet product net sales for the first quarter of 2003 were $131.6 million,
an increase of $15.8 million from the first quarter of 2002. Shipments of sheet
product in the first quarter of 2003 were 336 thousand tons compared to 365
thousand tons in the first quarter of 2002. The increase in sheet product
revenue resulted from an increase in sheet product selling prices, partially
offset by a decrease in volume.

Cost of sales for the first quarter of 2003 were $271.7 million, or $491
per ton, compared to $250.3 million, or $442 per ton, for the first quarter of
2002. The increase in cost of sales per ton was primarily attributable to an
increase in the Company's raw material and natural gas costs in addition to
pension costs, partially offset by the Company's savings initiatives.

The Company uses production variable depreciation to calculate depreciation
expense. During the first quarter of 2003, the Company had a scheduled hot mill
furnace outage which reduced the production of hot bands off the hot mill and
depreciation expense.

During February 2003, the Company's unionized employees ratified new labor
agreements which, among other things, provided for a freeze of further benefit
accruals under the Company's defined benefit pension plan. The Company applied
the same freeze to its non-unionized workforce. In accordance with SFAS No. 88,
"Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits," the Company recognized a pension
curtailment charge of $38.8 million. The curtailment charge reflects the full
recognition of the unrecognized prior service cost and transition obligation,
since all benefit accrual associated with expected future years of service has
been eliminated.

15

The Company's income from unconsolidated subsidiaries during the first
quarter of 2003 is related to WeBCo International LLC ("WeBCo"), which sells
excess and secondary sheet products.

Interest expense decreased $6.3 million in the first quarter of 2003 when
compared to the same period in 2002. The decrease is a result of the exchange
offers that were completed in the second quarter of 2002. As of March 31, 2003,
the Company had $144.6 million outstanding under its new senior credit facility,
an increase of $29.5 million from the first quarter of 2002.

First quarter 2003 other income decreased $1.6 million when compared to the
same period in 2002. During the first quarter of 2003, the Company was able to
sell a portion of its NOx allowances for $1.3 million. During the first quarter
of 2002, the Company received approximately $3.2 million from the sale of
Prudential Financial stock it had received in 2002 upon the demutualization of
Prudential.

Because the pension plan freeze constituted a significant event, the
Company remeasured its pension plan assets and liabilities as of February 28,
2003. The accounting rules provide that if, at any plan measurement date, the
fair value of plan assets is less than the plan's accumulated benefit obligation
("ABO"), the sponsor must establish a liability at least equal to the amount by
which the ABO exceeds the fair value of plan assets. The liability must be
offset by the recognition of an intangible asset and/or a charge against
stockholders' deficit. Because the Company was required to recognize all prior
service cost and transition obligation with the pension curtailment, the
difference between the ABO and plan assets at February 28, 2003 is a direct
charge to stockholders' deficit and it is shown as a component of other
comprehensive income in the statement of operations and comprehensive loss.

The Company recorded no income tax benefit in the first quarter of 2003 and
2002. Continuing losses and the Company's voluntary bankruptcy petition have
raised doubts about the Company's ability to continue to realize additional
deferred tax assets in the future, such as operating loss carryforwards, prior
to their expiration. Therefore, deferred tax assets generated in the first
quarter of 2003 and 2002 were offset by valuation allowances.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The Company believes the accounting principles
chosen are appropriate under the circumstances, and that the estimates,
judgments and assumptions involved in its financial reporting are reasonable.
Actual results could differ from those estimates.

Management believes that the following are the more significant judgments
and estimates used in the preparation of the financial statements.

Reserves and Valuation Allowances: The Company evaluates its significant
reserves and valuation allowances and makes revisions to the estimates as
required. The ultimate cost or loss to the Company changes as additional
information becomes available. The Company uses the following policies to
establish its reserves:

- Accounts Receivable -- Management analyzes accounts receivable
balances on an ongoing basis, including historical bad debt and
customer claims information, customer creditworthiness and current
economic trends, to evaluate the adequacy of the allowances for
accounts receivable. The Company records appropriate provision for
loss whenever reasonable doubt exists as to the collectibility of
customer accounts receivable.

