10-K

2002

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

F O R M  1 0 - K

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

For the Fiscal Year Ended December 31, 2002

OR

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

Commission File Number 1-983

National Steel Corporation

(Exact name of registrant as specified in its charter)

Incorporated under the Laws of the State of Delaware	25-0687210
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4100 Edison Lakes Parkway, Mishawaka, IN	46545-3440
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:    574-273-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of each exchange on which registered
Class B Common Stock	OTC Bulletin Board
First Mortgage Bonds, 8 3/8% Series due 2006	None

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

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

At June 28, 2002, there were 41,288,240 shares of the registrant’s common stock outstanding consisting of 22,100,000 shares of Class A Common Stock and 19,188,240 shares of Class B Common Stock.

Aggregate market value of voting stock held by non-affiliates: $2,601,015

The amount shown is based on the closing price of National Steel Corporation’s Common Stock on the OTC Bulletin Board on June 28, 2002. Voting stock held by officers and directors is not included in the computation. However, National Steel Corporation has made no determination that such individuals are “affiliates” within the meaning of Rule 405 under the Securities Act of 1933.

National Steel Corporation

Table of Contents

Part I		Page
Item 1	Business	3
Item 2	Properties	12
Item 3	Legal Proceedings	15
Item 4	Submission of Matters to a Vote of Security Holders	22
Part II
Item 5	Market for Registrant’s Common Stock and Related Stockholder Matters	25
Item 6	Selected Financial Data	26
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	41
Item 8	Consolidated Financial Statements	42
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	76
Part III
Item 10	Directors and Executive Officers of the Registrant	76
Item 11	Executive Compensation	78
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	85
Item 13	Certain Relationships and Related Transactions	86
Part IV
Item 14	Controls and Procedures	87
Item 15	Exhibits, Financial Statement Schedules and Reports on Form 8-K	87
Signatures		89
Certifications		90

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PART I

Item 1.    Business

Introduction

National Steel Corporation, a Delaware corporation (together with its consolidated subsidiaries, the “Company”), is one of the largest integrated steel producers in the United States and is engaged in the manufacture and sale of a wide variety of flat rolled carbon steel products, including hot-rolled, cold-rolled, galvanized, tin and chrome plated steels. We target high value-added applications of flat rolled carbon steel for sale primarily to the automotive, construction and container markets. Our principal executive offices are located at 4100 Edison Lakes Parkway, Mishawaka, Indiana 46545-3440; telephone (574) 273-7000.

National Steel Corporation was formed through the merger of Great Lakes Steel Corporation, Weirton Steel Corporation and Hanna Iron Ore Company and was incorporated in Delaware on November 7, 1929. Following are the major events impacting our ownership since incorporation:

• We built a finishing facility, now the Midwest Operations (“Midwest”), in Portage, Indiana, in 1961.

• In 1971, we purchased Granite City Steel Corporation, now the Granite City Division.

• On September 13, 1983, we became a wholly-owned subsidiary of National Intergroup, Inc. (which subsequently changed its name to FoxMeyer Health Corporation and then to Avatex Corporation and is hereinafter referred to as “Avatex”).

• On January 11, 1984, we sold the principal assets of our Weirton Steel Division and retained certain liabilities related thereto.

• On August 31, 1984, NKK Corporation (collectively with its subsidiaries, “NKK”) purchased a 50% equity interest in us from Avatex. In connection with this purchase, Avatex agreed to indemnify us for  (1) certain environmental liabilities related to our former Weirton Steel Division and our subsidiary, Hanna Furnace Corporation and (2) certain pension and employee benefit liabilities related to the Weirton Steel Division (together, the “Indemnification Obligations”).

• On June 26, 1990, NKK purchased an additional 20% equity interest in us from Avatex. In connection with this purchase, Avatex was issued shares of our Series B Redeemable Preferred Stock and NKK was issued shares of our Series A Preferred Stock.

• In April 1993, we completed an initial public offering of our Class B Common Stock.

• In October 1993, Avatex converted all of its shares of Class A Common Stock to an equal number of shares of Class B Common Stock and subsequently sold substantially all of its shares of Class B Common Stock in the market in January 1994, resulting in NKK owning a 75.6% voting interest at December 31, 1994.

• On February 1, 1995, we completed a primary offering of 6.9 million shares of Class B Common Stock. Subsequent to that transaction, NKK’s voting interest decreased to 67.6%.

• In November 1997, we entered into an agreement with Avatex to redeem all of the Series B Redeemable Preferred Stock held by Avatex and to release Avatex from the Indemnification Obligations.

• In December 1997, we completed the redemption of the Series A Preferred Stock held by NKK for a redemption price of $36.7 million, plus accrued dividends of approximately $0.6 million. Following this transaction, and the settlement with Avatex described above, we no longer have any preferred stock outstanding.

• In 1998 and 1999, we repurchased 2.0 million shares of Class B common stock for $16.3 million. Subsequent to the repurchase of these shares, NKK’s voting interest increased to 69.7%.

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Proceedings Under Chapter 11 of the Bankruptcy Code

On March 6, 2002, National Steel Corporation and forty-one of its domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”). Certain majority owned subsidiaries of National Steel Corporation have been excluded from the Chapter 11 filings. The case was assigned to Judge John H. Squires and is being jointly administered under case number  02-08699. We also obtained Bankruptcy Court approval of a $450 million Secured Super Priority Debtor In Possession Credit Agreement with the existing senior secured bank group, which combined with other actions has been used to fund post-petition operating expenses as well as supplier and employee obligations.

Historically low steel selling prices in 2001 and a weak economy impeded our ability to service our debt and make investments in the business necessary for continued growth. We worked diligently to reduce costs during these difficult times. In 2001, we reduced our costs by approximately $150 million compared to the prior year and inventory reductions exceeded $130 million. Despite our cost reduction activities, idling of production facilities, and focus on value-added shipments, these efforts were not enough to overcome the injury to us and the steel industry caused by depressed steel selling prices. We filed for protection under Chapter 11 in order to obtain the necessary time to stabilize our finances and to attempt to develop a plan of reorganization.

Under bankruptcy law, actions by creditors to collect amounts owed by us at the filing date are stayed and other pre-petition contractual obligations may not be enforced against us, without approval by the Bankruptcy Court to settle these claims. At the outset of the Chapter 11 cases we received approval from the Bankruptcy Court to pay certain of our pre-petition claims, including employee wages and certain employee benefits. In addition, we have the right, subject to Bankruptcy Court approval and other conditions, to assume or reject any pre-petition executory contracts and unexpired leases On May 24, 2002, we filed with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors as shown by our books and records, subject to the assumptions contained in certain notes filed in connection therewith. All of the schedules are subject to further amendment or modification. The Bankruptcy Court set August 15, 2002 as the deadline for creditors (other than Governmental units) to file proofs of claim. Differences between amounts scheduled by National and claims by creditors will be investigated and resolved in connection with our claims resolution process. That process has commenced, but in light of the number of claims filed, may take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known and, because the settlement terms of such allowed claims are subject to a confirmed plan of reorganization, the ultimate distribution with respect to allowed claims is not presently ascertainable. On November 5, 2002, the Bankruptcy Court entered an order that extended the exclusive period within which only the debtor can file a plan of reorganization through April 7, 2003.

Recent Events

On December 6, 2002 The Pension Benefit Guaranty Corporation (the “PBGC”) filed a complaint in the United States District Court for the Northern District of Illinois (the “District Court”) alleging there was sufficient cause under applicable laws to terminate seven of the eight pension plans of National Steel Corporation and its subsidiaries (the “Plans”). The complaint requests, among other things, that the PBGC be appointed as the Plans’ trustee and December 6, 2002 be established as the Plans’ termination date. We have filed an answer and certain unions representing employees of National Steel have filed motions to intervene. The Court has stayed all other proceedings in the litigation pending its decision on the motions to intervene. The District Court has not yet set a date to rule on the PBGC complaint. In accordance with the Financial Accounting Standards Board Statement No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits (“SFAS 88”), the PBGC’s actions require us to recognize a curtailment loss in the first quarter of 2003 of approximately $106 million. Should the PBGC be successful in terminating the Plans, we would be required to transfer administration responsibilities for the plans and transfer ownership of the plans’

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assets to the PBGC. If the courts uphold the PBGC’s decision to involuntarily terminate these pension plans, SFAS 88-settlement accounting would also be triggered. Recognition of a SFAS 88 gain or loss resulting from a plan termination is reflected in earnings when incurred with no delayed measurement. While the timing of the courts’ decision would impact the exact amount of the SFAS 88 settlement gain to be recognized, it is expected to fall between $280.0 and $320.0 million. Under these circumstances, the PBGC will concurrently submit claims against the Company for the unfunded pension benefit obligations assumed. The Bankruptcy Court is projected to place a value on the PBGC’s total claims in the range of $760.0 million to $1.6 billion. This would result in a net settlement loss ranging from $440 million to $1.32 billion. Upon termination of the Plans, the Company expects that the vast majority of claims asserted by the PBGC will be unsecured claims, and will be subject to a plan of reorganization.

On January 9, 2003, we entered into an Asset Purchase Agreement with United States Steel Corporation (“US Steel”) for the sale of substantially all of our principal steel making and finishing assets. This transaction was valued at approximately $950 million, consisting primarily of cash, but including up to $100 million of US Steel common stock and the assumption of certain liabilities approximating $200 million. This transaction was subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to US Steel for the National Steel employees who would become employees of US Steel. A motion to approve procedures related to this transaction was scheduled to be held in the Bankruptcy Court on January 30, 2003. Prior to that hearing, we received a competing bid from AK Steel Corporation (“AK Steel”). Following further negotiations among the parties, on January 30, 2003, we entered into an Asset Purchase Agreement with AK Steel for the sale of substantially all of our principal steelmaking and finishing assets, as well as National Steel Pellet Company, our iron ore pellet operations in Keewatin, Minnesota. This transaction is valued at approximately $1.125 billion, consisting of $925 million of cash and the assumption of certain liabilities approximating $200 million. The transaction is subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to AK Steel for the National Steel employees who would become employees of AK Steel. The Asset Purchase Agreement is also subject to higher and better offers submitted in accordance with the bidding procedures approved by the Bankruptcy Court under Sections 363 and 365 of the Bankruptcy Code on February 6, 2003, as modified by the Bankruptcy Court on March 25, 2003. Under these bidding procedures, bids must be submitted no later than April 10, 2003, and if one or more bids are determined to be Qualified Bids under the bidding procedures an auction is expected to be conducted on April 16, 2003. On February 26, 2003, we were notified that the Justice Department was terminating the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the AK Steel transaction.

On February 28, 2003, we entered into an agreement to sell our equity interest in National Robinson, L.L.C. to Robinson Steel Co., Inc. for approximately $3.5 million of cash.

On March 18, 2003, the Bankruptcy Court approved our motion to terminate the Pension Plan for Hourly Employees of American Steel Corporation. An application has been submitted to the Internal Revenue Service and the PBGC for approval of the plan termination. SFAS 88 curtailment and settlement charges upon termination are currently estimated to be $0.6 million.

Customers

Automotive. We are a major supplier of hot and cold-rolled steel and higher value-added galvanized coils to the automotive industry, one of the most demanding markets of steel consumption. Our steel has been used in a variety of automotive applications including exposed and unexposed panels, underbody and structural components, wheels and bumpers. Automotive manufacturers require wide sheets of steel, rolled to exact dimensions and properties under strict tolerances. In addition, strength, formability, weldability and defect-free surfaces are critical. Over the years, we have consistently demonstrated the ability to successfully meet these demands.

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Construction. We are also a leading supplier of steel to the construction market. Painted and bare roof and building panels and components are the principal applications for galvanized and Galvalume^® steel in this market. Due to cost and environmental issues, steel framing is experiencing growth and will continue to gain popularity with contractors. We believe that demand for Galvalume^® steel will exhibit strong growth for the next several years, partially as a result of a trend away from traditional building products. We are well positioned to profit from this growth as a result of our position and capability in this market.

Container. We produce chrome and tin plated steels to exacting tolerances of gauge, shape, surface flatness and cleanliness for the container industry. Tin and chrome plated steels are used to produce a wide variety of food and non-food containers. In recent years, the market for tin and chrome plated steels has been relatively stable and profitable.

Pipe and Tube. We supply the pipe and tube market with hot-rolled, cold-rolled and coated sheet. We are a key supplier to transmission pipeline, downhole casing and structural pipe producers.

Service Centers. We also supply the service center market with hot-rolled, cold-rolled and coated sheet. Service centers generally purchase steel coils for a variety of applications and markets and may further process them or sell them directly to third parties without further processing.

The following table sets forth the percentage of our revenues from various markets for the past three years.

	2002		2001		2000
Automotive	36.5	%	26.5	%	29.0	%
Construction	24.6		27.0		24.8
Containers	13.4		13.1		12.0
Pipe and Tube	5.3		7.0		6.9
Service Centers	16.5		21.5		22.0
All Other	3.7		4.9		5.3
	100.0	%	100.0	%	100.0	%

In 2002, one customer, within the automotive market, accounted for $267.0 million or 10.2% of net sales. No customer accounted for more than 10% of net sales in 2001 or 2000. Export sales accounted for approximately 3.8% of revenues in 2002, 3.4% in 2001 and 3.6% in 2000.

Our products are sold through sales offices and resident sales employees located in Chicago, Detroit, Houston, Nashville, Granite City Operations, Midwest Steel Operations and at National Steel Headquarters in Mishawaka, Indiana. Substantially all of our orders are for short-term delivery even though approximately one-half of our products are sold under long-term sales arrangements. Accordingly, backlog is not meaningful when assessing future results of operations.

Any sales arrangements with a term of six months or more are considered to be “long-term” most of which are negotiated on an annual basis. A significant amount of our flat rolled steel sales to larger customers in the automotive and container markets are made pursuant to such sales arrangements. Our sales arrangements generally provide for set base prices for the products ordered during the period that they are in effect. As a result, we may experience a delay in realizing price changes related to our long-term business. Much of the remainder of our products are sold under contracts covering shorter periods at the then prevailing market prices for such product.

Customer Partnership. Our customer technical partnerships program provides our customers with superior products, quality, and service through differentiated product development, technical assistance, and local customer service and sales support. We further differentiate our products and promote customer loyalty by establishing close relationships through early customer involvement, providing focused services and support through our technical resources, and broad interaction between customers and our technical personnel.

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Our customer technical partnerships are supported by the scientific and engineering personnel located at our Center for Product and Applications Development (“CPAD”) in Trenton, MI, near Great Lakes. The CPAD, established in late 2001, consolidates the customer applications development function of our former Product Application Center in Livonia, MI and the product development function of our former Technical Research Center in the present Trenton facility. We believe that locating these activities in the same facility enables faster development and application of new products.

The CPAD comprises Applications Development, Advanced Forming and Structural Modeling, and Product Development groups. Together, these groups identify new customer product requirements, design manufacturing process routes for our mills, and promote customer application of these products with design and product characterization support. The CPAD recently developed a family of advanced high strength steels to support emerging automotive customer initiatives to reduce the weight, improve fuel economy, and improve the crash-worthiness performance of their vehicles. Many of these will shortly enter commercial production on North American vehicles. Technical partnerships with our automotive customers’ vehicle design and computer-aided engineering analysis departments are utilized to conduct pioneering research on methods to improve the accuracy of crash safety computer models, and to select and implement our new advanced steels for optimum vehicle performance.

We spent $6.8 million, $8.6 million and $9.6 million for research and development in 2002, 2001 and 2000, respectively. In addition, we participate in various research efforts through the American Iron and Steel Institute (the “AISI”).

Operations

We operate three principal facilities: two integrated steel plants, Great Lakes in Ecorse and River Rouge, Michigan, near Detroit, and the Granite City Division in Granite City, Illinois, near St. Louis and a finishing facility, Midwest in Portage, Indiana, near Chicago. Great Lakes and Midwest operate as the Regional Division, a single business enterprise, in order to improve the planning and coordination of production at both plants and enhance our ability to monitor costs and utilize our resources, thereby allowing us to more effectively meet our customers’ needs.

Our centralized corporate structure, the close proximity of our principal steel facilities and the complementary balance of processing equipment shared by them, enable us to closely coordinate the operations of these facilities in order to maintain high operating rates throughout our processing facilities and to maximize the return on our capital investments.

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The following table details our effective steelmaking capacity, actual production, effective capacity utilization and percentage of steel continuously cast and that of the domestic steel industry for the years indicated.

	Raw Steel Production Data
	Effective Capacity	Actual Production	Effective Capacity Utilization		Percentage Continuously Cast
	(Thousands of net tons)
The Company
2002	6,620	5,755	86.9	%	100.0	%
2001	6,662	5,993	90.0		100.0
2000	6,580	6,138	93.3		100.0
1999	6,450	6,250	96.9		100.0
1998	6,600	6,087	92.2		100.0
Domestic Steel Industry*
2002	113,700	101,679	89.4	%	97.0	%
2001	125,400	99,322	79.2		96.9
2000	130,300	111,903	85.9		96.2
1999	128,100	107,237	83.7		95.6
1998	125,300	108,752	86.8		95.5

*Information as reported by the American Iron and Steel Institute. The 2002 industry information is preliminary.

In 2002, effective capacity was 6,620,000 net tons primarily as a result of the “A” blast furnace at Great Lakes being idled throughout the entire year. In 2001, effective capacity was 6,662,000 net tons primarily as a result of the “B” blast furnace at Great Lakes being idled until February of 2001, and the “A” blast furnace at Great Lakes being idled from October through the end of the year. The idling of these blast furnaces was done in an effort to more closely match production with forecasted demand. In 2000, effective capacity was 6,580,000 net tons primarily as a result of the scheduled “B” blast furnace reline at Great Lakes that was completed in the third quarter and was left idle during the remainder of the year in order to reduce our steel inventory levels. In 1999, effective capacity was 6,450,000 net tons primarily as a result of a planned blast furnace reline at the Granite City Division and the idling of the Great Lakes “D” furnace in the early part of the year as a result of decreased business primarily due to the high levels of imported steel experienced in the second half of 1998. In 1998, effective capacity was 6,600,000 net tons primarily as a result of the scheduled “A” blast furnace reline at Great Lakes.

Raw Materials

Iron Ore. Our metallic iron requirements are supplied primarily from iron ore pellets that are produced from a concentration of low grade ore. We have reserves of iron ore adequate to produce approximately 331.1 million gross tons of iron ore pellets through our wholly owned subsidiary, National Steel Pellet Company (“NSPC”). These iron ore reserves are located in Minnesota and Michigan. A significant portion of our average annual consumption of iron ore pellets was obtained from the deposits at NSPC during the last five years. The remaining consumption of iron ore pellets were purchased from third parties. Iron ore pellets available to us from our own deposits and outside suppliers are expected to be sufficient to meet our total iron ore requirements at competitive market prices for the foreseeable future.

Coal. All of our coal requirements are purchased from third parties. We believe that supplies of coal, adequate to meet our needs, are readily available from third parties at competitive market prices.

Coke. We operate and maintain the Great Lakes No. 5 coke battery on a contract basis and purchase all of the coke produced from the battery under a requirements contract, with the price being adjusted during the term

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of the contract, primarily to reflect changes in production costs. We also operate two efficient coke batteries servicing the Granite City Division. Approximately 60% of our annual coke requirements can be supplied by the Great Lakes and Granite City coke batteries. Our remaining coke requirements are met through market purchases. In addition, our coal injection process at Great Lakes continues to reduce our dependency on outside coke supplies.

Limestone. Prior to its sale in 2000, the majority of our average annual consumption of limestone was acquired from the reserves of an affiliated company at competitive market prices. All limestone requirements are now purchased at competitive market prices from unaffiliated third parties.

Scrap and Other Materials. Supplies of steel scrap, tin, zinc and other alloying and coating materials are readily available at competitive market prices.

Patents and Trademarks

We have the patents and licenses necessary for the operation of our business as now conducted. We do not consider our patents and trademarks to be material to our business.

Employees

As of December 31, 2002, we employed 8,229 people. We have labor agreements with the United Steelworkers of America (“USWA”), the International Chemical Workers Council of the United Food and Commercial Workers and other labor organizations which collectively represent approximately 83% of our employees. In 1999, we entered into labor agreements, which expire on or after July 31, 2004, with these various labor organizations.

Competition

We are in direct competition with domestic and foreign flat rolled carbon steel producers and producers of plastics, aluminum and other materials which can be used in place of flat rolled carbon steel in manufactured products. Steel industry participants compete primarily on price, service and quality. We believe we are able to differentiate our products from those of our competitors by, among other things, providing technical services and support, utilizing our CPAD facility, and by focusing on improving product quality through, among other things, capital investment and research and development, as previously described. We compete with domestic integrated and mini-mill steel producers, some of which have greater resources than us.

Imports. Domestic steel producers face significant competition from foreign producers and, from time to time, have been adversely affected by what we believe to be unfairly traded imports. The intensity of foreign competition is substantially affected by the relative strength of foreign economies and fluctuations in the value of the United States dollar against foreign currencies. Steel imports increase when the value of the dollar is strong in relation to foreign currencies. The recent economic slowdown in certain foreign markets resulted in an increase in imports at depressed prices. Some foreign steel producers are owned, controlled or subsidized by their governments. Decisions by these foreign producers with respect to production and sales may be influenced to a greater degree by political and economic policy considerations than by prevailing market conditions. On March 5, 2002, President Bush ordered relief in the form of increased tariffs on imports of some steel products and a tariff-rate quota on imports of slabs. See the discussion under the caption “Trade Litigation” in Item 3, “Legal Proceedings”.

Mini-mills. Mini-mills provide significant competition in certain product lines, including hot-rolled and cold-rolled sheets that represented, in the aggregate, approximately 51% of our shipments in 2002. Mini-mills also compete to a lesser extent with our galvanized products focused towards the automotive market. Mini-mills are relatively efficient, low-cost producers which make steel from scrap in electric furnaces, with lower employment and environmental costs. Thin slab casting technologies have allowed mini-mills to enter certain

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sheet markets which have traditionally been supplied by integrated producers. Certain companies have announced plans for, or have indicated that they are currently considering, additional mini-mill plants for sheet products in the United States.

Steel Substitutes. In the case of many steel products, there is substantial competition from manufacturers of other products, including plastics, aluminum, ceramics, glass, wood and concrete. Conversely, along with other manufacturers of steel products, we have begun to compete in recent years in markets not traditionally served by steel producers.

NKK

Since 1984, we have had an alliance with our principal stockholder, NKK, one of the largest steel companies in Japan and in the world as measured by production. Our relationship has materialized in a number of business contracts in such areas as engineering and construction, slab purchasing, employee transfers, research and development support and financial support. All such contracts with NKK were unanimously approved by all directors of the Company who were not then, and never have been, employees of NKK. On September 27, 2002, NKK and Kawasaki Steel Corporation (“KSC”), another large steel company in Japan, jointly established JFE Holdings, Incorporated (“JFE”) and became wholly-owned subsidiaries of JFE by the “stock-for-stock” exchange method.

Environmental Matters

Our operations are subject to numerous laws and regulations relating to the protection of human health and the environment. We have made capital expenditures of $0.6 million in connection with matters relating to environmental control during 2002. Our current estimates indicate that we will incur capital expenditures in connection with matters relating to environmental control of approximately $6 million and $3 million for 2003 and 2004, respectively. In addition, we have recorded expenses for environmental compliance, including depreciation, of approximately $60 million in 2002 and expect to record expenses of approximately $58 million in each of 2003 and 2004. Since environmental laws and regulations are becoming increasingly stringent, our environmental capital expenditures and costs for environmental compliance may increase in the future. In addition, due to the possibility of future changes in circumstances or regulatory requirements, the amount and timing of future environmental expenditures could vary substantially from those currently anticipated. The costs for environmental compliance may also place us at a competitive disadvantage with respect to foreign steel producers, as well as manufacturers of steel substitutes, that are subject to less stringent environmental requirements.

In 1990, Congress passed amendments to the Clean Air Act, which impose stringent standards on air emissions. The Clean Air Act amendments directly affect the operations of many of our facilities, including the coke ovens. Under such amendments, coke ovens generally will be required to comply with progressively more stringent standards over the thirty-year period beginning on the date of enactment of the amendments. We believe that the costs for complying with the Clean Air Act amendments will not have a material adverse effect on our financial position, results of operations or liquidity.

The Resource Conservation Recovery Act of 1976, as amended (“RCRA”), imposes certain investigative and corrective action obligations on facilities that are operating under a permit, or are seeking a permit, to treat, store or dispose of hazardous waste. As of December 31, 2002, we have recorded $6.5 million as a liability for certain corrective actions which are expected to be necessary at Midwest and other facilities.

We have recorded an aggregate liability of $0.8 million at December 31, 2002 for the reclamation costs to restore our coal and iron ore mines at our shut down locations to their original and natural state, as required by various federal and state mining statutes.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), and similar state statutes generally impose joint and several liability on present and former

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owners, operators, transporters and generators for remediation of contaminated properties, regardless of fault. We have been conducting steel manufacturing and related operations at numerous locations, including our present facilities, for over seventy years. Although we believe that we have utilized operating practices that were standard in the industry at the time, hazardous materials may have been released on or under these currently or previously owned sites. Consequently, we potentially may be required to remediate contamination at some of these sites. However, based on our past experience and the nature of environmental remediation proceedings, we believe that if any such remediation is required at a site, it will likely occur over an extended period of time.

Pursuant to an indemnity provision contained in the agreements with Weirton Steel Corporation (“Weirton Steel”) which were entered into at the time that we sold the assets of our former Weirton Steel Division to Weirton Steel, we have reimbursed Weirton Steel for the costs of certain remediation activities undertaken by Weirton Steel at our former manufacturing site in Weirton, West Virginia. Additional claims for indemnification by Weirton Steel are possible. In addition, our subsidiary, the Hanna Furnace Corporation is currently involved in remediation activities at the site of the former Donner Hanna coke plant in Buffalo, New York (which was operated as a joint venture with LTV Steel Company, Inc.). See the discussion under the caption “Donner Hanna Coke Plant” in Item 3, “Legal Proceedings”.

In addition to the remediation of current and former manufacturing sites, we are also involved as potentially responsible parties (“PRPs”) in a number of off-site CERCLA and other environmental cleanup proceedings.

We have accrued an aggregate liability of $6.9 million as of December 31, 2002, exclusive of accruals for Midwest and the coal and iron ore mines, for CERCLA and other environmental cleanup liabilities at our current and former manufacturing sites and off site disposal facilities. The outcome of these remediation activities and cleanup proceedings is not expected to have a material adverse effect on our financial position, results of operations or liquidity.

As a result of the settlement of a lawsuit we had previously filed against certain of our comprehensive general liability insurance carriers, we have partial insurance coverage for certain existing and future major environmental liabilities.

Forward Looking Statements

Statements made by us in this Form 10-K that are not historical facts constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements, by their nature, involve risk and uncertainty. A variety of factors could cause business conditions and our actual results and experiences to differ materially from those expected or expressed in our forward looking statements. These factors include, but are not limited to, the following:

General Factors:

  (1) changes in market prices and market demand for our products;

  (2) changes in our mix of products sold;

  (3) changes in the costs or availability of raw materials and other supplies used by us in the manufacture of our products;

  (4) equipment failures or outages at our steelmaking, mining and processing facilities;

  (5) losses of customers;

  (6) changes in the levels of our operating costs and expenses;

  (7) collective bargaining agreement negotiations, strikes, labor stoppages or other labor difficulties;

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  (8) actions by our competitors, including domestic integrated steel producers, foreign competitors, mini-mills and manufacturers of steel substitutes such as plastics, aluminum, ceramics, glass, wood and concrete;

  (9) changes in industry capacity;

(10) changes in economic conditions in the United States and other major international economies, including rates of economic growth and inflation;

(11) worldwide changes in trade, monetary or fiscal policies, including changes in interest rates;

(12) changes in the legal and regulatory requirements applicable to us;

(13) the effect of the increased tariffs ordered by the President after the ITC conducted an investigation pursuant to Section 201 of the Trade Act;

(14) the effects of extreme weather conditions;

Bankruptcy Related Factors:

(15) our ability to continue as a going concern;

(16) our ability to operate pursuant to the terms of the DIP Credit Facility;

(17) our ability to obtain Court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time;

(18) our ability to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 cases;

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

(20) our ability to obtain and maintain normal terms with vendors and service providers;

(21) our ability to maintain contracts that are critical to our operations;

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

(23) our ability to fund and execute our business plan.

Item 2.    Properties

The Granite City Division

The Granite City Division is an integrated steelmaking facility, located in Granite City, Illinois and, has an annual hot-rolled band production capacity of approximately 3.2 million tons. All steel at Granite City is continuous cast. Granite City also uses ladle metallurgy to refine the steel chemistry to enable it to meet the exacting specifications of its customers. The facility’s ironmaking facilities consist of two coke batteries and two blast furnaces. Finishing facilities include an 80-inch hot strip mill, a hot-rolled coil processing line, a continuous pickler, a tandem mill and two hot dip galvanizing lines. Granite City ships approximately 15% of its total production to Midwest for finishing. Principal products of the Granite City Division include hot-rolled, hot-dipped galvanized and Galvalume^® steel, grain bin and high strength, low alloy steels.

The Granite City Division is located on 1,540 acres and employs approximately 2,700 people. The Division’s proximity to the Mississippi River and other interstate transit systems, both rail and highway, provides easy accessibility for receiving raw materials and supplying finished steel products to customers.

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The Regional Division

Great Lakes Operations

Great Lakes, located in Ecorse and River Rouge, Michigan, is an integrated facility engaged in steelmaking primarily for use in the automotive market with an annual hot-rolled band production capacity of approximately 3.7 million tons. All steel at this location is continuous cast. Great Lakes ironmaking facilities consist of three blast furnaces and a rebuilt 85-oven coke battery which was sold in 1997 to a subsidiary of DTE Energy Company. Great Lakes also operates two basic oxygen process vessels, a vacuum degasser and a ladle metallurgy facility. Finishing facilities include a hot strip mill, a skinpass mill, a high speed pickle line, a tandem mill, a batch annealing station, a temper mill, one customer service line and an electrolytic galvanizing line. Additionally, a new automotive hot dip galvanizing line began production during the second quarter of 2000. Great Lakes ships approximately 40% of its production to Midwest and to joint venture coating operations for value-added processing. Principal products include hot-rolled, cold-rolled, electrolytic galvanized, hot dip galvanized, and high strength, low alloy steels.

Great Lakes is located on 650 acres and employs approximately 3,100 people. The facility is strategically located with easy access to water, rail and highway transit systems for receiving raw materials and supplying finished steel products to customers.

Midwest Operations

Midwest, located in Portage, Indiana, finishes hot-rolled bands produced at Great Lakes and Granite City primarily for use in the automotive, construction and container markets. All of the processes performed at Midwest help enhance our profitability by turning commodity grades of hot-rolled steel into higher value-added products. Midwest facilities include a continuous pickling line, two cold reduction mills and three continuous galvanizing lines: a 48 inch wide line (that has been indefinitely idled) which can produce galvanized or Galvalume^® steel products and which services the construction market; a 72 inch wide line which services the automotive market; and a Galvalume^® line which services the construction market. Additionally, Midwest includes finishing facilities for cold-rolled products consisting of a batch annealing station, a sheet temper mill and a continuous stretcher leveling line. The facility also includes an electrolytic cleaning line, a continuous annealing line, two tin temper mills, two tin recoil lines, an electrolytic tinning line and a chrome line, all of which service the container market. Principal products include tin mill products, hot-dipped galvanized and Galvalume^® steel, cold-rolled and electrical lamination steels.

Midwest is located on 650 acres and employs approximately 1,300 people. Its location provides excellent access to rail, water and highway transit systems for receiving raw materials and supplying finished steel products to customers.

National Steel Pellet Company

NSPC, a wholly-owned subsidiary, is located on the western end of the Mesabi Iron Ore Range in Keewatin, Minnesota. NSPC mines, crushes, concentrates and pelletizes low grade taconite ore into iron ore pellets. NSPC operations include two primary crushers, ten primary mills, five secondary mills, a concentrator and a pelletizer. The facility has a current annual effective iron ore pellet capacity of over five million gross tons and has a combination of rail and vessel access to our integrated steel mills. NSPC is located on 24,000 acres and employs approximately 480 people.

ProCoil Corporation

ProCoil, a wholly-owned subsidiary, is located in Canton, Michigan. ProCoil operates a steel processing facility which began operations in 1988 and a warehousing facility which began operations in 1993. ProCoil blanks, slits and cuts steel coils to desired specifications to service automotive market customers and provides laser welding services. In addition, ProCoil warehouses material to assist us in providing just-in-time delivery to our automotive customers. ProCoil is located on 30 acres and employs approximately 165 people.

