40-F

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 40-F

o REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

or

x ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002. Commission File Number:_____________

Gerdau Ameristeel Corporation

(Exact name of Registrant as specified in its charter)

Ontario, Canada	3312	N/A
(Province or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification No.)

Hopkins Street South
Whitby, Ontario
Canada L1N 5T1
(905) 668-3535

(Address and telephone number of Registrant’s principal executive offices)

Phillip E. Casey, Chief Executive Officer
Gerdau Ameristeel Corporation
5100 West Lemon Street
Tampa, Florida 33629
(813) 286-8383
(Name, address (including zip code) and telephone number
(including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Common Shares

For annual reports, indicate by check mark the information filed with this Form:
x Annual information form x Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of
the close of the period covered by the annual report:
133,388,400 Common Shares

Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby
furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the filing number assigned to the Registrant in
connection with such Rule.
Yes o. No x.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act 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 o. No x.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

Undertaking

Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

Consent to Service of Process

The Registrant is filing concurrently with the Commission a Form F-X in connection with the Common Shares.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of a date within 90 days of the filing date of this report (the “Evaluation Date”), Gerdau Ameristeel Corporation’s (the “Company”) Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-14(c) and 15(d)-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Controls

Since the Evaluation Date there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

SIGNATURE

Pursuant to the requirements of the Exchange Act, the Company certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

GERDAU AMERISTEEL CORPORATION
By:	/s/ Phillip E. Casey Phillip E. Casey, Chief Executive Officer

CERTIFICATIONS

I, Phillip E. Casey, Chief Executive Officer of Gerdau Ameristeel Corporation, certify that:

1.     I have reviewed this annual report on Form 40-F of Gerdau Ameristeel Corporation.

2.     Based on my knowledge, this annual report does not contain any untrue statement of 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 annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 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 annual 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 annual report (the “Evaluation Date”); and

     c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedure based on our evaluations as of the Evaluation Date;

5.     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:

     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

6.     The registrant’s other certifying officer and I have indicated in this annual 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 20, 2003 /s/ Phillip E. Casey
Phillip E. Casey, Chief Executive Officer

I, Tom J. Landa, Chief Financial Officer of Gerdau Ameristeel Corporation, certify that:

1.     I have reviewed this annual report on Form 40-F of Gerdau Ameristeel Corporation

2.     Based on my knowledge, this annual report does not contain any untrue statement of 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 annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 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 annual 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 annual report (the “Evaluation Date”); and

     c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedure based on our evaluations as of the Evaluation Date;

5.     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:

     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

6.     The registrant’s other certifying officer and I have indicated in this annual 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 20, 2003 /s/ Tom J. Landa
Tom J. Landa
Chief Financial Officer

EXHIBIT INDEX

Number	Document
99.1	Renewal Annual Information Form dated May 20, 2003
99.2	Annual Report for the year ended December 31, 2002 which includes:
	Management’s Discussion and Analysis for the year ended December 31, 2002
	Consolidated Financial Statements for the year ended December 31, 2002
99.3	Reconciliation to United States GAAP
99.4	Report of Independent Certified Public Accountants
99.5	Consent of PricewaterhouseCoopers LLP
99.6	Certificate of Chief Executive Officer
99.7	Certificate of Chief Financial Officer

EX-99.1 3 g83014exv99w1.txt EX-99.1 5/20/03 RENEWAL ANNUAL INFORMATION FORM GERDAU AMERISTEEL CORPORATION ------------------------------ ANNUAL INFORMATION FORM ------------------------------ MAY 20, 2003 TABLE OF CONTENTS

Page ---- OVERVIEW...................................................................1 CORPORATE STRUCTURE........................................................2 Name and Incorporation................................................2 Intercorporate Relationships..........................................3 GENERAL DEVELOPMENT OF THE BUSINESS........................................4 History...............................................................4 Industry and Trends...................................................4 NARRATIVE DESCRIPTION OF THE BUSINESS......................................6 Minimills.............................................................6 Downstream Operations.................................................9 Rebar Fabrication.................................................9 Railroad Spike Operations.........................................9 Cold Drawn Plants................................................10 Super Light Beam Processing and Elevator Guide Rails.............10 Wire Mesh and Collated Nails.....................................10 Our Joint Ventures...................................................10 Principal Products...................................................11 Merchant bars/special sections...................................11 Stock rebar......................................................12 Rod..............................................................12 Flat rolled sheet................................................12 Fabricated steel.................................................12 Billets..........................................................12 Marketing............................................................12 Competition..........................................................13 Competitive Conditions...........................................13 Local Competition................................................14 Foreign Competition..............................................14 Competitive Strengths............................................16 Cyclical and Seasonal Nature of the Business.........................17 Scrap, Energy and Other Raw Materials................................17 Environmental and Regulatory Matters.................................18 Employees............................................................19 Foreign Operations Risk..............................................20 Credit Facilities....................................................20 SELECTED CONSOLIDATED FINANCIAL INFORMATION...............................21 DIVIDENDS.................................................................21 MANAGEMENT'S DISCUSSION AND ANALYSIS......................................21 MARKET FOR SECURITIES.....................................................21 DIRECTORS AND OFFICERS....................................................22 AUDITORS..................................................................23 ADDITIONAL INFORMATION....................................................23 SCHEDULE A................................................................24

In this annual information form, references to "dollars" and "$" are to United States dollars. As used in this document, unless the context otherwise requires, (i) the "Company and "Gerdau Ameristeel" refer to Gerdau Ameristeel Corporation, (ii) "Ameristeel" refers to Gerdau Ameristeel US Inc. (formerly AmeriSteel Corporation), (iii) "Gerdau North America" refers to the North American operations of Gerdau S.A., and (iv) "we", "us" and "our" refers to the Company and its subsidiaries and 50% owned joint ventures. Our financial results are the financial results for Gerdau North America, the predecessor company for accounting purposes, with the results of the former Co-Steel Inc. added for the period since October 23, 2002. We also present pro forma financial and operating information which gives effect to the combination of Gerdau North America and Co-Steel Inc. as if the transaction had taken place at the beginning of the applicable period. Our financial information is prepared using Canadian generally accepted accounting principles. The results of our three 50% owned joint ventures, including Gallatin Steel Company, are proportionately consolidated. In addition, to be consistent with the presentation of our financial information, information on tons shipped or similar production information in this offering memorandum includes our 50% share of the joint ventures' production. "Tons" refers to U.S. short or "net" tons (i.e. 2,000 pounds). Information on net sales and tons shipped only includes net sales and tons shipped to third parties. Unless otherwise indicated, all information in this Annual Information Form is given as at May 12, 2003. OVERVIEW We are the second largest minimill steel producer in North America with annual manufacturing capacity of over 6.8 million tons of mill-finished steel products. Through our vertically integrated network of 11 minimills, 13 scrap recycling facilities and 27 downstream operations, we service the broad geographical market of eastern North America. Our products are generally sold to steel service centers, fabricators, or directly to original equipment manufacturers, or OEMs, for use in a variety of industries, including the construction, automotive, mining and equipment manufacturing industry. Our operations are segmented into two operating divisions, minimills and downstream businesses. Minimills. We own and operate seven minimills in the United States and three in Canada. We are also a 50/50 joint venture partner with Dofasco Inc. in an eleventh minimill located in Ghent, Gallatin County, Kentucky. We manufacture and market a wide range of steel products, including reinforcing steel bar (or rebar) merchant bars, structural shapes, beams, special sections, coiled wire rod (or rod) and rebar, and flat rolled sheet. Over 90% of the raw material feed for the steel operations is derived from recycled scrap which makes us one of the largest recycling businesses in North America. Four of our mills are provided scrap from 13 scrap recycling operations. We believe these recycling operations lower the overall cost of scrap used in these mills and provide a stable supply of these mills' primary raw material. Downstream operations. We have secondary value added steel businesses, which we refer to as downstream operations. These steel fabricating and product manufacturing operations process steel principally produced in our minimills. Our downstream operations consist of the following: - Rebar fabrication and epoxy coating- We operate one of the largest rebar fabricating and epoxy coating groups in North America. Our network, consisting of 15 rebar fabricating facilities and three epoxy coating plants, services the concrete construction industry in the eastern half of the United States. Our rebar fabricating capacity is in excess of 500,000 tons per year. The fabricating facilities purchase rebar from our mills at competitive market prices, and cut and bend it to meet our customers' engineering, architectural and other end-product specifications. Our epoxy coating plants apply epoxy coating to rebar for rust resistant applications. -2- - Railroad spike operations - Our two railroad spike operations forge steel square bars produced at our Charlotte mill into track spikes. We manufacture and distribute these spikes on an annual contract basis to the railroad industry throughout North America. - Cold drawn plants - Our two cold drawn plants process hot rolled merchant and light structural steel bars into cold drawn bars with improved physical characteristics. The cold drawn plants purchase sizeable quantities of their raw material requirements from our minimills. - Super light beam processing and elevator guide rails - In accordance with rigid customer specifications, we process super light steel beams into cross members for the truck trailer industry and process steel guide rail sections for elevator manufacturers. - Wire mesh and collated nails - We produce small diameter drawn wire from coiled steel rod. The wire is woven into sheets and rolls of wire mesh for concrete pavement reinforcement or converted into collated nails for use in high speed nail machines. CORPORATE STRUCTURE NAME AND INCORPORATION Gerdau Ameristeel Corporation (formerly Co-Steel Inc.) was incorporated under the laws of the Province of Ontario by letters patent dated September 10, 1970. The Company is the result of a combination of the North American operations of Brazilian Steelmaker Gerdau S.A. and Canadian Steelmaker Co-Steel Inc. on October 23, 2002. The registered office of the Company is located at Hopkins Street South, Whitby, Ontario, L1N 5T1, Canada. The executive office is located at 5100 West Lemon Street, Tampa, Florida, United States, 33609. Subsequent to incorporation, the following amendments to the Company's articles and constating documents were made: - December 27, 1985 - we amalgamated with our subsidiary, Lake Ontario Steel Company Limited; - June 10, 1986 - our name was changed from Co-Steel International Limited to Co-Steel Inc. and each of the outstanding shares (except the First Preference Shares) was reclassified and subdivided into two Multiple Voting Shares and three Subordinate Voting Shares; - December 31, 1993 - all of our outstanding multiple voting shares were automatically converted into subordinate voting shares; - April 27, 1994 - our subordinate voting shares were redesignated as common shares; - December 31, 2000 - 877449 Ontario Limited, a subsidiary, amalgamated with us; - October 23, 2002 - our name was changed to Gerdau Ameristeel Corporation; and - May 6, 2003 - By-law No. A2 was approved by the Company's shareholders. INTERCORPORATE RELATIONSHIPS We conduct our operations directly or indirectly through subsidiaries and joint ventures in Canada and the United States. The following chart shows Gerdau Ameristeel and its principal operating subsidiaries. Unless otherwise indicated, all subsidiaries are 100% owned and may be owned directly or indirectly by an intermediate -3- holding company. Schedule A to this Annual Information Form lists all of the Company's subsidiaries, their jurisdiction of incorporation and the percentage of shares beneficially owned by the Company. [CHART] Our current credit facilities prevent us from reorganizing the relatively complex corporate structure of our operations. Once we complete the refinancing of our current credit facilities, we will reorganize our subsidiaries to permit an efficient integration of all aspects of our operations. The following chart shows Gerdau Ameristeel, the principal subsidiaries that will remain after that reorganization, their respective operations and their jurisdictions of incorporation. Unless otherwise indicated, all subsidiaries will be 100% owned and may be owned directly or indirectly through an intermediate holding company. [CHART] GENERAL DEVELOPMENT OF THE BUSINESS HISTORY Gerdau S.A. made its initial investment in the North American steel market in 1989 by acquiring Courtice Steel Inc. (now our subsidiary Gerdau Ameristeel Cambridge Inc.), which operates a minimill in Cambridge, Ontario, Canada. In 1995, it acquired Gerdau MRM (now our subsidiary Gerdau Ameristeel MRM Special Sections Inc.), which operates our minimill in Selkirk, Manitoba, Canada. In 1999, it acquired an indirect majority interest in AmeriSteel Corporation (now our subsidiary Gerdau Ameristeel US Inc.), which we refer to as Ameristeel, that owned four minimills, and operated rebar fabricating plants and epoxy coating plants. In April 2001, AmeriSteel Bright Bar, Inc., our 80%-owned subsidiary, acquired the assets of American Bright Bar, a manufacturer of cold drawn steel bars in Orrville, Ohio. In December 2001, Ameristeel acquired our Cartersville mill in Georgia, from Birmingham Steel Corporation, which expanded Ameristeel's structural bar size range and added beams to its product line. In June 2002, Ameristeel acquired certain assets and assumed certain liabilities of Republic Technologies' cold drawn plant in Cartersville, Georgia, a producer of cold drawn merchant bar products, to complement the operations of AmeriSteel Bright Bar. -4- On October 23, 2002, the parent company of Gerdau S.A.'s North American operations, referred to as Gerdau North America, entered into a transaction agreement with Co-Steel Inc. Co-Steel Inc. was a Canadian public company that owned and operated three minimills, participated in a 50/50 joint venture that ran a fourth mill and was a major participant in the sourcing, trading and processing of scrap metal in its markets. This transaction agreement resulted in Co-Steel Inc. acquiring all of the issued and outstanding shares of the companies included in Gerdau North America, in exchange for Co-Steel Inc. common shares representing approximately 74% of Co-Steel Inc.'s total common shares. In connection with the merger, Co-Steel Inc.'s name was changed to Gerdau Ameristeel Corporation. As part of this transaction, certain related party loans payable of Gerdau North America were converted into equity in October 2002. The transaction was accounted for using the reverse-take-over method of purchase accounting. Gerdau North America is deemed to be the acquirer and is assumed to be purchasing the assets and liabilities of Co-Steel Inc., since the original shareholder of Gerdau North America became owner of more than 50 percent of the voting shares of Co-Steel Inc. on a fully-diluted basis following the transaction. As a result, Gerdau North America's historical accounts became the historical accounts of Co-Steel Inc. for all periods prior to the date of the merger. We combined with Gerdau North America in order to create a company with the financial strength, operational critical mass, geographic and product range coverage and experienced management team to succeed in the competitive North American steel market. We are on track to realize approximately $23 million of annual cost savings from the integration of the operations of Co-Steel Inc. and Gerdau North America through freight rationalization, product scheduling efficiencies, consolidated procurement activities and economies of scale in administrative and management functions. Incremental cost savings from operational improvements are anticipated through the adoption of best operating practices, the coordination of manufacturing technologies, knowledge, sharing and the fostering of an operating culture focused on continuous improvement. On December 31, 2002, Ameristeel was an indirect 87% owned subsidiary of Gerdau Ameristeel. Effective March 31, 2003, non-controlling shareholders holding, in the aggregate, approximately 13% of the issued and outstanding shares of AmeriSteel, had their holdings exchanged for Gerdau Ameristeel common shares at a ratio of 9.4617 Gerdau Ameristeel shares for each common share of Ameristeel exchanged. The acquisition of the minority interest of Ameristeel was accounted for as a step acquisition under the purchase method of accounting, whereby the purchase price of the shares was allocated to the net assets acquired based upon their relative fair values. The exchange resulted in the issuance of an additional 13,198,501 shares of Gerdau Ameristeel. Ameristeel is now an indirect wholly-owned subsidiary of Gerdau Ameristeel. As a result of the transaction with Co-Steel Inc. and the acquisition of the shares of Ameristeel, Gerdau S.A. indirectly holds approximately 67% of the shares of Gerdau Ameristeel. INDUSTRY AND TRENDS The North American steel industry is highly cyclical and competitive. The industry is affected by global production capacity, the prevailing levels of steel imports and tariffs, general economic conditions and the strength of the U.S. dollar. Trends and developments in other cyclical industries such as construction, appliance, transportation, machinery and equipment, and consumer and industrial packaging, which are significant markets for steel products, also affect the steel industry. Recent trends in the steel industry, in particular a wave of -5- consolidation and the introduction of tariffs, have strengthened the competitive positioning of the North American market participants. Beginning in mid-2000 and throughout 2001, the North American steel industry experienced a severe downward cycle due to excess global production capacity, high import levels at below-market prices ("dumping") and weak general economic conditions, causing numerous North American steel producers to file for bankruptcy. Monthly average merchant bar and rebar prices reached lows of $236 and $260 per ton, respectively, in December 2001 and monthly average hot-rolled sheet prices fell to cyclical lows of $217 per ton in November 2001. Due to reduced supply resulting from capacity closures, trade restrictions and the introduction of tariffs on certain steel products imported into the United States, monthly average merchant bar and rebar prices increased in 2002. Merchant bar prices increased to $261 per ton in June, while rebar prices climbed to $275 per ton in August. Monthly average domestic flat-rolled steel prices increased dramatically in 2002 and reached a high of $370 per ton in August. The cycle began to turn downward again toward the end of 2002 due to a number of unfavorable developments. The reinitiation of previously idled steelmaking capacity and reduced export opportunities to China have increased steel supply in North America, and a weak domestic economy has resulted in softening product demand. Monthly average hot-rolled steel pricing has fallen to $285 per ton in April 2003, despite an attempt by leading flat-rolled producers to impose a $30 per ton price increase effective April 1. In addition, the pricing of scrap, minimills' primary raw material, has risen sharply in the beginning of 2003 due to increased demand from the Chinese market and reduced scrap collection resulting from tough weather conditions in the Northeast United States. Higher energy costs, due to the particular cold winter, have put additional pressure on the steel industry's profitability. Scrap pricing has begun to fall, primarily due to reduced scrap exports to China and improved weather conditions in the Northeast United States. Recent developments in the bar segment industry have been more positive. The rebar and merchant bar price increases of $35 per ton, announced by leading bar producers in the beginning of 2003, have had a positive effect on pricing, particularly for merchant bars, for which the monthly average price rose to $295 per ton in April 2003. Merchant bars compete against fewer imports. Rebar imports have decreased due to stronger demand overseas and a weaker U.S. dollar. Overall, the North American steel industry produced 124 million metric tons of crude steel in 2002, an increase of 3.4% versus 2001. Additionally, for the first three months of 2003, North American crude steel continued to grow, totaling 31 million tons, a 7.4% increase versus the equivalent period in 2002. The North American steel industry has been restructuring since 2002, as the pace of domestic steel industry consolidation has accelerated, evidenced by a number of recent acquisitions. International Steel Group added to its 2002 acquisitions of the bankrupt steel assets of LTV Steel and Acme Steel with its acquisition of Bethlehem Steel's bankrupt assets in 2003. U.S. Steel has also announced its planned acquisition of National Steel's bankrupt assets in 2003. These developments are causing formerly idled or inefficient steelmaking facilities to reenter the market with substantially lower cost structures and renegotiated labor contracts, and without many previously burdensome retirement and health care legacy costs and other liabilities. The result of this consolidation is a more competitive North American steel industry. Other North American steel producers that have entered bankruptcy in the past several years may emerge from bankruptcy with lower cost structures and more efficient operations. In the bar sector, as a result of the Nucor and Birmingham consolidations, the restructuring of Bayou in Chapter 11 and the cessation of Kentucky Electric's operations has caused further consolidation and rationalization of inefficient supply in the steel industry. Unfavorable foreign economic conditions, excess foreign steelmaking capacity and a strong North American economy and U.S. dollar resulted in an oversupply of various steel products, lower domestic steel prices and significant domestic capacity closures starting in late 2000. These conditions led to the March 5, 2002 introduction of the Section 201 tariffs and quotas imposed on various steel products imported into the U.S. from -6- certain countries. The duties were imposed for a period of three years and will decrease each year they are in effect. For flat-rolled products, as well as for various merchant and special bar quality products, the tariff decreases from 30% in the first year to 24% in the second year and 18% in the third year. The quota for slab imports that can enter the United States without tariff imposition increases from 5.4 million tons in the first year to 5.9 million tons in the second year and 6.4 million tons in the third year. For rebar products, the tariff decreases from 15% in the first year to 12% in the second year and 9% in the third year. Throughout 2002 and during 2003, the U.S. Department of Commerce and the Office of the United States Trade Representative granted numerous exclusions and exemptions from the Section 201 tariffs for various categories of imported steel products, weakening the protection initially provided by Section 201. Various countries have challenged President Bush's action with the World Trade Organization ("WTO"). In May 2003, the WTO announced that the U.S. tariffs imposed to protect the U.S. steel industry from imports are illegal under trading rules, confirming its preliminary decision from March 2003. The United States plans to appeal the WTO decision. The tariffs will also be subject to a midterm review by the U.S. International Trade Commission, which is due to the President by September 2003 and will recommend whether the remedies should remain in effect. In addition, the Organization for Economic Cooperation and Development recently initiated a process to deal with worldwide overcapacity in the steel industry and to reduce or eliminate certain steel-trade distorting subsidies throughout the world. On July 5, 2002, the Canadian International Trade Tribunal ("CITT") ruled that imports of certain steel goods from other countries, including the United States, have injured the Canadian steel industry. On August 20, 2002, the CITT announced it was recommending the imposition of a three-year quota for certain categories of imported steel products, with tariffs imposed on imports exceeding the quota levels, except for rebar, in which case the CITT only recommended the imposition of a tariff. For imports exceeding the quota levels, a tariff ranging from 15-25% would be imposed in the first year, 11-18% in the second year and 7-12% in the third year. The government of Canada has not yet announced its decision on the remedies that it will implement. NARRATIVE DESCRIPTION OF THE BUSINESS MINIMILLS Minimills are steel mills that use electric arc furnaces, that melt scrap metal by charging it with electricity. Upon melting the scrap metal, we add alloys and other ingredients (such as fluxes) in measured quantities to achieve the desired metallurgical properties for the steel. The resulting molten steel is cast into long strands called billets in a continuous casting process. The billets are typically cooled and stored and then transferred to a rolling mill where they are reheated, passed through roughing mills for size reduction and then rolled into products such as rebar, merchant bars, structural shapes, rods or special sections. These products emerge from the rolling mill and are uniformly cooled on a cooling bed. Most merchant and structural products then pass through automated straightening and stacking equipment. Finished products are neatly bundled prior to shipment to customers typically by rail or truck. In some cases we ship finished products by rail to a depot before delivery to our customers. -7- The following picture shows the typical process of producing steel in our mills: [PICTURE] All of our mills are located on our owned property. Our mills are typically located with convenient access to raw materials, transportation (road and in some cases rail and water) and customers. Our rebar deliveries are generally concentrated within 350 miles of a mill and our merchant bar deliveries are generally concentrated within 500 miles. Some products, such as the special sections produced by our Selkirk mill, shipped greater distances, including overseas. The table below presents information regarding our 11 mills, including the current estimated annual production capacity and actual production for the year ended December 31, 2002. We calculate annual melting and rolling capacities based on our best historical months of production and best rolling mill cycles, respectively, annualized and assuming 18 days per year for maintenance shutdown. Actual capacity may vary significantly from annual capacity due to changes in customer requirements, sizes, grades and types of products rolled, and production efficiencies. Our capacity calculations may also change from year to year because of these reasons. We do not consider manufacturer's design capacity as a relevant measure due to differences in the product mix and production efficiency assumptions; we therefore do not present manufacturer's design capacity information. -8-

APPROX. YEAR ENDED APPROX. YEAR ENDED ANNUAL DECEMBER 31, CAPACITY ANNUAL DECEMBER 31, CAPACITY MELTING 2002 MELTING UTILIZATION ROLLING 2002 ROLLING UTILIZATION LOCATION CAPACITY PRODUCTION PERCENTAGE CAPACITY PRODUCTION PERCENTAGE - ---------------------- ---------- ------------ ----------- --------- ---------- ---------- (thousands (thousands (thousands (thousands of tons) of tons) of tons) of tons) Cambridge, Ontario ........... 360 333 92.5% 325 313 96.3% Cartersville, Georgia ........ 860 368 42.8 600 288 48.0 Charlotte, North Carolina .... 460 330 71.7 400 319 79.8 Gallatin, Kentucky (1) ....... 1,500 714 95.2 1,500 706 94.1 Jackson, Tennessee ........... 670 498 74.3 600 446 74.3 Jacksonville, Florida ........ 640 621 97.0 640 620 96.9 Knoxville, Tennessee ......... 455 415 91.2 500 413 82.6 Perth Amboy, New Jersey ...... 900 596 66.2 1,000 654 65.4 Sayreville, New Jersey ....... 800 595 74.4 600 450 75.0 Selkirk, Manitoba ............ 385 334 86.8 330 294 89.1 Whitby, Ontario .............. 960 667 69.5 1,100 644 58.5 Total ........................ 7,990(1) 5,471 75.6%(2) 7,595(1) 5,148 75.2%(2) ===== ===== ==== ===== ===== ===

(1) Includes 100% of the capacity of the Gallatin mill, which is a 50% owned joint venture. (2) Utilization % includes Gallatin calculated by dividing our 50% proportionate production by 50% of total capacity. We operate our mills so that inventory levels are maintained within targeted ranges. Although it is normally advantageous to run the mills at full production levels to achieve the lowest unit costs, producing to targeted inventory levels balances production with marketing and gives management flexibility to limit maintenance delays and other downtime. This approach also results in better working capital management. As a result, depending on market conditions, we do not generally utilize 100% of our capacity. In addition, some of our mills are run on a basis that differs from the assumptions used in calculating production capacity. For example, our Cambridge mill produces a large number of different products, which requires frequent switching of rolling equipment. The mills operated by Co-Steel Inc. prior to our combination have historically had lower capacity utilization for a variety of reasons. As market conditions in the steel industry improve, we expect that we will be able to improve the capacity utilization at those facilities, as well as at our Cartersville mill, so that their performance will be more consistent with that of our other facilities. -9- DOWNSTREAM OPERATIONS We are one of few minimill steel producers with an integrated operating base in North America. Our minimills are vertically integrated with 27 downstream businesses that produce specialty steel products and fabricated steel for the use in the construction, industrial markets and transportation. REBAR FABRICATION We believe we are one of the largest rebar fabricating and epoxy coating groups in North America and have a 50-year history of quality workmanship and service. Our network, consisting of 15 rebar fabricating plants and three epoxy coating plants, is located in the eastern half of the United States. Our rebar fabricating capacity is in excess of 500,000 tons per year. The fabricating facilities purchase rebar from our mills and cut and bend it to meet our customers' engineering, architectural and other end-product specifications. The fabricating plants purchase the majority of their rebar from our Jacksonville, Knoxville, Charlotte and Sayreville mills. The following table shows our rebar fabricating plant locations and their approximate annual capacity: REBAR FABRICATING PLANT CAPACITY ----------------------- -------- (IN TONS) Plant City, Florida (Tampa)............ 40,000 Jacksonville, Florida.................. 35,000 Ft. Lauderdale, Florida................ 40,000 Orlando, Florida....................... 15,000 Charlotte, North Carolina.............. 40,000 Raleigh, North Carolina................ 30,000 Duluth, Georgia (Atlanta).............. 40,000 Aiken, South Carolina.................. 15,000 Knoxville, Tennessee................... 45,000 Nashville, Tennessee................... 30,000 Collierville, Tennessee (Memphis)...... 20,000 Louisville, Kentucky................... 30,000 York, Pennsylvania..................... 60,000 Baltimore, Maryland.................... 30,000 Sayreville, New Jersey................. 30,000 --------- Total....................... 500,000 ========= In addition to the above fabricating plants, we operate three epoxy coating plants that are located in: Knoxville, Tennessee; Milton, Pennsylvania; and Sayreville, New Jersey. These facilities apply epoxy coating to fabricated rebar for rust applications and have a combined annual coating capacity of approximately 150,000 tons. RAILROAD SPIKE OPERATIONS Our railroad spike operations, located in Lancaster, South Carolina and Paragould, Arkansas, forge steel square bars produced at the Charlotte mill into track spikes. These track spikes are sold generally on an annual contractual basis to the major railroad companies in North America. Currently we sell approximately 50,000 tons of track spikes annually and maintain a 65% market share. -10- COLD DRAWN PLANTS We have two cold drawn plants. Our Orrville, Ohio plant is a 45,000 square foot greenfield facility built in 2000 on 6.5 acres of land. The Orville plant is owned by AmeriSteel Bright Bar, Inc. We own 80% of AmeriSteel Bright Bar and the remaining 20% is owned by members of management. It is equipped with a highly efficient production line designed to produce 30,000 tons of cold drawn flats and squares per year. Our Cartersville, Georgia cold drawn plant was acquired in June 2002. The Cartersville cold drawn plant expanded our product offering to include rounds and hexagons. The plant has the capacity to produce up to 45,000 tons of cold drawn bars. The Jackson, Cambridge and Cartersville mills, along with third party mills, supply the Orrville and Cartersville cold drawn facilities. The cold drawn business, with two producing locations, expands our product offering and provides a downstream shipping opportunity for the our minimills. We sell cold drawn bars primarily to steel service centers. SUPER LIGHT BEAM PROCESSING AND ELEVATOR GUIDE RAILS We operate a super light beam processing facility in Memphis, Tennessee, where we fabricate and coat super light beams purchased from a third party into cross members for the truck trailer industry. This facility is located on leased property. Bradley Steel Processors Inc., our 50% owned joint venture with Buhler Industries Inc., also operates a super light beam processing facility. Bradley's facility is located on leased property in Winnipeg, Manitoba, near our Selkirk mill, and processes beams produced by that mill. SSS/MRM Guide Rail Inc., our 50% joint venture with Monteferro S.p.A., processes our Selkirk mill's guide rail sections for elevator manufacturers. SSS/MRM carries on business under the name Monteferro North America and has two facilities, one in Steinbach, Manitoba and the other in Birds Hill, Manitoba, on leased property. SSS/MRM Guide Rail also has a 50% interest in a guide rail processing facility in Brazil. WIRE MESH AND COLLATED NAILS Our facility in New Orleans, Louisiana produces wire from steel rod. The wire is then either manufactured into wire mesh for concrete pavement reinforcement or converted into collated nails for use in high-speed nail machines. OUR JOINT VENTURES We have three 50% owned joint ventures. The Gallatin mill is our 50% owned joint venture with Dofasco Inc., located in Gallatin County, Kentucky. It produces hot rolled steel products. Bradley Steel Processors Inc. is our 50% owned joint venture with Buhler Industries Inc., which processes super light beams. SSS/MRM Guide Rail is our 50% joint venture with Monteferro S.p.A. which processes the Selkirk mill's guide rail sections for elevator manufacturers. Under Canadian GAAP, our three 50% owned joint ventures are proportionately consolidated, which means that 50% of individual items such as assets, sales and cost of sales are included in our results. In addition, to be consistent with the presentation of our financial information, information on tons shipped and other production information includes our 50% share of the joint ventures' production. -11- PRINCIPAL PRODUCTS The following table shows the breakdown of our tons shipped to third parties and average net selling prices by product for the two years ended December 31, 2002:

Tons Shipped Average Net Selling Prices (1) ----------------------- ------------------------------ YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, 2001 2002 2001 2002 ----- ---- ----- ------ (Thousands) (Per Ton) Merchant bar/special sections 1,553 1,859 $305 $295 Stock rebar 1,203 1,275 264 251 Rods 741 653 265 291 Flat rolled(2) 667 710 228 299 ----- ----- Total mill finished goods 4,164 4497 Fabricated steel 683 656 441 433 ----- ----- Total finished goods 4,847 5,153 ----- ----- Billets 131 -- 182 -- ----- ----- Total 4,978 5,153 ===== =====

(1) Selling prices are net of freight. (2) Includes 50% of Gallatin's production. The following principal products are produced by the Company. MERCHANT BARS/SPECIAL SECTIONS Merchant bars/special sections refers to merchant bars, structural products, special sections and special bar quality products. - - Merchant bars consist of rounds, squares, flats, angles, and channels with a size dimension of less than three inches. Merchant bars are generally sold to steel service centers and to manufacturers who fabricate the steel to meet engineering or end-product specifications. Merchant bars are used to manufacture a wide variety of products, including gratings, transmission towers, floor and roof joists, safety walkways, ornamental furniture, stair railings, and farm equipment. Merchant bars typically require more specialized processing and handling than rebar, including straightening, stacking, and specialized bundling. Due to their greater variety of shapes and sizes, merchant bars typically are produced in short production runs, necessitating frequent changeovers in rolling mill equipment. - - Structural products consist of angles, channels and beams with a size dimension of three inches and larger. Structural products are used in a wide variety of manufacturing applications, including housing, trailers, structural support for buildings, and other construction purposes. Like smaller merchant bars, structural products typically require specialized processing and handling and are produced in shorter production runs. Structural products are generally sold to service centers, fabricators and OEMs. - - Special sections are generally bar products with singular applications, as compared to merchant bar products that can be used in a variety of applications. Special sections include custom shapes for use in the earth moving, material handling and transportation industries. For example, our special sections products include grader blades for tractors, elevator guide rails, light rails for crane and mine applications and super light weight beams for truck trailer cross members. -12- - - Special bar quality products or SBQs are generally merchant bar shapes that have stringent chemical and dimensional tolerance requirements, and therefore are often more costly to produce and command a higher margin. SBQs are widely used in industries such as mining and automobile production. These products are generally sold to OEMs. STOCK REBAR Stock rebar refers to reinforcing steel bars in straight lengths ranging from 20 to 60 feet and ranging from 3/8th of an inch to 2 1/4th inches in diameter. Stock rebar is sold to companies that either fabricate it themselves or warehouse it for sale to others who will fabricate it for reinforced concrete construction. Rebar products are used primarily in two sectors of the construction industry: building projects such as institutional buildings, retail sites, commercial offices, apartments, condominiums, hotels, manufacturing facilities and sports stadiums; and infrastructure projects such as highways, bridges, utilities and water and waste treatment facilities. ROD Rod is coiled wire rod. We produce industrial quality rod products that are sold to customers in the automotive, agricultural, industrial fastener, welding, appliance, and construction industries. We sell rod to downstream manufacturers who further process it by cold drawing it into various shapes, including twisted or welded configurations such as coat hangers, supermarket baskets and chain link fences. We sell most of our rod to end users, while the remaining portion, depending on market conditions, is used in our downstream operations in the manufacture of wire mesh and collated nails. Other end uses of wire rod products include the manufacture of fences, fine wire, chain, welding wire, plating wire, fasteners and springs. FLAT ROLLED SHEET Flat rolled sheet is steel that is rolled flat onto coils and used in the manufacture of outer bodies of automobiles and household appliances. Gallatin Steel, our 50% joint venture with Dofasco Inc., is our only mill that produces flat rolled sheet, which is used in the construction, automotive, appliance, machinery, equipment and packaging industries. FABRICATED STEEL Fabricated steel is any steel that is further processed after being rolled by a mill. As a result of the further processing, fabricated steel generally receives a higher price in the market than mill finished products. Our stock rebar is fabricated in our fabricating plants by cutting it to size and bending it into various shapes to be used in reinforced concrete constructions, such as bridges, roads and buildings. We also process flats and squares at our cold drawn plants, and guide rails, super light beams, wire mesh and nails at other downstream facilities. BILLETS Billets are rectangular sections of steel that are semi-finished in a casting process and cut to various lengths. Billets can be sold to other steel producers or further finished into steel products and sold to downstream users or other steel producers. Our melt shops produce billets for conversion to the finished products listed above, such as rebar, merchant bar, structural shapes and special sections, in our rolling mills. A small portion of our billet production is sold in the open market to other steel producers for rolling into finished products. MARKETING Our products are generally sold to steel service centers, fabricators, or directly to OEMs east of the Mississippi River. Our products are used in a variety of industries, including the construction, mining, automotive, commercial, cellular and electrical transmission, metal building manufacturing and equipment manufacturing -13- industry. We also sell fabricated rebar to contractors performing work in both private (commercial) and public (road, bridge and other construction or infrastructure) projects. In our rebar fabrication business, the market areas we cover are those east of the Mississippi River, with plants located in, or near, most major cities in the eastern United States. Our long-standing strategy is to have our production facilities located in close proximity to the job-site we supply. Normally we are within 200 miles of our customer's job-site, so we can provide quick response time to satisfy their reinforcing steel needs. The following table shows information on our customers during 2001 and 2002 on a pro forma basis:

PERCENTAGE SALES BY CUSTOMER 2001 2002 ---- ---- Fabricators 43% 41% Steel service centers 31 35 Wire drawing 17 15 Transportation 7 7 Other 2 2 --- --- Total 100% 100% --- ---

In the year ended December 31, 2002, on a pro forma basis, we sold products to over 1,000 customers. Given the diversity of our products and markets, no one customer comprises 3% or greater of our consolidated net sales. Our five largest customers comprised 8% of our total consolidated pro forma net sales in the year ended December 31, 2002. The following table provides a percentage breakdown of total net sales by customer location on a pro forma basis for 2002 and 2001:

PERCENTAGE OF TOTAL NET SALES 2001 2002 ------ ------ United States 82.5% 80.3% Canada 16.9 19.2 Other 0.5 0.5 ------ ------ 100% 100% ------ ------

In general, sales of mill finished products to U.S. customers are centrally handled by employees in our Tampa sales office, and sales to Canadian customers are centrally handled by employees in our Whitby sales office. We also have sales offices in Perth Amboy, where rod sales are handled, and Selkirk, where sales of special sections are handled. Our sales representatives take orders, schedule mill production and manage inventory. As of March 31, 2003, we had 54 employees dedicated to marketing and sales, 13 of whom were located in the field, near our customers. Each of our sales representatives has immediate access to inventory and production schedules at all of our mills, which enables them to provide customers with "one stop shopping" and to service a customer's needs from the most convenient and/or cost effective source in the Company. Metallurgical service representatives at our mills provide technical support to our sales force but are not considered sales representatives. In general, sales of our cold drawn, rod and super light beam products are handled by sales representatives located at our relevant facilities. Our fabricated rebar and elevator guide rails are generally sold through a bidding process in which employees at our facilities work closely with each customer to establish its product requirements, shipping schedule and price. COMPETITION COMPETITIVE CONDITIONS We compete with numerous domestic and foreign steel producers. Competitors include integrated producers, which produce steel from coke and iron ore, and minimills, which, like us, produce steel by melting -14- scrap metal in electric arc furnaces. Minimills typically enjoy lower costs of production and higher productivity levels relative to integrated mills through reduced capital and operating costs, resulting from their streamlined melting process and smaller, more efficient plant layouts, as well as primarily non-unionized work forces with lower total employment costs. The minimills' smaller plant size also permits greater flexibility in their choice of location, optimizing their access to scrap supply, energy sources and customer base. Minimill producers have also more quickly adapted to the use of new, more cost efficient equipment, translating technological advances in the industry into more effective production processes. Minimills' competitiveness relative to integrated mills is influenced by the cost of scrap, which represents a significant production cost for the minimills. Competition in the steel industry is based on price, quality, and the ability to meet customers' product specifications and delivery schedules. In addition, in the case of certain product applications, the steel industry competes in many markets with producers of other materials such as plastic, aluminum, cement, glass, wood and composite materials. The North American steel industry's recent consolidation has led to a fundamental change in the industry's structure. In the flat-rolled sector, the emergence from bankruptcy of previously inefficient, high cost steelmaking assets, under new ownership and without their previously burdensome legacy costs, is reducing the North American steel industry's cost structure, creating a more globally competitive industry. In the bar sector, the Nucor acquisition of Birmingham Steel and the combination of Gerdau North America and Co-Steel Inc. has provided significant consolidation in that sector and some modest rationalization. LOCAL COMPETITION Our geographic market encompasses Canada and the United States, predominantly throughout the eastern seaboard and the Midwest. We experience substantial competition in the sale of each of our products from numerous competitors in our markets. Rebar, merchant bars, and structural shapes are commodity steel products for which price is the primary competitive factor. Due to the high cost of freight relative to the value of steel products, competition from non-regional producers is somewhat limited. Proximity of product inventories to customers, together with competitive freight costs and low-cost manufacturing processes, are key to maintaining margins on rebar and merchant bar products. Rebar deliveries are generally concentrated within a 350 mile radius of a mill, while merchant bar deliveries are generally concentrated within a 500 mile radius of a mill. Some products produced by our Selkirk mill, such as the cutting edges used in earth moving, are more specialized and thus are shipped greater distances, including overseas. Except in unusual circumstances, the customer's delivery expense is limited to freight charges from the nearest competitive mill, and the supplier absorbs any incremental freight charges. We believe our principal competitors include Ispat Sidbec Inc., Stelco Inc. and Ivaco Inc. in Canada and Bayou Steel Corporation, Commercial Metals Corporation, Marion Steel Company, NorthStar Steel Company, Nucor Corporation, Roanoke Electric Steel Corporation, Sheffield Steel, and Steel Dynamics Inc. in the United States. Our Gallatin joint venture competes with numerous other integrated and minimill steel producers. Despite the commodity characteristics of the rebar, merchant bar and structural markets, we believe that we distinguish ourselves from our competitors due to our large product range, our product quality, our consistent delivery performance, our capacity to service large orders, and our ability to fill most orders quickly from inventory. We believe that we produce the largest range of bar products and shapes east of the Mississippi River. This product diversity is an important competitive advantage in a market in which our customers are looking to fulfill all of their requirements from a few key suppliers. FOREIGN COMPETITION We and other North American steel producers have experienced significant and, we believe in some cases, unfair competition from foreign finished steel bar producers during the past several years. Due to unfavorable foreign economic conditions and excess capacity, imports of steel bar products to the U.S. and Canadian markets reached historically high levels in recent years, with a corresponding negative impact on domestic prices. -15- In September 2001, the International Trade Commission unanimously found steel imports to be a major cause of material injury to the domestic steel industry and sent proposed remedies to President Bush in December 2001. On March 5, 2002, President Bush imposed a series of tariffs relating to some imported steel products that are intended to give the domestic steel industry an opportunity to strengthen its competitive position through restructuring and consolidation and decline over the three-year period. The following table summarizes the duties imposed for certain steel products:

SECTION 201 IMPORT TARIFFS BY PRODUCT ---------------------------------------------------------------- TYPE YEAR 1 YEAR 2 YEAR 3 -------------------------------- --------------------- --------------------- ------------------- Slab............................ 5.4-min. 5.9-min. 6.4-min. Short-Ton Quota Short-Ton Quota Short-Ton Quota With Over-Quota With Over-Quota With Over-Quota Tariff of 30% Tariff of 24% Tariff of 18% Finished Flat Products (plate, hot-rolled sheet, cold-rolled sheet, coated sheet).......... 30% 24% 18% Hot-Rolled Bar.................. 30 24 18 Cold-Finished Bar............... 30 24 18 Rebar........................... 15 12 9

---------- Source: Office of The United States Trade Representative, Bloomberg. There are many products and countries not covered by these tariffs, in addition to numerous foreign steel manufacturers that have received specific product exemptions from these tariffs. According to published reports, the exemptions are now estimated to cover approximately 5.4 million of the original 13.1 million tons of imported steel products that were covered by the tariffs. The majority of the most recent exemptions were granted to products made by European Union and Japanese producers. To date, the United States Department of Commerce has granted 727 exemptions which, according to the AISI, is one reason the tariffs have not yet effectively reduced steel imports. According to the AISI, there are some early indications that the President's program is beginning to work, including improved operating performance, new stock offerings, increased consolidation activity and partial price restoration for some flat-rolled steel products; however, some analysts attribute these developments to other factors such as diminished domestic supply, higher domestic demand, the lower value of the United States dollar and recent successful antidumping cases. For the first nine months of 2002, steel imports were 23.9 million tons versus 22.1 million tons in the first nine months of 2001, according to the U.S. Census Bureau. The Bush administration has announced its intention to review the impact of these tariffs and determine whether they should be ended prior to their scheduled expiration. One of our subsidiaries, Gerdau Ameristeel Perth Amboy Inc. (formerly Co-Steel Raritan), was party to a United States wire rod anti-dumping and countervailing duty case against a number of countries and steel producers. In October 2002, the U.S. Department of Commerce made a determination of injury against wire roll producers in seven foreign countries with respect to both anti-dumping and countervailing duties that range from 4% to 369%. Although there have been recent increases in rod pricing following the imposition of these duties, a considerable amount of imported rod continues to enter U.S. markets. The Organization for Economic Cooperation and Development ("OECD") recently initiated a process to address worldwide overcapacity in the steel industry. Although meetings have been held by the OECD Steel Committee to discuss methods to reduce this steel surplus, there is no certainty that such efforts will lead to a satisfactory resolution of this issue. Continuing overcapacity in the steel industry would adversely affect our ability to compete and our sales levels. The tariffs imposed in the United States and any similar actions that may be taken in Canada may not have a material positive impact on the North American steel industry and may not reduce the volume or negative -16- impact of imports. Global overcapacity, a strong U.S. dollar, the strength of the North American economy relative to the rest of the world, numerous exemptions under the tariffs, the short term (three years) duration of the tariffs, the decline in tariff rates after the first year, and the disparity of tariff rates across different product lines are all factors that may negate any benefits of the tariffs. COMPETITIVE STRENGTHS We believe the following competitive strengths will enable us to compete more effectively in our strategic markets. Geographic and product diversification. Through our network of 11 minimills, we are able to efficiently service our customers over an extended geographical segment of the North American steel market. We manufacture and market an extensive range of steel products to meet a wide variety of our customers' steel and fabricated product requirements. We believe that we provide one-stop shopping and centralized order management for one of the broadest ranges of bar products and shapes available throughout the eastern two-thirds of North America. We believe our extensive manufacturing capacity and comprehensive range of steel products makes us a supplier of choice in a market in which our customers are looking to fulfill all of their steel supply chain requirements from a few key suppliers. Downstream integration and value added processing. We are one of a few minimill steel producers with integrated operating bases in North America. Our minimills are integrated with our 27 downstream steel fabricating and specialty product facilities. The downstream integration provides a captive market for a significant portion of our mill production and valuable market information on the end-use demand for steel products. In the year ended December 31, 2002, 15% of our net sales was derived from our downstream operations. We believe our downstream operations also balance some of the cyclicality and volatility of our base minimill business and allow us to capture additional value-added margins on the steel produced by our mills. Ability to generate substantial cost savings. We are on track to realize approximately $23 million of annual cost savings from the integration of the operations of Co-Steel and Gerdau North America through freight rationalization, product scheduling efficiencies, consolidated procurement activities and economies of scale in administrative and management functions. Incremental cost savings from operational improvements are anticipated through the adoption of best operating practices, the coordination of manufacturing technologies, knowledge, sharing and the fostering of an operating culture focused on continuous improvement. Disciplined business system platform for total quality management. We recognize that our competitive success will be determined by human factors that are more important than the technological condition of our physical asset base. Our employees are our most valuable resource and are the key to maintaining our competitive advantage. Our culture is geared to engaging all of our employees in a common, disciplined business system focused on total quality management. We have implemented the Gerdau Ameristeel Business System, in which we have identified global industry benchmarks for key operational and safety measures. Strong sponsorship. We have access to the knowledge base of, and sponsorship from, our parent company, Gerdau S.A., one of the largest long steel producers in the world with a history of over 100 years in the steel industry. We expect to continue to benefit from Gerdau's professional management experience and its expertise in manufacturing steel bar and rod. Gerdau S.A. and its subsidiaries, including Gerdau Ameristeel (together, the "Gerdau group"), have global annual capacity of 12.8 million tons of mill-finished steel products through 22 steelmills, 20 of which are minimills. We benefit from Gerdau S.A.'s talent, depth and technical support. Experienced management team. We have an experienced senior leadership team with in depth knowledge of modern management tools and tactical skills to implement aggressive cultural change within an organization. Our senior management has an average of over 26 years of experience in the steel industry and a proven track record in managing successful acquisitions and creating value in turnaround opportunities. -17- CYCLICAL AND SEASONAL NATURE OF THE BUSINESS The steel industry is highly cyclical in nature and is affected significantly by prevailing economic conditions in the major world economies. We are particularly sensitive to trends in cyclical industries such as the North American construction, appliance, machinery and equipment, and transportation industries, which are significant markets for our products. In addition, certain of our customers have been adversely affected by the continuing North American and worldwide economic downturn, which has resulted, and may in the future result, in defaults in the payment of accounts receivable owing to us and reduced sales levels. Market conditions for steel products in the North American market have fluctuated over the years and have been difficult since the third quarter of 2000. Demand for our finished steel products, notably rebar and structural shapes, will continue to be significantly affected by the relative strength of the construction sector in North America. Events or conditions having an adverse effect on the steel industry generally or on our markets in particular would have a material adverse effect on our financial condition or results of operations. All of our minimills produce steel by melting scrap metal in electric arc furnaces. The prices for scrap vary significantly, and these fluctuations do not always match fluctuations in the price of our products. For example, scrap metal prices are relatively higher during the winter months due to the impact of weather on collection and supply efforts. Realized selling prices for our end products cannot always be adjusted in the short-term to recover the cost of increases in scrap metal prices. If scrap prices were to increase significantly without a commensurate increase in finished steel selling prices, our profit margins could be materially adversely affected. Future increases in the prices paid for scrap and other inputs would materially adversely affect our operating margins and our results of operations. Most of our operations have long-term electricity supply contracts with major utilities. The interruptible portion of the contract supplies the majority of requirements, including the electric arc furnace load. The interruptible portion represents up to 70% to 90% of the total load and, for the most part, is based on a spot market price of electricity at the time it is being used. We therefore have significant exposure to the variances of the electricity spot market. We do not have long term contracts for natural gas and are therefore subject to market variables and pricing swings for that energy source that could materially affect our operating margins and results of operations. SCRAP, ENERGY AND OTHER RAW MATERIALS Steel scrap is the primary raw material consumed in steelmaking and comprises approximately 30% to 45% of our cost of sales, depending on the mill and product mix. Scrap availability is a major factor in our ability to operate. Direct reduced iron, hot briquetted iron and pig iron can substitute for a limited portion of the steel scrap used in electric furnace minimill steel production. We do not use scrap substitutes in our long-product minimills, except for the small portion we use for their chemical properties in our rod facilities and to manufacture certain special sections. Scrap metal is readily available in the regions where we operate, but prices may become volatile from time to time due to various factors. Four of our mills are integrated with recycling operations that supply a portion of their scrap needs. The balance of our scrap metal requirements are purchased in the open market either directly by our personnel or by brokers who procure and aggregate scrap as a business. Electricity and natural gas represented approximately 7.2% and 3.0%, respectively, of our pro forma cost of sales for the twelve months ended March 31, 2003. Natural gas has been very volatile in the recent past. For example, in the first quarter of 2003, NYMEX natural gas prices increased from $4.99/mmBtu to $8.00/mmBtu, an increase of 60%. We spent $13 million and $43 million for our natural gas requirements in the three months ended March 31, 2003 and the twelve months ended March 31, 2003, respectively, on a pro forma basis. If prices remain at current levels or increase further, our profitability will be adversely affected. Any interruption in the supply of energy, whether scheduled or unscheduled, could materially adversely affect our sales and earnings. Although deregulation of both natural gas and wholesale electricity have afforded opportunities for lower costs resulting from competitive market forces, prices for both of these energy sources have become more volatile -18- in the recent past and may continue to be. Volatility in electric power and natural gas markets generally reflects extremes in weather conditions or physical disruptions to the supply system. As such, these sources of volatility are beyond our immediate control. Various domestic and foreign firms supply other important raw materials or operating supplies required for our business, including refractories, ferroalloys and carbon electrodes. We have historically obtained adequate quantities of such raw materials and supplies at competitive market prices to permit efficient mill operations. We are not dependent on any one supplier as a source for any particular material and believe there are adequate alternative suppliers available in the marketplace should the need arise to replace an existing one. ENVIRONMENTAL AND REGULATORY MATTERS Our business units are required to comply with an evolving body of environmental laws and regulations concerning, among other things, emissions into air, discharges to surface water and groundwater, noise control, the generation, handling, storage, transportation, and disposal of toxic and hazardous substances, and the cleanup of contamination. These laws and regulations vary depending on the location of the facility and can fall within federal, provincial, state, or municipal jurisdictions. Our operations generate certain wastes, such as electric arc furnace dust and other contaminants, that are classified as hazardous and must be properly controlled and disposed of under applicable environmental laws and regulations. In the United States and Canada, certain environmental laws and regulations impose joint and several liability on certain classes of persons for the costs of investigation and cleanup of contaminated properties regardless of fault, the legality of the original operation or disposal and the ownership of the site. Some of our present and former facilities have been in operation for many years and, over such time, the facilities have used substances and disposed of wastes (both on-site and off-site) that may require cleanup, for which we could be liable. Appropriate reserves have been made for the clean-up of sites of which we have knowledge. However, there is no assurance that the costs of such cleanups or the cleanup of any potential contamination not yet discovered will not materially adversely affect us. Some of our North American operations in the U.S. are responsible for the remediation of certain sites where EAF dust was generated and/or disposed. In general, our estimate of remediation costs is based on our review of each site and the nature of the anticipated remediation activities to be undertaken. Our process for estimating such remediation costs includes determining for each site the expected remediation methods, and the estimated cost for each step of the remediation. In such determinations, we may employ outside consultants and providers of such remedial services to assist in making such determinations. Although the ultimate costs associated with the remediation are not known precisely, we estimated the total remaining costs as at December 31, 2002 to be approximately $6.3 million (2001 - $2.9 million), with these costs recorded as a liability at December 31, 2002, approximately $5.1 million of which we expect to pay within the year ended December 31, 2003. An additional liability of $8.6 million was recorded in 2002 with respect to certain environmental obligations which were triggered by the change in control of the Company in certain jurisdictions in which the Company operated. This liability was recorded at the present value of the estimated future costs of these obligations. In 2000, our Perth Amboy and Sayreville mills took part in the U.S. Environmental Protection Agency's (EPA) Steel Minimill Audit Initiative Program. Both New Jersey minimills conducted a comprehensive, third party, multi-media environmental audit. The results of this audit were disclosed to the EPA along with a list of corrective actions, all of which are expected to be completed by the first half of 2003. None of the identified and disclosed items have resulted, or will result, in material costs being incurred. Carbon monoxide emissions at our Perth Amboy mill exceeded permitted levels on several occasions during 2001 and 2002, and continue to periodically exceed current permit levels. We are conducting investigations to determine the cause of these episodes, what steps can be taken to reduce emissions and whether the Perth Amboy mill's environmental permits require modification. Discussions with NJDEP to resolve these permit and compliance issues are continuing. Penalty assessments of approximately $400,000 have been accrued. -19- In April 2001, we were notified by the EPA of an investigation that identifies us as a potential responsible party ("PRP") in a Superfund Site in Pelham, Georgia. The Pelham site was a fertilizer manufacturer in operation from 1910 through 1992, lastly operated by Stoller Chemical Company, a now bankrupt corporation. We are included in this action because we shipped EAF dust to this property. The EPA offered a settlement to the named PRPs under which our allocation was approximately $1.8 million. We object to our inclusion as a PRP in this site and are pursuing legal alternatives, including the addition to the allocation of larger third parties which the Company believes were incorrectly excluded from the original settlement offer. The EPA has filed suit with us named as a defendant. As the ultimate exposure to us, if any, is uncertain, no liability has been accrued for this site. The presence of radioactive materials in the scrap supply presents significant health and safety risks to steel workers and to the general public. In addition to the risk to our workers and the public, the cost to clean up the contaminated material and the loss of revenue resulting from the loss in production time can be material. Radioactive materials are usually in the form of: sealed radioactive sources, typically installed in measurement gauges used in manufacturing operations or in hospital equipment; scrap from decommissioned nuclear power and U.S. Department of Energy facilities; and imported scrap. Current regulations for generally licensed devices do not provide for tracking of individual owners. The lack of accountability makes it easy for licensees to negligently discard sealed sources in scrap and evade prosecution. In response to this regulatory gap, we have installed sophisticated radiation detection systems at all of our minimills to monitor all incoming shipments of scrap. If we detect radioactive material in the scrap we receive, we incur costs to dispose of the material and clean up the contamination of our facilities. In addition, the cost of clean up is even greater if the material is melted in our mill furnaces. While we have several detection devices at all of our mills, occasionally a radioactive scrap source may go undetected. For example, in July 2001, a small amount of cesium was received from suppliers among scrap material and accidentally melted in our Jacksonville mill furnace. Melt shop activities at our Jacksonville mill were halted for approximately 25 days until approximately 700 tons of contaminated material had been removed for proper disposal and equipment had been cleaned. The cost of clean up was approximately $10.5 million, all but $350 thousand of which was paid for by our insurer. As a result of this accident, we reviewed our radiation detection systems to reduce the risk of a similar accident in the future. We received notice this year of a lawsuit by neighbors of a waste disposal site in Louisiana that was operated by Safety Kleen, to which wastes from clean-up activities at the Jacksonville mill were sent during 1999. The site held permits from the EPA and state authorities, and the amount of material shipped was relatively small. We have retained counsel but cannot yet evaluate the merits, if any, of the claim. No assurance can be given that unforeseen changes, such as new laws or enforcement policies, or an incident at one of our properties or operations, will not have a material adverse effect on the business, financial condition, or results of our operations. Our business units are required to have governmental permits and approvals. Any of these permits or approvals may be subject to denial, revocation or modification under various circumstances. Failure to obtain or comply with the conditions of permits and approvals may adversely affect our operations and may subject us to penalties. In addition, we may be required to obtain additional operating permits or governmental approvals and incur additional costs. There can be no assurance that we will be able to meet all applicable regulatory requirements. There is no assurance that our environmental capital expenditures will not materially increase in the future. Moreover, we may be subject to fines, penalties or other liabilities arising from actions imposed under environmental legislation or regulations. EMPLOYEES We currently employ approximately 5,100 employees. Approximately 3,100 employees work in our minimills, 1,900 work in our downstream and fabricating facilities and 150 work in our corporate and sales offices. These figures include 50% of those employed at our joint ventures. Approximately 1,260 of our employees are represented by the unions under a number of collective bargaining agreements. The agreements with our mill employees have different expiration dates beginning February 2004. The collective agreements for our recycling facilities have different expiration dates beginning in -20- 2006. We may be unable to successfully negotiate new collective bargaining agreements without any labor disruption. For example, in the first quarter of 2001, a three-month labor disruption occurred at our Whitby mill and, in the second quarter of 2002, a 13-day labor disruption occurred at our Selkirk mill. In both cases, these disruptions were a result of our collective agreement negotiations. FOREIGN OPERATIONS RISK No material foreign operations risk exists, other than currency fluctuations. We report our results in U.S. dollars. A portion of the our net sales and operating costs are in Canadian dollars. As a result, fluctuations in the exchange rate between the U.S. dollar, and the Canadian dollar may affect our reported results. In addition, our Canadian operations compete with U.S. producers and are less competitive as the Canadian dollar strengthens relative to the U.S. dollar. To the extent we have borrowings that are denominated in U.S. dollars, our results of operations are also affected by fluctuations in the exchange rate. CREDIT FACILITIES Our existing credit arrangements were entered into prior to the combination with Co-Steel Inc. by companies that are currently in our consolidated group. As part of the combination with Co-Steel Inc., we were required to agree to maintain "status quo" segregation of Gerdau North America's U.S. operations, its Canadian operations and Co-Steel Inc.'s operations if the business combination had not taken place in order to satisfy lenders' lien rights. Under the status-quo agreement, we have not been able to manage our treasury functions, including cash management, in the most efficient manner, and available cash, while adequate under one credit arrangement, has not been available to offset shortfalls under one of the other credit arrangements. The Company is in the process of implementing a financing plan designed to refinance our existing credit facilities and other indebtedness. -21- SELECTED CONSOLIDATED FINANCIAL INFORMATION Our financial results are the results for the Gerdau North America operations, and include results for the Co-Steel Inc. operations for the period from October 23, 2002, which represents the period subsequent to the combination. The selected historical consolidated financial data presented below as at December 31, 2001 and 2002, and for each of the years in the three-year period ended December 31, 2002, have been derived from our audited consolidated financial statements. Selected Consolidated Financial Information (US$ in thousands except per share amounts)