- Deferred Tax Assets -- On a quarterly basis, the Company considers
the likelihood of its ability to realize the future benefit of its
deferred tax assets given the uncertainty of the domestic steel
market. The Company utilizes information regarding historical and
projected financial performance and other factors relating to the
generation of taxable income as a basis for its estimates. During
2001, the Company determined that a valuation allowance was
necessary for all of its net deferred tax assets. The Company will
continue to evaluate the need for a valuation allowance on a
quarterly basis.

16

- Environmental Matters -- Environmental matters are evaluated on an
individual occurrence basis. The Company works closely with its
environmental consultants and government agencies to estimate the
cost of environmental matters. Estimates are adjusted as information
becomes available to support such changes.

Pensions and Other Postemployment Benefits: Pension and other
postemployment benefit ("OPEB") expenses are based on, among other things,
assumptions of the discount rate, estimated return on plan assets, wage and
salary increases, the mortality of participants, and the current level and
escalation of health care costs in the future. On an annual basis, management
determines the assumptions to be used to compute pension and OPEB expense and
pension contributions based on discussions with the Company's actuaries and
other advisors. Changes in the factors discussed above and differences between
actual and assumed changes in the present value of liabilities or assets could
cause annual expense or contributions to increase or decrease materially from
year to year.

Asset Impairments: Based on its recent operating losses, the Company has
made estimates of the undiscounted future cash flow over the remaining useful
lives of its operating assets to determine if the assets are impaired. As of
December 31, 2002, the Company determined that no impairment existed. Estimates
of future cash flows in volatile market conditions are inherently subjective and
these estimates of future expected cash flows may change by a material amount in
the future.

Inventory: Inventories are stated at the lower of cost or market, cost
being determined by the first-in, first-out method. The Company records an
appropriate provision for net realizable value which is based on, among other
things, estimated future selling prices.

These financial statements have been prepared on a going concern basis,
which contemplates continuity of operations, realization of assets, and payment
of liabilities in the ordinary course of business. As a result of the Chapter 11
filing, there is no assurance that the carrying amounts of assets will be
realized or that liabilities will be settled for amounts recorded. In due course
and after negotiations with various parties in interest, Weirton expects to
present a plan of reorganization to the Court to reorganize the Company's
business and to restructure its obligations. This plan of reorganization could
change the amounts reported in the financial statements and cause a material
change in the carrying amount of assets and liabilities. Future financial
statements will be prepared in accordance with the AICPA's Statement of Position
90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7"). SOP 90-7 requires segregating pre-petition liabilities that
are subject to compromise and identifying all transactions and events that are
directly associated with the reorganization of the Company. A significant
portion of the liabilities recorded at March 31, 2003 is expected to be subject
to compromise. Also in accordance with SOP 90-7, after the filing date, interest
will no longer be accrued on any unsecured or undersecured debt.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities," ("FIN 46"). FIN 46 requires the primary beneficiary
to consolidate certain variable interest entities ("VIEs"). The primary
beneficiary is generally defined as one having the majority of the risks and
rewards arising from the VIE. For VIEs in which a significant (but not majority)
variable interest is held, certain disclosures are required. The consolidation
requirements of FIN 46 apply immediately to VIEs created after January 31, 2003.
The consolidation requirements apply to older entities in the first fiscal year
or interim period beginning after June 15, 2003. The adoption of FIN 46 is not
applicable to the financial position or results of operations of the Company.

In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure; Amendment of FASB Statement
No. 123." SFAS 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS 123 to provide more frequent and more prominent disclosure. The Company has
adopted both the annual and interim disclosure provisions of SFAS 148, and these
disclosures are properly included in the notes to these consolidated condensed
financial statements. The

17

Company is not changing to the fair value based method of accounting for
stock-based employee compensation. Therefore, the transition provisions are not
applicable.