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Joint Ventures and Equity Investments

DNN Galvanizing Limited Partnership. On August 13, 2002, we sold our 10% ownership interest in DNN Galvanizing Limited Partnership (“DNN”) to an affiliate of NKK, our majority shareholder, and we received proceeds of $3.8 million in the third quarter. In connection with this transaction, we entered into agreements with affiliates of NKK and Dofasco whereby we obtain the right to process material at DNN during the next 12 months. Over that period we will be reducing the tons processed at DNN and move the material to our own galvanizing lines. We anticipate no disruption to our customers in supply, delivery or quality as a result of this transition.

Double G Coatings, L.P. We own a 50% equity interest in Double G Coatings, L.P. (“Double G”), a 300,000 ton per year hot dip galvanizing and Galvalume^® steel facility near Jackson, Mississippi. Bethlehem Steel Corporation owns the remaining 50%. The facility is capable of coating steel coils with zinc to produce a product known as galvanized steel and with a zinc and aluminum coating to produce a product known as Galvalume^® steel. Double G primarily serves the metal buildings segment of the construction market in the south central United States. We are committed to utilize 50% of the available line time of the facility and pay a tolling fee designed to cover fixed and variable costs with respect to 50% of the available line time, whether or not such line time is utilized. The joint venture commenced production in the second quarter of 1994 and reached full operating capacity in 1995. Our steel substrate requirements are currently provided to Double G by Great Lakes and Granite City. On March 13, 2003, Bethlehem Steel Corporation announced that it had signed an asset purchase agreement to sell substantially all of its assets including its interest in joint ventures. We are uncertain what effect, if any, this will have on our future earnings and financial position.

Tinplate Holdings, Inc. In April 1997, one of our wholly-owned subsidiaries purchased 25% of the outstanding common stock of Tinplate Holdings, Inc. (“Tinplate”). During 2000, our ownership interest increased to 42%. Tinplate owns 100% of the outstanding stock of Tinplate Partners International, Inc. (“TPI”) which operated a tinmill service center in Gary, Indiana that purchased tin mill products from us. In March 2002, TPI filed for bankruptcy and subsequently sold all of its’ assets. Our equity investment at December 31, 2002 was valued at zero.

National Robinson LLC. In February 1998, National Steel Corporation entered into an agreement with Robinson Steel Co., Inc. to form a joint venture company, named National Robinson LLC. We own a 50% equity interest in National Robinson LLC. This company operates a temper mill, leveler and cut to length facility in Granite City, Illinois to produce high value added cut-to-length steel plates and sheets with superior quality, flatness and dimensional tolerances. National Robinson LLC processes approximately 200,000 tons of hot-rolled steel annually which is supplied by Granite City. On February 28, 2003, we entered into an agreement to sell our 50% equity interest to Robinson Steel Co., Inc. for approximately $3.5 million in cash. In connection with that transaction, we also agreed to terminate our steel supply agreement with National Robinson LLC. See the discussion under Note 10 to the consolidated financial statements.

Other Information With Respect to Our Properties

In addition to the properties described above, we own our corporate headquarters facility in Mishawaka, Indiana. Our properties are well maintained, considered adequate and are being utilized for their intended purposes. Our steel production facilities are owned in fee by us except for:

(1) a continuous caster and related ladle metallurgy facility which service Great Lakes,

(2) an electrolytic galvanizing line, which services Great Lakes, and

(3) one of the two coke batteries, which service the Granite City Division.

Each of these facilities is owned by third parties and leased to us pursuant to the terms of operating leases. The coke battery lease, the electrolytic galvanizing line lease and the continuous caster and related metallurgy

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facility lease are scheduled to expire in 2004, 2005 and 2008, respectively. Upon expiration, we have the option to extend the respective lease or purchase the facility at fair market value, or return the facility to the third party owner.

Substantially all of the land (excluding certain unimproved land), buildings and equipment (excluding, generally, mobile equipment) that are owned in fee by us at the Granite City Division and the Regional Division are subject to a lien securing the First Mortgage Bonds, 8 ³/8% Series due 2006 and 9 ⁷/8% Series due 2009 (“First Mortgage Bonds”). Included among the items which are not subject to this lien are a vacuum degassing facility and a pickle line which service Great Lakes and a continuous caster facility which services the Granite City Division. However, the pickle line and continuous caster facility are subject to a mortgage granted to the respective lenders who financed the construction of the facilities. We have also agreed to grant to the Voluntary Employees’ Benefit Association Trust (“VEBA Trust”) a second mortgage on that portion of the property which is covered by the lien securing the First Mortgage Bonds and which is located at Great Lakes. The VEBA Trust was established in connection with the 1993 Settlement Agreement with the USWA for the purpose of prefunding certain postretirement employee benefit obligations for USWA represented employees.

For a description of certain properties related to our production of raw materials, see the discussion under the caption “Raw Materials” in Item 1, “Business”.

Item 3.    Legal Proceedings

In addition to the matters discussed below, the Company is involved in various legal proceedings occurring in the normal course of its business. In the opinion of the Company’s management, adequate provision has been made for losses that are likely to result from these actions.

Chapter 11 Bankruptcy Proceedings

On March 6, 2002, National Steel Corporation and forty-one of its wholly owned subsidiaries filed voluntary petitions in the Bankruptcy Court for reorganization relief under Chapter 11 of the Bankruptcy Code. The case was assigned to the Hon. John H. Squires of the Bankruptcy Court and is being jointly administered under case number 02-08699. National Steel and our subsidiaries continue to manage and operate our businesses as debtors and debtors in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.

We obtained Bankruptcy Court approval of a new debtor-in-possession credit facility that provides for up to $450 million in financing from the existing senior secured bank group, which combined with other actions, has been used to fund post-petition operating expenses as well as supplier and employee obligations.

Under bankruptcy law, actions by creditors to collect amounts owed by us at the filing date are stayed and other pre-petition contractual obligations may not be enforced against us, without approval by the Bankruptcy Court. At the outset of the Chapter 11 cases we received approval from the Bankruptcy Court to pay certain of our pre-petition claims, including employee wages and certain employee benefits. In addition, we have the right, subject to Bankruptcy Court approval and other conditions, to assume or reject any pre-petition executory contracts and unexpired leases. Parties to contracts that we rejected may file claims with the Bankruptcy Court.

We have submitted the schedules setting forth all of our assets and liabilities as of the date of the petition as reflected in our accounting records. The amounts of claims filed by creditors could be significantly different from the recorded amounts. The last date for filing claims by creditors other than governmental units was August 15, 2002 and for governmental units was September 6, 2002.

On November 5, 2002, the Bankruptcy Court entered an order that extended the exclusive period within which only we can file a plan of reorganization through April 7, 2003.

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On January 9, 2003, we entered into an Asset Purchase Agreement with US Steel for the sale of substantially all of our principal steel making and finishing assets. This transaction was valued at approximately $950 million, consisting primarily of cash, but including up to $100 million of US Steel common stock and the assumption of certain liabilities approximating $200 million. This transaction was subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to US Steel for the National Steel employees who would become employees of US Steel. A motion to approve procedures related to this transaction was scheduled to be held in the Bankruptcy Court on January 30, 2003. Prior to that hearing, we received a competing bid from AK Steel. Following further negotiations among the parties, on January 30, 2003, we entered into an Asset Purchase Agreement with AK Steel for the sale of substantially all of our principal steelmaking and finishing assets, as well as National Steel Pellet Company, our iron ore pellet operations in Keewatin, Minnesota. This transaction is valued at approximately $1.125 billion, consisting of $925 million of cash and the assumption of certain liabilities approximating $200 million. The transaction is subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to AK Steel for the National Steel employees who would become employees of AK Steel. The Asset Purchase Agreement is also subject to higher and better offers submitted in accordance with the bidding procedures approved by the Bankruptcy Court under Sections 363 and 365 of the Bankruptcy Code on February 6, 2003, as modified by the Bankruptcy Court on March 25, 2003. Under these bidding procedures, bids must be submitted no later than April 10, 2003, and if one or more bids are determined to be Qualified Bids under the bidding procedures, an auction is expected to be conducted on April 16, 2003. On February 26, 2003, we were notified that the Justice Department was terminating the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the AK Steel transaction.

Due to material uncertainties, it is not possible to predict the length of time we will operate under Chapter 11 protection, the outcome of the proceedings in general, whether we will continue to operate under our current organizational structure, the effect of the proceedings on our businesses or the recovery by our creditors and equity holders.

Trade Litigation

National Steel Corporation is a party to on-going trade proceedings concerning imports of hot-rolled carbon steel flat products (“Hot-Rolled Steel”), cold-rolled carbon steel flat products (“Cold-Rolled Steel”), and corrosion-resistant carbon steel flat products (“Corrosion-Resistant Steel”). Such imports affect the steel industry generally. These trade proceedings relate to unfair trade practices for which the remedy is the imposition of antidumping and countervailing duties, which are designed to offset dumping and foreign government subsidies to create a level competitive playing field for domestic producers. In these proceedings, the Department of Commerce (the “DOC”) and the International Trade Commission (the “ITC”) initially conduct an investigation to determine whether to issue an antidumping or countervailing duty order. If an order is issued, the duty rate is then subject to change in subsequent annual administrative reviews. In addition, in five-year reviews, the DOC may revoke an order if it determines that revocation would not be likely to lead to continuation or recurrence of dumping or a countervailable subsidy or if the ITC determines that revocation would not be likely to lead to continuation or recurrence of material injury.

On September 30, 1998, a number of U.S. steel producers filed petitions alleging dumping of imported Hot-Rolled Steel from Brazil, Japan, and Russia. The U.S. steel producers also alleged subsidization of Hot-Rolled Steel from Brazil. We joined in the Russian and Brazilian petitions. The resulting investigations led to the imposition of an antidumping duty order on Japanese imports on June 29, 1999. In July 1999, certain Japanese and U.S. steel producers commenced challenges to the DOC’s final dumping determination in the U.S. Court of International Trade (the “CIT”). The CIT upheld all but one aspect of the DOC’s dumping determination. On February 25, 2002, the United States and certain U.S. steel producers commenced an appeal of the CIT’s decision to the U.S. Court of Appeals for the Federal Circuit (the “CAFC”). Oral argument was conducted before the CAFC in January 2003. A decision is expected later this year. In addition, on February 11, 2000, the Japanese

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government requested the establishment of a dispute settlement panel to review the antidumping duty order on Hot-Rolled Steel from Japan pursuant to the dispute settlement mechanism of the World Trade Organization (“WTO”). The WTO Panel publicly issued its final report on February 28, 2001. The Panel upheld the determinations by the ITC and the DOC that dumped imports had injured the domestic industry. However, the Panel also found that certain aspects of the DOC’s calculation of the dumping margins violated the United States’ international obligations. On April 25, 2001, the United States appealed these findings to the WTO’s Appellate Body. Japan commenced a cross-appeal on May 10, 2001. On July 24, 2001, the Appellate Body affirmed in part and reversed in part the findings by the WTO Panel that certain aspects of the DOC’s calculation of the dumping margins violated the United States’ international obligations. The Appellate Body also found that certain aspects of the ITC’s injury determination violated the United States’ international obligations. On November 22, 2002, the DOC issued a final determination implementing the Appellate Body’s decision by revising its calculation of the dumping margins. The United States now has until December 31, 2003 or the end of the current legislative session, whichever comes first, to implement those aspects of the Appellate Body’s decision relating to the U.S. antidumping statute.

In July 1999, in lieu of issuing antidumping and countervailing duty orders, the DOC entered into suspension agreements with Russia, Brazil, and three Brazilian steel producers to impose volume and price restrictions on imports of Hot-Rolled Steel from Russia and Brazil. In August 1999, challenges to the suspension agreements were commenced in the CIT by several U.S. steel producers, including us. In addition, affected foreign steel producers challenged the DOC’s final subsidization determination regarding Brazil in the CIT. On May 29, 2001 and August 3, 2001, respectively, the CIT remanded to the DOC its determinations to suspend the antidumping duty investigation and the countervailing duty investigation of Hot-Rolled Steel from Brazil. On February 4, 2002, upon finding that Brazilian steel producers had violated the antidumping suspension agreement, the DOC terminated that agreement and imposed an antidumping duty order. Based on these actions, on April 2, 2002, the CIT granted voluntary dismissal of the appeal of the antidumping suspension agreement. The challenge to the countervailing duty suspension agreement on Hot-Rolled Steel from Brazil is still pending before the CIT. In addition, regarding the challenge by affected foreign steel producers of the DOC’s final subsidization determination, on April 19, 2002, the CIT dismissed that action for lack of subject matter jurisdiction. On June 2, 1999, a number of U.S. steel producers filed petitions alleging dumping of Cold-Rolled Steel from Argentina, Brazil, China, Indonesia, Japan, Russia, South Africa, Slovakia, Taiwan, Thailand, Turkey, and Venezuela and subsidization of Cold-Rolled Steel from Brazil, Indonesia, Thailand, and Venezuela. We joined in all of these petitions, except the one against Japan. The resulting subsidy investigations of Indonesia, Thailand, and Venezuela were terminated on July 19, 1999, when the ITC found that imports from those countries were negligible. In Spring and Summer 2000, the ITC made negative final injury determinations with respect to the other cases. In April, June, and September 2000, several U.S. steel producers, including us, commenced challenges in the CIT to the negative final injury determinations of the ITC. Oral argument was conducted before the CIT in December 2001. A decision is expected at any time.

On September 1, 1999, the DOC and the ITC published notices initiating five-year reviews of antidumping and/or countervailing duty orders entered in 1993 on (i) Corrosion-Resistant Steel from Australia, Canada, France, Germany, Japan, and Korea and (ii) Cold-Rolled Steel from Germany, Korea, the Netherlands, and Sweden. In March and July 2000, the DOC determined that revocation of the orders would likely lead to continuation or recurrence of dumping and/or subsidization. And in November 2000, the ITC determined that revocation of the orders on Corrosion-Resistant Steel would be likely to lead to continuation or recurrence of material injury. Therefore, these orders remain in effect. However, the ITC voted to revoke the orders on Cold-Rolled Steel. Several foreign steel producers commenced challenges to the determinations of the DOC and the ITC regarding Corrosion-Resistant Steel either in the CIT or before a North American Free Trade Agreement (“NAFTA”) Binational Panel. On July 19, 2002, the CIT remanded the ITC’s determinations regarding Corrosion-Resistant Steel from France and Germany. On remand, the ITC again determined that revocation of the orders would be likely to lead to continuation or recurrence of material injury. A decision from the CIT on the ITC’s remand determination is expected later this year. And with respect to the NAFTA Binational Panel proceeding regarding Corrosion-Resistant Steel from Canada, all briefs have been filed and the parties are

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currently awaiting the appointment of a Panel. In addition, on July 30, 2002, the European Communities requested consultations with the United States regarding both the DOC and ITC determinations with respect to Corrosion-Resistant Steel from France and Germany pursuant to the dispute settlement mechanism of the WTO. Furthermore, on April 4, 2002, the Japanese government requested the establishment of a WTO dispute settlement panel to review the DOC and ITC determinations with respect to Corrosion-Resistant Steel from Japan. Pursuant to Japan’s request, a panel was appointed by the WTO on July 17, 2002 and is scheduled to issue its report publicly on April 25, 2003.

On November 13, 2000, a number of U.S. steel producers filed petitions alleging dumping of Hot-Rolled Steel from Argentina, China, India, Indonesia, Kazakhstan, the Netherlands, Romania, South Africa, Taiwan, Thailand, and the Ukraine and subsidization of Hot-Rolled Steel from Argentina, India, Indonesia, South Africa, and Thailand. We joined in all of these petitions. On July 16, 2001, the DOC made a final determination that Hot-Rolled Steel from Argentina had been dumped and subsidized and that Hot-Rolled Steel from South Africa had been dumped. On August 31, 2001, the ITC made a final determination that Hot-Rolled Steel from Argentina and South Africa had injured the domestic industry. The DOC published an antidumping duty order with respect to these two countries and a countervailing duty order with respect to Argentina on September 11, 2001. On September 21, 2001, the DOC made final determinations that Hot-Rolled Steel from India, Indonesia, Kazakhstan, the Netherlands, the People’s Republic of China, Romania, Taiwan, and Thailand had been dumped and that Hot-Rolled Steel from India, Indonesia, South Africa, and Thailand had been subsidized. On November 2, 2001, the ITC made a final determination that Hot-Rolled Steel from these countries had injured the domestic industry. An antidumping duty order was issued by the DOC on Hot-Rolled Steel from Kazakhstan on November 21, 2001. On November 29, 2001, the DOC issued antidumping duty orders on Hot-Rolled Steel from China, the Netherlands, Romania, Taiwan, Thailand, and the Ukraine. Finally, the DOC issued antidumping and countervailing duty orders on Hot-Rolled Steel from India and Indonesia and countervailing duty orders on Hot-Rolled Steel from South Africa and Thailand on December 3, 2001. In December 2001 and January 2002, several foreign steel producers commenced challenges in the CIT to the final injury determinations of the ITC. In addition, in December 2001, a steel producer in the Netherlands and several U.S. steel producers, including us, commenced challenges to the DOC’s final dumping determination on Hot-Rolled Steel from the Netherlands in the CIT. Oral argument was conducted before the CIT in the appeals of both the ITC and DOC determinations in December 2002. Decisions are expected in those appeals later this year.

On September 28, 2001, a number of U.S. steel producers filed petitions alleging dumping of Cold-Rolled Steel from Argentina, Australia, Belgium, Brazil, France, Germany, India, Japan, Korea, the Netherlands, New Zealand, the People’s Republic of China, the Russian Federation, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela and subsidization of Cold-Rolled Steel from Argentina, Brazil, France, and the Republic of Korea. We joined in all of the petitions, except the one regarding Japan. On July 10, 2002, the DOC made final determinations that Cold-Rolled Steel from Australia, India, Japan, Sweden, and Thailand had been dumped. And on October 3, 2002, the DOC made final determinations that Cold-Rolled Steel from Argentina, Belgium, Brazil, France, Germany, Korea, the Netherlands, New Zealand, the People’s Republic of China, the Russian Federation, South Africa, Spain, Taiwan, Turkey, and Venezuela had been dumped and that Cold-Rolled Steel from Brazil, France, and Korea had been subsidized. The DOC also determined that Cold-Rolled Steel from Argentina was not being subsidized. In September and October 2002, the ITC made negative final injury determinations with respect to Cold-Rolled Steel from all of the foregoing countries. These determinations mean that no antidumping or countervailing duties will be assessed against Cold-Rolled Steel imported from those countries. However, in September, October, and November 2002, several U.S. steel producers, including us, appealed the ITC’s negative final injury determinations to the CIT. Moreover, on December 12, 2002, several U.S. steel producers, including us, appealed the DOC’s final dumping determination with respect to Cold-Rolled Steel from Taiwan to the CIT.

In addition to the foregoing antidumping and countervailing duty proceedings to which we have been a party, on March 5, 2002, the President ordered relief in the form of increased tariffs on imports of cut-to-length plate, Hot-Rolled Steel, Cold-Rolled Steel, Corrosion-Resistant Steel, and tin-mill products and a tariff-rate quota on imports of slab pursuant to Section 201 of the Trade Act of 1974. The President excluded imports from certain

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of our Free Trade Agreement partners and certain developing countries from the relief ordered. Moreover, numerous parties have requested exclusions of specific products from the relief. Proceedings for the consideration of such exclusion requests will be conducted in each year in which the relief remains in effect. In the first round of exclusion requests, a number of the requests were granted, which resulted in a weakening of the effectiveness of the relief for certain product areas. A second round of exclusion requests is currently underway. We are participating in all phases of the proceedings before the United States Trade Representative and the DOC in which parties are requesting such exclusions and remains active in opposing unjustified requests. Furthermore, the governments of the European Communities, Japan, Korea, the People’s Republic of China, Switzerland, Norway, New Zealand, and Brazil all requested the establishment of a dispute settlement panel to review the relief ordered by the President pursuant to the WTO’s dispute settlement mechanism. On July 25, 2002, the WTO appointed a single panel to rule on all of these challenges to the relief. The WTO panel is currently scheduled to issue its final report by the end of April 2003. On November 11, 2002, Taiwan also requested WTO consultations with the United States regarding the relief ordered by the President. However, Taiwan has not yet requested the establishment of a dispute settlement panel to rule on its challenge. Additionally, one foreign steel producer commenced a challenge against the relief ordered by the President with respect to tin-mill products in the CIT. In that case, the CIT dismissed one count of the complaint on August 9, 2002 and dismissed the remaining count on September 5, 2002. On October 8, 2002, the foreign producer that commenced the challenge in question appealed the CIT’s August 9, 2002 decision to the CAFC.

Pension Benefit Guaranty Corporation v. National Steel Corporation

On December 6, 2002 the PBGC filed a Complaint in the District Court against National Steel Corporation seeking an order (i) terminating certain pension plans sponsored by us, (ii) appointing the PBGC as the statutory trustee of these pension plans, (iii) establishing December 6, 2002 as the termination date of the pension plans and (iv) requiring us to deliver to the PBGC all records, assets, property and documents related to these pension plans. The pension plans covered by the litigation are the National Steel Corporation Retirement Program; the National Steel Corporation Pension Plan—Hourly Employees; the Granite City United Steelworkers of America Pension Plan; the Granite City Pension Plan for Chemical Workers, Bricklayers, Hodcarriers, Blacksmiths and Watchmans Union; the Weirton Retirement Program; the National Steel Pellet Company Pension Plan for Hourly Wage Employees; and the Pension Plan for Salaried Employees of National Steel Pellet Company. We have filed an answer and certain unions representing employees of National Steel have filed motions to intervene. The Court has stayed all other proceedings in the litigation pending its decision on the motions to intervene. If the PBGC succeeds in having the pension plans terminated, certain preliminary claims made by the PBGC in our Chapter 11 Bankruptcy Case that were contingent upon termination of the plans would become actual claims. These claims would be processed in the normal course of the Chapter 11 Bankruptcy Case. While the amount of the PBGC’s claims is subject to several variables in connection with the proceedings, the Bankruptcy Court could place a value on the claims in the range of $760 million to $1.6 billion. Upon termination of the Plans, the Company expects that the vast majority of claims asserted by the PBGC will be unsecured claims, and will be subject to a plan of reorganization.

Donner Hanna Coke Plant

The Donner Hanna coke plant was operated from approximately 1920 to 1982, for the majority of that time as a corporation jointly owned by The Hanna Furnace Corporation (“Hanna Furnace”), a subsidiary of National Steel Corporation, and LTV Steel Company, Inc. (or its predecessor) (collectively “LTV”). In 1989 and 1990, the plant was demolished and, until the third quarter of 2002, Hanna Furnace and LTV each had a 50% ownership share in the property.

For years, Hanna Furnace participated in a voluntary effort with LTV to perform a site cleanup at Donner Hanna, with a goal of eventually transferring ownership of the property to either the City of Buffalo (the “City”) or a third party. A significant amount of site assessment work was completed during this time.

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In the spring of 1999, contamination was discovered on certain properties in the vicinity of the Donner Hanna coke plant which had been transferred by LTV and Hanna Furnace to the Buffalo Urban Renewal Agency (“BURA”) in 1992. These properties are located in a residential housing development commonly known as the Hickory Woods Subdivision. Several of the properties have had houses constructed on them, while several others remain vacant. Contamination also was discovered on a berm constructed on the Donner Hanna coke plant property by BURA pursuant to an easement granted by LTV and Hanna Furnace.

On September 3, 1999, Hanna Furnace and LTV filed suit in the U.S. District Court for the Western District of New York against the City and BURA (the “WDNY Litigation”) arising from defendants’ placement of hazardous substances within a berm on the site of the former Donner Hanna coke plant. Hanna Furnace and LTV sought $3 million to remove the berm and an unspecified amount of other damages, response costs, attorneys fees, and injunctive relief and asserted claims under CERCLA, breach of contract, and common law. On December 13, 1999, the City and BURA asserted counterclaims, alleging that Hanna Furnace and LTV disposed of wastes both on the coke plant property and on properties in the Hickory Woods Subdivision. The City and BURA’s counterclaims sought an unspecified amount of response costs, compensatory damages, injunctive relief and attorney fees, plus punitive damages of $250 million, based on CERCLA and New York statutory and common law.

In the spring of 2000, Hanna Furnace, LTV, and BURA entered into an Administrative Order on Consent with the United States Environmental Protection Agency (“EPA”), wherein they agreed to conduct a removal action on certain vacant lots in the Hickory Woods Subdivision sold to BURA by LTV and Hanna Furnace and to reimburse EPA for certain oversight costs. The cost estimate to conduct the removal action is approximately $600,000, and the estimated oversight costs are approximately $30,000. Hanna Furnace, LTV, BURA, and the City entered into a cost allocation agreement describing the parties’ responsibilities, as between themselves, for the removal costs and the oversight costs. Under the terms of that agreement, BURA and/or the City must pay $100,000 of the first $600,000 of removal costs, and Hanna Furnace and LTV are responsible for the other $500,000 of the first $600,000 of removal costs. If the removal costs exceed $600,000, then BURA and/or the City pay one-half of all removal costs in excess of $600,000, and Hanna Furnace and LTV are responsible for the other one-half of the excess removal costs. With regard to EPA response and oversight costs, BURA and/or the City pay one-third of such costs, and LTV and Hanna Furnace are responsible for the other two-thirds of such costs. As between LTV and Hanna Furnace, they are each responsible to pay one-half of the companies’ obligation under the agreement. To date, the vacant lots have been stabilized, but EPA has not required the parties to implement the removal action.

During the second half of 2000, EPA conducted a soil sampling program for more than 80 properties in the Hickory Woods Subdivision, including some of the properties that were transferred by LTV and Hanna Furnace. The data from this sampling program was evaluated by the New York State Department of Health (“DOH”). DOH concluded that a few of the properties merit further investigation, but generally the soils in the Hickory Woods Subdivision do not pose an unacceptable risk to human health. The City and BURA retained an independent group of scientists to conduct a peer review of the DOH study. It appears that the peer review generally supports the DOH study, but believes that there are several areas of potential exposure that merit further study.

In August 2001, National Steel Corporation was named as a defendant, along with Hanna Furnace, LTV, the City, BURA and Donner-Hanna Coke Corporation in four lawsuits in the State of New York Supreme Court, Erie County, initiated by persons residing in more than 80 houses in the vicinity of the former Donner-Hanna coke plant. Plaintiffs allege that defendants are responsible for contamination of plaintiffs’ properties, and their claims are based on various common law theories. In the Blake case, the Blake family seeks punitive damages of $160 million in addition to alleged property and personal injury damages of $80 million. In the other three cases (Acuff, Andriaccio and Gilmour), the remaining plaintiffs claim property and personal injury damages totaling at least $33 million. On March 12, 2002, National Steel Corporation and Hanna Furnace filed a Suggestion of Bankruptcy and Notice of Automatic Stay in all four cases.

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On October 23, 2002, the U.S. District Court for the Western District of New York entered a Consent Order among LTV, Hanna Furnace, the City, and BURA. In accordance with this Consent Order:

• Hanna Furnace and LTV transferred the former Donner Hanna Coke plant and other specified properties owned by LTV (collectively the “Properties”) to Steelfields LLC (“Steelfields”), an independent third-party developer.

• Hanna Furnace and LTV placed $16.5 million in an escrow account, to be drawn from for remediation of the Properties by Steelfields. Of this amount, Hanna Furnace paid $7.75 million, 43% of which was reimbursed by its insurers under an environmental insurance litigation settlement agreement. LTV paid $2,187,500 cash and assigned the rights to $6,562,500 of its insurance settlement into the escrow, for a total of $8.75 million.

• Steelfields agreed to remediate the Properties pursuant to a voluntary cleanup agreement with New York Department of Environmental Conservation (“NYDEC”) and an approved workplan. Steelfields will draw money from the escrow account per a schedule. If Steelfields defaults in its obligations, the balance of the escrow will go to NYDEC to complete the work.

• Steelfields agreed to indemnify Hanna Furnace and LTV from all post-closing liabilities regarding the Properties.

• NYDEC released Hanna Furnace (as well as its parents & affiliates) and LTV for all liabilities regarding existing environmental conditions at the Properties, and provided contribution protection from other PRPs with respect to the Properties.

• The City and BURA discharged Hanna Furnace (as well as its parents and affiliates) and LTV from all liabilities at the Properties and adjacent residential properties, and the parties dismissed with prejudice all claims and counterclaims in the WDNY Litigation.

Environmental Regulatory Enforcement Proceedings

From time to time, we are involved in proceedings with various regulatory authorities relating to violations of environmental laws and regulations which may require us to pay various fines and penalties, comply with applicable standards or other requirements or incur capital expenditures to add or change certain pollution control equipment or processes. The more significant of these proceedings which are currently pending are described below:

Granite City Division—IEPA Violation Notice. On October 18, 1996, the IEPA issued a Violation Notice alleging (1) releases to the environment between 1990 and 1996; (2) violations of solid waste requirements; and (3) violations of the NPDES water permit limitations, at our Granite City Division. No demand or proposal for penalties or other sanctions was contained in the Notice; however, the Notice does contain a recommendation by IEPA that we conduct an investigation of these releases and, if necessary, remediate any contamination discovered during that investigation. We submitted a written response to the Notice on December 4, 1996 and met with IEPA on December 18, 1996. We submitted certain additional information requested by IEPA in 1997. IEPA has not responded to us since receiving this additional information.

Release of Acid to Granite City Regional Wastewater Treatment Plant. On October 14, 1999 the Granite City Regional Wastewater Treatment Plant (the “Granite City POTW”) issued a Notice of Violation (“NOV”) to our Granite City Division. The NOV alleges that we discharged significant quantities of concentrated acid into the Granite City POTW without a permit and in violation of the Granite City POTW’s Sewer Use Ordinance. No penalty demand was included in the NOV, although it alleges that we are responsible for (i) all costs incurred by the Granite City POTW in investigating and monitoring these alleged violations and (ii) all costs to inspect, repair or replace any portion of the Granite City POTW facility that was damaged by these discharges. We have implemented actions to minimize the potential for the release of process wastewater to the Granite City POTW and submitted a response to the NOV on

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November 11, 1999. On February 25, 2000, the Illinois Emergency Management Agency (“IEMA”) issued an NOV to us, alleging that our reporting of the release of acid to the POTW (as well as an unrelated release of coke oven gas), was not as timely as required under applicable law. On April 14, 2000, we received a request for information pursuant to Section 104(e) of CERCLA from the U.S. Environmental Protection Agency seeking information regarding this release. We responded to this request on May 12, 2000.

Detroit Water and Sewerage Department NOVs. From November 25, 1998 to September 6, 2001 the Detroit Water and Sewerage Department (“DWSD”) issued numerous NOVs to our Great Lakes Division alleging that our discharge to the DWSD contained levels of zinc, cyanide and mercury in excess of the permitted limits. On November 9, 2001, this matter was resolved through the execution of an Administrative Consent Order between National Steel and DWSD. Pursuant to the terms of this Order, we developed and submitted a plan for further control of mercury discharges through the installation of additional controls, while simultaneously working to reduce mercury in the discharge through maintenance and operational changes. National Steel and DWSD have recently reached an agreement in principle to enter into an new Administrative Consent Order pursuant to which we would have a three month period to demonstrate compliance with the mercury standard following completion of the scheduled maintenance and operational changes. If compliance is not achieved through these means, we would submit a compliance plan involving additional control equipment. In either case, we have agreed to evaluate additional mercury controls in anticipation of more stringent mercury limits potentially being mandated in the future.

Proofs of Claim—United States Environmental Protection Agency. On November 6, 2002, the Department of Justice, on behalf of the United States Environmental Protection Agency, filed Proofs of Claim against National Steel and certain of our subsidiaries. The Proofs of Claim include alleged violations at our Great Lakes, Midwest and Granite City Divisions of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Emergency Planning and Community Right to Know Act (“EPCRA”), the Clean Air Act (“CAA”), the Resource Conservation and Recovery Act (“RCRA”), the Clean Water Act (“CWA”) and the Toxic Substances Control Act (“TSCA”) and alleged liability for environmental oversight costs and response costs under CERCLA. The Proofs of Claim for the above referenced violations assert claims for civil penalties in an amount up to the penalty amount provided for under the applicable statute and also seek certain injunctive relief. The Proofs of Claim also allege that our Great Lakes and Granite City Divisions are hazardous waste treatment, storage, management and/or disposal facilities, which would trigger RCRA permitting and corrective action for these Divisions. We deny these specific allegations and are in the process of attempting to negotiate a resolution of all claims raised in the Proofs of Claim.

For a discussion of our Superfund and other cleanup liabilities see “Environmental Matters” under Item 1, “Business”.

Item 4.    Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of 2002.

Executive Officers of the Registrant

The following sets forth certain information with respect to our executive officers. Executive officers are elected by our Board of Directors, generally at their first meeting after each annual meeting of stockholders. Our officers serve at the discretion of the Board of Directors and are subject to removal at any time.