Years Ended December 31, ---------------------------------------------------- Annual Results 2000 2001 2002 ---------- ----------- ---------- Sales $ 899,683 $ 840,836 $1,036,055 Net earnings (loss) 3,943 (6,066) 11,132 Total Assets 1,074,565 1,061,939 1,571,401 Total Debt 757,492 723,633 519,154 Earnings per share - basic $ 0.03 $ (0.05) $ 0.07 Earnings per share - diluted $ 0.03 $ (0.05) $ 0.07

Quarter Ended ---------------------------------------------------------------------- Quarterly Results Mar. 31, Jun. 30, Sep. 30, Dec. 31, 2002 2002 2002 2002 ----------- ----------- ----------- ----------- Sales $ 217,983 $ 245,116 $ 234,523 $ 338,433 Net earnings (loss) 1,275 3,819 2,511 3,527 Earnings per share - basic $ 0.01 $ 0.03 $ 0.02 $ 0.01 Earnings per share - diluted $ 0.01 $ 0.03 $ 0.02 $ 0.01

Quarter Ended ---------------------------------------------------------------------- Quarterly Results Mar. 31, Jun. 30, Sep. 30, Dec. 31, 2001 2001 2001 2001 -------- --------- ----------- ----------- Sales $211,684 $ 226,189 $ 211,529 $ 191,434 Net earnings (loss) 877 (607) 1,153 (7,489) Earnings per share - basic $ -- $ -- $ 0.01 $ (0.06) Earnings per share - diluted $ -- $ -- $ 0.01 $ (0.06)

DIVIDENDS In 2000, Co-Steel Inc. announced that its Board of Directors decided to eliminate dividends following payment of the December 14, 2000 dividend. The decision was made to preserve cash during a time of unprecedented turbulence in North American steel markets. No dividends have been paid since that date. The predecessor of the Company for accounting purposes, Gerdau North America, paid dividends of $2,181,000 in aggregate in 2002, prior to the combination with Co-Steel Inc., and dividends of $16,640,000 in 2000. MANAGEMENT'S DISCUSSION AND ANALYSIS The section entitled "Management's Discussion and Analysis" in the Company's Annual Report for the year ended December 31, 2002 is incorporated herein by reference. MARKET FOR SECURITIES -22- The common shares of Gerdau Ameristeel are listed on the Toronto Stock Exchange under the symbol "GNA.TO". DIRECTORS AND OFFICERS Gerdau Ameristeel's board of directors consists of nine directors, each of whom will hold office until the next annual meeting of shareholders or until his successor is elected or appointed. The names, municipalities of residence, position with the Company and principal occupations of the directors and officers of the Company and ownership of securities are as shown below:

YEAR FIRST OWNERSHIP PERCENTAGE BECAME A NAME AND MUNICIPALITY OF RESIDENCE AGE TITLE OF SECURITIES OWNERSHIP DIRECTOR PRINCIPAL OCCUPATION - ---------------------------------- --- ----- ---------- --------- --------- ----------------- Andre Beaudry........................ 44 Vice President, 22,997 * -- Vice President, Steel Tampa, Florida, U.S. Steel Product Product Sales Sales Phillip E. Casey(3)(7)............... 60 Director, Chief 8,069,091(3) 4.3%(3) 2002 Director, Chief Tampa, Florida, U.S. Executive Executive Officer and Officer and President of Gerdau President Ameristeel Kenneth W. Harrigan(1)(4)(6)......... 75 Director 1,000 * 1994 Chairman, K.W. Oakville, Ontario, Canada Harrigan. Consultants (business consultant) Joseph J. Heffernan(1)(3)(5)(6)...... 57 Director 5,200 * 1996 Chairman, Rothmans Toronto, Ontario, Canada Inc. (tobacco manufacturer) Jorge Gerdau Johannpeter (2)......... 66 Director and -- -- 2002 Director and Chairman Porto Alegre, Rio Grande do Sul, Chairman of the of the Board of Brazil Board of Directors of Gerdau Directors S.A. Frederico C. Gerdau Johannpeter(2)... 60 Director -- -- 2002 Vice President of Porto Alegre, Rio Grande do Sul, Gerdau S.A. Brazil Andre Bier Johannpeter(2)(7)......... 40 Director and -- -- 2003 Director and Vice Toronto, Ontario, Canada Vice President, President, COO Canada COO Canada of Gerdau Ameristeel Tom J. Landa......................... 51 Vice President, 203,822 * -- Vice President, Tampa, Florida, U.S. Finance, Chief Finance, Chief Financial Financial Officer Officer and and Secretary Secretary J. Spencer Lanthier(1)(4)............ 62 Director 2,043 * 2000 Corporate Director Toronto, Ontario, Canada Garry A. Leach....................... 55 Vice President, -- -- -- Vice President, St. Paul, Manitoba, Canada MRM Special MRM Special Michael Mueller...................... 56 Vice President, 22,214 * -- Vice President, Tampa, Florida, U.S. Steel Mill Steel Mill Operations Operations Arthur Scace(1)(4)(5)................ 64 Director 15,000 * 2003 Partner, McCarthy Toronto, Ontario, Canada Tetrault LLP, Law Firm Dr. Michael D. Sopko(1).............. 64 Director 1,000 * 1997 Corporate Director Oakville, Ontario, Canada

- --------------------- (1) Independent director. (2) The Gerdau family, indirectly, controls Metalurgica Gerdau S.A. holding, collectively, 71.8% of the voting capital and 23.9% of the total capital and Metalurgica Gerdau S.A. and its controlled companies hold 85% of the voting capital of Gerdau, S.A. Gerdau S.A. beneficially owns approximately 67.3% of Gerdau Ameristeel. (3) Mr. Phillip Casey owns 2,587,929 common shares directly and the remaining 5,481,162 common shares held indirectly. Mr. Joseph Heffernan owns 5,000 common shares and the remaining 200 common shares are held indirectly. (4) Member of the Audit Committee. (5) Member of the Corporate Governance Committee. (6) Member of Human Resources Committee. (7) Member of Safety, Health and Environmental Committee. * Less than one percent -23- AUDITORS Gerdau Ameristeel's auditor is PricewaterhouseCoopers LLP at 101 East Kennedy Blvd., Suite 1500, Tampa, Florida, 33602. ADDITIONAL INFORMATION Information, including directors' and officers' remuneration and indebtedness, principal holders of the Company's securities, options to purchase securities and interests of insiders in material transactions where applicable is contained in the Company's Management Information Circular for the most recent annual meeting of shareholders, which involved the election of directors. When the securities of the Company are in the course of a distribution under a short form prospectus or a preliminary short form prospectus, the following are available upon request from the Secretary of the Company: (i) one copy of the AIF of the issuer, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the AIF; (ii) one copy of the comparative financial statements of the issuer for its most recently completed financial year for which financial statements have been filed together with the accompanying report of the auditor and one copy of the most recent interim financial statements of the issuer that have been filed, if any, for any period after the end of its most recently completed financial year; (iii) one copy of the information circular of the issuer in respect of its most recent annual meeting of shareholders that involved the election of directors or one copy of any annual filing prepared instead of that information circular, as appropriate; and (iv) one copy of any other documents that are incorporated by reference into the preliminary short form prospectus or the short form prospectus and are not required to be provided under clauses (i), (ii) or (iii). At any other time, the Company will provide, upon request to the Secretary of the Company, a copy of any of the documents referred to above, provided that the Company may require payment of a reasonable charge if a person who is not a security holder of the Company makes the request. -24- SCHEDULE A Gerdau Nova Scotia Holding Company Gerdau Ameristeel Cambridge Inc. (Saskatchewan) Gerdau MRM Holdings Inc. (Canada) Gerdau Ameristeel MRM Special Sections Inc. (Saskatchewan) Bradley Steel Processors Inc. (50%) (Manitoba) SSS/MRM Guide Rail Inc. (50%) (Manitoba) Canadian Guide Rail Corporation (Manitoba) GUSAP Partners (Delaware) 3038482 Nova Scotia Company PASUG LLC (Delaware) Gerdau USA Inc. (Delaware) Gerdau Ameristeel US Inc. (Florida) AmeriSteel Bright Bar, Inc. (80%) (Florida) Gerdau MRM America Holding Corp. (Delaware) Porter Bros. Corporation (North Dakota) MFT Acquisition, Corp. (Delaware) 1062316 Ontario limited Co-Steel Benefit Plans Inc. (Ontario) Gerdau Ameristeel Distribution Canada Ltd. (Ontario) 1300554 Ontario Limited 1102590 Ontario Limited Co-Steel (U.S.) Ltd. (Delaware) Co-Steel C.S.M. Corp. (Delaware) Gallatin Steel Company (50%) (Kentucky) Ghent Industries (Kentucky) Gallatin Terminal Company (Kentucky) Gallatin Transit Authority (Kentucky) Co-Steel Finance Corp. (Delaware) Gerdau Ameristeel Perth Amboy Inc. (New Jersey) Raritan River Urban Renewal Corporation (New Jersey) Gerdau Ameristeel Distribution US Inc. (Delaware) Gerdau Ameristeel Lake Ontario Inc. (Delaware) Co-Steel Benefit Plans USA Inc. (Delaware) Co-Steel USA Holdings, Inc. (Delaware) Gerdau Ameristeel Sayreville Inc. (Delaware) N.J.S.C. Investment Co., Inc. (New Jersey)(1) Dofasco LLC (50%) (Wyoming) Cansteel Antilles N.V. (Dutch Antilles) Co-Steel Amsterdam B.V. (Netherlands)(2) Co-Steel (UK) Limited (United Kingdom) ASW Holdings PLC (30%) (United Kingdom) Goldmarsh Enterprises (Ireland) Acierco S.A. (Luxembourg) Co-Steel Liquidity Management Hungary Limited Liability Company (Hungary) Monteferro International Business S.A. (50%) (Spain) Monteferro America Latina Ltda. (Brazil) - ------------------------------------ (1) This company is in the process of being dissolved. (2) This company is in liquidation. EX-99.2 4 g83014exv99w2.txt EX-99.2 12/31/02 ANNUAL REPORT EXHIBIT 99.2 Annual Report 2002 [GERDAU AMERISTEEL LOGO] Vision, Mission and Values VISION To be recognized as the most successful company in the steel industry. MISSION To create value for our customers, employees, shareholders and communities through the engagement of people and excellence of operations. VALUES - - Safety - - Integrity - - Customer Driven Culture - - Investment in People, Processes, and Technology - - Engaged Employees - - Open Communication - - Community and Environmental Awareness - - Profitability Financial Highlights

Year ended December 31, 2002 ---------------------------- Pro Forma Income Statement US$(000s except EPS) Net Sales $1,676,176 Operating Profit 86,086 Net Income 33,131 EBITDA 175,408 EPS - Basic .16 EPS - Diluted .15 Balance Sheet US$(000s) Net Working Capital $294,221 Cash 16,361 Debt 519,154 Book Value 626,410 Market Capitalization (based on US$1.46 per share) 289,291

Notes: Net Working Capital excludes cash and debt. Debt excludes Convertible Debentures of $79.1 million. EBITDA includes non-recurring cash gain totaling $9.1 million insurance and electrode settlements and excludes a non-recurring, non-cash charge of $5.8 million relating to an investment write-down. The table above summarizes the combined pro forma results of Gerdau AmeriSteel, for the year ended December 31, 2002. The information has been prepared as if the combination had taken place January 1, 2002. About Gerdau AmeriSteel Through a combined network of 11 mills with annual manufacturing capacity in excess of 6.8 million tons of finished steel products, Gerdau AmeriSteel services long product and flat rolled customers throughout the eastern half of North America. Gerdau AmeriSteel's mini-mills are vertically integrated with 13 scrap recycling facilities, and 27 downstream businesses that produce specialty steel products and fabricated steel mainly for use in the construction and industrial markets. As of December 31, 2002, Gerdau AmeriSteel had approximately 185 million common shares outstanding (with an additional 13 million shares issued to AmeriSteel minority shareholders in March 2003), and the shares are traded on the Toronto Stock Exchange under the symbol GNA.TO. For additional financial and investor information, visit www.gerdauameristeel.com Gerdau AmeriSteel's financial results are presented in accordance with Canadian GAAP. However, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a non-GAAP measure that management believes is a useful supplemental measure of cash available prior to debt service, capital expenditures and income tax. For 2002, it includes non-recurring cash gains and losses, and excludes non-recurring non-cash items. Investors are cautioned that EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the company's performance or to cash flows from operations as a measure of liquidity and cash flows. The company's method of calculating EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies. The pro forma statements present combined pro forma financial information for Co-Steel and the North American operations of Gerdau S.A. as if they were combined at the beginning of the period indicated and at December 31, 2002 as adjusted for the pro forma effects of the combination and related transactions. Assumptions have been made in preparing these statements, and the results in future periods may show that these assumptions were not correct. These statements do not purport to represent what the actual operating results and financial position of Gerdau AmeriSteel would have been had the combination of Co-Steel and Gerdau S.A.'s North American operations actually taken place at the beginning of the period indicated or on December 31, 2002. In addition, these statements do not purport to project the company's results of operations for any future periods or its financial position at any future date. Gerdau AmeriSteel 3 To our Shareholders For the third consecutive year, Gerdau AmeriSteel and the North American steel industry faced extremely competitive market conditions and a challenging business environment. As the year began, there was a general expectation that the prospects for a slow economic recovery and government safeguard tariffs on steel imports would afford long overdue margin relief and market stabilization. In reality, the March 5, 2002 import tariffs provided only temporary margin relief for the Company's flat rolled steel products and minimal influence on the larger long products segment of our business. Improvement in domestic economic prospects also proved to be elusive as the level of consumer confidence in spending began to reflect the insecure realities of geopolitical events. The original stimulus for the steel industry cyclical downturn was the protracted surge of low priced steel imports from virtually every global region where economic activity was anemic. The longevity and gravity of the decline was amplified by the deterioration of the domestic economy and the fragmented nature of domestic steel producer competition. This business environment has exerted intense financial pressure on virtually every steel industry competitor. Over the balance of the year, the deteriorating economic climate in the US and the resulting decline in steel demand overshadowed the effects of import tariffs and reductions in low priced steel imports. The continuing existence of surplus steel capacity and the financial liquidity crisis among steel industry competitors led to an acceleration of the long-anticipated consolidation phase of the domestic industry. The strategic mergers and alliances within the major integrated steel companies and the mini-mill sector were watershed events which will have significant repercussions for years to come. This environment gave birth to Gerdau AmeriSteel with the October 23, 2002 merger between Co-Steel and the North American affiliates of Gerdau S.A. The logic for this strategic alliance was based on creating the critical mass for competitive survival, the essential financial liquidity and balance sheet strength, and the depth of talented employees. In retrospect, the decisions of both boards and the shareholder approvals to create the critical mass for competitive survival have proven to be correct. The combination allowed the merged entities to weather a harsh winter and chilling global political events that created intense inflationary pressures on energy and scrap raw material costs. Attempts to recover these inflated costs have encountered weak market demand and stiff customer resistance to price increases. These conditions would have severely tested either entity had they stood alone. In this challenging environment, Gerdau AmeriSteel realized 2002 pro forma net income of $33.1 million and EBITDA cash flow of $175 million. Because of substantial structural changes resulting from our merger, these financial benchmarks are not readily comparable to prior periods. They do, however, provide an initial basis for future comparisons as the merged entities begin to realize the economic and strategic synergies from this combination. 2002 was more significant as a defining moment in the eventual turnaround of Gerdau AmeriSteel's financial outlook and the resurgence of a viable steel industry segment in North America. 4 Annual Report 2002 CURRENT STATUS OF THE MERGER INTEGRATION Despite the adverse economic and seasonal climate, the initial six month phase of the merged entities has generated progressive improvements in the corporate administrative infrastructure, the commercialization of a universal brand identity and the operational integration of the manufacturing assets. Acceptance of the combination by the customer base and the diverse employee elements has been extremely positive. The signs of a unified corporate image are becoming more prevalent with extensive knowledge sharing of best practices and the network exchange of comparative benchmark information. Considerable time and attention has been directed at effective internal and external communications. These measures and the establishment of aggressive goals are generating tangible results in the formulation of a common corporate culture. The turbulence of recently-announced price changes and customer hedge buying has created extreme volatility in order processing and inventory management. Despite the disruptive surges in distribution patterns, we have managed to maintain a high level of customer service and satisfaction. Successful integration of the diverse independent order entry systems into a central commercial database also provides consistent information on the availability of inventories and the status of company wide customer inquiries and order activity. Technological enhancements to this centralized commercial systems platform are progressing, and the breadth of product knowledge within the combined marketing resources is improving with experience. These marketing infrastructure capabilities are facilitating the effective cross selling of our full product offering to the consolidated customer base. The integrated customer base is beginning to experience and appreciate the advantages of our expanded product range, extended geographical coverage, logistical efficiencies and operational flexibility of our combined resources. From an operational perspective, we have reinforced the caliber of leadership talent at all of the steel facilities and identified the technical skills and training required to continuously improve the overall productivity of each mill and downstream operation. Despite a short term environment of cost austerity, we are focusing the necessary training and asset investment resources to insure the long term competitive posture of our steel assets. As we identify customer demand patterns and logistical distribution efficiencies, we will continue to customize and optimize the product rolling schedules for each manufacturing facility. Substantial savings in freight and redundant inventories are anticipated as we proceed to fine tune the rolling schedules of the diverse manufacturing operations. Product supply channels for the scrap recycling operations and the internal downstream fabrication facilities have also been revised for optimization of logistical savings. OUTLOOK The transparency of steel demand and market pricing continues to be clouded by the uncertainties of the 201 safeguard tariffs, fluctuations in global economic activity, continuing consolidation of the domestic competitive picture and instability in energy and scrap raw material costs. The adverse rulings of the World Trade Organization and the statutory progress review of the 201 tariffs pose a serious threat to the retention of this import deterrent. The domestic industry must submit a mid term progress report on its restructuring activities. In September, the administration will determine if termination, modification or continuance of the tariffs is appropriate. The global supply and demand balance for steel has been favorably enhanced by the economic boom and construction activity in China. If this Asian demand outlet for steel weakens, there could be an immediate resurgence of foreign steel into the North American market. The exchange valuation and further weakening of the US dollar will also influence the international flow of global excess steel production into the domestic market. The consolidation and rationalization of the domestic steel industry will perhaps exert the greatest impact on financial prospects for the foreseeable future. As global events and steel trade patterns exert instability in the domestic market, decreased industry fragmentation will limit the magnitude of these disturbances. Over the next few months, the financial performance of the domestic steel industry will be significantly dependent on pricing discipline and support for the recent price increase announcements. General adherence to these higher list prices will be challenged by the weak outlook for economic growth and questionable levels of steel demand. On a more positive note, there is general optimism for relief from inflated energy and scrap raw material costs. Moderation in the winter weather demands plus improved energy availability from political stabilization in Venezuela and Iraq should lower overall energy cost levels. The recovery in supply of scrap substitutes from Venezuela and increased seasonal collection flows of scrap should also reverse the recent inflationary trends in scrap costs. Gerdau AmeriSteel 5 Internally, the past six months have reaffirmed the expectations, rationale and economic prospects for Gerdau AmeriSteel. We have secured a very competitive position in the bar, rod, flat-rolled and downstream steel markets that we serve. Considerable challenges and market uncertainties still lie ahead but the execution risks and prospects for improvement in financial results are within Management's control. We believe we are well positioned to capture attractive shareholder returns as the economy and the steel markets improve. One of the first things that we did shortly after the merger was to bring together the Management group of Gerdau AmeriSteel to define the new organization's Vision, Mission and Values that we have prominently displayed in this annual report. The Vision, Mission and Values are designed to meet the diverse expectations of our employees, shareholders, customers, suppliers and communities. Sincerely, /s/ Jorge Gerdau Johannpeter /s/ Phillip E. Casey Jorge Gerdau Johannpeter Phillip E. Casey Chairman of the Board President and CEO April 7, 2003 6 Annual Report 2002 Vision, Mission and Values VISION To be recognized as the most successful company in the steel industry. MISSION To create value for our customers, employees, shareholders and communities through the engagement of people and excellence of operations. VALUES - - Safety - - Integrity - - Customer Driven Culture - - Investment in People, Processes, and Technology - - Engaged Employees - - Open Communication - - Community and Environmental Awareness - - Profitability Gerdau AmeriSteel 7 Pro Forma Financials On October 23, 2002, Gerdau S.A. (NYSE: GGB) merged its North American operations (Gerdau Canada and AmeriSteel Corporation, or "Gerdau North America") with Co-Steel Inc. to form Gerdau AmeriSteel Corporation. Actual Canadian GAAP results were net income of $11.1 million on net sales of $1,036.1 million for the year ended December 31, 2002, or $.07 per share basic and fully diluted. These actual results reflect full year operations for Gerdau North America, the predecessor company for accounting purposes, with the former Co-Steel results added for the period October 23 through December 31, the period since the combination. Gerdau AmeriSteel believes that the pro forma results, which reflect a full year of Co-Steel operations, adjusted for the impact of purchase price allocations and resulting acquisition accounting entries, are a more informative disclosure on the combined operations. Gerdau AmeriSteel's pro forma net income was $33.1 million, or $.15 per share for the year ended December 31, 2002. Pro forma EBITDA was $175.4 million for the year. Included in pro forma net income and EBITDA are non-recurring pretax cash gains of $9.1 million for the full year period. All figures are in US dollars and Canadian GAAP. The tables below summarize the combined pro forma results of Gerdau AmeriSteel, for the year ended December 31, 2002. The information has been prepared as if the combination had taken place at the beginning of the period. The following table reconciles actual net income to pro forma net income, and pro forma net income to pro forma EBITDA for the year:

Year ended December 31, 2002 US$(000s) Net Income, actual $ 11,132 Adjust Co-Steel for pre-acquisition period to October 23, 2002 * 5,699 Adjust to reflect income impact of Co-Steel purchase price allocations 3,731 Adjust interest for debt converted to equity 10,862 -------- Adjust for minority interest 1,707 Net Income, pro forma 33,131 Interest and foreign exchange 38,833 Income taxes 7,170 Depreciation and amortization 90,494 Non-cash write-down of investment 5,780 -------- EBITDA, pro forma $175,408 --------

* Includes pre-acquisition tax refund of $1.9 million received in the fourth quarter but accounted for as a pre-acquisition receivable. 8 Annual Report 2002 Gerdau AmeriSteel and Subsidiaries Consolidated Statements of Financial Position (US$ in thousands)

December 31, 2002 ASSETS CURRENT ASSETS Cash and cash equivalents $ 16,361 Accounts receivable, net 172,745 Inventories 351,400 Deferred tax assets and recoverable 11,417 taxes Other current assets 2,997 ----------- TOTAL CURRENT ASSETS 554,920 PROPERTY, PLANT AND EQUIPMENT Fixed assets at cost 1,118,308 Less accumulated depreciation (219,360) ----------- NET PROPERTY, PLANT AND EQUIPMENT 898,948 GOODWILL 114,374 OTHER ASSETS 3,159 ----------- TOTAL ASSETS $ 1,571,401 ----------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable & accruals $ 214,266 Other current liabilities 30,072 Bank indebtedness 23,379 Current maturities of long-term borrowings 83,942 ----------- TOTAL CURRENT LIABILITIES 351,659 LONG-TERM BORROWINGS, LESS CURRENT PORTION 411,833 OTHER LIABILITIES 99,341 DEFERRED TAX LIABILITIES 82,158 MINORITY INTEREST 33,312 SHAREHOLDERS' EQUITY Invested capital 513,400 Convertible debentures 79,134 Retained earnings 1,329 Cumulative foreign currency (765) ----------- 593,098 ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,571,401 -----------

Gerdau AmeriSteel's financial results are presented in accordance with Canadian GAAP. However, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a non-GAAP measure that management believes is a useful supplemental measure of cash available prior to debt service, capital expenditures and income tax. For 2002, it includes non-recurring cash gains and losses, and excludes non-recurring non-cash items. Investors are cautioned that EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the company's performance or to cash flows from operations as a measure of liquidity and cash flows. The company's method of calculating EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies. The pro forma statements present combined pro forma financial information for Co-Steel and the North American operations of Gerdau S.A. as if they were combined at the beginning of the periods indicated and at December 31, 2002 as adjusted for the pro forma effects of the combination and related transactions. Assumptions have been made in preparing these statements, and the results in future periods may show that these assumptions were not correct. These statements do not purport to represent what the actual operating results and financial position of Gerdau AmeriSteel would have been had the combination of Co-Steel and Gerdau S.A.'s North American operations actually taken place at the beginning of the periods indicated or on December 31, 2002. In addition, these statements do not purport to project the company's results of operations for any future periods or its financial position at any future date. Consolidated Statements of Income (US$ in thousands)

Pro forma Year ended December 31, 2002 NET SALES $ 1,676,176 Operating Expenses: Cost of sales 1,429,094 Selling and administrative 80,741 Depreciation 89,322 Other operating income (9,067) 1,590,090 ----------- INCOME FROM OPERATIONS 86,086 OTHER EXPENSES Interest 39,039 Amortization of deferred financing costs 1,172 Foreign exchange gains (206) Write-down portfolio investment 5,780 INCOME BEFORE INCOME TAXES 40,301 INCOME TAX (BENEFIT) EXPENSE 7,170 ----------- NET INCOME (LOSS) $ 33,131 -----------

Pro forma Year ended December 31, 2002 Tons % --------- ----- Total Finished Steel Shipments 5,152,530 --------- Rebar 1,275,267 24.8% Merchant/Structural/Specials 1,859,020 36.1% Rod 652,869 12.7% Flat Rolled 709,835 13.8% Fabricated Steel 655,539 12.7% Weighted Average Selling Price US$/Ton Mill External Shipments $ 283 Fabricated Steel Shipments $ 433 Scrap charged - US$/Ton $ 89 Metals Spread - US$/Ton (Mills External) $ 193 Production - Melt Shop 5,469,532 tons Production - Rolling Mill 5,147,867 tons

US$ million US$/Ton ----------- ------- EBITDA Operating $175.4 $34 Income Interest $ 86.1 $17 Expense Capital $ 39.0 $ 8 Expenditures Total $ 44.7 Shares Outstanding 198,092,154

Gerdau AmeriSteel 9 Management's Discussion and Analysis of Financial Condition and Results of Operations This report contains certain forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to our management. Such statements include, among others, (i) the benefits anticipated to be realized from the merger with Co-Steel, Inc. (ii) the highly cyclical nature and seasonality of the steel industry, (iii) the fluctuations in the cost and availability of raw materials, (iv) the possibility of excess production capacity, (v) the potential costs of environmental compliance, (vi) the risks associated with potential and recent acquisitions, (vii) further industry consolidation, (viii) the impact of inflation, (ix) global economic factors and trade imbalances, and (x) the fluctuations in the cost of electricity. Because such statements involve risks and uncertainties, actual actions and strategies and the timing and expected results thereof may differ materially from those expressed or implied by such forward-looking statements, and our future results, performance or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. The following presentation of management's discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the Notes thereto. All dollar amounts are reported in United States dollars unless otherwise indicated. ACQUISITION OF CO-STEEL, INC. On October 23, 2002, Gerdau S.A., the ultimate parent company of Gerdau S.A.'s operations in Canada and the United States (the "Gerdau North America Group") completed a business combination with Co-Steel, Inc. ("Co-Steel") that resulted in Co-Steel acquiring all of the issued and outstanding shares of the companies included in the Gerdau North America Group, in exchange for Co-Steel common shares representing approximately 74% of the combined entity's total common shares. A portion of these shares were issued to minority shareholders of AmeriSteel Corporation ("AmeriSteel"). In connection with the merger, Co-Steel's name was changed to Gerdau AmeriSteel Corporation (the "Company" or "Gerdau AmeriSteel"). Certain related party loans payable of the Gerdau North America Group were converted into equity prior to the merger. The transaction was accounted for using the reverse-take-over method of purchase accounting. Gerdau North America Group is deemed to be the acquirer and is assumed to be purchasing the assets and liabilities of Co-Steel, since the original shareholder of the Gerdau North America Group, became the owner of more than 50 percent of the voting shares of Co-Steel on a fully-diluted basis following the transaction. As a result, the Gerdau North America Group's historical accounts became the historical accounts of Gerdau AmeriSteel for all periods prior to the date of merger. Consolidated financial statements include the accounts of the Company and its subsidiaries. For the year ended December 31, 2002, they include full year results for the Gerdau North America Group's operations, and results for the period from October 23, 2002, through December 31, 2002, the period subsequent to the acquisition, for the former Co-Steel operations. IMPACT OF ACQUISITION BY GERDAU As a result of the combination of Co-Steel with the Gerdau North America Group, the combined company will realize several benefits. Economies of scale will result from improved production scheduling at the mills. Geographic and product diversification will result in Gerdau AmeriSteel being able to market a fully competitive range of products to its North American customers. Downstream operations will benefit from improved supply capabilities as well as being captive markets for some of the Company's mill products. Cost savings are expected primarily from savings in freight, improved production scheduling at the mills, and scrap rationalization. Gerdau AmeriSteel will have an improved leverage position compared to Co-Steel, greater earnings stability through diversification, and strong sponsorship from its principal shareholder, Gerdau S.A. This sponsorship will be reflected in greater sharing of knowledge in engineering, operations and administration through best practices procedures. 10 Annual Report 2002 Although the combination has been completed, Gerdau AmeriSteel is currently operating in the short term under the pre-existing debt arrangements and associated covenants of the individual companies until the Company's consolidated debt can be restructured and refinanced. The Company is currently in compliance with the covenants, or has received waivers for non-compliance, under its debt agreements and management believes its business fundamentals have been enhanced as a result of the combination. In January and February 2003, Gerdau S.A. made loans totaling $30 million to subsidiaries of Gerdau AmeriSteel to increase liquidity within the group. These loans will be used for working capital purposes and bear interest at the rate of 6.5%. The loans do not have a stated maturity, but it is the intent of the Company to repay these loans as soon as practicable. In order to improve the long-term financial flexibility of Gerdau AmeriSteel, extend duration, ease administrative complexities and better utilize its collateral the Company has embarked on a refinancing program which is expected to be completed in the second quarter of 2003. SELECTED COMBINED FINANCIAL DATA The following table presents selected historical financial information for Gerdau AmeriSteel as of and for each of the fiscal years in the four-year period ended December 31, 2002. This information represents the historical financial data of Gerdau AmeriSteel Corporation as successor to Co-Steel after the combination with Co-Steel. Financial results prior to October 23, 2002 reflect only the results of the Gerdau North America Group and do not include the results of the former Co-Steel operations. The information has been prepared in accordance with Canadian generally accepted accounting principles and, for the years ended December 31, 2002 and 2001, has been derived from Gerdau AmeriSteel's audited combined financial statements included in this document. We encourage you to read this financial information in conjunction with the combined financial statements, and related notes.

December 31, December 31, December 31, December 31, 2002 2001 2000 1999 ($(000s) except per share data) Sales $ 1,036,055 $ 840,836 $ 922,725 $ 401,429 Income from Operations 53,180 43,325 59,142 58,549 Net Income (Loss) 11,132 (6,066) 3,943 21,928 Net Income (Loss) per Share $ 0.08 $ (0.05) $ 0.03 $ 0.16 Total Assets 1,571,401 1,061,939 1,072,089 999,203 Shareholder's Equity 593,098 49,798 56,976 69,477 Number of Common Shares Outstanding 184,892,360 133,388,400 133,388,400 133,388,400

RESULTS OF OPERATIONS The results of operations are those of Gerdau AmeriSteel, Co-Steel's successor. Gerdau AmeriSteel is comprised of operations in the Gerdau North America Group whose main operations in Canada and the United States include Gerdau Ameristeel Cambridge Inc., Gerdau AmeriSteel MRM Special Sections Inc., and AmeriSteel. Since October 23, 2002, Gerdau AmeriSteel also includes the Co-Steel operations. On December 31, 2002, AmeriSteel was an 87% owned subsidiary. The results of operations of Gerdau AmeriSteel are largely dependent on the level of construction and general economic activity in the North American market. Gerdau AmeriSteel's sales are seasonal, with sales in the June and September quarters generally being stronger than the rest of the year. Gerdau AmeriSteel's cost of sales includes the cost of its primary raw material, steel scrap, the cost of converting the scrap to finished steel products, and the cost of warehousing and handling finished steel products. Gerdau AmeriSteel 11 YEAR ENDED DECEMBER 31, 2002 VERSUS DECEMBER 31, 2001 The following table sets forth information regarding results of operations of Gerdau AmeriSteel:

Year Ended Year Ended --------------------- ----------------------- December 31, 2002 December 31, 2001 (In thousands, except percentages) Sales $ 1,036,055 100.0% $ 840,836 100.0% Cost of sales 867,091 83.70% 680,084 80.9% Selling and administrative 62,173 6.0% 56,431 6.7% Depreciation 58,683 5.7% 54,877 6.5% Amortization of goodwill - -- 6,582 .8% Other operating (income) expenses (5,072) (.5)% (463) (.1)% Income from operations 53,180 5.1% 43,325 5.2% Interest expense 38,598 3.7% 48,852 5.8% Loss on interest derivatives - - 707 .1% Amortization of def'd finance costs 1,172 .1% 1,180 .1% Foreign Exchange Loss 230 .1% 249 .1% Income (loss) before income tax 13,180 1.3% (7,663) (.9)% Income tax expenses (benefit) 341 .1% (2,581) (.3)% Income (loss) before minority interest 12,839 1.2% (5,082) (.6)% Minority interest (1,707) (.2)% (984) (.1)% Net income (loss) $ 11,132 1.1% $ (6,066) (.7)%

TONS SHIPPED AVERAGE NET SELLING PRICES --------------------------------------- ---------------------------------------- Year Ended Year Ended Year Ended Year Ended December 31, 2002 December 31, 2001 December 31, 2002 December 31, 2002 (Thousands) (Per Ton) MILL FINISHED GOODS Stock Rebar 839 784 $249 $250 Merchant Bar/Special Sections 1,424 1,061 304 310 Rods 166 62 284 275 Flat Rolled 120 -- 322 -- 2,548 1,906 285 284 Fabricated Steel 566 588 440 430 Billets 75 22 194 188 Total 3,190 2,516