In November 2002 the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Guarantees of
Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the disclosures and
clarifies the accounting related to a guarantor's obligation in issuing a
guarantee. The interim disclosures required by FIN 45 are included in Note 8 to
these consolidated condensed financial statements. The adoption of FIN 45 is not
expected to have a material effect on the financial position or results of
operations of the Company.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force ("EITF") issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." The adoption of
SFAS 146 could have a material effect on the Company's financial statements to
the extent that significant exit or disposal activities occur subsequent to
December 31, 2002.

In April 2002, SFAS No. 145, "Rescission of FASB Statements 4, 44, and 64,
Amendment of FASB Statement 13, and Technical Corrections," was issued. Among
other amendments to previous statements, which have already taken effect, a
provision in the Statement, requiring certain gains and losses from the
extinguishment of debt to be reclassified from extraordinary items, is effective
January 1, 2003. Certain of the Company's long-term debt agreements contain
provisions for the payment of contingent interest. To the extent these
contingent payments are not required to be made, a gain will be included as part
of other income, and it will not be considered an extraordinary item.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations." SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. It applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development and/or the normal operation of a long-lived asset. The
Company's adoption of SFAS 143 in 2003 did not have a material effect on its
financial statements.

ACCESS TO INFORMATION

The Company's Annual Report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and all amendments to those reports, as well as
proxy and information statements to our stockholders are made available, free of
charge, on our Web site at www.weirton.com, as soon as reasonably practicable
after such reports have been filed with or furnished to the SEC.

FORWARD LOOKING STATEMENTS

Weirton Steel Corporation from time to time makes forward-looking
statements in reports filed with the Securities and Exchange Commission (the
"SEC"). These forward-looking statements may extend to matters such as
statements concerning its projected levels of sales, shipments and income, cash
flows, pricing trends, anticipated cost-reductions, product mix, anticipated
capital expenditures and other future plans and strategies.

As permitted by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, Weirton is identifying in this report important
factors that could cause Weirton's actual results to differ materially from
those projected in these forward-looking statements. These factors include, but
are not necessarily limited to:

Bankruptcy factors:

- our ability to continue as a going concern;

- our ability to operate pursuant to the terms of the DIP Facility;

- our ability to obtain Court approval with respect to motions in the
Chapter 11 proceeding from time to time;

18

- our ability to develop, negotiate, prosecute, confirm and consummate
one or more plans of reorganization with respect to our Chapter 11
case;

- risks associated with third parties seeking and obtaining court
approval to terminate or shorten the exclusivity period that we have
to propose and confirm one or more plans of reorganization, for the
appointment of a Chapter 11 trustee or to convert our case to a
Chapter 7 case;

- our ability to obtain and maintain normal terms with vendors and
service providers;

- our ability to maintain contracts that are critical to our
operations;

- our ability to maintain the services of managers and other key
employees;

- the potential adverse impact of the Chapter 11 cases on our
liquidity or results of operations; and

- our ability to develop, fund and execute our revised business plan.

General factors:

- Weirton's highly leveraged capital structure and its ability to
obtain new capital at reasonable costs and terms;

- employment matters, including costs and uncertainties associated
with Weirton's collective bargaining agreements, and employee
postemployement and retirement obligations;

- the high capital requirements associated with integrated steel
facilities;

- availability, prices and terms associated with raw materials,
supplies, utilities and other services and items required by
Weirton's operations;

- the sensitivity of Weirton's results to relatively small changes in
the prices it obtains for its products;

- intense competition due to excess global steel capacity, low-cost
domestic steel producers, imports (especially unfairly-traded
imports) and substitute materials;

- whether Weirton will continue to operate under its current
organizational structure;

- the effects of the currently ongoing major steel industry
consolidation effort and how they will relate to Weirton;

- changes in customer spending patterns, supplier choices and demand
for steel products;

- the effect of planned and unplanned outages on Weirton's operations;

- the potential impact of strikes or work stoppages at facilities of
Weirton's customers and suppliers;

- the consolidation of many of Weirton's customers and suppliers;

- the significant costs associated with environmental controls and
remediation expenditures and the uncertainty of future environmental
control requirements;

- the effect of possible future closure or exit of businesses; and

- the effect of existing and possible future lawsuits filed against
Weirton.