Mineo Shimura, Chairman and Chief Executive Officer. Mr. Shimura, age 51, has been a director of the Company since April 21, 1997. He was elected Chairman of the Board and Chief Executive Officer effective as of September 27, 2002. Prior to being elected to that position, Mr. Shimura served as a senior executive for various U.S. affiliates of NKK and held the following positions with NKK affiliates: President of NUF LLC (a finance company), President of NKK America, Inc. (a service company), President of NKK U.S.A. Corporation (a holding company), President of NKK Windsor Corporation (a finance company) and President of Galvatek Ontario Corporation (a holding company).

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John A. Maczuzak, President and Chief Operating Officer. Mr. Maczuzak, age 61, joined National Steel as Vice President and General Manager—Granite City Division in May 1996. He was elected Executive Vice President and Acting Chief Operating Officer in August 1996 and assumed his present position in December 1996. Mr. Maczuzak was formerly employed by ProTec Coating Company as General Manager and USS/Kobe Steel Company as Vice President of Operations and has more than 37 years of broad-based experience in the steel industry.

Kirk A. Sobecki, Senior Vice President and Chief Financial Officer. Mr. Sobecki, age 41, joined National Steel in January 1999 as Corporate Controller. He was elected Vice President and Corporate Controller in November 2001 and assumed his present position in March 2002. From September 1997 to December 1998, he served as Chief Financial Officer of Luitpold Pharmaceuticals, Inc. From June 1986 to August 1997 Mr. Sobecki held various positions with Zimmer, Inc., a Division of Bristol-Myers Squibb, including Director of Finance/Controller from 1995 to 1997.

Ronald J. Werhnyak, Senior Vice President, General Counsel and Secretary. Mr. Werhnyak, age 57, became National Steel’s Senior Counsel in January 1996. He was elected Acting General Counsel and Secretary in August 1998, Vice President, General Counsel and Secretary in December 1998, and to his current position in March 2002.

John L. Davis, Vice President—Purchasing, Information Technology and Engineering. Mr. Davis, age 48, joined National Steel Corporation in 1995. He has held various positions of increasing responsibility including Director—Strategic Planning, Coordinating Director—Environmental and Technology Services and General Manager—Information Technology and Engineering. Mr. Davis assumed the responsibility for the purchasing function in January 2001. He was elected to his current position in March 2001.

Stephen G. Denner, Vice President—Research and Technology. Dr. Denner, age 52, began his career with National Steel Corporation in 1983. His most recent positions have been General Manager of Technology from March 1995 to December 1999 and General Manager of Technology Planning and Coordination from December 1999 until May 2000. Dr. Denner assumed his current position in May 2000.

Tamara J. Freeman, Vice President Administration. Ms. Freeman, age 45, began her career with National Steel in 1980. She has held various positions in the Financial and Human Resource organizations including Director—Personal Services and Employee Benefits from August 1996 to October 2000 and General Manager—Safety, Health and Employee Welfare from November 2000 to June 2002. Ms. Freeman was appointed to her present position in July 2002.

Michael D. Gibbons, Vice President and General Manager—Granite City Division. Mr. Gibbons, age 52, joined National Steel Corporation in 1973. He served in various capacities at the Company’s Granite City Division including Controller from February 1995 to May 2000. Mr. Gibbons served as the Company’s Acting Chief Financial Officer from December 1997 to August 1998 and assumed his current position in May 2000.

Daniel B. Joeright, Vice President and General Manager—Regional Division. Mr. Joeright, age 56, joined National Steel Corporation in May 1991. He served as Director—Cold Roll Operations until December 1998 when he was appointed to the position of Plant Manager—Finishing for the Regional Operations. Mr. Joeright had twenty years of experience with another steel producer prior to joining National Steel Corporation. He was elected to his current position in May 2000.

William E. McDonough, Vice President and Treasurer. Mr. McDonough, age 44, began his career with National Steel in 1985 in the Financial Department. He has held various positions of increasing responsibility including Manager, Treasury Operations, Assistant Treasurer and Treasurer and was elected to his present position in November 2001.

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Scott J. Montross, Vice President Sales. Mr. Montross, age 38, began his career with National Steel in 1990. He has held various positions in the Commercial organization, including Manager Sheet Sales—Chicago DSO from July 1997 to September 2000 and General Manager of Sheet Sales from October 2000 to July 2002. Mr. Montross was appointed to his present position in July 2002.

Lawrence F. Zizzo, Jr., Vice President Human Resources. Mr. Zizzo, age 54, began his career with National Steel in 1978. He has held various positions in the Human Resources organization, including Director of Human Resources at the Great Lakes Division from March 1991 to November 1998 and Regional Director of Human Resources from December 1998 to January 2000. Mr. Zizzo was appointed to his present position in February 2000.

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PART II

Item 5.    Market for Registrant’s Common Equity and Related Stockholder Matters

National Steel Corporation’s Class B Common Stock was traded on the New York Stock Exchange (“NYSE”) until March 12, 2002 under the symbol “NS”. After the NYSE delisted our Class B common stock, the stock began being quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “NSTLB.” OTCBB quotations reflect inter-dealer prices, without mark-up, mark-down or commission and may not necessarily represent actual transactions. The following table sets forth, for the periods indicated, the high and low sales prices of the Class B Common Stock on a quarterly basis as reported on the NYSE Composite Tape and the OTCBB.

Period	High		Low
2002
First Quarter	$	1.77	$0.16
Second Quarter		0.24	0.14
Third Quarter		0.17	0.05
Fourth Quarter		0.16	0.095
2001
First Quarter	$	2.81	$1.25
Second Quarter		2.90	1.56
Third Quarter		2.22	1.12
Fourth Quarter		1.97	0.87

As of December 31, 2002, there were approximately 235 registered holders of Class B Common Stock. (See Note 3 to the Consolidated Financial Statements for further discussion.) During the first three quarters of 2000, we paid quarterly dividends of $0.07 per common share (or an annual total of $0.21 per common share). We did not pay dividends in the fourth quarter of 2000 or during 2001 and 2002. We will not pay dividends during 2003. Dividends are restricted under the Company’s debtor-in-possession credit facility.

Prior to August 1, 1999, any dividend payments were required to be matched by a like contribution into the VEBA Trust, the amount of which was calculated under the terms of the 1993 Settlement Agreement between the Company and the USWA, until the asset value of the VEBA Trust exceeded $100.0 million. On August 1, 1999, a new five year Basic Labor Agreement became effective between the Company and the USWA. This new agreement provides that if the assets in the VEBA Trust equal or exceed $100 million (1) we will not be required to make contributions to the VEBA Trust and (2) we may withdraw up to $5.5 million from the VEBA Trust in each calendar year to fund current retiree medical and life insurance benefits.

The asset value of the VEBA Trust was $75.9 million at December 31, 2002 and $97.2 million at December 31, 2001. No matching dividend contribution to the VEBA Trust was required for the years ended December 31, 2002, 2001 and 2000 and $5.5 million was withdrawn from the VEBA Trust in 2001 and 2000.

Certain debt and lease agreements include restrictions on the amount of stockholders’ equity available for the payment of dividends. Under these agreements, the Company was prohibited from declaring or paying dividends at December 31, 2002.

Currently, it is not possible to predict with certainty the length of time that we will operate under the protection of Chapter 11, the outcome of the Chapter 11 proceedings in general, or the effect of the proceedings on the business of the Company or on the interests of the various creditors and stakeholders. Under the priority scheme established by the Bankruptcy Code, certain post-petition liabilities and pre-petition liabilities need to be satisfied before shareholders can receive any distribution. National believes that any recovery by its stockholders under any Chapter 11 plan appears unlikely.

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Equity Compensation Plan Information

The following table presents certain information about the Company’s equity compensation plan as of December 31, 2002:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	1,441,065	$	6.29	2,031,795
Equity compensation plans not approved by security holders	—		—	—
Total	1,441,065	$	6.29	2,031,795

Item 6.    Selected Financial Data

	Year Ended December 31,
	2002			2001			2000			1999			1998
	(Dollars in millions, except per share data)
Statement of Operations Data
Net sales	$	2,609		$	2,492		$	2,979		$	2,954		$	2,936
Cost of products sold		2,476			2,649			2,792			2,671			2,579
Depreciation		161			168			153			140			129
Gross margin		(28	)		(325	)		34			143			228
Selling, general and administrative expense		117			149			151			148			154
Other items		(7	)		(16	)		—			—			(27	)
Income (loss) from operations		(135	)		(455	)		(114	)		(3	)		102
Reorganization items		51			—			—			—			—
Financing costs, net		25			67			37			28			11
Income (loss) before income taxes, extraordinary items and cumulative effect of accounting change		(207	)		(519	)		(137	)		(31	)		93
Extraordinary items		—			(2	)		—			—			—
Cumulative effect of accounting change		—			17			—			—			—
Net income (loss)		(149	)		(652	)		(130	)		(29	)		89
Net income (loss) applicable to common stock		(149	)		(652	)		(130	)		(29	)		89
Basic per share data:
Income (loss) before extraordinary items and cumulative effect of accounting change		(3.60	)		(16.16	)		(3.14	)		(0.69	)		2.06
Net income (loss)		(3.60	)		(15.79	)		(3.14	)		(0.69	)		2.06
Diluted earnings (loss) per share applicable to common stock		(3.60	)		(15.79	)		(3.14	)		(0.69	)		2.06
Cash dividends paid per common share		—			—			0.21			0.28			0.28

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	Year Ended December 31,
	2002			2001			2000			1999			1998
	(Dollars in millions, except per share data)
Balance Sheet Data
Cash and cash equivalents	$	2		$	1		$	2		$	58		$	138
Working capital (deficit)		372			(78	)		179			361			333
Net property, plant and equipment		1,257			1,385			1,517			1,446			1,271
Total assets		2,209			2,308			2,565			2,749			2,505
Current maturities of long-term obligations		—			29			28			31			30
Long-term obligations		—			810			523			556			286
Liabilities subject to compromise		2,646			—			—			—			—
Stockholders’ equity (deficit)		(905	)		(311	)		718			853			852
Other Data
Shipments (net tons, in thousands)		5,319			5,904			6,254			6,110			5,587
Raw steel production (net tons, in thousands)		5,755			5,993			6,138			6,250			6,087
Effective capacity utilization		87	%		90	%		93	%		97	%		92	%
Number of employees (year end)		8,229			8,342			9,283			9,395			9,230
Purchases of property, plant and equipment including capitalized leases	$	39		$	52		$	225		$	332		$	171
Common shares outstanding at year end (in thousands)		41,288			41,288			41,288			41,288			42,178

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

National Steel Corporation is a domestic manufacturer engaged in a single line of business, the production and processing of steel. We target high value-added applications of flat rolled carbon steel for sale primarily to the automotive, construction and container markets. We have two principal divisions: The Granite City Division which is a fully integrated steelmaking facility located near St. Louis; and The Regional Division comprised of Great Lakes, a fully integrated steelmaking facility located near Detroit, and Midwest, a steel finishing facility located near Chicago. These two divisions have been aggregated for financial reporting purposes and represent our only reportable segment—Steel (See Note 4 to the Consolidated Financial Statements for further discussion.)

Overview

On March 6, 2002, National Steel Corporation and forty-one of its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the Bankruptcy Court. The case was assigned to Judge John H. Squires and is being jointly administered under case number 02-08699. Certain majority owned subsidiaries of National Steel Corporation have been excluded from the Chapter 11 filings. We also obtained Bankruptcy Court approval of a $450 million Secured Super Priority Debtor In Possession (“DIP”) Credit Agreement with the existing senior secured bank group, which combined with other actions has been used to fund post-petition operating expenses as well as supplier and employee obligations.

Historically low steel selling prices in 2001 and a weak economy impeded our ability to service our debt and make investments in the business necessary for continued growth. We worked diligently to reduce costs during these difficult times. In 2001, we reduced our costs by approximately $150 million compared to the prior year and inventory reductions exceeded $130 million. Despite our cost reduction activities, idling of production facilities, and our focus on value-added shipments, these efforts were not enough to overcome the injury to us and the steel industry caused by the lingering effects of the record levels of unfairly traded steel imports and the downturn in the economy that have led to depressed steel selling prices. We filed for protection under Chapter 11 in order to obtain the necessary time to stabilize our finances and to attempt to develop a plan of reorganization.

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Our financial results discussed below have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and settlement of liabilities in the normal course of business and do not reflect adjustments that may result if we are unable to continue as a going concern. The Consolidated Financial Statements contained herein have been prepared in accordance with the AICPA’s Statement of Position No. 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (“SOP 90-7”). SOP 90-7 requires us to segregate liabilities subject to compromise by the Court as of the bankruptcy filing date and to identify all transactions and events that are directly associated with our reorganization. A significant portion of the liabilities recorded at December 31, 2002 is reflected as subject to compromise. Also in accordance with SOP 90-7, after the filing date, interest expense will only be recognized on long-term obligations that are believed to be fully secured.

Under bankruptcy law, actions by creditors to collect amounts owed by us at the filing date are stayed and other pre-petition contractual obligations may not be enforced against us, without approval by the Bankruptcy Court to settle these claims. At the outset of the Chapter 11 cases, we received approval from the Bankruptcy Court to pay certain of our pre-petition claims, including employee wages and certain employee benefits. In addition, we have the right, subject to Bankruptcy Court approval and other conditions, to assume or reject any pre-petition executory contracts and unexpired leases. On May 24, 2002, we filed with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors as shown by our books and records, subject to the assumptions contained in certain notes filed in connection therewith. All of the schedules are subject to further amendment or modification. The Bankruptcy Court set August 15, 2002 as the deadline for creditors (other than governmental units) to file proofs of claim. Differences between amounts scheduled by National Steel Corporation and claims by creditors will be investigated and resolved in connection with our claims resultion process. That process has commenced, but in light of the number of claims filed, may take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known and, because the settlement terms of such allowed claims are subject to a confirmed plan of reorganization, the ultimate distribution with respect to allowed claims is not presently ascertainable.

The United States Trustee has appointed an unsecured creditors committee. An Ad Hoc Committee of First Mortgage Bondholders has also been formed. These committees and their legal representatives have a right to be heard on all matters that come before the Court, and are the primary entities with which we will negotiate the terms of a plan of reorganization. There can be no assurance that these committees will support our positions in the bankruptcy proceedings or the plan of reorganization once proposed, and disagreements between us and these committees could protract the bankruptcy proceedings, could negatively impact our ability to operate during bankruptcy and could delay our emergence from bankruptcy.

At this time, it is not possible to predict the effect of the Chapter 11 reorganization on our business, various creditors and security holders or when we will be able to emerge from Chapter 11. Our future results are dependent upon our confirming and implementing, on a timely basis, a plan of reorganization.

On December 6, 2002, the PBGC filed a complaint in District Court alleging there was sufficient cause under applicable laws to terminate seven of the eight pension plans of National Steel Corporation and its subsidiaries. The complaint requests, among other things, that the PBGC be appointed as the Plans’ trustee and December 6, 2002 be established as the Plans’ termination date. We and other parties are contesting the PBGC’s proposed actions. The District Court has not yet set a date to rule on the PBGC complaint. In accordance with the Financial Accounting Standards Board Statement No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits (“SFAS 88”), the PBGC’s actions require us to recognize a curtailment loss in the first quarter of 2003 of approximately $106 million. Should the PBGC be successful in terminating the Plans, we would be required to transfer administration responsibilities for the plans and transfer ownership of the plans’ assets to the PBGC. SFAS 88 would require us to record a settlement loss upon termination estimated to be $760 million to $1.6 billion. Upon termination of the Plans, the Company expects that the vast majority of claims asserted by the PBGC will be unsecured claims, and will be subject to a plan of reorganization.

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On January 9, 2003, we entered into an Asset Purchase Agreement with US Steel for the sale of substantially all of our principal steel making and finishing assets. This transaction was valued at approximately $950 million, consisting primarily of cash, but including up to $100 million of US Steel common stock and the assumption of certain liabilities approximating $200 million. This transaction was subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to US Steel for the National Steel employees who would become employees of US Steel. A motion to approve procedures related to this transaction was scheduled to be held in the Bankruptcy Court on January 30, 2003. Prior to that hearing, we received a competing bid from AK Steel. Following further negotiations among the parties, on January 30, 2003, we entered into an Asset Purchase Agreement with AK Steel for the sale of substantially all of our principal steelmaking and finishing assets, as well as National Steel Pellet Company, the Company’s iron ore pellet operations in Keewatin, Minnesota. This transaction is valued at approximately $1.125 billion, consisting of $925 million of cash and the assumption of certain liabilities approximating $200 million. The transaction is subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to AK Steel for the National Steel employees who would become employees of AK Steel. The Asset Purchase Agreement is also subject to higher and better offers submitted in accordance with the bidding procedures approved by the Bankruptcy Court under Sections 363 and 365 of the Bankruptcy Code on February 6, 2003, as modified by the Bankruptcy Court on March 25, 2003. Under these bidding procedures, bids must be submitted no later than April 10, 2003, and if one or more bids are determined to be Qualified bids under the bidding procedures, an auction is expected to be conducted on April 16, 2003. On February 26, 2003, we were notified that the Justice Department was terminating the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the AK Steel transaction.

On February 28, 2003, the Company entered into an agreement to sell its equity interest in National Robinson, L.L.C. to Robinson Steel Co., Inc. for approximately $3.5 million of cash.

On March 18 2003, the Bankruptcy Court approved our motion to terminate the Pension Plan for Hourly Employees of American Steel Corporation. An application has been submitted to the Internal Revenue Service and the Pension Benefit Guaranty Corporation for approval of the plan termination. SFAS 88 curtailment and settlement charges upon termination are currently estimated to be $0.6 million.

Results of Operations

Comparative operating results for the three years ended December 31, are as follows:

	2002			2001			2000
	(Dollars and tons in millions)
Net sales	$	2,609.4		$	2,492.3		$	2,978.9
Loss from operations		(134.5	)		(454.5	)		(114.4	)
Net loss		(148.7	)		(652.1	)		(129.8	)
Tons shipped		5.319			5.904			6.254

Year ended December 31, 2002 as compared to 2001

Net Sales

Net sales for 2002 increased $117.1 million, or 4.7%, compared to the prior year. This increase resulted from a $65 per ton, or 16.3%, increase in average selling prices. This increase was partially offset by a 585,000 ton, or 9.9%, decrease in shipment volume. Average selling prices increased throughout the year primarily due to a combination of higher market prices, and a shift in our mix of products toward value-added coated product and away from commodity grade hot-rolled and non-prime products.

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Loss from Operations

We reported an operating loss of $134.5 million for 2002 compared to an operating loss of $454.5 million in the prior year. Several factors contributed to the improvement as shown below:

• The impact of the aforementioned reduction in shipping volumes, favorable shift in product mix and the higher selling prices for our steel products.

• Higher production volumes on our finishing units and at our pellet production facility favorably impacted our 2002 results by $39 million as compared to the prior year. Some significant changes in operating levels include:

• Pellet production at our NSPC production facility increased by 1,080,000 tons or 25% as compared to the prior year. The facility resumed production on January 1, 2002 after being idled in the fourth quarter of 2001.

• Production at our galvanizing lines at Great Lakes and Midwest increased by 24% as compared to the prior year. This increase partially offset the continued idling of one of our blast furnaces at Great Lakes for all of 2002.

• Natural gas, electric, coke and pellet costs were lower than the prior year by approximately $60 million mainly due to the abnormally high prices in the first half of the year 2001 and rejection of unfavorable contracts. These improvements were partially offset by higher scrap prices which were $13 million higher than the prior year.

• We recorded a charge of approximately $8 million for potentially uncollectible accounts receivable from various customers, representing a decrease of approximately $14 million as compared to the year earlier period.

Reorganization Items

Reorganization items are comprised of items of income, expense and loss that were realized or incurred by us as a direct result of our decision to reorganize under Chapter 11 of the Bankruptcy Code. Such items for the year 2002 consisted of the following:

	Dollars in millions
Professional fees	$	20.7
Write-down of deferred financing costs		2.3
Provision for rejected derivative contract		1.3
Provision for potential additional costs on long-term agreements		26.1
Gain on sale of equity interest in DNN Galvanizing Limited Partnership		(0.3	)
Vendor settlements		(2.7	)
Other		3.2
	$	50.6

Net Gain on Disposal of Non-Core Assets

During 2002 and 2001, we sold certain non-core assets and recorded net gains on the disposals. During 2002, we sold undeveloped land located in Corpus Christi, Texas. The net gain that we recognized in 2002 was $3.3 million. During 2001, we received a final payment related to the sale of our equity interest in the Presque Isle Corporation (“Presque Isle”), sold property and certain assets related to an idled pickling operation, and sold property and certain assets related to our Granite City Division building products line and certain trademarks used in that business. The combined net gain that we recognized in 2001 was $3.0 million.

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Net Financing Costs

Net financing costs decreased $42.2 million in 2002 as compared to the prior year. The decrease relates primarily to interest on unsecured debt that was not charged to earnings in 2002 in accordance with SOP 90-7.

Income Taxes

During 2002, we recorded an income tax benefit of $57.9 million. On March 9, 2002, President Bush signed the Job Creation and Work Assistance Act of 2002 (the “Act”). This new act, among other provisions, provides for the carryback of net operating losses (“NOLs”) from two years to five years for NOLs arising in 2001 and 2002. We were able to carry back our loss recorded during 2001 to the 1996 through 1998 tax years when we paid an alternative minimum tax. This carryback allowed us to recover the entire amount of alternative minimum taxes paid during those prior taxable years resulting in a refund of $53.2 million. A tax benefit was also recorded in 2002 upon the closure of open tax years and the conclusion of a federal tax audit.

During 2001, we recorded a non-cash expense of $148.8 million. After reviewing our future taxable income and tax planning strategies, we determined that a decrease in our deferred tax assets was necessary.

Extraordinary Item

During 2001, we closed on a new $465 million Credit Facility secured by both accounts receivable and inventory which was scheduled to expire in September 2004. The Credit Facility replaced our previous $200 million Receivable Purchase Agreement with an expiration date of September 2002 and the $200 million Inventory Facility with an expiration date of November 2004. As a result, we recorded an extraordinary charge of $2.0 million with respect to the write-off of unamortized debt issuance costs in connection with the extinguishment of debt. (See Note 9 to the consolidated financial statements for additional information.)

Change in Accounting Principle

Effective January 1, 2001, we changed our method of accounting for investment gains and losses on pension assets used in the calculation of net periodic pension cost. The cumulative effect of this change on prior periods was a benefit of $17.2 million. (See Note 9 to the consolidated financial statements for additional information.)

Year ended December 31, 2001 as compared to 2000

Net Sales

Net sales for 2001 decreased $486.6 million, or 16%, compared to the prior year. This decrease resulted from a $57 per ton, or 13%, reduction in average selling prices and a 350,000 ton, or 6%, decrease in shipment volume. Average selling prices continued to decline throughout the year primarily due to a combination of depressed market prices and, to a lesser extent, a shift in our mix of products sold away from higher-priced value-added coated product toward lower-priced commodity grade hot-rolled and non-prime products. General economic conditions as well as the continuing impact of high levels of low-priced imported steel products and the resulting high inventory levels at our customers adversely affected the demand, mix, and market price for our steel products.

Loss from Operations

We reported an operating loss of $454.5 million for 2001 compared to an operating loss of $114.4 million in the prior year. Several factors contributed to the increased loss from operations:

• The impact of the aforementioned reduction in shipping volumes, unfavorable shift in product mix and the lower selling prices for our steel products.

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• The underabsorption of fixed costs related to lower production volumes of approximately 6% on our primary and finishing units adversely impacted our 2001 results by $85 million as compared to the prior year. Some significant changes in operating levels include:

• The temporary idling of our narrow galvanizing line at Midwest in the second quarter of 2001.

• The temporary idling of one of our blast furnaces at Great Lakes in the fourth quarter of 2001. This outage had the affect of reducing production levels of downstream finishing units at Great Lakes.

• The extended outage and idling of our NSPC production facility in the fourth quarter of 2001. We resumed production on January 1, 2002.

• Natural gas costs exceeded the prior year by approximately $43 million mainly due to the abnormally high prices in the first half of the year. However, reduced pricing for other raw materials, including scrap and zinc, partially offset the adverse affect of the natural gas pricing by $17 million as compared to the prior year.

• Depreciation expense increased approximately $15 million compared to the prior year due primarily to the full year affect of the hot dip galvanizing facility at Great Lakes that began production at the end of the second quarter of 2000.

• We recorded a charge of approximately $22 million for potentially uncollectible accounts receivable from various customers, representing an increase of approximately $14 million as compared to the year earlier period.

• Our OPEB expense related to medical and life insurance benefits provided to eligible retirees and their dependents was $91.0 million representing an increase of $15.4 million as compared to the prior year. We increased our assumed health care cost trend rate for the year immediately following the measurement date to 9.25%, an increase of 1.65% over the prior year.

Our successful cost reduction activities served to partially offset these unfavorable impacts. Our cost reduction efforts resulted in savings of approximately $150 million or $25 per ton shipped compared to our performance in the prior year. Our production costs were reduced by approximately $117 million and Selling, General and Administrative expenses were reduced by approximately $17 million (excluding the unfavorable charge for uncollectible accounts receivable). Labor costs, material expenses, and other spending were the primary drivers of the reduction. Some of our accomplishments include the reduction of overtime by over 32% compared to average levels in the prior year, the reduction of approximately 1,000 employees, which is 11% of our workforce, and reductions in other spending. In addition, we recognized an aggregate of $15.9 million of unusual credits during 2001. These credits related to the sale of a natural gas derivative contract and favorable property tax settlements, partially offset by certain expenses related to a Staff Retirement Incentive Program for Salaried Non-Represented Employees and the write-off of a portion of a partially installed computer system (See Note 9 to the consolidated financial statements for additional information.)

Net Gain on Disposal of Non-Core Assets

During 2001 and 2000, we sold certain non-core assets and recorded net gains on the disposals. During 2001, we received a final payment related to the sale of our equity interest in the Presque Isle Corporation (“Presque Isle”), sold property and certain assets related to an idled pickling operation, and sold property and certain assets related to our Granite City Division building products line and certain trademarks used in that business. The combined net gain that we recognized in 2001 was $3.0 million. During 2000, we sold our 30% equity interest in Presque Isle and received proceeds of $16.9 million (net of expenses) and recognized a net gain of $15.1 million.

Net Financing Costs

Net financing costs increased $29.7 million in 2001 as compared to the prior year. Approximately $15.3 million of the increase relates to lower capitalized interest in 2001 as compared to the year earlier period during

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which time the new hot dip galvanizing facility was under construction. Additionally, higher levels of borrowing under our credit facilities increased our interest costs and lower levels of cash and cash equivalents reduced our interest income during 2001.

Income Taxes

During 2001, we recorded a non-cash tax expense of $148.8 million. After reviewing our future taxable income and tax planning strategies, we determined that a decrease in our deferred tax assets was necessary. We recorded an income tax benefit of $6.8 million in 2000, utilizing an effective tax rate of 5%.

Extraordinary Item

During 2001, we closed on a new $465 million Credit Facility secured by both accounts receivable and inventory which was scheduled to expire in September 2004. The Credit Facility replaced our previous $200 million Receivable Purchase Agreement with an expiration date of September 2002 and the $200 million Inventory Facility with an expiration date of November 2004. As a result, we recorded an extraordinary charge of $2.0 million with respect to the write-off of unamortized debt issuance costs in connection with the extinguishment of debt. (See Note 9 to the consolidated financial statements for additional information.)

Change in Accounting Principle

Effective January 1, 2001, we changed our method of accounting for investment gains and losses on pension assets used in the calculation of net periodic pension cost. The cumulative effect of this change on prior periods was a benefit of $17.2 million. The net loss in 2001 was reduced by $6.7 million or $0.16 per share (basic and diluted) as a result of lower pension expense due to this accounting change. The net loss in 2000 would have been negatively impacted by $1.8 million or $0.04 per share (basic and diluted) had this accounting change been applied retroactively. (See Note 9 to the consolidated financial statements for additional information.)

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period (See Note 2 to the Consolidated Financial Statements for further discussion). On an on-going basis, we evaluate these estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that of our significant accounting policies (See Note 2 to the consolidated financial statements), the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Asset Impairment

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”), we periodically evaluate our long-lived assets for impairment whenever indicators of impairment exist. Generally, we group assets at the facility level, which is the lowest level of the organization for which identifiable cash flows are independent of the cash flows of other assets and liabilities of the Company, for impairment testing.

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We compared the estimated undiscounted future cash flows to the carrying value of the attributable long-lived assets. Our average long-lived assets are already two-thirds depreciated, accordingly the levels of cash flows necessary for recoverability are greatly reduced.

Our recoverability estimates are based essentially on static volume while pricing levels continue to grow at approximately 1-2% per annum through 2006 and then remain constant over the remaining average useful life of the long-lived assets. The highest annual average selling price per ton in this impairment model is approximately 2% lower than the average price per ton experienced before the high levels of low-priced imported steel began to flood the market in 1998. We further assume that cost reduction activities and improved efficiencies will reduce cost per ton by approximately 4% through 2003 and hold constant for the remainder of the assets’ average useful lives.

Additionally, the impairment analysis does not contemplate the asset purchase agreement with AK Steel or related fair value of long-lived assets which may be derived therefrom.

Pensions

We account for our defined benefit pension plans in accordance with SFAS No. 87, Employers’ Accounting for Pensions (“SFAS 87”), which requires that amounts recognized in financial statements be determined on an actuarial basis. Required cash contributions not made in 2002 were $230.3 million. No cash contributions were required under the Employee Retirement Income Security Act of 1974 for our pension plans during 2001. SFAS 87 and the policies we use, including the delayed recognition of gains and losses and the use of a calculated value of plan assets (which is further described below), generally reduce the volatility of pension expense due to changes in pension liability assumptions, demographic experience, and the market performance of the pension plan’s assets.

Our pension expense is significantly affected by the expected return on plan assets. We have assumed that the expected long-term rate of return on plan assets will be 9.25%, a reduction of 0.50% from the prior year. This assumption is based on reasonable long-term expectations as to the returns available on the underlying asset classes held by the pension trust. The assumed long-term rate of return on assets is applied to the market-related value of assets. This produces the expected return on plan assets component included in the pension expense. The difference between this expected return and the actual return on plan assets will be deferred in accordance with the amortization provisions of SFAS 87. Should actual returns be less than the expected returns, future pension expense would likely increase.

We use a September 30 measurement date. The discount rate, which is used to discount plan liabilities, reflects the current rate at which the pension liabilities could be effectively settled at the measurement date. In estimating this rate, we look to the Moody’s Average Aa-Rated Corporate Bonds index. At September 30, 2002, we determined this rate to be 6.75%, a reduction of 0.75% from the prior year.

On December 6, 2002, the PBGC informed National Steel Corporation that it would terminate all of the Company’s qualified pension plans, other than American Steel. The PBGC’s decision effectively eliminates the accrual of qualified defined benefits for all National Steel Corporation employees, which triggers curtailment accounting under SFAS 88. Since the event is probable, its effects are reasonably estimatable, and it produces a loss, the curtailment is to be recognized three months after the event. The SFAS 88 curtailment loss to be recognized during the first quarter of fiscal 2003 is estimated to be $106 million.

If the courts uphold the PBGC’s decision to involuntarily terminate these pension plans, SFAS 88 settlement accounting would also be triggered. Recognition of a SFAS 88 gain or loss resulting from a plan termination is not subject to the three month lag from the delayed measurement date. While the timing of the courts’ decision would impact the exact amount of the SFAS 88 settlement gain to be recognized, it is expected to fall between $280 and $320 million. Under these circumstances, the PBGC will concurrently submit claims against the

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Company for the unfunded pension benefit obligations assumed. The bankruptcy court is projected to place a value on the PBGC’s total claims in the range of $760 million to $1.6 billion. Upon termination of the Plans, the Company expects that the vast majority of claims asserted by the PBGC will be unsecured claims, and will be subject to a plan of reorganization.

Other Postretirement Benefits

We provide retiree health care benefits for certain salaried and represented employees that retire under our pension plans. Our retiree health care plans provide health care benefits to approximately 23,000 of our former employees and their dependents. We account for these other postretirement benefit plans in accordance with SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other than Pensions (“SFAS 106”), which requires that amounts recognized in financial statements be determined on an actuarial basis. SFAS 106 and the policies we use, including the delayed recognition of gains and losses, generally reduce the volatility of retiree health care expense due to changes in assumptions, claims experience, demographic experience, and the market performance of the plan’s assets.

We use various actuarial assumptions including the discount rate and the expected trend in health care costs to estimate the costs and benefit obligations for our retiree health care plans.

We use a September 30 measurement date. The discount rate, which is used to discount plan liabilities, reflects the current rate at which the retiree health care liabilities could be effectively settled at the measurement date. In estimating this rate, we look to the Moody’s Average Aa-Rated Corporate Bonds index. At  September 30, 2002, we determined this rate to be 6.75%, a reduction of 0.75% compared to the prior year.