Sales: Sales in the year ended December 31, 2002 were $1,036.1 million compared to $840.8 million in the year ended December 31, 2001, an increase of $195.2 million. The acquisition of the Cartersville mill in December 2001 resulted in additional sales of $84.1 million during the year ended December 31, 2002 compared to the year ended December 31, 2001. The merger with Co-Steel in October 2002 resulted in additional sales of $122.4 million compared to the year ended December 31, 2001. Excluding Cartersville and the former Co-Steel operations, sales declined by $11.2 million, and finished tons shipped remained relatively flat in the year ended December 31, 2002 compared to the year ended December 31, 2001. Pricing of mill finished products in the fourth quarter remained at roughly the same levels as the immediately preceding quarter, and are up about 5% from the same period last year. Average merchant bar prices were up almost 10% in the fourth quarter compared to the same prior year period while rebar prices remained relatively flat. For the year, average mill finished goods selling prices were $285 per ton, up by less than 2% from last year's average. Fabricating sales were down approximately 5% in the fourth quarter from the same period last year and ended the year down approximately 3%. 12 Annual Report 2002 COST OF SALES: Cost of sales for the year ended December 31, 2002 was $867.1 million compared to $680.1 million for the year ended December 31, 2001, an increase of $287 million. Compared to last year, the addition of the Cartersville mill in December 2001 resulted in increased cost of sales of $78.9 million, while the October 2002 merger with Co-Steel resulted in $110.5 million additional cost of sales. Yielded scrap costs, which comprise approximately 35% to 40% of Gerdau AmeriSteel's cost of sales, increased by approximately $8 per ton in the year ended December 31, 2002 compared to the year ended December 31, 2001, with a fourth quarter surge in scrap costs that resulted in an average $15 per ton increase in the fourth quarter compared to last year. Costs have increased as a result of higher demand for scrap in both export and other U.S. steel markets as the Section 201 tariff relief has resulted in increased production at U.S. mills, primarily in the flat rolled market. SELLING AND ADMINISTRATIVE: Selling and administrative expenses for the year ended December 31, 2002 were $62.1 million compared to $56.4 million for the year ended December 31, 2001, an increase of $5.7 million, due primarily to the addition of the Cartersville mill ($0.6 million) and Co-Steel ($3.8 million.) Higher professional fees relating to consulting engagements for strategic development initiatives, improved performance incentive pay, severance pay and the incremental costs associated with the acquisition of AmeriSteel Bright Bar, Inc. ("ABB") account for the rest of the increase. DEPRECIATION: Depreciation for the year ended December 31, 2002 was $58.7 million compared to $54.9 million for the year ended December 31, 2001, an increase of $3.8 million due primarily to the addition of Co-Steel operations ($7.0 million) and Cartersville ($0.9 million) which was partially offset resulting by a change in estimated useful lives of Gerdau Canada's property, plant and equipment. GOODWILL AMORTIZATION: Due to changes in accounting standards, goodwill is not subject to amortization after fiscal 2001, therefore there was no goodwill amortization expense for the year ended December 31, 2002 compared to $6.6 million for the year ended December 31, 2001. OTHER OPERATING INCOME: Other operating income for the year ended December 31, 2002 relates to a $6.1 million insurance settlement in the fourth quarter of 2002 partially offset by $1.0 million in costs associated with the closing of the Wilmington and St. Albans fabricating plants. Other operating income for the year ended December 31, 2001 consists of a non-recurring net gain of $2.8 million from cash settlements from graphite electrode suppliers and a prior year tax refund of $0.7 million. These are partially offset by a charge of $2.6 million relating to a loss on investment and a $0.4 million charge relating to insurance claims deductibles. INTEREST EXPENSE: Interest expense was $38.6 million for the year ended December 31, 2002 compared to $48.9 million for the year ended December 31, 2001, a decrease of $10.3 million, due primarily to the conversion of $325.8 million of related party debt to equity in connection with the acquisition of Co-Steel. Related party interest expense, net of interest income, was $14.0 million for the year ended December 31, 2002 compared to $25.0 million for the year ended December 31, 2001, a decrease of $11 million, due primarily to the conversion of debt to equity. The debt relating to the Co-Steel operations added $4.0 million interest expense during the period October 23 through December 31, 2002. Lower interest rates on the Company's LIBOR denominated debt and normal day-to-day fluctuations in borrowings accounted for approximately $3.3 million of savings compared to the prior year. SEGMENTS: Gerdau AmeriSteel has two primary business unit segments: (a) mills and (b) downstream. Mill operation profits for the year ended December 31, 2002 were $50.0 million compared to $42.9 million for the year ended December 31, 2001, an increase of $7.1 million. The acquisition of the Cartersville mill in December 2001 resulted in increased volumes of approximately 283,000 tons of finished steel in 2002 and essentially broke even at an operating income level. The former Co-Steel mills included from October 23, 2002, resulted in increased volumes of 370,000 tons of finished steel and also essentially broke even at an operating level for the 2.25 month period from October 23 through December 31, 2002. AmeriSteel's mill operations improved from $19.7 million in the year ended December 31, 2001 to $20.6 million in the year ended December 31, 2002, largely due to improved pricing in its merchant bar products. Profits from Gerdau Canada's mill segment increased from $23.2 million for the year ended December 31, 2001 to $28.9 million for the year ended December 31, 2002. Improved merchant bar prices, and to a lesser extent rebar prices, combined to add approximately $2.2 million to mill segment profits, and a change in estimated useful lives of property plant and equipment in one of the Canadian mills resulted in a $3.2 million reduction of depreciation expense. Gerdau AmeriSteel 13 The downstream segment is made up principally of rebar fabrication, merchant bar value added businesses, and wire mesh and collated nails. Profits from the downstream segment were $8.8 million for the year ended December 31, 2002 compared to $13.0 million for the year ended December 31, 2001, a decrease of $4.2 million. The closure of two redundant rebar fabricating plants in the U.S. resulted in a charge of $1.0 million in 2002. Rebar fabricating profits also declined as a result of lower prices and higher material costs in the year ended December 31, 2002. Because the fabricating division's backlog is approximately nine months of shipments, rebar price increases are not immediately passed along to customers. The combination of lower shipments and higher rebar costs resulted in $5.6 million lower profits in the year ended December 31, 2002 compared to the prior year. Partially offsetting rebar fabricating declines were improved results in the other downstream operations which include rail spike operations, a wire mesh and collated nail plant, and cold drawn merchant bar plants. These business units added approximately $2.7 million to downstream segment profits in 2002 compared with 2001, through a combination of higher prices and volumes. See "NOTE 18 TO GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2002 - SEGMENT INFORMATION" FOR A RECONCILIATION OF SEGMENT SALES AND PROFITS TO CONSOLIDATED RESULTS. LIQUIDITY AND CAPITAL RESOURCES Please refer to "NOTE 7 TO GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2002 - LONG-TERM DEBT" for a more detailed discussion of the Company's debt structure and obligations. Gerdau AmeriSteel's liquidity is primarily dependent upon three separate credit arrangements, one in the U.S. and two in Canada. A) US CREDIT FACILITY The main U.S. subsidiary, AmeriSteel, had as its primary financial obligation outstanding on December 31, 2002 a Revolving Credit Agreement. It is collateralized by first priority security interests in substantially all accounts receivable and inventory of AmeriSteel as well as a lien on AmeriSteel's Charlotte Mill property, plant and equipment. The $285 million Revolving Credit Agreement includes a $100 million term loan that amortizes at the rate of 25% per year beginning in December 2001. The loan matures in September 2005. The Revolving Credit Agreement contains certain covenants including the requirement to maintain financial ratios and limitations on indebtedness, liens, investments and disposition of assets and dividends. AmeriSteel was in compliance with the provisions of the Revolving Credit Agreement through December 31, 2002. Loans under the Revolving Credit Agreement bear interest at a per annum rate equal to one of several rate options (LIBOR, Fed Funds, or prime rate) based on the facility chosen at the time of borrowing plus an applicable margin determined by tests of performance from time to time. The effective interest rate on the Revolving Credit Agreement at December 31, 2002 was approximately 4.0%. As of December 31, 2002, the Revolving Credit Agreement, including the term loan component, had approximately $170.0 million outstanding of which $44.8 million was allocated to letters of credit (most of which are being provided as credit backing for AmeriSteel's outstanding Industrial Revenue Bonds and insurance obligations). These Industrial Revenue Bonds were issued to construct facilities in Jackson, Tennessee; Charlotte, North Carolina; Jacksonville, Florida; and Plant City, Florida. The latest bond is associated with the Cartersville cold drawn facility, acquired from Republic Technologies in June 2002 in the amount of $3.6 million. The interest rates on these bonds range from 50% to 75% of the prime rate. The Industrial Revenue Bonds mature in 2003, 2014, 2017 and 2018. As of March 31, 2003 availability under the Revolving Credit Agreement is approximately $37.1 million. In April 2003, AmeriSteel received a waiver from its lenders as it expected to exceed its leverage ratio covenant of 3.75 to one due to weak operating margins in the first quarter. The Company believes AmeriSteel will be able to comply with the covenants under the Revolving Credit Agreement during the remainder of 2003. B) CANADA CREDIT FACILITY Gerdau Canada's primary financial obligation outstanding as of December 31, 2002 was a credit facility. The revolving component of this facility has an amount authorized of Cdn$73 million with Cdn$43.2 borrowed at December 31, 2002. The revolving facility is secured with a pledge of accounts receivable and inventory by Gerdau AmeriSteel MRM Special Sections Inc. and Gerdau AmeriSteel Cambridge Inc. Loans borrowed under the revolving facility carry interest at floating market rates approximating the bank's prime rate plus 1.75%, or Bankers' Acceptance plus 2.75%. The term component of the facility is Cdn$97.5 million at December 31, 2002 and is fully drawn. Loans borrowed under the term facility carry interest at floating market rates approximating the bank's prime rate plus 1.75%, or Banker's Acceptance 14 Annual Report 2002 plus 2.75%. Collateral for the credit facility includes: (i) Cdn$350 million demand debentures given by each of Gerdau Steel Inc., Gerdau MRM Holdings Inc., Gerdau Ameristeel MRM Special Sections Inc. and Gerdau AmeriSteel Cambridge Inc., each granting a first priority fixed charge on real estate, machinery and equipment, a first priority floating charge on all other assets and a first priority fixed charge on inventory and accounts receivable to a maximum of Cdn$20 million, (ii) pledges and guarantees of various subsidiaries of Gerdau Ameristeel, and (iii) a guarantee by Gerdau S.A. In addition, an "all risks" insurance policy for full insurable value on a replacement cost basis has been pledged to the lenders. This credit facility contains certain covenants, including the requirement to maintain financial ratios and limitations on indebtedness, investments and disposition of assets and dividends. Loans of this facility become due January 15, 2004. The Company was not in compliance with certain covenants under this facility at December 31, 2002 and anticipates it may not be in compliance in fiscal 2003. The Company has received waivers for non-compliance with certain covenants from its lenders as of December 31, 2002 and for the remainder of fiscal 2003. The term component of this facility is fully drawn as of March 31, 2003 with approximately Cdn$10 million currently available under the revolver. C) CO-STEEL CREDIT FACILITY In addition to the U.S. and Canadian credit facilities, as a result of the merger with Co-Steel, Gerdau AmeriSteel is subject to additional credit facilities with lenders to the former Co-Steel. As of December 31, 2002, the Co-Steel credit facilities included a revolving credit agreement with $90 million outstanding and notes payable totaling $97 million. The revolving facilities bear interest at the banker's acceptance rate or LIBOR plus 2% to 5% depending on debt to EBITDA ratios. The term loans bear interest at a fixed rate of 8.9% to 10.9% depending on debt to EBITDA ratios. The revolving facilities expire on January 15, 2004 and the term facilities reduce by $59 million on January 15, 2004, and by $12.5 million on July 15th in each of the years 2004 to 2006. The facilities are secured by a first charge against substantially all assets of the former Co-Steel entities. As of March 31, 2003 availability under the Co-Steel facilities is approximately $6.0 million and $204 million is outstanding. The Company's unsecured, subordinated convertible debentures in the principal amount of Cdn$125 million bear interest at 6.5% per annum, mature on April 30, 2007, and, at the holders' option, are convertible into Common Shares of the Company at a conversion price of Cdn$26.25 per share. Under the terms of the Trust Indenture for the Convertible Debentures, no adjustment to the conversion price is required if the Company issues Common Shares in a customary offering. The debentures are redeemable after April 30, 2002, at the option of the Company at par plus accrued interest. The Company has the right to settle the principal amount by the issuance of Common Shares based on their market value at the time of redemption. As the convertible debentures can be redeemed by the Company by the issuance of Common Shares, the debenture obligations are classified as shareholders' equity. Interest on the shareholders' equity component, net of related income taxes, has been charged to reinvested earnings, and was deducted from the net earnings or added to net loss in calculating basic earnings per share. As a result of operating under three separate and distinct credit arrangements, Gerdau AmeriSteel is required to maintain "status quo" segregation of operations as if the business combination had not taken place in order to satisfy lenders' lien rights. Under the status-quo agreement, the Company may not be able to manage treasury functions, including cash management, in the most efficient manner, and available cash, while adequate under one credit arrangement, may not be available to offset a shortfall under one of the other credit arrangements. Interest payments on the outstanding debt are payable monthly, quarterly or semi-annually depending on the individual debt agreements. Interest on the Company's convertible debentures is due semi-annually. Interest on the revolving credit agreements is due monthly or quarterly as required of each borrowing tranche. Total cash interest payments are approximately $40 million per year. Except for interest payments due in April and October of Cdn$4.1 million each, interest payments are made relatively equally throughout the year based on the borrowing tranches selected. Gerdau AmeriSteel has discretion in selecting borrowing tranches and therefore has the ability to manage, in part, when payments are made. Each of the three credit facilities has separate financial ratios which must be maintained or met. AmeriSteel reports quarterly to its lenders the following items: debt to EBITDA ratio, consolidated net worth, interest coverage ratio, and capital expenditures. It also must comply with other covenant ratios including EBITDA to cash interest expense. Gerdau Canada also reports quarterly to its lenders on the following Gerdau AmeriSteel 15 items: current ratio, debt service coverage ratio, interest coverage ratio, debt to EBITDA, debt to net worth, and tangible net worth. Gerdau AmeriSteel reports monthly to its lenders under the facility that was originally with Co-Steel and must comply with the covenants including the following: current ratio, debt to EBITDA, free cash flow, tangible net worth, and other tests against forecasted results. In the first quarter of 2003, Gerdau S.A. made loans totaling $30 million to subsidiaries of the Company to increase liquidity within the group. These loans will be used for working capital purposes and bear interest at the rate of 6.5%. The loans do not have a stated maturity, but it is the intent of the Company to repay these loans as soon as practicable. In order to improve the long-term financial flexibility of Gerdau AmeriSteel, extend duration, ease administrative complexities and better utilize its collateral the Company has embarked on a refinancing program which is expected to be completed in the second quarter of 2003. The Company is optimistic that it will complete the refinancing on favorable terms and conditions within the second quarter; however if it is unable to do so, the Company would be required to extend and negotiate substantive amendments to its existing credit agreements and/or obtain additional capital or financing from other sources. The Company spent $33.4 million on capital projects for the year ended December 31, 2002 and $28.4 million for the year ended December 31, 2001, an increase of $5.0 million. $2.8 million of these capital expenditures were made at Co-Steel operations after October 23, 2002 and $3.5 million was spent during the year on Cartersville which was acquired in December 2001. The Company anticipates spending approximately $75 million on capital projects in 2003 of which $16 million will be spent by the Co-Steel operations. Also for fiscal 2003, $29 million of capital expenditures relates to projects committed to in 2002. These carryover projects include rolling mill electrical control system upgrades at the Charlotte mill; an additional warehouse at the Cartersville mill; a new baghouse at the Cambridge mill; and a caster upgrade at the Jackson mill. New capital expenditure projects for fiscal 2003 are approximately $60 million of which $17 million is expected to carryover to fiscal 2004. The largest of these projects is a warehouse at the Whitby mill ($7 million) with no other single project estimated to be more than $2.3 million. Approximately $3.5 million of the anticipated capital expenditures is related to safety projects across several operations, with the remaining projects being largely discretionary. RISK AND UNCERTAINTIES The following is a discussion of some of the risks and uncertainties that relate to Gerdau AmeriSteel and its business. In this section, "we", "us", and "our" refer to Gerdau AmeriSteel and its subsidiaries. The global steel industry is highly competitive and capital intensive which may cause our production or sales to decline. We compete with numerous foreign and domestic producers, including both integrated and minimill producers. Some of our competitors have greater financial and capital resources than we do, and some continue to invest heavily to achieve increased production efficiencies and improved product quality. Competition is based on price, quality, and the ability to meet customers' product specifications and delivery schedules. In addition, in the case of certain product applications, steel competes with a number of other materials such as plastic, aluminum, and composite materials. We may be adversely affected by excess industry capacity, the potential for currently idled facilities to be restarted, and excess supply of some products and a number of potential steel substitutes. The highly competitive nature of the industry may in the future exert downward pressure on prices for certain of our products, which could adversely affect our sales. All of our steel making production facilities are minimills -- production facilities that produce steel by melting scrap metal in electric arc furnaces. The competitiveness of minimills relative to integrated mills (production facilities that produce steel from coke and iron ore) is influenced somewhat by the cost of scrap, which represents a significant production cost for minimills. If scrap prices were to increase significantly without a commensurate increase in finished steel selling prices, the competitive position of minimills compared to integrated mills could be materially adversely affected. Future increases in the prices paid for scrap and other inputs could cause our production to decline. Despite recent industry developments and trade regulation efforts, we may not be able to successfully reduce imports of steel or improve steel prices. Due to unfavorable foreign economic conditions and excess capacity, imports of steel bar products to the U.S. and Canadian markets are at historically high levels and often at prices below their production and export costs, with a corresponding negative impact on domestic prices. Despite favorable anti-dumping rulings on rebar from several countries early in 2001 by the United States International Trade Commission, imports of rebar into the U.S. have continued at very high levels. Canada and Mexico have been excluded from tariffs imposed by the 16 Annual Report U.S. Canada and Mexico are now concerned that steel imports initially destined to the U.S. may now be rerouted to Canada and Mexico. Such rerouting could result in a substantial surge of imports into Canada and Mexico, causing a further price depression in these countries. In 2002, the Canadian International Trade Tribunal (the "CITT") made a finding of serious injury in respect of rebar and structural shapes and recommended that Canada impose a 15% declining tariff on rebar and a tariff rate quota on structural shapes. The tariffs imposed by the U.S. and CITT findings may not reduce imports or result in improved prices. In addition, the U.S. and Canadian safeguard remedies have limited time horizons. It therefore is possible that unfairly priced imports could enter into the North American markets at a future date, resulting in further price depressions, which would adversely affect our ability to compete and our sales levels. The cyclical nature of the steel industry and negative economic conditions in North America and worldwide may cause fluctuations in our revenue and profitability. The steel industry is highly cyclical in nature and is affected significantly by prevailing economic conditions in the major world economies. We are particularly sensitive to trends in cyclical industries such as the construction, appliance, machinery and equipment, and transportation industries, which are significant markets for our products. In addition, certain of our customers have been adversely affected by the recent North American and worldwide recession, particularly following the events of September 11, 2001, which has resulted in and which may in the future result in defaults in the payment of accounts receivable owing to us. Market conditions for steel products in the North American market have fluctuated over the years and have been difficult since the third quarter of 2000. A significant portion of our products is destined for the construction industry and the steel service industry. Both of these markets have experienced lower demand in recent periods. Demand for our finished steel products, notably rebar, light structural shapes, and flat rolled steel, will be significantly affected by the relative strength of the construction sector in North America. Events or conditions having an adverse effect on the steel industry generally or on our markets in particular could occur or continue. Such events or conditions could include, for example, a further economic downturn, an increase in steel imports, an increase in production resulting in over-supply in the markets in which we will operate, an increase in the strength of the U.S. dollar or Canadian dollar relative to other currencies, or an increase in North American or international competition, or other events or conditions that we cannot predict. Any such event or condition could have a material adverse effect on our financial condition or results of operations. Our profit margins could be adversely affected by a significant increase in our raw material and energy costs. All of our production facilities are minimills -- production facilities that produce steel by melting scrap metal in electric arc furnaces. Our operating results are strongly linked to the cost of steel scrap and scrap substitutes, which are the primary input for our minimill facilities. Steel scrap prices are relatively higher during the winter months due to the impact of weather on collection and supply efforts. Realized selling prices for our end products cannot always be adjusted in the short-term to recover the cost of increases in steel scrap prices, but generally tend to reflect increases or decreases in these prices. Approximately half of all steel products in North America currently are made in electric arc furnaces that utilize steel scrap. The increasing rate of steel scrap consumption has placed upward pressure on the price of steel scrap. The availability of and prices for scrap are subject to market forces and governmental regulation largely beyond our control, including demand by North American and international steel producers, freight costs, and speculation. If scrap prices were to increase significantly without a commensurate increase in finished steel selling prices, profit margins could be materially adversely affected. Future increases in the prices paid for scrap and other inputs could materially adversely affect our operating margins and our results of operations. We do not have long term contracts for natural gas and oxygen and are therefore subject to market variables and pricing swings that could materially adversely affect our operating margins and our results of operations. Most of our operations have long-term electricity supply contracts with either major utilities or energy suppliers. These contracts typically have two components to them: a firm portion and an interruptible portion. The firm portion supplies a base load for each plant's rolling mill and auxiliary services. The interruptible portion supplies the electric arc furnace load. The interruptible portion of the contract represents up to 60% to 70% of the total load and, for the most part, is based on a spot market price of electricity at the time it is being used. We therefore have significant exposure to the variances of the electricity spot market. We may not be able to pass on increases in the price of steel scrap or other raw materials and, consequently, any such increases may adversely impact our profitability. Although each of our plants can use oil as an alternate fuel when natural gas has been interrupted, any interruption in the supply of energy, whether scheduled or unscheduled, could materially adversely affect our costs, sales and earnings. Gerdau AmeriSteel 17 Our pension plans are currently underfunded and continued adverse market conditions may require us to make cash payments and reduce the cash available for our business. The Lasco Hourly-Rated Employees' Pension Plan, a benefit plan maintained by a division of Gerdau AmeriSteel, had an excess of actuarially computed benefits over plan assets of approximately Cdn$7.3 million as of January 1, 2002. Funding of this plan was approximately Cdn$12.2 million in 2002 and is expected to be approximately Cdn$8.6 million in 2003. We have an unfunded liability in respect of the Group Supplementary Retirement Plans for Senior Management Employees of Gerdau AmeriSteel in the estimated amount of Cdn$10.1 million. This amount takes into consideration the change of control provisions contained in the employment arrangements of certain of our senior executives. This liability is secured by a letter of credit. The projected benefit obligations under the Lasco benefit plans and the Group Supplementary Retirement Plans for Senior Management Employees of Gerdau AmeriSteel in excess of the fair value of the plans' assets have been recorded as a liability in connection with the purchase accounting for the reverse acquisition of Co-Steel by Gerdau S.A. The defined benefit AmeriSteel Retirement Plan had a deficiency of approximately $9.7 million as of December 31, 2002. We have an unfunded liability in respect of the Pension Plan for Union Employees of Mandak Metal Processors in the estimated amount of Cdn$120 thousand. We anticipate the above deficiencies to be larger at this time based on the recent performance of the North American equity markets. Our pension and retirement plans are in compliance with applicable Canadian and U.S. regulatory, funding requirements and filings. It is expected that cash funding requirements in 2003 will be in the range of $10 million to $20 million which is comparable to the funding requirements in 2002. The Co-Steel operations recorded a fair valuation acquisition pre-tax adjustment of $36.8 million. This charge did not result in loan covenant violations. The primary rate used to measure Gerdau AmeriSteel's post-retirement benefit obligation is the discount rate. For year-end purposes, and for the above valuation purposes, Gerdau AmeriSteel used a 6.5% discount factor for Canadian plans and a 6.75% discount factor for U.S. plans. Each half percentage change in the discount factor corresponds to an approximate 7%-9% change in the post-retirement benefit obligations, which was approximately $300 million at December 31, 2002. A half percentage change in the rate of return on plan assets corresponds to a change in pension expense of approximately $1.1 million. We may have to make substantial cash payments to fund our underfunded pension plans if market conditions do not improve over the next fiscal year, which would reduce the cash available for our business. We may not be able to successfully renegotiate collective bargaining agreements when they expire and our financial results may be adversely affected by labor disruptions. We have approximately 4,800 employees, of which approximately 1,300 are represented by the United Steelworkers of America under four collective bargaining agreements. These agreements have different expiration dates beginning February 2004. Certain recycling facilities have approximately 60 employees represented by three different unions under collective agreements that expire in the first half of 2003 and are currently being renegotiated. We may be unable to successfully negotiate new collective bargaining agreements for these employees without any labor disruption. Labor organizing activities could occur at one or more of our other facilities. Other labor difficulties could arise at our facilities or at other companies upon which we are dependent for raw materials, transportation, or other services. Any such activities or difficulties could result in a significant loss of production and revenue and have a material adverse effect on our financial condition, or results of operations. Compliance with environmental laws is costly and onerous and may reduce our profitability. As the Company is involved in the manufacture of steel, it produces and uses certain substances that may pose environmental hazards. The principal hazardous waste generated by current and past operations is electric arc furnace ("EAF") dust, a residual from the production of steel in electric arc furnaces. Environmental legislation and regulation at the federal, state and provincial levels over EAF dust is subject to change, which may change the cost of compliance. While EAF dust is generated in current production processes, such EAF dust is being collected, handled and disposed of in a manner that management believes meets all current federal, state and provincial environmental regulations. The costs of collection and disposal of EAF dust are being expensed as operating costs when incurred. In addition, the Company has handled and disposed of EAF dust in other manners in previous years, and is responsible for the remediation of certain sites where such EAF dust was generated and/or disposed. In general, the Company's estimate of remediation costs is based on its review of each site and the nature of the anticipated remediation activities to be undertaken. The Company's process for estimating such remediation costs includes determining for each site the expected remediation methods, and the estimated cost for 18 Annual Report 2002 each step of the remediation. In such determinations, the Company may employ outside consultants and providers of such remedial services to assist in making such determinations. Although the ultimate costs associated with the remediation are not known precisely, the Company estimated the total remaining costs as of December 31, 2002 to be approximately $6.3 million, with these costs recorded as a liability in the Company's financial statements, of which the Company expects to pay approximately $5.1 million during the year ended December 31, 2003. An additional liability of $8.6 million was recorded in 2002 with respect of certain environmental obligations which were triggered by the change in control of Co-Steel in certain jurisdictions in which Co-Steel operated. This liability was recorded in the Company's financial statements at the present value of the estimated future costs of these obligations. Based on past use of certain technologies and remediation methods by third parties, evaluation of those technologies and methods by the Company's consultants and third-party estimates of costs of remediation-related services provided to the Company of which the Company and its consultants are aware, the Company and its consultants believe that the Company's cost estimates are reasonable. Considering the uncertainties inherent in determining the costs associated with the clean-up of such contamination, including the time periods over which such costs must be paid, the extent of contribution by parties which are jointly and severally liable, and the nature and timing of payments to be made under cost sharing arrangements, there can be no assurance the ultimate costs of remediation will not differ from the estimated remediation costs. In April 2001, the Company was notified by the United States Environmental Protection Agency (the "EPA") of an investigation that identifies the Company as a potential responsible party ("PRP") in a Superfund Site in Pelham, Georgia. The Pelham site was a fertilizer manufacturer in operation from 1910 through 1992, lastly operated by Stoller Chemical Company, a now bankrupt corporation. The EPA offered a settlement to the named PRPs under which the Company's allocation was approximately $1.8 million. The Company objects to its inclusion as a PRP in this site and is pursuing legal alternatives, including the addition to the allocation of larger third parties which the Company believes were incorrectly excluded from the original settlement offer. The EPA has filed suit with the Company named as a defendant. As the ultimate exposure to the Company, if any, is uncertain, no liability has been established for this site. Carbon monoxide emissions at Gerdau Ameristeel Perth Amboy exceeded permitted levels on several occasions during 2001 and early 2002. These episodes were promptly reported to the New Jersey Department of Environmental Protection (NJDEP). Gerdau Ameristeel is conducting investigations to determine the cause of these episodes, what steps can be taken to reduce emissions and whether the Gerdau Ameristeel Perth Amboy environmental permits require modification. Discussions with the NJDEP regarding permit and compliance issues are in a preliminary stage. Penalty assessments expected to total approximately $400 thousand, have been accrued. Inflation may affect our profitability. Gerdau AmeriSteel's primary costs include ferrous scrap, energy and labor, all of which can be affected by inflationary conditions. Gerdau Ameristeel has generally been able to pass on cost increases through price adjustments. However, the ability to pass on these increases depends on market conditions which are driven primarily by the level of construction activity. Other factors that may limit Gerdau AmeriSteel's ability to pass on cost increases in materials is over-capacity in the North American steel industry and dumping of foreign produced steel. We are exposed to fluctuations in interest rates. The interest rates charged on our debt are predominantly variable, the majority of which is based on LIBOR (London Interbank Offered Rate). In November 1999, Gerdau Canada hedged $68 million of its debt (the "notional amount") via interest rate swaps that in effect resulted in fixed interest rates on the notional amount. Under two separate swap arrangements, the notional amounts declined on predetermined dates by predetermined amounts. The first swap ran for a period of three years and terminated on November 4, 2002. The second swap terminates September 2004. The notional amount swapped is currently $17 million. In late 2001, Gerdau USA hedged $55 million of its debt via interest rate swaps that in effect result in a fixed interest rate on $55 million for a period of four to five years. As a result, Gerdau USA has reduced its exposure to fluctuations in interest rates with the result being that approximately 33% of the US operations' debt is subject to changes in interest expense due to fluctuations of interest rates in the markets. A 10% change in interest rates would result in a change in annual interest expense of less than $0.5 million. The value of our interest rate swaps changes from period to period due to changes in the swap yield curve relative to the swap yield curve on the date it was entered into, and adjusted for the shortening duration. Generally the market value of the swap instrument will decline if interest rates remain lower than forecasted and will increase in value if interest rates rise faster than anticipated. Gerdau AmeriSteel 19 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF GERDAU AMERISTEEL CORPORATION: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings(loss), of shareholders' equity, and of cash flows present fairly, in all material respects, the financial position of Gerdau Ameristeel Corporation and its subsidiaries (the Company) at December 31, 2002 and 2001, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles which, as described in Note 2, are generally accepted in Canada. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Gerdau Canada Group, a company under common control, as of December 31, 2001 and for the year then ended, which statements reflect total assets of $330,463,000 and total revenues of $237,442,000. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Gerdau Canada Group, is based solely on the report of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 2 to the Consolidated Financial Statements, the Company adopted the provisions of CICA Handbook Section 3062, Goodwill and Other Intangible Assets, on January 1, 2002. /s/ PricewaterhouseCoopers LLP January 24, 2003 except for certain information contained in Notes 3 and 20, as to which the date is April 4, 2003 Orlando, Florida 20 Annual Report 2002 CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002 and 2001 (Canadian GAAP/U.S. Dollar) GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES Consolidated Balance Sheet (US$ in thousands)

DECEMBER 31, DECEMBER 31, 2002 2001 ----------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 16,361 $ 5,087 Accounts receivable, net of allowance for doubtful accounts of $4,688 (2001 - $2,210) 172,745 97,327 Inventories (note 4) 351,400 211,420 Future tax assets (note 10) 11,417 5,320 Other current assets 2,997 1,096 ----------- ----------- TOTAL CURRENT ASSETS 554,920 320,250 PROPERTY, PLANT AND EQUIPMENT (NOTE 5) 898,948 530,885 GOODWILL 114,374 114,374 OTHER ASSETS (NOTE 8) 3,159 96,430 ----------- ----------- TOTAL ASSETS $ 1,571,401 $ 1,061,939 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $ 170,334 $ 99,647 Accrued salaries, wages and employee benefits 43,932 16,826 Other current liabilities (note 12) 20,110 9,453 Taxes payable 6,567 -- Interest payable 3,395 6,563 Bank Indebtedness (note 7) 23,379 4,083 Current portion of long-term borrowings (note 7) 83,942 62,977 ----------- ----------- TOTAL CURRENT LIABILITIES 351,659 199,549 LONG-TERM BORROWINGS, LESS CURRENT PORTION (NOTE 7) 411,833 251,346 RELATED PARTY BORROWINGS (NOTE 8) -- 405,227 ACCRUED BENEFIT OBLIGATION (NOTE 11) 70,166 20,746 OTHER LIABILITIES (NOTE 12) 29,175 5,530 FUTURE TAX LIABILITIES (NOTE 10) 82,158 99,109 MINORITY INTEREST 33,312 30,634 ----------- ----------- 978,303 1,012,141 ----------- ----------- TOTAL LIABILITIES SHAREHOLDERS' EQUITY Capital stock (note 14) 513,400 58,364 Convertible debentures (note 9) 79,134 -- Retained earnings (deficit) 1,329 (7,622) Cumulative translation adjustment (765) (944) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 593,098 49,798 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,571,401 $ 1,061,939 =========== ===========

See notes to consolidated financial statements. GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES Consolidated Statements of Earnings (Loss) (US$ in thousands, except earnings per share data)

Year Ended Year Ended ----------------- ----------------- December 31, 2002 December 31, 2001 NET SALES $1,036,055 $840,836 OPERATING EXPENSES Cost of sales 867,091 680,084 Selling and administrative 62,173 56,431 Depreciation 58,683 54,877 Amortization of goodwill -- 6,582 Other operating income (note 17) (5,072) (463) 982,875 797,511 ========== -------- INCOME FROM OPERATIONS 53,180 43,325 OTHER EXPENSES Interest, net 38,598 48,852 Foreign exchange loss 230 249 Loss on marketable securities -- 707 Amortization of deferred financing costs 1,172 1,180 40,000 50,988 ---------- -------- INCOME (LOSS) BEFORE INCOME TAXES 13,180 (7,663) INCOME TAX EXPENSE (RECOVERY) 341 (2,581) ---------- -------- INCOME (LOSS) BEFORE MINORITY INTEREST 12,839 (5,082) MINORITY INTEREST (1,707) (984) NET INCOME (LOSS) $ 11,132 $ (6,066) EARNINGS PER COMMON SHARE- BASIC (note 14) $ 0.07 $ (0.05) EARNINGS PER COMMON SHARE - DILUTED $ 0.07 $ (0.05)

See notes to consolidated financial statements. 22 Annual Report 2002 Gerdau AmeriSteel Corporation and Subsidiaries Consolidated Statements of Shareholders' Equity (US$ in thousands, except share data)

Cumulative Invested Convertible Retained Translation Deferred Shares Capital Debentures Earnings Adjustment Compensation Total Balance - December 31, 2000 $133,388,400 $ 58,619 $ -- $(1,556) $ (11) $(76) $ 56,976 Net income (loss) -- -- (6,066) -- -- (6,066) Subsidiary stock activity (255) -- -- -- -- (255) Foreign exchange -- -- -- (933) -- (933) Reduction in deferred compensation 76 76 Balance - December 31, 2001 133,388,400 58,364 -- (7,622) (944) -- 49,798 Net income -- -- 11,132 -- -- 11,132 Subsidiary stock activity (187) -- -- -- -- (187) Foreign exchange -- -- -- 179 -- 179 Debt converted to equity 325,948 -- -- -- -- 325,948 (note 8) Acquisition (note 3) 51,503,960 129,275 79,134 -- -- -- 208,409 Dividends paid -- -- (2,181) -- -- (2,181) Balance - December 31, 2002 184,892,360 $513,400 $79,134 $ 1,329 $(765) -- $593,098

See notes to consolidated financial statements. Gerdau AmeriSteel 23 GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (US$ in thousands)

Year Ended Year Ended ----------------- ----------------- December 31, 2002 December 31, 2001 OPERATING ACTIVITIES Net income (loss) $ 11,132 $ (6,066) Adjustment to reconcile net income to net cash provided by operating activities: Depreciation 58,683 54,877 Amortization 1,172 7,762 Deferred income taxes (10,428) (2,284) Loss (Gain) on disposition of property, plant and equipment 1,044 (17) Unrealized foreign exchange on related party loans 436 (6,253) Accrued interest on related party loans (2,561) 14,144 Loss on sale of marketable securities -- 3,658 Deferred compensation -- 76 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 21,433 12,159 Inventories (17,991) 18,640 Other assets (9,061) 6 Liabilities (19,791) 5,878 NET CASH PROVIDED BY OPERATING ACTIVITIES 34,068 102,580 INVESTING ACTIVITIES Additions to property, plant and equipment (33,482) (28,419) Purchase price for acquisitions (6,856) (51,184) Cash acquired in acquisition 18,465 -- Proceeds from dispositions 489 811 NET CASH USED IN INVESTING ACTIVITIES (21,384) (78,792) FINANCING ACTIVITIES Term debt payments (29,503) (58,906) Revolving credit borrowings (payments) 27,273 (31,279) Increase in related party loans payable -- 64,638 Reductions (additions) to deferred financing costs 705 (4) Foreign exchange (loss) gain (195) 142 Changes in minority interest 2,678 984 Subsidiary stock activity (187) (232) Dividends paid (2,181) -- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,410) (24,657) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,274 (869) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,087 5,956 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,361 $ 5,087 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest $ 57,610 $ 45,882 Cash paid for income taxes $ 2,289 $ 690

See notes to consolidated financial statements. 24 Annual Report Notes to the Consolidated Financial Statements (US$ In Thousands) NOTE 1 - BASIS OF PRESENTATION The 2001 consolidated financial statements include the results and accounts of companies controlled by Gerdau AmeriSteel Corporation, a Canadian corporation, whose ultimate parent is Gerdau S.A., a Brazilian Company. The financial statements include the accounts of Gerdau Ameristeel Cambridge Inc. and Gerdau MRM Holdings Inc. and their consolidated subsidiaries Gerdau Ameristeel MRM Special Sections Inc., Gerdau MRM America Holding Corp., Porter Bros. Corporation, GUSAP Partners, Mandak Car Crusher Inc., MFT Acquisition Corp., 3038482 Nova Scotia Company, PASUG Inc., (combined, referred to as Gerdau Canada Group), and Gerdau USA, Inc. and its consolidated subsidiaries FLS Holdings Inc., AmeriSteel Corporation and AmeriSteel Bright Bar, Inc. ("GUSA"), collectively, the "Gerdau North America Group". All significant intercompany transactions and accounts have been eliminated in consolidation. On October 23, 2002, the ultimate parent company of the Gerdau North America Group entered into a transaction agreement with Co-Steel Inc. ("Co-Steel"), a Canadian public company. This transaction agreement resulted in Co-Steel acquiring all of the issued and outstanding shares of the companies included in the Gerdau North America Group, in exchange for Co-Steel common shares representing approximately 74% of Co-Steel's total common shares. As part of this transaction, certain related party loans payable of the Gerdau North America Group were converted into equity in October 2002. The transaction was accounted for using the reverse-take-over method of purchase accounting. The Gerdau North America Group is deemed to be the acquirer and is assumed to be purchasing the assets and liabilities of Co-Steel, since the original shareholder of the Gerdau North America Group became owner of more than 50 percent of the voting shares of Co-Steel on a fully-diluted basis following the transaction. As a result, the Gerdau North America Group's historical accounts became the historical accounts of Co-Steel for all periods prior to the date of merger. In connection with the merger, Co-Steel's name was changed to Gerdau AmeriSteel Corporation (the "Company" or "Gerdau AmeriSteel"). The Company operates steel mini-mills, producing primarily steel bars and special sections for commercial and industrial building construction and original equipment manufacturers. Its principal market area is the eastern United States and Canada. Principal suppliers to the Company include scrap metal producers and electric utilities. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements are presented by management in accordance with accounting principles generally accepted in Canada. All dollar amounts are reported in United States dollars unless otherwise indicated. CONSOLIDATION: These consolidated financial statements include the accounts of the Company and its subsidiaries. They include full year results for the Gerdau North America operations, and results for the Co-Steel operations for the period from October 23, 2002 through December 31, 2002, which represents the period subsequent to the date of acquisition. JOINT VENTURES AND OTHER INVESTMENTS: The Company's investments in Gallatin Steel Company, Bradley Steel Processors and MRM Guide Rail are 50% joint ventures, and are proportionately consolidated. Other investments where the Company does not exercise significant influence are accounted for by the cost method. The Company evaluates the carrying value of the investments to determine if there has been an impairment in value considered other than temporary, which is assessed by review of cash flows, operating income and takes into consideration trading values on recognized stock exchanges. If impairment is considered other than temporary, a provision is recorded. Gerdau AmeriSteel 25 REVENUE RECOGNITION AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: The Company recognizes revenues from sales and the allowance for estimated costs associated with returns from these sales when the product is shipped and title transferred to the buyer. Provisions are made for estimated product returns and customer claims based on estimates and actual historical experience. If the historical data used in the estimates does not reflect future returns and claims trends, additional provisions may be necessary. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. If the financial condition of customers was to deteriorate, resulting in the impairment of their ability to make payments, additional allowance may be required. CASH AND CASH EQUIVALENTS: The Company considers all cash on deposit and term deposits with original maturities of three months or less, to be cash equivalents. Cash held in the joint venture operations are for the sole use of the joint ventures. INVENTORIES: Billets and finished goods are valued at the lower of cost or market value. Scrap, consumables and spare parts are valued at the lower of cost (calculated on an average basis) or replacement value. Consumables include rolls, which are recorded at cost and amortized based on usage. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at cost. Major renewals and betterments are capitalized and depreciated over their estimated useful lives. Maintenance and repairs are charged against operations as incurred. Upon retirement or other disposition of property, plant and equipment, the cost and related allowances for depreciation are removed from the accounts and any resulting gain or loss is recorded in the statement of operations. Interest incurred in connection with significant capital projects is capitalized. Interest costs for property, plant and equipment construction expenditures of approximately $100 thousand was capitalized for the year ended December 31, 2002 (2001 - $800 thousand). For financial reporting purposes, the Company provides for depreciation of property, plant and equipment using the straight-line method over the estimated useful lives of 15 to 30 years for buildings and improvements and 4 to 15 years for other equipment. During 2002, the Company changed the depreciable lives of certain buildings and equipment to reflect their updated estimated economic lives. The effect of this change in accounting estimate reduced depreciation expense in 2002 by approximately $3.2 million. Property, Plant & Equipment Held for Sale is carried at the lower of cost or net realizable value. GOODWILL: Goodwill represents the cost of investments in operating companies in excess of the fair value of the net identifiable assets acquired. On January 1, 2002, the Company adopted CICA Handbook Section 3062, Goodwill and Other Intangible Assets. This section requires that goodwill and intangible assets with indefinite lives are not amortized, but rather their fair value be assessed at least annually and written down for any impairment in value. For acquisitions made subsequent to July 1, 2001, and as of January 1, 2002 for all existing goodwill and intangible assets with indefinite lives, such assets will no longer be amortized, but will be evaluated annually for impairment. There was amortization of goodwill and intangible assets recorded under the prior accounting standard for 2001. In 2001, goodwill resulting from acquisitions was amortized over 20 to 25 years, the estimated lives of the related benefit. Had goodwill not been amortized in 2001, net loss in 2001 would have been $2.1 million (versus a loss of $6.1 million), or $(0.02) per share. DEFERRED FINANCING COSTS: Deferred financing costs were incurred in relation to long term debt and are reflected net of accumulated amortization and are amortized over the term of the respective debt instruments, which range from 5 to 22 years from the debt inception date. FUTURE INCOME TAXES: The liability method of accounting for income taxes is used whereby future income taxes arise from temporary differences between the book value of assets and liabilities and their respective tax value. Future income tax assets and liabilities are measured using substantially enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the substantive enactment date. A valuation allowance is recorded to the extent the recoverability of future income tax assets is considered more likely than not. PENSIONS AND POST-RETIREMENT BENEFITS: The Company accrues its obligations under employee benefit plans and the related costs, net of plan assets. The Company has adopted the following policies: - - The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected 26 Annual Report 2002 benefit method prorated on service and management's best estimate of expected plan investment performance for funded plans, salary escalation, retirement ages of employees and expected health care costs. The discount rate used for determining the liability for future benefits is the current interest rate at the balance sheet date on high quality fixed income investments with maturities that match the expected maturity of the obligations. - - Pension assets are valued at fair market value. - - Past service costs from plan amendments are amortized on a straight-line basis over the average remaining service period of employees active at the date of amendment. - - The excess of the net actuarial gain or loss over 10% of the greater of the benefit obligation and the fair value of plan assets is amortized over the average remaining service period of the active employees. - - A plan curtailment will result if there has been a significant reduction in the expected future service of present employees. A net curtailment loss is recognized when the event is probable and can be estimated, a net curtailment gain is deferred until realized. ENVIRONMENTAL LIABILITIES: The Company has reserved for potential environmental liabilities based on the best estimates of potential clean-up and remediation estimates for known environmental sites. The Company employs a staff of environmental experts to administer all phases of its environmental programs, and uses outside experts where needed. These professionals develop estimates of potential liabilities at these sites based on projected and known remediation costs. This analysis requires the Company to make significant estimates, and changes in facts and circumstances could result in material changes in the environmental accrual. REPORTING CURRENCY AND FOREIGN CURRENCY TRANSLATION: Operating revenue and expenses arising from foreign currency transactions are translated into U.S. dollars at exchange rates in effect on the date of the transactions. Monetary assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Gains or losses arising from these translations are included in earnings, with the exception of unrealized foreign exchange gains or losses on long-term monetary items that hedge net investments in foreign operations which are accumulated in the foreign currency translation adjustment account in shareholders' equity, until there is a reduction in the net investment in the foreign operation. Assets and liabilities of self-sustaining foreign operations are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Operating revenue and expense items are translated at average exchange rates prevailing during the year. Any corresponding foreign exchange gains and losses are deferred and disclosed separately as part of shareholders' equity and are recognized in earnings when the ownership interest in the foreign operations is reduced. The consolidated financial statements have been prepared in U.S. dollars as the majority of the Company's transactions occur in this currency. EARNINGS PER SHARE: The Company's diluted earnings per share is determined using the treasury stock method for the effect of outstanding share purchase options and the dilution impact of the convertible debenture at the stated conversion price. STOCK OPTION PLAN: The Company has a stock option plan described in Note 15. No compensation expense is recognized when stock options are issued to employees as the option price is equivalent to the market value of the shares at the date of grant. Consideration paid on exercise of stock options is credited to share capital. No options have been granted in 2002. DEFERRED SHARE UNIT PLAN: The Corporation offers a Deferred Share Unit Plan (DSUP) for members of the Board of Directors. Under the DSUP each director receives a percentage of their annual compensation in the form of deferred share units (DSUs) which are notional Common Shares of the Company. The issue price of each DSU is based on the closing trading value of the Common Shares on the meeting dates and an expense is recognized at that time. The DSU account of each director includes the value of dividends, if any, as if reinvested in additional DSUs. The director is not permitted to convert DSUs into cash until retirement from the Board. The value of the DSUs, when converted to cash, will be equivalent to the market value of the Common Shares at the time the conversion takes place. The value of the outstanding DSUs as at December 31, 2002 was $141 thousand (2001 - $67 thousand). USE OF ESTIMATES: The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Gerdau AmeriSteel 27 NOTE 3 - ACQUISITIONS On October 23, 2002, Brazilian Steelmaker Gerdau S.A. and Canadian steelmaker Co-Steel combined their North American operations. In the transaction, Co-Steel acquired all of the issued and outstanding shares of the Gerdau North America Group in exchange for shares of Co-Steel representing approximately 74% of the shares of the combined entity. A portion of these shares will be issued to minority shareholders of AmeriSteel Corporation on March 31, 2003, as described below. The name of Co-Steel was changed to Gerdau AmeriSteel Corporation as part of the transaction. For accounting purposes, the business combination of the Gerdau North America Group and Co-Steel has been accounted for using the reverse take-over method of purchase accounting. Gerdau North America is deemed to be the acquirer and is assumed to be purchasing the assets and liabilities of Co-Steel, since the original shareholders of the Gerdau North America Group have become owners of more than 50% of the voting shares of Co-Steel on a fully diluted basis. The results of the operations of Co-Steel are included from the date of the transaction. The following table summarizes the fair value of assets and liabilities acquired at the date of the acquisition ($000s): NET ASSETS (LIABILITIES) ACQUIRED Current assets $ 242,252 Current liabilities (130,345) Property, plant and equipment 389,915 Other assets (177) Long-term debt (219,969) Other long-term liabilities (81,386) Net future income taxes 15,768 Convertible debenture (recorded as equity) (80,113) ------------ $ 135,945 ------------ Purchase consideration, representing 51,503,960 Co-Steel shares at $2.51 per share $ 129,275 Plus transaction costs 6,670 ------------ $ 135,945 ------------ Effective March 31, 2003, non-controlling shareholders holding, in the aggregate, approximately 13% of the issued and outstanding shares of AmeriSteel Corporation ("AmeriSteel"), will have their holdings exchanged for Gerdau AmeriSteel common shares in a ratio of 9.4617 Gerdau AmeriSteel shares for each common share of AmeriSteel exchanged. The acquisition of the minority interest of AmeriSteel will be accounted for as a step acquisition under the purchase method of accounting, whereby the purchase price of the shares will be allocated to the net assets acquired based upon their relative fair values. The exchange will result in the issuance of an additional 13,199,260 shares of Gerdau AmeriSteel (see Note 20). On June 24, 2002, the Company acquired certain assets and assumed certain liabilities of Republic Technologies' cold drawn plant in Cartersville, Georgia. The purchase price was $8.4 million and the transaction was accounted for as a business combination. The plant commenced operations under Gerdau AmeriSteel ownership on July 2, 2002. On December 28, 2001, AmeriSteel acquired certain assets and assumed certain liabilities of the Cartersville, Georgia mill ("Cartersville"), a producer of structural steel products, from Birmingham Steel Corporation. In a separate transaction on the same date, AmeriSteel acquired certain assets that were being leased by Cartersville from the existing lessor group for cash and negotiated a new operating lease. The two transactions are being accounted for as a business combination for financial reporting purposes. The results of operations for Cartersville have been included in the accompanying combined statement of financial position as of December 31, 2001, but had no significant impact on the results of operations for the year ended December 31, 2001. The aggregate purchase price was $49.4 million, including $41.5 million cash, $0.2 million marketable securities and $7.7 million assumed liabilities. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition ($000s).

AT DECEMBER 28, 2001 Inventory $ 20,674 Property, plant and equipment 28,757 Total assets 49,431 Accounts payable (6,756) Accrued liabilities (959) -------- Total liabilities assumed (7,715) -------- Net assets acquired $ 41,716 --------

On March 13, 2001, AmeriSteel acquired 80% of the operations of American Bright Bar of Orrville, Ohio, a producer of cold drawn flat bar, for total consideration of $4.2 million cash and $5.3 million of debt. The transaction was accounted for as a purchase and goodwill of approximately $4.8 million was recorded. 28 Annual Report 2002 NOTE 4 - INVENTORIES Inventories consist of the following ($000s):

At December 31, 2002 2001 ------------ ------------ Ferrous and non-ferrous scrap $ 40,983 $ 18,999 Work in-process 33,701 19,077 Finished goods 195,893 127,818 Raw materials (excluding scrap) and operating supplies 80,823 45,526 ------------ ------------ $ 351,400 $ 211,420 ------------ ------------

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following ($000s):

At December 31, 2002 ---------------------------------------------- Accumulated Net Cost Depreciation Book Value ------------ ------------ ------------ Land and improvements $ 65,021 $ 1,769 $ 63,252 Buildings and improvements 142,971 14,472 128,499 Machinery & equipment 889,779 203,119 686,660 Construction in progress 14,315 -- 14,315 Property plant and equipment held for sale 6,222 -- 6,222 ------------ ------------ ------------ $ 1,118,308 $ 219,360 $ 898,948 ------------ ------------ ------------

At December 31, 2001 ---------------------------------------------- Accumulated Net Cost Depreciation Book Value ------------ ------------ ------------ Land and improvements $ 31,098 $ 1,177 $ 29,921 Buildings and 84,545 10,011 74,534 improvements Machinery & equipment 562,151 154,995 407,157 Construction in progress 12,724 -- 12,724 Property plant and equipment held for sale 6,550 -- 6,550 ------------ ------------ ------------ $ 697,068 $ 166,183 $ 530,885 ------------ ------------ ------------

NOTE 6-JOINT VENTURES The Company's investments in Gallatin Steel Company, Bradley Steel Processors and MRM Guide Rail are 50% joint ventures. The Company's interests in the joint ventures have been accounted for using the proportional consolidation method under which the Company's proportionate share of assets, liabilities, revenues and expenses of the joint ventures have been included in these consolidated financial statements. The Company's interest in the joint ventures is as follows ($000s):

At December 31, 2002 2001 ------------ ------------ Balance Sheet Current assets(1)(2) $ 45,234 $ 3,984 Property, plant and equipment(3) Land 4,525 -- Buildings 19,740 38 Machinery and equipment 81,378 2,519 Construction-in-progress 1,778 -- Current liabilities 26,505 88 Long-term debt 3,415 -- Statement of Earnings Sales $ 53,591 $ 14,141 Operating earnings 6,836 1,833 Earnings before income taxes 6,275 1,774 Changes in Cash Flows Cash provided from (used in) Operating activities $ 6,098 $ 973 Investing activities (1,809) (738) Financing activities (17,026) (198) ------------ ------------ Proportionate share of increase (decrease) in cash $ (12,737) $ 37 ------------ ------------

(1) Includes $4.8 million (2001 - $1.5 million) of cash and cash equivalents. (2) Current assets are net of allowance for doubtful accounts of $2.2 million (2001 - $9 thousand). (3) Net of accumulated depreciation of $5.9 million (2001 - $2.6 million). Gerdau AmeriSteel 29 NOTE 7 - LONG-TERM DEBT The Company has debt agreements that are specific to the Gerdau Canada Group, GUSA and former Co-Steel entities. Gerdau AmeriSteel debt includes the following ($000s):

At December 31, 2002 2001 ------------ ------------ Gerdau Canada Group: Bank indebtedness $ 17,243 $ 4,083 U.S. Dollar Floating Rate Term 61,743 85,855 Loan Canadian dollar revolving loan (Cdn $35.0 million) 22,157 15,068 Other 1,444 1,458 GUSA: AmeriSteel Revolving Credit 100,800 80,000 Agreement AmeriSteel Term Loan 68,750 93,750 Industrial Revenue Bonds 36,795 33,195 AmeriSteel Bright Bar 3,522 3,867 Other 809 1,130 Co-Steel Group: Bank Indebtedness 6,136 -- Canadian dollar revolving loan (Cdn$48.3 million) 30,577 -- U.S. Dollar Fixed Rate Reducing 96,784 -- Term Loan Fair value of early payment penalty of fixed rate reducing term loans 9,065 -- U.S. dollar revolving loan 59,768 -- Other 3,561 -- ------------ ------------ 519,154 318,406 Less current portion (107,321) (67,060) ------------ ------------ $ 411,833 $ 251,346 ------------ ------------

GERDAU CANADA GROUP The Gerdau Canada Group has a total authorized revolver facility of Cdn $73 million ($46 million) that bears interest at floating market rates approximating the bank's prime rate (as defined in the agreement) plus 1.75% (2001 - 2.25%) or Bankers' Acceptance plus 2.75% (2001 - 3.25%). Companies in the Gerdau Canada Group have pledged accounts receivable and inventory as collateral. The revolver facility expires on September 30, 2003 and is renewable through January 15, 2004. The total authorized Canadian term facility is Cdn $97.5 million [$61.7 million] (2001 - Cdn$135 million [$84.8 million]) with a due date of January 15, 2004, bearing interest at floating market rates approximating the bank's prime rate (as defined in the agreement) plus 1.75% (2001 - 2.25%). Interest rate swap agreements related to this facility were entered into with the Gerdau Canada Group's bank as the counterparty in November, 1999 that effectively fixes the rate of interest on approximately 50% of the balance. The agreement is for $17 million and bears interest at 6.425% for a term of five years expiring in 2004. The aggregate fair value of the interest rate swap agreements, which represents the amount that would be paid by the Gerdau Canada Group if the agreements were terminated at December 31, 2002, was $1.2 million (2001 - $2.2 million). The Canadian banking agreement, which includes Gerdau Steel Inc. (the controlling shareholder of Gerdau AmeriSteel), contains various restrictive covenants with respect to maintenance of certain financial ratios. At December 31, 2002, the Company was not in compliance with certain covenants and requested and received a waiver of compliance (see Note 20). In addition, the Gerdau Canada Group banking agreement requires additional principal repayments of 50% of surplus combined cash flow as defined by the banking agreement for years 2001 - 2003. Based on the cash flows recorded in 2002, Gerdau Canada will be required to make an additional principal repayment of $4.1 million in 2003. Collateral for the Canadian credit facility includes: (i) Cdn$350 million demand debentures given by each of Gerdau Steel Inc., Gerdau MRM Holdings Inc., Gerdau AmeriSteel MRM Special Sections Inc. and Gerdau AmeriSteel Cambridge Inc., granting a first priority fixed charge on real estate, machinery and equipment, a first priority floating charge on all other assets and a first priority fixed charge on inventory and accounts receivable to a maximum of $20 million, (ii) pledges and guaranties of various Gerdau Canada Group members, and (iii) a guaranty by Gerdau SA. In addition, an "all risks" insurance policy for full insurable value on a replacement cost basis has been pledged to the lenders. At December 31, 2002 Gerdau Canada Group was not in compliance with certain covenants and requested and received a waiver of compliance from its lenders. GUSA GUSA's primary financial obligation outstanding as of December 31, 2002 is a $285 million credit facility (the "Revolving Credit Agreement"). It is collateralized by first priority security interests in substantially all accounts receivable and inventories of GUSA as well as a lien on the Company's Charlotte Mill property, plant and equipment. The Revolving Credit Agreement was amended in September 2000 and increased the total facility from $150 million to $285 million, of which $100 million is a term loan that amortizes at the rate of 25% per year beginning in December 2001. The Revolving Credit Agreement matures in September 2005. Loans under the Revolving Credit Agreement bear interest at a per annum rate equal to one of several rate options (LIBOR, Fed Funds or Prime Rate, as defined in the agreement) based on the facility chosen at the time of borrowing plus an applicable margin determined by tests of performance from time to time. The effective interest rate at December 31, 2002 and 2001 was approximately 3.8% and 4.2%, respectively. The Revolving Credit Agreement contains certain 30 Annual Report 2002 covenants including the requirement to maintain financial ratios and limitations on indebtedness, liens, investments and disposition of assets and dividends. Letters of credit are subject to an aggregate sublimit of $50 million. GUSA's industrial revenue bonds ("IRBs") were issued to obtain funding to construct facilities in Jackson, Tennessee; Charlotte, North Carolina; Jacksonville, Florida; and Plant City, Florida. GUSA incurred an additional $3.6 million IRB with the acquisition of the Cartersville cold drawn facility in June 2002. The interest rates on these bonds range from 50% to 75% of the prime rate (3.8% to 4.3% at December 31, 2002); $9.4 million of the IRBs mature in 2003, $3.8 million matures in 2015, $20.0 million matures in 2017, and $3.6 million matures in 2018. Irrevocable letters of credit issued pursuant to the Revolving Credit Agreement back the IRBs. As of December 31, 2002, GUSA had approximately $44.8 million of outstanding letters of credit, primarily for IRBs and insurance. The AmeriSteel Bright Bar Loan represents a bank loan of GUSA's majority-owned subsidiary, secured by machinery and equipment. The loan matures in 2011 with amortization payments that began in July 2001. The loan currently bears interest at a rate of approximately 6.0% per year with the rate having been reset in June 2002 and every three years thereafter based on prime plus 1%. AmeriSteel is a guarantor of the loan. In order to reduce its exposure to interest-rate fluctuations, GUSA entered into interest-rate swap agreements in August and September 2001. The interest-rate swaps have a notional value of $55 million, with the Company paying a fixed interest rate and receiving a variable interest rate based on three-month LIBOR. The underlying hedged instruments are specific tranches of LIBOR-based revolving credit and term loan borrowings under the Company's Revolving Credit Agreement. The aggregate fair value of the effective portion of the interest rate agreements, which represents the amount that would be paid by GUSA if the agreements were terminated at December 31, 2002, was approximately $4.6 million. As the hedged transaction occurs, this amount will be charged as interest expense. CO-STEEL GROUP The Co-Steel entities at December 31, 2002, have revolving facilities of Cdn$133.9 million and Cdn$22.2 million which can be drawn in either Canadian or U.S. dollars. These facilities come due on January 15, 2004 and bear interest at the bankers' acceptance rate or LIBOR plus 2% to 5% depending on debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratios. The fixed rate reducing term loan at December 31, 2002 was $96.8 million. This facility is reduced by $59.3 million on January 15, 2004 and then reduces by $12.5 million on July 15 in each of the years 2004 to 2006 and bears interest at a fixed rate of 8.9% to 10.9% depending on debt to EBITDA ratios. The terms of this facility include a make-whole provision (in the event of prepayment) that requires the Company to pay a penalty if interest rates had decreased since the original inception of the loan. At December 31, 2002, the amount of the make-whole provision (which was included in the fair value adjustments related to the acquisition of Co-Steel) was $9.1 million. The facilities are secured by a first charge against substantially all assets of the former Co-Steel entities. The maturities of borrowings for the years subsequent to December 31, 2002 are as follows ($000s):

AMOUNT -------- 2003 $107,321 2004 233,056 2005 133,188 2006 13,483 2007 730 Thereafter 31,376 -------- $519,154

NOTE 8 - RELATED PARTY TRANSACTIONS Amounts due from (to) related companies at December 31, 2001 are as follows ($000's):

2001 ------------ NOTES RECEIVABLE FROM GERDAU STEEL INC. Interest ranging from 0.0% - 10.25% (included in Other Assets) $ 90,682 NOTES PAYABLE TO GERDAU STEEL INC. Interest ranging from 0.0% - 9.775% $ (213,516) NOTES PAYABLE TO GTL FINANCIAL CORPORATION B.V. Interest ranging from 0.0% - 9.10% (156,071) NOTES PAYABLE BY GUSA TO GERDAU STEEL INC. Interest rate of 9.23% (35,640) ------------ LONG-TERM RELATED PARTY LOANS PAYABLE $ (405,227)