The forward-looking statements included in this document are based on
information available to Weirton as of the date of this report. Weirton does not
undertake to update any forward-looking statements that may be made from time to
time by Weirton or its representatives.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations consume large amounts of natural gas and blast furnace coke.
Global demand for coke is high. China, the largest exporter of coke, is
producing less and consuming more coke, resulting in a 3.0 million ton reduction
in exports. Domestic coke has a 3.0 million ton deficit (demand is greater than
supply) caused by recent blast furnace start-ups and coke plant closures.
Domestic coke prices have risen over $10 per ton from
19

2002 to 2003. At normal consumption levels, a $1.00 per ton change in our coke
costs would result in an estimated $0.3 million change in our quarterly
operating costs.

Domestic natural gas prices increased from an average of $2.95 per mcf in
1999 to an average of $6.07 per mcf in the first quarter of 2003. At normal
consumption levels, a $1.00 per mcf change in domestic natural gas prices would
result in an estimated $3.6 million change in our normal operating costs for the
quarter. A hypothetical 10% change in the Company's natural gas prices would
result in a change in the Company's pretax loss of approximately $2.1 million.
For the quarters ended March 31, 2003 and 2002, the average price of natural gas
consumed by the Company was $6.07 per mcf and $3.84 per mcf, respectively, for a
total cost of $21.0 million and $16.1 million, respectively.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the Company's disclosure controls and procedures within 90 days of the
filing of this report, and they have concluded that these controls and
procedures are effective.

CHANGE IN INTERNAL CONTROLS

There are no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to within 90 days of
the filing of this report.

20

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On May 19, 2003, Weirton filed a voluntary petition under Chapter 11 of
Title 11, United States Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Northern District of West Virginia (Chapter 11 Case No.
03-1802 ). Weirton remains in possession of its assets and properties, and
continues to operate its business and manage its properties as a
debtor-in-possession as permitted by Sections 1107(a) and 1108 of the Bankruptcy
Code.

Weirton, in the ordinary course of its business, is the subject of various
pending or threatened legal actions involving governmental agencies or private
interests. Prosecution of certain of these actions may be stayed by Weirton's
Chapter 11 filing. Weirton believes that any ultimate liability arising from
these actions should not have a material adverse effect on its consolidated
financial position at March 31, 2003 or the date of this report.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

On May 19, 2003, Weirton filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code. This event constitutes an
Event of Default under our Senior Credit Facility and under the terms of our
other indebtedness reflected in Item 1, either independently or by reason of
cross-default provisions. The entitlements and claims of creditors under such
indebtedness are subject to the resolution of the bankruptcy process.

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

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit 10.1 -- Form of Debtor-in-Possession Loan and Security
Agreement dated as of May 20, 2003.

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

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

(b) Reports on Form 8-K

The company filed a current report on Form 8-K on May 19, 2003.

21

SIGNATURE

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.

WEIRTON STEEL CORPORATION
Registrant

/s/ MARK E. KAPLAN
--------------------------------------
Mark E. Kaplan
Senior Vice President of Finance and
Administration
(Principal Financial Officer)

May 20, 2003

22

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER REGARDING FACTS AND
CIRCUMSTANCES RELATING TO QUARTERLY REPORTS

I, John H. Walker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Weirton Steel
Corporation;

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 statement 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 officer 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
evaluations as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors:

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 auditors any material weaknesses in internal
controls; and

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

6. The registrant's other certifying officer 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.

/s/ John H. Walker
Chief Executive Officer
May 20, 2003

23

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER REGARDING FACTS AND
CIRCUMSTANCES RELATING TO QUARTERLY REPORTS

I, Mark E. Kaplan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Weirton Steel
Corporation;

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 statement 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 officer 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
evaluations as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors:

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 auditors any material weaknesses in internal
controls; and

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

6. The registrant's other certifying officer 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.

/s/ Mark E. Kaplan
Senior Vice President of Finance and
Administration
May 20, 2003

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