The health care cost trend is used to project plan liabilities. While the ultimate health care cost trend reflects long-term expectations as to a sustainable growth rate for underlying health care costs, the initial health care cost trends reflect short-term expectations influenced by recent experience. At September 30, 2002, we determined the health care cost trend for 2003 to be 10%. The health care cost trend is then expected to decrease by 1% per year until an ultimate health care cost trend of 5% is reached in 2008. Under the prior year’s assumptions, the health care cost trend for 2003 was to be 8.25%, with an ultimate health care cost trend of 5.25% being reached in 2006.

Liabilities Subject to Compromise

SOP 90-7 requires that prepetition liabilities, including claims that become known after a petition is filed, be reported on the basis of the expected amount of the claim allowed rather than the amounts for which those claims might be settled. We have continued to prepare our financial statements as a going concern in accordance with accounting principles generally accepted in the United States on the basis that, until other information is available, recorded liability amounts represent our best estimate for potential allowed claims. It is reasonably possible that the amount of claims ultimately allowed by the Court could exceed the amounts presently recorded by amounts that are material to our financial position and results of operations. Also, the PBGC has filed a preliminary proof of claim with the court that is substantially larger than the pension liability recorded on our balance sheet. The PBGC uses different discount rates and mortality assumptions to determine the actuarial liability and, therefore, the funded status of our plan. The amount of the claim that the Court could allow could be materially in excess of those actuarially determined amounts disclosed in Note 6 to the Consolidated Financial Statements. Also a transaction involving the sale of a material amount of our operating facilities or a Court confirmed Chapter 11 plan will likely result in a material reduction in the carrying value of our long-lived assets.

Under provisions of SOP 90-7 interest is not accrued on secured claims if the value of the collateral is less than the principal amount of the secured claim. In addition, interest on unsecured claims does not accrue during bankruptcy proceedings. Interest at the stated contractual amount not charged to earnings in 2002 was approximately $41.5 million and primarily related to the First Mortgage Bonds and other debt obligations. The amount of claim the Court could allow could be materially different.

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Allowance for Doubtful Accounts—Methodology

We evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us (e.g., bankruptcy filings, substantial down-grading of credit scores), we record a specific reserve for bad debts against outstanding amounts to reduce the net recognized receivable to the amount we reasonably believe will be collected. For customers that are highly leveraged (those customers whose value of debt exceeds equity by a predetermined ratio) and exceed a minimal risk threshold, we record a reserve representing our best estimate of potential losses from these customers in the aggregate. For all other customers, we recognize reserves for bad debts based on the general status of the economy and, specifically, the steel industry and past collections experience. The bankruptcy filing of some customers and current economic conditions within the United States, especially within the steel industry, have caused us to record a provision for doubtful accounts receivable of $7.9 million during 2002. At December 31, 2002 and 2001, the allowance for doubtful accounts represented 15% and 14% of outstanding trade accounts receivable, respectively. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us), our estimates of the recoverability of amounts due us could be reduced by a material amount.

Postemployment Benefits

We provide workers’ compensation, disability, and other medical benefits for certain salaried and represented employees. We account for these costs in accordance with SFAS No. 112, Employers’ Accounting for Postemployment Benefits (“SFAS 112”). With respect to those costs for which we have sufficient information to reasonably estimate our future expenditures, we have accrued $73.0 million at December 31, 2002 which represents our best estimates of the probable cost for these benefits. This estimate has been developed based upon past history of actual payments for these benefits and in consultation with third parties that assist us in managing and settling the workers’ compensation costs. To the extent additional information arises, it is possible our best estimate of our probable liability for these costs may change. Such changes could have a material adverse effect on our earnings and financial position.

Environmental Liabilities and Other Contingencies

Our operations are subject to numerous laws and regulations relating to the protection of human health and the environment. We have expended, and can be expected to expend in the future, substantial amounts for ongoing compliance with these laws and regulations, including the Clean Air Act and the Resource Conservation and Recovery Act of 1976. Additionally, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state superfund statutes have imposed joint and several liability on us as one of many potentially responsible parties at a number of sites requiring remediation.

With respect to those claims for which we have sufficient information to reasonably estimate our future expenditures, we have accrued $14.2 million at December 31, 2002 which represents our best estimate of the probable cost for the resolution of these claims. This estimate has been developed in consultation with outside counsel that is handling our defense in these matters and is based upon a combination of litigation and settlement strategies. To the extent additional information arises or our strategies change, it is possible that our best estimate of our probable liability in these matters may change. Since environmental laws are becoming increasingly more stringent, our expenditures and costs for environmental compliance may increase in the future.

Since we have been conducting steel manufacturing and related operations at numerous locations for over sixty years, we potentially may be required to remediate or reclaim any contamination that may be present at these sites. We do not have sufficient information to estimate our potential liability in connection with any potential future remediation at such sites. Accordingly, we have not accrued for such potential liabilities.

One of our subsidiaries, The Hanna Furnace Corporation, is jointly liable with LTV Steel Company, Inc. for environmental clean-up and certain retiree benefit costs related to the closed Donner Hanna Coke plant. On

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December 31, 2000, LTV filed for Chapter 11 protection under U.S. bankruptcy laws. During the fourth quarter of 2001, LTV announced their intentions to initiate an orderly liquidation in accordance with bankruptcy laws. As a result, in the fourth quarter in 2001, we recorded 100% of the obligation for the retiree benefit costs and recorded a charge of $3.6 million.

We have a 50% interest in a joint venture coating facility with Bethlehem and a 13% interest in a joint venture family health care facility with Bethlehem and another steel company. On March 13, 2003, Bethlehem Steel Corporation announced that it had signed an asset purchase agreement to sell substantially all of its assets including its interest in joint ventures. We are uncertain what effect, if any, this will have on our future earnings and financial position.

We are also involved in various non-environmental legal proceedings, most of which occur in the normal course of our business. We do not believe that these proceedings will have a material adverse effect, either individually or in the aggregate, on our financial position. However, with respect to certain of the proceedings, if reserves prove to be inadequate and we incur a charge to earnings, such charges could have a material adverse effect on our earnings and liquidity for the applicable period.

Other Operational and Financial Disclosure Matters

Impact of Recently Issued Accounting Standards

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS 143”). SFAS 143 applies to legal obligations associated with the retirement of certain long-lived assets. It requires companies to record the fair value of the liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the company capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. We plan to adopt SFAS 143, as required, in our fiscal year beginning on January 1, 2003. The transition adjustment of less than $3 million, net of tax, resulting from the adoption of SFAS 143 will be reported as a cumulative effect of a change in accounting principle in the first quarter of 2003.

In April 2002, the FASB issued SFAS No. 145, Recession of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections (“SFAS 145”), which will require gains and losses on extinguishments of debt to be classified as income or loss from continuing operation rather than as extraordinary items as previously required under SFAS 4. SFAS 145 also amends SFAS 13 to require certain modifications to capital leases be treated as a sales-leaseback. We adopted SFAS 145 effective January 1, 2003 and it did not have a material impact on our earnings or financial position. Adoption will require the extraordinary gain in 2001 to be reclassified.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS 146”), which changes financial accounting and reporting for costs associated with exit or disposal activities. SFAS 146 requires that a liability for costs associated with an exit or disposal activity be recognized as incurred rather than at the date a company commits to an exit plan as currently required. SFAS 146 also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. Adoption of SFAS 146 did not have an effect on the Company’s earnings or financial position.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS 148”) an amendment of SFAS No. 123 Accounting for Stock-Based Compensation (“SFAS 123”), which provides alternative transition methods for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also amended the disclosure

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provisions, which now require the method of accounting for stock-based employee compensation to be provided and the effect of the method used on reported results. As permitted by SFAS 123, the Company has chosen to continue accounting for stock options at their intrinsic value at the date of grant consistent with the provision of APB 25. The adoption of this statement in December 2002 did not have an impact on the Company’s earnings or financial position, and the disclosure requirements have been met.

Asset Purchase Agreement

On January 9, 2003, we entered into an Asset Purchase Agreement with US Steel for the sale of substantially all of our principal steel making and finishing assets. This transaction was valued at approximately $950 million, consisting primarily of cash, but including up to $100 million of US Steel common stock and the assumption of certain liabilities approximating $200 million. This transaction was subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to US Steel for the National Steel employees who would become employees of US Steel. A motion to approve procedures related to this transaction was scheduled to be held in the Bankruptcy Court on January 30, 2003. Prior to that hearing, we received a competing bid from AK Steel. Following further negotiations among the parties, on January 30, 2003, we entered into an Asset Purchase Agreement with AK Steel for the sale of substantially all of our principal steelmaking and finishing assets, as well as National Steel Pellet Company, our iron ore pellet operations in Keewatin, Minnesota. This transaction is valued at approximately $1.125 billion, consisting of $925 million of cash and the assumption of certain liabilities approximating $200 million. The transaction is subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to AK Steel for the National Steel employees who will become employees of AK Steel. The Asset Purchase Agreement is also subject to higher and better offers submitted in accordance with the bidding procedures approved by the Bankruptcy Court under Sections 363 and 365 of the Bankruptcy Code on February 6, 2003, as modified by the Bankruptcy Court on March 25, 2003. Under these bidding procedures, bids must be submitted no later than April 10, 2003, and if one or more bids are determined to be Qualified bids under the bidding procedures, an auction is expected to be conducted on April 16, 2003. On February 26, 2003, the Company was notified that the Justice Department was terminating the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the AK Steel transaction.

Job Creation and Worker Assistance Act of 2002

On March 9, 2002, President Bush signed the Job Creation and Worker Assistance Act of 2002 (the “Act”). This new Act, among other provisions, provides for an expansion of the carryback of net operating losses (“NOLs”) from two years to five years for NOLs arising in 2001 and 2002. We were able to carryback our loss recorded during 2001 to the 1996 through 1998 tax years when we paid an alternative minimum tax. This carryback allowed us to recover the entire amount of alternative minimum taxes paid during those prior taxable years. On March 27, 2002, we received a refund of $53.2 million. The impact of this change in the tax law was reflected in the financial results in the first quarter of 2002.

Discussion of Liquidity and Sources of Capital

Overview

Our liquidity needs arise primarily from working capital requirements, capital investments, principal and interest payments on our indebtedness, and pension and retiree health care funding requirements. We have satisfied these liquidity needs with funds provided by borrowings, the sale of non-core assets and cash provided by operations. Additionally, during 2002 we received $53.2 million in federal income tax refunds. As a result of our Chapter 11 filing, we have not made principal or interest payments on substantially all secured and unsecured indebtedness incurred prior to March 6, 2002.

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In conjunction with our Chapter 11 filing, we obtained Court approval of a $450 million Secured Super Priority Debtor in Possession Credit Agreement (the “DIP Facility”) with our existing senior secured bank group. As part of the DIP Facility, all cash received by us or any of our subsidiaries is applied to outstanding obligations under the DIP Facility.

Total liquidity, which includes cash balances plus available borrowing capacity under the DIP Facility was $221 million at December 31, 2002 as compared to $107 million under the Credit Facility at December 31, 2001.

Availability under the DIP Facility will be subject to a borrowing base calculated by applying advance rates to eligible accounts receivable and eligible inventory. Availability under the DIP Facility is also subject to: (i) certain eligibility reserves and availability reserves, (ii) a reserve for certain professional and bankruptcy court expenses related to our Chapter 11 cases and (iii) a liquidity reserve of $35 million.

Proceeds of loans under the DIP Facility will be used solely to pay certain pre-petition claims approved by the Court, for post-petition operating expenses incurred in the ordinary course of business and certain other costs and expenses of administration of the cases as will be specified and as approved by the Court. Except for certain specified circumstances, all cash received by us or any of our subsidiaries shall be applied to outstanding claims under the Credit Facility and after all such claims have been paid, to outstanding obligations under the DIP Facility.

All amounts owing by us under the DIP Facility at all times will constitute allowed super-priority administrative expense claims in our Chapter 11 cases, generally having priority over all our administrative expenses. In addition, all amounts owing by us under the DIP will be secured by valid and perfected security interests in, and liens on, substantially all of our assets.

Liabilities Subject to Compromise

The principal categories of claims classified as liabilities subject to compromise under reorganization proceedings are identified below. All amounts below may be subject to future adjustment depending on Court action, further developments with respect to disputed claims, or other events. Additional claims may arise resulting from rejection of additional executory contracts or unexpired leases by the Company. Under an approved final plan of reorganization, these claims may be settled at amounts substantially less than their allowed amounts.

Recorded liabilities subject to compromise under the Chapter 11 proceedings consisted of the following at December 31, 2002:

	Dollars in millions
Accounts payable	$	154.3
Short-term borrowings		100.0
Salaries, wages, benefits and related taxes		112.0
Pension liabilities, including minimum pension liabilities		1,156.6
Property taxes		46.3
Income taxes		1.8
Other accrued liabilities		65.1
Long-term obligations		511.6
Postretirement benefits other than pensions		403.8
Other long-term liabilities		94.9
	$	2,646.4

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Cash Flows from Operating Activities

During 2002, we generated $248.5 million of cash in operating activities compared to using cash of $241.3 million in 2001. This change is primarily the result of decreased losses during the year, improved operating performance, non-payment of various liabilities in conjunction with our Chapter 11 filing, and receipt of a federal income tax refund.

During 2001, we used $241.3 million of cash in operating activities compared to a cash inflow of $110.1 million in 2000. This change is primarily the result of increased losses during the year and the repurchase of previously sold accounts receivable under our Receivables Purchase Agreement partially offset by a reduction in inventories of $134.1 million during the year.

Capital Investments

Capital investments including those under capital leases for the years ended December 31, 2002, 2001 and 2000 amounted to $38.5 million, $51.9 million and $225.2 million, respectively. Spending in 2002 included upgrades to the “A” blast furnace at Great Lakes, replacement of gas lines at the Great Lakes hot strip mill, and various other small projects necessary to maintain our facilities at current operating levels. Spending in 2001 included the replacement of a BOF steam drum at Great Lakes, new computer systems, and various other small projects necessary to maintain our facilities at their current operating levels. A large part of our spending in 2000 was attributable to the B blast furnace reline at Great Lakes, the new hot dip galvanizing facility at Great Lakes, the initial addition of roll bending capabilities to the hot strip mill at Granite City and a new order fulfillment system.

Capital investments in 2003 are expected to increase to $64.8 million, of which approximately $8.1 million was committed at December 31, 2002. Planned capital expenditures include upgrades to the “B” Blast Furnace at Granite City, the “A” blast furnace at Great Lakes, and replacement of certain heavy equipment at our Pellet operations.

Cash Proceeds from the Sale of Non-Core Assets

During 2002, we sold undeveloped land in Texas related to non-core businesses and received net proceeds of $7.1 million and recorded a gain of $3.3 million.

During the second quarter of 2001, we sold certain assets related to our Granite City Division building products line and certain trademarks used in that business for $1.5 million and recognized a net gain for the full amount of the proceeds. During the third quarter of 2001, we sold property and certain assets related to a discontinued pickling operation for $0.4 million and recognized a net gain of $0.9 million as a result of the reversal of certain liabilities and cash in excess of the net book value. During the fourth quarter of 2001, we received a final payment of $0.6 million related to the sale of our equity interest in Presque Isle Corporation (“Presque Isle”) and recognized a gain for the full amount.

During the second quarter of 2000, we sold our 30% equity interest in Presque Isle and received proceeds of $16.9 million (net of expenses) and recognized a net gain of $15.1 million.

All proceeds from the aforementioned non-core asset sales were used for general corporate purposes.

Cash Flows from Financing Activities

During 2002, net cash used in financing activities amounted to $204.5 million. This resulted from a net reduction in borrowings under our revolving credit agreements of $185.1 million, scheduled payments on long-term debt prior to our bankruptcy filing, scheduled payments on long-term debt after our bankruptcy filing in accordance with Court orders, and debt issuance costs related to our new DIP facility. As a result of our

40

Chapter 11 filing, we have not made principal and interest payments on substantially all secured or unsecured indebtness incurred prior to March 6, 2002. Contractual principal and interest payments not made in 2002 were $165.8 million.

During 2001, net cash provided by financing activities amounted to $287.4 million. Financing activities included additional short-term borrowings of $13.5 million and long-term borrowings of $313.6 million partially offset by scheduled debt repayments of $28.9 million. In addition, we paid fees of $10.8 million during 2001 related to the closing on our new $465 million Credit Agreement.

During 2000, net cash provided by financing activities amounted to $33.5 million. This resulted from cash borrowings under the Inventory Facility offset by scheduled payments on other outstanding debt and dividend payments on our common stock during the first three quarters of the year.

Contractual Obligations

Aggregated information on future cash obligations based on contractual liabilities (excluding liabilities subject to compromise) (in millions) at December 31, 2002 follows:

Obligation	Total		Less than 1 Year		1 to 3 Years		4 to 5 Years		After 5 Years
DIP Facility	$	128.5	$	128.5	$	—	$	—	$	—
Operating leases		148.4		64.4		83.5		0.5		—
Guarantee of joint venture debt		6.1		4.0		2.1		—		—
Standby Letters of Credit		38.9		38.9		—		—		—
Total	$	321.9	$	235.8	$	85.6	$	0.5	$	—

Aggregated information on future cash obligations based upon commercial commitments at December 31, 2002 follows:

Commitment	Total		Less than 1 Year		1 to 3 Years		4 to 5 Years		After 5 Years
Joint Venture Tolling charges	$	10.5	$	7.4	$	3.1	$	—	$	—
Raw material purchase obligations		589.3		83.8		183.4		79.0		243.1
Capital investments		8.1		8.1		—		—		—
Total	$	607.9	$	99.3	$	186.5	$	79.0	$	243.1

Under the Bankruptcy Code we may assume or reject executory contracts, including lease obligations. Therefore, the amounts shown above may not reflect actual cash outlays in the future periods.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, our operations are exposed to continuing fluctuations in commodity prices and interest rates that can affect the cost of operating, investing and financing. Accordingly, we address a portion of these risks, primarily commodity price risk, through a controlled program of risk management that includes the use of derivative financial instruments. Our objective is to reduce earnings volatility associated with these fluctuations to allow management to focus on core business issues. Our derivative activities, all of which are for purposes other than trading, are initiated within the guidelines of a documented corporate risk-management policy. We do not enter into any derivative transactions for speculative purposes.

Interest Rate Risk

We are exposed to interest rate risk from having certain variable rate financing arrangements. The interest on our DIP Facility is based on an indexed rate. We do not have any interest rate swaps or other financial

41

instruments in place that would fix a portion of the interest rates on these financings. Therefore, a hypothetical increase or decrease in interest rates by 1% would increase or decrease interest expense on the $128.5 million of variable secured debt by $1.3 million per year, with a corresponding change in cash flows. The effect of changing interest rates on pension and OPEB obligations and expense is discussed under the caption “Critical Accounting Policies” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Commodity Price Risk

In the normal course of business we are exposed to market risk or price fluctuations of raw materials and energy used to manufacture our products. For example, we are exposed to changes in prices for coal, coke, natural gas, steel scrap, iron ore and pellets, zinc, tin and other metals. In the past, we have used derivative financial instruments (principally swap contracts with global financial institutions) to manage the price risk for a portion of our annual requirements for zinc. At December 31, 2002, we did not have any such instruments. Therefore, the requirement to disclose the impact of a hypothetical change in prices or rates on financial instruments is not applicable.

Item 8.    Consolidated Financial Statements

The following consolidated financial statements of National Steel Corporation and subsidiaries are submitted pursuant to the requirements of Item 8:

National Steel Corporation and Subsidiaries

Debtor-In-Possession As of March 6, 2002

Index to Consolidated Financial Statements

	Page
Management’s Responsibility for Consolidated Financial Statements	43
Report of Ernst & Young LLP Independent Auditors	44
Consolidated Statements of Operations—Years Ended December 31, 2002, 2001 and 2000	45
Consolidated Balance Sheets—December 31, 2002 and 2001	46
Consolidated Statements of Cash Flows—Years Ended December 31, 2002, 2001 and 2000	47
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)—Years Ended December 31, 2002, 2001 and 2000	48
Notes to Consolidated Financial Statements	49

42

MANAGEMENT’S RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS

Management is responsible for the preparation, integrity and fair presentation of the consolidated financial statements and related notes. The consolidated financial statements, presented on pages 46 to 76, have been prepared in conformity with accounting principles generally accepted in the United States and include amounts based upon our estimates and judgments, as required. Management also prepared the other information included in the Form 10-K and is responsible for its accuracy and consistency with the consolidated financial statements. The consolidated financial statements have been audited in accordance with auditing standards generally accepted in the United States and reported upon by our independent auditors, Ernst & Young LLP, who were given free access to all financial records and related data, including minutes of the meetings of the Board of Directors and committees of the Board. We believe the representations made to the independent auditors during the audit were valid and appropriate. Ernst & Young LLP’s audit report is presented on page 45.

National Steel Corporation maintains a system of internal accounting control designed to provide reasonable assurance for the safeguarding of assets and reliability of financial records. The system is subject to review through its internal audit function, which monitors and reports on the adequacy of and compliance with the internal control system and appropriate action is taken to address control deficiencies and other opportunities for improving the system as they are identified. Although no cost effective internal control system will preclude all errors and irregularities, management believes that through the careful selection, training and development of employees, the division of responsibilities and the application of formal policies and procedures, National Steel Corporation has an effective and responsive system of internal accounting controls.

The Audit Committee of the Board of Directors, which is composed solely of non-employee directors, provides oversight to the financial reporting process through periodic meetings. The Audit Committee is responsible for recommending to the Board of Directors, subject to approval by the Board, the independent auditors to perform audit and related work for the Company, for reviewing with the independent auditors the scope of their audit of the Company’s financial statements, for reviewing with the Company’s internal auditors the scope of the plan of audit, for meeting with the independent auditors and the Company’s internal auditors to review the results of their audits and the Company’s internal accounting controls and for reviewing other professional services being performed for the Company by the independent auditors. Both the independent auditors and the Company’s internal auditors have free access to the Audit Committee.

Management believes the system of internal accounting controls provides reasonable assurance that business activities are conducted in a manner consistent with the Company’s high standards of business conduct, and the Company’s financial accounting system contains the integrity and objectivity necessary to maintain accountability for assets and to prepare National Steel Corporation’s consolidated financial statements in accordance with accounting principles generally accepted in the United States.

Mineo Shimura

Chairman & Chief Executive Officer

John A. Maczuzak	Kirk A. Sobecki
President & Chief Operating Officer	Senior Vice President and Chief Financial Officer

43

REPORT OF ERNST & YOUNG LLP

INDEPENDENT AUDITORS

Board of Directors

National Steel Corporation

We have audited the accompanying consolidated balance sheets of National Steel Corporation and subsidiaries (the “Debtor-in-Possession” or the “Company”) as of December 31, 2002 and 2001, and the related consolidated statements of operations, cash flows, and changes in stockholders’ equity (deficit) for each of the three years in the period ended December 31, 2002. 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 conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company (Debtor-in-Possession) at December 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 9 to the consolidated financial statements, in 2001 the Company changed its method for reporting realized and unrealized gains and losses on plan assets in the determination of pension expense.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, on March 6, 2002, the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”). The Company is currently operating its business under the jurisdiction of Chapter 11 and the United States Bankruptcy Court in Chicago, Illinois (the “Bankruptcy Court”), and continuation of the Company as a going concern is dependent upon, among other things, the ability to formulate a plan of reorganization which will be approved by the requisite parties under the United States Bankruptcy Code and be confirmed by the Bankruptcy Court, comply with its debtor-in-possession financing facility, obtain adequate financing sources, and generate sufficient cash flows from operations to meet its future obligations. In addition, the Company has experienced operating losses in 2002, 2001 and 2000. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classification of liabilities that may result from the outcome of these uncertainties.

ERNST & YOUNG LLP

Indianapolis, Indiana

February 5, 2003 except for

Notes 1 and 10, as to which the

date is March 25, 2003

44

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Millions, Except Per Share Amounts)

	Years Ended December 31,
	2002			2001			2000
Net Sales	$	2,609.4		$	2,492.3		$	2,978.9
Cost of products sold		2,476.2			2,648.7			2,792.2
Selling, general and administrative expense		117.1			148.8			150.9
Depreciation		160.7			167.9			153.0
Equity income of affiliates		(3.2	)		(2.7	)		(2.8	)
Other items		(6.9	)		(15.9	)		—
Loss from Operations before Reorganization Items		(134.5	)		(454.5	)		(114.4	)
Reorganization items		50.6			—			—
Other (income) expense
Interest and other financial income		(0.6	)		(1.2	)		(4.0	)
Interest and other financial expense (contractual interest for 2002 was $66.9)		25.4			68.2			41.3
Net gain on disposal of non-core assets and other related activities		(3.3	)		(3.0	)		(15.1	)
Loss before Income Taxes		(206.6	)		(518.5	)		(136.6	)
Income taxes (credit)		(57.9	)		148.8			(6.8	)
Loss Before Extraordinary Item and Cumulative Effect of Change in Accounting Principle		(148.7	)		(667.3	)		(129.8	)
Extraordinary item		—			(2.0	)		—
Cumulative effect of change in accounting principle		—			17.2			—
Net Loss	$	(148.7	)	$	(652.1	)	$	(129.8	)
Basic and Diluted Earnings Per Share:
Loss Before Extraordinary Item and Cumulative Effect of Change in Accounting Principle	$	(3.60	)	$	(16.16	)	$	(3.14	)
Extraordinary item		—			(0.05	)		—
Cumulative effect of change in accounting principle		—			0.42			—
Net loss	$	(3.60	)	$	(15.79	)	$	(3.14	)
Weighted average shares outstanding (in thousands)		41,288			41,288			41,288
Dividends paid per common share	$	—		$	—		$	0.21

See notes to consolidated financial statements.

45

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions, Except Per Share Amounts)

	December 31,
	2002			2001
ASSETS
Current assets
Cash and cash equivalents	$	1.5		$	1.4
Restricted cash		—			2.4
Receivables, net		222.5			224.2
Inventories		405.7			390.4
Deferred tax assets		4.7			3.2
Other		41.3			15.5
Total current assets		675.7			637.1
Investments in affiliated companies		13.7			16.3
Property, plant and equipment, net		1,256.5			1,385.3
Deferred tax assets		43.3			44.5
Intangible pension asset		108.8			126.0
Other assets		110.7			98.4
	$	2,208.7		$	2,307.6
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	131.8		$	165.6
Current portion of long-term obligations		—			29.3
Short-term borrowings		—			100.0
Salaries, wages, benefits and related taxes		90.6			119.0
Pension		—			169.8
Property taxes		24.2			40.3
Income taxes		0.2			6.5
Other accrued liabilities		57.1			84.1
Total current liabilities		303.9			714.6
Debtor-in-possession financing		128.5			—
Long-term obligations		—			809.7
Long-term pension liabilities		—			4.7
Minimum pension liabilities		—			502.3
Postretirement benefits other than pensions		21.3			476.1
Other long-term liabilities		13.4			110.9
Liabilities subject to compromise		2,646.4			—
Commitments and contingencies
Stockholders’ equity (deficit)
Common Stock par value $.01:
Class A—authorized 30,000,000 shares; issued and outstanding 22,100,000 shares in 2002 and 2001		0.2			0.2
Class B—authorized 65,000,000 shares; issued 21,188,240 shares in 2002 and 2001		0.2			0.2
Additional paid-in capital		491.8			491.8
Retained earnings (deficit)		(556.7	)		(408.0	)
Treasury stock, at cost: 2,000,000 shares in 2002 and 2001		(16.3	)		(16.3	)
Accumulated other comprehensive loss:
Unrealized loss on derivative instruments		—			(2.3	)
Minimum pension liability		(824.0	)		(376.3	)
Total stockholders’ equity (deficit)		(904.8	)		(310.7	)
	$	2,208.7		$	2,307.6

See notes to consolidated financial statements.

46

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Millions)

	Years Ended December 31,
	2002			2001			2000
Cash Flows from Operating Activities:
Net loss	$	(148.7	)	$	(652.1	)	$	(129.8	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		160.7			167.9			153.0
Reorganization items		50.6			—			—
Other items		(6.9	)		12.1			—
Net gain on disposal of non-core assets		(3.3	)		(3.0	)		(15.1	)
Extraordinary item		—			2.0			—
Cumulative effect of change in accounting principle		—			(17.2	)		—
Deferred income taxes		(0.3	)		148.2			10.3
Changes in assets and liabilities:
Receivables—trade		5.1			44.1			25.8
Receivables—allowance		(3.4	)		17.3			11.4
Receivables sold		—			(95.0	)		95.0
Inventories		(15.3	)		134.1			(3.6	)
Accounts payable		118.6			(66.1	)		(14.4	)
Pension liability (net of change in intangible pension asset)		38.6			31.8			(44.5	)
Postretirement benefits		26.2			26.5			19.4
Accrued liabilities		45.6			2.0			0.8
Other		(19.0	)		6.1			1.8
Net Cash Provided by (Used in) Operating Activities Before Reorganization Items		248.5			(241.3	)		110.1
Reorganization items (excluding non-cash charges of $32.6 million)		(18.0	)		—			—
Net Cash Provided by (Used in) Operating Activities		230.5			(241.3	)		110.1
Cash Flows from Investing Activities:
Purchases of property, plant and equipment		(38.5	)		(48.8	)		(217.3	)
Net proceeds from settlement		5.5			—			—
Net proceeds from disposal of non-core assets		7.1			2.5			16.9
Net Cash Used in Investing Activities		(25.9	)		(46.3	)		(200.4	)
Cash Flows from Financing Activities:
Debt repayments		(13.8	)		(28.9	)		(43.5	)
Borrowings—net		(185.1	)		327.1			86.5
Dividend payments on common stock		—			—			(8.7	)
Debt issuance costs		(5.6	)		(10.8	)		(0.8	)
Net Cash Provided by (Used in) Financing Activities		(204.5	)		287.4			33.5
Net Increase (Decrease) in Cash and Cash Equivalents		0.1			(0.2	)		(56.8	)
Cash and cash equivalents, at beginning of the year		1.4			1.6			58.4
Cash and cash equivalents, at end of the year	$	1.5		$	1.4		$	1.6
Supplemental Cash Payment (Receipt) Information
Cash paid (received) during the year for:
Interest and other financing costs	$	18.7		$	65.4		$	55.0
Income taxes, net		(53.2	)		(18.0	)		(4.0	)
Noncash Investing and Financing Activities
Purchase of equipment through capital leases	$	—		$	3.1		$	7.9

See notes to consolidated financial statements.

47

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Dollars in Millions)

	Common Stock— Class A		Common Stock— Class B		Additional Paid-In Capital		Retained Earnings (Deficit)			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity (Deficit)
Balance at January 1, 2000		0.2		0.2		491.8		382.6			(16.3	)		(5.5	)		853.0
Comprehensive loss:
Net loss								(129.8	)								(129.8	)
Other comprehensive income:
Minimum pension liability														3.2			3.2
Comprehensive loss																	(126.6	)
Dividends on common stock								(8.7	)								(8.7	)
Balance at December 31, 2000		0.2		0.2		491.8		244.1			(16.3	)		(2.3	)		717.7
Comprehensive loss:
Net loss								(652.1	)								(652.1	)
Other comprehensive income (loss):
Minimum pension liability														(374.0	)		(374.0	)
Cumulative effect of the adoption of SFAS 133														23.8			23.8
Net activity relating to derivative instruments														(26.1	)		(26.1	)
Comprehensive loss																	(1,028.4	)
Balance at December 31, 2001	$	0.2	$	0.2	$	491.8	$	(408.0	)	$	(16.3	)	$	(378.6	)	$	(310.7	)
Comprehensive loss:
Net loss								(148.7	)								(148.7	)
Other comprehensive income (loss):
Minimum pension liability														(447.7	)		(447.7	)
Net activity relating to derivative instruments														2.3			2.3
Comprehensive loss																	(594.1	)
Balance at December 31, 2002	$	0.2	$	0.2	$	491.8	$	(556.7	)	$	(16.3	)	$	(824.0	)	$	(904.8	)

See notes to consolidated financial statements.

48

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002

Note 1.    Reorganization Under Chapter 11 Bankruptcy Code

On March 6, 2002, National Steel Corporation and forty-one of its domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the Bankruptcy Court. Certain majority owned subsidiaries of National Steel Corporation and subsidiaries (the “Company”) have been excluded from the Chapter 11 filings. The case was assigned to the Hon. John H. Squires and is being jointly administered under case number 02-08699. The Company continues to manage its properties and operate its businesses under Sections 1107(a) and 1108 of the Code as a debtor-in-possession. Due to material uncertainties, it is not possible to predict the length of time the Debtors will operate under Chapter 11 protection, the outcome of the proceedings in general, whether it will continue to operate under our current organizational structure, the effect of the proceedings on its businesses or the recovery by its creditors and equity holders.