The Company is affiliated with a group of companies controlled by Gerdau S.A. The related parties noted in the table above are related to Gerdau S.A. Related party loans bear interest that is expensed but is not payable on a current basis. Except for the $35.6 million debt of GUSA to Gerdau Steel Inc., interest is added to the loan balance. All advances were repayable on demand with no collateral. The related parties indicated that it was not their intent to demand repayment during 2002 and, as a result, the amounts were classified as long-term. Intercompany charges for interest income (expense) of $4.3 million/($18.3 million) and $6.6 million/($31.6 million) in 2002 and 2001, respectively. Intercompany charges for management fees and royalties from related parties were $2.1 million and $2.8 million for the years ended December 31, 2002 and 2001, respectively. The $35.6 million note payable by GUSA to Gerdau Steel Inc related to the September 2000 acquisition by Gerdau of the outstanding Gerdau AmeriSteel 31 common stock of FLS formerly owned by Kyoei Steel Ltd. The loan accrued interest at the rate of 9.23% and had no stated maturity date. Gerdau Steel Inc. had represented that no repayments are required prior to December 31, 2003, and therefore the loan was classified as long-term. As part of the Co-Steel transaction (see Note 1), all of the related party notes payable, net of the notes receivable from Gerdau Steel Inc., were converted to equity in October 2002. NOTE 9 - CONVERTIBLE DEBENTURES The Company's unsecured, subordinated convertible debentures bear interest at 6.5% per annum, mature on April 30, 2007, and, at the holders' option, are convertible into Common Shares of the Company at a conversion price of Cdn$26.25 per share. Under the terms of the Trust Indenture for the Convertible Debentures, no adjustment to the conversion price is required if the Company issues Common Shares in a customary offering. The debentures are redeemable after April 30, 2002, at the option of the Company at par plus accrued interest. The Company has the right to settle the principal amount by the issuance of Common Shares based on their market value at the time of redemption. As the convertible debentures can be redeemed by the Company by the issuance of Common Shares, the debenture obligations are classified as shareholders' equity. Interest on the shareholders' equity component, net of related income taxes, has been charged to retained earnings, and was deducted from the net earnings or added to net loss in calculating basic earnings per share. NOTE 10- INCOME TAXES The effective income tax rate on earnings (loss) is influenced by the geographic mix of the consolidated earnings (loss), as well as various tax incentives introduced by governments from time to time to encourage investment. The following table reconciles income tax recovery (expense) calculated at a combined U.S. federal/state and Canadian federal/provincial tax rate with the income tax provision ($000s):

2002 2001 ------------ ------------ Income (loss) before provision for income taxes $ 13,180 $ (7,663) ------------ ------------ Tax provision at Canadian statutory rates of 38.62% 5,091 (2,402) Increased (decreased) by the tax effect of: Foreign earnings (losses) taxed at lower rates (4,437) (9,933) Canadian manufacturing and processing credit (215) 532 Capital losses not tax affected 4,719 Goodwill amortization -- 2,531 Other items, net (98) 1,972 ------------ ------------ Income Tax Expense (Recovery) $ 341 $ (2,581)

The components of the future tax assets and liabilities consisted of the following:

2002 2001 ------------ ------------ Current Assets Allowance for doubtful accounts $ 3,716 $ 497 Liabilities not currently deductible for tax purposes 7,701 4,823 ------------ ------------ Gross current future tax assets $ 11,417 $ 5,320 ------------ ------------ Non-Current Assets Operating loss carry forwards $ 37,244 $ -- Recycling and AMT credits 6,694 -- Pension and retirement accruals 23,722 9,461 Long-term liabilities not currently deductible 25,171 2,605 ------------ ------------ Gross non-current future tax assets $ 92,831 $ 12,066 ------------ ------------ Non-Current Liabilities Property, plant and equipment (164,406) $ (109,715) Assets held for sale (2,161) (2,183) Other $ (8,422) 723 ------------ ------------ Gross future tax liabilities $ (174,989) $ (111,175) ------------ ------------ Net long-term future tax liability $ (82,158) $ (99,109) ------------ ------------

The provision for income tax recovery (expense) by jurisdiction is as follows:

2002 2001 ------------ ------------ Earnings (loss) before income taxes Canada $ 4,863 $ 46,788 U.S. 4,691 (54,451) Other 3,626 -- ------------ ------------ $ 13,180 $ (7,663) ------------ ------------ Current income tax recovery (expense) Canada $ 2,890 $ 20 U.S. 8,255 (317) Other (375) -- ------------ ------------ 10,769 (297) ------------ ------------ Future income tax recovery (expense) Canada (830) (1,201) U.S. (9,598) (1,083) Other -- -- ------------ ------------ (10,428) (2,284) ------------ ------------ Net income tax expense (recovery) $ 341 $ (2,581) ------------ ------------

NOTE 11 - POST RETIREMENT BENEFITS The Company maintains a defined benefit pension plan covering the majority of employees. The benefits are based on years of service and compensation during the period of employment. Annual contributions are made in conformity with minimum funding requirements and maximum deductible limitations. The remaining employees are covered by defined contribution retirement plans for which Company contributions and expense amounted to approximately $8.2 million (2001 - $1.1 million). The Company currently provides specified health care benefits to 32 Annual Report 2002 retired employees. Employees who retire after a certain age with specified years of service become eligible for benefits under this unfunded plan. The Company has the right to modify or terminate these benefits. The following tables summarize the accumulated pension benefits and postretirement medical benefit obligations included in the Company's consolidated statements of financial position ($000s):

Pension Benefits Other Benefit Plans ------------------------------ ------------------------------ Year Ended Year Ended Year Ended Year Ended December December December December 31, 2002 31, 2001 31, 2002 31, 2001 ------------ ------------ ------------ ------------ Components of net periodic benefit cost Service cost $ 5,606 $ 4,947 $ 341 $ 247 Interest cost 12,830 10,921 876 586 Expected return on plan assets (13,536) (12,258) -- -- Amortization of prior service cost 388 282 -- -- Recognized actuarial gain 4 (134) -- -- ------------ ------------ ------------ ------------ Net periodic benefit cost $ 5,292 $ 3,758 $ 1,217 $ 833 ------------ ------------ ------------ ------------ Change in benefit obligations Benefit obligation at beginning of period $ 164,260 $ 146,934 $ 9,068 $ 7,858 Acquisition of Co-Steel 111,531 -- 22,048 -- Service cost 5,606 4,947 341 247 Interest cost 12,829 10,921 876 585 Plan participants' contributions 532 466 Amendments 2,232 973 - 135 Actuarial loss 13,659 7,777 444 1,180 Benefits and administrative expenses paid (8,765) (7,292) (1,331) (1,403) ------------ ------------ ------------ ------------ Benefit obligation at beginning of period $ 301,352 $ 164,260 $ 31,978 $ 9,068 ------------ ------------ ------------ ------------ Change in plan assets Fair value of plan assets at beginning of period $ 133,827 $ 140,599 $ -- $ -- Acquisition of Co-Steel 79,628 -- -- -- Actual return on plan assets (8,762) (1,390) -- -- Employer contribution 10,142 1,910 799 937 Plan participants' contributions -- -- 532 466 Benefits and administrative expenses paid (8,765) (7,292) (1,331) (1,403) ------------ ------------ ------------ ------------ Fair value of plan assets at end of period $ 206,070 $ 133,827 $ -- $ -- ------------ ------------ ------------ ------------ Reconciliation of funded status - End of Period Funded status $ (95,282) $ (30,433) $ (31,979) $ (9,068) Unrecognized Transition Liability 1,702 1,845 -- -- Unrecognized prior service cost 2,564 578 -- -- Unrecognized actuarial loss 52,139 16,086 690 246 ------------ ------------ ------------ ------------ Net amount recognized $ (38,877) $ (11,924) $ (31,289) $ (8,822) ------------ ------------ ------------ ------------ Assumptions Rate of return on plan assets 7.5% -9.25% 7.0%-9.25% Discount rate 6.5%-6.75% 7%-7.25% 6.5%-6.75% 7.25% Rate of compensation increases 4.25%-4.5% 2.5%-4.5% Trend rate - beginning next year 10.0%-12.0% 8.6% Trend rate - ending year 2008 5.5% 5.5%-6.0%

The Company also has a voluntary savings plan available to substantially all of its employees. Under this plan, the Company contributes amounts based upon a percentage of the savings paid into the plan by employees. The Company matches 50% of the employees' contributions up to 4% of employees' salaries. Costs under this plan for the period ended December 31, 2002 were $1.9 million (2001- $1.8 million). NOTE 12 - OTHER LIABILITIES Other liabilities consist of the following ($000s)

At December 31, 2002 2001 ---------- ---------- Unfavorable long-term lease obligations (a) $ 18,510 $ -- Environmental remediation costs (note 16) 14,900 1,755 Royalties and management fees payable to parent 6,410 11,024 Other 9,465 2,204 ---------- ---------- 49,295 14,983 Less current portion (20,110) (9,453) ---------- ---------- $ 29,175 $ 5,530 ---------- ----------

(a) Certain of the operating lease commitments of the former Co-Steel entities were at lease rates in excess of fair value as of the acquisition date. Accordingly, a purchase accounting liability has been recorded by the Company for the present value of the unfavorable lease commitments. NOTE 13 - FINANCIAL INSTRUMENTS The Company's use of derivative instruments is limited. Derivative instruments are not used for speculative purposes but they are used to manage well-defined foreign exchange and interest rate risks arising out of the normal course of business. At certain times throughout the year the Company enters into forward foreign exchange contracts and put and call options (collectively "foreign exchange contracts") to hedge accounts receivable and future revenues denominated in US dollars. At December 31, 2002, the Company had no forward foreign exchange contracts outstanding. Unrealized gains and losses on outstanding forward foreign exchange contracts are recorded in the financial statements for accounts receivable and not recorded in the financial statements for hedges against future foreign currency revenue. The Company's estimate of the fair value of the financial instruments, which include receivables, accounts payable, long-term debt and the liability component of the convertible debentures, approximates their carrying value due to their short maturity. Gerdau AmeriSteel 33 NOTE 14-CAPITAL STOCK Capital stock consists of the following shares:

Authorized Issued Invested Capital Number Number (in thousands) ----------- ----------- ---------------- December 31, 2001 Common Unlimited 133,388,400 $ 58,364 Preferred Unlimited -- -- ----------- -------- 133,388,400 $ 58,364 ----------- -------- December 31, 2002 Common Unlimited 184,892,360 $513,400 Preferred Unlimited -- -- ----------- -------- 184,892,360 $513,400 ----------- --------

The predecessor of the Company is the Gerdau North America Group, which was not a legal entity but a combination of Gerdau companies in North America and therefore had no capital structure of its own. The 133,388,400 issued shares as of December 31, 2001 represent those shares issued to Gerdau as a result of the acquisition which occurred on October 23, 2002. The Company has two stock options plans; one, the former Co-Steel Stock-Based Option Plan, and the other, a plan administered by the AmeriSteel subsidiary. The following discussion relates to the former Co-Steel Stock-Based Option Plan. Please see Note 15 - Subsidiary Stock Compensation Plans for details regarding the AmeriSteel plans. Under the Company's Stock-Based Option Plan, the Company was permitted to grant options to employees and directors to acquire up to a maximum of 3,041,335 Common Shares. The exercise price was based on the closing price of Common Shares on the trading date previous to the date the options are issued. The options have a maximum term of 10 years, have a vesting term of various periods as determined by the Plan administrator at the time of grant, and are exercisable in installments. A summary of all share purchase options is as follows:

Weighted Aggregate Number of Average Option Price Shares Exercise Price (in thousands) ---------- --------------- ---------------- Balance - December 31, 2002 1,367,400 Cdn$ 14.69 Cdn$ 20,092

The following table summarizes information about share purchase options outstanding at December 31, 2002:

Number Weighted Avg Weighted Avg Number Exercise Price Outstanding at Remaining Exercise Price Exercisable at Range Cdn$ Dec 31, 2002 Contractual Life Cdn$ Dec 31, 2002 -------------- -------------- ---------------- -------------- --------------- 18.60 to 19.75 295,500 4.5 years 19.07 295,500 22.00 to 30.625 1,071,900 3.2 years 24.35 1,071,900

The options expire on various dates up to April 13, 2008. On October 23, 2002, the Gerdau companies in North America, consisting of GUSA, Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc., among other holding companies, were combined with Co-Steel Inc., a Canadian minimill steel producer. The combined entity was renamed Gerdau AmeriSteel Corporation and is publicly traded on the Toronto Stock Exchange under the ticker symbol GNA.TO. As part of this transaction, minority shareholders of AmeriSteel, consisting primarily of management and other employees, are required to exchange their shares of AmeriSteel stock for shares of Gerdau AmeriSteel. Gerdau AmeriSteel has filed Form F-4 with the Securities and Exchange Commission and the exchange of shares is expected to be completed on or about March 31, 2003. As a result, an additional 13,199,794 shares of Gerdau AmeriSteel will be issued. On October 23, 2002, the sole owner (Gerdau U.S.A., Inc., or "GUSA1") of AmeriSteel's parent (FLS Holdings, Inc., or "FLS") was merged into FLS, which then changed its name to Gerdau USA Inc. As a result, AmeriSteel is a majority-owned subsidiary of GUSA whose only business is to own common stock of AmeriSteel. GUSA, which owns 87% of the common stock of AmeriSteel, is an indirect majority owned subsidiary of Gerdau AmeriSteel Corporation, a Canadian corporation. GUSA acquired 88% of FLS in September 1999, and the remaining 12% in September 2000, in each instance from Kyoei Steel Ltd. An institutional investor owns approximately 4% of the common stock of AmeriSteel. Executives, other employees and related persons own the remaining 9% of AmeriSteel's common stock. 34 Annual Report 2002 Earnings per share: The following table identifies the components of basic and diluted earnings per share ($000s except per share data):

2002 2001 ------------- ------------- Net income (loss) Less interest on equity $ 11,132 $ (6,066) component of convertible debentures (631) -- ------------- ------------- Adjusted net income (loss) $ 10,501 $ (6,066) ------------- ------------- Weighted average shares outstanding - Basic 143,045,393 133,388,400 ------------- ------------- Earnings per share - Basic $ 0.07 $ (0.05) ------------- ------------- Weighted average shares outstanding - Diluted 143,045,393 133,388,400 ------------- ------------- Earnings per share - Diluted $ 0.07 $ (0.05) ------------- -------------

At December 31, 2002, options to purchase 1,367,400 (2001 -1,801,209) common shares were not included in the computation of diluted earnings (loss) per share because the options' exercise price was greater than the market price of the common shares. The conversion into common shares of the convertible debentures has not been included in the diluted earnings (loss) per share calculations as the conversion rate of Cdn$26.25 per share is antidilutive. NOTE 15 - SUBSIDIARY STOCK COMPENSATION PLANS A subsidiary of the Company, AmeriSteel Corporation, has a number of stock compensation plans for its employees. Under the terms of the Transaction Agreement relating to the acquisition of Co-Steel, minority shareholders of AmeriSteel will exchange shares of AmeriSteel stock and options for stock and options of Gerdau AmeriSteel at an exchange rate of 9.4617 Gerdau AmeriSteel shares and options for each AmeriSteel share or option. This exchange is scheduled to occur by March 31, 2003. In March 2000, AmeriSteel's Board of Directors approved a long-term incentive plan available to executive management (the "Stakeholder Plan") to ensure AmeriSteel's senior management's interest is congruent with AmeriSteel's shareholders. Awards are determined by a formula based on AmeriSteel's return on capital employed in a given plan year. Earned awards vest and are paid out over a period of four years. Participants may elect cash payout or investments in phantom stock of AmeriSteel and Gerdau, for which a 25% premium is earned if elected. Benefits charged to expense under this plan for the years ended December 31, 2002 and 2001, were $90 thousand and $257 thousand, respectively. In July 1999, AmeriSteel's Board of Directors approved a Stock Purchase/SAR Plan (the "SAR Plan") available to essentially all employees. The SAR Plan authorizes 100,000 shares of common stock to be sold to employees during three offering periods, July through September in each of 1999, 2002 and 2005. Employees who purchase stock are awarded stock appreciation rights ("SARs") equal to four times the number of shares purchased. In the 1999 offering period, a total of 42,321 shares were sold under the SAR Plan at a purchase price of $15.30 per share, with 28,683 of these shares outstanding as of December 31, 2002. SARs were granted at fair value at the date of the grant, determined based on an independent appraisal as of the previous year-end. In the 1999 offering period, a total of 169,284 SARs were granted under the SAR Plan, with 114,451 of these rights outstanding as of December 31, 2002. In the 2002 offering period, a total of 44,299 shares were sold under the SAR Plan at a purchase price of $14.45 per share, with 44,299 of these shares outstanding as of December 31, 2002. SARs were granted at fair value at the date of the grant, determined based on an independent appraisal as of the previous year-end. In the 2002 offering period, a total of 177,196 SARs were granted under the SAR Plan, with 177,048 of these rights outstanding as of December 31, 2002. The SARs become exercisable at the rate of 25% annually from the grant date and may be exercised for 10 years from the grant date. In September 1996, AmeriSteel's Board of Directors also approved the AmeriSteel Corporation Equity Ownership Plan (the "Equity Ownership Plan"), which provides for grants of common stock, options to purchase common stock and SARs. The maximum number of shares that can be issued under the plan is 438,852. The Company has granted 493,350 incentive stock options and 52,100 shares of common stock under the Equity Ownership Plan through December 31, 2002, with 279,553 incentive stock options and 22,006 shares of common stock outstanding at December 31, 2002. All issued options and shares of issued common stock become one-third vested two years from the grant date, and one third in each of the subsequent two years from the grant date. All grants were at the fair market value of the common stock on the grant date, determined based on an independent appraisal as of the end of the previous year-end. Options may be exercised for 10 years from the grant date. In May 1995, AmeriSteel's Board of Directors approved a Stock Purchase/Option Plan (the "Purchase Plan") available to essentially all employees. Employees who purchased stock were awarded stock options equal to six times the number of shares purchased. A total of 37,689 shares were sold under the Purchase Plan at a purchase price of $10.63 per share, with 397 of these shares outstanding as of December 31, 2002. The options were granted at fair value at the date of the grant, determined based on an independent appraisal as of the end of the previous year-end. A total of 226,134 options were granted under the Purchase Plan, with 1,644 of these options outstanding as of December 31, 2002. No options remain available for future grant. All options outstanding are currently vested. Options Gerdau AmeriSteel 35 may be exercised for 10 years from the grant date. The following tables summarize AmeriSteel's stock option activity for the years ended December 31, 2002 and 2001:

Equity Ownership Plan ------------------------------------------------------------------ Year Ended Year Ended December 31, 2002 December 31, 2001 ------------------------------- ------------------------------- Weighted- Weighted- Number Average Number Average of Shares Exercise Price of Shares Exercise Price ------------ -------------- ------------ -------------- Outstanding, beginning of period 305,840 $ 19.22 204,006 $ 19.22 Granted 58,650 17.00 121,000 13.00 Exercised (17,053) 12.75 (9,631) 13.42 Forfeited (67,884) 14.02 (9,535) 19.31 ------------ ------------ ------------ ------------ Outstanding, end of period 279,553 $ 17.91 305,840 $ 16.94 ------------ ------------ ------------ ------------ Options vested at end of period 115,395 $ 18.29 92,977 $ 15.57 ------------ ------------ ------------ ------------ Weighted-average fair value of options granted during the period $ 3.22 $ 2.87 ------------ ------------

Purchase Plan ------------------------------------------------------------------- Purchase Plan Year Ended Year Ended December 31, 2002 December 31, 2001 ------------------------------ -------------------------------- Weighted- Weighted- Number Average Number Average of Shares Exercise Price of Shares Exercise Price ------------ -------------- ------------ -------------- Outstanding, beginning of period 1,824 $ 12.50 3,468 $ 12.50 Granted -- -- -- -- Exercised (180) 12.50 (1,644) 12.50 Forfeited -- 12.50 -- 12.50 ------------ ------------ ------------ ------------ Outstanding, end of period 1,644 $ 12.50 1,824 $ 12.50 ------------ ------------ ------------ ------------ Options vested at end of period 1,644 $ 12.50 1,824 $ 12.50 ------------ ------------ ------------ ------------

The weighted-average remaining contractual life of the options under the Equity Ownership Plan and the Purchase Plan as of December 31, 2002, is 4.1 years for options granted through 1997 at a price between $12.50 and $13.50 per share, and 6.6 years for those options granted between 1998 and 2000 at a price between $20.00 and $28.00 per share, and 8.9 years for options granted between 2001 and 2002 at a price between $13.00 and $17.00 per share. The weighted-average exercise price of the options under the Equity Ownership Plan as of December 31, 2002 is $13.21 for options granted through 1997 at a price between $12.50 and $13.50 per share, $22.17 for those options granted between 1998 and 2000 at a price between $20.00 and $28.00 per share, and $14.95 for options granted in 2001 and 2002 at a price between $13.00 and $17.00 per share. The weighted-average exercise price of the options under the Purchase Plan as of December 31, 2002 is $12.50. NOTE 16 - CONTINGENCIES AND COMMITMENTS ENVIRONMENTAL As the Company is involved in the manufacture of steel, it produces and uses certain substances that may pose environmental hazards. The principal hazardous waste generated by current and past operations is electric arc furnace ("EAF") dust, a residual from the production of steel in electric arc furnaces. Environmental legislation and regulation at both the federal and state level over EAF dust is subject to change, which may change the cost of compliance. While EAF dust is generated in current production processes, such EAF dust is being collected, handled and disposed of in a manner that the Company believes meets all current federal, state and provincial environmental regulations. The costs of collection and disposal of EAF dust are being expensed as operating costs when incurred. In addition, the Company has handled and disposed of EAF dust in other manners in previous years, and is responsible for the remediation of certain sites where such dust was generated and/or disposed. In general, the Company's estimate of remediation costs is based on its review of each site and the nature of the anticipated remediation activities to be undertaken. The Company's process for estimating such remediation costs includes determining for each site the expected remediation methods, and the estimated cost for each step of the remediation. In such determinations, the Company may employ outside consultants and providers of such remedial services to assist in making such determinations. Although the ultimate costs associated with the remediation are not known precisely, the Company estimated the total remaining costs as at December 31, 2002 to be approximately $6.3 million (2001 - $2.9 million), with these costs recorded as a liability at December 31, 2002, of which the Company expects to pay approximately $5.1 million within the year ended December 31, 2003. 36 Annual Report 2002 An additional liability of $8.6 million has been recorded in respect of certain environmental obligations which were triggered by the change in control of Co-Steel in certain jurisdictions in which Co-Steel operated. This liability was recorded at the present value of the estimated future costs of these obligations. Based on past use of certain technologies and remediation methods by third parties, evaluation of those technologies and methods by the Company's consultants and third-party estimates of costs of remediation-related services provided to the Company or which the Company and its consultants are aware, the Company and its consultants believe that the Company's cost estimates are reasonable. Considering the uncertainties inherent in determining the costs associated with the clean-up of such contamination, including the time periods over which such costs must be paid, the extent of contribution by parties which are jointly and severally liable, and the nature and timing of payments to be made under cost sharing arrangements, there can be no assurance the ultimate costs of remediation may not differ from the estimated remediation costs. In April 2001, the Company was notified by the United States Environmental Protection Agency (the "EPA") of an investigation that identifies the Company as a potential responsible party ("PRP") in a Superfund Site in Pelham, Georgia. The Pelham site was a fertilizer manufacturer in operation from 1910 through 1992, lastly operated by Stoller Chemical Company, a now bankrupt corporation. The EPA offered a settlement to the named PRPs under which the Company's allocation was approximately $1.8 million. The Company objects to its inclusion as a PRP in this site and is pursuing legal alternatives, including the addition to the allocation of larger third parties which the Company believes were incorrectly excluded from the original settlement offer. The EPA has filed suit with the Company named as a defendant. As the ultimate exposure to the Company, if any, is uncertain, no liability has been established for this site. Carbon monoxide emissions at Gerdau Ameristeel Perth Amboy exceeded permitted levels on several occasions during 2001 and early 2002. These episodes were promptly reported to the New Jersey Department of Environmental Protection (NJDEP). Gerdau AmeriSteel is conducting investigations to determine the cause of these episodes, what steps can be taken to reduce emissions and whether the Gerdau AmeriSteel Perth Amboy environmental permits require modification. Discussions with the NJDEP regarding permit and compliance issues are in a preliminary stage. Penalty assessments of approximately $400 thousand have been accrued. OTHER CLAIMS In the normal course of its business, various lawsuits and claims are brought against the Company. The Company vigorously contests any claim which it believes is without merit. Management believes that any settlements will not have a material effect on the financial position or the consolidated earnings of the Company. OPERATING LEASE COMMITMENTS The Company leases certain equipment and real property under non-cancelable operating leases. Aggregate future minimum payments under these leases are as follows ($000s):

Year Ending December 31, Amount ------------------------ --------- 2003 $ 13,242 2004 10,757 2005 9,417 2006 6,859 2007 5,981 Thereafter 38,095 -------- $ 84,351 --------

SERVICE COMMITMENTS The Company has long-term contracts with several raw material suppliers. The Company typically realizes lower costs and improved service from these contracts. The Company believes these raw materials would be readily available in the market without such contracts. Gerdau AmeriSteel 37 NOTE 17 - OTHER INCOME Other income, net of other expenses for the year ended December 31, 2002 consists of $6.1 million proceeds from an insurance settlement relating to environmental costs incurred by the Company in prior years, partially offset by $1.0 million relating to the closing of the Wilmington, Delaware and St. Albans, West Virginia fabricating plants. Other income, net of other expenses for the year ended December 31, 2001 includes prior year tax refunds ($.7 million income), expenses relating to the melting of a small amount of cesium at the Jacksonville mill ($.4 million expense), a settlement with electrode suppliers ($2.8 million income), and the loss on sale of marketable securities ($2.6 million expense.) NOTE 18 - SEGMENT INFORMATION The Company is organized into two primary business segments: (a) Mills and (b) Downstream. Steel products sold to the downstream divisions are sold at market prices with intracompany transactions eliminated upon consolidation. Performance is evaluated and resources allocated based on specific segment requirements and measurable factors. Segment assets are those assets that are specifically identified with the operations in each operational segment. Corporate assets include primarily: cash; assets held for sale; some property, plant and equipment; deferred income taxes; and deferred financing costs. Corporate expense includes: corporate headquarters staff, including executive management; human resources; finance and accounting; procurement and environmental; and management information systems. Included in these respective areas are payroll costs, travel and entertainment, professional fees and other costs that may not be directly attributable to either specific segment. Operational results and other financial data for the geographic and two business segments for years ended December 31 are presented below ($000s):

MILLS DOWNSTREAM TOTAL ---------- ---------- ---------- 2002 Revenue from external customers $ 771,906 $264,149 $1,036,055 Intrasegment revenues 159,027 - 159,027 Depreciation and amortization expense 46,460 3,775 50,235 Segment profit 49,973 8,842 58,815 Total Assets 1,424,363 122,425 1,546,788 Expenditures for long-lived assets 24,581 7,131 31,712 ---------- -------- ---------- 2001 Revenue from external customers $ 562,216 $278,620 $ 840,836 Intrasegment revenues 176,846 - 176,846 Depreciation and amortization expense 44,842 4,650 49,492 Segment profit 42,852 13,008 55,860 Total Assets 1,052,211 113,531 1,165,742 Expenditures for long-lived assets 24,176 3,748 27,924 ---------- -------- ----------

Geographic data is as follows:

UNITED STATES CANADA TOTAL ------------- ------ ----- 2002 Revenue from external customers $862,300 $173,754 $1,036,055 Long-lived assets 665,055 233,251 898,948 2001 Revenue from external customers $704,474 $136,362 $ 840,836 Long-lived assets 395,844 135,041 530,885

38 Annual Report 2002 The reconciliation of reportable segments to combined totals is as follows ($000's):

YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2002 2001 ------------ ------------ Revenue Total segments revenue $ 1,195,082 $ 1,017,682 Elimination of intersegment revenues (159,027) (176,846) ------------ ------------ Combined revenues $ 1,036,055 $ 840,836 ------------ ------------ Depreciation and Amortization Total segments depreciation and amortizations 50,235 $ 49,492 Corporate depreciation and amortization 9,620 13,147 ------------ ------------ Combined depreciation and amortization $ 59,855 $ 62,639 ------------ ------------ Profit Total segments profit $ 58,815 $ 55,860 Other income 5,072 1,079 Elimination of intersegment profits 899 (480) Unallocated amounts: Corporate expense (11,606) (13,134) Interest expense (39,770) (50,032) Foreign exchange loss (230) (249) Taxes (expense) benefit (341) 2,581 Loss on investment -- (707) Minority interest (1,707) (984) ------------ ------------ Consolidated profit (loss) $ 11,132 $ (6,066) ------------ ------------ Assets Total segments assets $ 1,546,788 $ 1,165,742 Elimination of intersegment assets (133,085) (241,726) Other unallocated assets 157,698 137,923 ------------ ------------ Combined assets $ 1,571,401 $ 1,061,939 ------------ ------------ Expenditures for long-lived assets Total segments expenditures $ 31,712 $ 27,924 Corporate expenditures 1,770 495 ------------ ------------ Combined expenditures for long-lived assets $ 33,482 $ 28,419 ------------ ------------ Revenues by product lines Mill finished goods : Stock rebar $ 198,460 $ 185,032 Merchant bar/special sections 440,909 338,218 Rods 47,060 16,925 Flat rolled 38,572 -- ------------ ------------ Total mill finished goods: 725,001 540,175 Billets 15,313 5,790 ------------ ------------ Total mill products 740,314 545,965 Other mill segments 31,101 15,913 Fabricating and downstream 264,640 278,958 ------------ ------------ Total segment revenues $ 1,036,055 $ 840,836 ============ ============

NOTE 19 - LIQUIDITY The Company's Canadian credit facilities are scheduled to be reduced by approximately $120 million on January 15, 2004 and total debt to be repaid under existing repayment terms in fiscal 2004 totals $233 million. In March 2003, the Company commenced a $750 million refinancing program which the Company expects to complete in the second quarter of 2003. If successful, the proceeds from the refinancing program will be used to repay existing revolving credit facilities and term loans. NOTE 20 - SUBSEQUENT EVENTS In the first quarter of 2003, Gerdau S.A. made loans totaling $30 million to GUSA to increase liquidity within Gerdau AmeriSteel. These loans will be used for working capital purposes and bear interest at the rate of 6.5%. The loans do not have a stated maturity, but it is the intent of the Company to repay these loans as soon as practicable. In April 2003, AmeriSteel received a waiver from its lenders as it expected to exceed its leverage ratio covenant of 3.75 to one due to weak operating margins in the first quarter. The Company believes AmeriSteel will be able to comply with the covenants during the remainder of 2003. In April 2003, the Gerdau Canada Group requested and received waivers for non-compliance with certain covenants for the December quarter and expected non-compliance for fiscal 2003. On March 31, 2003, under the terms of the Transaction Agreement relating to the acquisition of Co-Steel, the Company completed an exchange of minority shares of subsidiary AmeriSteel for shares of Gerdau AmeriSteel. Minority shareholders of AmeriSteel, mostly executives and employees, exchanged 1,395,041 shares of AmeriSteel for 13,199,260 shares of Gerdau AmeriSteel, an exchange ratio of 9.4617 to one. As a result, AmeriSteel became a wholly owned subsidiary of Gerdau AmeriSteel. Gerdau AmeriSteel 39 Corporate Officers - ------------------------------------------------------------------------------- CORPORATE OFFICES Phillip E. Casey President and CEO Andre B. Johannpeter Vice President, COO Canada Mike Mueller Vice President, US Steel Operations Tom J. Landa Vice President, Finance, and Chief Financial Officer Corporate Secretary Andre Beaudry Vice President, Steel Product Sales Robert P. Muhlhan Vice President, Procurement, Logistics and Government Affairs James F. Oliver Vice President, Strategic Development James S. Rogers Vice President, Human Resources Glen A. Beeby Vice President Administration, Canada George Beck Treasurer OPERATIONS J. Neal McCullohs Vice President, Fabricated Reinforcing Steel Products Garry A. Leach President, MRM Special Sections, Inc. Robert L. Bullard Vice President, Perth Amboy Mill Glen A. Beeby Vice President, Cambridge Mill Wib G. Manuel Vice President, Jackson Mill Roger Paiva Vice President, Whitby Mill Arlan Piepho Vice President, Knoxville Mill Anthony S. Read Vice President, Charlotte Mill William E. Rider Vice President, Sayreville Mill Donald R. Shumake Vice President, Jacksonville Mill Edward C. Woodrow Vice President, Cartersville Mill Matthew C. Yeatman Vice President, Canadian Recycling Operations Richard E. Danhoff Assistant Vice President, Rail Products Steve Higley Assistant Vice President, Cold Drawn Products Al J. Theriot Assistant Vice President, Atlas Steel & Wire 40 Annual Report 2002 Corporate Information - ------------------------------------------------------------------------------- Listing of Capital Stock and Convertible Debentures The shares and convertible debentures of the Company are listed on the Toronto Stock Exchange under the ticker symbols GNA.TO and GNAdb.TO respectively. Transfer Agent and Registrar The transfer agent and registrar for the shares of the Company is The CIBC Mellon Trust Company at its offices in Toronto, Montreal, Winnipeg, Calgary, Regina, Vancouver and Halifax. Shareholder Information Shareholders seeking information or Assistance concerning their accounts may contact The CIBC Mellon Trust Company through the Shareholder Inquiry Line. Toronto: (416) 643-5500 Outside Toronto and US: 1-800-387-0825 Financial Calendar Fiscal year end: December 31 Annual Meeting: May 6, 2003 Annual Meeting of the Shareholders The Annual Meeting of the Shareholders of Gerdau AmeriSteel Corporation will be held at the Hilton Toronto, 145 Richmond St. West, on Tuesday May 6, 2003, at 10 a.m. Investor Information Shareholders or other interested parties seeking assistance or information about the Company are invited to contact Tom Landa, Vice President and Chief Financial Officer at the Executive Offices or via email: IR@gerdauameristeel.com Web site: www.gerdauameristeel.com Gerdau AmeriSteel 41 Gerdau AmeriSteel Corporation Executive Office 5100 W. Lemon St., Suite 312 Tampa, FL 33609 Phone: (813) 286.8383 www.gerdauameristeel.com Gerdau AmeriSteel - Investor Relations Phone: (813) 207.2300 Fax: (813) 207.2328 ir@gerdauameristeel.com Gerdau Av. Farrapos, 1811 - 90220-005 Porto Alegre - RS - Brasil Phone: +55 (51) 3323.2000 www.gerdau.com.br Gerdau - Investor Relations Phone: +55 (51) 3323.2703 Fax: +55 (51) 3323.2281 inform@gerdau.com.br [GERDAU AMERISTEEL LOGO] www.gerdauameristeel.com - ------------------------------------------------------------------------------- EX-99.3 5 g83014exv99w3.txt EX-99.3 RECONCILIATION TO UNITED STATES GAAP NOTE 21 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Supplement to the audited consolidated financial statements for the years ended December 31, 2002 and 2001) The Company's consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). The most significant differences between Canadian and United States GAAP, in terms of impact on the Company's consolidated financial statements, relate to the accounting for pensions, convertible debentures, derivative instruments and the reporting of comprehensive income. The following table reconciles the consolidated statements of (loss) earnings as reported under Canadian GAAP with those that would have been reported under United States GAAP:

YEAR ENDED DECEMBER 31 2002 2001 ----------------------------------------------------- -------- ------- NET INCOME (LOSS)-- CANADIAN GAAP ................. $ 11,132 $(6,066) Increase in interest expense related to convertible debentures (a) ...................... (590) -- Adjustment to purchase price allocation relating to differences in treatment of Joint Ventures (b) .. (450) -- Changes in fair value of interest rate derivatives (d) ................................. 368 (1,021) Unrealized loss on investment held for sale (e) ... -- 707 Other ............................................. 589 -- NET INCOME (LOSS) -- UNITED STATES GAAP ............................................ $ 11,049 $(6,380) ======== ======= OTHER COMPREHENSIVE (LOSS) INCOME: Derivative loss (d) ............................. (2,310) (163) Foreign currency translation adjustment (c) ..... 179 (933) Minimum unfunded pension liability (f)....... (16,309) (195) -------- ------- OTHER COMPREHENSIVE INCOME (LOSS) -- UNITED STATES GAAP ..................................... (18,440) (1,291) -------- ------- COMPREHENSIVE (LOSS) INCOME -- UNITED STATES GAAP ............................................ $ (7,391) $(7,671) ======== ======= Net (loss) earnings per share-- United States GAAP Basic ........................................... $ (0.08) $ (0.04) Diluted ......................................... $ (0.08) $ (0.04) ======== =======

(a) Convertible Debentures Under Canadian GAAP, the convertible debenture obligation is classified as an equity instrument. For Canadian GAAP, the interest, net of taxes, of the equity component of the convertible debentures is recorded as an after-tax charge to reinvested earnings. Under US GAAP, the convertible debenture obligation would be accounted for entirely as a liability and, accordingly, interest costs would be recorded as interest expense. The Company has the ability to redeem the convertible debenture at par plus accrued interest by the issuance of Common Shares or cash. As a result, for US GAAP, the convertible debenture would be classified as current debt in the 12-month period in advance of the redemption date, and as long-term debt during the remainder of the 20 year term. Therefore, for US GAAP the liability would be classified as long term debt for 2002 and 2001. (b) Adjustment to Purchase Price Allocation Relating to Joint Ventures Under Canadian GAAP, joint ventures are accounted for using the proportionate consolidation method, while under US GAAP, joint ventures are accounted for under the equity method. Under an accommodation of the US Securities and Exchange Commission, accounting for joint ventures need not be reconciled from Canadian to US GAAP. The different accounting treatment affects only the display and classification of financial statement items and not net income or shareholders' equity. See note 6 for summarized financial information in respect of the Company's joint ventures. Because of the different treatment of joint ventures between Canadian GAAP and US GAAP, a permanent difference results in the allocation of the purchase price. Under purchase accounting, the excess of the value of the assets over the purchase price (negative goodwill) is allocated to the long term assets acquired. Under Canadian GAAP, because the joint venture assets are proportionately accounted for and therefore there is no investment in subsidiary long term asset, the negative goodwill is allocated only against property, plant and equipment. Under US GAAP, the negative goodwill is allocated to both property, plant and equipment and to investment in subsidiary. As a result, there is a difference in depreciation expense. (c) Comprehensive Income United States accounting standards for reporting comprehensive income are set forth in SFAS No. 130. Comprehensive income represents the change in equity during a reporting period from transactions and other events and circumstances from non-owner sources. Components of comprehensive income include items such as net earnings (loss), changes in the fair value of investments not held for trading, minimum pension liability adjustments, derivative instruments and certain foreign currency translation gains and losses. (d) Derivative Instruments The Company has interest rate swap agreements. Under US GAAP, unrealized gains and losses on the mark-to-market valuation of the swaps may be subject to hedge treatment under SFAS No. 133 whereby all or a portion of the mark-to-market gain or loss is recorded to other comprehensive income and the swap recorded at fair value. Any ineffective portion is recorded against income. In 2002, a portion of the US interest rate swap mark-to-market value was deemed to be ineffective and therefore recorded as an expense under US GAAP. Under Canadian GAAP, which does not recognize Comprehensive Income on the face of the financial statements, mark-to-market valuation changes are only reported in the footnotes. (e) Investments United States accounting standards for equity investments, which are set forth in SFAS No. 115, require that certain equity investments not held for trading be recorded at fair value with unrealized holding gains and losses excluded from the determination of earnings and reported as a separate component of other comprehensive income. At December 31, 2001, the Company had an investment held for sale which was below market value. (f) Accumulated Unfunded Pension Liability Under U.S. GAAP, the Company should recognize an additional minimum pension liability charged to other comprehensive income in shareholders' equity to the extent that the unfunded accumulated benefit obligation ("ABO") exceeds the fair value of the plan assets and this amount is not covered by the pension liability already recognized in the balance sheet. The calculation of the ABO is based on the actuarial present value of the vested benefits to which the employee is currently entitled, based on the employee's expected date of separation or retirement. Canadian GAAP does not require the recognition of an additional minimum liability. (g) Freight Costs For Canadian GAAP, sales are recorded net of freight costs for delivery. US GAAP would require that freight costs be included in cost of sales. The impact of this adjustment is to increase sales and cost of sales by $70.6 million in 2002 and $58.3 million in 2001. The following table indicates the cumulative effect of the above adjustments on balance sheet accounts, displaying results under Canadian GAAP and US GAAP:

CANADIAN GAAP U.S. GAAP ------------------------ ------------------------ DECEMBER 31 2002 2001 2002 2001 ------------------ ------- ------- ------- ------- $ $ $ $ ASSETS Current assets .................... 554,920 320,250 518,144 316,454 Property, plant & equipment ....... 898,948 530,885 765,644 528,300 Goodwill ........................ 114,374 114,374 114,374 114,374 Other assets ...................... 3,159 96,430 115,562 99,428 LIABILITIES Current liabilities (excl indebtedness).................... 244,338 132,489 222,471 130,810 Current portion of long-term debt . 107,321 67,060 101,090 68,545 Long-term debt & related party debt 411,833 656,573 463,423 656,573 Other long-term liabilities ....... 99,341 26,276 132,894 26,548 Deferred income taxes ............. 82,158 99,109 67,341 97,718 Minority interest ................. 33,312 30,634 33,312 30,634 SHAREHOLDERS' EQUITY Invested capital .................. 513,400 58,364 513,393 58,357 Convertible debentures ............ 79,134 -- -- -- Retained earnings (deficit) ....... 1,329 (7,622) (107) (8,975) Cumulative translation adjustment . (765) (944) (765) (944) Deferred compensation ............. -- -- -- -- Other comprehensive income ........ -- -- (19,329) (710)

Changes in shareholders' equity under US GAAP were as follows:

YEAR ENDED DECEMBER 31 2002 2001 ----------------------------------------- -------- ------- $ $ Shareholders' equity at beginning of year 47,728 55,799 Net (loss) earnings ..................... 11,049 (6,380) Subsidiary stock activity ............... (187) (476) Changes in deferred compensation ........ -- 76 Foreign currency translation adjustment . 179 (933) Debt converted to equity ................ 325,948 -- Acquisition ............................. 129,275 -- Other comprehensive loss ................ (18,619) (358) Dividends ............................... (2,181) -- -------- ------- Shareholders' equity at end of year ..... 493,192 47,728 ======== =======

The difference in consolidated shareholders' equity may be reconciled as follows:

YEAR ENDED DECEMBER 31 2002 2001 ----------------------------------------- -------- ------- $ $ Shareholders' equity based on Canadian GAAP 593,098 49,798 Debenture reclassified to debt .......... (79,134) -- Adjust purchase price for Gallatin joint venture (450) -- Accumulated unfunded pension ............ (16,856) (547) Unrealized losses on interest rate derivatives (3,466) (1,523) Other ................................... -- -- -------- ------- Cumulative reduction in net earnings under US GAAP .................................. (99,906) (2,070) -------- ------- Shareholders' equity based on US GAAP ... 493,192 47,728 ======== =======

There are no significant differences with respect to the consolidated statement of cash flows between US GAAP and Canadian GAAP for 2002 and 2001. EX-99.4 6 g83014exv99w4.txt REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Exhibit 99.4 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Our audits of the consolidated financial statements referred to in our report dated January 24, 2003, except for certain information contained in notes 3 and 20, as to which the date is April 4, 2003, relating to the consolidated financial statements of Gerdau AmeriSteel Corporation, included audits of the Schedule of Differences Between Canadian and United States Generally Accepted Accounting Principles presented under Exhibit 99.3 of this Form 40-F. In our opinion, the information presented in the schedule is presented fairly, in all material respects, when read in conjunction with the related consolidated financial statements. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Orlando, Florida January 24, 2003 EX-99.5 7 g83014exv99w5.txt EX-99.5 CONSENT OF PRICEWATERHOUSECOOPERS EXHIBIT 99.5 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the use in this Annual Report on Form 40-F of our report dated January 24, 2003, except for certain information contained in notes 3 and 20, as to which the date is April 4, 2003, relating to the consolidated financial statements of Gerdau AmeriSteel Corporation, which appear in Exhibit 99.2 of this Form 40-F. We also consent to the use in this Annual Report on Form 40-F of our Comments by Auditors for United States of America Readers on Canada - United States of America Reporting Differences dated January 24, 2003. /s/ PricewaterhouseCoopers LLP Orlando, Florida January 24, 2003 EX-99.6 8 g83014exv99w6.txt EX-99.6 CEO CERTIFICATE EXHIBIT 99.6 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 I, Phillip E. Casey, Chief Executive Officer of Gerdau Ameristeel Corporation (the "Company") certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Annual Report of the Company on Form 40-F for the fiscal year ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Date: May 20, 2003 /s/ Phillip E. Casey ----------------------------------------- Phillip E. Casey, Chief Executive Officer EX-99.7 9 g83014exv99w7.txt EX-99.7 CFO CERTIFICATE Exhibit 99.7 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 I, Tom J. Landa, Chief Financial Officer of Gerdau Ameristeel Corporation (the "Company") certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Annual Report of the Company on Form 40-F for the fiscal year ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Date: May 20, 2003 /s/ Tom J. Landa -------------------------- Tom J. Landa Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

                          GERDAU AMERISTEEL CORPORATION






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

                             ANNUAL INFORMATION FORM

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









                                  MAY 20, 2003













                                TABLE OF CONTENTS



                                                                         Page
                                                                         ----
                                                                      
OVERVIEW...................................................................1

CORPORATE STRUCTURE........................................................2

     Name and Incorporation................................................2
     Intercorporate Relationships..........................................3
GENERAL DEVELOPMENT OF THE BUSINESS........................................4

     History...............................................................4
     Industry and Trends...................................................4
NARRATIVE DESCRIPTION OF THE BUSINESS......................................6

     Minimills.............................................................6
     Downstream Operations.................................................9
         Rebar Fabrication.................................................9
         Railroad Spike Operations.........................................9
         Cold Drawn Plants................................................10
         Super Light Beam Processing and Elevator Guide Rails.............10
         Wire Mesh and Collated Nails.....................................10
     Our Joint Ventures...................................................10
     Principal Products...................................................11
         Merchant bars/special sections...................................11
         Stock rebar......................................................12
         Rod..............................................................12
         Flat rolled sheet................................................12
         Fabricated steel.................................................12
         Billets..........................................................12
     Marketing............................................................12
     Competition..........................................................13
         Competitive Conditions...........................................13
         Local Competition................................................14
         Foreign Competition..............................................14
         Competitive Strengths............................................16
     Cyclical and Seasonal Nature of the Business.........................17
     Scrap, Energy and Other Raw Materials................................17
     Environmental and Regulatory Matters.................................18
     Employees............................................................19
     Foreign Operations Risk..............................................20
     Credit Facilities....................................................20
SELECTED CONSOLIDATED FINANCIAL INFORMATION...............................21

DIVIDENDS.................................................................21

MANAGEMENT'S DISCUSSION AND ANALYSIS......................................21

MARKET FOR SECURITIES.....................................................21

DIRECTORS AND OFFICERS....................................................22

AUDITORS..................................................................23

ADDITIONAL INFORMATION....................................................23

SCHEDULE A................................................................24






In this annual information form, references to "dollars" and "$" are to United
States dollars. As used in this document, unless the context otherwise requires,
(i) the "Company and "Gerdau Ameristeel" refer to Gerdau Ameristeel Corporation,
(ii) "Ameristeel" refers to Gerdau Ameristeel US Inc. (formerly AmeriSteel
Corporation), (iii) "Gerdau North America" refers to the North American
operations of Gerdau S.A., and (iv) "we", "us" and "our" refers to the Company
and its subsidiaries and 50% owned joint ventures.

Our financial results are the financial results for Gerdau North America, the
predecessor company for accounting purposes, with the results of the former
Co-Steel Inc. added for the period since October 23, 2002. We also present pro
forma financial and operating information which gives effect to the combination
of Gerdau North America and Co-Steel Inc. as if the transaction had taken place
at the beginning of the applicable period. Our financial information is prepared
using Canadian generally accepted accounting principles. The results of our
three 50% owned joint ventures, including Gallatin Steel Company, are
proportionately consolidated. In addition, to be consistent with the
presentation of our financial information, information on tons shipped or
similar production information in this offering memorandum includes our 50%
share of the joint ventures' production. "Tons" refers to U.S. short or "net"
tons (i.e. 2,000 pounds). Information on net sales and tons shipped only
includes net sales and tons shipped to third parties.

Unless otherwise indicated, all information in this Annual Information Form is
given as at May 12, 2003.

OVERVIEW

         We are the second largest minimill steel producer in North America with
annual manufacturing capacity of over 6.8 million tons of mill-finished steel
products. Through our vertically integrated network of 11 minimills, 13 scrap
recycling facilities and 27 downstream operations, we service the broad
geographical market of eastern North America. Our products are generally sold to
steel service centers, fabricators, or directly to original equipment
manufacturers, or OEMs, for use in a variety of industries, including the
construction, automotive, mining and equipment manufacturing industry.

         Our operations are segmented into two operating divisions, minimills
and downstream businesses.

         Minimills. We own and operate seven minimills in the United States and
three in Canada. We are also a 50/50 joint venture partner with Dofasco Inc. in
an eleventh minimill located in Ghent, Gallatin County, Kentucky. We manufacture
and market a wide range of steel products, including reinforcing steel bar (or
rebar) merchant bars, structural shapes, beams, special sections, coiled wire
rod (or rod) and rebar, and flat rolled sheet. Over 90% of the raw material feed
for the steel operations is derived from recycled scrap which makes us one of
the largest recycling businesses in North America. Four of our mills are
provided scrap from 13 scrap recycling operations. We believe these recycling
operations lower the overall cost of scrap used in these mills and provide a
stable supply of these mills' primary raw material.

         Downstream operations. We have secondary value added steel businesses,
which we refer to as downstream operations. These steel fabricating and product
manufacturing operations process steel principally produced in our minimills.
Our downstream operations consist of the following:

         -        Rebar fabrication and epoxy coating- We operate one of the
                  largest rebar fabricating and epoxy coating groups in North
                  America. Our network, consisting of 15 rebar fabricating
                  facilities and three epoxy coating plants, services the
                  concrete construction industry in the eastern half of the
                  United States. Our rebar fabricating capacity is in excess of
                  500,000 tons per year. The fabricating facilities purchase
                  rebar from our mills at competitive market prices, and cut and
                  bend it to meet our customers' engineering, architectural and
                  other end-product specifications. Our epoxy coating plants
                  apply epoxy coating to rebar for rust resistant applications.


                                      -2-


         -        Railroad spike operations - Our two railroad spike operations
                  forge steel square bars produced at our Charlotte mill into
                  track spikes. We manufacture and distribute these spikes on an
                  annual contract basis to the railroad industry throughout
                  North America.

         -        Cold drawn plants - Our two cold drawn plants process hot
                  rolled merchant and light structural steel bars into cold
                  drawn bars with improved physical characteristics. The cold
                  drawn plants purchase sizeable quantities of their raw
                  material requirements from our minimills.

         -        Super light beam processing and elevator guide rails - In
                  accordance with rigid customer specifications, we process
                  super light steel beams into cross members for the truck
                  trailer industry and process steel guide rail sections for
                  elevator manufacturers.

         -        Wire mesh and collated nails - We produce small diameter drawn
                  wire from coiled steel rod. The wire is woven into sheets and
                  rolls of wire mesh for concrete pavement reinforcement or
                  converted into collated nails for use in high speed nail
                  machines.

CORPORATE STRUCTURE

NAME AND INCORPORATION

         Gerdau Ameristeel Corporation (formerly Co-Steel Inc.) was incorporated
under the laws of the Province of Ontario by letters patent dated September 10,
1970. The Company is the result of a combination of the North American
operations of Brazilian Steelmaker Gerdau S.A. and Canadian Steelmaker Co-Steel
Inc. on October 23, 2002. The registered office of the Company is located at
Hopkins Street South, Whitby, Ontario, L1N 5T1, Canada. The executive office is
located at 5100 West Lemon Street, Tampa, Florida, United States, 33609.

         Subsequent to incorporation, the following amendments to the Company's
articles and constating documents were made:

         -        December 27, 1985 - we amalgamated with our subsidiary, Lake
                  Ontario Steel Company Limited;

         -        June 10, 1986 - our name was changed from Co-Steel
                  International Limited to Co-Steel Inc. and each of the
                  outstanding shares (except the First Preference Shares) was
                  reclassified and subdivided into two Multiple Voting Shares
                  and three Subordinate Voting Shares;

         -        December 31, 1993 - all of our outstanding multiple voting
                  shares were automatically converted into subordinate voting
                  shares;

         -        April 27, 1994 - our subordinate voting shares were
                  redesignated as common shares;

         -        December 31, 2000 - 877449 Ontario Limited, a subsidiary,
                  amalgamated with us;

         -        October 23, 2002 - our name was changed to Gerdau Ameristeel
                  Corporation; and

         -        May 6, 2003 - By-law No. A2 was approved by the Company's
                  shareholders.

