March 27, 2007 — WCI Steel, Inc. announced a net loss of $1.1 million for the quarter ending December 31, 2006, and net income of $15.0 million for the eight-month period since the company emerged from bankruptcy.

For the fourth quarter, the company reported shipments of 283,000 tons, and revenues from product sales of $191.2 million ($676 per ton). EBITDA was $7.5 million ($27 per ton).

The company’s fourth quarter operating loss was $1.2 million. The net loss of $1.1 million reflects results prior to the "payment-in-kind" preferred dividend, and translates to a net loss per diluted share of $0.11, and diluted earnings per share of $1.49 for the eight months since May 1

Management Comments—"Our performance demonstrates that WCI Steel was able to successfully weather a challenging quarter,” said Patrick G. Tatom, WCI’s President and CEO. “Our shipments in the quarter exceeded our prior guidance largely due to sales of semi-finished steel. Our fourth-quarter results fell short of our prior guidance, but reflected a more challenging marketplace”.

"Our liquidity remains strong,” noted Cynthia B. Bezik, Chief Financial Officer. “At year-end, we had $2.4 million of cash on hand and $24.7 million borrowed under the $150-million revolving credit facility. Our borrowings under the revolving credit facility increased by only $4.9 million since September 30. Borrowings were significantly less than previously forecasted as slowing sales and lower receivable levels offset the normal seasonal build-up of iron ore pellets for the winter.

"The fourth quarter results reflect a variety of one-time adjustments related to fresh-start accounting as of May 1, 2006," Bezik added. "In particular, the May 1 valuation of property, plant and equipment was revised upward, resulting in $8.0 million of depreciation and amortization being recorded in the quarter. In the first quarter of 2007, however, we expect our depreciation expense to return to a more normal level of about $6.5 million. Also, for accounting purposes, we recognized a net retiree healthcare obligation of $188.6 million at May 1 that was subsequently reduced to $134.1 million at year-end, related to our obligation for USW-represented employees and retirees. This has no impact on cash or on our on-going obligation, which is simply to fund a VEBA trust jointly administered with the USW. Our funding obligation under the collective bargaining agreement is fixed at $3.0 million per quarter plus a profit-sharing component. Reflecting this as a balance-sheet obligation under GAAP does not affect the limited nature of the funding commitment under the collective bargaining agreement."

Calendar-year 2006 shipments totaled 1,293,000 tons as compared with 1,194,000 tons in calendar year 2005 and 1,108,000 tons in calendar-year 2004. Revenues for the calendar year 2006, including Old WCI, totaled $894.0 million.

Capital Expenditures—WCI Steel will invest $66 million in two major capital projects, a walking-beam slab reheat furnace at the hot strip mill, which will be operational early in 2008, and a baghouse system to meet new federal air quality standards to be operational in April, 2007.

For the eight-month period ending December 31, 2006, WCI Steel spent $29.6 million in capital, primarily related to these two projects. As planned, in late November, one of the three pusher-style furnaces in the hot strip mill was decommissioned to allow construction to commence on the new walking-beam furnace. As a result, the company expects to have excess semi-finished steel capacity and sell between 7 and 10% of its production as slabs until the walking-beam furnace is commissioned.

Outlook—The company says that it expects first-quarter sales volume to be 290,000 tons, modestly ahead of the 283,000 tons shipped in the fourth quarter of 2006. For the full year, the company expects sales volume to total almost 1.3 million tons, including the sales of semi-finished steel. Once the walking-beam furnace is operational in 2008, shipments are expected to approach 1.4 million tons of finished steel.

The company says that although first-quarter volume will exceed the fourth quarter's levels, lower pricing, combined with additional costs related to damage to one of WCI’s two BOF vessels, will result in first-quarter EBITDA performance that is below the fourth quarter's level. (Damaged in late January, the BOF vessel was returned to service in mid-March.) The company says that this incident, combined with the scheduled week outage in April for the BOF baghouse installation, will also reduce sales volume in the early part of the second quarter. The company expects average sales price in the first quarter will be about $45 per ton below the $676 per ton realized in the fourth quarter.

The company’s second-quarter shipments are currently forecasted to be 310,000 tons. The company says that although first-quarter results are expected to be below fourth quarter 2006 results, its outlook for the second quarter reflects an improving market in both volume and pricing.

"Our future success is driven by aggressively focusing on three strategies: marketing differentiation, strengthening our core operations and pursuing external growth opportunities," Tatom said. "We are committed to executing these strategies to build WCI as a strong, independent, custom steel producer."

Background—WCI Steel, Inc. was formed in March, 2006. Under a plan of reorganization for WCI Steel, Inc. (Old WCI), the newly former WCI Steel acquired substantially all the assets of Old WCI. On May 1, 2006, WCI Steel issued $100 million 2016 senior secured notes, received $50 million in cash for the issuance of 5.0 million preferred shares and was obligated to issue 4.0 million shares of common stock to the creditors of Old WCI as bankruptcy claims are resolved. As of December 31, 2006, WCI Steel had distributed 3.9 million shares of common stock and expects to distribute the remainder in the first half of 2007.

The 5,250,000 shares of preferred stock currently outstanding have a 10% "payment-in-kind" (PIK) dividend, payable semi-annually on May 1 and November 1. The May 1, 2007 PIK dividend is payable to shareholders of record as of April 15, 2007. The preferred stock converts into common stock at a 1.2 ratio no later than May 1, 2008. Assuming conversion of the 5,250,000 shares of preferred stock and the 4.0 million shares of common stock, WCI Steel had approximately 10.3 million common shares outstanding on a fully diluted basis at year-end 2006.

WCI Steel is a niche-oriented integrated producer of value-added, custom steel products with an emphasis on customer and technical service. WCI Steel currently produces 185 grades of flat-rolled custom and commodity steel products at its Warren, Ohio ,facility, focusing on a wide range of custom flat-rolled steel products. Products include high carbon, alloy, ultra high strength, and heavy-gauge galvanized steel and on developing closer, more-responsive relationships with customers. Major customers are steel converters, processors, service centers, construction product companies, and to a lesser extent, automobile manufacturers.

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