The Company is pursuing various strategic alternatives including, among other things, possible consolidation opportunities, a stand-alone plan of reorganization and liquidation of part or all of its assets. After further consideration of such alternatives and negotiations with various parties in interest, the Debtors expect to present a Chapter 11 plan, which will likely cause a material change to the carrying amount of assets and liabilities in the financial statements. The accompanying consolidated financial statements do not reflect (a) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities, (b) aggregate pre-petition liability amounts that may be allowed for claims or contingencies, or their status or priority, (c) the effect of any changes to the Company’s capital structure or in its business operations as the result of an approved plan of reorganization, or (d) adjustments to the carrying value of asset or liability amounts that may be necessary as the result of actions by the Bankruptcy Court.

Under bankruptcy law, actions by creditors to collect amounts owed by us at the filing date are stayed and other pre-petition contractual obligations may not be enforced against us, without approval by the Bankruptcy Court to settle these claims. The Debtors received approval from the Bankruptcy Court to pay certain of its pre-petition claims, including employee wages and certain employee benefits. In addition, the Debtors have the right, subject to Bankruptcy Court approval and other conditions, to assume or reject any pre-petition executory contracts and unexpired leases. The Debtors have submitted the schedules setting forth all of its assets and liabilities as of the date of the petition as reflected in its accounting records. The amounts of claims filed by creditors could be significantly different from the recorded amounts. The last date for filing claims by creditors other than governmental units was August 15, 2002 and for governmental units was September 6, 2002. On November 5, 2002, the Bankruptcy Court entered an order that extended the exclusive period within which only the debtor can file a plan of reorganization through April 7, 2003.

On January 9, 2003, the Company entered into an Asset Purchase Agreement with US Steel for the sale of substantially all of the Company’s steel making and finishing assets. This transaction was valued at approximately $950 million, consisting primarily of cash, but including up to $100 million of US Steel common stock and the assumption of certain liabilities approximating $200 million. This transaction was subject to a number of conditions, including approval of the Bankruptcy Court, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to US Steel for the National Steel employees who would become employees of US Steel. A motion to approve procedures related to this transaction was scheduled to be held in the Bankruptcy Court on January 30, 2003. Prior to that hearing, the Company received a competing bid from AK Steel. Following further negotiations among the parties, on January 30, 2003, the Company entered into an Asset Purchase Agreement with AK Steel for the sale of substantially all of the Company’s steelmaking and finishing assets, as well as National Steel Pellet Company, the Company’s iron ore pellet operations in Keewatin, Minnesota. This transaction is valued at approximately $1.125 billion,

49

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

consisting of $925 million of cash and the assumption of certain liabilities approximating $200 million. The transaction is subject to a number of conditions, including approval of the Bankruptcy Court, termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and the execution and ratification of a new collective bargaining agreement by the United Steelworkers of America satisfactory to AK Steel for the National Steel employees who would become employees of AK Steel.

The U.S. Bankruptcy Court for the Northern District of Illinois on February 6, 2003 approved the break up fee of approximately $15 million and bidding procedures related to the Asset Purchase Agreement with AK Steel. The court’s ruling gives AK Steel “stalking horse”, or priority status, which generally allows AK Steel to collect a break up fee should National agree to sell its assets to another party prior to termination of the Asset Purchase Agreement with AK Steel. The Asset Purchase Agreement is also subject to higher and better offers submitted in accordance with the bidding procedures approved by the Bankruptcy Court under Sections 363 and 365 of the Bankruptcy Code on February 6, 2003, as modified by the Bankruptcy Court on March 25, 2003. Under these bidding procedures, bids must be submitted no later than April 10, 2003, and if one or more bids are determined to be Qualified bids under the bidding procedures an auction is expected to be conducted on April 16, 2003. On February 26, 2003, the Company was notified that the Justice Department was terminating the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the AK Steel transaction.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business and do not reflect adjustments that might result if the Company is unable to continue as a going concern. As a result of its Chapter 11 filings, however, such matters are subject to significant uncertainty. Continuing on a going concern basis is dependent upon, among other things, the Company’s formulation of an acceptable plan of reorganization, the success of future business operations, and the generation of sufficient cash from operations and financing sources to meet its obligations.

The Company has applied the provisions of AICPA’s Statement of Position No. 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, issued November 19, 1990 (“SOP 90-7”). SOP 90-7 requires a segregation of liabilities subject to compromise by the Court as of the filing date and identification of all transactions which impact the statement of operations that are directly associated with the reorganization of the Company. Prior year’s comparative balances have not been reclassified to conform to current year balances stated under SOP 90-7.

Liabilities Subject To Compromise

The principal categories of claims classified as liabilities subject to compromise under reorganization proceedings are identified below. All amounts below may be subject to future adjustment depending on Court action, further developments with respect to disputed claims, or other events. Additional claims may arise resulting from rejection of additional executory contracts or unexpired leases by the Company. Under an approved final plan of reorganization, these claims may be settled at amounts substantially less than their allowed amounts.

50

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Recorded liabilities subject to compromise under the Chapter 11 proceedings consisted of the following at December 31, 2002:

	Dollars in millions
Accounts payable	$	154.3
Short-term borrowings		100.0
Salaries, wages, benefits and related taxes		112.0
Pension liabilities, including minimum pension liabilities		1,156.6
Property taxes		46.3
Income taxes		1.8
Other accrued liabilities		65.1
Long-term obligations		511.6
Postretirement benefits other than pensions		403.8
Other long-term liabilities		94.9
	$	2,646.4

Reorganization Items

Reorganization items are comprised of items of income, expense and loss that were realized or incurred by the Company as a result of its decision to reorganize under Chapter 11 of the Bankruptcy Code. The following summarizes the reorganization charges recorded by the Company during the year ended December 31, 2002:

	Year Ended December 31, 2002
	Dollars in millions
Professional and other fees	$	20.7
Write-down of deferred financing costs		2.3
Provision for rejected derivative contract		1.3
Provision for potential additional costs on long-term agreements		26.1
Gain on sale of equity interest in DNN Galvanizing Limited Partnership		(0.3	)
Vendor settlement		(2.7	)
Other		3.2
	$	50.6

Interest Expense

Interest at the stated contractual amount on unsecured debt that was not charged to earnings for the year ended December 31, 2002 was approximately $41.5 million.

Note 2.    Description of the Business and Significant Accounting Policies

National Steel Corporation is a domestic manufacturer engaged in a single line of business, the production and processing of steel. The Company targets high value-added applications of flat rolled carbon steel for sale primarily to the automotive, construction and container markets. The Company also sells hot and cold-rolled steel to a wide variety of other users including the pipe and tube industry and independent steel service centers. The Company’s principal markets are located throughout the United States.

51

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Since 1986, the Company has had cooperative labor agreements with the United Steelworkers of America (the “USWA”), the International Chemical Workers Union Council of the United Food and Commercial Workers and other labor organizations, which collectively represent 83% of the Company’s employees. The Company entered into five-year agreements with these labor organizations in 1999. Additionally, these 1999 agreements contain a no-strike clause also effective through the term of the agreements.

Principles of Consolidation

The consolidated financial statements include the accounts of National Steel Corporation and its majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

The Company applies the provisions of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (“SAB 101”), to recognize revenue. As such, all revenue is recognized when products are shipped to customers or when all provisions of SAB 101 have been met.

Repair and Maintenance Costs

All costs for repair and maintenance projects, including materials, internal labor and external contract labor, are expensed as incurred.

Shipping and Handling Costs

The cost to deliver products to customers is recorded as part of cost of products sold.

Cash and Cash Equivalents

Cash equivalents are short-term liquid investments consisting principally of time deposits and commercial paper at cost which approximates market. Generally, these investments have maturities of three months or less at the time of purchase.

Restricted Cash

As of December 31, 2002 there were no restricted uses of cash or cash equivalents. At December 31, 2001, cash and cash equivalents in the amount of $2.4 million were restricted for use primarily in connection with zinc swap contracts and certain credit arrangements.

52

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Receivables

Receivables consist of trade and notes receivable and other miscellaneous receivables including refundable income taxes. Concentration of credit risk related to trade receivables is limited due to the large number of customers in differing industries and geographic areas and management’s credit practices. Receivables are shown net of allowances and estimated claims of $44.9 million and $48.3 million at December 31, 2002 and 2001, respectively. Activity relating to the allowance was as follows:

	2002			2001			2000
	Dollars in millions
Balance, January 1	$	48.3		$	31.0		$	19.6
Provision for doubtful accounts		7.9			22.1			7.7
Doubtful accounts written off, net of recoveries		(9.5	)		(0.4	)		(0.6	)
Other, net		(1.8	)		(4.4	)		4.3
Balance, December 31	$	44.9		$	48.3		$	31.0

The Company evaluates the collectibility of its accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filings, substantial down-grading of credit scores), the Company records a specific reserve for bad debts against outstanding amounts to reduce the net recognized receivable to the amount reasonably believed to be collectible. For customers that are highly leveraged (those customers whose value of debt exceeds equity by a predetermined ratio) and exceed a minimal risk threshold, the Company records a reserve representing its best estimate of potential losses from these customers in the aggregate. For all other customers, the Company recognizes reserves for bad debts based on the general status of the economy and, specifically, the steel industry and past collections experience. The bankruptcy filing of the LTV Steel Company, Inc. (described in Note 12 to the consolidated financial statements) and other customers and current economic conditions within the United States, especially within the steel industry, have caused the Company to record a provision for doubtful accounts receivable of $7.9 million, $22.1 million, and $7.7 million during 2002, 2001, and 2000, respectively. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us), the Company’s estimates of the recoverability of amounts due could be reduced by a material amount.

Derivative Instruments

In the normal course of business, the Company’s operations are exposed to continuing fluctuations in commodity prices and interest rates that can affect the cost of operating, investing, and financing. Accordingly, the Company addresses a portion of these risks, primarily commodity price risk, through a controlled program of risk management that may include the purchase of commodity purchase swap contracts from global financial institutions. The Company’s objective is to reduce earnings volatility associated with these fluctuations to allow management to focus on core business issues. The Company’s derivative activities, all of which are for purposes other than trading, are initiated within the guidelines of a documented corporate risk-management policy. The Company does not enter into any derivative transaction for speculative purposes. The Company has adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), as amended and interpreted. (See Note 13 to the Consolidated Financial Statements.)

Inventories

Inventories are stated at the lower of last-in, first-out (“LIFO”) cost or market.

53

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Based on replacement cost, inventories would have been approximately $173.8 million and $180.0 million higher than reported at December 31, 2002 and 2001, respectively. During 2001 certain inventory quantity reductions caused liquidations of LIFO inventory values that had the effect of reducing the net loss by $2.1 million or $0.05 per share (basic and diluted). During 2002 and 2000 certain inventory quantity reductions caused liquidations of LIFO inventory values that did not have a material effect on the net loss.

Inventories as of December 31, are as follows:

	2002			2001
	Dollars in millions
Inventories
Finished and semi-finished	$	352.8		$	339.0
Raw materials and supplies		178.7			176.9
		531.5			515.9
Less LIFO reserve		(125.8	)		(125.5	)
	$	405.7		$	390.4

Investments in Affiliated Companies

Investments in affiliated companies (corporate joint ventures and 20.0% to 50.0% owned companies) are stated at cost plus equity in undistributed earnings and/or losses since acquisition. Undistributed deficit of affiliated companies at December 31, 2002 and 2001 amounted to $10.2 million and $7.6 million, respectively.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and include certain expenditures for leased facilities. Interest costs applicable to facilities under construction are capitalized. No interest was capitalized during 2002 and 2001. Capitalized interest amounted to $15.3 million in 2000. Depreciation of capitalized interest amounted to $4.9 million in 2002, $5.1 million in 2001 and $4.5 million in 2000.

Property, plant and equipment as of December 31, are as follows:

	2002		2001
	Dollars in millions
Land and land improvements	$	175.0	$	175.6
Buildings		362.1		361.6
Machinery and equipment		3,346.6		3,336.3
Total property, plant and equipment		3,883.7		3,873.5
Less accumulated depreciation		2,627.2		2,488.2
Net property, plant and equipment	$	1,256.5	$	1,385.3

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”), the Company periodically evaluates its long-lived assets for impairment whenever indicators of impairment exist. A long-lived asset is considered impaired when the anticipated undiscounted future cash flows from a logical grouping of assets over the remaining service life of the asset grouping is less than its carrying value. Generally, the Company groups its assets at the facility level, which is the lowest level of the organization for which identifiable cash flows are independent of the cash flows of other assets and liabilities of the Company, for impairment testing.

54

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Based on the Company’s filing under Chapter 11 of Title 11 of the United States Code in the Bankruptcy Court, impairment indicators were present at December 31, 2002 for all of the Company’s long-lived assets. As such, the Company compared the estimated undiscounted future cash flows to the carrying value of the attributable long-lived assets. As the Company’s average long-lived assets are already two-thirds depreciated, the levels of cash flows necessary for recoverability were greatly reduced.

The Company’s recoverability estimates are based essentially on static volume while pricing levels continue to grow at approximately 1-2% per annum through 2006 and then remain constant over the remaining average useful life of the long-lived assets. The highest annual average selling price per ton in this impairment model is approximately 2% lower than the average price per ton experienced before the high levels of low-priced imported steel began to flood the market in 1998. The Company further assumes that cost reduction activities and improved efficiencies will reduce cost per ton by approximately 4% through 2003 and hold constant for the remainder of the assets’ average useful lives.

Based on the impairment model utilized by the Company, in accordance with SFAS 144, the estimated undiscounted future cash flows exceed the carrying value of the attributable long-lived assets, and therefore, no impairment charge was recorded in 2002. There can be no assurances that the Company will successfully attain the shipping volumes, average selling prices or cost reductions included in its recoverability estimates. Should future actual results or assumptions change, the Company may be required to record an impairment charge in a future period. Additionally, the impairment analysis does not contemplate the asset purchase agreement with AK Steel or related fair value of long-lived assets which may be derived therefrom.

Depreciation

Depreciation of production facilities, equipment and capitalized lease obligations is generally computed by the straight-line method over their estimated useful lives or, if applicable, remaining lease term, if shorter. The following useful lives are used for financial statement purposes:

Land improvements	10–20 years
Buildings	15–40 years
Machinery and equipment	3–15 years

Depreciation of furnace relinings is computed on the basis of tonnage produced in relation to estimated total production to be obtained from such facilities.

Pensions

The Company accounts for its defined benefit pension plans in accordance with SFAS No. 87, Employers’ Accounting for Pensions (“SFAS 87”), which requires that amounts recognized in financial statements be determined on an actuarial basis. SFAS 87 and the policies the Company uses, including the delayed recognition of gains and losses and the use of a calculated value of plan assets, generally reduce the volatility of pension expense due to changes in pension liability assumptions, demographic experience, and the market performance of the pension plan’s assets. (See Notes 6 and 9 to the Consolidated Financial Statements.)

Other Postretirement Benefits

The Company provides retiree health care benefits for certain salaried and represented employees that retire under its pension plans. The Company’s retiree health care plans provide health care benefits to approximately 23,000 of its former employees and their dependents. The Company accounts for its other postretirement benefit

55

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

plans in accordance with SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other than Pensions (“SFAS 106”), which requires that amounts recognized in financial statements be determined on an actuarial basis. SFAS 106 and the policies the Company uses, including the delayed recognition of gains and losses, generally reduce the volatility of retiree health care expense due to changes in assumptions, claims experience, demographic experience, and the market performance of the plan’s assets. (See Note 6 to the Consolidated Financial Statements.)

Research and Development

Research and development costs are expensed when incurred as a component of cost of products sold. Expenses for 2002, 2001 and 2000 were $6.8 million, $8.6 million and $9.6 million, respectively.

Financial Instruments

Financial instruments consist of cash and cash equivalents and long-term obligations (excluding capitalized lease obligations). The fair value of cash and cash equivalents approximates their carrying amounts at December 31, 2002. The carrying value of long-term obligations (excluding capitalized lease obligations) exceeded the fair value by approximately $210 million at December 31, 2002. The fair value is based on quoted market prices or is estimated using discounted cash flows based on current interest rates for similar issues.

Earnings per Share (Basic and Diluted)

Basic Earnings per Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options. The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company’s common stock at the average market price during the period. If a net loss is incurred, dilutive stock options are considered antidilutive and are excluded from the dilutive EPS calculation. As a result of the reported net loss for each of the three years ended December 31, 2002, 2001 and 2000, the denominator for both basic and diluted earnings per share were the same.

Stock-Based Compensation

As permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock Based Compensation (“SFAS 123”), the Company has elected to continue to apply Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) and related interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of employee stock options equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is recorded. The Company has adopted the disclosure-only provisions of SFAS 123 and SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS 148”). (See Note 14 to the Consolidated Financial Statements.)

56

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Had compensation cost for the option plans been determined based on the fair value at the grant date for awards in 2002, 2001, and 2000 consistent with the provisions of SFAS 148 and 123, the Company’s net loss and earnings per share would have been adjusted to the pro forma amounts indicated below:

	2002			2001			2000
	Dollars in millions, except EPS
Net loss as reported	$	(148.7	)	$	(652.1	)	$	(129.8	)
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		0.4			1.0			0.7
Pro-forma net loss	$	(149.1	)	$	(653.1	)	$	(130.5	)
Earnings per share:
Basic EPS—As reported	$	(3.60	)	$	(15.79	)	$	(3.14	)
Basic EPS—Pro-forma	$	(3.61	)	$	(15.82	)	$	(3.16	)
Diluted EPS—As reported	$	(3.60	)	$	(15.79	)	$	(3.14	)
Diluted EPS—Pro-forma	$	(3.61	)	$	(15.82	)	$	(3.16	)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	2002*	2001		2000
Dividend yield	N/A	0.0	%	2.8	%
Expected volatility	N/A	74.5	%	58.5	%
Risk-free interest rate	N/A	5.0	%	6.6	%
Expected term (in years)	N/A	7.0		7.0

      * There were no options granted in 2002.

Use of Estimates

Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expense during the year. Actual results could differ from those estimates.

Reclassifications

Certain amounts in prior years consolidated financial statements have been reclassified to conform with the current year presentation.

Impact of Recently Issued Accounting Standards

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS 143”). SFAS 143 applies to legal obligations associated with the retirement of certain long-lived assets. It requires companies to record the fair value of the liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the company capitalizes a cost by increasing the

57

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The Company adopted SFAS 143, as required, in its fiscal year beginning on January 1, 2003. The transition adjustment of less than $3 million, net of tax, resulting from the adoption of SFAS 143 will be reported as a cumulative effect of a change in accounting principle in the first quarter of 2003.

In April 2002, the FASB issued SFAS No. 145, Recession of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections (“SFAS 145”), which will require gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under SFAS 4. SFAS 145 also amends SFAS 13 to require certain modifications to capital leases be treated as a sales-leaseback. We adopted SFAS 145 effective January 1, 2003 and it did not have a material impact on our earnings or financial position. Adoption will require the extraordinary gain in 2001 to be reclassified.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS 146”), which changes financial accounting and reporting for costs associated with exit or disposal activities. SFAS 146 requires that a liability for costs associated with an exit or disposal activity be recognized as incurred rather than at the date a company commits to an exit plan as currently required. SFAS 146 also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. Adoption of SFAS 146 did not have an effect on the Company’s earnings or financial position.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure (“SFAS 148”) an amendment of SFAS No. 123 Accounting for Stock-Based Compensation (‘SFAS 123), which provides alternative transition methods for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also amended the disclosure provisions, which now require the method of accounting for stock-based employee compensation to be provided and the effect of the method used on reported results. As permitted by SFAS 123, the Company has chosen to continue accounting for stock options at their intrinsic value at the date of grant consistent with the provision of APB 25. The adoption of this statement in December 2002 had no impact on the Company’s earnings or financial position, and the disclosure requirements have been met.

Note 3.    Capital Structure

At December 31, 2002, the Company’s capital structure was as follows.

Class A Common Stock:  The Company had 30,000,000 shares of $.01 par value Class A Common Stock authorized, of which 22,100,000 shares were issued and outstanding and owned by NKK U.S.A. Corporation. Each share is entitled to two votes. No dividends were paid in 2002 and 2001. Dividends of $0.21 per share were paid in 2000. As a result of its ownership of the Class A Common Stock, NKK U.S.A. Corporation controls approximately 69.7% of the voting power of the Company.

Class B Common Stock:  The Company had 65,000,000 shares of $0.01 par value Class B Common Stock authorized, 21,188,240 shares issued, and 19,188,240 outstanding net of 2,000,000 shares of Treasury Stock. No dividends were paid in 2002 and 2001. Dividends of $0.21 per share were paid in 2000. All of the issued and outstanding shares of Class B Common Stock are publicly traded and are entitled to one vote.

58

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 4.    Segment Information

The Company has one reportable segment: Steel. The Steel segment consists of two operating divisions, the Regional Division and the Granite City Division, that produce and sell hot and cold-rolled steel to automotive, construction, container, and pipe and tube customers as well as independent steel service centers. The Company’s operating divisions are primarily organized and managed by geographic location. A third operating division, National Steel Pellet Company, has been combined with “All Other” as it does not meet the quantitative thresholds for determining reportable segments. “All Other” also includes the Company’s transportation divisions, administrative office and certain steel processing and warehousing operations. “All Other” revenues from external customers are attributable primarily to steel processing, warehousing and transportation services.

The Company evaluates performance and allocates resources based on income(loss) from operations before reorganization items. The accounting policies of the Steel segment are the same as described in Note 2 to the consolidated financial statements. Intersegment sales and transfers are accounted for at market prices and are eliminated in consolidation.

	2002								2001
	Steel		All Other			Total			Steel			All Other			Total
	Dollars in millions
Revenues from external customers	$	2,589.4	$	20.0		$	2,609.4		$	2,475.0		$	17.3		$	2,492.3
Intersegment revenues		457.8		250.6			708.4			464.2			1,754.7			2,218.9
Depreciation expense		122.9		37.8			160.7			126.0			41.9			167.9
Other items		—		6.9			6.9			28.7			(12.8	)		15.9
Segment income (loss) from operations before reorganization items		10.9		(145.4	)		(134.5	)		(223.2	)		(231.3	)		(454.5	)
Extraordinary item		—		—			—			—			(2.0	)		(2.0	)
Cumulative effect of change in accounting principle		—		—			—			23.1			(5.9	)		17.2
Segment assets		1,451.6		757.1			2,208.7			1,516.0			791.6			2,307.6
Expenditures for long-lived assets		32.6		5.9			38.5			38.6			13.3			51.9

Included in “All Other” intersegment revenues in 2001 is $1,524.0 million of qualified trade receivables sold to National Steel Funding Corporation (“NSFC”), a wholly-owned subsidiary. On September 28, 2001, the Company replaced the Receivables Purchase Agreement with a new credit facility as described in Note 5 to the consolidated financial statements. As a result, no qualified trade receivables were sold to NSFC subsequent to September 28, 2001.

The following table sets forth the percentage of the Company’s revenues from various markets for 2002, 2001 and 2000:

	2002		2001		2000
Automotive	36.5	%	26.5	%	29.0	%
Construction	24.6		27.0		24.8
Containers	13.4		13.1		12.0
Pipe and Tube	5.3		7.0		6.9
Service Centers	16.5		21.5		22.0
All Other	3.7		4.9		5.3
	100.0	%	100.0	%	100.0	%

59

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In 2002, one customer, within the automotive market, accounted for $267.0 million or 10.2% of net sales. No single customer accounted for more than 10% of net sales in 2001 or 2000. Export sales accounted for approximately 3.8% of revenues in 2002, 3.4% in 2001 and 3.6% in 2000. The Company has no long-lived assets that are maintained outside of the United States.

Note 5.    Long-Term Obligations

Long-term obligations were as follows:

	December 31,
	2002			2001
	Dollars in millions
DIP Credit Facility	$	128.5		$	—
First Mortgage Bonds, 9.875% Series due March 1, 2009, with general first liens on principal plants, properties and certain subsidiaries		300.0			300.0
First Mortgage Bonds, 8.375% Series due August 1, 2006, with general first liens on principal plants, properties and certain subsidiaries		60.5			60.5
Credit Facility, 5.7% effective in December 2001 due September 2004, secured by both accounts receivable and inventory		—			313.6
Continuous Caster Facility Loan, 7.477% effective in December 2000 (the rate was 10.057% prior to being reset in November 2000). Equal semi-annual payments due through 2007, with a first mortgage in favor of the lenders		76.0			76.0
Pickle Line Loan, 7.726% fixed rate due in equal semi-annual installments through 2007, with a first mortgage in favor of the lender		52.5			55.9
Adequate protection payments required by bankruptcy court order for First Mortgage Bond and Caster Facility Loan		(6.0	)		—
ProCoil, various rates and due dates		2.2			2.2
Capitalized lease obligations, various rates and due dates		8.8			13.2
Other		17.6			17.6
Total long-term obligations		640.1			839.0
Less amounts subject to compromise		(511.6	)		—
Less long-term obligations due within one year		—			(29.3	)
Long-term obligations	$	128.5		$	809.7

60

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Under the Bankruptcy Code we may assume or reject executory contracts, including lease obligations. Therefore, the commitments shown below may not reflect actual cash outlays in the future periods. See Note 1 to consolidated financial statements. Future minimum payments for all long-term obligations and leases as of December 31, 2002 are as follows:

	Capitalized Leases			Operating Leases		Other Long-Term Obligations
	Dollars in millions
2003	$	5.8		$	64.4	$	49.3
2004		3.6			58.9		30.7
2005		—			24.6		157.6
2006		—			0.3		57.2
2007		—			0.2		25.2
Thereafter		—			—		311.3
Total payments		9.4		$	148.4	$	631.3
Less amount representing interest		0.6
Less current portion of obligations under capitalized leases		5.4
Long-term obligations under capitalized leases	$	3.4
Assets under capitalized leases:
Machinery and equipment	$	24.3
Less accumulated depreciation		(14.2	)
	$	10.1

Operating leases include a coke battery facility which services Granite City and expires in 2004, an electrolytic galvanizing facility which services Great Lakes and expires in 2005, and a continuous caster and the related ladle metallurgy facility which services Great Lakes and expires in 2008. Upon expiration, the Company has the option to extend the leases, purchase the equipment at fair market value, or return the facility to the third party owner. The Company’s remaining operating leases cover various types of properties, primarily machinery and equipment, which have lease terms generally for periods of 2 to 20 years, and which are expected to be renewed or replaced by other leases in the normal course of business. Rental expense totaled $70.4 million in 2002, $65.4 million in 2001, and $70.8 million in 2000. During 2002, the Company recorded $26.1 million in estimated penalties related to leases as a reorganization item.

Credit Arrangements

On March 6, 2002, the Company received commitments for up to a $450 million Secured Super Priority Debtor in Possession (“DIP”) financing from the lenders under the Credit Facility. The term of the DIP runs from the closing date to the earlier of (i) the second anniversary of the closing date, (ii) the effective date of a Plan of Reorganization in the Company’s Chapter 11 case and (iii) acceleration of the Company’s obligations under the DIP as a result of certain specified events, including a change of control transaction.

Availability under the DIP is subject to a borrowing base calculated by applying advance rates to eligible accounts receivable and eligible inventory. Availability under the DIP is also subject to: (i) certain eligibility reserves and availability reserves, (ii) a reserve for certain professional and bankruptcy court expenses related to the Company’s Chapter 11 cases and (iii) a liquidity reserve of $35 million. At December 31, 2002, the maximum amount available after adjusting for these items, and after reduction for letters of credit and outstanding borrowings was $220 million.

61

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Proceeds of loans under the DIP will be used solely to pay certain pre-petition claims approved by the Court, for post-petition operating expenses incurred in the ordinary course of business and certain other costs and expenses of administration of the cases as will be specified and as approved by the Court. Except for certain specified circumstances, all cash received by the Company or any of its subsidiaries shall be applied to outstanding claims under the Credit Agreement and after all such claims have been paid, to outstanding obligations under the DIP. At December 31, 2002, all outstanding claims under the Credit Agreement were paid.

All amounts owing by the Company under the DIP at all times will constitute allowed super-priority administrative expense claims in its Chapter 11 cases, generally having priority over all the Company’s administrative expenses. In addition, all amounts owing by the Company under the DIP will be secured by valid and perfected security interests in, and liens on substantially all of its assets.

On December 31, 2002, there was $128.5 million outstanding under the DIP Agreement. These borrowings bear interest at a bank prime rate or at an adjusted Eurodollar rate plus an applicable margin that varies, depending upon the type of loan the Company executes. At December 31, 2002, the outstanding borrowings under the DIP Agreement had an average annual interest rate of 6.3%.

During 2001, the Company closed on a new $465 million Credit Agreement secured by both accounts receivable and inventory. The Credit Agreement replaced a Receivables Purchase Agreement that was to expire in September 2002 and a Inventory Facility that was to expire in November 2004.

Prior to the closing of the Credit Agreement, the Company had utilized the Receivables Purchase Agreement to sell $110 million of trade accounts receivable and had borrowed $128.6 million under the Inventory Facility. Upon the closing of the Credit Agreement, the Company purchased the previously sold trade accounts receivable and repaid the outstanding Inventory Facility borrowings.

On December 31, 2001, there was $313.6 million outstanding under the Credit Agreement. These borrowings bore interest at a bank prime rate or at an adjusted Eurodollar rate plus an applicable margin that varies, depending upon the type of loan the Company executed. At December 31, 2001, the outstanding borrowings under the Credit Agreement had an average annual interest rate of 5.7%.

Under the Credit Agreement, the maximum amount available from time to time was subject to change based on the level of eligible receivables and inventory and restrictions on concentrations of certain receivables. At December 31, 2001, the maximum amount available, after reduction for letters of credit and outstanding borrowings, was $105.3 million subject to a minimum liquidity requirement of $75 million.

During March 2001, the Company closed on a new $100.0 million subordinated revolving credit facility with NUF LLC, a wholly-owned subsidiary of NKK Corporation, the Company’s principal stockholder (the “NUF Facility”) that expired in February 2002. On December 31, 2002, there was $100.0 million outstanding under the NUF Facility. These borrowings also bear interest at a bank prime rate or at an adjusted Eurodollar rate plus an applicable margin that varies, depending upon the type of loan the Company executed. At December 31, 2001, the outstanding borrowings under the NUF Facility had an average annual interest rate of 5.9%.

Due to the proceedings under Chapter 11, we are in default on our debt agreements, with the exception of the DIP Credit Facility. While operating under Chapter 11, we are prohibited from paying interest on unsecured debts. We ceased accruing interest on all unsecured long-term debt subject to compromise in accordance with SOP 90-7 beginning March 6, 2002. If we were not in Chapter 11, $41.5 million of interest would have been accrued on the long-term debt subject to compromise during the year ended December 31, 2002.

62

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 6.    Pension and Other Postretirement Employee Benefits

The Company has various qualified and nonqualified pension plans and other postretirement employee benefit (“OPEB”) plans for its employees and retirees. The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets over the periods ended September 30, 2002 and 2001, and the plans funded status at September 30 reconciled to the amounts recognized on the balance sheet on December 31, 2002 and 2001:

	Pension Benefits						Other Postretirement Benefits
	2002			2001			2002			2001
	Dollars in millions
Reconciliation of benefit obligation
Benefit obligation, October 1 Prior Year	$	2,289.8		$	2,137.0		$	992.8		$	817.0
Service cost		31.4			29.4			14.1			12.7
Interest cost		167.7			165.6			70.8			63.2
Participant contributions		—			—			13.0			9.4
Other contributions		—			1.9			—			—
Plan amendments		—			0.2			—			—
Actuarial loss		188.2			133.7			190.8			161.0
Benefits paid		(185.6	)		(178.6	)		(92.7	)		(70.5	)
Settlement		(0.7	)		—			—			—
Special termination benefits		—			0.6			—			—
Benefit obligation, September 30	$	2,490.8		$	2,289.8		$	1,188.8		$	992.8
Reconciliation of fair value of plan assets
Fair value of plan assets, October 1 Prior Year	$	1,549.4		$	2,093.7		$	90.5		$	116.0
Actual return on plan assets		(88.5	)		(367.8	)		(20.1	)		(25.5	)
Company contributions		—			0.2			79.7			61.1
Participant contributions		—			—			13.0			9.4
Other contributions		—			1.9			—			—
Benefits paid		(185.6	)		(178.6	)		(92.7	)		(70.5	)
Fair value of plan assets, September 30	$	1,275.3		$	1,549.4		$	70.4		$	90.5
Funded Status
Funded status, September 30	$	(1,215.5	)	$	(740.4	)	$	(1,118.5	)	$	(902.3	)
Unrecognized actuarial loss		947.0			493.3			323.2			106.0
Unamortized prior service cost		109.3			126.4			3.1			3.4
Unrecognized net transition obligation		—			0.3			264.1			291.4
Fourth quarter contributions		—			—			23.0			22.6
Net amount recognized, December 31	$	(159.2	)	$	(120.4	)	$	(505.1	)	$	(478.9	)

Pursuant to the terms of the 1993 Settlement Agreement between the Company and the United Steelworkers of America (“USWA”), a VEBA Trust was established for the purpose of pre-funding a portion of future retiree health care benefits. Under the terms of the agreement, the Company agreed to contribute a minimum of $10.0 million annually to the VEBA Trust. Effective August 1, 1999, a new five-year agreement was ratified between the Company and the USWA and the requirement for mandatory contributions to the VEBA Trust was eliminated over the term of the agreement.