INTERCORPORATE RELATIONSHIPS

         We conduct our operations directly or indirectly through subsidiaries
and joint ventures in Canada and the United States. The following chart shows
Gerdau Ameristeel and its principal operating subsidiaries. Unless otherwise
indicated, all subsidiaries are 100% owned and may be owned directly or
indirectly by an intermediate


                                      -3-


holding company. Schedule A to this Annual Information Form lists all of the
Company's subsidiaries, their jurisdiction of incorporation and the percentage
of shares beneficially owned by the Company.

                                    [CHART]

         Our current credit facilities prevent us from reorganizing the
relatively complex corporate structure of our operations. Once we complete the
refinancing of our current credit facilities, we will reorganize our
subsidiaries to permit an efficient integration of all aspects of our
operations. The following chart shows Gerdau Ameristeel, the principal
subsidiaries that will remain after that reorganization, their respective
operations and their jurisdictions of incorporation. Unless otherwise indicated,
all subsidiaries will be 100% owned and may be owned directly or indirectly
through an intermediate holding company.



                                     [CHART]




GENERAL DEVELOPMENT OF THE BUSINESS

HISTORY

         Gerdau S.A. made its initial investment in the North American steel
market in 1989 by acquiring Courtice Steel Inc. (now our subsidiary Gerdau
Ameristeel Cambridge Inc.), which operates a minimill in Cambridge,
Ontario, Canada. In 1995, it acquired Gerdau MRM (now our subsidiary Gerdau
Ameristeel MRM Special Sections Inc.), which operates our minimill in Selkirk,
Manitoba, Canada. In 1999, it acquired an indirect majority interest in
AmeriSteel Corporation (now our subsidiary Gerdau Ameristeel US Inc.), which we
refer to as Ameristeel, that owned four minimills, and operated rebar
fabricating plants and epoxy coating plants. In April 2001, AmeriSteel Bright
Bar, Inc., our 80%-owned subsidiary, acquired the assets of American Bright Bar,
a manufacturer of cold drawn steel bars in Orrville, Ohio. In December 2001,
Ameristeel acquired our Cartersville mill in Georgia, from Birmingham Steel
Corporation, which expanded Ameristeel's structural bar size range and added
beams to its product line. In June 2002, Ameristeel acquired certain assets and
assumed certain liabilities of Republic Technologies' cold drawn plant in
Cartersville, Georgia, a producer of cold drawn merchant bar products, to
complement the operations of AmeriSteel Bright Bar.

                                      -4-



         On October 23, 2002, the parent company of Gerdau S.A.'s North American
operations, referred to as Gerdau North America, entered into a transaction
agreement with Co-Steel Inc. Co-Steel Inc. was a Canadian public company that
owned and operated three minimills, participated in a 50/50 joint venture that
ran a fourth mill and was a major participant in the sourcing, trading and
processing of scrap metal in its markets. This transaction agreement resulted in
Co-Steel Inc. acquiring all of the issued and outstanding shares of the
companies included in Gerdau North America, in exchange for Co-Steel Inc. common
shares representing approximately 74% of Co-Steel Inc.'s total common shares. In
connection with the merger, Co-Steel Inc.'s name was changed to Gerdau
Ameristeel Corporation. As part of this transaction, certain related party loans
payable of Gerdau North America were converted into equity in October 2002. The
transaction was accounted for using the reverse-take-over method of purchase
accounting. Gerdau North America is deemed to be the acquirer and is assumed to
be purchasing the assets and liabilities of Co-Steel Inc., since the original
shareholder of Gerdau North America became owner of more than 50 percent of the
voting shares of Co-Steel Inc. on a fully-diluted basis following the
transaction. As a result, Gerdau North America's historical accounts became the
historical accounts of Co-Steel Inc. for all periods prior to the date of the
merger.

          We combined with Gerdau North America in order to create a company
with the financial strength, operational critical mass, geographic and product
range coverage and experienced management team to succeed in the competitive
North American steel market. We are on track to realize approximately $23
million of annual cost savings from the integration of the operations of
Co-Steel Inc. and Gerdau North America through freight rationalization, product
scheduling efficiencies, consolidated procurement activities and economies of
scale in administrative and management functions. Incremental cost savings from
operational improvements are anticipated through the adoption of best operating
practices, the coordination of manufacturing technologies, knowledge, sharing
and the fostering of an operating culture focused on continuous improvement.

         On December 31, 2002, Ameristeel was an indirect 87% owned subsidiary
of Gerdau Ameristeel. Effective March 31, 2003, non-controlling shareholders
holding, in the aggregate, approximately 13% of the issued and outstanding
shares of AmeriSteel, had their holdings exchanged for Gerdau Ameristeel common
shares at a ratio of 9.4617 Gerdau Ameristeel shares for each common share of
Ameristeel exchanged. The acquisition of the minority interest of Ameristeel was
accounted for as a step acquisition under the purchase method of accounting,
whereby the purchase price of the shares was allocated to the net assets
acquired based upon their relative fair values. The exchange resulted in the
issuance of an additional 13,198,501 shares of Gerdau Ameristeel. Ameristeel is
now an indirect wholly-owned subsidiary of Gerdau Ameristeel. As a result of the
transaction with Co-Steel Inc. and the acquisition of the shares of Ameristeel,
Gerdau S.A. indirectly holds approximately 67% of the shares of Gerdau
Ameristeel.

INDUSTRY AND TRENDS

         The North American steel industry is highly cyclical and competitive.
The industry is affected by global production capacity, the prevailing levels of
steel imports and tariffs, general economic conditions and the strength of the
U.S. dollar. Trends and developments in other cyclical industries such as
construction, appliance, transportation, machinery and equipment, and consumer
and industrial packaging, which are significant markets for steel products, also
affect the steel industry. Recent trends in the steel industry, in particular a
wave of


                                      -5-


consolidation and the introduction of tariffs, have strengthened the competitive
positioning of the North American market participants.

         Beginning in mid-2000 and throughout 2001, the North American steel
industry experienced a severe downward cycle due to excess global production
capacity, high import levels at below-market prices ("dumping") and weak general
economic conditions, causing numerous North American steel producers to file for
bankruptcy. Monthly average merchant bar and rebar prices reached lows of $236
and $260 per ton, respectively, in December 2001 and monthly average hot-rolled
sheet prices fell to cyclical lows of $217 per ton in November 2001.

         Due to reduced supply resulting from capacity closures, trade
restrictions and the introduction of tariffs on certain steel products imported
into the United States, monthly average merchant bar and rebar prices increased
in 2002. Merchant bar prices increased to $261 per ton in June, while rebar
prices climbed to $275 per ton in August. Monthly average domestic flat-rolled
steel prices increased dramatically in 2002 and reached a high of $370 per ton
in August.

         The cycle began to turn downward again toward the end of 2002 due to a
number of unfavorable developments. The reinitiation of previously idled
steelmaking capacity and reduced export opportunities to China have increased
steel supply in North America, and a weak domestic economy has resulted in
softening product demand. Monthly average hot-rolled steel pricing has fallen to
$285 per ton in April 2003, despite an attempt by leading flat-rolled producers
to impose a $30 per ton price increase effective April 1.

         In addition, the pricing of scrap, minimills' primary raw material, has
risen sharply in the beginning of 2003 due to increased demand from the Chinese
market and reduced scrap collection resulting from tough weather conditions in
the Northeast United States. Higher energy costs, due to the particular cold
winter, have put additional pressure on the steel industry's profitability.
Scrap pricing has begun to fall, primarily due to reduced scrap exports to China
and improved weather conditions in the Northeast United States.

         Recent developments in the bar segment industry have been more
positive. The rebar and merchant bar price increases of $35 per ton, announced
by leading bar producers in the beginning of 2003, have had a positive effect on
pricing, particularly for merchant bars, for which the monthly average price
rose to $295 per ton in April 2003. Merchant bars compete against fewer imports.
Rebar imports have decreased due to stronger demand overseas and a weaker U.S.
dollar.

         Overall, the North American steel industry produced 124 million metric
tons of crude steel in 2002, an increase of 3.4% versus 2001. Additionally, for
the first three months of 2003, North American crude steel continued to grow,
totaling 31 million tons, a 7.4% increase versus the equivalent period in 2002.

         The North American steel industry has been restructuring since 2002, as
the pace of domestic steel industry consolidation has accelerated, evidenced by
a number of recent acquisitions. International Steel Group added to its 2002
acquisitions of the bankrupt steel assets of LTV Steel and Acme Steel with its
acquisition of Bethlehem Steel's bankrupt assets in 2003. U.S. Steel has also
announced its planned acquisition of National Steel's bankrupt assets in 2003.
These developments are causing formerly idled or inefficient steelmaking
facilities to reenter the market with substantially lower cost structures and
renegotiated labor contracts, and without many previously burdensome retirement
and health care legacy costs and other liabilities. The result of this
consolidation is a more competitive North American steel industry. Other North
American steel producers that have entered bankruptcy in the past several years
may emerge from bankruptcy with lower cost structures and more efficient
operations. In the bar sector, as a result of the Nucor and Birmingham
consolidations, the restructuring of Bayou in Chapter 11 and the cessation of
Kentucky Electric's operations has caused further consolidation and
rationalization of inefficient supply in the steel industry.

         Unfavorable foreign economic conditions, excess foreign steelmaking
capacity and a strong North American economy and U.S. dollar resulted in an
oversupply of various steel products, lower domestic steel prices and
significant domestic capacity closures starting in late 2000. These conditions
led to the March 5, 2002 introduction of the Section 201 tariffs and quotas
imposed on various steel products imported into the U.S. from


                                      -6-


certain countries. The duties were imposed for a period of three years and will
decrease each year they are in effect. For flat-rolled products, as well as for
various merchant and special bar quality products, the tariff decreases from 30%
in the first year to 24% in the second year and 18% in the third year. The quota
for slab imports that can enter the United States without tariff imposition
increases from 5.4 million tons in the first year to 5.9 million tons in the
second year and 6.4 million tons in the third year. For rebar products, the
tariff decreases from 15% in the first year to 12% in the second year and 9% in
the third year.

         Throughout 2002 and during 2003, the U.S. Department of Commerce and
the Office of the United States Trade Representative granted numerous exclusions
and exemptions from the Section 201 tariffs for various categories of imported
steel products, weakening the protection initially provided by Section 201.
Various countries have challenged President Bush's action with the World Trade
Organization ("WTO"). In May 2003, the WTO announced that the U.S. tariffs
imposed to protect the U.S. steel industry from imports are illegal under
trading rules, confirming its preliminary decision from March 2003. The United
States plans to appeal the WTO decision. The tariffs will also be subject to a
midterm review by the U.S. International Trade Commission, which is due to the
President by September 2003 and will recommend whether the remedies should
remain in effect. In addition, the Organization for Economic Cooperation and
Development recently initiated a process to deal with worldwide overcapacity in
the steel industry and to reduce or eliminate certain steel-trade distorting
subsidies throughout the world.

         On July 5, 2002, the Canadian International Trade Tribunal ("CITT")
ruled that imports of certain steel goods from other countries, including the
United States, have injured the Canadian steel industry. On August 20, 2002, the
CITT announced it was recommending the imposition of a three-year quota for
certain categories of imported steel products, with tariffs imposed on imports
exceeding the quota levels, except for rebar, in which case the CITT only
recommended the imposition of a tariff. For imports exceeding the quota levels,
a tariff ranging from 15-25% would be imposed in the first year, 11-18% in the
second year and 7-12% in the third year. The government of Canada has not yet
announced its decision on the remedies that it will implement.

NARRATIVE DESCRIPTION OF THE BUSINESS

MINIMILLS

         Minimills are steel mills that use electric arc furnaces, that melt
scrap metal by charging it with electricity. Upon melting the scrap metal, we
add alloys and other ingredients (such as fluxes) in measured quantities to
achieve the desired metallurgical properties for the steel. The resulting molten
steel is cast into long strands called billets in a continuous casting process.
The billets are typically cooled and stored and then transferred to a rolling
mill where they are reheated, passed through roughing mills for size reduction
and then rolled into products such as rebar, merchant bars, structural shapes,
rods or special sections. These products emerge from the rolling mill and are
uniformly cooled on a cooling bed. Most merchant and structural products then
pass through automated straightening and stacking equipment. Finished products
are neatly bundled prior to shipment to customers typically by rail or truck. In
some cases we ship finished products by rail to a depot before delivery to
our customers.


                                      -7-


         The following picture shows the typical process of producing steel in
our mills:

                                   [PICTURE]

         All of our mills are located on our owned property. Our mills are
typically located with convenient access to raw materials, transportation (road
and in some cases rail and water) and customers. Our rebar deliveries are
generally concentrated within 350 miles of a mill and our merchant bar
deliveries are generally concentrated within 500 miles. Some products, such as
the special sections produced by our Selkirk mill, shipped greater distances,
including overseas.

         The table below presents information regarding our 11 mills, including
the current estimated annual production capacity and actual production for the
year ended December 31, 2002. We calculate annual melting and rolling capacities
based on our best historical months of production and best rolling mill cycles,
respectively, annualized and assuming 18 days per year for maintenance shutdown.
Actual capacity may vary significantly from annual capacity due to changes in
customer requirements, sizes, grades and types of products rolled, and
production efficiencies. Our capacity calculations may also change from year to
year because of these reasons. We do not consider manufacturer's design capacity
as a relevant measure due to differences in the product mix and production
efficiency assumptions; we therefore do not present manufacturer's design
capacity information.


                                      -8-




                                      APPROX.         YEAR ENDED                       APPROX.         YEAR ENDED
                                      ANNUAL         DECEMBER 31,     CAPACITY         ANNUAL          DECEMBER 31,     CAPACITY
                                      MELTING        2002 MELTING    UTILIZATION       ROLLING         2002 ROLLING    UTILIZATION
LOCATION                             CAPACITY         PRODUCTION     PERCENTAGE       CAPACITY          PRODUCTION     PERCENTAGE
- ----------------------              ----------       ------------    -----------      ---------         ----------     ----------
                                    (thousands        (thousands                      (thousands        (thousands
                                     of tons)           of tons)                        of tons)          of tons)
                                                                                                     
Cambridge, Ontario ...........          360               333            92.5%             325               313          96.3%
Cartersville, Georgia ........          860               368            42.8              600               288          48.0
Charlotte, North Carolina ....          460               330            71.7              400               319          79.8
Gallatin, Kentucky (1) .......        1,500               714            95.2            1,500               706          94.1
Jackson, Tennessee ...........          670               498            74.3              600               446          74.3
Jacksonville, Florida ........          640               621            97.0              640               620          96.9
Knoxville, Tennessee .........          455               415            91.2              500               413          82.6
Perth Amboy, New Jersey ......          900               596            66.2            1,000               654          65.4
Sayreville, New Jersey .......          800               595            74.4              600               450          75.0
Selkirk, Manitoba ............          385               334            86.8              330               294          89.1
Whitby, Ontario ..............          960               667            69.5            1,100               644          58.5
Total ........................        7,990(1)          5,471            75.6%(2)        7,595(1)          5,148          75.2%(2)
                                      =====             =====            ====            =====             =====          ===


(1)      Includes 100% of the capacity of the Gallatin mill, which is a 50%
         owned joint venture.

(2)      Utilization % includes Gallatin calculated by dividing our 50%
         proportionate production by 50% of total capacity.

         We operate our mills so that inventory levels are maintained within
targeted ranges. Although it is normally advantageous to run the mills at full
production levels to achieve the lowest unit costs, producing to targeted
inventory levels balances production with marketing and gives management
flexibility to limit maintenance delays and other downtime. This approach also
results in better working capital management. As a result, depending on market
conditions, we do not generally utilize 100% of our capacity. In addition, some
of our mills are run on a basis that differs from the assumptions used in
calculating production capacity. For example, our Cambridge mill produces a
large number of different products, which requires frequent switching of rolling
equipment. The mills operated by Co-Steel Inc. prior to our combination have
historically had lower capacity utilization for a variety of reasons. As market
conditions in the steel industry improve, we expect that we will be able to
improve the capacity utilization at those facilities, as well as at our
Cartersville mill, so that their performance will be more consistent with that
of our other facilities.


                                      -9-


DOWNSTREAM OPERATIONS

         We are one of few minimill steel producers with an integrated operating
base in North America. Our minimills are vertically integrated with 27
downstream businesses that produce specialty steel products and fabricated steel
for the use in the construction, industrial markets and transportation.

         REBAR FABRICATION

         We believe we are one of the largest rebar fabricating and epoxy
coating groups in North America and have a 50-year history of quality
workmanship and service. Our network, consisting of 15 rebar fabricating plants
and three epoxy coating plants, is located in the eastern half of the United
States. Our rebar fabricating capacity is in excess of 500,000 tons per year.
The fabricating facilities purchase rebar from our mills and cut and bend it to
meet our customers' engineering, architectural and other end-product
specifications. The fabricating plants purchase the majority of their rebar from
our Jacksonville, Knoxville, Charlotte and Sayreville mills. The following table
shows our rebar fabricating plant locations and their approximate annual
capacity:


    REBAR FABRICATING PLANT                      CAPACITY
    -----------------------                      --------
                                                 (IN TONS)

Plant City, Florida (Tampa)............           40,000

Jacksonville, Florida..................           35,000

Ft. Lauderdale, Florida................           40,000

Orlando, Florida.......................           15,000

Charlotte, North Carolina..............           40,000

Raleigh, North Carolina................           30,000

Duluth, Georgia (Atlanta)..............           40,000

Aiken, South Carolina..................           15,000

Knoxville, Tennessee...................           45,000

Nashville, Tennessee...................           30,000

Collierville, Tennessee (Memphis)......           20,000

Louisville, Kentucky...................           30,000

York, Pennsylvania.....................           60,000

Baltimore, Maryland....................           30,000

Sayreville, New Jersey.................           30,000
                                               ---------

           Total.......................          500,000
                                               =========

         In addition to the above fabricating plants, we operate three epoxy
coating plants that are located in: Knoxville, Tennessee; Milton, Pennsylvania;
and Sayreville, New Jersey. These facilities apply epoxy coating to fabricated
rebar for rust applications and have a combined annual coating capacity of
approximately 150,000 tons.

         RAILROAD SPIKE OPERATIONS

         Our railroad spike operations, located in Lancaster, South Carolina and
Paragould, Arkansas, forge steel square bars produced at the Charlotte mill into
track spikes. These track spikes are sold generally on an annual contractual
basis to the major railroad companies in North America. Currently we sell
approximately 50,000 tons of track spikes annually and maintain a 65% market
share.


                                      -10-


         COLD DRAWN PLANTS

         We have two cold drawn plants. Our Orrville, Ohio plant is a 45,000
square foot greenfield facility built in 2000 on 6.5 acres of land. The Orville
plant is owned by AmeriSteel Bright Bar, Inc. We own 80% of AmeriSteel Bright
Bar and the remaining 20% is owned by members of management. It is equipped with
a highly efficient production line designed to produce 30,000 tons of cold drawn
flats and squares per year.

         Our Cartersville, Georgia cold drawn plant was acquired in June 2002.
The Cartersville cold drawn plant expanded our product offering to include
rounds and hexagons. The plant has the capacity to produce up to 45,000 tons of
cold drawn bars.

         The Jackson, Cambridge and Cartersville mills, along with third party
mills, supply the Orrville and Cartersville cold drawn facilities. The cold
drawn business, with two producing locations, expands our product offering and
provides a downstream shipping opportunity for the our minimills. We sell cold
drawn bars primarily to steel service centers.

         SUPER LIGHT BEAM PROCESSING AND ELEVATOR GUIDE RAILS

         We operate a super light beam processing facility in Memphis,
Tennessee, where we fabricate and coat super light beams purchased from a third
party into cross members for the truck trailer industry. This facility is
located on leased property. Bradley Steel Processors Inc., our 50% owned joint
venture with Buhler Industries Inc., also operates a super light beam processing
facility. Bradley's facility is located on leased property in Winnipeg,
Manitoba, near our Selkirk mill, and processes beams produced by that mill.

         SSS/MRM Guide Rail Inc., our 50% joint venture with Monteferro S.p.A.,
processes our Selkirk mill's guide rail sections for elevator manufacturers.
SSS/MRM carries on business under the name Monteferro North America and has two
facilities, one in Steinbach, Manitoba and the other in Birds Hill, Manitoba, on
leased property. SSS/MRM Guide Rail also has a 50% interest in a guide rail
processing facility in Brazil.

         WIRE MESH AND COLLATED NAILS

         Our facility in New Orleans, Louisiana produces wire from steel rod.
The wire is then either manufactured into wire mesh for concrete pavement
reinforcement or converted into collated nails for use in high-speed nail
machines.

OUR JOINT VENTURES

         We have three 50% owned joint ventures. The Gallatin mill is our 50%
owned joint venture with Dofasco Inc., located in Gallatin County, Kentucky. It
produces hot rolled steel products. Bradley Steel Processors Inc. is our 50%
owned joint venture with Buhler Industries Inc., which processes super light
beams. SSS/MRM Guide Rail is our 50% joint venture with Monteferro S.p.A. which
processes the Selkirk mill's guide rail sections for elevator manufacturers.

         Under Canadian GAAP, our three 50% owned joint ventures are
proportionately consolidated, which means that 50% of individual items such as
assets, sales and cost of sales are included in our results. In addition, to be
consistent with the presentation of our financial information, information on
tons shipped and other production information includes our 50% share of the
joint ventures' production.


                                      -11-


PRINCIPAL PRODUCTS

         The following table shows the breakdown of our tons shipped to third
parties and average net selling prices by product for the two years ended
December 31, 2002:



                                            Tons Shipped          Average Net Selling Prices (1)
                                      -----------------------     ------------------------------
                                      YEAR ENDED DECEMBER 31,        YEAR ENDED DECEMBER 31,
                                        2001          2002               2001           2002
                                       -----          ----              -----          ------
                                            (Thousands)                      (Per Ton)
                                                                           
Merchant bar/special sections          1,553         1,859                $305          $295
Stock rebar                            1,203         1,275                 264           251
Rods                                     741           653                 265           291
Flat rolled(2)                           667           710                 228           299
                                       -----         -----
   Total mill finished goods           4,164          4497
Fabricated steel                         683           656                 441           433
                                       -----         -----
   Total finished goods                4,847         5,153
                                       -----         -----
Billets                                  131            --                 182            --
                                       -----         -----
Total                                  4,978         5,153
                                       =====         =====


         (1)      Selling prices are net of freight.

         (2)      Includes 50% of Gallatin's production.

         The following principal products are produced by the Company.

         MERCHANT BARS/SPECIAL SECTIONS

         Merchant bars/special sections refers to merchant bars, structural
products, special sections and special bar quality products.

- -        Merchant bars consist of rounds, squares, flats, angles, and channels
         with a size dimension of less than three inches. Merchant bars are
         generally sold to steel service centers and to manufacturers who
         fabricate the steel to meet engineering or end-product specifications.
         Merchant bars are used to manufacture a wide variety of products,
         including gratings, transmission towers, floor and roof joists, safety
         walkways, ornamental furniture, stair railings, and farm equipment.
         Merchant bars typically require more specialized processing and
         handling than rebar, including straightening, stacking, and specialized
         bundling. Due to their greater variety of shapes and sizes, merchant
         bars typically are produced in short production runs, necessitating
         frequent changeovers in rolling mill equipment.

- -        Structural products consist of angles, channels and beams with a size
         dimension of three inches and larger. Structural products are used in a
         wide variety of manufacturing applications, including housing,
         trailers, structural support for buildings, and other construction
         purposes. Like smaller merchant bars, structural products typically
         require specialized processing and handling and are produced in shorter
         production runs. Structural products are generally sold to service
         centers, fabricators and OEMs.

- -        Special sections are generally bar products with singular applications,
         as compared to merchant bar products that can be used in a variety of
         applications. Special sections include custom shapes for use in the
         earth moving, material handling and transportation industries. For
         example, our special sections products include grader blades for
         tractors, elevator guide rails, light rails for crane and mine
         applications and super light weight beams for truck trailer cross
         members.


                                      -12-


- -        Special bar quality products or SBQs are generally merchant bar shapes
         that have stringent chemical and dimensional tolerance requirements,
         and therefore are often more costly to produce and command a higher
         margin. SBQs are widely used in industries such as mining and
         automobile production. These products are generally sold to OEMs.

         STOCK REBAR

         Stock rebar refers to reinforcing steel bars in straight lengths
ranging from 20 to 60 feet and ranging from 3/8th of an inch to 2 1/4th inches
in diameter. Stock rebar is sold to companies that either fabricate it
themselves or warehouse it for sale to others who will fabricate it for
reinforced concrete construction. Rebar products are used primarily in two
sectors of the construction industry: building projects such as institutional
buildings, retail sites, commercial offices, apartments, condominiums, hotels,
manufacturing facilities and sports stadiums; and infrastructure projects such
as highways, bridges, utilities and water and waste treatment facilities.

         ROD

         Rod is coiled wire rod. We produce industrial quality rod products that
are sold to customers in the automotive, agricultural, industrial fastener,
welding, appliance, and construction industries. We sell rod to downstream
manufacturers who further process it by cold drawing it into various shapes,
including twisted or welded configurations such as coat hangers, supermarket
baskets and chain link fences. We sell most of our rod to end users, while the
remaining portion, depending on market conditions, is used in our downstream
operations in the manufacture of wire mesh and collated nails. Other end uses of
wire rod products include the manufacture of fences, fine wire, chain, welding
wire, plating wire, fasteners and springs.

         FLAT ROLLED SHEET

         Flat rolled sheet is steel that is rolled flat onto coils and used in
the manufacture of outer bodies of automobiles and household appliances.
Gallatin Steel, our 50% joint venture with Dofasco Inc., is our only mill that
produces flat rolled sheet, which is used in the construction, automotive,
appliance, machinery, equipment and packaging industries.

         FABRICATED STEEL

         Fabricated steel is any steel that is further processed after being
rolled by a mill. As a result of the further processing, fabricated steel
generally receives a higher price in the market than mill finished products. Our
stock rebar is fabricated in our fabricating plants by cutting it to size and
bending it into various shapes to be used in reinforced concrete constructions,
such as bridges, roads and buildings. We also process flats and squares at our
cold drawn plants, and guide rails, super light beams, wire mesh and nails at
other downstream facilities.

         BILLETS

         Billets are rectangular sections of steel that are semi-finished in a
casting process and cut to various lengths. Billets can be sold to other steel
producers or further finished into steel products and sold to downstream users
or other steel producers. Our melt shops produce billets for conversion to the
finished products listed above, such as rebar, merchant bar, structural shapes
and special sections, in our rolling mills. A small portion of our billet
production is sold in the open market to other steel producers for rolling into
finished products.

MARKETING

         Our products are generally sold to steel service centers, fabricators,
or directly to OEMs east of the Mississippi River. Our products are used in a
variety of industries, including the construction, mining, automotive,
commercial, cellular and electrical transmission, metal building manufacturing
and equipment manufacturing


                                      -13-


industry. We also sell fabricated rebar to contractors performing work in both
private (commercial) and public (road, bridge and other construction or
infrastructure) projects.

         In our rebar fabrication business, the market areas we cover are those
east of the Mississippi River, with plants located in, or near, most major
cities in the eastern United States. Our long-standing strategy is to have our
production facilities located in close proximity to the job-site we supply.
Normally we are within 200 miles of our customer's job-site, so we can provide
quick response time to satisfy their reinforcing steel needs.

         The following table shows information on our customers during 2001 and
2002 on a pro forma basis:



                          PERCENTAGE SALES BY CUSTOMER
                              2001           2002
                              ----           ----
                                      
Fabricators                     43%           41%
Steel service centers           31            35
Wire drawing                    17            15
Transportation                   7             7
Other                            2             2
                               ---           ---
Total                          100%          100%
                               ---           ---


         In the year ended December 31, 2002, on a pro forma basis, we sold
products to over 1,000 customers. Given the diversity of our products and
markets, no one customer comprises 3% or greater of our consolidated net sales.
Our five largest customers comprised 8% of our total consolidated pro forma net
sales in the year ended December 31, 2002. The following table provides a
percentage breakdown of total net sales by customer location on a pro forma
basis for 2002 and 2001:



                        PERCENTAGE OF TOTAL NET SALES
                           2001             2002
                          ------           ------
                                     
United States              82.5%            80.3%
Canada                     16.9             19.2
Other                       0.5              0.5
                         ------           ------
                            100%             100%
                         ------           ------


         In general, sales of mill finished products to U.S. customers are
centrally handled by employees in our Tampa sales office, and sales to Canadian
customers are centrally handled by employees in our Whitby sales office. We also
have sales offices in Perth Amboy, where rod sales are handled, and Selkirk,
where sales of special sections are handled. Our sales representatives take
orders, schedule mill production and manage inventory. As of March 31, 2003, we
had 54 employees dedicated to marketing and sales, 13 of whom were located in
the field, near our customers. Each of our sales representatives has immediate
access to inventory and production schedules at all of our mills, which enables
them to provide customers with "one stop shopping" and to service a customer's
needs from the most convenient and/or cost effective source in the Company.
Metallurgical service representatives at our mills provide technical support to
our sales force but are not considered sales representatives.

         In general, sales of our cold drawn, rod and super light beam products
are handled by sales representatives located at our relevant facilities. Our
fabricated rebar and elevator guide rails are generally sold through a bidding
process in which employees at our facilities work closely with each customer to
establish its product requirements, shipping schedule and price.

COMPETITION

         COMPETITIVE CONDITIONS

         We compete with numerous domestic and foreign steel producers.
Competitors include integrated producers, which produce steel from coke and iron
ore, and minimills, which, like us, produce steel by melting


                                      -14-


scrap metal in electric arc furnaces. Minimills typically enjoy lower costs of
production and higher productivity levels relative to integrated mills through
reduced capital and operating costs, resulting from their streamlined melting
process and smaller, more efficient plant layouts, as well as primarily
non-unionized work forces with lower total employment costs. The minimills'
smaller plant size also permits greater flexibility in their choice of location,
optimizing their access to scrap supply, energy sources and customer base.
Minimill producers have also more quickly adapted to the use of new, more cost
efficient equipment, translating technological advances in the industry into
more effective production processes. Minimills' competitiveness relative to
integrated mills is influenced by the cost of scrap, which represents a
significant production cost for the minimills.

         Competition in the steel industry is based on price, quality, and the
ability to meet customers' product specifications and delivery schedules. In
addition, in the case of certain product applications, the steel industry
competes in many markets with producers of other materials such as plastic,
aluminum, cement, glass, wood and composite materials.

         The North American steel industry's recent consolidation has led to a
fundamental change in the industry's structure. In the flat-rolled sector, the
emergence from bankruptcy of previously inefficient, high cost steelmaking
assets, under new ownership and without their previously burdensome legacy
costs, is reducing the North American steel industry's cost structure, creating
a more globally competitive industry. In the bar sector, the Nucor acquisition
of Birmingham Steel and the combination of Gerdau North America and Co-Steel
Inc. has provided significant consolidation in that sector and some modest
rationalization.

         LOCAL COMPETITION

         Our geographic market encompasses Canada and the United States,
predominantly throughout the eastern seaboard and the Midwest. We experience
substantial competition in the sale of each of our products from numerous
competitors in our markets. Rebar, merchant bars, and structural shapes are
commodity steel products for which price is the primary competitive factor. Due
to the high cost of freight relative to the value of steel products, competition
from non-regional producers is somewhat limited. Proximity of product
inventories to customers, together with competitive freight costs and low-cost
manufacturing processes, are key to maintaining margins on rebar and merchant
bar products. Rebar deliveries are generally concentrated within a 350 mile
radius of a mill, while merchant bar deliveries are generally concentrated
within a 500 mile radius of a mill. Some products produced by our Selkirk mill,
such as the cutting edges used in earth moving, are more specialized and thus
are shipped greater distances, including overseas. Except in unusual
circumstances, the customer's delivery expense is limited to freight charges
from the nearest competitive mill, and the supplier absorbs any incremental
freight charges.

         We believe our principal competitors include Ispat Sidbec Inc., Stelco
Inc. and Ivaco Inc. in Canada and Bayou Steel Corporation, Commercial Metals
Corporation, Marion Steel Company, NorthStar Steel Company, Nucor Corporation,
Roanoke Electric Steel Corporation, Sheffield Steel, and Steel Dynamics Inc. in
the United States. Our Gallatin joint venture competes with numerous other
integrated and minimill steel producers.

         Despite the commodity characteristics of the rebar, merchant bar and
structural markets, we believe that we distinguish ourselves from our
competitors due to our large product range, our product quality, our consistent
delivery performance, our capacity to service large orders, and our ability to
fill most orders quickly from inventory. We believe that we produce the largest
range of bar products and shapes east of the Mississippi River. This product
diversity is an important competitive advantage in a market in which our
customers are looking to fulfill all of their requirements from a few key
suppliers.

         FOREIGN COMPETITION

         We and other North American steel producers have experienced
significant and, we believe in some cases, unfair competition from foreign
finished steel bar producers during the past several years. Due to unfavorable
foreign economic conditions and excess capacity, imports of steel bar products
to the U.S. and Canadian markets reached historically high levels in recent
years, with a corresponding negative impact on domestic prices.


                                      -15-


         In September 2001, the International Trade Commission unanimously found
steel imports to be a major cause of material injury to the domestic steel
industry and sent proposed remedies to President Bush in December 2001. On March
5, 2002, President Bush imposed a series of tariffs relating to some imported
steel products that are intended to give the domestic steel industry
an opportunity to strengthen its competitive position through restructuring and
consolidation and decline over the three-year period.

         The following table summarizes the duties imposed for certain steel
products:



                                                        SECTION 201 IMPORT TARIFFS BY PRODUCT
                                         ----------------------------------------------------------------
                  TYPE                           YEAR 1                YEAR 2                 YEAR 3
    --------------------------------     --------------------- ---------------------  -------------------
    Slab............................               5.4-min.              5.9-min.               6.4-min.
                                            Short-Ton Quota       Short-Ton Quota        Short-Ton Quota
                                            With Over-Quota       With Over-Quota        With Over-Quota
                                               Tariff of 30%         Tariff of 24%          Tariff of 18%
                                                                             
    Finished Flat Products (plate,
      hot-rolled sheet, cold-rolled
      sheet, coated sheet)..........                     30%                   24%                    18%
    Hot-Rolled Bar..................                     30                    24                     18
    Cold-Finished Bar...............                     30                    24                     18
    Rebar...........................                     15                    12                      9



     ----------
     Source:  Office of The United States Trade Representative, Bloomberg.

         There are many products and countries not covered by these tariffs, in
addition to numerous foreign steel manufacturers that have received specific
product exemptions from these tariffs. According to published reports, the
exemptions are now estimated to cover approximately 5.4 million of the original
13.1 million tons of imported steel products that were covered by the tariffs.
The majority of the most recent exemptions were granted to products made by
European Union and Japanese producers. To date, the United States Department of
Commerce has granted 727 exemptions which, according to the AISI, is one reason
the tariffs have not yet effectively reduced steel imports. According to the
AISI, there are some early indications that the President's program is beginning
to work, including improved operating performance, new stock offerings,
increased consolidation activity and partial price restoration for some
flat-rolled steel products; however, some analysts attribute these developments
to other factors such as diminished domestic supply, higher domestic demand, the
lower value of the United States dollar and recent successful antidumping cases.
For the first nine months of 2002, steel imports were 23.9 million tons versus
22.1 million tons in the first nine months of 2001, according to the U.S. Census
Bureau. The Bush administration has announced its intention to review the impact
of these tariffs and determine whether they should be ended prior to their
scheduled expiration.

         One of our subsidiaries, Gerdau Ameristeel Perth Amboy Inc. (formerly
Co-Steel Raritan), was party to a United States wire rod anti-dumping and
countervailing duty case against a number of countries and steel producers. In
October 2002, the U.S. Department of Commerce made a determination of injury
against wire roll producers in seven foreign countries with respect to both
anti-dumping and countervailing duties that range from 4% to 369%. Although
there have been recent increases in rod pricing following the imposition of
these duties, a considerable amount of imported rod continues to enter U.S.
markets.

         The Organization for Economic Cooperation and Development ("OECD")
recently initiated a process to address worldwide overcapacity in the steel
industry. Although meetings have been held by the OECD Steel Committee to
discuss methods to reduce this steel surplus, there is no certainty that such
efforts will lead to a satisfactory resolution of this issue. Continuing
overcapacity in the steel industry would adversely affect our ability to compete
and our sales levels.

         The tariffs imposed in the United States and any similar actions that
may be taken in Canada may not have a material positive impact on the North
American steel industry and may not reduce the volume or negative


                                      -16-


impact of imports. Global overcapacity, a strong U.S. dollar, the strength of
the North American economy relative to the rest of the world, numerous
exemptions under the tariffs, the short term (three years) duration of the
tariffs, the decline in tariff rates after the first year, and the disparity of
tariff rates across different product lines are all factors that may negate any
benefits of the tariffs.

         COMPETITIVE STRENGTHS

         We believe the following competitive strengths will enable us to
compete more effectively in our strategic markets.

         Geographic and product diversification. Through our network of 11
minimills, we are able to efficiently service our customers over an extended
geographical segment of the North American steel market. We manufacture and
market an extensive range of steel products to meet a wide variety of our
customers' steel and fabricated product requirements. We believe that we provide
one-stop shopping and centralized order management for one of the broadest
ranges of bar products and shapes available throughout the eastern two-thirds of
North America. We believe our extensive manufacturing capacity and comprehensive
range of steel products makes us a supplier of choice in a market in which our
customers are looking to fulfill all of their steel supply chain requirements
from a few key suppliers.

         Downstream integration and value added processing. We are one of a few
minimill steel producers with integrated operating bases in North America. Our
minimills are integrated with our 27 downstream steel fabricating and specialty
product facilities. The downstream integration provides a captive market for a
significant portion of our mill production and valuable market information on
the end-use demand for steel products. In the year ended December 31, 2002, 15%
of our net sales was derived from our downstream operations. We believe our
downstream operations also balance some of the cyclicality and volatility of our
base minimill business and allow us to capture additional value-added margins on
the steel produced by our mills.

         Ability to generate substantial cost savings. We are on track to
realize approximately $23 million of annual cost savings from the integration of
the operations of Co-Steel and Gerdau North America through freight
rationalization, product scheduling efficiencies, consolidated procurement
activities and economies of scale in administrative and management functions.
Incremental cost savings from operational improvements are anticipated through
the adoption of best operating practices, the coordination of manufacturing
technologies, knowledge, sharing and the fostering of an operating culture
focused on continuous improvement.

         Disciplined business system platform for total quality management. We
recognize that our competitive success will be determined by human factors that
are more important than the technological condition of our physical asset base.
Our employees are our most valuable resource and are the key to maintaining our
competitive advantage. Our culture is geared to engaging all of our employees in
a common, disciplined business system focused on total quality management. We
have implemented the Gerdau Ameristeel Business System, in which we have
identified global industry benchmarks for key operational and safety measures.

         Strong sponsorship. We have access to the knowledge base of, and
sponsorship from, our parent company, Gerdau S.A., one of the largest long steel
producers in the world with a history of over 100 years in the steel industry.
We expect to continue to benefit from Gerdau's professional management
experience and its expertise in manufacturing steel bar and rod. Gerdau S.A. and
its subsidiaries, including Gerdau Ameristeel (together, the "Gerdau group"),
have global annual capacity of 12.8 million tons of mill-finished steel products
through 22 steelmills, 20 of which are minimills. We benefit from Gerdau S.A.'s
talent, depth and technical support.

         Experienced management team. We have an experienced senior leadership
team with in depth knowledge of modern management tools and tactical skills to
implement aggressive cultural change within an organization. Our senior
management has an average of over 26 years of experience in the steel industry
and a proven track record in managing successful acquisitions and creating value
in turnaround opportunities.


                                      -17-


CYCLICAL AND SEASONAL NATURE OF THE BUSINESS

         The steel industry is highly cyclical in nature and is affected
significantly by prevailing economic conditions in the major world economies. We
are particularly sensitive to trends in cyclical industries such as the North
American construction, appliance, machinery and equipment, and transportation
industries, which are significant markets for our products. In addition, certain
of our customers have been adversely affected by the continuing North American
and worldwide economic downturn, which has resulted, and may in the future
result, in defaults in the payment of accounts receivable owing to us and
reduced sales levels.

         Market conditions for steel products in the North American market have
fluctuated over the years and have been difficult since the third quarter of
2000. Demand for our finished steel products, notably rebar and structural
shapes, will continue to be significantly affected by the relative strength of
the construction sector in North America. Events or conditions having an adverse
effect on the steel industry generally or on our markets in particular would
have a material adverse effect on our financial condition or results of
operations.

         All of our minimills produce steel by melting scrap metal in electric
arc furnaces. The prices for scrap vary significantly, and these fluctuations do
not always match fluctuations in the price of our products. For example, scrap
metal prices are relatively higher during the winter months due to the impact of
weather on collection and supply efforts. Realized selling prices for our end
products cannot always be adjusted in the short-term to recover the cost of
increases in scrap metal prices. If scrap prices were to increase significantly
without a commensurate increase in finished steel selling prices, our profit
margins could be materially adversely affected. Future increases in the prices
paid for scrap and other inputs would materially adversely affect our operating
margins and our results of operations.

         Most of our operations have long-term electricity supply contracts with
major utilities. The interruptible portion of the contract supplies the majority
of requirements, including the electric arc furnace load. The interruptible
portion represents up to 70% to 90% of the total load and, for the most part, is
based on a spot market price of electricity at the time it is being used. We
therefore have significant exposure to the variances of the electricity spot
market. We do not have long term contracts for natural gas and are therefore
subject to market variables and pricing swings for that energy source that could
materially affect our operating margins and results of operations.

SCRAP, ENERGY AND OTHER RAW MATERIALS

         Steel scrap is the primary raw material consumed in steelmaking and
comprises approximately 30% to 45% of our cost of sales, depending on the mill
and product mix. Scrap availability is a major factor in our ability to operate.
Direct reduced iron, hot briquetted iron and pig iron can substitute for a
limited portion of the steel scrap used in electric furnace minimill steel
production. We do not use scrap substitutes in our long-product minimills,
except for the small portion we use for their chemical properties in our rod
facilities and to manufacture certain special sections. Scrap metal is readily
available in the regions where we operate, but prices may become volatile from
time to time due to various factors. Four of our mills are integrated with
recycling operations that supply a portion of their scrap needs. The balance of
our scrap metal requirements are purchased in the open market either directly by
our personnel or by brokers who procure and aggregate scrap as a business.

         Electricity and natural gas represented approximately 7.2% and 3.0%,
respectively, of our pro forma cost of sales for the twelve months ended March
31, 2003. Natural gas has been very volatile in the recent past. For example, in
the first quarter of 2003, NYMEX natural gas prices increased from $4.99/mmBtu
to $8.00/mmBtu, an increase of 60%. We spent $13 million and $43 million for our
natural gas requirements in the three months ended March 31, 2003 and the twelve
months ended March 31, 2003, respectively, on a pro forma basis. If prices
remain at current levels or increase further, our profitability will be
adversely affected. Any interruption in the supply of energy, whether scheduled
or unscheduled, could materially adversely affect our sales and earnings.

         Although deregulation of both natural gas and wholesale electricity
have afforded opportunities for lower costs resulting from competitive market
forces, prices for both of these energy sources have become more volatile


                                      -18-


in the recent past and may continue to be. Volatility in electric power and
natural gas markets generally reflects extremes in weather conditions or
physical disruptions to the supply system. As such, these sources of volatility
are beyond our immediate control.

         Various domestic and foreign firms supply other important raw materials
or operating supplies required for our business, including refractories,
ferroalloys and carbon electrodes. We have historically obtained adequate
quantities of such raw materials and supplies at competitive market prices to
permit efficient mill operations. We are not dependent on any one supplier as a
source for any particular material and believe there are adequate alternative
suppliers available in the marketplace should the need arise to replace an
existing one.

ENVIRONMENTAL AND REGULATORY MATTERS

         Our business units are required to comply with an evolving body of
environmental laws and regulations concerning, among other things, emissions
into air, discharges to surface water and groundwater, noise control, the
generation, handling, storage, transportation, and disposal of toxic and
hazardous substances, and the cleanup of contamination. These laws and
regulations vary depending on the location of the facility and can fall within
federal, provincial, state, or municipal jurisdictions.

         Our operations generate certain wastes, such as electric arc furnace
dust and other contaminants, that are classified as hazardous and must be
properly controlled and disposed of under applicable environmental laws and
regulations. In the United States and Canada, certain environmental laws and
regulations impose joint and several liability on certain classes of persons for
the costs of investigation and cleanup of contaminated properties regardless of
fault, the legality of the original operation or disposal and the ownership of
the site. Some of our present and former facilities have been in operation for
many years and, over such time, the facilities have used substances and disposed
of wastes (both on-site and off-site) that may require cleanup, for which we
could be liable. Appropriate reserves have been made for the clean-up of sites
of which we have knowledge. However, there is no assurance that the costs of
such cleanups or the cleanup of any potential contamination not yet discovered
will not materially adversely affect us.

         Some of our North American operations in the U.S. are responsible for
the remediation of certain sites where EAF dust was generated and/or disposed.
In general, our estimate of remediation costs is based on our review of each
site and the nature of the anticipated remediation activities to be undertaken.
Our process for estimating such remediation costs includes determining for each
site the expected remediation methods, and the estimated cost for each step of
the remediation. In such determinations, we may employ outside consultants and
providers of such remedial services to assist in making such determinations.
Although the ultimate costs associated with the remediation are not known
precisely, we estimated the total remaining costs as at December 31, 2002 to be
approximately $6.3 million (2001 - $2.9 million), with these costs recorded as a
liability at December 31, 2002, approximately $5.1 million of which we expect to
pay within the year ended December 31, 2003. An additional liability of $8.6
million was recorded in 2002 with respect to certain environmental obligations
which were triggered by the change in control of the Company in certain
jurisdictions in which the Company operated. This liability was recorded at the
present value of the estimated future costs of these obligations.

         In 2000, our Perth Amboy and Sayreville mills took part in the U.S.
Environmental Protection Agency's (EPA) Steel Minimill Audit Initiative Program.
Both New Jersey minimills conducted a comprehensive, third party, multi-media
environmental audit. The results of this audit were disclosed to the EPA along
with a list of corrective actions, all of which are expected to be completed by
the first half of 2003. None of the identified and disclosed items have
resulted, or will result, in material costs being incurred.

         Carbon monoxide emissions at our Perth Amboy mill exceeded permitted
levels on several occasions during 2001 and 2002, and continue to periodically
exceed current permit levels. We are conducting investigations to determine the
cause of these episodes, what steps can be taken to reduce emissions and whether
the Perth Amboy mill's environmental permits require modification. Discussions
with NJDEP to resolve these permit and compliance issues are continuing. Penalty
assessments of approximately $400,000 have been accrued.


                                      -19-


         In April 2001, we were notified by the EPA of an investigation that
identifies us as a potential responsible party ("PRP") in a Superfund Site in
Pelham, Georgia. The Pelham site was a fertilizer manufacturer in operation from
1910 through 1992, lastly operated by Stoller Chemical Company, a now bankrupt
corporation. We are included in this action because we shipped EAF dust to this
property. The EPA offered a settlement to the named PRPs under which our
allocation was approximately $1.8 million. We object to our inclusion as a PRP
in this site and are pursuing legal alternatives, including the addition to the
allocation of larger third parties which the Company believes were incorrectly
excluded from the original settlement offer. The EPA has filed suit with us
named as a defendant. As the ultimate exposure to us, if any, is uncertain, no
liability has been accrued for this site.

         The presence of radioactive materials in the scrap supply presents
significant health and safety risks to steel workers and to the general public.
In addition to the risk to our workers and the public, the cost to clean up the
contaminated material and the loss of revenue resulting from the loss in
production time can be material. Radioactive materials are usually in the form
of: sealed radioactive sources, typically installed in measurement gauges used
in manufacturing operations or in hospital equipment; scrap from decommissioned
nuclear power and U.S. Department of Energy facilities; and imported scrap.
Current regulations for generally licensed devices do not provide for tracking
of individual owners. The lack of accountability makes it easy for licensees to
negligently discard sealed sources in scrap and evade prosecution. In response
to this regulatory gap, we have installed sophisticated radiation detection
systems at all of our minimills to monitor all incoming shipments of scrap. If
we detect radioactive material in the scrap we receive, we incur costs to
dispose of the material and clean up the contamination of our facilities. In
addition, the cost of clean up is even greater if the material is melted in our
mill furnaces. While we have several detection devices at all of our mills,
occasionally a radioactive scrap source may go undetected. For example, in July
2001, a small amount of cesium was received from suppliers among scrap material
and accidentally melted in our Jacksonville mill furnace. Melt shop activities
at our Jacksonville mill were halted for approximately 25 days until
approximately 700 tons of contaminated material had been removed for proper
disposal and equipment had been cleaned. The cost of clean up was approximately
$10.5 million, all but $350 thousand of which was paid for by our insurer. As a
result of this accident, we reviewed our radiation detection systems to reduce
the risk of a similar accident in the future.

         We received notice this year of a lawsuit by neighbors of a waste
disposal site in Louisiana that was operated by Safety Kleen, to which wastes
from clean-up activities at the Jacksonville mill were sent during 1999. The
site held permits from the EPA and state authorities, and the amount of material
shipped was relatively small. We have retained counsel but cannot yet evaluate
the merits, if any, of the claim.

         No assurance can be given that unforeseen changes, such as new laws or
enforcement policies, or an incident at one of our properties or operations,
will not have a material adverse effect on the business, financial condition, or
results of our operations. Our business units are required to have governmental
permits and approvals. Any of these permits or approvals may be subject to
denial, revocation or modification under various circumstances. Failure to
obtain or comply with the conditions of permits and approvals may adversely
affect our operations and may subject us to penalties. In addition, we may be
required to obtain additional operating permits or governmental approvals and
incur additional costs. There can be no assurance that we will be able to meet
all applicable regulatory requirements. There is no assurance that our
environmental capital expenditures will not materially increase in the future.
Moreover, we may be subject to fines, penalties or other liabilities arising
from actions imposed under environmental legislation or regulations.

EMPLOYEES

         We currently employ approximately 5,100 employees. Approximately 3,100
employees work in our minimills, 1,900 work in our downstream and fabricating
facilities and 150 work in our corporate and sales offices. These figures
include 50% of those employed at our joint ventures.

         Approximately 1,260 of our employees are represented by the unions
under a number of collective bargaining agreements. The agreements with our mill
employees have different expiration dates beginning February 2004. The
collective agreements for our recycling facilities have different expiration
dates beginning in


                                      -20-


2006. We may be unable to successfully negotiate new collective bargaining
agreements without any labor disruption. For example, in the first quarter of
2001, a three-month labor disruption occurred at our Whitby mill and, in the
second quarter of 2002, a 13-day labor disruption occurred at our Selkirk mill.
In both cases, these disruptions were a result of our collective agreement
negotiations.

FOREIGN OPERATIONS RISK

         No material foreign operations risk exists, other than currency
fluctuations. We report our results in U.S. dollars. A portion of the our net
sales and operating costs are in Canadian dollars. As a result, fluctuations in
the exchange rate between the U.S. dollar, and the Canadian dollar may affect
our reported results. In addition, our Canadian operations compete with U.S.
producers and are less competitive as the Canadian dollar strengthens relative
to the U.S. dollar. To the extent we have borrowings that are denominated in
U.S. dollars, our results of operations are also affected by fluctuations in the
exchange rate.

CREDIT FACILITIES

          Our existing credit arrangements were entered into prior to the
combination with Co-Steel Inc. by companies that are currently in our
consolidated group. As part of the combination with Co-Steel Inc., we were
required to agree to maintain "status quo" segregation of Gerdau North America's
U.S. operations, its Canadian operations and Co-Steel Inc.'s operations if the
business combination had not taken place in order to satisfy lenders' lien
rights. Under the status-quo agreement, we have not been able to manage our
treasury functions, including cash management, in the most efficient manner, and
available cash, while adequate under one credit arrangement, has not been
available to offset shortfalls under one of the other credit arrangements.

          The Company is in the process of implementing a financing plan
designed to refinance our existing credit facilities and other indebtedness.


                                      -21-



SELECTED CONSOLIDATED FINANCIAL INFORMATION

         Our financial results are the results for the Gerdau North America
operations, and include results for the Co-Steel Inc. operations for the period
from October 23, 2002, which represents the period subsequent to the
combination. The selected historical consolidated financial data presented below
as at December 31, 2001 and 2002, and for each of the years in the three-year
period ended December 31, 2002, have been derived from our audited consolidated
financial statements.