63

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other contributions reflect reimbursements from the Weirton Steel Corporation (“Weirton”), the Company’s former Weirton Steel Division, for retired Weirton employees whose pension benefits are paid by the Company but are partially the responsibility of Weirton. An offsetting amount is reflected in benefits paid.

The following table provides the amounts recognized in the consolidated balance sheet as of December 31 of both years:

	Pension Benefits						Other Postretirement Benefits
	2002			2001			2002			2001
	Dollars in millions
Prepaid benefit cost	$	64.6		$	54.1		$	N/A		$	N/A
Accrued benefit liability		(223.8	)		(174.5	)		(505.1	)		(478.9	)
Additional minimum liability		(932.8	)		(502.3	)		N/A			N/A
Intangible asset		108.8			126.0			N/A			N/A
Accumulated other comprehensive income		824.0			376.3			N/A			N/A
Recognized amount	$	(159.2	)	$	(120.4	)	$	(505.1	)	$	(478.9	)

The projected benefit obligation, accumulated benefit obligation (“ABO”) and fair value of plan assets for pension plans with an ABO in excess of plan assets were $2,489.9 million, $2,366.3 million and $1,274.2 million, respectively, as of September 30, 2002 and $2,289.0 million, $2,170.9 million and $1,548.2 million, respectively, as of September 30, 2001.

The following table provides the components of net periodic benefit cost for the plans for fiscal years 2002, 2001 and 2000.

	Pension Benefits									Other Postretirement Benefits
	2002			2001			2000			2002			2001			2000
	Dollars in millions
Service cost	$	31.4		$	29.4		$	31.4		$	14.1		$	12.7		$	11.3
Interest cost		167.7			165.6			161.8			70.8			63.2			55.3
Expected return on assets		(177.7	)		(189.2	)		(186.0	)		(8.6	)		(11.0	)		(10.6	)
Prior service cost amortization		17.1			17.7			18.5			0.3			0.3			0.3
Actuarial (gain)/loss amortization		0.5			(0.8	)		0.4			2.3			(1.5	)		(8.0	)
Transition amount amortization		0.2			8.8			8.8			27.3			27.3			27.3
Settlement (gain)/loss		(0.4	)		—			—			—			—			—
Net periodic benefit cost	$	38.8		$	31.5		$	34.9		$	106.2		$	91.0		$	75.6

64

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company generally uses a September 30 measurement date. The assumptions used in the measuring of the Company’s benefit obligations and costs are shown in the following table:

	Weighted-average assumptions, September 30,
	2002		2001		2000
Discount rate	6.75	%	7.50	%	8.00	%
Expected return on plan assets—Pension	9.75	%	9.75	%	9.75	%
Expected return on plan assets—Retiree Welfare	9.75	%	9.75	%	9.75	%
Rate of compensation increase	4.20	%	4.20	%	4.19	%

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects on 2002 service and interest cost and the accumulated postretirement benefit obligation at September 30, 2002:

	1% Increase		1% Decrease
	Dollars in millions
Effect on total of service and interest cost components of net periodic postretirement health care benefit cost	$	9.1	$	(8.3	)
Effect on the health care component of the accumulated postretirement benefit obligation		109.1		(99.1	)

The Company has assumed a 10.0% healthcare cost trend rate at September 30, 2002, reducing 1.0% a year over five years and reaching an ultimate trend rate of 5.0% in 2008.

The Company also sponsors a defined contribution Retirement Savings Plan for non-represented salaried employees and a defined contribution Represented Employee Retirement Savings Plan that covers substantially all employees of the Company employed on a full time basis who are covered by a collective bargaining agreement. Eligible employees of these plans may contribute between 1% and 18% of their annual compensation on a before-tax basis, up to a maximum limit imposed by law. The Retirement Savings Plan for non-represented employees provides for a Company match on the first 5% of an eligible employee’s contributions based upon the Company’s profitability in the prior year. During 2002, 2001 and 2000, the Company provided a match of 50%, 50% and 57.5%, respectively. Non-represented salaried employees become vested in Company contributions immediately. Contributions by the Company for 2002, 2001 and 2000 were $2.1 million, $2.2 million and $2.7 million, respectively.

The Company terminated the nonqualified ERISA Parity Plan and Supplemental Retirement Program, effective December 31, 2002. While National Steel Corporation uses an early measurement date, recognition of a SFAS 88 gain or loss resulting from a plan termination does not receive delayed measurement. As a result, $0.4 million of SFAS 88-curtailment and settlement gains associated with the plan terminations were recognized during the fourth quarter of fiscal 2002.

During December 2002, the Pension Benefit Guaranty Corporation (“PBGC”) informed the Company that it would involuntarily terminate all of its qualified pension plans, other than American Steel, effective December 6, 2002. The PBGC’s decision effectively eliminates the accrual of qualified defined benefits for all National Steel Corporation employees, which triggers curtailment accounting under SFAS 88. Since the event is probable, its effects are reasonably estimable, and it produces a loss, a curtailment occurred on December 6, 2002. Under curtailment, unamortized prior service cost is recognized. As the Company reports pension cost with a delayed

65

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

measurement date, three months in arrears, we will recognize a SFAS 88-curtailment loss on March 6, 2003 which is estimated to be approximately $106.0 million.

If the courts uphold the PBGC’s decision to involuntarily terminate these pension plans, SFAS 88-settlement accounting would also be triggered. Recognition of a SFAS 88 gain or loss resulting from a plan termination is reflected in earnings when incurred with no delayed measurement. While the timing of the courts’ decision would impact the exact amount of the FAS 88-settlement gain to be recognized, it is expected to fall between $280.0 and $320.0 million. Under these circumstances, the PBGC will concurrently submit claims against the Company for the unfunded pension benefit obligations assumed. The bankruptcy court is projected to place a value on the PBGC’s total claims in the range of $760.0 million to $1.6 billion. This would result in a net settlement loss ranging from $440 million to $1.32 billion. Upon termination of the Plans, the Company expects that the vast majority of claims asserted by the PBGC will be unsecured claims, and will be subject to a plan of reorganization.

Note 7.    Other Long-Term Liabilities

Other long-term liabilities at December 31 consisted of the following:

	2002			2001
	Dollars in millions
Deferred gain on sale leasebacks	$	6.0		$	7.3
Insurance and employee benefits (excluding pensions and OPEBs)		62.9			58.7
Shutdown mines and coal properties		24.8			28.3
Other		14.6			16.6
		108.3			110.9
Less amounts subject to compromise		(94.9	)		—
Total Other Long-Term Liabilities	$	13.4		$	110.9

Note 8.    Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities at December 31 are as follows:

	2002			2001
	Dollars in millions
Deferred tax assets
Accrued liabilities	$	137.0		$	112.4
Employee benefits		266.2			239.9
Net operating loss (“NOL”) carryforwards		347.3			280.2
Federal tax credits		20.1			73.3
Other		17.2			17.6
Total deferred tax assets		787.8			723.4
Valuation allowance		(479.1	)		(441.7	)
Deferred tax assets net of valuation allowance		308.7			281.7
Deferred tax liabilities
Book basis of property in excess of tax basis		(215.6	)		(198.0	)
Excess tax LIFO over book		(36.5	)		(30.5	)
Other		(8.6	)		(5.5	)
Total deferred tax liabilities		(260.7	)		(234.0	)
Net deferred tax assets after valuation allowance	$	48.0		$	47.7

66

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In 2002 and 2001, the Company determined that it was more likely than not that approximately $124.4 million and $123.5 million, respectively, of future taxable income could be generated from operations or tax planning strategies to justify the net deferred tax assets after the valuation allowance.

Significant components of income taxes (credit) are as follows:

	2002			2001		2000
	Dollars in millions
Current taxes payable (refundable):
Federal tax	$	(58.0	)	$	—	$	(17.8	)
State and foreign		0.4			0.6		0.7
Deferred tax (credit)		(0.3	)		148.2		10.3
Income taxes (credit)	$	(57.9	)	$	148.8	$	(6.8	)

The reconciliation of income tax computed at the federal statutory tax rates to the recorded income taxes (credit) is as follows:

	2002			2001			2000
	Dollars in millions
Tax at federal statutory rates	$	(73.5	)	$	(178.0	)	$	(47.3	)
State income taxes, net		(8.3	)		(12.6	)		(6.6	)
Change in valuation allowance		37.4			338.6			53.0
Depletion		(5.8	)		—			(3.6	)
Other, net		(7.7	)		0.8			(2.3	)
Income taxes (credit)	$	(57.9	)	$	148.8		$	(6.8	)

At December 31, 2002, the Company had unused NOL carryforwards of approximately $906.6 million, which expire in 2020 through 2022 and had unused alternative minimum tax credit and other tax credit carryforwards of approximately $20.1 million which may be applied to offset its future regular federal income tax liabilities. These tax credits may be carried forward indefinitely.

On March 9, 2002, President Bush signed the Job Creation and Worker Assistance Act of 2002 (the “Act”). This new Act, among other provisions, provides for an expansion of the carryback of net operating losses (“NOLs”) from two years to five years for NOLs arising in 2001 and 2002. The Company was able to carryback the loss recorded during 2001 to the 1996 through 1998 tax years when it paid an alternative minimum tax. As a result of this change in the tax law, the Company received a refund of $53.2 million in 2002. This carryback allowed the Company to recover the entire amount of alternative minimum taxes paid during those prior taxable years.

Note 9.    Non-Operational Activities

A number of non-operational activities are reflected in the consolidated statement of operations in each of the three years ended December 31, 2002. A discussion of these items follows.

Other Items

In 2002, we received $6.9 million from the conversion of Prudential Insurance Company from a mutual company owned by its policyholders to a publicly held company, all of which was recognized as a gain.

67

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2001, the Company recognized income (loss) from other items consisting of the following items:

Gain on sale of natural gas derivative contract (see Note 13)	$	26.2
Property tax settlements		3.0
Expense related to Staff Retirement Incentive Program for Salaried Non-Represented Employees		(1.2	)
Write-off of computer system costs		(12.1	)
Other items	$	15.9

During 2001, the Company completed an evaluation of certain of its computer system software that was in the process of installation. As a result of this evaluation and a reduction in the Company’s capital spending plan, it was determined that certain aspects of projects in process will not be completed or will be delayed indefinitely. This evaluation resulted in a write-off of previously capitalized computer software installation costs of $12.1 million.

During the second quarter of 2001, the Company recorded a credit of $3.0 million for the settlement of property tax issues at the Company’s Midwest and Great Lakes operations relating to prior tax years.

Additionally, the Company offered a Staff Retirement Incentive Program for certain salaried non-represented employees. The voluntary program, available between March 1, 2001 and May 1, 2001, was offered to support the Company’s efforts to reduce the salaried workforce. The expense results from the additional pension, other postretirement employee benefits and severance liabilities incurred as a result of the employees who accepted the program.

Net Gain on the Disposal of Non-Core Assets and Other Related Activities

In 2002, 2001 and 2000, the Company disposed, or made provisions for disposing of, certain non-core assets. The effects of these transactions and other activities relating to non-core assets are presented as a separate component in the consolidated statements of operations. During 2002, we sold undeveloped land located in Corpus Christi, Texas. The net gain that we recognized in 2002 was $3.3 million. The $3.0 million net gain on disposal of non-core assets in 2001 resulted from the sale of property and certain assets related to an idled pickling operation, the sale of property and certain assets, including trademarks, related to the Granite City Division building products line, and a final payment related to the sale of our equity interest in Presque Isle Corporation (“Presque Isle”) in 2000. The $15.1 million net gain on disposal of non-core assets in 2000 resulted from the sale of our 30% equity interest in the Presque Isle Corporation, a limestone quarry.

Extraordinary Item

During 2001, the Company closed on a new $465 million Credit Agreement secured by both accounts receivable and inventory which was scheduled to expire in September 2004. This Credit Agreement replaced the old $200 million Receivables Purchase Agreement with an expiration date of September 2002 and the $200 million revolving credit facility secured by the Company’s inventories (the “Inventory Facility”) with an expiration date of November 2004. As a result, the Company recorded an extraordinary charge of $2.0 million with respect to the write-off of unamortized debt issuance costs in connection with the extinguishment of debt.

Change in Accounting Principle

Effective January 1, 2001, the Company changed its method of accounting for investment gains and losses on pension assets for the calculation of net periodic pension cost. Previously, the Company’s actuary used a

68

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

method that recognized all realized gains and losses immediately and deferred and amortized all unrealized gains and losses over five years. The Company has decided to change its actuarial method to treat realized and unrealized gains and losses in the same manner. Under the new accounting method, the market value of plan assets will reflect gains and losses at the actuarial expected rate of return. In addition, the difference between actual gains and losses and the amount recognized based on the expected rate of return will be amortized in the market value of plan assets over three years. In management’s opinion, this method of accounting, which is consistent with the practices of many other companies with significant pension assets, will result in improved reporting because the new method more closely reflects the fair value of its pension assets.

The cumulative effect of this change was a credit of $17.2 million recognized in income as of January 1, 2001. There was no income tax expense on the cumulative effect of the change in accounting method. Pension cost and the net loss for the year ended December 31, 2001 was $6.7 million or $0.16 per share less as a result of the change in accounting. The pro forma effect of this change as if it had been made retroactively for the year ended December 31, 2000 would have been to increase pension cost by $1.9 million and decrease net income by $1.8 million or $0.04 per share.

Note 10.    Related Party Transactions

Summarized below are transactions between the Company and NKK (the Company’s principal stockholder) and other affiliates.

NKK Transactions

During 1998, the Company entered into a Turnkey Engineering and Construction Contract with NKK Steel Engineering, Inc. (“NKK SE”), a subsidiary of NKK, to design, engineer, construct and install a continuous galvanizing facility at Great Lakes. The purchase price payable by the Company to NKK SE for the facility is approximately $150 million. During 2002, 2001, 2000, 1999 and 1998, $0.2, $4.0, $32.2, $98.4, and $15.2 million, respectively, was paid to NKK SE relating to the above mentioned contract. In March of 2002, the Company received $5.5 million from NKK SE in settlement of the Company’s claims for liquidated damages for late startup and other performance issues. All claims between the parties pursuant to the Construction Contract have now been resolved and all letters of credit previously held by the Company as security for NKK SE’s performance have been returned to NKK SE.

During 2002, the Company did not purchase any finished-coated steel produced by NKK. During 2001, the Company purchased from a trading company in arms’ length transactions at competitively bid prices, approximately $0.1 million, of finished-coated steel produced by NKK.

Effective as of February 16, 2000, the Company entered into a Steel Slab Products Supply Agreement with NKK, the initial term of which extended through December 31, 2000 and continues on a year-to-year basis thereafter until terminated by either party on six months notice. Pursuant to the terms of this Agreement, the Company will purchase steel slabs produced by NKK at a price determined in accordance with a formula set forth in the Agreement that approximates current market price. The quantity of slabs to be purchased is negotiated on a quarterly basis. The Company purchased $1.9 million and $28.9 million of slabs under this agreement during 2002 and 2001. The Company currently has no commitments to purchase slabs produced by NKK during 2003.

Effective May 1, 1995, the Company entered into an Agreement for the Transfer of Employees with NKK, the term of which has been extended through June 30, 2003. Pursuant to the terms of this Transfer Agreement,

69

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

technical and business advice is provided through NKK employees who are transferred to the employ of the Company. The Company is obligated to reimburse NKK for the costs and expenses incurred by NKK in connection with the transfer of these employees, subject to an agreed-upon cap. The cap was $7.0 million during each of 2001 and 2000 and was $6.0 million in 2002. The cap for 2003 will be $1.5 million. The Company incurred expenditures of approximately $4.5 million, $5.0 million and $6.7 million under this agreement during 2002, 2001 and 2000, respectively. In addition, the Company utilized various other engineering services provided by NKK and incurred expenditures of approximately $0.3 million, $1.7 million and $0.2 million for these services during 2002, 2001 and 2000, respectively.

During March 2001, the Company entered into a Subordinated Credit Agreement with NUF LLC (“NUF”), a wholly owned subsidiary of NKK, pursuant to which NUF agreed to provide a $100 million revolving credit facility to the Company. This loan is secured by a junior lien on the Company’s inventory and certain unsold receivables and had a scheduled termination date of February 25, 2002. (See Note 5 to the Consolidated Financial Statements.)

On May 25, 2000, the Company entered into a Cooperation Agreement on Research and Development and Technical Assistance with NKK Corporation with an initial term of five years. The Cooperation Agreement allows for either party to make available to the other party technical assistance and consulting services relating to research and development on existing and future steel products and relevant technology. No amounts were paid or received pursuant to the Cooperation Agreement during 2002, 2001 and 2000.

On August 13, 2002, the Company sold its 10% ownership interest in DNN Galvanizing Limited Partnership to an affiliate of NKK, National’s majority shareholder, and the Company received proceeds of $3.8 million.

All of the transactions between the Company and NKK and its affiliates which are described above were unanimously approved by all directors of the Company who were not then, and never have been, employees of NKK.

In 2002 and 2001 no dividends were paid. In 2000, cash dividends of $0.21 per share, or approximately $4.6 million, were paid on 22,100,000 shares of Class A Common Stock owned by NKK. (See Note 3 to the Consolidated Financial Statements.)

Affiliate Transactions

The Company is contractually required to purchase its proportionate share of raw material production or services from certain affiliated companies. Such purchases of raw materials and services aggregated $30.0 million in 2002, $36.0 million in 2001 and $37.6 million in 2000. Additional expenses were incurred in connection with the operation of a joint venture agreement. (See Note 12 to the Consolidated Financial Statements.) Accounts payable at December 31, 2002 and 2001 included amounts with affiliated companies accounted for by the equity method of $1.7 million and $1.3 million, respectively.

The Company sold various prime and non-prime steel products and services to affiliated companies at prices that approximate market price. Sales totaled approximately $27.8 million in 2002, $36.7 million in 2001 and $65.3 million in 2000. Accounts receivable at December 31, 2002 and 2001 included amounts with affiliated companies of $9.2 million and $13.2 million, respectively.

70

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Tinplate Partners International, Inc. (“TPI”) filed for bankruptcy in 2002 and subsequently sold all of its assets. The Company holds a 42% equity interest in Tin Plate Holdings, Inc. which owns all of the outstanding stock of TPI. The Company’s equity investment in Tin Plate Holdings, Inc. was valued at zero in 2001.

On February 28, 2003, the Company entered into an agreement to sell its equity interest in National Robinson, L.L.C. to Robinson Steel Co., Inc. for approximately $3.5 million of cash, which results in a gain of $0.9 million.

Note 11.    Environmental Liabilities

The Company’s operations are subject to numerous laws and regulations relating to the protection of human health and the environment. Because these environmental laws and regulations are quite stringent and are generally becoming more stringent, the Company has expended, and can be expected to expend in the future, substantial amounts for compliance with these laws and regulations. Due to the possibility of future changes in circumstances or regulatory requirements, the amount and timing of future environmental expenditures could vary substantially from those currently anticipated.

It is the Company’s policy to expense or capitalize, as appropriate, environmental expenditures that relate to current operating sites. Environmental expenditures that relate to past operations and which do not contribute to future or current revenue generation are expensed. With respect to costs for environmental assessments or remediation activities, or penalties or fines that may be imposed for noncompliance with such laws and regulations, such costs are accrued when it is probable that liability for such costs will be incurred and the amount of such costs can be reasonably estimated. The Company has accrued an aggregate liability for such costs of $6.5 million and $6.6 million as of December 31, 2002 and 2001, respectively.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), and similar state statutes generally impose joint and several liability on present and former owners and operators, transporters and generators for remediation of contaminated properties regardless of fault. The Company and certain of its subsidiaries are involved as a potentially responsible party (“PRP”) in a number of CERCLA and other environmental cleanup proceedings. At some of these sites, the Company does not have sufficient information regarding the nature and extent of the contamination, the wastes contributed by other PRPs, or the required remediation activity to estimate its potential liability. With respect to those sites for which the Company has sufficient information to estimate its potential liability, the Company has accrued an aggregate liability of $6.9 million and $9.0 million as of December 31, 2002 and 2001, respectively.

The Company has also recorded reclamation and other costs to restore its shutdown coal locations to their original and natural state, as required by various federal and state mining statutes. The Company has recorded an aggregate liability of $0.8 and $2.0 million, respectively at December 31, 2002 and 2001, relating to these properties.

Since the Company has been conducting steel manufacturing and related operations at numerous locations for over seventy years, the Company potentially may be required to remediate or reclaim any contamination that may be present at these sites. The Company does not have sufficient information to estimate its potential liability in connection with any potential future remediation at such sites. Accordingly, the Company has not accrued for such potential liabilities.

As these matters progress or the Company becomes aware of additional matters, the Company may be required to accrue charges in excess of those previously accrued. Although the outcome of any of the matters

71

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

described, to the extent they exceed any applicable accruals or insurance coverages, could have a material adverse effect on the Company’s results of operations and liquidity for the applicable period, the Company has no reason to believe that such outcomes, whether considered individually or in the aggregate, will have a material adverse effect on the Company’s financial condition.

Note 12.    Other Commitments and Contingencies

In conjunction with the sale of our interest in DNN, the Company entered into a Line Access Agreement for use of the galvanizing line. The agreement makes available to the Company on a declining basis line-time for coating of the Company’s products through December 31, 2003. The Company is required to commit to actual line-time usage 67 days prior to the start of a month. The company is then committed to utilize and pay a tolling fee in connection with this “committed line time”.

The Company has a 50% interest in a joint venture with Bethlehem Steel Corporation (“Bethlehem”), which commenced production in May 1994. The joint venture, Double G Coatings Company, L.P. (“Double G”), constructed a 300,000 ton per year coating facility near Jackson, Mississippi which produces galvanized and Galvalume steel sheet for the construction market. The Company is committed to utilize and pay a tolling fee in connection with 50% of the available line-time at the facility through May 10, 2004. Double G provided a first mortgage on its property, plant and equipment and the Company has separately guaranteed $6.1 million of Double G’s debt as of December 31, 2002.

The Company has entered into certain commitments with suppliers which are of a customary nature within the steel industry. Commitments have been entered into relating to future expected requirements for such commodities as coal, coke, iron ore pellets, natural and industrial gas, electricity and certain transportation and other services. Commitments have also been made relating to the supply of pulverized coal and coke briquettes. Certain commitments contain provisions which require that the Company “take or pay” for specified quantities without regard to actual usage for periods of up to 10 years. In 2003 and 2004 the Company has commitments with “take or pay” or other similar commitment provisions for approximately $83.8 million and $83.1 million, respectively. Under the Bankruptcy Code, we may assume or reject executory contracts. In 2002, the Company rejected some of these “take or pay” commitments. In 2002, we purchased $132.5 million under the remaining contracts. The Company fully utilized all such “take or pay” requirements in 2001 and 2000 and purchased $281.4 million and $405.9 million, respectively, under these contracts. The Company believes that production requirements will be such that consumption of the products or services purchased under these commitments will occur in the normal production process. The Company also believes that prices in the contracts are such that the products or services will approximate the market price over the lives of the contracts. Under the Bankruptcy Code, we may assume or reject executory contracts. Therefore the amounts actually paid under these commitments could differ from these amounts.

The Company is jointly liable with LTV Steel Company, Inc. (“LTV”) for environmental clean-up and certain retiree benefit costs related to the closed Donner Hanna Coke plant. On December 31, 2000, LTV filed for Chapter 11 protection under U.S. bankruptcy laws. During the fourth quarter of 2001, LTV announced their intentions to initiate an orderly liquidation in accordance with bankruptcy laws. As a result, the Company recorded 100% of the obligation for the retiree benefit costs and recorded a charge of $3.6 million in 2001.

The Company has a 50% interest in Double G with Bethlehem and a 13% interest in a joint venture family health care facility with Bethlehem and another steel company. On March 13, 2003, Bethlehem Steel Corporation announced that it had signed an asset purchase agreement to sell substantially all of its assets including its interest in joint ventures. We are uncertain what effect, if any, this will have on our future earnings and financial position.

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NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Letters of Credit

The Company utilizes third-party standby letters of credit to provide financial assurance for certain insurance activities, employee benefit payments and other activities in the normal course of business. These letters of credit are irrevocable and generally have one-year renewable terms. Outstanding standby letters of credit as of December 31, 2002 and 2001 were $38.9 million and $24.7 million, respectively. The contract amounts of these letters of credit approximate their fair value.

Note 13.    Derivative Instruments

In order to reduce the uncertainty of price movements with respect to the purchase of zinc, the Company has entered into financial derivative instruments in the form of swap contracts with global financial institutions. These contracts, which typically mature within one year, have been designated as cash flow hedges. Therefore, these contracts are recorded at their fair value on the balance sheet and any changes in their fair value, to the extent they have been effective as hedges, will be reclassified into earnings in the period during which the hedged forecasted transaction affects earnings. The fair value of commodity purchase swap contracts are calculated using pricing models used widely in financial markets. Additionally, the Company had one forward contract for the purchase of natural gas that upon adoption of SFAS 133 was classified as a derivative instrument. This contract was sold in January 2001 for $26.2 million. Upon the sale of the contract, the resulting gain was recognized as an unusual item in the income statement.

The estimated fair value of derivative financial instruments used to hedge the Company’s risks will fluctuate over time. At December 31, 2002, the Company had no outstanding derivative instruments. At December 31, 2001, the Company had recorded a liability of $2.3 million with an offset to accumulated other comprehensive income.

Note 14.    Long-term Incentive Plan

The Long-Term Incentive Plan, established in 1993, has authorized the granting of options for up to 3,400,000 shares of Class B Common Stock to certain executive officers and other key employees of the Company. The Non-Employee Directors Stock Option Plan, also established in 1993, has authorized the grant of options for up to 100,000 shares of Class B Common Stock to certain non-employee directors. No stock based employee compensation cost is reflected in net income as the exercise price of the options equals the fair market value of the Common Stock on the date of the grant. All options granted have ten year terms. Options generally vest and become fully exercisable ratably over three years of continued employment. However, in the event that termination of employment is by reason of retirement, permanent disability or death, the option must be exercised in whole or in part within 24 months of such occurrences. There were 2,031,795 and 1,757,837 options available for granting under the stock option plans as of December 31, 2002 and 2001, respectively. There were no options granted in 2002.

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NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A reconciliation of the Company’s stock option activity and related information follows:

	Number Of Options		Exercise Price (Weighted Average)
Balance outstanding at January 1, 2000	1,069,993			11.15
Granted	501,500			6.72
Forfeited	(319,581	)		12.65
Balance outstanding at December 31, 2000	1,251,912			8.99
Granted	775,000			2.05
Forfeited	(326,889	)		7.35
Balance outstanding at December 31, 2001	1,700,023		$	6.14
Granted	—			—
Forfeited	(273,958	)		5.79
Balance outstanding at December 31, 2002	1,426,065		$	6.21

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

Range of Exercise Prices	Number Outstanding at 12/31/02	Weighted Average Remaining Life (in years)	Weighted Average Exercise Price		Number Exercisable at 12/31/02	Weighted Average Exercise Price
$1 1/10 to $4	606,126	7.6	$	2.07	210,648	$	2.09
$4 to $8	372,889	6.1		7.04	265,213		7.05
$8 to $12	277,416	3.9		8.75	277,416		8.75
$12 to $19	169,634	2.8		14.99	169,634		14.99
Total	1,426,065	5.9	$	6.21	922,911	$	7.89

There were 674,130 exercisable stock options with a weighted average exercise price of $9.91 as of December 31, 2001.

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NATIONAL STEEL CORPORATION AND SUBSIDIARIES

DEBTOR-IN-POSSESSION AS OF MARCH 6, 2002

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 15.    Quarterly Results of Operations (Unaudited)

Following are the unaudited quarterly results of operations for the years 2002 and 2001.

	2002
	Three Months Ended
	March 31			June 30			September 30			December 31
	Dollars in millions, except per share amounts
Net sales	$	604.0		$	658.1		$	694.2		$	653.1
Gross margin		(48.2	)		5.3			34.4			(19.0	)
Other items		—			—			—			(6.9	)
Reorganization items		7.2			6.4			4.5			32.5
Net income (loss)		(53.2	)		(34.0	)		3.5			(65.0	)
Basic and diluted earnings per share:
Net income (loss)	$	(1.29	)	$	(0.82	)	$	0.08		$	(1.57	)
	2001
	Three Months Ended
	March 31			June 30			September 30			December 31
	Dollars in millions, except per share amounts
Net sales	$	589.4		$	673.2		$	637.0		$	592.7
Gross margin		(76.7	)		(51.1	)		(75.5	)		(121.0	)
Other items		(26.0	)		(2.0	)		10.9			1.2
Extraordinary item		—			—			(2.0	)		—
Cumulative effect of change in accounting principal		17.2			—			—			—
Net loss		(108.7	)		(110.3	)		(152.8	)		(280.3	)
Basic and diluted earnings per share:
Net loss	$	(2.63	)	$	(2.67	)	$	(3.70	)	$	(6.79	)

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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

PART III

Item 10.    Directors and Executive Officers of the Registrant

The information required by this Item regarding executive officers is incorporated by reference from the section captioned “Executive Officers” in Part I of this report.

Information Concerning Directors

Set forth below for each director is his name and age; the date on which he first became a director of the Company; the names of other companies of which he serves as a director; and his principal occupation during at least the last five years.

Arthur H. Aronson

Mr. Aronson, age 67, has been a director of the Company since March 14, 2001. Mr. Aronson served as Chairman and Chief Executive Officer of Allegheny Ludlum Corporation from 1994 to 1996. From 1996 to 1998, he served as Executive Vice President and President of the Specialty Metals Group of Allegheny Teledyne, Inc., which manufactures stainless and specialty metals. Mr. Aronson was a consultant to Allegheny Teledyne Incorporated from 1999 until his retirement in July 2000. Mr. Aronson also serves as a director of Cooper Tire & Rubber Company and Keystone Powder Metal Corp. Mr. Aronson is a member of the Audit and Compensation Committees.

Edsel D. Dunford

Mr. Dunford, age 67, has been a director of the Company since April 27, 1998. Mr. Dunford has held a variety of management and technical positions with TRW, Inc., a manufacturer of products for the automotive, space and defense and information systems industries. He served as President of TRW from 1991 until his retirement in 1994. Mr. Dunford also serves as a director of Cooper Tire & Rubber Company. Mr. Dunford is Chairman of the Compensation Committee and a member of the Audit Committee.

Hideji Endo

Mr. Endo, age 54, has been a director of the Company since December 18, 2002. In March of 2001, Mr. Endo was appointed General Manager of Manufacturing Technology of the Company. He was appointed to his current position of Assistant Chairman in December of 2002. Prior to March of 2001, Mr. Endo served in various capacities with NKK Corporation (“NKK”), a Japanese steel manufacturer and the parent company of NKK U.S.A. Corporation (the holder of all of the outstanding shares of the Company’s Class A Common Stock). His most recent positions were General Manager of Egypt Project Team, Engineering Division from March of 1997 to March 2001 and General Manager of Technical Coordination, Steel Division from July of 1995 through March of 1997.

Freman Hendrix

Mr. Hendrix, age 52, has been a director of the Company since February 25, 2003. Since 2001, Mr. Hendrix has served as the Chief Operations Officer of Strategic Staffing Solutions, a company which provides information technology and consulting services. Prior to 2001, Mr. Hendrix served for almost 8 years in the

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administration of Dennis Archer, the Mayor of Detroit. From 1994 to 1997, he served as Chief of Staff and Chief Executive Assistant and from 1998 to 2001 as Deputy Mayor and Chief Administrative Officer. From 1999 to 2000 Mr. Hendrix also served as Chairman of the Detroit Public Schools Board of Education. Mr. Hendrix was nominated to serve on the Board of Directors pursuant to a collective bargaining agreement with the United Steel Workers of America.

Mitsuoki Hino

Mr. Hino, age 55, has been a director of the Company since October 27, 1998. Since 1971, Mr. Hino has served in various capacities with NKK. His most recent positions have been General Manager, Sales and Production Planning from 1995 to March 2000 and Vice President, Planning, Logistics and Information Technology from April 2000 to March 2001 and Senior Vice President, Planning, Logistics, and Information Technology since April 2001. He served as a Director of the Board of NKK from June 1999 until March 2000.

Bruce K. MacLaury

Mr. MacLaury, age 71, has been a director of the Company since April 30, 1996. From 1977 to 1995, Mr. MacLaury served as President of The Brookings Institution which is engaged in public policy research and education. Mr. MacLaury also serves as a director of American Express Bank, Ltd. and the St. Paul Companies Inc. Mr. MacLaury is Chairman of the Audit Committee and a member of the Nominating Committee.

Mineo Shimura

Mr. Shimura, age 51, has been a director of the Company since April 21, 1997. He was elected Chairman of the Board and Chief Executive Officer effective as of September 27, 2002. Prior to being elected to that position, Mr. Shimura served as a senior executive for various U.S. affiliates of NKK, including President of NUF LLC (a finance company), President of NKK America, Inc. (a service company), President of NKK U.S.A. Corporation (a holding company), President of NKK Windsor Corporation (a finance company) and President of Galvatek Ontario Corporation (a holding company).

Akira Uemura

Mr. Uemura, age 52, has been a director of the Company since March 14, 2001. Mr. Uemura has served in various capacities with NKK since 1974. His most recent positions have been Team Manager of the Plant Construction and Engineering Department at NKK’s head office from 1995 to 1997, General Manager of the Plant Engineering Department at NKK’s Fukuyama Works from 1998 to 1999 and General Manager of the Plant Construction and Engineering Department at NKK’s head office from 2000 to the present. Mr. Uemura is Chairman of the Nominating Committee.

Sotaro Wakabayashi

Mr. Wakabayashi, age 53, has been a director of the Company since December 16, 1998. Mr. Wakabayashi has served in various capacities with NKK since 1974. His most recent positions have been Senior Counselor from 1994 to 1998 and Chief Senior Counselor from 1998 to the present. Mr. Wakabayashi is a member of the Compensation Committee.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers and directors and persons who owned greater than 10% of a class of the Company’s equity securities to file with the Securities and Exchange Commission an initial statement of beneficial ownership and certain statements of changes in beneficial ownership of equity securities of the Company. Based solely upon a review

77

of the copies of the forms furnished to the Company, or written representations from certain reporting persons that no other forms were required, the Company believes that all Section 16(a) filing requirements with respect to its executive officers and directors were met during 2002, with the exception of a Form 3 for Mr. Endo and a Form 4 for Mr. Dunford that were filed late.

Item 11.    Executive Compensation

Compensation of Directors

Directors who are not employees of the Company or any of its subsidiaries receive an annual fee of $30,000 plus a fee of $1,000 for attendance at each meeting of the Board of Directors and at each meeting of a committee of the Board of Directors. The chairman of each standing committee receives an additional annual payment of $3,000. All directors are reimbursed for expenses incurred in attending Board and committee meetings. In addition, any non-employee director who, at the request of the Chairman of the Board, performs special services or assignments on behalf of the Board, receives compensation of $1,000 per day plus reasonable out-of-pocket expenses. The 1993 National Steel Corporation Non-Employee Directors Stock Option Plan (“Directors Plan”) provides that each non-employee director will receive, upon his initial election to the Board of Directors, a stock option grant of 2,500 shares of Class B Common Stock at the then market price. The Directors Plan also provides for an additional stock option grant of 1,000 shares of Class B Common Stock to each non-employee director at each anniversary of Board service. All stock options granted pursuant to the Directors Plan vest in one-third annual increments commencing on the first anniversary date of the initial grant. No options were granted pursuant to the Directors Plan during 2002 as a result of the voluntary petitions for reorganization relief under Chapter 11 of Title 11 of the United States Code filed on March 6, 2002 by the Company and certain of its subsidiaries in the Bankruptcy Court.

Executive Compensation

The following table sets forth separately, for the fiscal years indicated, each component of compensation paid or awarded to, or earned by, each individual who served as Chief Executive Officer of the Company during the last fiscal year, and each of the other four most highly compensated executive officers who were serving as executive officers at the end of the last fiscal year (collectively referred to herein as the “Named Executive Officers”).

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SUMMARY COMPENSATION TABLE

		Annual Compensation			Long-Term Compensation Awards	All Other Compensation ($)(4)
Name and Principal Position	Year	Salary ($)	Bonus ($) (1)	Other Annual Compensation ($)(2)	Securities Underlying Options/SARs (#)(3)
Hisashi Tanaka	2002	375,003	—	11,290	—	14,225
Former Chairman of the Board	2001	413,144	—	15,420	50,000	19,427
and Chief Executive Officer (5)	2000	—	—	—	1,000	—
Mineo Shimura	2002	128,847	—	12,330	—	18,611
Chairman of the Board and	2001	—	—	—	1,000	—
Chief Executive Officer (6)	2000	—	—	—	1,000	—
John A. Maczuzak	2002	425,004	—	11,896	—	19,988
President and	2001	425,004	—	11,896	50,000	29,822
Chief Operating Officer	2000	422,920	—	12,287	50,000	26,936
Ronald J. Werhnyak	2002	261,664	81,137	5,510	—	13,045
Senior Vice President, General	2001	245,004	—	5,510	20,000	16,067
Counsel and Secretary	2000	243,754	—	5,695	20,000	14,689
Kirk A. Sobecki	2002	230,000	68,200	1,858	—	7,705
Senior Vice President, and	2001	175,000	—	5,303	15,000	12,242
Chief Financial Officer	2000	163,750	—	—	10,000	3,750
Daniel B. Joeright	2002	200,004	23,500	4,092	—	11,000
Vice President and General	2001	200,004	—	4,144	20,000	12,328
Manager—Regional Division (7)	2000	185,203	—	7,917	20,000	16,647

(1) The amount shown for 2002 includes (i) for Mr. Werhnyak, a one time special performance bonus in the amount of $50,000 and a payment pursuant to the Company’s Retention and Emergence Incentive Compensation Program (the “Retention Program”) of $31,137; (ii) for Mr. Sobecki, a one time special performance bonus in the amount of $40,000 and a payment pursuant to the Retention Program of $28,200; and (iii) for Mr. Joeright, a payment pursuant to the Retention Program of $23,500. The Retention Program was approved by the Bankruptcy Court on May 28, 2002 and is designed to incent and reward a select group of key executives and employees to remain in the employ of the Company throughout the Bankruptcy Case and until the date of “emergence.” The Retention Program covers 95 key employees (including all of the Named Executive Officers, other than Mr. Tanaka) and provides for fixed retention payments on specified dates and a one-time payment upon “emergence.” Emergence is defined as the earlier to occur of: (i) the effective date of a confirmed plan of reorganization or (ii) the date on which a “Change of Control” occurs. For the Named Executive Officers, payments equal to 11.75% of the individual’s annual base compensation are payable 4, 10, 16 and 22 months after the date of filing the Bankruptcy Case. In addition, the Named Executive Officer receives a payment equal to 47% of annual base compensation upon emergence. If emergence occurs prior to 22 months after the date of filing the Bankruptcy Case, the aggregate value of all remaining payments is paid to the Named Executive Officer. However, Mr. Shimura and Mr. Maczuzak do not receive interim payments. Their payments accrue and are paid only upon emergence.

(2) The amount shown represents amounts paid to the Named Executive Officer for reimbursement of taxes.

(3) All grants shown were made pursuant to the Company’s 1993 Long Term Incentive Plan, except for the grants made to Mr. Tanaka in 2000 and to Mr. Shimura in 2000 and 2001, all of which were made pursuant to the Directors Plan.

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(4) The amount shown for 2002 includes (a) the Company’s contribution to the National Steel Retirement Savings Program for Messrs. Maczuzak, Werhnyak, Sobecki and Joeright in the amount of $5,000 each; and (b) the dollar value of life insurance premiums paid by the Company on behalf of the Named Executive Officer for Messrs. Tanaka, Shimura, Maczuzak, Werhnyak, Sobecki and Joeright in the amounts of $14,225, $18,611, $14,988, $8,045, $2,705 and 6,000, respectively.

(5) Mr. Tanaka resigned his position as Chairman of the Board and Chief Executive Officer on September 26, 2002.

(6) Mr. Shimura was appointed Chairman of the Board and Chief Executive Officer on September 27, 2002.

(7) Mr. Joeright became an executive officer of the Company on May 8, 2000.

Stock Option/SAR Tables

No stock options or SARs were granted to the Named Executive Officers during 2002.

The following table sets forth certain information concerning options to purchase the Company’s Class B Common Stock and SARs which were exercised by the Named Executive Officers during 2002 and the value of unexercised options and SARs held by the Named Executive Officers as of December 31, 2002.

AGGREGATED OPTION/SAR EXERCISES IN 2002 AND

DECEMBER 31, 2002 OPTION/SAR VALUES

Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options/SARs at December 31, 2002 (#)(1)		Value of Unexercised In-the-Money Options/SARs at December 31, 2002 ($)(2)
			Exercisable	Unexercisable	Exercisable	Unexercisable
Hisashi Tanaka	0	0	0	0	0	0
Mineo Shimura	0	0	4,499	1,001	0	0
John A. Maczuzak	0	0	195,001	49,999	0	0
Kirk A. Sobecki	0	0	31,666	13,334	0	0
Ronald J. Werhnyak	0	0	62,801	19,999	0	0
Daniel B. Joeright	0	0	19,999	20,001	0	0

(1) All unexercised instruments are stock options.

(2) There were no in-the-money stock options held by the Named Executive Officers at December 31, 2002 because the exercise prices of all unexercised stock options exceeded the market price of the Company’s Class B Common Stock on December 31, 2002.

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Pension Plans

The following table shows the annual benefits payable under the Company’s qualified defined benefit pension plan along with the non-qualified defined pension plans, which provide for the payment of retirement benefits in excess of certain maximum limitations imposed by the Internal Revenue Code. The amounts shown are approximate benefits payable as a straight life annuity for an employee retiring in 2002 at age 65, computed at various levels of average compensation and years of service at retirement.

	PENSION PLAN TABLE
Average Annual	Years of Service
Eligible Compensation Preceding Retirement	10		15		20		25		30		35		40		45
$100,000	$	13,000	$	19,500	$	26,000	$	32,500	$	39,500	$	46,000	$	52,500	$	59,000
150,000		20,000		30,500		40,500		50,500		60,500		70,500		80,500		91,000
200,000		27,000		41,000		54,500		68,000		81,500		95,500		109,000		122,500
250,000		34,500		51,500		68,500		86,000		103,000		120,000		137,500		154,500
300,000		41,500		62,000		83,000		103,500		124,000		145,000		165,500		186,500
350,000		48,500		72,500		97,000		121,000		145,500		169,500		194,000		218,000
400,000		55,500		83,500		111,000		139,000		166,500		194,500		222,000		250,000
450,000		62,500		94,000		125,000		156,500		188,000		219,000		250,500		282,000
500,000		69,500		104,500		139,500		174,000		209,000		244,000		279,000		313,500
600,000		84,000		126,000		167,500		209,500		251,500		293,500		335,500		377,500
700,000		98,000		147,000		196,000		245,000		294,000		343,000		392,000		441,000
800,000		112,000		168,000		224,500		280,500		336,500		392,500		448,500		504,500
900,000		126,500		189,500		252,500		315,500		379,000		442,000		505,000		568,500
1,000,000		140,500		210,500		281,000		351,000		421,500		491,500		562,000		632,000

Eligible compensation covered by the Company’s retirement plans includes the eligible employee’s base salary, before reduction for any salary deferral agreements, and certain bonus awards paid to the eligible employee for the sixty highest consecutive months during the last ten years of employment. Benefits paid under the Company’s plans are not subject to reduction for social security payments received by the Company’s executive officers.

The table below shows for each of the Named Executive Officers (a) the years of service under the retirement plans as of December 31, 2002, and (b) the amount of eligible compensation under the retirement plans for 2002:

Name	Years of Service	Eligible Compensation
Hisashi Tanaka	1.8333	$	375,003
Mineo Shimura	0.25		128,847
John A. Maczuzak	6.6667		425,004
Kirk A. Sobecki	4.00		270,000
Ronald J. Werhnyak	10.4167		311,664
Daniel B. Joeright	11.667		200,004

In December of 2002, the PBGC filed a complaint seeking an order (i) terminating certain pension plans sponsored by the Company (including the plan in which the Named Executive Officers participate), (ii) appointing the PBGC as the statutory trustee of these pension plans, (iii) establishing December 6, 2002 as the termination date of the pension plans and (iv) requiring the Company to deliver to the PBGC all records, assets, property and documents related to these pension plans. The action taken by the PBGC could result in a reduction in the amounts payable to the Named Executive Officers from the amounts described above.

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Employment Contracts

The Company has entered into employment contracts (“Contracts”) with certain executives, including the Named Executive Officers identified below. Set forth below is a summary of certain terms of the Contracts applicable to such Named Executive Officers.

The Contract with Mr. Tanaka, who terminated his employment with the Company effective as of September 26, 2002, provided for certain post termination covenants including non-disclosure, non-solicitation of employees, cooperation during a transition period and release of employment claims. The Contract with Mr. Tanaka also provided for certain payments and benefits to Mr. Tanaka upon termination of his employment under certain circumstances. However, because Mr. Tanaka terminated his employment without “good reason”, he received no special termination benefits pursuant to his Contract.

The Contract with Mr. Shimura provides for (i) non-competition for a period of two years subsequent to termination of employment by Mr. Shimura without “good reason”; and (ii) other post termination covenants including non-disclosure, non-solicitation of employees, cooperation during a transition period and release of employment claims. The term of the Contract with Mr. Shimura expires on February 29, 2004. The Contract provides that (i) the annual base salary of Mr. Shimura under the Contract shall be equal to the base salary in effect on the date of the Contract, subject to adjustment from time to time and (ii) Mr. Shimura’s annual target incentive compensation opportunity shall be equal to at least 50% of base salary. The Contract further provides that any reduction in Mr. Shimura’s then current base salary or target incentive opportunity constitutes “good reason” for termination of the Contract by Mr. Shimura.

The Contract with Mr. Shimura provides for certain payments and benefits upon termination of Mr. Shimura’s employment. If Mr. Shimura’s employment terminates due to death or disability, he will receive a payment equal to the average incentive compensation paid to him in the three preceding years or, if greater, his target incentive compensation percentage multiplied by his then current base salary, in each case pro-rated to reflect the part of the year completed before termination. If his employment is terminated by the Company without “cause” or by Mr. Shimura for “good reason”, he would be entitled to special termination benefits consisting of: (i) a severance payment equal to 50% of his annual base salary; (ii) a pro-rata incentive compensation payment for the year of termination, based on the formula applied in the case of death or disability; (iii) continued stock option vesting and exercisability for a five year period; and (iv) a two year continuation of health care and certain other employee benefits on the same basis as if he had remained an employee for such period. During the benefit continuation period, Company provided employee benefits would be secondary to any benefits provided under an NKK sponsored benefit plan, or any Japanese government benefit plan or other available benefit plan. If Mr. Shimura is age 69 at the time of a qualifying termination, the benefit continuation period is reduced to one year. If termination occurs on or after age 70, there is no benefit continuation period. After expiration of his Contract term, Mr. Shimura would be entitled to the special termination benefits described above in the event he terminates his employment with or without “good reason”, or if the Company terminates his employment without “cause”. The Contract also provides that the Company will reimburse Mr. Shimura for expenses incurred in seeking in good faith to enforce his Contract.

The Contract with Mr. Maczuzak provides for non-competition subsequent to termination of employment by the executive without “good reason” for a period of two years. The Contract with Mr. Maczuzak also provides other post termination covenants including non-disclosure, non-solicitation of employees, cooperation during a transition period and release of employment claims. The Contract had an initial term ending July 1, 1998 and is subject to automatic month-to-month extensions unless either party elects not to extend the term. Prior to the date the executive reaches age 65, an election by the Company not to extend the term of the Contract will automatically result in a termination of employment without “cause”. The Contract provides that (i) the executive’s annual base salary under his Contract shall be equal to the base salary in effect on the date of the Contract, subject to adjustment from time to time, (ii) his annual target incentive compensation opportunity shall be equal to at least 40% of his base salary and (iii) any reduction in the executive’s then current base salary or target incentive opportunity constitutes “good reason” for termination of the Contract by the executive.

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The Contract with Mr. Maczuzak provides for certain payments and benefits upon termination of employment. If employment terminates for any reason on or after age 65, or due to death or disability, the executive will receive a payment equal to the average incentive compensation paid to the executive in the three preceding years or, if greater, the executive’s target incentive compensation percentage multiplied by his then current base salary, in each case pro-rated to reflect the part of the year completed before termination. If employment is terminated by the Company without “cause” or by the executive for “good reason” before the executive reaches age 64, Mr. Maczuzak would be entitled to special termination benefits consisting of: (i) a severance payment equal to two times the executive’s annual base salary, a pro-rata incentive compensation payment for the year of termination plus, if such termination follows a change of control, an additional amount equal to two times the average incentive compensation paid to the executive in the three preceding years or, if greater, the executive’s target incentive compensation amount based on the formula applied in the case of death or disability; (ii) continued stock option vesting and exercisability for a two year period; (iii) outplacement services; and (iv) a two year continuation of health care and certain other employee benefits on the same basis as if the executive had remained an employee for such period. During the benefit continuation period, Company provided health care benefits would be secondary to any health care benefits provided under another employer provided plan. If a qualifying termination occurs after Mr. Maczuzak reaches age 64, the two year severance and two year benefit continuation periods are reduced to one year, and if a qualifying termination occurs after the executive reaches age 65, there is no severance payment and no benefit continuation period.

The Contract with Mr. Maczuzak also provides that, in the event of a change of control, the benefits provided under the various Company plans and programs may not be less favorable than those provided at any time during the 120 day period immediately preceding the change of control. If a termination by the Company without “cause” or by the executive for “good reason” follows a change of control, then, in addition to the special termination benefits described above, a lump sum cash payment equal to the actuarially equivalent value of non-qualified unfunded retirement benefits will be paid to the executive. If payments under the Contract following a change in control are subject to excise tax, the Company will make a “gross-up” payment sufficient to ensure that the net after-tax amount retained by the executive (taking into account all taxes, including those on the gross-up payment) is the same as would have been the case had such excise tax not applied. The Contract also provides that the Company will reimburse the executive for expenses incurred in seeking in good faith to enforce his Contract.

The Contracts with Messrs. Werhnyak, Sobecki and Joeright provide for non-competition for a period of one year subsequent to a voluntary termination of employment by the executive under circumstances that do not constitute a “constructive discharge.” In addition, the Contracts provide other post-termination covenants including non-disclosure, non-solicitation of employees or customers, no unfavorable publicity and cooperation during a transition period. The Contracts have an initial term ending February 28, 2003, but will be extended for successive one-year periods unless terminated by written notice from either party not less than 60 days prior to any scheduled expiration date. Notice of termination of the Contracts, if given by the Company, will constitute “constructive discharge.” The Contracts provide that (i) the executive’s annual base salary shall be equal to the base salary in effect on the date of the Contract, subject to adjustment from time to time; (ii) his annual target incentive compensation opportunity shall be provided in accordance with short-term incentive compensation programs offered by the Company from time to time for its senior level executives; and (iii) any reduction in the executive’s then current base salary, target incentive opportunity or other benefits constitutes “constructive discharge.”

The Contracts with Messrs. Werhnyak, Sobecki and Joeright provide for certain payments and benefits upon termination of employment. If employment is terminated by the Company without “cause” or by the executive due to a “constructive discharge,” the executive would be entitled to receive: (i) a lump sum payment equal to 2.0, in the case of Mr. Werhnyak and Mr. Sobecki, or 1.75, in the case of Mr. Joeright, times the executive’s annual base salary; (ii) a lump sum payment equal to 2.0, in the case of Mr. Werhnyak and Mr. Sobecki, or 1.75, in the case of Mr. Joeright, times the greater of (A) the average annual incentive compensation paid to the executive in the three preceding years or (B) the executive’s target incentive compensation percentage multiplied

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by his then current base salary; (iii) a lump sum payment of all amounts accrued to the executive under the Executive Deferred Compensation Plan, whether or not otherwise forfeitable; (iv) executive outplacement services at a cost not to exceed thirty percent (thirty-five percent in the case of Mr. Sobecki) of annual base salary; (v) a one-year continuation of health care and other benefits on the same basis as if the executive had remained an employee for such period (and in the case of Messrs. Sobecki and Joeright, if he has not reached age 55 at the end of the one-year period, health care benefits only will continue for an additional period ending on the earlier of his 55th birthday or the second anniversary of the last day of his employment term); (vi) supplemental retirement benefits in an amount sufficient to provide the executive with retirement benefits from all Company sources equal to the pension provided under the National Steel Corporation Retirement Program, unreduced for early commencement and based on service of not less than 10 years in the case of Mr. Werhnyak and 15 years in the case of Mr. Joeright, and in the case of Mr. Werhnyak with an option to receive a portion of those payments in the form of an actuarially equivalent lump sum if his actual service at the time of termination is fewer than 10 years; (vii) retiree health care coverage in the case of Messrs. Werhnyak and Joeright; and (viii) continued stock option vesting and exercisability for a two-year period. If payments under the Contracts following a change in control of the Company are subject to excise tax, the Company will make a gross-up payment sufficient to ensure that the net after-tax amount retained by the executive (taking into account all taxes, including those on the gross-up payment) is the same as would have been the case had such excise tax not applied. All payments and other benefits under the Contracts are expressly conditioned on the executive’s execution of a Release of any claims against the Company. The Contracts also provide that disputes will be resolved through arbitration, and the Company will be responsible for all of the fees and expenses of the arbitration (including the executive’s reasonable attorney’s fees) if the executive prevails on any material issue which is the subject of the arbitration.

On May 28, 2002, the Bankruptcy Court approved the Senior Management Severance Program which covers certain key employees that have prepetion employment contracts with the Company, including the Named Executive Officers. The Senior Management Severance Program provides that severance for Messrs. Shimura, Maczuzak, Sobecki, Werhnyak and Joeright will be payable under the same circumstances as set forth in the Contracts described above, subject to the following limitations:

(i) Upon the occurrence of a severance event, Messrs. Werhnyak, Sobecki and Joeright will receive a lump sum equal to the lesser of (a) the severance payment specified in the Contract or (b) one year’s annual base compensation plus bonus. Any severance amounts specified in the Contract in excess of this lump sum amount are fully earned, but subject to mitigation by the officer upon obtaining new employment.

(ii) Mr. Shimura and Mr. Maczuzak will be initially entitled to only one year of severance, but shall earn an additional month of severance entitlement for each month of continued employment by the Company after the date of filing the Bankruptcy Case, capped at two years. No severance shall be paid to Mr. Shimura or Mr. Maczuzak in a lump sum. Instead, all severance payments shall be paid in the form of continuing salary, subject to mitigation upon obtaining new employment. Mr. Shimura will not be entitled to any severance if, after a severance event, he becomes employed by NKK or any NKK affiliate.

(iii) After a “Change-in-Control”, severance shall only be payable if payable under the Contract, the employee is not employed by the acquirer or successor company or is terminated within 6 months of the Change-in-Control.

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Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership Of Directors And Management

The following table sets forth the number of shares of the Company’s Class B Common Stock and the number of shares of common stock of JFE Holdings beneficially owned by each of the Company’s directors, nominees for director and Named Executive Officers and by the Company’s directors and executive officers as a group as of March 1, 2003 in the case of the Company’s Class B Common Stock and as of December 31, 2002 in the case of JFE Holdings common stock. None of the Company’s directors, nominees for director or Named Executive Officers beneficially owned any shares of the Company’s Class A Common Stock. Except as otherwise indicated, each director, nominee for director or Named Executive Officer had sole voting and investment power with respect to any shares beneficially owned.

	JFE Holdings, Inc. Stock (1)		Class B Common Stock of Company
Name	Number of Shares Beneficially Owned (2)	Percent of Class	Number of Shares Beneficially Owned (3)		Percent of Class
Arthur H. Aronson	0	0	1,666		*
Edsel D. Dunford	0	0	4,666		*
Hideji Endo	1,125	*	0		0
Freman Hendrix	0	0	0		0
Mitsuoki Hino	2,475	*	3,999		*
Bruce K. MacLaury	0	0	5,666		*
Mineo Shimura	825	*	5,166		*
Akira Uemura	609	*	1,666		*
Sotaro Wakabayashi	375	*	3,999		*
Hisashi Tanaka	2,175	*	0		0
John A. Maczuzak	0	0	235,259	(4)(5)	1.23	%
Kirk A. Sobecki	0	0	40,000		*
Ronald J. Werhnyak	0	0	76,134		*
Daniel B. Joeright	0	0	30,000		*
All directors and executive officers as a group (21 persons)	7,584	*	609,558	(3)	3.18	%

      * Less than 1% of the outstanding shares on March 1, 2003 in the case of the Company’s Class B Common Stock and on December 31, 2002 in the case of JFE Holdings common stock.

(1) NKK U.S.A. Corporation is the owner of the Company’s Class A Common Stock. NKK U.S.A. Corporation is a wholly owned subsidiary of NKK Corporation which is, in turn, a wholly owned subsidiary of JFE Holdings, Inc.

(2) In addition, Messrs. Endo, Hino, Uemura, Wakabayashi and Tanaka have no voting power with respect to 81, 203, 929, 635 and 59 shares of JFE Holdings, Inc. stock respectively owned by them which are held by the trustee of the JFE Holdings, Inc. employee stock ownership program.

(3) Includes shares which the individual has the right to acquire through the exercise of stock options which are exercisable within 60 days of March 1, 2003 in the following amounts: for Mr. Aronson 1,666 shares; for Mr. Dunford 4,666 shares; for Mr. Hino 3,999 shares; for Mr. MacLaury 5,666 shares; for Mr. Shimura 5,166 shares; for Mr. Uemura 1,666 shares; for Mr. Wakabayashi 3,999 shares; for Mr. Maczuzak 228,334 shares; for Mr. Werhnyak 76,134 shares; for Mr. Sobecki 40,000 shares; for Mr. Joeright 30,000 shares; and for all directors and executive officers as a group 588,793 shares.

(4) Includes shares held by the trustee of the Company’s Salaried Employees Retirement Savings Program as of December 31, 2002 in the following amounts: for Mr. Maczuzak 3,425 shares; and for all directors and executive officers as a group 16,465 shares.

(5) Includes 3,500 shares owned by Mr. Maczuzak’s spouse.

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Additional Information Relating To Voting Securities

The following table sets forth the only holders known to the Company to beneficially own more than 5% of the Company’s Class A Common Stock or Class B Common Stock as of March 1, 2003, unless otherwise indicated. The information contained in this table is based upon the statements filed with the Securities and Exchange Commission pursuant to Sections 13(d) and 13(g) of the Securities Exchange Act of 1934.

	Number of Shares Beneficially Owned		Class of Commo Stock	Percent of Class Outstanding	Percent of Total Common Stock Outstanding
Name and Address of Beneficial Owner
NKK U.S.A. Corporation	22,100,000	(1)	Class A	100.00%	53.53%
1013 Centre Road
Wilmington, Delaware 19805-1297
Donald Smith & Co., Inc.	2,392,400	(2)	Class B	12.47%	5.79%
East 80, Rte. 4
Suite 360
Paramus, New Jersey 07652

(1) According to a Schedule 13D/A dated January 18, 2002 filed with the Securities and Exchange Commission, NKK had shared voting and investment power with respect to 22,100,000 shares of Class B Common Stock listed as beneficially owned as a result of its ownership of Class A Common Stock convertible into an equal number of shares of Class B Common Stock.

(2) According to a Schedule 13G dated January 17, 2003 filed with the Securities and Exchange Commission, Donald Smith & Co., Inc. reported that it had no voting power or dispositive power with respect to any of these shares.

Equity Compensation Plan Information

The information regarding our equity compensation plans required to be disclosed under Item 201(d) of Regulation S-K is included in Item 5 of this report.

Item 13.    Certain Relationships and Related Transactions

Effective May 1, 1995, the Company entered into an Agreement for the Transfer of Employees with NKK, the term of which has been extended through June 30, 2003. Pursuant to the terms of this Agreement, technical and business advice is provided through NKK employees who are transferred to the employ of the Company. The Company is obligated to reimburse NKK for the costs and expenses incurred by NKK in connection with the transfer of these employees, subject to an agreed upon cap. The cap was $6 million during 2002 and will be reduced to $1.5 million in 2003. The Company incurred expenditures of approximately $4.5 million under this Agreement during 2002. In addition, the Company paid approximately $0.3 million to NKK for various other engineering services provided by NKK during 2002.

On October 23, 1998, the Company entered into a Turnkey Engineering and Construction Contract with NKK Steel Engineering, Inc. (“NKK SE”), a subsidiary of NKK, to design, engineer, construct and install a continuous galvanizing facility at Great Lakes. The purchase price payable by the Company to NKK SE for the facility is approximately $150 million. During 2002, $0.2 million was paid to NKK SE relating to this contract. In March of 2002, the Company received $5.5 million from NKK SE in settlement of the Company’s claims for liquidated damages for late startup and other performance issues. All claims between the parties pursuant to the Construction Contract have now been resolved and all letters of credit previously held by the Company as security for NKK SE’s performance have been returned to NKK SE.

Effective as of February 16, 2000, the Company entered into a Steel Slab Products Supply Agreement with NKK, the initial term of which extended through December 31, 2000 and continues on a year to year basis

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thereafter until terminated by either party on six months notice. Pursuant to the terms of this Agreement, the Company purchases steel slabs manufactured by NKK at a price determined in accordance with a formula set forth in the Agreement that approximates current market price. The quantity of slabs to be purchased is negotiated on a quarterly basis. The Company purchased $1.9 million of slabs under this agreement during 2002 and currently has no commitments to purchase slabs produced by NKK during 2003.

On May 25, 2000, the Company entered into a Cooperation Agreement on Research and Development and Technical Assistance with NKK Corporation, with an initial term of five years. The Cooperation Agreement allows either party to make available to the other party technical assistance and consulting services relating to research and development on existing and future steel products and relevant technology. No amounts were paid or received pursuant to the Cooperation Agreement during 2002.

During March 2001, the Company entered into a Subordinated Credit Agreement with NUF LLC (“NUF”), a wholly owned subsidiary of NKK, pursuant to which NUF agreed to provide a $100 million revolving credit facility to the Company. This loan is secured by a junior lien on the Company’s inventory and certain unsold receivables and had a scheduled termination date of February 25, 2002. Due to proceeding under Chapter 11, we are in default on this agreement.

On August 13, 2002, the Company sold its 10% ownership interest in DNN Galvanizing Limited Partnership to an affiliate of NKK, National’s majority shareholder, and the Company received proceeds of $3.8 million.

All transactions between the Company and NKK and its affiliates which are described above have been unanimously approved by all directors of the Company who were not then, and never have been, employees of NKK.

On September 27, 2002, NKK and Kawasaki Steel Corporation (“KSC”), another large steel company in Japan, jointly established JFE Holdings, Incorporated (“JFE”) and became wholly-owned subsidiaries of JFE by the “stock-for-stock exchange” method. It was also announced that the steel businesses of KSC and NKK under JFE Holdings will be reorganized into JFE Steel Corporation in April 2003. According to documents filed by AK Steel Holding Corporation (“AK Steel”) with the Securities and Exchange Commission, as of March 14, 2003, KSC was the owner of 5.1% of the outstanding common stock of AK Steel.

PART IV

Item 14.    Controls and Procedures

Within 90 days of the filing of this report, an evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-14(c) under the Securities Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information regarding the Company required to be included in the Company’s periodic SEC filings. There have been no significant changes to the Company’s internal controls or in other factors that could significantly affect these controls, subsequent to the date of this evaluation.

Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Documents filed as part of this Report:

The following is a list of the financial statements, schedules and exhibits included in this Report or incorporated herein by reference.

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(1) Financial Statements

NATIONAL STEEL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000

Consolidated Balance Sheets as of December 31, 2002 and 2001

Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000

Consolidated Statements of Shareholders’ Equity (Deficit) for the years ended December 31, 2002, 2001 and 2000

Notes to Consolidated Financial Statements (Including Quarterly Financial Data)

(2) Consolidated Financial Statement Schedules

Schedules have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

Separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons accounted for by the equity method have been omitted because considered in the aggregate as a single subsidiary they do not constitute a significant subsidiary.

(3) Exhibits

See the attached Exhibit Index. Items 10-AA through 10-YY are management contracts or compensatory plans or arrangements.

(b) Reports on Form 8-K:

During the quarter ended December 31, 2002, the Company filed the following reports on Form 8-K:

(i) The Company filed a report on Form 8-K dated October 10, 2002, reporting on Item 5, Other Events and Regulation FD Disclosure and Item 7, Financial Statements and Exhibits.