Selected Consolidated Financial Information
(US$ in thousands except per share amounts)



                                                                Years Ended December 31,
                                                  ----------------------------------------------------
Annual Results                                       2000                 2001                 2002
                                                  ----------          -----------           ----------
                                                                                   
Sales                                             $  899,683          $   840,836           $1,036,055
Net earnings (loss)                                    3,943               (6,066)              11,132
Total Assets                                       1,074,565            1,061,939            1,571,401
Total Debt                                           757,492              723,633              519,154
Earnings per share - basic                        $     0.03          $     (0.05)          $     0.07
Earnings per share - diluted                      $     0.03          $     (0.05)          $     0.07





                                                                   Quarter Ended
                                      ----------------------------------------------------------------------
Quarterly Results                      Mar. 31,            Jun. 30,             Sep. 30,           Dec. 31,
                                         2002               2002                  2002               2002
                                      -----------        -----------          -----------        -----------

                                                                                     
Sales                                 $   217,983        $   245,116          $   234,523        $   338,433
Net earnings (loss)                         1,275              3,819                2,511              3,527
Earnings per share - basic            $      0.01        $      0.03          $      0.02        $      0.01
Earnings per share - diluted          $      0.01        $      0.03          $      0.02        $      0.01





                                                                Quarter Ended
                                      ----------------------------------------------------------------------
Quarterly Results                      Mar. 31,         Jun. 30,             Sep. 30,             Dec. 31,
                                        2001               2001                 2001                2001
                                      --------          ---------           -----------          -----------
                                                                                     
Sales                                 $211,684          $ 226,189           $   211,529          $   191,434
Net earnings (loss)                        877               (607)                1,153               (7,489)
Earnings per share - basic            $     --          $      --           $      0.01          $     (0.06)
Earnings per share - diluted          $     --          $      --           $      0.01          $     (0.06)


DIVIDENDS

         In 2000, Co-Steel Inc. announced that its Board of Directors decided to
eliminate dividends following payment of the December 14, 2000 dividend. The
decision was made to preserve cash during a time of unprecedented turbulence in
North American steel markets. No dividends have been paid since that date. The
predecessor of the Company for accounting purposes, Gerdau North America, paid
dividends of $2,181,000 in aggregate in 2002, prior to the combination with
Co-Steel Inc., and dividends of $16,640,000 in 2000.

MANAGEMENT'S DISCUSSION AND ANALYSIS

         The section entitled "Management's Discussion and Analysis" in the
Company's Annual Report for the year ended December 31, 2002 is incorporated
herein by reference.

MARKET FOR SECURITIES


                                      -22-


         The common shares of Gerdau Ameristeel are listed on the Toronto Stock
Exchange under the symbol "GNA.TO".

DIRECTORS AND OFFICERS

         Gerdau Ameristeel's board of directors consists of nine directors, each
of whom will hold office until the next annual meeting of shareholders or until
his successor is elected or appointed. The names, municipalities of residence,
position with the Company and principal occupations of the directors and
officers of the Company and ownership of securities are as shown below:



                                                                                               YEAR
                                                                                               FIRST
                                                                 OWNERSHIP       PERCENTAGE    BECAME A
NAME AND MUNICIPALITY OF RESIDENCE      AGE    TITLE             OF SECURITIES   OWNERSHIP     DIRECTOR   PRINCIPAL OCCUPATION
- ----------------------------------      ---    -----             ----------      ---------     ---------  -----------------
                                                                                        
Andre Beaudry........................     44     Vice President,      22,997           *           --       Vice President, Steel
Tampa, Florida, U.S.                             Steel Product                                              Product Sales
                                                 Sales

Phillip E. Casey(3)(7)...............     60     Director, Chief   8,069,091(3)      4.3%(3)     2002       Director,  Chief
Tampa, Florida, U.S.                             Executive                                                  Executive Officer and
                                                 Officer and                                                President of Gerdau
                                                 President                                                  Ameristeel

Kenneth W. Harrigan(1)(4)(6).........     75     Director              1,000           *         1994       Chairman, K.W.
Oakville, Ontario, Canada                                                                                   Harrigan. Consultants
                                                                                                            (business consultant)

Joseph J. Heffernan(1)(3)(5)(6)......     57     Director              5,200           *         1996       Chairman, Rothmans
Toronto, Ontario, Canada                                                                                    Inc. (tobacco
                                                                                                            manufacturer)

Jorge Gerdau Johannpeter (2).........     66     Director and             --          --         2002       Director and  Chairman
Porto Alegre, Rio Grande do Sul,                 Chairman of the                                            of the Board of
Brazil                                           Board of                                                   Directors of Gerdau
                                                 Directors                                                  S.A.

Frederico C. Gerdau Johannpeter(2)...     60     Director                 --          --         2002       Vice President of
Porto Alegre, Rio Grande do Sul,                                                                            Gerdau S.A.
Brazil

Andre Bier Johannpeter(2)(7).........     40     Director and             --          --         2003       Director and Vice
Toronto, Ontario, Canada                         Vice President,                                            President, COO Canada
                                                 COO Canada                                                 of Gerdau Ameristeel

Tom J. Landa.........................     51     Vice President,     203,822           *           --       Vice President,
Tampa, Florida, U.S.                             Finance, Chief                                             Finance, Chief
                                                 Financial                                                  Financial Officer
                                                 Officer and                                                and Secretary
                                                 Secretary

J. Spencer Lanthier(1)(4)............     62     Director              2,043           *         2000       Corporate Director
Toronto, Ontario, Canada

Garry A. Leach.......................     55     Vice President,          --          --           --       Vice President,
St. Paul, Manitoba, Canada                       MRM Special                                                MRM Special

Michael Mueller......................     56     Vice President,      22,214           *           --       Vice President,
Tampa, Florida, U.S.                             Steel Mill                                                 Steel Mill
                                                 Operations                                                 Operations

Arthur Scace(1)(4)(5)................     64     Director             15,000           *         2003       Partner,  McCarthy
Toronto, Ontario, Canada                                                                                    Tetrault LLP, Law Firm

Dr. Michael D. Sopko(1)..............     64     Director              1,000           *         1997       Corporate Director
Oakville, Ontario, Canada



- ---------------------
(1)      Independent director.

(2)      The Gerdau family, indirectly, controls Metalurgica Gerdau S.A.
         holding, collectively, 71.8% of the voting capital and 23.9% of the
         total capital and Metalurgica Gerdau S.A. and its controlled companies
         hold 85% of the voting capital of Gerdau, S.A. Gerdau S.A. beneficially
         owns approximately 67.3% of Gerdau Ameristeel.

(3)      Mr. Phillip Casey owns 2,587,929 common shares directly and the
         remaining 5,481,162 common shares held indirectly. Mr. Joseph Heffernan
         owns 5,000 common shares and the remaining 200 common shares are held
         indirectly.

(4)      Member of the Audit Committee.

(5)      Member of the Corporate Governance Committee.

(6)      Member of Human Resources Committee.

(7)      Member of Safety, Health and Environmental Committee.

*        Less than one percent

                                      -23-


AUDITORS

         Gerdau Ameristeel's auditor is PricewaterhouseCoopers LLP at 101 East
Kennedy Blvd., Suite 1500, Tampa, Florida, 33602.

ADDITIONAL INFORMATION

         Information, including directors' and officers' remuneration and
indebtedness, principal holders of the Company's securities, options to purchase
securities and interests of insiders in material transactions where applicable
is contained in the Company's Management Information Circular for the most
recent annual meeting of shareholders, which involved the election of directors.

         When the securities of the Company are in the course of a distribution
under a short form prospectus or a preliminary short form prospectus, the
following are available upon request from the Secretary of the Company:

         (i)      one copy of the AIF of the issuer, together with one copy of
                  any document, or the pertinent pages of any document,
                  incorporated by reference in the AIF;

         (ii)     one copy of the comparative financial statements of the issuer
                  for its most recently completed financial year for which
                  financial statements have been filed together with the
                  accompanying report of the auditor and one copy of the most
                  recent interim financial statements of the issuer that have
                  been filed, if any, for any period after the end of its most
                  recently completed financial year;

         (iii)    one copy of the information circular of the issuer in respect
                  of its most recent annual meeting of shareholders that
                  involved the election of directors or one copy of any annual
                  filing prepared instead of that information circular, as
                  appropriate; and

         (iv)     one copy of any other documents that are incorporated by
                  reference into the preliminary short form prospectus or the
                  short form prospectus and are not required to be provided
                  under clauses (i), (ii) or (iii).

         At any other time, the Company will provide, upon request to the
Secretary of the Company, a copy of any of the documents referred to above,
provided that the Company may require payment of a reasonable charge if a person
who is not a security holder of the Company makes the request.


                                      -24-


                                   SCHEDULE A

Gerdau Nova Scotia Holding Company
Gerdau Ameristeel Cambridge Inc. (Saskatchewan)
Gerdau MRM Holdings Inc. (Canada)
Gerdau Ameristeel MRM Special Sections Inc. (Saskatchewan)
Bradley Steel Processors Inc. (50%) (Manitoba)
SSS/MRM Guide Rail Inc. (50%) (Manitoba)
Canadian Guide Rail Corporation (Manitoba)
GUSAP Partners (Delaware)
3038482 Nova Scotia Company
PASUG LLC (Delaware)
Gerdau USA Inc. (Delaware)
Gerdau Ameristeel US Inc. (Florida)
AmeriSteel Bright Bar, Inc. (80%) (Florida)
Gerdau MRM America Holding Corp. (Delaware)
Porter Bros. Corporation (North Dakota)
MFT Acquisition, Corp. (Delaware)
1062316 Ontario limited
Co-Steel Benefit Plans Inc. (Ontario)
Gerdau Ameristeel Distribution Canada Ltd. (Ontario)
1300554 Ontario Limited
1102590 Ontario Limited
Co-Steel (U.S.) Ltd. (Delaware)
Co-Steel C.S.M. Corp. (Delaware)
Gallatin Steel Company (50%) (Kentucky)
Ghent Industries (Kentucky)
Gallatin Terminal Company (Kentucky)
Gallatin Transit Authority (Kentucky)
Co-Steel Finance Corp. (Delaware)
Gerdau Ameristeel Perth Amboy Inc. (New Jersey)
Raritan River Urban Renewal Corporation (New Jersey)
Gerdau Ameristeel Distribution US Inc. (Delaware)
Gerdau Ameristeel Lake Ontario Inc. (Delaware)
Co-Steel Benefit Plans USA Inc. (Delaware)
Co-Steel  USA Holdings, Inc. (Delaware)
Gerdau Ameristeel Sayreville Inc. (Delaware)
N.J.S.C. Investment Co., Inc. (New Jersey)(1)
Dofasco LLC (50%) (Wyoming)
Cansteel Antilles N.V. (Dutch Antilles)
Co-Steel Amsterdam B.V. (Netherlands)(2)
Co-Steel (UK) Limited (United Kingdom)
ASW Holdings PLC (30%) (United Kingdom)
Goldmarsh Enterprises (Ireland)
Acierco S.A. (Luxembourg)
Co-Steel Liquidity Management Hungary Limited Liability Company (Hungary)
Monteferro International Business S.A. (50%) (Spain)
Monteferro America Latina Ltda. (Brazil)

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

(1)  This company is in the process of being dissolved.
(2)  This company is in liquidation.

EX-99.2

                                                                    EXHIBIT 99.2

                               Annual Report 2002


[GERDAU AMERISTEEL LOGO]




                           Vision, Mission and Values

VISION

To be recognized as the most successful company in the steel industry.

MISSION

To create value for our customers, employees, shareholders and communities
through the engagement of people and excellence of operations.

VALUES

- - Safety
- - Integrity
- - Customer Driven Culture
- - Investment in People, Processes, and Technology
- - Engaged Employees
- - Open Communication
- - Community and Environmental Awareness
- - Profitability




                              Financial Highlights




                                                        Year ended December 31, 2002
                                                        ----------------------------
                                                                           Pro Forma
                                                     
Income Statement                                                US$(000s except EPS)
              Net Sales                                                   $1,676,176
              Operating Profit                                                86,086
              Net Income                                                      33,131
              EBITDA                                                         175,408
              EPS - Basic                                                        .16
              EPS - Diluted                                                      .15

Balance Sheet                                                              US$(000s)
              Net Working Capital                                           $294,221
              Cash                                                            16,361
              Debt                                                           519,154
              Book Value                                                     626,410
              Market Capitalization (based on US$1.46 per share)             289,291



Notes: Net Working Capital excludes cash and debt. Debt excludes Convertible
Debentures of $79.1 million. EBITDA includes non-recurring cash gain totaling
$9.1 million insurance and electrode settlements and excludes a non-recurring,
non-cash charge of $5.8 million relating to an investment write-down.

The table above summarizes the combined pro forma results of Gerdau
AmeriSteel, for the year ended December 31, 2002. The information has been
prepared as if the combination had taken place January 1, 2002.

About Gerdau AmeriSteel

Through a combined network of 11 mills with annual manufacturing capacity in
excess of 6.8 million tons of finished steel products, Gerdau AmeriSteel
services long product and flat rolled customers throughout the eastern half of
North America. Gerdau AmeriSteel's mini-mills are vertically integrated with 13
scrap recycling facilities, and 27 downstream businesses that produce specialty
steel products and fabricated steel mainly for use in the construction and
industrial markets. As of December 31, 2002, Gerdau AmeriSteel had approximately
185 million common shares outstanding (with an additional 13 million shares
issued to AmeriSteel minority shareholders in March 2003), and the shares are
traded on the Toronto Stock Exchange under the symbol GNA.TO. For additional
financial and investor information, visit www.gerdauameristeel.com

Gerdau AmeriSteel's financial results are presented in accordance with Canadian
GAAP. However, EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) is a non-GAAP measure that management believes is a useful
supplemental measure of cash available prior to debt service, capital
expenditures and income tax. For 2002, it includes non-recurring cash gains and
losses, and excludes non-recurring non-cash items. Investors are cautioned that
EBITDA should not be construed as an alternative to net income determined in
accordance with GAAP as an indicator of the company's performance or to cash
flows from operations as a measure of liquidity and cash flows. The company's
method of calculating EBITDA may differ from the methods used by other companies
and, accordingly, it may not be comparable to similarly titled measures used by
other companies.

The pro forma statements present combined pro forma financial information for
Co-Steel and the North American operations of Gerdau S.A. as if they were
combined at the beginning of the period indicated and at December 31, 2002 as
adjusted for the pro forma effects of the combination and related transactions.
Assumptions have been made in preparing these statements, and the results in
future periods may show that these assumptions were not correct. These
statements do not purport to represent what the actual operating results and
financial position of Gerdau AmeriSteel would have been had the combination of
Co-Steel and Gerdau S.A.'s North American operations actually taken place at the
beginning of the period indicated or on December 31, 2002. In addition, these
statements do not purport to project the company's results of operations for any
future periods or its financial position at any future date.



                                                             Gerdau AmeriSteel 3



                               To our Shareholders

For the third consecutive year, Gerdau AmeriSteel and the North American steel
industry faced extremely competitive market conditions and a challenging
business environment. As the year began, there was a general expectation that
the prospects for a slow economic recovery and government safeguard tariffs on
steel imports would afford long overdue margin relief and market stabilization.
In reality, the March 5, 2002 import tariffs provided only temporary margin
relief for the Company's flat rolled steel products and minimal influence on the
larger long products segment of our business. Improvement in domestic economic
prospects also proved to be elusive as the level of consumer confidence in
spending began to reflect the insecure realities of geopolitical events.

The original stimulus for the steel industry cyclical downturn was the
protracted surge of low priced steel imports from virtually every global region
where economic activity was anemic. The longevity and gravity of the decline was
amplified by the deterioration of the domestic economy and the fragmented nature
of domestic steel producer competition. This business environment has exerted
intense financial pressure on virtually every steel industry competitor.

Over the balance of the year, the deteriorating economic climate in the US and
the resulting decline in steel demand overshadowed the effects of import tariffs
and reductions in low priced steel imports. The continuing existence of surplus
steel capacity and the financial liquidity crisis among steel industry
competitors led to an acceleration of the long-anticipated consolidation phase
of the domestic industry. The strategic mergers and alliances within the major
integrated steel companies and the mini-mill sector were watershed events which
will have significant repercussions for years to come.

This environment gave birth to Gerdau AmeriSteel with the October 23, 2002
merger between Co-Steel and the North American affiliates of Gerdau S.A. The
logic for this strategic alliance was based on creating the critical mass for
competitive survival, the essential financial liquidity and balance sheet
strength, and the depth of talented employees.

In retrospect, the decisions of both boards and the shareholder approvals to
create the critical mass for competitive survival have proven to be correct. The
combination allowed the merged entities to weather a harsh winter and chilling
global political events that created intense inflationary pressures on energy
and scrap raw material costs. Attempts to recover these inflated costs have
encountered weak market demand and stiff customer resistance to price increases.
These conditions would have severely tested either entity had they stood alone.

In this challenging environment, Gerdau AmeriSteel realized 2002 pro forma net
income of $33.1 million and EBITDA cash flow of $175 million. Because of
substantial structural changes resulting from our merger, these financial
benchmarks are not readily comparable to prior periods. They do, however,
provide an initial basis for future comparisons as the merged entities begin to
realize the economic and strategic synergies from this combination. 2002 was
more significant as a defining moment in the eventual turnaround of Gerdau
AmeriSteel's financial outlook and the resurgence of a viable steel industry
segment in North America.



4  Annual Report 2002


CURRENT STATUS OF THE MERGER INTEGRATION

Despite the adverse economic and seasonal climate, the initial six month phase
of the merged entities has generated progressive improvements in the corporate
administrative infrastructure, the commercialization of a universal brand
identity and the operational integration of the manufacturing assets.

Acceptance of the combination by the customer base and the diverse employee
elements has been extremely positive. The signs of a unified corporate image are
becoming more prevalent with extensive knowledge sharing of best practices and
the network exchange of comparative benchmark information. Considerable time and
attention has been directed at effective internal and external communications.
These measures and the establishment of aggressive goals are generating tangible
results in the formulation of a common corporate culture.

The turbulence of recently-announced price changes and customer hedge buying has
created extreme volatility in order processing and inventory management. Despite
the disruptive surges in distribution patterns, we have managed to maintain a
high level of customer service and satisfaction. Successful integration of the
diverse independent order entry systems into a central commercial database also
provides consistent information on the availability of inventories and the
status of company wide customer inquiries and order activity.

Technological enhancements to this centralized commercial systems platform are
progressing, and the breadth of product knowledge within the combined marketing
resources is improving with experience. These marketing infrastructure
capabilities are facilitating the effective cross selling of our full product
offering to the consolidated customer base. The integrated customer base is
beginning to experience and appreciate the advantages of our expanded product
range, extended geographical coverage, logistical efficiencies and operational
flexibility of our combined resources.

From an operational perspective, we have reinforced the caliber of leadership
talent at all of the steel facilities and identified the technical skills and
training required to continuously improve the overall productivity of each mill
and downstream operation. Despite a short term environment of cost austerity, we
are focusing the necessary training and asset investment resources to insure the
long term competitive posture of our steel assets.

As we identify customer demand patterns and logistical distribution
efficiencies, we will continue to customize and optimize the product rolling
schedules for each manufacturing facility. Substantial savings in freight and
redundant inventories are anticipated as we proceed to fine tune the rolling
schedules of the diverse manufacturing operations. Product supply channels for
the scrap recycling operations and the internal downstream fabrication
facilities have also been revised for optimization of logistical savings.

OUTLOOK

The transparency of steel demand and market pricing continues to be clouded by
the uncertainties of the 201 safeguard tariffs, fluctuations in global economic
activity, continuing consolidation of the domestic competitive picture and
instability in energy and scrap raw material costs.

The adverse rulings of the World Trade Organization and the statutory progress
review of the 201 tariffs pose a serious threat to the retention of this import
deterrent. The domestic industry must submit a mid term progress report on its
restructuring activities. In September, the administration will determine if
termination, modification or continuance of the tariffs is appropriate.

The global supply and demand balance for steel has been favorably enhanced by
the economic boom and construction activity in China. If this Asian demand
outlet for steel weakens, there could be an immediate resurgence of foreign
steel into the North American market. The exchange valuation and further
weakening of the US dollar will also influence the international flow of global
excess steel production into the domestic market.

The consolidation and rationalization of the domestic steel industry will
perhaps exert the greatest impact on financial prospects for the foreseeable
future. As global events and steel trade patterns exert instability in the
domestic market, decreased industry fragmentation will limit the magnitude of
these disturbances. Over the next few months, the financial performance of the
domestic steel industry will be significantly dependent on pricing discipline
and support for the recent price increase announcements. General adherence to
these higher list prices will be challenged by the weak outlook for economic
growth and questionable levels of steel demand.

On a more positive note, there is general optimism for relief from inflated
energy and scrap raw material costs. Moderation in the winter weather demands
plus improved energy availability from political stabilization in Venezuela and
Iraq should lower overall energy cost levels. The recovery in supply of scrap
substitutes from Venezuela and increased seasonal collection flows of scrap
should also reverse the recent inflationary trends in scrap costs.



                                                             Gerdau AmeriSteel 5



Internally, the past six months have reaffirmed the expectations, rationale and
economic prospects for Gerdau AmeriSteel. We have secured a very competitive
position in the bar, rod, flat-rolled and downstream steel markets that we
serve. Considerable challenges and market uncertainties still lie ahead but the
execution risks and prospects for improvement in financial results are within
Management's control. We believe we are well positioned to capture attractive
shareholder returns as the economy and the steel markets improve.

One of the first things that we did shortly after the merger was to bring
together the Management group of Gerdau AmeriSteel to define the new
organization's Vision, Mission and Values that we have prominently displayed in
this annual report. The Vision, Mission and Values are designed to meet the
diverse expectations of our employees, shareholders, customers, suppliers and
communities.

Sincerely,

/s/  Jorge Gerdau Johannpeter         /s/ Phillip E. Casey

Jorge Gerdau Johannpeter              Phillip E. Casey
Chairman of the Board                 President and CEO


April 7, 2003



6  Annual Report 2002




                           Vision, Mission and Values

VISION

To be recognized as the most successful company in the steel industry.

MISSION

To create value for our customers, employees, shareholders and communities
through the engagement of people and excellence of operations.

VALUES

- -  Safety
- -  Integrity
- -  Customer Driven Culture
- -  Investment in People, Processes, and Technology
- -  Engaged Employees
- -  Open Communication
- -  Community and Environmental Awareness
- -  Profitability



                                                             Gerdau AmeriSteel 7



                              Pro Forma Financials

On October 23, 2002, Gerdau S.A. (NYSE: GGB) merged its North American
operations (Gerdau Canada and AmeriSteel Corporation, or "Gerdau North America")
with Co-Steel Inc. to form Gerdau AmeriSteel Corporation. Actual Canadian GAAP
results were net income of $11.1 million on net sales of $1,036.1 million for
the year ended December 31, 2002, or $.07 per share basic and fully diluted.
These actual results reflect full year operations for Gerdau North America, the
predecessor company for accounting purposes, with the former Co-Steel results
added for the period October 23 through December 31, the period since the
combination.

Gerdau AmeriSteel believes that the pro forma results, which reflect a full year
of Co-Steel operations, adjusted for the impact of purchase price allocations
and resulting acquisition accounting entries, are a more informative disclosure
on the combined operations.

Gerdau AmeriSteel's pro forma net income was $33.1 million, or $.15 per share
for the year ended December 31, 2002. Pro forma EBITDA was $175.4 million for
the year. Included in pro forma net income and EBITDA are non-recurring pretax
cash gains of $9.1 million for the full year period. All figures are in US
dollars and Canadian GAAP.

The tables below summarize the combined pro forma results of Gerdau AmeriSteel,
for the year ended December 31, 2002. The information has been prepared as if
the combination had taken place at the beginning of the period.

The following table reconciles actual net income to pro forma net income, and
pro forma net income to pro forma EBITDA for the year:



                                                          Year ended December 31, 2002
US$(000s)
                                                       
Net Income, actual                                                 $ 11,132
Adjust Co-Steel for pre-acquisition period to
October 23, 2002 *                                                    5,699
Adjust to reflect income impact of Co-Steel
purchase price allocations                                            3,731
Adjust interest for debt converted to equity                         10,862
                                                                   --------
Adjust for minority interest                                          1,707
Net Income, pro forma                                                33,131
Interest and foreign exchange                                        38,833
Income taxes                                                          7,170
Depreciation and amortization                                        90,494

Non-cash write-down of investment                                     5,780
                                                                   --------
EBITDA, pro forma                                                  $175,408
                                                                   --------


* Includes pre-acquisition tax refund of $1.9 million received in the fourth
quarter but accounted for as a pre-acquisition receivable.



8  Annual Report 2002


                       Gerdau AmeriSteel and Subsidiaries

Consolidated Statements of Financial Position
(US$ in thousands)



                                                    December 31, 2002
                                                 
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                             $    16,361
  Accounts receivable, net                                  172,745
  Inventories                                               351,400
  Deferred tax assets and recoverable                        11,417
  taxes
  Other current assets                                        2,997
                                                        -----------
TOTAL CURRENT ASSETS                                        554,920
PROPERTY, PLANT AND EQUIPMENT
  Fixed assets at cost                                    1,118,308
  Less accumulated depreciation                            (219,360)
                                                        -----------
NET PROPERTY, PLANT AND EQUIPMENT                           898,948
GOODWILL                                                    114,374
OTHER ASSETS                                                  3,159
                                                        -----------
TOTAL ASSETS                                            $ 1,571,401
                                                        -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Trade accounts payable & accruals                     $   214,266
  Other current liabilities                                  30,072
  Bank indebtedness                                          23,379
  Current maturities of long-term borrowings                 83,942
                                                        -----------

TOTAL CURRENT LIABILITIES                                   351,659
LONG-TERM BORROWINGS, LESS CURRENT PORTION                  411,833
OTHER LIABILITIES                                            99,341
DEFERRED TAX LIABILITIES                                     82,158
MINORITY INTEREST                                            33,312
SHAREHOLDERS' EQUITY
  Invested capital                                          513,400
  Convertible debentures                                     79,134
  Retained earnings                                           1,329
  Cumulative foreign currency                                  (765)
                                                        -----------
                                                            593,098
                                                        -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $ 1,571,401
                                                        -----------



Gerdau AmeriSteel's financial results are presented in accordance with Canadian
GAAP. However, EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) is a non-GAAP measure that management believes is a useful
supplemental measure of cash available prior to debt service, capital
expenditures and income tax. For 2002, it includes non-recurring cash gains and
losses, and excludes non-recurring non-cash items. Investors are cautioned that
EBITDA should not be construed as an alternative to net income determined in
accordance with GAAP as an indicator of the company's performance or to cash
flows from operations as a measure of liquidity and cash flows. The company's
method of calculating EBITDA may differ from the methods used by other companies
and, accordingly, it may not be comparable to similarly titled measures used by
other companies.

The pro forma statements present combined pro forma financial information for
Co-Steel and the North American operations of Gerdau S.A. as if they were
combined at the beginning of the periods indicated and at December 31, 2002 as
adjusted for the pro forma effects of the combination and related transactions.
Assumptions have been made in preparing these statements, and the results in
future periods may show that these assumptions were not correct. These
statements do not purport to represent what the actual operating results and
financial position of Gerdau AmeriSteel would have been had the combination of
Co-Steel and Gerdau S.A.'s North American operations actually taken place at the
beginning of the periods indicated or on December 31, 2002. In addition, these
statements do not purport to project the company's results of operations for any
future periods or its financial position at any future date.


Consolidated Statements of Income
(US$ in thousands)



                                                  Pro forma
                               Year ended December 31, 2002
                                             
 NET SALES                                      $ 1,676,176
 Operating Expenses:
  Cost of sales                                   1,429,094
  Selling and administrative                         80,741
  Depreciation                                       89,322
  Other operating income                             (9,067)
                                                  1,590,090
                                                -----------
 INCOME FROM OPERATIONS                              86,086
 OTHER EXPENSES
  Interest                                           39,039
  Amortization of deferred financing costs            1,172
  Foreign exchange gains                               (206)
  Write-down portfolio investment                     5,780
 INCOME BEFORE INCOME TAXES                          40,301
 INCOME TAX (BENEFIT) EXPENSE                         7,170
                                                -----------
 NET INCOME (LOSS)                              $    33,131
                                                -----------





                                                                        Pro forma
                                                     Year ended December 31, 2002
                                                         Tons                  %
                                                      ---------             -----
                                                                      
Total Finished Steel Shipments                        5,152,530
                                                      ---------
  Rebar                                               1,275,267              24.8%
  Merchant/Structural/Specials                        1,859,020              36.1%
  Rod                                                   652,869              12.7%
  Flat Rolled                                           709,835              13.8%
  Fabricated Steel                                      655,539              12.7%
Weighted Average Selling Price  US$/Ton
  Mill External Shipments                                                   $ 283
  Fabricated Steel Shipments                                                $ 433
Scrap charged - US$/Ton                                                     $  89
Metals Spread -  US$/Ton (Mills External)                                   $ 193
Production - Melt Shop                                5,469,532 tons
Production - Rolling  Mill                            5,147,867 tons





                                 US$ million        US$/Ton
                                 -----------        -------
                                              
 EBITDA
   Operating                          $175.4           $34
 Income
   Interest                           $ 86.1           $17
 Expense
   Capital                            $ 39.0           $ 8
 Expenditures
   Total                              $ 44.7
 Shares Outstanding              198,092,154




                                                            Gerdau AmeriSteel  9

                     Management's Discussion and Analysis of
                 Financial Condition and Results of Operations

This report contains certain forward-looking statements that are based on the
beliefs of our management, as well as assumptions made by, and information
currently available to our management. Such statements include, among others,
(i) the benefits anticipated to be realized from the merger with Co-Steel, Inc.
(ii) the highly cyclical nature and seasonality of the steel industry, (iii) the
fluctuations in the cost and availability of raw materials, (iv) the possibility
of excess production capacity, (v) the potential costs of environmental
compliance, (vi) the risks associated with potential and recent acquisitions,
(vii) further industry consolidation, (viii) the impact of inflation, (ix)
global economic factors and trade imbalances, and (x) the fluctuations in the
cost of electricity. Because such statements involve risks and uncertainties,
actual actions and strategies and the timing and expected results thereof may
differ materially from those expressed or implied by such forward-looking
statements, and our future results, performance or achievements could differ
materially from those expressed in, or implied by, any such forward-looking
statements. The following presentation of management's discussion and analysis
of our financial condition and results of operations should be read in
conjunction with our Consolidated Financial Statements and the Notes thereto.
All dollar amounts are reported in United States dollars unless otherwise
indicated.

ACQUISITION OF CO-STEEL, INC.

On October 23, 2002, Gerdau S.A., the ultimate parent company of Gerdau S.A.'s
operations in Canada and the United States (the "Gerdau North America Group")
completed a business combination with Co-Steel, Inc. ("Co-Steel") that resulted
in Co-Steel acquiring all of the issued and outstanding shares of the companies
included in the Gerdau North America Group, in exchange for Co-Steel common
shares representing approximately 74% of the combined entity's total common
shares. A portion of these shares were issued to minority shareholders of
AmeriSteel Corporation ("AmeriSteel"). In connection with the merger, Co-Steel's
name was changed to Gerdau AmeriSteel Corporation (the "Company" or "Gerdau
AmeriSteel"). Certain related party loans payable of the Gerdau North America
Group were converted into equity prior to the merger. The transaction was
accounted for using the reverse-take-over method of purchase accounting. Gerdau
North America Group is deemed to be the acquirer and is assumed to be purchasing
the assets and liabilities of Co-Steel, since the original shareholder of the
Gerdau North America Group, became the owner of more than 50 percent of the
voting shares of Co-Steel on a fully-diluted basis following the transaction. As
a result, the Gerdau North America Group's historical accounts became the
historical accounts of Gerdau AmeriSteel for all periods prior to the date of
merger. Consolidated financial statements include the accounts of the Company
and its subsidiaries. For the year ended December 31, 2002, they include full
year results for the Gerdau North America Group's operations, and results for
the period from October 23, 2002, through December 31, 2002, the period
subsequent to the acquisition, for the former Co-Steel operations.

IMPACT OF ACQUISITION BY GERDAU

As a result of the combination of Co-Steel with the Gerdau North America Group,
the combined company will realize several benefits. Economies of scale will
result from improved production scheduling at the mills. Geographic and product
diversification will result in Gerdau AmeriSteel being able to market a fully
competitive range of products to its North American customers. Downstream
operations will benefit from improved supply capabilities as well as being
captive markets for some of the Company's mill products. Cost savings are
expected primarily from savings in freight, improved production scheduling at
the mills, and scrap rationalization. Gerdau AmeriSteel will have an improved
leverage position compared to Co-Steel, greater earnings stability through
diversification, and strong sponsorship from its principal shareholder, Gerdau
S.A. This sponsorship will be reflected in greater sharing of knowledge in
engineering, operations and administration through best practices procedures.

10 Annual Report 2002





Although the combination has been completed, Gerdau AmeriSteel is currently
operating in the short term under the pre-existing debt arrangements and
associated covenants of the individual companies until the Company's
consolidated debt can be restructured and refinanced. The Company is currently
in compliance with the covenants, or has received waivers for non-compliance,
under its debt agreements and management believes its business fundamentals have
been enhanced as a result of the combination. In January and February 2003,
Gerdau S.A. made loans totaling $30 million to subsidiaries of Gerdau AmeriSteel
to increase liquidity within the group. These loans will be used for working
capital purposes and bear interest at the rate of 6.5%. The loans do not have a
stated maturity, but it is the intent of the Company to repay these loans as
soon as practicable. In order to improve the long-term financial flexibility of
Gerdau AmeriSteel, extend duration, ease administrative complexities and better
utilize its collateral the Company has embarked on a refinancing program which
is expected to be completed in the second quarter of 2003.

SELECTED COMBINED FINANCIAL DATA

The following table presents selected historical financial information for
Gerdau AmeriSteel as of and for each of the fiscal years in the four-year period
ended December 31, 2002. This information represents the historical financial
data of Gerdau AmeriSteel Corporation as successor to Co-Steel after the
combination with Co-Steel. Financial results prior to October 23, 2002 reflect
only the results of the Gerdau North America Group and do not include the
results of the former Co-Steel operations. The information has been prepared in
accordance with Canadian generally accepted accounting principles and, for the
years ended December 31, 2002 and 2001, has been derived from Gerdau
AmeriSteel's audited combined financial statements included in this document. We
encourage you to read this financial information in conjunction with the
combined financial statements, and related notes.





                                    December 31,        December 31,         December 31,        December 31,
                                       2002                2001                 2000                1999
                                                         ($(000s) except per share data)
                                                                                     
Sales                              $  1,036,055        $     840,836         $    922,725        $    401,429
Income from Operations                   53,180               43,325               59,142              58,549
Net Income (Loss)                        11,132               (6,066)               3,943              21,928
Net Income (Loss) per Share        $       0.08        $       (0.05)        $       0.03        $       0.16
Total Assets                          1,571,401            1,061,939            1,072,089             999,203
Shareholder's Equity                    593,098               49,798               56,976              69,477
Number of Common Shares
Outstanding                         184,892,360          133,388,400          133,388,400         133,388,400


RESULTS OF OPERATIONS

The results of operations are those of Gerdau AmeriSteel, Co-Steel's successor.
Gerdau AmeriSteel is comprised of operations in the Gerdau North America Group
whose main operations in Canada and the United States include Gerdau Ameristeel
Cambridge Inc., Gerdau AmeriSteel MRM Special Sections Inc., and AmeriSteel.
Since October 23, 2002, Gerdau AmeriSteel also includes the Co-Steel operations.
On December 31, 2002, AmeriSteel was an 87% owned subsidiary. The results of
operations of Gerdau AmeriSteel are largely dependent on the level of
construction and general economic activity in the North American market. Gerdau
AmeriSteel's sales are seasonal, with sales in the June and September quarters
generally being stronger than the rest of the year. Gerdau AmeriSteel's cost of
sales includes the cost of its primary raw material, steel scrap, the cost of
converting the scrap to finished steel products, and the cost of warehousing and
handling finished steel products.


                                                            Gerdau AmeriSteel 11





YEAR ENDED DECEMBER 31, 2002 VERSUS DECEMBER 31, 2001

The following table sets forth information regarding results of operations of
Gerdau AmeriSteel:



                                                  Year Ended                      Year Ended
                                             ---------------------         -----------------------
                                               December 31, 2002              December 31, 2001

                                                   (In thousands, except percentages)
                                                                                 
Sales                                        $ 1,036,055     100.0%        $  840,836        100.0%
Cost of sales                                    867,091     83.70%           680,084         80.9%
Selling and administrative                        62,173       6.0%            56,431          6.7%
Depreciation                                      58,683       5.7%            54,877          6.5%
Amortization of goodwill                               -        --              6,582           .8%
Other operating (income) expenses                 (5,072)      (.5)%             (463)         (.1)%


Income from operations                            53,180       5.1%            43,325          5.2%
Interest expense                                  38,598       3.7%            48,852          5.8%
Loss on interest derivatives                           -         -                707           .1%
Amortization of def'd finance costs                1,172        .1%             1,180           .1%
Foreign Exchange Loss                                230        .1%               249           .1%
Income (loss) before income tax                   13,180       1.3%            (7,663)         (.9)%

Income tax expenses (benefit)                        341        .1%            (2,581)         (.3)%

Income (loss) before minority interest            12,839       1.2%            (5,082)         (.6)%

Minority interest                                 (1,707)      (.2)%             (984)         (.1)%

Net income (loss)                               $ 11,132       1.1%         $  (6,066)         (.7)%






                                                TONS SHIPPED                           AVERAGE NET SELLING PRICES
                                   ---------------------------------------     ----------------------------------------
                                      Year Ended             Year Ended           Year Ended              Year Ended
                                   December 31, 2002     December 31, 2001     December 31, 2002      December 31, 2002
                                               (Thousands)                                     (Per Ton)

MILL FINISHED GOODS
                                                                                          
 Stock Rebar                            839                     784                   $249                $250
 Merchant Bar/Special Sections        1,424                   1,061                    304                 310
 Rods                                   166                      62                    284                 275
 Flat Rolled                            120                      --                    322                  --
                                      2,548                   1,906                    285                 284

 Fabricated Steel                       566                     588                    440                 430
 Billets                                 75                      22                    194                 188
 Total                                3,190                   2,516


Sales:

Sales in the year ended December 31, 2002 were $1,036.1 million compared to
$840.8 million in the year ended December 31, 2001, an increase of $195.2
million. The acquisition of the Cartersville mill in December 2001 resulted in
additional sales of $84.1 million during the year ended December 31, 2002
compared to the year ended December 31, 2001. The merger with Co-Steel in
October 2002 resulted in additional sales of $122.4 million compared to the year
ended December 31, 2001. Excluding Cartersville and the former Co-Steel
operations, sales declined by $11.2 million, and finished tons shipped remained
relatively flat in the year ended December 31, 2002 compared to the year ended
December 31, 2001. Pricing of mill finished products in the fourth quarter
remained at roughly the same levels as the immediately preceding quarter, and
are up about 5% from the same period last year. Average merchant bar prices were
up almost 10% in the fourth quarter compared to the same prior year period while
rebar prices remained relatively flat. For the year, average mill finished goods
selling prices were $285 per ton, up by less than 2% from last year's average.
Fabricating sales were down approximately 5% in the fourth quarter from the same
period last year and ended the year down approximately 3%.


12 Annual Report 2002






COST OF SALES:

Cost of sales for the year ended December 31, 2002 was $867.1 million compared
to $680.1 million for the year ended December 31, 2001, an increase of $287
million. Compared to last year, the addition of the Cartersville mill in
December 2001 resulted in increased cost of sales of $78.9 million, while the
October 2002 merger with Co-Steel resulted in $110.5 million additional cost of
sales. Yielded scrap costs, which comprise approximately 35% to 40% of Gerdau
AmeriSteel's cost of sales, increased by approximately $8 per ton in the year
ended December 31, 2002 compared to the year ended December 31, 2001, with a
fourth quarter surge in scrap costs that resulted in an average $15 per ton
increase in the fourth quarter compared to last year. Costs have increased as a
result of higher demand for scrap in both export and other U.S. steel markets as
the Section 201 tariff relief has resulted in increased production at U.S.
mills, primarily in the flat rolled market.

SELLING AND ADMINISTRATIVE:


Selling and administrative expenses for the year ended December 31, 2002 were
$62.1 million compared to $56.4 million for the year ended December 31, 2001, an
increase of $5.7 million, due primarily to the addition of the Cartersville mill
($0.6 million) and Co-Steel ($3.8 million.) Higher professional fees relating to
consulting engagements for strategic development initiatives, improved
performance incentive pay, severance pay and the incremental costs associated
with the acquisition of AmeriSteel Bright Bar, Inc. ("ABB") account for the rest
of the increase.

DEPRECIATION:

Depreciation for the year ended December 31, 2002 was $58.7 million compared to
$54.9 million for the year ended December 31, 2001, an increase of $3.8 million
due primarily to the addition of Co-Steel operations ($7.0 million) and
Cartersville ($0.9 million) which was partially offset resulting by a change in
estimated useful lives of Gerdau Canada's property, plant and equipment.

GOODWILL AMORTIZATION:

Due to changes in accounting standards, goodwill is not subject to amortization
after fiscal 2001, therefore there was no goodwill amortization expense for the
year ended December 31, 2002 compared to $6.6 million for the year ended
December 31, 2001.

OTHER OPERATING INCOME:

Other operating income for the year ended December 31, 2002 relates to a $6.1
million insurance settlement in the fourth quarter of 2002 partially offset by
$1.0 million in costs associated with the closing of the Wilmington and St.
Albans fabricating plants. Other operating income for the year ended December
31, 2001 consists of a non-recurring net gain of $2.8 million from cash
settlements from graphite electrode suppliers and a prior year tax refund of
$0.7 million. These are partially offset by a charge of $2.6 million relating to
a loss on investment and a $0.4 million charge relating to insurance claims
deductibles.

INTEREST EXPENSE:

Interest expense was $38.6 million for the year ended December 31, 2002 compared
to $48.9 million for the year ended December 31, 2001, a decrease of $10.3
million, due primarily to the conversion of $325.8 million of related party debt
to equity in connection with the acquisition of Co-Steel. Related party interest
expense, net of interest income, was $14.0 million for the year ended December
31, 2002 compared to $25.0 million for the year ended December 31, 2001, a
decrease of $11 million, due primarily to the conversion of debt to equity. The
debt relating to the Co-Steel operations added $4.0 million interest expense
during the period October 23 through December 31, 2002. Lower interest rates on
the Company's LIBOR denominated debt and normal day-to-day fluctuations in
borrowings accounted for approximately $3.3 million of savings compared to the
prior year.

SEGMENTS:

Gerdau AmeriSteel has two primary business unit segments: (a) mills and (b)
downstream. Mill operation profits for the year ended December 31, 2002 were
$50.0 million compared to $42.9 million for the year ended December 31, 2001, an
increase of $7.1 million. The acquisition of the Cartersville mill in December
2001 resulted in increased volumes of approximately 283,000 tons of finished
steel in 2002 and essentially broke even at an operating income level. The
former Co-Steel mills included from October 23, 2002, resulted in increased
volumes of 370,000 tons of finished steel and also essentially broke even at an
operating level for the 2.25 month period from October 23 through December 31,
2002. AmeriSteel's mill operations improved from $19.7 million in the year ended
December 31, 2001 to $20.6 million in the year ended December 31, 2002, largely
due to improved pricing in its merchant bar products. Profits from Gerdau
Canada's mill segment increased from $23.2 million for the year ended December
31, 2001 to $28.9 million for the year ended December 31, 2002. Improved
merchant bar prices, and to a lesser extent rebar prices, combined to add
approximately $2.2 million to mill segment profits, and a change in estimated
useful lives of property plant and equipment in one of the Canadian mills
resulted in a $3.2 million reduction of depreciation expense.



                                                            Gerdau AmeriSteel 13





The downstream segment is made up principally of rebar fabrication, merchant bar
value added businesses, and wire mesh and collated nails. Profits from the
downstream segment were $8.8 million for the year ended December 31, 2002
compared to $13.0 million for the year ended December 31, 2001, a decrease of
$4.2 million. The closure of two redundant rebar fabricating plants in the U.S.
resulted in a charge of $1.0 million in 2002. Rebar fabricating profits also
declined as a result of lower prices and higher material costs in the year ended
December 31, 2002. Because the fabricating division's backlog is approximately
nine months of shipments, rebar price increases are not immediately passed along
to customers. The combination of lower shipments and higher rebar costs resulted
in $5.6 million lower profits in the year ended December 31, 2002 compared to
the prior year. Partially offsetting rebar fabricating declines were improved
results in the other downstream operations which include rail spike operations,
a wire mesh and collated nail plant, and cold drawn merchant bar plants. These
business units added approximately $2.7 million to downstream segment profits in
2002 compared with 2001, through a combination of higher prices and volumes. See
"NOTE 18 TO GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2002 - SEGMENT INFORMATION"
FOR A RECONCILIATION OF SEGMENT SALES AND PROFITS TO CONSOLIDATED RESULTS.

LIQUIDITY AND CAPITAL RESOURCES

Please refer to "NOTE 7 TO GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2002 -
LONG-TERM DEBT" for a more detailed discussion of the Company's debt structure
and obligations. Gerdau AmeriSteel's liquidity is primarily dependent upon three
separate credit arrangements, one in the U.S. and two in Canada.

A)       US CREDIT FACILITY

         The main U.S. subsidiary, AmeriSteel, had as its primary financial
         obligation outstanding on December 31, 2002 a Revolving Credit
         Agreement. It is collateralized by first priority security interests in
         substantially all accounts receivable and inventory of AmeriSteel as
         well as a lien on AmeriSteel's Charlotte Mill property, plant and
         equipment. The $285 million Revolving Credit Agreement includes a $100
         million term loan that amortizes at the rate of 25% per year beginning
         in December 2001. The loan matures in September 2005. The Revolving
         Credit Agreement contains certain covenants including the requirement
         to maintain financial ratios and limitations on indebtedness, liens,
         investments and disposition of assets and dividends. AmeriSteel was in
         compliance with the provisions of the Revolving Credit Agreement
         through December 31, 2002. Loans under the Revolving Credit Agreement
         bear interest at a per annum rate equal to one of several rate options
         (LIBOR, Fed Funds, or prime rate) based on the facility chosen at the
         time of borrowing plus an applicable margin determined by tests of
         performance from time to time. The effective interest rate on the
         Revolving Credit Agreement at December 31, 2002 was approximately 4.0%.

         As of December 31, 2002, the Revolving Credit Agreement, including the
         term loan component, had approximately $170.0 million outstanding of
         which $44.8 million was allocated to letters of credit (most of which
         are being provided as credit backing for AmeriSteel's outstanding
         Industrial Revenue Bonds and insurance obligations). These Industrial
         Revenue Bonds were issued to construct facilities in Jackson,
         Tennessee; Charlotte, North Carolina; Jacksonville, Florida; and Plant
         City, Florida. The latest bond is associated with the Cartersville cold
         drawn facility, acquired from Republic Technologies in June 2002 in the
         amount of $3.6 million. The interest rates on these bonds range from
         50% to 75% of the prime rate. The Industrial Revenue Bonds mature in
         2003, 2014, 2017 and 2018.

         As of March 31, 2003 availability under the Revolving Credit Agreement
         is approximately $37.1 million. In April 2003, AmeriSteel received a
         waiver from its lenders as it expected to exceed its leverage ratio
         covenant of 3.75 to one due to weak operating margins in the first
         quarter. The Company believes AmeriSteel will be able to comply with
         the covenants under the Revolving Credit Agreement during the remainder
         of 2003.

B)       CANADA CREDIT FACILITY

         Gerdau Canada's primary financial obligation outstanding as of December
         31, 2002 was a credit facility. The revolving component of this
         facility has an amount authorized of Cdn$73 million with Cdn$43.2
         borrowed at December 31, 2002. The revolving facility is secured with a
         pledge of accounts receivable and inventory by Gerdau AmeriSteel MRM
         Special Sections Inc. and Gerdau AmeriSteel Cambridge Inc. Loans
         borrowed under the revolving facility carry interest at floating market
         rates approximating the bank's prime rate plus 1.75%, or Bankers'
         Acceptance plus 2.75%. The term component of the facility is Cdn$97.5
         million at December 31, 2002 and is fully drawn. Loans borrowed under
         the term facility carry interest at floating market rates approximating
         the bank's prime rate plus 1.75%, or Banker's Acceptance


14 Annual Report 2002





         plus 2.75%. Collateral for the credit facility includes: (i) Cdn$350
         million demand debentures given by each of Gerdau Steel Inc., Gerdau
         MRM Holdings Inc., Gerdau Ameristeel MRM Special Sections Inc. and
         Gerdau AmeriSteel Cambridge Inc., each granting a first priority fixed
         charge on real estate, machinery and equipment, a first priority
         floating charge on all other assets and a first priority fixed charge
         on inventory and accounts receivable to a maximum of Cdn$20 million,
         (ii) pledges and guarantees of various subsidiaries of Gerdau
         Ameristeel, and (iii) a guarantee by Gerdau S.A. In addition, an "all
         risks" insurance policy for full insurable value on a replacement cost
         basis has been pledged to the lenders. This credit facility contains
         certain covenants, including the requirement to maintain financial
         ratios and limitations on indebtedness, investments and disposition of
         assets and dividends. Loans of this facility become due January 15,
         2004. The Company was not in compliance with certain covenants under
         this facility at December 31, 2002 and anticipates it may not be in
         compliance in fiscal 2003. The Company has received waivers for
         non-compliance with certain covenants from its lenders as of December
         31, 2002 and for the remainder of fiscal 2003.

         The term component of this facility is fully drawn as of March 31, 2003
         with approximately Cdn$10 million currently available under the
         revolver.

C)       CO-STEEL CREDIT FACILITY

         In addition to the U.S. and Canadian credit facilities, as a result of
         the merger with Co-Steel, Gerdau AmeriSteel is subject to additional
         credit facilities with lenders to the former Co-Steel. As of December
         31, 2002, the Co-Steel credit facilities included a revolving credit
         agreement with $90 million outstanding and notes payable totaling $97
         million. The revolving facilities bear interest at the banker's
         acceptance rate or LIBOR plus 2% to 5% depending on debt to EBITDA
         ratios. The term loans bear interest at a fixed rate of 8.9% to 10.9%
         depending on debt to EBITDA ratios. The revolving facilities expire on
         January 15, 2004 and the term facilities reduce by $59 million on
         January 15, 2004, and by $12.5 million on July 15th in each of the
         years 2004 to 2006. The facilities are secured by a first charge
         against substantially all assets of the former Co-Steel entities. As of
         March 31, 2003 availability under the Co-Steel facilities is
         approximately $6.0 million and $204 million is outstanding. The
         Company's unsecured, subordinated convertible debentures in the
         principal amount of Cdn$125 million bear interest at 6.5% per annum,
         mature on April 30, 2007, and, at the holders' option, are convertible
         into Common Shares of the Company at a conversion price of Cdn$26.25
         per share. Under the terms of the Trust Indenture for the Convertible
         Debentures, no adjustment to the conversion price is required if the
         Company issues Common Shares in a customary offering. The debentures
         are redeemable after April 30, 2002, at the option of the Company at
         par plus accrued interest. The Company has the right to settle the
         principal amount by the issuance of Common Shares based on their market
         value at the time of redemption.

         As the convertible debentures can be redeemed by the Company by the
         issuance of Common Shares, the debenture obligations are classified as
         shareholders' equity. Interest on the shareholders' equity component,
         net of related income taxes, has been charged to reinvested earnings,
         and was deducted from the net earnings or added to net loss in
         calculating basic earnings per share.

         As a result of operating under three separate and distinct credit
         arrangements, Gerdau AmeriSteel is required to maintain "status quo"
         segregation of operations as if the business combination had not
         taken place in order to satisfy lenders' lien rights. Under the
         status-quo agreement, the Company may not be able to manage treasury
         functions, including cash management, in the most efficient manner,
         and available cash, while adequate under one credit arrangement, may
         not be available to offset a shortfall under one of the other credit
         arrangements.

         Interest payments on the outstanding debt are payable monthly,
         quarterly or semi-annually depending on the individual debt
         agreements. Interest on the Company's convertible debentures is due
         semi-annually. Interest on the revolving credit agreements is due
         monthly or quarterly as required of each borrowing tranche. Total
         cash interest payments are approximately $40 million per year. Except
         for interest payments due in April and October of Cdn$4.1 million
         each, interest payments are made relatively equally throughout the
         year based on the borrowing tranches selected. Gerdau AmeriSteel has
         discretion in selecting borrowing tranches and therefore has the
         ability to manage, in part, when payments are made.

         Each of the three credit facilities has separate financial ratios which
         must be maintained or met. AmeriSteel reports quarterly to its lenders
         the following items: debt to EBITDA ratio, consolidated net worth,
         interest coverage ratio, and capital expenditures. It also must comply
         with other covenant ratios including EBITDA to cash interest expense.
         Gerdau Canada also reports quarterly to its lenders on the following


                                                            Gerdau AmeriSteel 15





         items: current ratio, debt service coverage ratio, interest coverage
         ratio, debt to EBITDA, debt to net worth, and tangible net worth.
         Gerdau AmeriSteel reports monthly to its lenders under the facility
         that was originally with Co-Steel and must comply with the covenants
         including the following: current ratio, debt to EBITDA, free cash flow,
         tangible net worth, and other tests against forecasted results. In the
         first quarter of 2003, Gerdau S.A. made loans totaling $30 million to
         subsidiaries of the Company to increase liquidity within the group.
         These loans will be used for working capital purposes and bear interest
         at the rate of 6.5%. The loans do not have a stated maturity, but it is
         the intent of the Company to repay these loans as soon as practicable.
         In order to improve the long-term financial flexibility of Gerdau
         AmeriSteel, extend duration, ease administrative complexities and
         better utilize its collateral the Company has embarked on a refinancing
         program which is expected to be completed in the second quarter of
         2003. The Company is optimistic that it will complete the refinancing
         on favorable terms and conditions within the second quarter; however if
         it is unable to do so, the Company would be required to extend and
         negotiate substantive amendments to its existing credit agreements
         and/or obtain additional capital or financing from other sources.

         The Company spent $33.4 million on capital projects for the year ended
         December 31, 2002 and $28.4 million for the year ended December 31,
         2001, an increase of $5.0 million. $2.8 million of these capital
         expenditures were made at Co-Steel operations after October 23, 2002
         and $3.5 million was spent during the year on Cartersville which was
         acquired in December 2001. The Company anticipates spending
         approximately $75 million on capital projects in 2003 of which $16
         million will be spent by the Co-Steel operations. Also for fiscal 2003,
         $29 million of capital expenditures relates to projects committed to in
         2002. These carryover projects include rolling mill electrical control
         system upgrades at the Charlotte mill; an additional warehouse at the
         Cartersville mill; a new baghouse at the Cambridge mill; and a caster
         upgrade at the Jackson mill. New capital expenditure projects for
         fiscal 2003 are approximately $60 million of which $17 million is
         expected to carryover to fiscal 2004. The largest of these projects is
         a warehouse at the Whitby mill ($7 million) with no other single
         project estimated to be more than $2.3 million. Approximately $3.5
         million of the anticipated capital expenditures is related to safety
         projects across several operations, with the remaining projects being
         largely discretionary.

RISK AND UNCERTAINTIES

The following is a discussion of some of the risks and uncertainties that relate
to Gerdau AmeriSteel and its business. In this section, "we", "us", and "our"
refer to Gerdau AmeriSteel and its subsidiaries.

The global steel industry is highly competitive and capital intensive which may
cause our production or sales to decline. We compete with numerous foreign and
domestic producers, including both integrated and minimill producers. Some of
our competitors have greater financial and capital resources than we do, and
some continue to invest heavily to achieve increased production efficiencies and
improved product quality. Competition is based on price, quality, and the
ability to meet customers' product specifications and delivery schedules. In
addition, in the case of certain product applications, steel competes with a
number of other materials such as plastic, aluminum, and composite materials. We
may be adversely affected by excess industry capacity, the potential for
currently idled facilities to be restarted, and excess supply of some products
and a number of potential steel substitutes. The highly competitive nature of
the industry may in the future exert downward pressure on prices for certain of
our products, which could adversely affect our sales.

All of our steel making production facilities are minimills -- production
facilities that produce steel by melting scrap metal in electric arc furnaces.
The competitiveness of minimills relative to integrated mills (production
facilities that produce steel from coke and iron ore) is influenced somewhat by
the cost of scrap, which represents a significant production cost for minimills.
If scrap prices were to increase significantly without a commensurate increase
in finished steel selling prices, the competitive position of minimills compared
to integrated mills could be materially adversely affected. Future increases in
the prices paid for scrap and other inputs could cause our production to
decline.

Despite recent industry developments and trade regulation efforts, we may not
be able to successfully reduce imports of steel or improve steel prices.

Due to unfavorable foreign economic conditions and excess capacity, imports of
steel bar products to the U.S. and Canadian markets are at historically high
levels and often at prices below their production and export costs, with a
corresponding negative impact on domestic prices. Despite favorable anti-dumping
rulings on rebar from several countries early in 2001 by the United States
International Trade Commission, imports of rebar into the U.S. have continued at
very high levels.

Canada and Mexico have been excluded from tariffs imposed by the


16 Annual Report





U.S. Canada and Mexico are now concerned that steel imports initially destined
to the U.S. may now be rerouted to Canada and Mexico. Such rerouting could
result in a substantial surge of imports into Canada and Mexico, causing a
further price depression in these countries. In 2002, the Canadian International
Trade Tribunal (the "CITT") made a finding of serious injury in respect of rebar
and structural shapes and recommended that Canada impose a 15% declining tariff
on rebar and a tariff rate quota on structural shapes. The tariffs imposed by
the U.S. and CITT findings may not reduce imports or result in improved prices.
In addition, the U.S. and Canadian safeguard remedies have limited time
horizons. It therefore is possible that unfairly priced imports could enter into
the North American markets at a future date, resulting in further price
depressions, which would adversely affect our ability to compete and our sales
levels.

The cyclical nature of the steel industry and negative economic conditions in
North America and worldwide may cause fluctuations in our revenue and
profitability. The steel industry is highly cyclical in nature and is affected
significantly by prevailing economic conditions in the major world economies. We
are particularly sensitive to trends in cyclical industries such as the
construction, appliance, machinery and equipment, and transportation industries,
which are significant markets for our products. In addition, certain of our
customers have been adversely affected by the recent North American and
worldwide recession, particularly following the events of September 11, 2001,
which has resulted in and which may in the future result in defaults in the
payment of accounts receivable owing to us. Market conditions for steel products
in the North American market have fluctuated over the years and have been
difficult since the third quarter of 2000. A significant portion of our products
is destined for the construction industry and the steel service industry. Both
of these markets have experienced lower demand in recent periods. Demand for our
finished steel products, notably rebar, light structural shapes, and flat rolled
steel, will be significantly affected by the relative strength of the
construction sector in North America. Events or conditions having an adverse
effect on the steel industry generally or on our markets in particular could
occur or continue. Such events or conditions could include, for example, a
further economic downturn, an increase in steel imports, an increase in
production resulting in over-supply in the markets in which we will operate, an
increase in the strength of the U.S. dollar or Canadian dollar relative to other
currencies, or an increase in North American or international competition, or
other events or conditions that we cannot predict. Any such event or condition
could have a material adverse effect on our financial condition or results of
operations. Our profit margins could be adversely affected by a significant
increase in our raw material and energy costs.

All of our production facilities are minimills -- production facilities that
produce steel by melting scrap metal in electric arc furnaces. Our operating
results are strongly linked to the cost of steel scrap and scrap substitutes,
which are the primary input for our minimill facilities. Steel scrap prices are
relatively higher during the winter months due to the impact of weather on
collection and supply efforts. Realized selling prices for our end products
cannot always be adjusted in the short-term to recover the cost of increases in
steel scrap prices, but generally tend to reflect increases or decreases in
these prices.

Approximately half of all steel products in North America currently are made in
electric arc furnaces that utilize steel scrap. The increasing rate of steel
scrap consumption has placed upward pressure on the price of steel scrap. The
availability of and prices for scrap are subject to market forces and
governmental regulation largely beyond our control, including demand by North
American and international steel producers, freight costs, and speculation. If
scrap prices were to increase significantly without a commensurate increase in
finished steel selling prices, profit margins could be materially adversely
affected. Future increases in the prices paid for scrap and other inputs could
materially adversely affect our operating margins and our results of operations.
We do not have long term contracts for natural gas and oxygen and are therefore
subject to market variables and pricing swings that could materially adversely
affect our operating margins and our results of operations.

Most of our operations have long-term electricity supply contracts with either
major utilities or energy suppliers. These contracts typically have two
components to them: a firm portion and an interruptible portion. The firm
portion supplies a base load for each plant's rolling mill and auxiliary
services. The interruptible portion supplies the electric arc furnace load. The
interruptible portion of the contract represents up to 60% to 70% of the total
load and, for the most part, is based on a spot market price of electricity at
the time it is being used. We therefore have significant exposure to the
variances of the electricity spot market.

We may not be able to pass on increases in the price of steel scrap or other raw
materials and, consequently, any such increases may adversely impact our
profitability.

Although each of our plants can use oil as an alternate fuel when natural gas
has been interrupted, any interruption in the supply of energy, whether
scheduled or unscheduled, could materially adversely affect our costs, sales and
earnings.


                                                            Gerdau AmeriSteel 17





Our pension plans are currently underfunded and continued adverse market
conditions may require us to make cash payments and reduce the cash available
for our business.

The Lasco Hourly-Rated Employees' Pension Plan, a benefit plan maintained by a
division of Gerdau AmeriSteel, had an excess of actuarially computed benefits
over plan assets of approximately Cdn$7.3 million as of January 1, 2002. Funding
of this plan was approximately Cdn$12.2 million in 2002 and is expected to be
approximately Cdn$8.6 million in 2003. We have an unfunded liability in respect
of the Group Supplementary Retirement Plans for Senior Management Employees of
Gerdau AmeriSteel in the estimated amount of Cdn$10.1 million. This amount takes
into consideration the change of control provisions contained in the employment
arrangements of certain of our senior executives. This liability is secured by a
letter of credit. The projected benefit obligations under the Lasco benefit
plans and the Group Supplementary Retirement Plans for Senior Management
Employees of Gerdau AmeriSteel in excess of the fair value of the plans' assets
have been recorded as a liability in connection with the purchase accounting for
the reverse acquisition of Co-Steel by Gerdau S.A.

The defined benefit AmeriSteel Retirement Plan had a deficiency of approximately
$9.7 million as of December 31, 2002. We have an unfunded liability in respect
of the Pension Plan for Union Employees of Mandak Metal Processors in the
estimated amount of Cdn$120 thousand.

We anticipate the above deficiencies to be larger at this time based on the
recent performance of the North American equity markets. Our pension and
retirement plans are in compliance with applicable Canadian and U.S. regulatory,
funding requirements and filings. It is expected that cash funding requirements
in 2003 will be in the range of $10 million to $20 million which is comparable
to the funding requirements in 2002.


The Co-Steel operations recorded a fair valuation acquisition pre-tax adjustment
of $36.8 million. This charge did not result in loan covenant violations.

The primary rate used to measure Gerdau AmeriSteel's post-retirement benefit
obligation is the discount rate. For year-end purposes, and for the above
valuation purposes, Gerdau AmeriSteel used a 6.5% discount factor for Canadian
plans and a 6.75% discount factor for U.S. plans. Each half percentage change in
the discount factor corresponds to an approximate 7%-9% change in the
post-retirement benefit obligations, which was approximately $300 million at
December 31, 2002. A half percentage change in the rate of return on plan assets
corresponds to a change in pension expense of approximately $1.1 million. We may
have to make substantial cash payments to fund our underfunded pension
plans if market conditions do not improve over the next fiscal year, which would
reduce the cash available for our business.

We may not be able to successfully renegotiate collective bargaining agreements
when they expire and our financial results may be adversely affected by labor
disruptions.

We have approximately 4,800 employees, of which approximately 1,300 are
represented by the United Steelworkers of America under four collective
bargaining agreements. These agreements have different expiration dates
beginning February 2004. Certain recycling facilities have approximately 60
employees represented by three different unions under collective agreements that
expire in the first half of 2003 and are currently being renegotiated. We may be
unable to successfully negotiate new collective bargaining agreements for these
employees without any labor disruption. Labor organizing activities could occur
at one or more of our other facilities. Other labor difficulties could arise at
our facilities or at other companies upon which we are dependent for raw
materials, transportation, or other services. Any such activities or
difficulties could result in a significant loss of production and revenue and
have a material adverse effect on our financial condition, or results of
operations.

Compliance with environmental laws is costly and onerous and may reduce our
profitability.

As the Company is involved in the manufacture of steel, it produces and uses
certain substances that may pose environmental hazards. The principal hazardous
waste generated by current and past operations is electric arc furnace ("EAF")
dust, a residual from the production of steel in electric arc furnaces.
Environmental legislation and regulation at the federal, state and provincial
levels over EAF dust is subject to change, which may change the cost of
compliance. While EAF dust is generated in current production processes, such
EAF dust is being collected, handled and disposed of in a manner that management
believes meets all current federal, state and provincial environmental
regulations. The costs of collection and disposal of EAF dust are being expensed
as operating costs when incurred. In addition, the Company has handled and
disposed of EAF dust in other manners in previous years, and is responsible for
the remediation of certain sites where such EAF dust was generated and/or
disposed.

In general, the Company's estimate of remediation costs is based on its review
of each site and the nature of the anticipated remediation activities to be
undertaken. The Company's process for estimating such remediation costs includes
determining for each site the expected remediation methods, and the estimated
cost for


18 Annual Report 2002



each step of the remediation. In such determinations, the Company may employ
outside consultants and providers of such remedial services to assist in making
such determinations. Although the ultimate costs associated with the remediation
are not known precisely, the Company estimated the total remaining costs as of
December 31, 2002 to be approximately $6.3 million, with these costs recorded as
a liability in the Company's financial statements, of which the Company expects
to pay approximately $5.1 million during the year ended December 31, 2003. An
additional liability of $8.6 million was recorded in 2002 with respect of
certain environmental obligations which were triggered by the change in control
of Co-Steel in certain jurisdictions in which Co-Steel operated. This liability
was recorded in the Company's financial statements at the present value of the
estimated future costs of these obligations.

Based on past use of certain technologies and remediation methods by third
parties, evaluation of those technologies and methods by the Company's
consultants and third-party estimates of costs of remediation-related services
provided to the Company of which the Company and its consultants are aware, the
Company and its consultants believe that the Company's cost estimates are
reasonable. Considering the uncertainties inherent in determining the costs
associated with the clean-up of such contamination, including the time periods
over which such costs must be paid, the extent of contribution by parties which
are jointly and severally liable, and the nature and timing of payments to be
made under cost sharing arrangements, there can be no assurance the ultimate
costs of remediation will not differ from the estimated remediation costs.

In April 2001, the Company was notified by the United States Environmental
Protection Agency (the "EPA") of an investigation that identifies the Company as
a potential responsible party ("PRP") in a Superfund Site in Pelham, Georgia.
The Pelham site was a fertilizer manufacturer in operation from 1910 through
1992, lastly operated by Stoller Chemical Company, a now bankrupt corporation.
The EPA offered a settlement to the named PRPs under which the Company's
allocation was approximately $1.8 million. The Company objects to its inclusion
as a PRP in this site and is pursuing legal alternatives, including the addition
to the allocation of larger third parties which the Company believes were
incorrectly excluded from the original settlement offer. The EPA has filed suit
with the Company named as a defendant. As the ultimate exposure to the Company,
if any, is uncertain, no liability has been established for this site.

Carbon monoxide emissions at Gerdau Ameristeel Perth Amboy exceeded permitted
levels on several occasions during 2001 and early 2002. These episodes were
promptly reported to the New Jersey Department of Environmental Protection
(NJDEP). Gerdau Ameristeel is conducting investigations to determine the cause
of these episodes, what steps can be taken to reduce emissions and whether the
Gerdau Ameristeel Perth Amboy environmental permits require modification.
Discussions with the NJDEP regarding permit and compliance issues are in a
preliminary stage. Penalty assessments expected to total approximately $400
thousand, have been accrued.

Inflation may affect our profitability.

Gerdau AmeriSteel's primary costs include ferrous scrap, energy and labor, all
of which can be affected by inflationary conditions. Gerdau Ameristeel has
generally been able to pass on cost increases through price adjustments.
However, the ability to pass on these increases depends on market conditions
which are driven primarily by the level of construction activity. Other factors
that may limit Gerdau AmeriSteel's ability to pass on cost increases in
materials is over-capacity in the North American steel industry and dumping of
foreign produced steel.

We are exposed to fluctuations in interest rates.

The interest rates charged on our debt are predominantly variable, the majority
of which is based on LIBOR (London Interbank Offered Rate). In November 1999,
Gerdau Canada hedged $68 million of its debt (the "notional amount") via
interest rate swaps that in effect resulted in fixed interest rates on the
notional amount. Under two separate swap arrangements, the notional amounts
declined on predetermined dates by predetermined amounts. The first swap ran for
a period of three years and terminated on November 4, 2002. The second swap
terminates September 2004. The notional amount swapped is currently $17 million.
In late 2001, Gerdau USA hedged $55 million of its debt via interest rate swaps
that in effect result in a fixed interest rate on $55 million for a period of
four to five years. As a result, Gerdau USA has reduced its exposure to
fluctuations in interest rates with the result being that approximately 33% of
the US operations' debt is subject to changes in interest expense due to
fluctuations of interest rates in the markets. A 10% change in interest rates
would result in a change in annual interest expense of less than $0.5 million.
The value of our interest rate swaps changes from period to period due to
changes in the swap yield curve relative to the swap yield curve on the date it
was entered into, and adjusted for the shortening duration. Generally the market
value of the swap instrument will decline if interest rates remain lower than
forecasted and will increase in value if interest rates rise faster than
anticipated.


                                                            Gerdau AmeriSteel 19


                             REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND
SHAREHOLDERS OF GERDAU AMERISTEEL CORPORATION:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings(loss), of shareholders' equity, and of cash
flows present fairly, in all material respects, the financial position of Gerdau
Ameristeel Corporation and its subsidiaries (the Company) at December 31, 2002
and 2001, and the results of their operations and their cash flows for the years
then ended, in conformity with accounting principles which, as described in Note
2, are generally accepted in Canada. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of Gerdau Canada Group, a company under common control, as
of December 31, 2001 and for the year then ended, which statements reflect total
assets of $330,463,000 and total revenues of $237,442,000. Those statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Gerdau Canada Group,
is based solely on the report of the other auditors. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the Consolidated Financial Statements, the Company
adopted the provisions of CICA Handbook Section 3062, Goodwill and Other
Intangible Assets, on January 1, 2002.


/s/ PricewaterhouseCoopers LLP

January 24, 2003 except for certain information contained
in Notes 3 and 20, as to which the date is April 4, 2003

Orlando, Florida


20  Annual Report 2002


                       CONSOLIDATED FINANCIAL STATEMENTS
             December 31, 2002 and 2001 (Canadian GAAP/U.S. Dollar)

GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(US$ in thousands)





                                                                   DECEMBER 31,          DECEMBER 31,
                                                                      2002                  2001
                                                                   -----------           -----------
                                                                                   
ASSETS

CURRENT ASSETS
         Cash and cash equivalents                                 $    16,361           $     5,087
         Accounts receivable, net of allowance for
           doubtful accounts of $4,688 (2001 - $2,210)                 172,745                97,327
         Inventories (note 4)                                          351,400               211,420
         Future tax assets (note 10)                                    11,417                 5,320
         Other current assets                                            2,997                 1,096
                                                                   -----------           -----------
TOTAL CURRENT ASSETS                                                   554,920               320,250

PROPERTY, PLANT AND EQUIPMENT (NOTE 5)                                 898,948               530,885
GOODWILL                                                               114,374               114,374
OTHER ASSETS (NOTE 8)                                                    3,159                96,430
                                                                   -----------           -----------
TOTAL ASSETS                                                       $ 1,571,401           $ 1,061,939
                                                                   ===========           ===========
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
         Trade accounts payable                                    $   170,334           $    99,647
         Accrued salaries, wages and employee benefits                  43,932                16,826
         Other current liabilities (note 12)                            20,110                 9,453
         Taxes payable                                                   6,567                    --
         Interest payable                                                3,395                 6,563
         Bank Indebtedness (note 7)                                     23,379                 4,083
         Current portion of long-term borrowings (note 7)               83,942                62,977
                                                                   -----------           -----------
TOTAL CURRENT LIABILITIES                                              351,659               199,549

LONG-TERM BORROWINGS, LESS CURRENT PORTION (NOTE 7)                    411,833               251,346

RELATED PARTY BORROWINGS (NOTE 8)                                           --               405,227

ACCRUED BENEFIT OBLIGATION (NOTE 11)                                    70,166                20,746

OTHER LIABILITIES (NOTE 12)                                             29,175                 5,530

FUTURE TAX LIABILITIES (NOTE 10)                                        82,158                99,109

MINORITY INTEREST                                                       33,312                30,634
                                                                   -----------           -----------

                                                                       978,303             1,012,141
                                                                   -----------           -----------
TOTAL LIABILITIES

SHAREHOLDERS' EQUITY
       Capital stock (note 14)                                         513,400                58,364
       Convertible debentures (note 9)                                  79,134                    --
       Retained earnings (deficit)                                       1,329                (7,622)
       Cumulative translation adjustment                                  (765)                 (944)
                                                                   -----------           -----------
TOTAL SHAREHOLDERS' EQUITY                                             593,098                49,798
                                                                   -----------           -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $ 1,571,401           $ 1,061,939
                                                                   ===========           ===========


See notes to consolidated financial statements.



GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings (Loss)
(US$ in thousands, except earnings per share data)



                                                                                Year Ended           Year Ended
                                                                         -----------------    -----------------
                                                                         December 31, 2002    December 31, 2001
                                                                                        
NET SALES                                                                       $1,036,055             $840,836
OPERATING EXPENSES
   Cost of sales                                                                   867,091              680,084
   Selling and administrative                                                       62,173               56,431
   Depreciation                                                                     58,683               54,877
   Amortization of goodwill                                                             --                6,582
   Other operating income (note 17)                                                 (5,072)                (463)
                                                                                   982,875              797,511
                                                                                ==========             --------

INCOME FROM OPERATIONS                                                              53,180               43,325
OTHER EXPENSES
   Interest, net                                                                    38,598               48,852
   Foreign exchange loss                                                               230                  249
   Loss on marketable securities                                                        --                  707
   Amortization of deferred financing costs                                          1,172                1,180
                                                                                    40,000               50,988
                                                                                ----------             --------

INCOME (LOSS) BEFORE INCOME TAXES                                                   13,180               (7,663)
INCOME TAX EXPENSE (RECOVERY)                                                          341               (2,581)
                                                                                ----------             --------

INCOME (LOSS) BEFORE MINORITY INTEREST                                              12,839               (5,082)
MINORITY INTEREST                                                                   (1,707)                (984)
NET INCOME (LOSS)                                                               $   11,132             $ (6,066)
EARNINGS PER COMMON SHARE- BASIC (note 14)                                      $     0.07             $  (0.05)
EARNINGS PER COMMON SHARE - DILUTED                                             $     0.07             $  (0.05)


                               See notes to consolidated financial statements.


22  Annual Report 2002


Gerdau AmeriSteel Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
(US$ in thousands, except share data)




                                                                                            Cumulative
                                                Invested     Convertible      Retained     Translation        Deferred
                                    Shares       Capital      Debentures      Earnings      Adjustment    Compensation        Total
                                                                                                      
Balance -
December 31, 2000             $133,388,400      $ 58,619         $    --      $(1,556)          $ (11)           $(76)     $ 56,976
 Net income (loss)                                    --              --       (6,066)             --              --        (6,066)
 Subsidiary stock activity                          (255)             --           --              --              --          (255)
 Foreign exchange                                     --              --           --            (933)             --          (933)
 Reduction in deferred
 compensation                                                                                                      76            76
Balance -
December 31, 2001              133,388,400        58,364              --       (7,622)           (944)             --        49,798

 Net income                                           --              --       11,132              --              --        11,132
 Subsidiary stock activity                          (187)             --           --              --              --          (187)
 Foreign exchange                                     --              --           --             179              --           179
 Debt converted to equity                        325,948              --           --              --              --       325,948
 (note 8)
 Acquisition (note 3)           51,503,960       129,275          79,134           --              --              --       208,409

 Dividends paid                                       --              --       (2,181)             --              --        (2,181)
Balance -
December 31, 2002              184,892,360      $513,400         $79,134      $ 1,329           $(765)             --      $593,098


                                 See notes to consolidated financial statements.


                                                           Gerdau AmeriSteel  23


                 GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
            Consolidated Statements of Cash Flows (US$ in thousands)




                                                                              Year Ended            Year Ended
                                                                       -----------------     -----------------
                                                                       December 31, 2002     December 31, 2001
                                                                                       
OPERATING ACTIVITIES
Net income (loss)                                                               $ 11,132             $ (6,066)
Adjustment to reconcile net income to net cash
 provided by operating activities:
   Depreciation                                                                   58,683               54,877
   Amortization                                                                    1,172                7,762
   Deferred income taxes                                                         (10,428)              (2,284)
   Loss (Gain) on disposition of property, plant and equipment                     1,044                  (17)
   Unrealized foreign exchange on related party loans                                436               (6,253)
   Accrued interest on related party loans                                        (2,561)              14,144
   Loss on sale of marketable securities                                              --                3,658
   Deferred compensation                                                              --                   76
Changes in operating assets and liabilities, net of acquisitions:
   Accounts receivable                                                            21,433               12,159
   Inventories                                                                   (17,991)              18,640
   Other assets                                                                   (9,061)                   6
   Liabilities                                                                   (19,791)               5,878
NET CASH PROVIDED BY OPERATING ACTIVITIES                                         34,068              102,580
INVESTING ACTIVITIES
   Additions to property, plant and equipment                                    (33,482)             (28,419)
   Purchase price for acquisitions                                                (6,856)             (51,184)
   Cash acquired in acquisition                                                   18,465                   --
   Proceeds from dispositions                                                        489                  811
NET CASH USED IN INVESTING ACTIVITIES                                            (21,384)             (78,792)
FINANCING ACTIVITIES
   Term debt payments                                                            (29,503)             (58,906)
   Revolving credit borrowings (payments)                                         27,273              (31,279)
   Increase in related party loans payable                                            --               64,638
   Reductions (additions) to deferred financing costs                                705                   (4)
   Foreign exchange (loss) gain                                                     (195)                 142
   Changes in minority interest                                                    2,678                  984
   Subsidiary stock activity                                                        (187)                (232)
   Dividends paid                                                                 (2,181)                  --
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                               (1,410)             (24,657)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  11,274                 (869)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                   5,087                5,956
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $ 16,361             $  5,087
SUPPLEMENTAL CASH FLOW INFORMATION
   Cash paid for interest                                                       $ 57,610             $ 45,882
   Cash paid for income taxes                                                   $  2,289             $    690


                                 See notes to consolidated financial statements.


24  Annual Report

      Notes to the Consolidated Financial Statements (US$ In Thousands)

NOTE 1 - BASIS OF PRESENTATION

The 2001 consolidated financial statements include the results and accounts of
companies controlled by Gerdau AmeriSteel Corporation, a Canadian corporation,
whose ultimate parent is Gerdau S.A., a Brazilian Company. The financial
statements include the accounts of Gerdau Ameristeel Cambridge Inc. and Gerdau
MRM Holdings Inc. and their consolidated subsidiaries Gerdau Ameristeel MRM
Special Sections Inc., Gerdau MRM America Holding Corp., Porter Bros.
Corporation, GUSAP Partners, Mandak Car Crusher Inc., MFT Acquisition Corp.,
3038482 Nova Scotia Company, PASUG Inc., (combined, referred to as Gerdau Canada
Group), and Gerdau USA, Inc. and its consolidated subsidiaries FLS Holdings
Inc., AmeriSteel Corporation and AmeriSteel Bright Bar, Inc. ("GUSA"),
collectively, the "Gerdau North America Group". All significant intercompany
transactions and accounts have been eliminated in consolidation. On October 23,
2002, the ultimate parent company of the Gerdau North America Group entered into
a transaction agreement with Co-Steel Inc. ("Co-Steel"), a Canadian public
company. This transaction agreement resulted in Co-Steel acquiring all of the
issued and outstanding shares of the companies included in the Gerdau North
America Group, in exchange for Co-Steel common shares representing approximately
74% of Co-Steel's total common shares. As part of this transaction, certain
related party loans payable of the Gerdau North America Group were converted
into equity in October 2002. The transaction was accounted for using the
reverse-take-over method of purchase accounting. The Gerdau North America Group
is deemed to be the acquirer and is assumed to be purchasing the assets and
liabilities of Co-Steel, since the original shareholder of the Gerdau North
America Group became owner of more than 50 percent of the voting shares of
Co-Steel on a fully-diluted basis following the transaction. As a result, the
Gerdau North America Group's historical accounts became the historical accounts
of Co-Steel for all periods prior to the date of merger. In connection with the
merger, Co-Steel's name was changed to Gerdau AmeriSteel Corporation (the
"Company" or "Gerdau AmeriSteel"). The Company operates steel mini-mills,
producing primarily steel bars and special sections for commercial and
industrial building construction and original equipment manufacturers. Its
principal market area is the eastern United States and Canada. Principal
suppliers to the Company include scrap metal producers and electric utilities.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements are presented by management in
accordance with accounting principles generally accepted in Canada. All dollar
amounts are reported in United States dollars unless otherwise indicated.

CONSOLIDATION:

These consolidated financial statements include the accounts of the Company and
its subsidiaries. They include full year results for the Gerdau North America
operations, and results for the Co-Steel operations for the period from October
23, 2002 through December 31, 2002, which represents the period subsequent to
the date of acquisition.

JOINT VENTURES AND OTHER INVESTMENTS:

The Company's investments in Gallatin Steel Company, Bradley Steel Processors
and MRM Guide Rail are 50% joint ventures, and are proportionately consolidated.
Other investments where the Company does not exercise significant influence are
accounted for by the cost method. The Company evaluates the carrying value of
the investments to determine if there has been an impairment in value considered
other than temporary, which is assessed by review of cash flows, operating
income and takes into consideration trading values on recognized stock
exchanges. If impairment is considered other than temporary, a provision is
recorded.


                                                           Gerdau AmeriSteel  25



REVENUE RECOGNITION AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:

The Company recognizes revenues from sales and the allowance for estimated costs
associated with returns from these sales when the product is shipped and title
transferred to the buyer. Provisions are made for estimated product returns and
customer claims based on estimates and actual historical experience. If the
historical data used in the estimates does not reflect future returns and claims
trends, additional provisions may be necessary. An allowance for doubtful
accounts is maintained for estimated losses resulting from the inability of
customers to make required payments. If the financial condition of customers was
to deteriorate, resulting in the impairment of their ability to make payments,
additional allowance may be required.

CASH AND CASH EQUIVALENTS:

The Company considers all cash on deposit and term deposits with original
maturities of three months or less, to be cash equivalents. Cash held in the
joint venture operations are for the sole use of the joint ventures.

INVENTORIES:

Billets and finished goods are valued at the lower of cost or market value.
Scrap, consumables and spare parts are valued at the lower of cost (calculated
on an average basis) or replacement value. Consumables include rolls, which are
recorded at cost and amortized based on usage.

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment are recorded at cost. Major renewals and
betterments are capitalized and depreciated over their estimated useful lives.
Maintenance and repairs are charged against operations as incurred. Upon
retirement or other disposition of property, plant and equipment, the cost and
related allowances for depreciation are removed from the accounts and any
resulting gain or loss is recorded in the statement of operations.

Interest incurred in connection with significant capital projects is
capitalized. Interest costs for property, plant and equipment construction
expenditures of approximately $100 thousand was capitalized for the year ended
December 31, 2002 (2001 - $800 thousand). For financial reporting purposes,
the Company provides for depreciation of property, plant and equipment using
the straight-line method over the estimated useful lives of 15 to 30 years for
buildings and improvements and 4 to 15 years for other equipment. During 2002,
the Company changed the depreciable lives of certain buildings and equipment
to reflect their updated estimated economic lives. The effect of this change
in accounting estimate reduced depreciation expense in 2002 by approximately
$3.2 million.

Property, Plant & Equipment Held for Sale is carried at the lower of cost or net
realizable value.

GOODWILL:

Goodwill represents the cost of investments in operating companies in excess of
the fair value of the net identifiable assets acquired. On January 1, 2002, the
Company adopted CICA Handbook Section 3062, Goodwill and Other Intangible
Assets. This section requires that goodwill and intangible assets with
indefinite lives are not amortized, but rather their fair value be assessed at
least annually and written down for any impairment in value. For acquisitions
made subsequent to July 1, 2001, and as of January 1, 2002 for all existing
goodwill and intangible assets with indefinite lives, such assets will no longer
be amortized, but will be evaluated annually for impairment. There was
amortization of goodwill and intangible assets recorded under the prior
accounting standard for 2001. In 2001, goodwill resulting from acquisitions was
amortized over 20 to 25 years, the estimated lives of the related benefit.

Had goodwill not been amortized in 2001, net loss in 2001 would have been $2.1
million (versus a loss of $6.1 million), or $(0.02) per share.

DEFERRED FINANCING COSTS:

Deferred financing costs were incurred in relation to long term debt and are
reflected net of accumulated amortization and are amortized over the term of the
respective debt instruments, which range from 5 to 22 years from the debt
inception date.

FUTURE INCOME TAXES:

The liability method of accounting for income taxes is used whereby future
income taxes arise from temporary differences between the book value of assets
and liabilities and their respective tax value. Future income tax assets and
liabilities are measured using substantially enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on future income tax assets and
liabilities of a change in tax rates is recognized in operations in the period
that includes the substantive enactment date. A valuation allowance is recorded
to the extent the recoverability of future income tax assets is considered more
likely than not.

PENSIONS AND POST-RETIREMENT BENEFITS:

The Company accrues its obligations under employee benefit plans and the related
costs, net of plan assets. The Company has adopted the following policies:


- -        The cost of pensions and other retirement benefits earned by employees
         is actuarially determined using the projected


26  Annual Report 2002


         benefit method prorated on service and management's best estimate of
         expected plan investment performance for funded plans, salary
         escalation, retirement ages of employees and expected health care
         costs. The discount rate used for determining the liability for future
         benefits is the current interest rate at the balance sheet date on high
         quality fixed income investments with maturities that match the
         expected maturity of the obligations.

- -        Pension assets are valued at fair market value.

- -        Past service costs from plan amendments are amortized on a
         straight-line basis over the average remaining service period of
         employees active at the date of amendment.

- -        The excess of the net actuarial gain or loss over 10% of the greater of
         the benefit obligation and the fair value of plan assets is amortized
         over the average remaining service period of the active employees.

- -        A plan curtailment will result if there has been a significant
         reduction in the expected future service of present employees. A net
         curtailment loss is recognized when the event is probable and can be
         estimated, a net curtailment gain is deferred until realized.

ENVIRONMENTAL LIABILITIES:

The Company has reserved for potential environmental liabilities based on the
best estimates of potential clean-up and remediation estimates for known
environmental sites. The Company employs a staff of environmental experts to
administer all phases of its environmental programs, and uses outside experts
where needed. These professionals develop estimates of potential liabilities at
these sites based on projected and known remediation costs. This analysis
requires the Company to make significant estimates, and changes in facts and
circumstances could result in material changes in the environmental accrual.

REPORTING CURRENCY AND FOREIGN CURRENCY TRANSLATION:

Operating revenue and expenses arising from foreign currency transactions are
translated into U.S. dollars at exchange rates in effect on the date of the
transactions. Monetary assets and liabilities are translated into U.S. dollars
at the exchange rate in effect at the balance sheet date. Gains or losses
arising from these translations are included in earnings, with the exception of
unrealized foreign exchange gains or losses on long-term monetary items that
hedge net investments in foreign operations which are accumulated in the foreign
currency translation adjustment account in shareholders' equity, until there is
a reduction in the net investment in the foreign operation. Assets and
liabilities of self-sustaining foreign operations are translated into U.S.
dollars at the exchange rate in effect at the balance sheet date. Operating
revenue and expense items are translated at average exchange rates prevailing
during the year. Any corresponding foreign exchange gains and losses are
deferred and disclosed separately as part of shareholders' equity and are
recognized in earnings when the ownership interest in the foreign operations
is reduced.

The consolidated financial statements have been prepared in U.S. dollars as
the majority of the Company's transactions occur in this currency.

EARNINGS PER SHARE:

The Company's diluted earnings per share is determined using the treasury stock
method for the effect of outstanding share purchase options and the dilution
impact of the convertible debenture at the stated conversion price.

STOCK OPTION PLAN:

The Company has a stock option plan described in Note 15. No compensation
expense is recognized when stock options are issued to employees as the option
price is equivalent to the market value of the shares at the date of grant.
Consideration paid on exercise of stock options is credited to share capital. No
options have been granted in 2002.

DEFERRED SHARE UNIT PLAN:

The Corporation offers a Deferred Share Unit Plan (DSUP) for members of the
Board of Directors. Under the DSUP each director receives a percentage of their
annual compensation in the form of deferred share units (DSUs) which are
notional Common Shares of the Company. The issue price of each DSU is based on
the closing trading value of the Common Shares on the meeting dates and an
expense is recognized at that time. The DSU account of each director includes
the value of dividends, if any, as if reinvested in additional DSUs. The
director is not permitted to convert DSUs into cash until retirement from the
Board. The value of the DSUs, when converted to cash, will be equivalent to the
market value of the Common Shares at the time the conversion takes place. The
value of the outstanding DSUs as at December 31, 2002 was $141 thousand (2001 -
$67 thousand).

USE OF ESTIMATES:

The preparation of financial statements in conformity with Canadian generally
accepted accounting principles 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 amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.


                                                           Gerdau AmeriSteel  27


NOTE 3 - ACQUISITIONS

On October 23, 2002, Brazilian Steelmaker Gerdau S.A. and Canadian steelmaker
Co-Steel combined their North American operations. In the transaction, Co-Steel
acquired all of the issued and outstanding shares of the Gerdau North America
Group in exchange for shares of Co-Steel representing approximately 74% of the
shares of the combined entity. A portion of these shares will be issued to
minority shareholders of AmeriSteel Corporation on March 31, 2003, as described
below. The name of Co-Steel was changed to Gerdau AmeriSteel Corporation as part
of the transaction. For accounting purposes, the business combination of the
Gerdau North America Group and Co-Steel has been accounted for using the reverse
take-over method of purchase accounting. Gerdau North America is deemed to be
the acquirer and is assumed to be purchasing the assets and liabilities of
Co-Steel, since the original shareholders of the Gerdau North America Group have
become owners of more than 50% of the voting shares of Co-Steel on a fully
diluted basis. The results of the operations of Co-Steel are included from the
date of the transaction. The following table summarizes the fair value of assets
and liabilities acquired at the date of the acquisition ($000s):

NET ASSETS (LIABILITIES) ACQUIRED

                                                         
Current assets                                              $    242,252
Current liabilities                                             (130,345)
Property, plant and equipment                                    389,915
Other assets                                                        (177)
Long-term debt                                                  (219,969)
Other long-term liabilities                                      (81,386)
Net future income taxes                                           15,768
Convertible debenture (recorded as equity)                       (80,113)
                                                            ------------
                                                            $    135,945
                                                            ------------
Purchase consideration, representing
  51,503,960 Co-Steel shares at
  $2.51 per share                                           $    129,275
Plus transaction costs                                             6,670
                                                            ------------
                                                            $    135,945
                                                            ------------




Effective March 31, 2003, non-controlling shareholders holding, in the
aggregate, approximately 13% of the issued and outstanding shares of AmeriSteel
Corporation ("AmeriSteel"), will have their holdings exchanged for Gerdau
AmeriSteel common shares in a ratio of 9.4617 Gerdau AmeriSteel shares for each
common share of AmeriSteel exchanged. The acquisition of the minority interest
of AmeriSteel will be accounted for as a step acquisition under the purchase
method of accounting, whereby the purchase price of the shares will be allocated
to the net assets acquired based upon their relative fair values. The exchange
will result in the issuance of an additional 13,199,260 shares of Gerdau
AmeriSteel (see Note 20). On June 24, 2002, the Company acquired certain assets
and assumed certain liabilities of Republic Technologies' cold drawn plant in
Cartersville, Georgia. The purchase price was $8.4 million and the transaction
was accounted for as a business combination. The plant commenced operations
under Gerdau AmeriSteel ownership on July 2, 2002.

On December 28, 2001, AmeriSteel acquired certain assets and assumed certain
liabilities of the Cartersville, Georgia mill ("Cartersville"), a producer of
structural steel products, from Birmingham Steel Corporation. In a separate
transaction on the same date, AmeriSteel acquired certain assets that were being
leased by Cartersville from the existing lessor group for cash and negotiated a
new operating lease. The two transactions are being accounted for as a business
combination for financial reporting purposes. The results of operations for
Cartersville have been included in the accompanying combined statement of
financial position as of December 31, 2001, but had no significant impact on the
results of operations for the year ended December 31, 2001. The aggregate
purchase price was $49.4 million, including $41.5 million cash, $0.2 million
marketable securities and $7.7 million assumed liabilities.

The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition ($000s).




                                      AT DECEMBER 28, 2001

                                  
Inventory                                    $ 20,674
Property, plant and equipment                  28,757
Total assets                                   49,431
Accounts payable                               (6,756)
Accrued liabilities                              (959)
                                             --------
Total liabilities assumed                      (7,715)
                                             --------
Net assets acquired                          $ 41,716
                                             --------




On March 13, 2001, AmeriSteel acquired 80% of the operations of American Bright
Bar of Orrville, Ohio, a producer of cold drawn flat bar, for total
consideration of $4.2 million cash and $5.3 million of debt. The transaction was
accounted for as a purchase and goodwill of approximately $4.8 million was
recorded.


28 Annual Report 2002





NOTE 4 - INVENTORIES

Inventories consist of the following ($000s):





                                               At December 31,
                                            2002             2001
                                        ------------     ------------
                                                   
Ferrous and non-ferrous scrap           $     40,983     $     18,999
Work in-process                               33,701           19,077
Finished goods                               195,893          127,818
Raw materials (excluding
scrap) and operating
supplies                                      80,823           45,526
                                        ------------     ------------
                                        $    351,400     $    211,420
                                        ------------     ------------


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following ($000s):





                                                   At December 31, 2002
                                        ----------------------------------------------
                                                         Accumulated          Net
                                            Cost         Depreciation      Book Value
                                        ------------     ------------     ------------
                                                                 
Land and improvements                   $     65,021     $      1,769     $     63,252
Buildings and improvements                   142,971           14,472          128,499
Machinery & equipment                        889,779          203,119          686,660
Construction in progress                      14,315               --           14,315
Property plant and
  equipment held for sale                      6,222               --            6,222
                                        ------------     ------------     ------------
                                        $  1,118,308     $    219,360     $    898,948
                                        ------------     ------------     ------------







                                                     At December 31, 2001
                                        ----------------------------------------------
                                                         Accumulated           Net
                                             Cost        Depreciation       Book Value
                                        ------------     ------------     ------------
                                                                 
Land and improvements                   $     31,098     $      1,177     $     29,921
Buildings and                                 84,545           10,011           74,534
 improvements
Machinery & equipment                        562,151          154,995          407,157
Construction in progress                      12,724               --           12,724
Property plant and
 equipment held for sale                       6,550               --            6,550
                                        ------------     ------------     ------------
                                        $    697,068     $    166,183     $    530,885
                                        ------------     ------------     ------------



NOTE 6-JOINT VENTURES

The Company's investments in Gallatin Steel Company, Bradley Steel Processors
and MRM Guide Rail are 50% joint ventures. The Company's interests in the joint
ventures have been accounted for using the proportional consolidation method
under which the Company's proportionate share of assets, liabilities, revenues
and expenses of the joint ventures have been included in these consolidated
financial statements.

The Company's interest in the joint ventures is as follows ($000s):




                                                    At December 31,
                                                 2002              2001
                                             ------------      ------------
                                                         
Balance Sheet
Current assets(1)(2)                         $     45,234      $      3,984
Property, plant and equipment(3)
  Land                                              4,525                --
  Buildings                                        19,740                38
  Machinery and equipment                          81,378             2,519
  Construction-in-progress                          1,778                --
Current liabilities                                26,505                88
Long-term debt                                      3,415                --
Statement of Earnings
  Sales                                      $     53,591      $     14,141
  Operating earnings                                6,836             1,833
Earnings before income taxes                        6,275             1,774
Changes in Cash Flows
Cash provided from (used in)
Operating activities                         $      6,098      $        973
Investing activities                               (1,809)             (738)
Financing activities                              (17,026)             (198)
                                             ------------      ------------
Proportionate share of
increase (decrease) in cash                  $    (12,737)     $         37
                                             ------------      ------------


(1)      Includes $4.8 million (2001 - $1.5 million) of cash and cash
         equivalents.

(2)      Current assets are net of allowance for doubtful accounts of $2.2
         million (2001 - $9 thousand).

(3)      Net of accumulated depreciation of $5.9 million (2001 - $2.6 million).


                                                            Gerdau AmeriSteel 29


NOTE 7 - LONG-TERM DEBT

The Company has debt agreements that are specific to the Gerdau Canada Group,
GUSA and former Co-Steel entities. Gerdau AmeriSteel debt includes the following
($000s):




                                                    At December 31,
                                                 2002              2001
                                             ------------      ------------

                                                         
Gerdau Canada Group:
  Bank indebtedness                          $     17,243      $      4,083
  U.S. Dollar Floating Rate Term                   61,743            85,855
    Loan
  Canadian dollar revolving loan
  (Cdn $35.0 million)                              22,157            15,068
  Other                                             1,444             1,458
GUSA:
  AmeriSteel Revolving Credit                     100,800            80,000
    Agreement
  AmeriSteel Term Loan                             68,750            93,750
  Industrial Revenue Bonds                         36,795            33,195
  AmeriSteel Bright Bar                             3,522             3,867
  Other                                               809             1,130
Co-Steel Group:
  Bank Indebtedness                                 6,136                --
  Canadian dollar revolving loan
  (Cdn$48.3 million)                               30,577                --
  U.S. Dollar Fixed Rate Reducing                  96,784                --
    Term Loan
  Fair value of early payment
    penalty of fixed rate reducing term
    loans                                           9,065                --
  U.S. dollar revolving loan                       59,768                --
  Other                                             3,561                --
                                             ------------      ------------
                                                  519,154           318,406
Less current portion                             (107,321)          (67,060)
                                             ------------      ------------
                                             $    411,833      $    251,346
                                             ------------      ------------



GERDAU CANADA GROUP

The Gerdau Canada Group has a total authorized revolver facility of Cdn $73
million ($46 million) that bears interest at floating market rates approximating
the bank's prime rate (as defined in the agreement) plus 1.75% (2001 - 2.25%) or
Bankers' Acceptance plus 2.75% (2001 - 3.25%). Companies in the Gerdau Canada
Group have pledged accounts receivable and inventory as collateral. The revolver
facility expires on September 30, 2003 and is renewable through January 15,
2004.

The total authorized Canadian term facility is Cdn $97.5 million [$61.7 million]
(2001 - Cdn$135 million [$84.8 million]) with a due date of January 15, 2004,
bearing interest at floating market rates approximating the bank's prime rate
(as defined in the agreement) plus 1.75% (2001 - 2.25%). Interest rate swap
agreements related to this facility were entered into with the Gerdau Canada
Group's bank as the counterparty in November, 1999 that effectively fixes the
rate of interest on approximately 50% of the balance. The agreement is for $17
million and bears interest at 6.425% for a term of five years expiring in 2004.
The aggregate fair value of the interest rate swap agreements, which represents
the amount that would be paid by the Gerdau Canada Group if the agreements were
terminated at December 31, 2002, was $1.2 million (2001 - $2.2 million).

The Canadian banking agreement, which includes Gerdau Steel Inc. (the
controlling shareholder of Gerdau AmeriSteel), contains various restrictive
covenants with respect to maintenance of certain financial ratios. At December
31, 2002, the Company was not in compliance with certain covenants and requested
and received a waiver of compliance (see Note 20).

In addition, the Gerdau Canada Group banking agreement requires additional
principal repayments of 50% of surplus combined cash flow as defined by the
banking agreement for years 2001 - 2003. Based on the cash flows recorded in
2002, Gerdau Canada will be required to make an additional principal repayment
of $4.1 million in 2003.

Collateral for the Canadian credit facility includes: (i) Cdn$350 million demand
debentures given by each of Gerdau Steel Inc., Gerdau MRM Holdings Inc., Gerdau
AmeriSteel MRM Special Sections Inc. and Gerdau AmeriSteel Cambridge Inc.,
granting a first priority fixed charge on real estate, machinery and equipment,
a first priority floating charge on all other assets and a first priority fixed
charge on inventory and accounts receivable to a maximum of $20 million, (ii)
pledges and guaranties of various Gerdau Canada Group members, and (iii) a
guaranty by Gerdau SA. In addition, an "all risks" insurance policy for full
insurable value on a replacement cost basis has been pledged to the lenders.

At December 31, 2002 Gerdau Canada Group was not in compliance with certain
covenants and requested and received a waiver of compliance from its lenders.

GUSA

GUSA's primary financial obligation outstanding as of December 31, 2002 is a
$285 million credit facility (the "Revolving Credit Agreement"). It is
collateralized by first priority security interests in substantially all
accounts receivable and inventories of GUSA as well as a lien on the Company's
Charlotte Mill property, plant and equipment. The Revolving Credit Agreement was
amended in September 2000 and increased the total facility from $150 million to
$285 million, of which $100 million is a term loan that amortizes at the rate of
25% per year beginning in December 2001. The Revolving Credit Agreement matures
in September 2005. Loans under the Revolving Credit Agreement bear interest at a
per annum rate equal to one of several rate options (LIBOR, Fed Funds or Prime
Rate, as defined in the agreement) based on the facility chosen at the time of
borrowing plus an applicable margin determined by tests of performance from time
to time. The effective interest rate at December 31, 2002 and 2001 was
approximately 3.8% and 4.2%, respectively. The Revolving Credit Agreement
contains certain



30 Annual Report 2002


covenants including the requirement to maintain financial ratios and limitations
on indebtedness, liens, investments and disposition of assets and dividends.
Letters of credit are subject to an aggregate sublimit of $50 million.

GUSA's industrial revenue bonds ("IRBs") were issued to obtain funding to
construct facilities in Jackson, Tennessee; Charlotte, North Carolina;
Jacksonville, Florida; and Plant City, Florida. GUSA incurred an additional $3.6
million IRB with the acquisition of the Cartersville cold drawn facility in June
2002. The interest rates on these bonds range from 50% to 75% of the prime rate
(3.8% to 4.3% at December 31, 2002); $9.4 million of the IRBs mature in 2003,
$3.8 million matures in 2015, $20.0 million matures in 2017, and $3.6 million
matures in 2018. Irrevocable letters of credit issued pursuant to the Revolving
Credit Agreement back the IRBs. As of December 31, 2002, GUSA had approximately
$44.8 million of outstanding letters of credit, primarily for IRBs and
insurance.

The AmeriSteel Bright Bar Loan represents a bank loan of GUSA's majority-owned
subsidiary, secured by machinery and equipment. The loan matures in 2011 with
amortization payments that began in July 2001. The loan currently bears interest
at a rate of approximately 6.0% per year with the rate having been reset in June
2002 and every three years thereafter based on prime plus 1%. AmeriSteel is a
guarantor of the loan.

In order to reduce its exposure to interest-rate fluctuations, GUSA entered into
interest-rate swap agreements in August and September 2001. The interest-rate
swaps have a notional value of $55 million, with the Company paying a fixed
interest rate and receiving a variable interest rate based on three-month LIBOR.
The underlying hedged instruments are specific tranches of LIBOR-based revolving
credit and term loan borrowings under the Company's Revolving Credit Agreement.
The aggregate fair value of the effective portion of the interest rate
agreements, which represents the amount that would be paid by GUSA if the
agreements were terminated at December 31, 2002, was approximately $4.6 million.
As the hedged transaction occurs, this amount will be charged as interest
expense.

CO-STEEL GROUP

The Co-Steel entities at December 31, 2002, have revolving facilities of
Cdn$133.9 million and Cdn$22.2 million which can be drawn in either Canadian or
U.S. dollars. These facilities come due on January 15, 2004 and bear interest at
the bankers' acceptance rate or LIBOR plus 2% to 5% depending on debt to EBITDA
(earnings before interest, taxes, depreciation and amortization) ratios.

The fixed rate reducing term loan at December 31, 2002 was $96.8 million. This
facility is reduced by $59.3 million on January 15, 2004 and then reduces by
$12.5 million on July 15 in each of the years 2004 to 2006 and bears interest at
a fixed rate of 8.9% to 10.9% depending on debt to EBITDA ratios. The terms of
this facility include a make-whole provision (in the event of prepayment) that
requires the Company to pay a penalty if interest rates had decreased since the
original inception of the loan. At December 31, 2002, the amount of the
make-whole provision (which was included in the fair value adjustments related
to the acquisition of Co-Steel) was $9.1 million. The facilities are secured by
a first charge against substantially all assets of the former Co-Steel entities.

The maturities of borrowings for the years subsequent to December 31, 2002 are
as follows ($000s):




                                     AMOUNT
                                    --------
                                 
2003                                $107,321
2004                                 233,056
2005                                 133,188
2006                                  13,483
2007                                     730
Thereafter                            31,376
                                    --------
                                    $519,154



NOTE 8 - RELATED PARTY TRANSACTIONS

Amounts due from (to) related companies at December 31, 2001 are as follows
($000's):





                                                                2001
                                                            ------------
NOTES RECEIVABLE FROM GERDAU STEEL INC.
                                                         
Interest ranging from 0.0% - 10.25%
(included in Other Assets)                                  $     90,682
NOTES PAYABLE TO GERDAU STEEL INC.
Interest ranging from 0.0% - 9.775%                         $   (213,516)
NOTES PAYABLE TO GTL FINANCIAL CORPORATION B.V.
Interest ranging from 0.0% - 9.10%                              (156,071)
NOTES PAYABLE BY GUSA TO GERDAU STEEL INC.
Interest rate of 9.23%                                           (35,640)
                                                            ------------
LONG-TERM RELATED PARTY LOANS PAYABLE                       $   (405,227)



The Company is affiliated with a group of companies controlled by Gerdau S.A.
The related parties noted in the table above are related to Gerdau S.A. Related
party loans bear interest that is expensed but is not payable on a current
basis. Except for the $35.6 million debt of GUSA to Gerdau Steel Inc., interest
is added to the loan balance. All advances were repayable on demand with no
collateral. The related parties indicated that it was not their intent to demand
repayment during 2002 and, as a result, the amounts were classified as
long-term. Intercompany charges for interest income (expense) of $4.3
million/($18.3 million) and $6.6 million/($31.6 million) in 2002 and 2001,
respectively. Intercompany charges for management fees and royalties from
related parties were $2.1 million and $2.8 million for the years ended December
31, 2002 and 2001, respectively. The $35.6 million note payable by GUSA to
Gerdau Steel Inc related to the September 2000 acquisition by Gerdau of the
outstanding



                                                            Gerdau AmeriSteel 31







common stock of FLS formerly owned by Kyoei Steel Ltd. The loan accrued interest
at the rate of 9.23% and had no stated maturity date. Gerdau Steel Inc. had
represented that no repayments are required prior to December 31, 2003, and
therefore the loan was classified as long-term.

As part of the Co-Steel transaction (see Note 1), all of the related party notes
payable, net of the notes receivable from Gerdau Steel Inc., were converted to
equity in October 2002.

NOTE 9 - CONVERTIBLE DEBENTURES

The Company's unsecured, subordinated convertible debentures bear interest at
6.5% per annum, mature on April 30, 2007, and, at the holders' option, are
convertible into Common Shares of the Company at a conversion price of Cdn$26.25
per share. Under the terms of the Trust Indenture for the Convertible
Debentures, no adjustment to the conversion price is required if the Company
issues Common Shares in a customary offering. The debentures are redeemable
after April 30, 2002, at the option of the Company at par plus accrued interest.
The Company has the right to settle the principal amount by the issuance of
Common Shares based on their market value at the time of redemption.

As the convertible debentures can be redeemed by the Company by the issuance of
Common Shares, the debenture obligations are classified as shareholders' equity.
Interest on the shareholders' equity component, net of related income taxes, has
been charged to retained earnings, and was deducted from the net earnings or
added to net loss in calculating basic earnings per share.

NOTE 10- INCOME TAXES

The effective income tax rate on earnings (loss) is influenced by the geographic
mix of the consolidated earnings (loss), as well as various tax incentives
introduced by governments from time to time to encourage investment. The
following table reconciles income tax recovery (expense) calculated at a
combined U.S. federal/state and Canadian federal/provincial tax rate with the
income tax provision ($000s):





                                                                    2002              2001
                                                                 ------------      ------------

                                                                             
Income (loss) before provision for income taxes                  $     13,180      $     (7,663)
                                                                 ------------      ------------
Tax provision at Canadian statutory rates of 38.62%                     5,091            (2,402)
Increased (decreased) by the tax effect of:
  Foreign earnings (losses) taxed at lower rates                       (4,437)           (9,933)
  Canadian manufacturing and processing credit                           (215)              532
  Capital losses not tax affected                                                         4,719
  Goodwill amortization                                                    --             2,531
  Other items, net                                                        (98)            1,972
                                                                 ------------      ------------
Income Tax Expense (Recovery)                                    $        341      $     (2,581)


The components of the future tax assets and liabilities consisted of the
following:




                                                                     2002              2001
                                                                 ------------      ------------

                                                                             
Current Assets
Allowance for doubtful accounts                                  $      3,716      $        497
Liabilities not currently deductible for tax purposes                   7,701             4,823
                                                                 ------------      ------------
Gross current future tax assets                                  $     11,417      $      5,320
                                                                 ------------      ------------
Non-Current Assets
  Operating loss carry forwards                                  $     37,244      $         --
  Recycling and AMT credits                                             6,694                --
  Pension and retirement accruals                                      23,722             9,461
  Long-term liabilities not currently deductible                       25,171             2,605
                                                                 ------------      ------------
Gross non-current future tax assets                              $     92,831      $     12,066
                                                                 ------------      ------------
Non-Current Liabilities
  Property, plant and equipment                                      (164,406)     $   (109,715)
  Assets held for sale                                                 (2,161)           (2,183)
  Other                                                          $     (8,422)              723
                                                                 ------------      ------------
Gross future tax liabilities                                     $   (174,989)     $   (111,175)
                                                                 ------------      ------------
Net long-term future tax liability                               $    (82,158)     $    (99,109)
                                                                 ------------      ------------


The provision for income tax recovery (expense) by jurisdiction is as follows:





                                                           2002             2001
                                                       ------------      ------------

                                                                   
Earnings (loss) before income taxes
  Canada                                               $      4,863      $     46,788
  U.S.                                                        4,691           (54,451)
  Other                                                       3,626                --
                                                       ------------      ------------
                                                       $     13,180      $     (7,663)
                                                       ------------      ------------
Current income tax recovery (expense)
  Canada                                               $      2,890      $         20
  U.S.                                                         8,255              (317)
  Other                                                        (375)               --
                                                       ------------      ------------
                                                             10,769              (297)
                                                       ------------      ------------
Future income tax recovery (expense)
  Canada                                                       (830)           (1,201)
  U.S.                                                        (9,598)           (1,083)
  Other                                                          --                --
                                                       ------------      ------------
                                                            (10,428)           (2,284)
                                                       ------------      ------------
Net income tax expense (recovery)                      $        341      $     (2,581)
                                                       ------------      ------------



NOTE 11 - POST RETIREMENT BENEFITS

The Company maintains a defined benefit pension plan covering the majority of
employees. The benefits are based on years of service and compensation during
the period of employment. Annual contributions are made in conformity with
minimum funding requirements and maximum deductible limitations. The remaining
employees are covered by defined contribution retirement plans for which Company
contributions and expense amounted to approximately $8.2 million (2001 - $1.1
million).

The Company currently provides specified health care benefits to


32 Annual Report 2002



retired employees. Employees who retire after a certain age with specified years
of service become eligible for benefits under this unfunded plan. The Company
has the right to modify or terminate these benefits.

The following tables summarize the accumulated pension benefits and
postretirement medical benefit obligations included in the Company's
consolidated statements of financial position ($000s):




                                                              Pension Benefits                Other Benefit Plans
                                                       ------------------------------      ------------------------------
                                                        Year Ended        Year Ended       Year Ended        Year Ended
                                                         December          December         December          December
                                                         31, 2002          31, 2001         31, 2002           31, 2001
                                                       ------------      ------------      ------------      ------------
                                                                                                 
Components of net periodic benefit cost
Service cost                                           $      5,606      $      4,947      $        341      $        247
Interest cost                                                12,830            10,921               876               586
Expected return on plan assets                              (13,536)          (12,258)               --                --
Amortization of prior service cost                              388               282                --                --
Recognized actuarial gain                                         4              (134)               --                --
                                                       ------------      ------------      ------------      ------------
Net periodic benefit cost                              $      5,292      $      3,758      $      1,217      $        833
                                                       ------------      ------------      ------------      ------------
Change in benefit obligations
Benefit obligation at beginning of period              $    164,260      $    146,934      $      9,068      $      7,858
Acquisition of Co-Steel                                     111,531                --            22,048                --
Service cost                                                  5,606             4,947               341               247
Interest cost                                                12,829            10,921               876               585
Plan participants' contributions                                                                    532               466
Amendments                                                    2,232               973                 -               135
Actuarial loss                                                13,659             7,777               444            1,180
Benefits and administrative expenses paid                    (8,765)           (7,292)           (1,331)           (1,403)
                                                       ------------      ------------      ------------      ------------

Benefit obligation at beginning of period              $    301,352      $    164,260      $     31,978      $      9,068
                                                       ------------      ------------      ------------      ------------

Change in plan assets
Fair value of plan assets at beginning of period       $    133,827      $    140,599      $         --      $         --
Acquisition of Co-Steel                                      79,628                --                --                --
Actual return on plan assets                                 (8,762)           (1,390)               --                --
Employer contribution                                        10,142             1,910               799               937
Plan participants' contributions                                 --                --               532               466
Benefits and administrative expenses paid                    (8,765)           (7,292)           (1,331)           (1,403)
                                                       ------------      ------------      ------------      ------------
Fair value of plan assets at end of period             $    206,070      $    133,827      $         --      $         --
                                                       ------------      ------------      ------------      ------------
Reconciliation of funded status - End of Period
Funded status                                          $    (95,282)     $    (30,433)     $    (31,979)     $     (9,068)
Unrecognized Transition Liability                             1,702             1,845                --                --
Unrecognized prior service cost                               2,564               578                --                --
Unrecognized actuarial loss                                  52,139            16,086               690               246
                                                       ------------      ------------      ------------      ------------
Net amount recognized                                  $    (38,877)     $    (11,924)     $    (31,289)     $     (8,822)
                                                       ------------      ------------      ------------      ------------
Assumptions

Rate of return on plan assets                            7.5% -9.25%        7.0%-9.25%
Discount rate                                             6.5%-6.75%          7%-7.25%        6.5%-6.75%             7.25%
Rate of compensation increases                            4.25%-4.5%         2.5%-4.5%
Trend rate - beginning next year                                                             10.0%-12.0%              8.6%
Trend rate - ending year 2008                                                                       5.5%         5.5%-6.0%



The Company also has a voluntary savings plan available to substantially all of
its employees. Under this plan, the Company contributes amounts based upon a
percentage of the savings paid into the plan by employees. The Company matches
50% of the employees' contributions up to 4% of employees' salaries. Costs under
this plan for the period ended December 31, 2002 were $1.9 million (2001- $1.8
million).

NOTE 12 - OTHER LIABILITIES

Other liabilities consist of the following ($000s)




                                                            At December 31,
                                                          2002            2001
                                                       ----------      ----------

                                                                 
Unfavorable long-term lease obligations (a)            $   18,510      $       --
Environmental remediation costs (note 16)                  14,900           1,755
Royalties and management fees payable to parent             6,410          11,024
Other                                                       9,465           2,204
                                                       ----------      ----------
                                                           49,295          14,983
Less current portion                                      (20,110)         (9,453)
                                                       ----------      ----------
                                                       $   29,175      $    5,530
                                                       ----------      ----------



(a) Certain of the operating lease commitments of the former Co-Steel entities
were at lease rates in excess of fair value as of the acquisition date.
Accordingly, a purchase accounting liability has been recorded by the Company
for the present value of the unfavorable lease commitments.

NOTE 13 - FINANCIAL INSTRUMENTS

The Company's use of derivative instruments is limited. Derivative instruments
are not used for speculative purposes but they are used to manage well-defined
foreign exchange and interest rate risks arising out of the normal course of
business.

At certain times throughout the year the Company enters into forward foreign
exchange contracts and put and call options (collectively "foreign exchange
contracts") to hedge accounts receivable and future revenues denominated in US
dollars. At December 31, 2002, the Company had no forward foreign exchange
contracts outstanding. Unrealized gains and losses on outstanding forward
foreign exchange contracts are recorded in the financial statements for accounts
receivable and not recorded in the financial statements for hedges against
future foreign currency revenue. The Company's estimate of the fair value of the
financial instruments, which include receivables, accounts payable, long-term
debt and the liability component of the convertible debentures, approximates
their carrying value due to their short maturity.

                                                           Gerdau AmeriSteel 33


 NOTE 14-CAPITAL STOCK

 Capital stock consists of the following shares:




                     Authorized               Issued     Invested Capital
                       Number                 Number      (in thousands)
                    -----------            -----------   ----------------
                                                

 December 31, 2001
 Common              Unlimited             133,388,400      $ 58,364
 Preferred           Unlimited                      --            --
                                           -----------      --------
                                           133,388,400      $ 58,364
                                           -----------      --------

 December 31, 2002
 Common              Unlimited             184,892,360      $513,400
 Preferred           Unlimited                      --            --
                                           -----------      --------
                                           184,892,360      $513,400
                                           -----------      --------


The predecessor of the Company is the Gerdau North America Group, which was not
a legal entity but a combination of Gerdau companies in North America and
therefore had no capital structure of its own. The 133,388,400 issued shares as
of December 31, 2001 represent those shares issued to Gerdau as a result of the
acquisition which occurred on October 23, 2002.

The Company has two stock options plans; one, the former Co-Steel Stock-Based
Option Plan, and the other, a plan administered by the AmeriSteel subsidiary.
The following discussion relates to the former Co-Steel Stock-Based Option Plan.
Please see Note 15 - Subsidiary Stock Compensation Plans for details regarding
the AmeriSteel plans. Under the Company's Stock-Based Option Plan, the Company
was permitted to grant options to employees and directors to acquire up to a
maximum of 3,041,335 Common Shares. The exercise price was based on the closing
price of Common Shares on the trading date previous to the date the options are
issued. The options have a maximum term of 10 years, have a vesting term of
various periods as determined by the Plan administrator at the time of grant,
and are exercisable in installments.

A summary of all share purchase options is as follows:




                                          Weighted               Aggregate
                         Number of         Average              Option Price
                          Shares        Exercise Price         (in thousands)
                         ----------     ---------------       ----------------

                                                     
 Balance -
 December 31, 2002        1,367,400        Cdn$ 14.69           Cdn$ 20,092


The following table summarizes information about share purchase options
outstanding at December 31, 2002:




                          Number           Weighted Avg       Weighted Avg         Number
 Exercise Price       Outstanding at        Remaining         Exercise Price    Exercisable at
 Range Cdn$            Dec 31, 2002      Contractual Life           Cdn$         Dec 31, 2002
 --------------       --------------     ----------------     --------------    ---------------
                                                                    
 18.60 to 19.75           295,500            4.5 years              19.07            295,500
 22.00 to 30.625        1,071,900            3.2 years              24.35          1,071,900



The options expire on various dates up to April 13, 2008. On October 23, 2002,
the Gerdau companies in North America, consisting of GUSA, Gerdau Courtice Steel
Inc. and Gerdau MRM Steel Inc., among other holding companies, were combined
with Co-Steel Inc., a Canadian minimill steel producer. The combined entity was
renamed Gerdau AmeriSteel Corporation and is publicly traded on the Toronto
Stock Exchange under the ticker symbol GNA.TO. As part of this transaction,
minority shareholders of AmeriSteel, consisting primarily of management and
other employees, are required to exchange their shares of AmeriSteel stock for
shares of Gerdau AmeriSteel. Gerdau AmeriSteel has filed Form F-4 with the
Securities and Exchange Commission and the exchange of shares is expected to be
completed on or about March 31, 2003. As a result, an additional 13,199,794
shares of Gerdau AmeriSteel will be issued. On October 23, 2002, the sole owner
(Gerdau U.S.A., Inc., or "GUSA1") of AmeriSteel's parent (FLS Holdings, Inc., or
"FLS") was merged into FLS, which then changed its name to Gerdau USA Inc. As a
result, AmeriSteel is a majority-owned subsidiary of GUSA whose only business is
to own common stock of AmeriSteel. GUSA, which owns 87% of the common stock of
AmeriSteel, is an indirect majority owned subsidiary of Gerdau AmeriSteel
Corporation, a Canadian corporation. GUSA acquired 88% of FLS in September 1999,
and the remaining 12% in September 2000, in each instance from Kyoei Steel Ltd.
An institutional investor owns approximately 4% of the common stock of
AmeriSteel. Executives, other employees and related persons own the remaining 9%
of AmeriSteel's common stock.


34 Annual Report 2002



Earnings per share:

The following table identifies the components of basic and diluted earnings per
share ($000s except per share data):




                                            2002               2001
                                        -------------      -------------
                                                     
Net income (loss)
 Less interest on equity                $      11,132      $      (6,066)
 component of convertible
 debentures                                      (631)                --
                                        -------------      -------------
Adjusted net income (loss)              $      10,501      $      (6,066)
                                        -------------      -------------
Weighted average
 shares outstanding - Basic               143,045,393        133,388,400
                                        -------------      -------------
Earnings per share - Basic              $        0.07      $       (0.05)
                                        -------------      -------------
Weighted average
 shares outstanding - Diluted             143,045,393        133,388,400
                                        -------------      -------------
Earnings per share - Diluted            $        0.07      $       (0.05)
                                        -------------      -------------


At December 31, 2002, options to purchase 1,367,400 (2001 -1,801,209) common
shares were not included in the computation of diluted earnings (loss) per share
because the options' exercise price was greater than the market price of the
common shares. The conversion into common shares of the convertible debentures
has not been included in the diluted earnings (loss) per share calculations as
the conversion rate of Cdn$26.25 per share is antidilutive.


NOTE 15 - SUBSIDIARY STOCK COMPENSATION PLANS

A subsidiary of the Company, AmeriSteel Corporation, has a number of stock
compensation plans for its employees. Under the terms of the Transaction
Agreement relating to the acquisition of Co-Steel, minority shareholders of
AmeriSteel will exchange shares of AmeriSteel stock and options for stock and
options of Gerdau AmeriSteel at an exchange rate of 9.4617 Gerdau AmeriSteel
shares and options for each AmeriSteel share or option. This exchange is
scheduled to occur by March 31, 2003.

In March 2000, AmeriSteel's Board of Directors approved a long-term incentive
plan available to executive management (the "Stakeholder Plan") to ensure
AmeriSteel's senior management's interest is congruent with AmeriSteel's
shareholders. Awards are determined by a formula based on AmeriSteel's return on
capital employed in a given plan year. Earned awards vest and are paid out over
a period of four years. Participants may elect cash payout or investments in
phantom stock of AmeriSteel and Gerdau, for which a 25% premium is earned if
elected. Benefits charged to expense under this plan for the years ended
December 31, 2002 and 2001, were $90 thousand and $257 thousand, respectively.

In July 1999, AmeriSteel's Board of Directors approved a Stock Purchase/SAR Plan
(the "SAR Plan") available to essentially all employees. The SAR Plan authorizes
100,000 shares of common stock to be sold to employees during three offering
periods, July through September in each of 1999, 2002 and 2005. Employees who
purchase stock are awarded stock appreciation rights ("SARs") equal to four
times the number of shares purchased. In the 1999 offering period, a total of
42,321 shares were sold under the SAR Plan at a purchase price of $15.30 per
share, with 28,683 of these shares outstanding as of December 31, 2002. SARs
were granted at fair value at the date of the grant, determined based on an
independent appraisal as of the previous year-end. In the 1999 offering period,
a total of 169,284 SARs were granted under the SAR Plan, with 114,451 of these
rights outstanding as of December 31, 2002. In the 2002 offering period, a total
of 44,299 shares were sold under the SAR Plan at a purchase price of $14.45 per
share, with 44,299 of these shares outstanding as of December 31, 2002. SARs
were granted at fair value at the date of the grant, determined based on an
independent appraisal as of the previous year-end. In the 2002 offering period,
a total of 177,196 SARs were granted under the SAR Plan, with 177,048 of these
rights outstanding as of December 31, 2002. The SARs become exercisable at the
rate of 25% annually from the grant date and may be exercised for 10 years from
the grant date.

In September 1996, AmeriSteel's Board of Directors also approved the AmeriSteel
Corporation Equity Ownership Plan (the "Equity Ownership Plan"), which provides
for grants of common stock, options to purchase common stock and SARs. The
maximum number of shares that can be issued under the plan is 438,852. The
Company has granted 493,350 incentive stock options and 52,100 shares of common
stock under the Equity Ownership Plan through December 31, 2002, with 279,553
incentive stock options and 22,006 shares of common stock outstanding at
December 31, 2002. All issued options and shares of issued common stock become
one-third vested two years from the grant date, and one third in each of the
subsequent two years from the grant date. All grants were at the fair market
value of the common stock on the grant date, determined based on an independent
appraisal as of the end of the previous year-end. Options may be exercised for
10 years from the grant date. In May 1995, AmeriSteel's Board of Directors
approved a Stock Purchase/Option Plan (the "Purchase Plan") available to
essentially all employees. Employees who purchased stock were awarded stock
options equal to six times the number of shares purchased. A total of 37,689
shares were sold under the Purchase Plan at a purchase price of $10.63 per
share, with 397 of these shares outstanding as of December 31, 2002. The options
were granted at fair value at the date of the grant, determined based on an
independent appraisal as of the end of the previous year-end. A total of 226,134
options were granted under the Purchase Plan, with 1,644 of these options
outstanding as of December 31, 2002. No options remain available for future
grant. All options outstanding are currently vested. Options

                                                           Gerdau AmeriSteel 35


may be exercised for 10 years from the grant date. The following tables
summarize AmeriSteel's stock option activity for the years ended December 31,
2002 and 2001:





                                                                      Equity Ownership Plan
                                             ------------------------------------------------------------------
                                                        Year Ended                         Year Ended
                                                     December 31, 2002                  December 31, 2001
                                             -------------------------------    -------------------------------
                                                                Weighted-                          Weighted-
                                                Number           Average            Number          Average
                                               of Shares      Exercise Price      of Shares      Exercise Price
                                             ------------     --------------    ------------     --------------

                                                                                      
Outstanding, beginning of period                  305,840      $      19.22          204,006      $      19.22

Granted                                            58,650             17.00          121,000             13.00
Exercised                                         (17,053)            12.75           (9,631)            13.42
Forfeited                                         (67,884)            14.02           (9,535)            19.31
                                             ------------      ------------     ------------      ------------
Outstanding, end of period                        279,553      $      17.91          305,840      $      16.94
                                             ------------      ------------     ------------      ------------
Options vested at end of period                   115,395      $      18.29           92,977      $      15.57
                                             ------------      ------------     ------------      ------------
Weighted-average fair value
of options granted during
the period                                                     $       3.22                       $       2.87
                                                               ------------                       ------------





                                                                         Purchase Plan
                                             -------------------------------------------------------------------
                                                      Purchase Plan
                                                       Year Ended                         Year Ended
                                                    December 31, 2002                  December 31, 2001
                                             ------------------------------     --------------------------------
                                                               Weighted-                            Weighted-
                                                 Number         Average            Number            Average
                                               of Shares     Exercise Price      of Shares        Exercise Price
                                             ------------    --------------     ------------      --------------
                                                                                      
Outstanding, beginning of period                    1,824      $      12.50            3,468      $      12.50
Granted                                                --                --               --                --
Exercised                                            (180)            12.50           (1,644)            12.50
Forfeited                                              --             12.50               --             12.50
                                             ------------      ------------     ------------      ------------
Outstanding, end of period                          1,644      $      12.50            1,824      $      12.50
                                             ------------      ------------     ------------      ------------
Options vested at end of period                     1,644      $      12.50            1,824      $      12.50
                                             ------------      ------------     ------------      ------------



The weighted-average remaining contractual life of the options under the Equity
Ownership Plan and the Purchase Plan as of December 31, 2002, is 4.1 years for
options granted through 1997 at a price between $12.50 and $13.50 per share, and
6.6 years for those options granted between 1998 and 2000 at a price between
$20.00 and $28.00 per share, and 8.9 years for options granted between 2001 and
2002 at a price between $13.00 and $17.00 per share. The weighted-average
exercise price of the options under the Equity Ownership Plan as of December 31,
2002 is $13.21 for options granted through 1997 at a price between $12.50 and
$13.50 per share, $22.17 for those options granted between 1998 and 2000 at a
price between $20.00 and $28.00 per share, and $14.95 for options granted in
2001 and 2002 at a price between $13.00 and $17.00 per share. The
weighted-average exercise price of the options under the Purchase Plan as of
December 31, 2002 is $12.50.

NOTE 16 - CONTINGENCIES AND COMMITMENTS

ENVIRONMENTAL

As the Company is involved in the manufacture of steel, it produces and uses
certain substances that may pose environmental hazards. The principal hazardous
waste generated by current and past operations is electric arc furnace ("EAF")
dust, a residual from the production of steel in electric arc furnaces.
Environmental legislation and regulation at both the federal and state level
over EAF dust is subject to change, which may change the cost of compliance.
While EAF dust is generated in current production processes, such EAF dust is
being collected, handled and disposed of in a manner that the Company believes
meets all current federal, state and provincial environmental regulations. The
costs of collection and disposal of EAF dust are being expensed as operating
costs when incurred. In addition, the Company has handled and disposed of EAF
dust in other manners in previous years, and is responsible for the remediation
of certain sites where such dust was generated and/or disposed. In general, the
Company's estimate of remediation costs is based on its review of each site and
the nature of the anticipated remediation activities to be undertaken. The
Company's process for estimating such remediation costs includes determining for
each site the expected remediation methods, and the estimated cost for each step
of the remediation. In such determinations, the Company may employ outside
consultants and providers of such remedial services to assist in making such
determinations. Although the ultimate costs associated with the remediation are
not known precisely, the Company estimated the total remaining costs as at
December 31, 2002 to be approximately $6.3 million (2001 - $2.9 million), with
these costs recorded as a liability at December 31, 2002, of which the Company
expects to pay approximately $5.1 million within the year ended December 31,
2003.



36 Annual Report 2002





An additional liability of $8.6 million has been recorded in respect of certain
environmental obligations which were triggered by the change in control of
Co-Steel in certain jurisdictions in which Co-Steel operated. This liability was
recorded at the present value of the estimated future costs of these
obligations.

Based on past use of certain technologies and remediation methods by third
parties, evaluation of those technologies and methods by the Company's
consultants and third-party estimates of costs of remediation-related services
provided to the Company or which the Company and its consultants are aware, the
Company and its consultants believe that the Company's cost estimates are
reasonable. Considering the uncertainties inherent in determining the costs
associated with the clean-up of such contamination, including the time periods
over which such costs must be paid, the extent of contribution by parties which
are jointly and severally liable, and the nature and timing of payments to be
made under cost sharing arrangements, there can be no assurance the ultimate
costs of remediation may not differ from the estimated remediation costs. In
April 2001, the Company was notified by the United States Environmental
Protection Agency (the "EPA") of an investigation that identifies the Company as
a potential responsible party ("PRP") in a Superfund Site in Pelham, Georgia.
The Pelham site was a fertilizer manufacturer in operation from 1910 through
1992, lastly operated by Stoller Chemical Company, a now bankrupt corporation.
The EPA offered a settlement to the named PRPs under which the Company's
allocation was approximately $1.8 million. The Company objects to its inclusion
as a PRP in this site and is pursuing legal alternatives, including the addition
to the allocation of larger third parties which the Company believes were
incorrectly excluded from the original settlement offer. The EPA has filed suit
with the Company named as a defendant. As the ultimate exposure to the Company,
if any, is uncertain, no liability has been established for this site. Carbon
monoxide emissions at Gerdau Ameristeel Perth Amboy exceeded permitted levels on
several occasions during 2001 and early 2002. These episodes were promptly
reported to the New Jersey Department of Environmental Protection (NJDEP).
Gerdau AmeriSteel is conducting investigations to determine the cause of these
episodes, what steps can be taken to reduce emissions and whether the Gerdau
AmeriSteel Perth Amboy environmental permits require modification. Discussions
with the NJDEP regarding permit and compliance issues are in a preliminary
stage. Penalty assessments of approximately $400 thousand have been accrued.

OTHER CLAIMS

In the normal course of its business, various lawsuits and claims are brought
against the Company. The Company vigorously contests any claim which it believes
is without merit. Management believes that any settlements will not have a
material effect on the financial position or the consolidated earnings of the
Company.

OPERATING LEASE COMMITMENTS

The Company leases certain equipment and real property under non-cancelable
operating leases. Aggregate future minimum payments under these leases are as
follows ($000s):




 Year Ending December 31,                          Amount
 ------------------------                        ---------

                                              
 2003                                            $ 13,242
 2004                                              10,757
 2005                                               9,417
 2006                                               6,859
 2007                                               5,981
 Thereafter                                        38,095
                                                 --------
                                                 $ 84,351
                                                 --------


SERVICE COMMITMENTS

The Company has long-term contracts with several raw material suppliers. The
Company typically realizes lower costs and improved service from these
contracts. The Company believes these raw materials would be readily available
in the market without such contracts.


                                                           Gerdau AmeriSteel 37


NOTE 17 - OTHER INCOME

Other income, net of other expenses for the year ended December 31, 2002
consists of $6.1 million proceeds from an insurance settlement relating to
environmental costs incurred by the Company in prior years, partially offset by
$1.0 million relating to the closing of the Wilmington, Delaware and St. Albans,
West Virginia fabricating plants.

Other income, net of other expenses for the year ended December 31, 2001
includes prior year tax refunds ($.7 million income), expenses relating to the
melting of a small amount of cesium at the Jacksonville mill ($.4 million
expense), a settlement with electrode suppliers ($2.8 million income), and the
loss on sale of marketable securities ($2.6 million expense.)

NOTE 18 - SEGMENT INFORMATION

The Company is organized into two primary business segments: (a) Mills and (b)
Downstream. Steel products sold to the downstream divisions are sold at market
prices with intracompany transactions eliminated upon consolidation. Performance
is evaluated and resources allocated based on specific segment requirements and
measurable factors. Segment assets are those assets that are specifically
identified with the operations in each operational segment. Corporate assets
include primarily: cash; assets held for sale; some property, plant and
equipment; deferred income taxes; and deferred financing costs. Corporate
expense includes: corporate headquarters staff, including executive management;
human resources; finance and accounting; procurement and environmental; and
management information systems. Included in these respective areas are payroll
costs, travel and entertainment, professional fees and other costs that may not
be directly attributable to either specific segment.

Operational results and other financial data for the geographic and two business
segments for years ended December 31 are presented below ($000s):



                                                      MILLS            DOWNSTREAM         TOTAL
                                                   ----------          ----------      ----------
                                                                              
2002
Revenue from external customers                    $  771,906           $264,149       $1,036,055
Intrasegment revenues                                 159,027                  -          159,027
Depreciation and amortization expense                  46,460              3,775           50,235
Segment profit                                         49,973              8,842           58,815
Total Assets                                        1,424,363            122,425        1,546,788
Expenditures for long-lived assets                     24,581              7,131           31,712
                                                   ----------           --------       ----------
2001
Revenue from external customers                    $  562,216           $278,620       $  840,836
Intrasegment revenues                                 176,846                  -          176,846
Depreciation and amortization expense                  44,842              4,650           49,492
Segment profit                                         42,852             13,008           55,860
Total Assets                                        1,052,211            113,531        1,165,742
Expenditures for long-lived assets                     24,176              3,748           27,924
                                                   ----------           --------       ----------


Geographic data is as follows:



                                                  UNITED STATES      CANADA            TOTAL
                                                  -------------      ------            -----
                                                                           
2002
Revenue from external customers                     $862,300        $173,754        $1,036,055
Long-lived assets                                    665,055         233,251           898,948
2001
Revenue from external customers                     $704,474        $136,362        $  840,836
Long-lived assets                                    395,844         135,041           530,885



38 Annual Report 2002


The reconciliation of reportable segments to combined totals is as follows
($000's):



                                                                                        YEAR ENDED             YEAR ENDED
                                                                                       DECEMBER 31,           DECEMBER 31,
                                                                                           2002                   2001
                                                                                       ------------           ------------
                                                                                                        
Revenue
Total segments revenue                                                                 $  1,195,082           $  1,017,682
Elimination of intersegment revenues                                                       (159,027)              (176,846)
                                                                                       ------------           ------------
Combined revenues                                                                      $  1,036,055           $    840,836
                                                                                       ------------           ------------
Depreciation and Amortization
Total segments depreciation and amortizations                                                50,235           $     49,492
Corporate depreciation and amortization                                                       9,620                 13,147
                                                                                       ------------           ------------
Combined depreciation and amortization                                                 $     59,855           $     62,639
                                                                                       ------------           ------------
Profit
Total segments profit                                                                  $     58,815           $     55,860
Other income                                                                                  5,072                  1,079
Elimination of intersegment profits                                                             899                   (480)
Unallocated amounts:
     Corporate expense                                                                      (11,606)               (13,134)
     Interest expense                                                                       (39,770)               (50,032)
     Foreign exchange loss                                                                     (230)                  (249)
     Taxes (expense) benefit                                                                   (341)                 2,581
     Loss on investment                                                                          --                   (707)
     Minority interest                                                                       (1,707)                  (984)
                                                                                       ------------           ------------
     Consolidated profit (loss)                                                        $     11,132           $     (6,066)
                                                                                       ------------           ------------
Assets
Total segments assets                                                                  $  1,546,788           $  1,165,742
Elimination of intersegment assets                                                         (133,085)              (241,726)
Other unallocated assets                                                                    157,698                137,923
                                                                                       ------------           ------------
Combined assets                                                                        $  1,571,401           $  1,061,939
                                                                                       ------------           ------------
Expenditures for long-lived assets
Total segments expenditures                                                            $     31,712           $     27,924
Corporate expenditures                                                                        1,770                    495
                                                                                       ------------           ------------
Combined expenditures for long-lived assets                                            $     33,482           $     28,419
                                                                                       ------------           ------------
Revenues by product lines
Mill finished goods :
    Stock rebar                                                                        $    198,460           $    185,032
    Merchant bar/special sections                                                           440,909                338,218
     Rods                                                                                    47,060                 16,925
     Flat rolled                                                                             38,572                     --
                                                                                       ------------           ------------
Total mill finished goods:                                                                  725,001                540,175
Billets                                                                                      15,313                  5,790
                                                                                       ------------           ------------
Total mill products                                                                         740,314                545,965
Other mill segments                                                                          31,101                 15,913
Fabricating and downstream                                                                  264,640                278,958
                                                                                       ------------           ------------
Total segment revenues                                                                 $  1,036,055           $    840,836
                                                                                       ============           ============


NOTE 19 - LIQUIDITY

The Company's Canadian credit facilities are scheduled to be reduced by
approximately $120 million on January 15, 2004 and total debt to be repaid under
existing repayment terms in fiscal 2004 totals $233 million. In March 2003, the
Company commenced a $750 million refinancing program which the Company expects
to complete in the second quarter of 2003. If successful, the proceeds from the
refinancing program will be used to repay existing revolving credit facilities
and term loans.

NOTE 20 - SUBSEQUENT EVENTS

In the first quarter of 2003, Gerdau S.A. made loans totaling $30 million to
GUSA to increase liquidity within Gerdau AmeriSteel. These loans will be used
for working capital purposes and bear interest at the rate of 6.5%. The loans do
not have a stated maturity, but it is the intent of the Company to repay these
loans as soon as practicable.

In April 2003, AmeriSteel received a waiver from its lenders as it expected to
exceed its leverage ratio covenant of 3.75 to one due to weak operating margins
in the first quarter. The Company believes AmeriSteel will be able to comply
with the covenants during the remainder of 2003.

In April 2003, the Gerdau Canada Group requested and received waivers for
non-compliance with certain covenants for the December quarter and expected
non-compliance for fiscal 2003. On March 31, 2003, under the terms of the
Transaction Agreement relating to the acquisition of Co-Steel, the Company
completed an exchange of minority shares of subsidiary AmeriSteel for shares of
Gerdau AmeriSteel. Minority shareholders of AmeriSteel, mostly executives and
employees, exchanged 1,395,041 shares of AmeriSteel for 13,199,260 shares of
Gerdau AmeriSteel, an exchange ratio of 9.4617 to one. As a result, AmeriSteel
became a wholly owned subsidiary of Gerdau AmeriSteel.


                                                           Gerdau AmeriSteel 39


Corporate Officers
- -------------------------------------------------------------------------------

CORPORATE OFFICES

Phillip E. Casey
President and CEO

Andre B. Johannpeter
Vice President, COO Canada

Mike Mueller
Vice President, US Steel Operations

Tom J. Landa
Vice President, Finance, and Chief Financial Officer
Corporate Secretary

Andre Beaudry
Vice President, Steel Product Sales

Robert P. Muhlhan
Vice President, Procurement, Logistics and
Government Affairs

James F. Oliver
Vice President, Strategic Development

James S. Rogers
Vice President, Human Resources

Glen A. Beeby
Vice President Administration, Canada

George Beck
Treasurer

OPERATIONS

J. Neal McCullohs
Vice President, Fabricated Reinforcing Steel Products

Garry A. Leach
President, MRM Special Sections, Inc.

Robert L. Bullard
Vice President, Perth Amboy Mill

Glen A. Beeby
Vice President, Cambridge Mill

Wib G. Manuel
Vice President, Jackson Mill

Roger Paiva
Vice President, Whitby Mill

Arlan Piepho
Vice President, Knoxville Mill

Anthony S. Read
Vice President, Charlotte Mill

William E. Rider
Vice President, Sayreville Mill

Donald R. Shumake
Vice President, Jacksonville Mill

Edward C. Woodrow
Vice President, Cartersville Mill

Matthew C. Yeatman
Vice President, Canadian Recycling Operations

Richard E. Danhoff
Assistant Vice President, Rail Products

Steve Higley
Assistant Vice President, Cold Drawn Products

Al J. Theriot
Assistant Vice President, Atlas Steel & Wire


40 Annual Report 2002


Corporate Information
- -------------------------------------------------------------------------------

Listing of Capital Stock
and Convertible Debentures

The shares and convertible debentures of the Company are listed on the Toronto
Stock Exchange under the ticker symbols GNA.TO and GNAdb.TO respectively.

Transfer Agent and Registrar

The transfer agent and registrar for the shares of the Company is The CIBC
Mellon Trust Company at its offices in Toronto, Montreal, Winnipeg, Calgary,
Regina, Vancouver and Halifax.

Shareholder Information

Shareholders seeking information or Assistance concerning their accounts may
contact The CIBC Mellon Trust Company through the Shareholder Inquiry Line.
Toronto: (416) 643-5500 Outside Toronto and US: 1-800-387-0825

Financial Calendar

Fiscal year end: December 31
Annual Meeting: May 6, 2003

Annual Meeting of the Shareholders

The Annual Meeting of the Shareholders of Gerdau AmeriSteel Corporation will be
held at the Hilton Toronto, 145 Richmond St. West, on Tuesday May 6, 2003, at 10
a.m.

Investor Information

Shareholders or other interested parties seeking assistance or information about
the Company are invited to contact Tom Landa, Vice President and Chief Financial
Officer at the Executive Offices or via email: IR@gerdauameristeel.com Web site:
www.gerdauameristeel.com


                                                           Gerdau AmeriSteel 41


Gerdau AmeriSteel Corporation
Executive Office
5100 W. Lemon St., Suite 312
Tampa, FL  33609
Phone: (813) 286.8383
www.gerdauameristeel.com

Gerdau AmeriSteel - Investor Relations
Phone: (813) 207.2300
Fax: (813) 207.2328
ir@gerdauameristeel.com

Gerdau
Av. Farrapos, 1811 - 90220-005
Porto Alegre - RS - Brasil
Phone: +55 (51) 3323.2000
www.gerdau.com.br

Gerdau - Investor Relations
Phone: +55 (51) 3323.2703
Fax: +55 (51) 3323.2281
inform@gerdau.com.br

[GERDAU AMERISTEEL LOGO]

www.gerdauameristeel.com
- -------------------------------------------------------------------------------

EX-99.3

NOTE 21 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES

  (Supplement to the audited consolidated financial statements for the years
                      ended December 31, 2002 and 2001)

         The Company's consolidated financial statements are prepared in
accordance with Canadian generally accepted accounting principles ("GAAP"). The
most significant differences between Canadian and United States GAAP, in terms
of impact on the Company's consolidated financial statements, relate to the
accounting for pensions, convertible debentures, derivative instruments and the
reporting of comprehensive income.

         The following table reconciles the consolidated statements of (loss)
earnings as reported under Canadian GAAP with those that would have been
reported under United States GAAP:



                         YEAR ENDED DECEMBER 31                       2002             2001
         -----------------------------------------------------      --------         -------
                                                                            
         NET INCOME (LOSS)-- CANADIAN GAAP .................        $ 11,132         $(6,066)
         Increase in interest expense related to
           convertible debentures (a) ......................            (590)             --
         Adjustment to purchase price allocation relating to
           differences in treatment of Joint Ventures (b) ..            (450)             --
         Changes in fair value of interest rate
           derivatives (d) .................................             368          (1,021)
         Unrealized loss on investment held for sale (e) ...              --             707
         Other .............................................             589              --
         NET INCOME (LOSS) -- UNITED STATES
           GAAP ............................................        $ 11,049         $(6,380)
                                                                    ========         =======
         OTHER COMPREHENSIVE (LOSS) INCOME:
           Derivative loss (d) .............................          (2,310)           (163)
           Foreign currency translation adjustment (c) .....             179            (933)
           Minimum unfunded pension liability (f).......             (16,309)           (195)
                                                                    --------         -------
         OTHER COMPREHENSIVE INCOME (LOSS) -- UNITED
           STATES GAAP .....................................         (18,440)         (1,291)
                                                                    --------         -------
         COMPREHENSIVE (LOSS) INCOME -- UNITED STATES
           GAAP ............................................        $ (7,391)        $(7,671)
                                                                    ========         =======
         Net (loss) earnings per share-- United States
           GAAP
           Basic ...........................................        $  (0.08)        $ (0.04)
           Diluted .........................................        $  (0.08)        $ (0.04)
                                                                    ========         =======


(a) Convertible Debentures

         Under Canadian GAAP, the convertible debenture obligation is classified
as an equity instrument. For Canadian GAAP, the interest, net of taxes, of the
equity component of the convertible debentures is recorded as an after-tax
charge to reinvested earnings. Under US GAAP, the convertible debenture
obligation would be accounted for entirely as a liability and, accordingly,
interest costs would be recorded as interest expense. The Company has the
ability to redeem the convertible debenture at par plus accrued interest by the
issuance of Common Shares or cash. As a result, for US GAAP, the convertible
debenture would be classified as current debt in the 12-month period in advance
of the redemption date, and as long-term debt during the remainder of the 20
year term. Therefore, for US GAAP the liability would be classified as long term
debt for 2002 and 2001.

(b) Adjustment to Purchase Price Allocation Relating to Joint Ventures

         Under Canadian GAAP, joint ventures are accounted for using the
proportionate consolidation method, while under US GAAP, joint ventures are
accounted for under the equity method. Under an accommodation of the US
Securities and Exchange Commission, accounting for joint ventures need not be
reconciled from Canadian to US GAAP. The different accounting treatment affects
only the display and classification of financial statement items and not net
income or shareholders' equity. See note 6 for summarized financial information
in respect of the Company's joint ventures.

         Because of the different treatment of joint ventures between Canadian
GAAP and US



GAAP, a permanent difference results in the allocation of the purchase price.
Under purchase accounting, the excess of the value of the assets over the
purchase price (negative goodwill) is allocated to the long term assets
acquired. Under Canadian GAAP, because the joint venture assets are
proportionately accounted for and therefore there is no investment in subsidiary
long term asset, the negative goodwill is allocated only against property, plant
and equipment. Under US GAAP, the negative goodwill is allocated to both
property, plant and equipment and to investment in subsidiary. As a result,
there is a difference in depreciation expense.

(c) Comprehensive Income

         United States accounting standards for reporting comprehensive income
are set forth in SFAS No. 130. Comprehensive income represents the change in
equity during a reporting period from transactions and other events and
circumstances from non-owner sources. Components of comprehensive income include
items such as net earnings (loss), changes in the fair value of investments not
held for trading, minimum pension liability adjustments, derivative instruments
and certain foreign currency translation gains and losses.

(d) Derivative Instruments

         The Company has interest rate swap agreements. Under US GAAP,
unrealized gains and losses on the mark-to-market valuation of the swaps may be
subject to hedge treatment under SFAS No. 133 whereby all or a portion of the
mark-to-market gain or loss is recorded to other comprehensive income and the
swap recorded at fair value. Any ineffective portion is recorded against income.
In 2002, a portion of the US interest rate swap mark-to-market value was deemed
to be ineffective and therefore recorded as an expense under US GAAP. Under
Canadian GAAP, which does not recognize Comprehensive Income on the face of the
financial statements, mark-to-market valuation changes are only reported in the
footnotes.

(e) Investments

         United States accounting standards for equity investments, which are
set forth in SFAS No. 115, require that certain equity investments not held for
trading be recorded at fair value with unrealized holding gains and losses
excluded from the determination of earnings and reported as a separate component
of other comprehensive income. At December 31, 2001, the Company had an
investment held for sale which was below market value.

(f) Accumulated Unfunded Pension Liability

     Under U.S. GAAP, the Company should recognize an additional minimum pension
liability charged to other comprehensive income in shareholders' equity to the
extent that the unfunded accumulated benefit obligation ("ABO") exceeds the fair
value of the plan assets and this amount is not covered by the pension liability
already recognized in the balance sheet. The calculation of the ABO is based on
the actuarial present value of the vested benefits to which the employee is
currently entitled, based on the employee's expected date of separation or
retirement. Canadian GAAP does not require the recognition of an additional
minimum liability.

 (g) Freight Costs

         For Canadian GAAP, sales are recorded net of freight costs for
delivery. US GAAP would require that freight costs be included in cost of sales.
The impact of this adjustment is to increase sales and cost of sales by $70.6
million in 2002 and $58.3 million in 2001.




         The following table indicates the cumulative effect of the above
adjustments on balance sheet accounts, displaying results under Canadian GAAP
and US GAAP:



                                                            CANADIAN GAAP                        U.S. GAAP
                                                       ------------------------          ------------------------
                      DECEMBER 31                       2002              2001             2002             2001
                  ------------------                   -------          -------          -------          -------
                                                          $                $                $                 $
                                                                                              
         ASSETS
           Current assets ....................         554,920          320,250          518,144          316,454
           Property, plant & equipment .......         898,948          530,885          765,644          528,300
             Goodwill ........................         114,374          114,374          114,374          114,374
           Other assets ......................           3,159           96,430          115,562           99,428
         LIABILITIES
           Current liabilities (excl
             indebtedness)....................         244,338          132,489          222,471          130,810
           Current portion of long-term debt .         107,321           67,060          101,090           68,545
           Long-term debt & related party debt         411,833          656,573          463,423          656,573
           Other long-term liabilities .......          99,341           26,276          132,894           26,548
           Deferred income taxes .............          82,158           99,109           67,341           97,718
           Minority interest .................          33,312           30,634           33,312           30,634
         SHAREHOLDERS' EQUITY
           Invested capital ..................         513,400           58,364          513,393           58,357
           Convertible debentures ............          79,134               --               --               --
           Retained earnings (deficit) .......           1,329           (7,622)            (107)           (8,975)
           Cumulative translation adjustment .            (765)            (944)            (765)            (944)
           Deferred compensation .............              --               --               --               --
           Other comprehensive income ........              --               --          (19,329)            (710)


Changes in shareholders' equity under US GAAP were as follows:



                 YEAR ENDED DECEMBER 31                     2002             2001
         -----------------------------------------        --------         -------
                                                              $                $
                                                                     
         Shareholders' equity at beginning of year          47,728          55,799
         Net (loss) earnings .....................          11,049          (6,380)
         Subsidiary stock activity ...............            (187)           (476)
         Changes in deferred compensation ........              --              76
         Foreign currency translation adjustment .             179            (933)
         Debt converted to equity ................         325,948              --
         Acquisition .............................         129,275              --
         Other comprehensive loss ................         (18,619)           (358)
         Dividends ...............................          (2,181)             --
                                                          --------         -------
         Shareholders' equity at end of year .....         493,192          47,728
                                                          ========         =======


    The difference in consolidated shareholders' equity may be reconciled as
follows:



                 YEAR ENDED DECEMBER 31                     2002             2001
         -----------------------------------------        --------         -------
                                                              $                $
                                                                     
         Shareholders' equity based on Canadian GAAP       593,098          49,798
         Debenture reclassified to debt ..........         (79,134)             --
         Adjust purchase price for Gallatin joint venture     (450)             --
         Accumulated unfunded pension ............         (16,856)           (547)
         Unrealized losses on interest rate derivatives     (3,466)         (1,523)
         Other ...................................              --              --
                                                          --------         -------
         Cumulative reduction in net earnings under US
           GAAP ..................................         (99,906)         (2,070)
                                                          --------         -------
         Shareholders' equity based on US GAAP ...         493,192          47,728
                                                          ========         =======


    There are no significant differences with respect to the consolidated
statement of cash flows between US GAAP and Canadian GAAP for 2002 and 2001.

EX-99.4

                                                                    Exhibit 99.4

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Our audits of the consolidated financial statements referred to in our report
dated January 24, 2003, except for certain information contained in notes 3 and
20, as to which the date is April 4, 2003, relating to the consolidated
financial statements of Gerdau AmeriSteel Corporation, included audits of the
Schedule of Differences Between Canadian and United States Generally Accepted
Accounting Principles presented under Exhibit 99.3 of this Form 40-F. In our
opinion, the information presented in the schedule is presented fairly, in all
material respects, when read in conjunction with the related consolidated
financial statements.



/s/PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Orlando, Florida
January 24, 2003

EX-99.5

                                                                    EXHIBIT 99.5

               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


        We hereby consent to the use in this Annual Report on Form 40-F of our
report dated January 24, 2003, except for certain information contained in notes
3 and 20, as to which the date is April 4, 2003, relating to the consolidated
financial statements of Gerdau AmeriSteel Corporation, which appear in Exhibit
99.2 of this Form 40-F. We also consent to the use in this Annual Report on
Form 40-F of our Comments by Auditors for United States of America Readers on
Canada - United States of America Reporting Differences dated January 24, 2003.


/s/ PricewaterhouseCoopers LLP
Orlando, Florida
January 24, 2003

EX-99.6

                                                                    EXHIBIT 99.6

                Certification Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant To
                  Section 906 Of The Sarbanes-Oxley Act Of 2002

I, Phillip E. Casey, Chief Executive Officer of Gerdau Ameristeel Corporation
(the "Company") certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my
knowledge:

         (1) The Annual Report of the Company on Form 40-F for the fiscal year
ended December 31, 2002 as filed with the Securities and Exchange Commission on
the date hereof (the "Report") fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company.



Date:  May 20, 2003                   /s/ Phillip E. Casey
                                      -----------------------------------------
                                      Phillip E. Casey, Chief Executive Officer

EX-99.7

                                                                    Exhibit 99.7

                Certification Pursuant To 18 U.S.C. Section 1350,
                             As Adopted Pursuant To
                  Section 906 Of The Sarbanes-Oxley Act Of 2002


         I, Tom J. Landa, Chief Financial Officer of Gerdau Ameristeel
Corporation (the "Company") certify, pursuant to 18 U.S.C. section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the
best of my knowledge:

         (1) The Annual Report of the Company on Form 40-F for the fiscal year
ended December 31, 2002 as filed with the Securities and Exchange Commission on
the date hereof (the "Report") fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company.


Date:  May 20, 2003                                  /s/ Tom J. Landa
                                                     --------------------------
                                                     Tom J. Landa
                                                     Chief Financial Officer