(ii) The Company filed a report on Form 8-K dated October 25, 2002, reporting on Item 7, Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

(iii) The Company filed a report on Form 8-K/A dated October 28, 2002, reporting on Item 7, Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

(iv) The Company filed a report on Form 8-K/A dated November 8, 2002, reporting on Item 7, Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

(v) The Company filed a report on Form 8-K dated November 12, 2002, reporting on Item 5, Other Events and Regulation FD Disclosure and Item 7, Financial Statements and Exhibits.

(vi) The Company filed a report on Form 8-K dated November 25, 2002, reporting on Item 7, Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

(vii) The Company filed a report on Form 8-K dated December 5, 2002, reporting on Item 5, Other Events and Regulation FD Disclosure and Item 7, Financial Statements and Exhibits.

(viii) The Company filed a report on Form 8-K dated December 6, 2002, reporting on Item 5, Other Events and Regulation FD Disclosure and Item 7, Financial Statements and Exhibits.

(ix) The Company filed a report on Form 8-K dated December 23, 2002, reporting on Item 7, Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

(x) The Company filed a report on Form 8-K dated December 30, 2002, reporting on Item 5, Other Events and Regulation FD Disclosure and Item 7, Financial Statements and Exhibits.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mishawaka, State of Indiana, on March 28, 2003.

NATIONAL STEEL CORPORATION
By:	/S/    JOHN A. MACZUZAK
	John A. Maczuzak President and Chief Operating Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company in the capacities indicated on March 28, 2003

Name	Title
/S/    MINEO SHIMURA         Mineo Shimura	Director; Chairman of the Board and Chief Executive Officer
/S/    ARTHUR H. ARONSON         Arthur H. Aronson	Director
/S/    EDSEL D. DUNFORD         Edsel D. Dunford	Director
/S/    HIDEJI ENDO         Hideji Endo	Director
/S/    FREMAN HENDRIX         Freman Hendrix	Director
/S/    MITSUOKI HINO         Mitsuoki Hino	Director
/S/    BRUCE K. MACLAURY         Bruce K. MacLaury	Director
/S/    AKIRA UEMURA         Akira Uemura	Director
/S/    SOTARO WAKABAYASHI         Sotaro Wakabayashi	Director
/S/    KIRK A. SOBECKI         Kirk A. Sobecki	Senior Vice President and Chief Financial Officer

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CERTIFICATION

I, Mineo Shimura, certify that:

1. I have reviewed this annual report on Form 10-K of National Steel Corporation;

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

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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 procedures based on our evaluation 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 (or persons performing the equivalent function):

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

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

6. The registrant’s other certifying officers 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: March 28, 2003

/S/    MINEO SHIMURA        

Mineo Shimura

Chairman of the Board and
Chief Executive Officer

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CERTIFICATION

I, Kirk A. Sobecki, certify that:

1. I have reviewed this annual report on Form 10-K of National Steel Corporation;

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

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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 procedures based on our evaluation 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 (or persons performing the equivalent function):

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

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

6. The registrant’s other certifying officers 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: March 28, 2003

/S/    KIRK A. SOBECKI        

Kirk A. Sobecki

Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

Except for those exhibits which are incorporated by reference, as indicated below, all exhibits are being filed along with this Form 10-K.

Exhibit Number	Exhibit Description
2-A	Assets Purchase Agreement between Weirton Steel Corporation and the Company, dated as of April 29, 1983, together with collateral agreements incident to such Assets Purchase Agreement, filed as Exhibit 2-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
2-B	Stock Purchase Agreement by and among NKK Corporation, National Intergroup, Inc. and the Company, dated August 22, 1984, together with certain collateral agreements incident to such Stock Purchase Agreement and certain schedules to such agreements, filed as Exhibit 2-B to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
2-C	Stock Purchase and Recapitalization Agreement by and among National Intergroup, Inc., NII Capital Corporation, NKK Corporation, NKK U.S.A. Corporation and the Company, dated as of June 26, 1990, filed as Exhibit 2-C to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
2-D	Amendment to Stock Purchase and Recapitalization Agreement by and among National Intergroup, Inc., NII Capital Corporation, NKK Corporation, NKK U.S.A. Corporation and the Company, dated July 31, 1991, filed as Exhibit 2-D to the annual report of the Company on Form 10-K for the year ended December 31, 1997, Commission File Number 1-983, is incorporated herein by reference.
2-E	Asset Purchase Agreement dated January 9, 2003 between United States Steel Corporation and the Company and certain of its subsidiaries, filed as Exhibit 2.1 to the report of the Company on Form 8-K dated January 10, 2003, Commission File Number 1-983, is incorporated herein by reference.
2-F	Asset Purchase Agreement dated January 30, 2003 between AK Steel Corporation and the Company and certain of its subsidiaries, filed as Exhibit 2.1 to the report of the Company on Form 8-K dated February 7, 2003, Commission File Number 1-983, is incorporated herein by reference.
2-G	First Amendment dated February 21, 2003 to Asset Purchase Agreement dated January 30, 2003 between AK Steel Corporation and the Company and certain of its subsidiaries.
3-A	The Sixth Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (Registration No. 33-57952), is incorporated herein by reference.
3-B	Form of Amended and Restated By-laws of the Company, filed as Exhibit 3-A to the quarterly report of the Company on Form 10-Q for the quarter ended March 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
4-A	Indenture of Mortgage and Deed of Trust dated May 1, 1952 between the Company and Great Lakes Steel Corporation and City Bank Farmers Trust Company and Ralph E. Morton, as Trustee, filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (Registration No. 2-9639), is incorporated herein by reference.
4-B	Second Supplemental Indenture dated as of January 1, 1957 between the Company and City Bank Farmers Trust Company and Francis M. Pitt, as Trustees, filed as Exhibit 2-C to the Company’s Registration Statement on Form S-9 (Registration No. 2-15070), is incorporated herein by reference.

92

Exhibit Number	Exhibit Description
4-C	Fourth Supplemental Indenture dated as of December 1, 1960 between the Company and First National City Trust Company and Francis M. Pitt, as Trustees, filed as Exhibit 4(b)(5) to the Registration Statement of M.A. Hanna Company on Form S-1 (Registration No. 2-19169), is incorporated herein by reference.
4-D	Fifth Supplemental Indenture dated as of May 1, 1962 between the Company, First National City Trust Company, as Trustee, and First National City Bank, as Successor Trustee, filed as Exhibit 4-D to the Company’s Registration Statement on Form S-4 (Registration No.333-76541), is incorporated herein by reference.
4-E	Eighth Supplemental Indenture dated as of September 19, 1973 between the Company and First National City Bank and E. J. Jaworski, as Trustees, filed as Exhibit 2-I to the Company’s Registration Statement on Form S-7 (Registration No. 2-56823), is incorporated herein by reference.
4-F	Ninth Supplemental Indenture dated as of August 1, 1976 between the Company and Citibank, N.A. and E. J. Jaworski, as Trustees, filed as Exhibit 2-J to the Company’s Registration Statement on Form S-7 (Registration No. 2-5622916), is incorporated herein by reference.
4-G	Tenth Supplemental Indenture dated as of March 8, 1999 between the Company and The Chase Manhattan Bank and Frank J. Grippo, as Trustees, filed as Exhibit 4-G to the Company’s Registration Statement on Form S-4 (Registration No. 333-76541), is incorporated herein by reference.
4-H	Eleventh Supplemental Indenture dated as of March 31, 1999 between the Company and The Chase Manhattan Bank and Frank J. Grippo, as Trustees, filed as Exhibit 4-H to the Company’s Registration Statement on Form S-4 (Registration No. 333-76541), is incorporated herein by reference.
4-I	NSC Stock Transfer Agreement between National Intergroup, Inc., the Company, NKK Corporation and NII Capital Corporation dated December 24, 1985, filed as Exhibit 4-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
4-J	$450,000,000 Secured Super Priority Debtor in Possession Credit Agreement dated as of March 6, 2002 among the Company, the subsidiaries of the Company party thereto, Citicorp USA, Inc., as Administrative Agent, Heller Financial, Inc., as Collateral Monitoring Agent, Fleet Capital Corporation and The CIT Group/Business Credit, Inc., as Documentation Agents, Heller Financial, Inc. and GMAC Business Credit, LLC, as Syndication Agents, The Fuji Bank Limited, as Co-Arranger, Salomon Smith Barney Inc., as Sole Book Manager and Sole Lead Arranger and the other lenders party thereto, filed as Exhibit 4-L to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
4-K	The Company is a party to certain long-term debt agreements where the amount involved does not exceed 10% of the Company’s total assets. The Company agrees to furnish a copy of any such agreement to the Commission upon request.
10-A	Amended and Restated Lease Agreement between the Company and Wilmington Trust Company, dated as of December 20, 1985, relating to the Electrolytic Galvanizing Line, filed as Exhibit 10-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
10-B	Lease Agreement between The Connecticut National Bank as Owner Trustee and Lessor and National Acquisition Corporation as Lessee dated as of September 1, 1987 for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-B to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.

93

Exhibit Number	Exhibit Description
10-C	Lease Supplement No. 1 dated as of September 1, 1987 between The Connecticut National Bank as Owner Trustee and National Acquisition Corporation as the Lessee for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-C to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
10-D	Lease Supplement No. 2 dated as of November 18, 1987 between The Connecticut National Bank as Owner Trustee and National Acquisition Corporation as Lessee for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-D to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
10-E	Purchase Agreement dated as of March 25, 1988 relating to the Stinson Motor Vessel among Skar-Ore Steamship Corporation, Wilmington Trust Company, General Foods Credit Investors No. 1 Corporation, Stinson, Inc. and the Company, and Time Charter between Stinson, Inc. and the Company, filed as Exhibit 10-E to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
10-F	Form of Indemnification Agreement, filed as Exhibit 10-R to the Annual Report of the Company on Form 10-K for the year ended December 31, 1996, Commission File Number 1-983, is incorporated herein by reference.
10-G	Form of Indemnification Agreement between the Company and its directors and officers, filed as Exhibit 10-G to the Annual Report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-H	Purchase and Sale Agreement dated as of August 13, 2002 among Galvatek America Corporation, Galvatek Ontario Corporation, National Ontario Corporation and National Ontario II Limited.
10-I	Line Access Agreement dated as of August 13, 2002 among the Company, NKK U.S.A. Corporation, Dofasco Inc. and DNN Galvanizing Corporation.
10-J	Forbearance Agreement dated as of August 13, 2002 among the Company, Dofasco, Inc., Galvatek Ontario Corporation, National Ontario II Limited, DNN Galvanizing Corporation, 904153 Ontario Inc., Galvatek America Corporation, National Ontario Corporation, NKK U.S.A. Corporation, and NKK Corporation.
10-K	Agreement for the Transfer of Employees by and between the Company and NKK Corporation, dated as of May 1, 1995, filed as Exhibit 10-CC to the annual report of the Company on Form 10-K for the year ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference.
10-L	Amendment No. 1 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-NN to the annual report of the Company on Form 10-K for the year ended December 31, 1996, Commission File Number 1-983, is incorporated herein by reference.
10-M	Amendment No. 2 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-Q to the annual report of the Company on Form 10-K for the year ended December 31, 1997, Commission File Number 1-983, is incorporated herein by reference.
10-N	Amendment No. 3 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-R to the annual report of the Company on Form 10-K for the year ended December 31, 1998, Commission File Number 1-983, is incorporated herein by reference.
10-O	Amendment No. 4 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-S to the annual report of the Company on Form 10-K for the year ended December 31, 1999, Commission File Number 1-983, is incorporated herein by reference.

94

Exhibit Number	Exhibit Description
10-P	Amendment No. 5 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-T to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-Q	Amendment No. 6 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-Q to the Annual Report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-R	Amendment No. 7 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation.
10-S	Amendment No. 8 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation.
10-T	Agreement dated as of November 25, 1997 among the Company, Avatex Corporation, NKK Corporation and NKK U.S.A. Corporation, filed as Exhibit 10-R to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997, Commission File Number 1-983, is incorporated herein by reference.
10-U	Steel Slab Products Supply Agreement dated as of February 16, 2000 between the Company and NKK Corporation, filed as Exhibit 10-LL to the annual report of the Company on Form 10-K for the year ended December 31, 1999, Commission File Number 1-983, is incorporated herein by reference.
10-V	Cooperation Agreement on Research and Development and Technical Assistance dated May 25, 2000 between NKK Corporation and the Company, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-W	Amended and Restated $100 Million Subordinated Credit Agreement dated September 28, 2001 between NUF LLC and the Company, filed as Exhibit 10-Y to the annual report of the Company on Form 10-K for ended December 31, 1995, Commission File Number 1-983, is incorporated herein by reference. the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-X	Technical Assistance Agreement dated June 25, 1990 between the Company and NKK Corporation, filed as Exhibit 10-Z to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-Y	Amendment No. 1 dated July 29, 1998 to Technical Assistance Agreement dated June 25, 1990 between the Company and NKK Corporation, filed as Exhibit 10-AA to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-Z	Amendment No. 2 dated December 11, 2000 to Technical Assistance Agreement dated June 25, 1990 between the Company and NKK Corporation, filed as Exhibit 10-BB to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-AA	1993 National Steel Corporation Long-Term Incentive Plan, filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (Registration No. 33-57952), is incorporated herein by reference.
10-BB	1993 National Steel Corporation Non-Employee Directors’ Stock Option Plan, filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (Registration No. 33-57952), is incorporated herein by reference.
10-CC	Amendment Number One to the 1993 National Steel Corporation Non-Employee Directors’ Stock Option Plan, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1997, Commission File Number 1-983, is incorporated herein by reference.

95

Exhibit Number	Exhibit Description
10-DD	Amendment Number Two to the 1993 National Steel Corporation Non-Employee Directors’ Stock Option Plan, filed as Exhibit 10-V to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997, Commission File Number 1-983, is incorporated herein by reference.
10-EE	Amendment Number Three to the 1993 National Steel Corporation Non-Employee Directors’ Stock Option Plan, filed as Exhibit 10-Y to the Annual Report of the Company on Form 10-K for the year ended December 31, 1999, Commission File Number 1-983, is incorporated herein by reference.
10-FF	National Steel Corporation Management Incentive Compensation Plan dated January 30, 1989, filed as Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (Registration No. 33-57952), Commission File Number 1-983, is incorporated herein by reference.
10-GG	Employment Contract dated May 1, 1996 between the Company and John A. Maczuzak, filed as Exhibit 10-G to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1996, Commission File Number 1-983, is incorporated herein by reference.
10-HH	Employment Contract dated as of March 4, 2001 between the Company and Hisashi Tanaka, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended March 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-II	Employment Contract dated as of March 1, 2001 between the Company and John L. Davis, filed as Exhibit 10-NN to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-JJ	Employment Contract dated as of March 1, 2001 between the Company and Stephen G. Denner, filed as Exhibit 10-OO to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-KK	Employment Contract dated as of March 1, 2001 between the Company and Michael D. Gibbons, filed as Exhibit 10-PP to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-LL	Employment Contract dated as of March 1, 2001 between the Company and Daniel B. Joeright, filed as Exhibit 10-QQ to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-MM	Employment Contract dated as of March 1, 2001 between the Company and Ronald J. Werhnyak, filed as Exhibit 10-RR to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-NN	Amendment dated February 22, 2002 to Employment Contract dated as of March 1, 2001 between the Company and Ronald J. Werhnyak, filed as Exhibit 10-TT to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-OO	Employment Contract dated as of March 1, 2001 between the Company and Lawrence F. Zizzo, filed as Exhibit 10-SS to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-PP	Employment Contract dated as of March 1, 2001 between the Company and William E. McDonough, filed as Exhibit 10-TT to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-QQ	Amendment dated November 7, 2001 to Employment Contract dated as of March 1, 2001 between the Company and William E. McDonough, filed as Exhibit 10-WW to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.

96

Exhibit Number	Exhibit Description
10-RR	Employment Contract dated as of March 1, 2001 between the Company and Kirk A. Sobecki, filed as Exhibit 10-UU to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-SS	Amendment dated November 7, 2001 to Employment Contract dated as of March 1, 2001 between the Company and Kirk A. Sobecki, filed as Exhibit 10-YY to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-TT	Amendment dated February 22, 2002 to Employment Contract dated as of March 1, 2001 between the Company and Kirk A. Sobecki, filed as Exhibit 10-ZZ to the annual report of the Company on Form 10-K for the year ended December 31, 2001, Commission File Number 1-983, is incorporated herein by reference.
10-UU	Employment Contract dated as of March 1, 2001 between the Company and Tamara J. Freeman.
10-VV	Employment Contract dated as of January 24, 2003 between the Company and Scott Montross.
10-WW	Employment Contract dated as of September 27, 2002 between the Company and Mineo Shimura, filed as Exhibit 10-A to the to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 2002, Commission File Number 1-983, is incorporated herein by reference.
10-XX	National Steel Corporation Executive Deferred Compensation Plan restated effective as of January 1, 2000, filed as Exhibit 10-VV to the annual report of the Company on Form 10-K for the year ended December 31, 2000, Commission File Number 1-983, is incorporated herein by reference.
10-YY	Employee Retention and Severance Program, filed as Exhibit 10-A to the to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 2002, Commission File Number 1-983, is incorporated herein by reference.
21	List of Subsidiaries of the Company.
23	Consent of Independent Auditors.
99-A	Certification of Chief Executive Officer.
99-B	Certification of Chief Financial Officer.

97

EX-2.G

                                                                     EXHIBIT 2.G

                               FIRST AMENDMENT TO
                            ASSET PURCHASE AGREEMENT

     THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT, dated as of February 21,
2003 (this "Amendment"), is entered into by and among AK Steel Corporation, a
Delaware corporation ("Buyer"), and National Steel Corporation, a Delaware
corporation (the "Company").

     WHEREAS, Buyer, the Company and certain of the Company's subsidiaries
(collectively with the Company, "Sellers" and each a "Seller") are parties to
that certain Asset Purchase Agreement, dated as of January 30, 2003 (the
"Purchase Agreement") pursuant to which Buyer has agreed to purchase the assets
and assume the liabilities relating to the Business (as defined in the Purchase
Agreement) as are specified in the Purchase Agreement, all in the manner and
subject to the terms and conditions set forth in the Purchase Agreement and
pursuant to, inter alia, Sections 363 and 365 of the Bankruptcy Code; and

     WHEREAS, pursuant to Section 7.20 of the Purchase Agreement, Buyer and the
Company desire to amend the Purchase Agreement and the schedules thereto to
reflect that National Steel Pellet Company is a Seller and Buyer's purchase of
all assets related thereto and to add as Sellers other parties necessary to
effectuate the foregoing.

     WHEREAS, pursuant to Section 11.6 of the Purchase Agreement, Buyer and the
Company desire to amend the Purchase Agreement as set forth herein.

     NOW, THEREFORE, in consideration of the premises, and the representations,
warranties, covenants and agreements contained in the Purchase Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:

1.   Amendment of Section 1.1.

          (a)    Accounts Payable. The definition of the term "Accounts Payable"
     is hereby amended and restated in its entirety to read as follows:

                 ""Accounts Payable" shall mean those trade accounts payable of
          Sellers relating to the Business or the Acquired Assets, incurred in
          bona fide business transactions in the ordinary course of business
          after the commencement of the Chapter 11 Case. Accounts Payable shall
          not include any Cure Amounts or any Excluded Liabilities."

          (b)    Estimated Inventory Value. The definition of the term
     "Estimated Inventory Value" is hereby amended and restated in its entirety
     to read as follows:

                 ""Estimated Inventory Value" shall mean the Inventory
          Value (excluding the Inventory Value of the Inventory of
          National Steel Pellet



          Company) determined as of the close of business on the last day of the
          month immediately prior to the Closing Date."

          (c)    Estimated Net Receivables Amount. The definition of the term
     "Estimated Net Receivables Amount" is hereby amended and restated in its
     entirety to read as follows:

                 ""Estimated Net Receivables Amount" shall mean the
          aggregate amount of Accounts Receivable (excluding the amount
          of Accounts Receivable of National Steel Pellet Company) minus
          the aggregate amount of Accounts Payable (excluding the amount
          of Accounts Payable of National Steel Pellet Company) minus
          the Company Reserves (excluding the amount of Company Reserves
          related to National Steel Pellet Company) calculated as of the
          close of business on the last day of the month immediately
          prior to the Closing Date."

2.   Amendment of Section 3.4(e). Section 3.4(e) of the Purchase Agreement is
     hereby amended and restated in its entirety to read as follows:

          "(e)   If the aggregate amount of Accounts Receivable included
          in the Acquired Assets (excluding the amount of Accounts
          Receivable of National Steel Pellet Company included in the
          Acquired Assets) minus (i) the aggregate amount of Accounts
          Payable included in the Assumed Liabilities (excluding the
          amount of Accounts Payable of National Steel Pellet Company
          included in the Assumed Liabilities) and (ii) the Company
          Reserves, excluding the amount of Company Reserves related to
          National Steel Pellet Company (the "Net Receivables Amount"),
          plus the Inventory Value, excluding the Inventory Value of the
          Inventory of National Steel Pellet Company included in the
          Acquired Assets (the "Working Capital Amount"), is less than
          $450 million then the Purchase Price shall be decreased by the
          amount of the shortfall (the "Working Capital Adjustment").
          Any Working Capital Adjustment resulting from this Section
          3.4(e) shall be offset by any reduction to the Purchase Price
          made at the Closing based on the Estimated Working Capital
          Adjustment."

3.   Amendment of Section 7.20. Section 7.20 of the Purchase Agreement is hereby
     amended and restated in its entirety to read as follows:

                 "7.20 Pellet Company Modification. On or prior to
          February 21, 2003, Sellers shall prepare and deliver
          amendments, modifications or supplements to the exhibits and
          schedules hereto in a form reasonably satisfactory to Buyer to
          reflect that National Steel Pellet Company is a Seller and
          Buyer's purchase of all assets related thereto (the "Pellet
          Company Modification"), and to add as Sellers other parties as
          necessary to effectuate the foregoing."

                                        2



4.   Addition of Hanna Ore Mining Company as Seller. By executing this
     Amendment, the parties hereto hereby agree that the Purchase Agreement is
     amended to include Hanna Ore Mining Company as a Seller and to add Hanna
     Ore Mining Company as a signatory to the Purchase Agreement.

5.   Amendment of Schedule 1. Schedule 1 to the Purchase Agreement is hereby
     amended as set forth on Exhibit A attached hereto.

6.   Amendment of Schedule 2.1(a)-1. Schedule 2.1(a)-1 to the Purchase Agreement
     is hereby amended as set forth on Exhibit B attached hereto.

7.   Amendment of Schedule 2.1(c). Schedule 2.1(c) to the Purchase Agreement is
     hereby amended as set forth on Exhibit C attached hereto.

8.   Amendment of Schedule 2.1(i). Schedule 2.1(i) to the Purchase Agreement is
     hereby amended as set forth on Exhibit D attached hereto.

9.   Amendment of Schedule 2.1(k). Schedule 2.1(k) to the Purchase Agreement is
     hereby amended as set forth on Exhibit E attached hereto.

10.  Amendment of Schedule 2.1(n). Schedule 2.1(n) to the Purchase Agreement is
     hereby amended as set forth on Exhibit F attached hereto.

11.  Amendment of Schedule 2.2(i). Schedule 2.2(i) to the Purchase Agreement is
     hereby amended as set forth on Exhibit G attached hereto.

12.  Amendment of Schedule 2.2(k). Schedule 2.2(k) to the Purchase Agreement is
     hereby amended as set forth on Exhibit H attached hereto.

13.  Amendment of Schedule 7.16. Schedule 7.16 to the Purchase Agreement is
     hereby amended as set forth on Exhibit I attached hereto.

14.  Amendment of Schedule 10.1(c). Schedule 10.1(c) to the Purchase Agreement
     is hereby amended as set forth on Exhibit J attached hereto.

15.  Amendment of Schedule 5.1 of the Disclosure Schedule. Schedule 5.1 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit K attached
     hereto.

16.  Amendment of Schedule 5.4 of the Disclosure Schedule. Schedule 5.4 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit L attached
     hereto.

17.  Amendment of Schedule 5.6(a) of the Disclosure Schedule. Schedule 5.6(a) of
     the Disclosure Schedule is hereby amended as set forth on Exhibit M
     attached hereto.

18.  Amendment of Schedule 5.6(b) of the Disclosure Schedule. Schedule 5.6(b) of
     the Disclosure Schedule is hereby amended as set forth on Exhibit N
     attached hereto.

                                        3



19.  Amendment of Schedule 5.7 of the Disclosure Schedule. Schedule 5.7 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit O attached
     hereto.

20.  Amendment of Schedule 5.8(a) of the Disclosure Schedule. Schedule 5.8(a) of
     the Disclosure Schedule is hereby amended as set forth on Exhibit P
     attached hereto.

21.  Amendment of Schedule 5.10(a)(i) of the Disclosure Schedule. Schedule
     5.10(a)(i) of the Disclosure Schedule is hereby amended as set forth on
     Exhibit Q attached hereto.

22.  Amendment of Schedule 5.11 of the Disclosure Schedule. Schedule 5.11 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit R attached
     hereto.

23.  Amendment of Schedule 5.13 of the Disclosure Schedule. Schedule 5.13 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit S attached
     hereto.

24.  Amendment of Schedule 5.14 of the Disclosure Schedule. Schedule 5.14 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit T attached
     hereto.

25.  Amendment of Schedule 5.15 of the Disclosure Schedule. Schedule 5.15 of the
     Disclosure Schedule is hereby amended and restated in its entirety to read
     as set forth on Exhibit U attached hereto.

26.  Amendment of Schedule 5.18 of the Disclosure Schedule. Schedule 5.18 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit V attached
     hereto.

27.  Amendment of Schedule 5.19 of the Disclosure Schedule. Schedule 5.19 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit W attached
     hereto.

28.  Amendment of Schedule 5.20 of the Disclosure Schedule. Schedule 5.20 of the
     Disclosure Schedule is hereby amended as set forth on Exhibit X attached
     hereto.

29.  Miscellaneous.

          (a)    Counterparts. This Amendment may be executed in two or more
     counterparts, each of which shall be deemed an original, and all of which
     together shall constitute one and the same instrument. Counterparts to this
     Amendment may be delivered via facsimile. In proving this Amendment, it
     shall not be necessary to produce or account for more than one such
     counterpart signed by the party against whom enforcement is sought.

          (b)    No Further Effect. Except as expressly set forth herein, this
     Amendment shall not, by implication or otherwise, alter, modify, amend or
     in any way affect any of the terms, conditions, obligations or agreements
     contained in the Purchase Agreement and the Purchase Agreement shall remain
     in full force and effect in accordance with its terms.

                                        4



          (c)    References. Each reference in the Purchase Agreement to "this
     Agreement," "herein," "hereof" and words of like import and each reference
     to the "Purchase Agreement" in each other agreement, including, without
     limitation, each agreement attached as an exhibit to the Purchase
     Agreement, entered into between Buyer and Sellers in connection with the
     Transaction shall mean the Purchase Agreement as amended hereby. Each
     reference in the Purchase Agreement to a Schedule to the Purchase Agreement
     or to the Disclosure Schedule shall mean the Schedules to the Purchase
     Agreement and to the Disclosure Schedule as amended hereby. Each reference
     to the "Agreement" in any Schedule to the Purchase Agreement and in the
     Disclosure Schedule shall mean the Purchase Agreement as amended hereby.

          (d)    Choice of Law. This Amendment shall be construed and
     interpreted,and the rights of the parties shall be determined, in
     accordance with the substantive laws of the State of Delaware, without
     giving effect to any provision thereof that would require the application
     of the substantive laws of any other jurisdiction, except to the extent
     that such laws are superseded by the Bankruptcy Code.

                  [Remainder of Page Intentionally Left Blank]

                                        5



     IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by
the duly authorized officers of Buyer and the Company as of the date first above
written.

                       AK STEEL CORPORATION

                       By:    /s/  James L. Wainscott
                          ------------------------------------------------------
                       Name:   James L. Wainscott
                       Title:  Senior Vice President and Chief Financial Officer

                       NATIONAL STEEL CORPORATION

                       By:    /s/ Kirk A. Sobecki
                          ------------------------------------------------------
                       Name:   Kirk A. Sobecki
                       Title:  Senior Vice President & Chief Financial Officer

                       HANNA ORE MINING COMPANY

                       By:    /s/ Kirk A. Sobecki
                          ------------------------------------------------------
                       Name:   Kirk A. Sobecki
                       Title:  Vice President & Chief Financial Officer

          Signature Page to First Amendment to Asset Purchase Agreement



                                    Exhibit A

Schedule 1 to the Purchase Agreement is hereby amended to include the following
item(s):

     14.  Hanna Ore Mining Company, a corporation incorporated under the laws of
          the State of Minnesota.

                                       A-1



                                    Exhibit B

Schedule 2.1(a)-1 to the Purchase Agreement is hereby amended to include the
following item(s):

     7.   All lands owned in fee by the Company, National Steel Pellet Company
          and Hanna Ore Mining Company in and near Keewatin, Minnesota and used
          in connection with the operation of the National Steel Pellet Company
          Taconite Plant located in both Itasca County, Minnesota and St. Louis
          County, Minnesota and in Townships Fifty-six (56) and Fifty-seven (57)
          North, Range Twenty-one (21) and Twenty-two (22) West.

                                       B-1



                                    Exhibit C

Section 5 of Schedule 2.1(c) to the Purchase Agreement is hereby amended to
include the following new item:

          aa) Gas Operations Program Agreement, effective November 1, 2002,
              between National Steel Pellet Company and Cornerstone Energy,
              Inc.

                                       C-1



                                    Exhibit D

Schedule 2.1(i) to the Purchase Agreement is hereby amended to include the
following items:

National Steel Pellet Company
1.   Radio Station License (Call Sign WPHH785), issued March 22, 2000, to
     National Steel Pellet Company by the Federal Communications Commission
2.   Radio Station Authorization (Call Sign WNRD611), granted September 9, 1998,
     to National Steel Pellet Company by the Federal Communications Commission
3.   Radio Station Authorization (Call Sign KAF691), granted February 28, 2002,
     to National Steel Pellet Company by the Federal Communications Commission

NATIONAL STEEL PELLET COMPANY



      MEDIA             APPLICABLE PERMIT               PERMIT INFORMATION                      DATES
- ---------------------------------------------------------------------------------------------------------------------
                                                                         
       Air         Minnesota Pollution Control           Pellet Screening           Issue Date: November 28, 1995
                         Agency ("MPCA")               Construction Permit        Expiration Date: November 28, 2000
                         No. 13700063-006
- ---------------------------------------------------------------------------------------------------------------------
       Air                     MPCA                  Total Facility Operating        Issue Date: August 8, 1997
                         No. 13700063-002                     Permit               Expiration Date: August 8, 2002
- ---------------------------------------------------------------------------------------------------------------------
                   National Pollutant Discharge
                   Elimination System ("NPDES")                                     Issue Date: November 1, 1997
      Water       Industrial Activity Permit MN     General Storm Water Permit    Expiration Date: October 31, 2002
                             G611000
- ---------------------------------------------------------------------------------------------------------------------
                     NPDES Permit MN 0055948,
                   including MPCA certification                                     Issue Date: January 16, 1996
      Water       under Section 401 of the Clean          Tailings Basin          Expiration Date: September 30, 1997
                            Water Act
- ---------------------------------------------------------------------------------------------------------------------
      Water          NPDES Permit MN 0031879              Mine and Plant            Issue Date: January 16, 1996
                                                                                   Expiration Date: July 31, 1999
- ---------------------------------------------------------------------------------------------------------------------
                                                     Drain, excavate, and/or
      Water         US Army Corp of Engineers       discharge fill material in       Issue Date: April 24, 1997
                    Permit No. 96-04859-IP-TWP          isolated wetlands         Expiration Date: December 31, 2003
- ---------------------------------------------------------------------------------------------------------------------
      Water      Minnesota Department of Natural       Water Appropriation           Issue Date: January 6, 1966
                        Resources ("MDNR")
- ---------------------------------------------------------------------------------------------------------------------
                     U.S. Nuclear Regulatory          Materials License for
     Nuclear          Commission License No.        By-Products, Source and/or    Expiration Date: November 30, 2004
                           22-05587-02               Special Nuclear Material
- ---------------------------------------------------------------------------------------------------------------------
   Explosives     Explosives Permit No. B 28628      Mining Explosives Permit         Issue Date: July 9, 2002
                                                     issued by Hibbing Police      Expiration Date: July 31, 2003
- ---------------------------------------------------------------------------------------------------------------------
                                                     Mining Explosives Permit
   Explosives     Explosives Permit No. B 28079      issued by Itasca County          Issue Date: July 9, 2002
                                                       Sheriff's Department        Expiration Date: July 31, 2003
- ---------------------------------------------------------------------------------------------------------------------


                                       D-1



NATIONAL STEEL PELLET COMPANY



      MEDIA             APPLICABLE PERMIT               PERMIT INFORMATION                      DATES
- ---------------------------------------------------------------------------------------------------------------------
                                                                         
      Other             MPCA MND071344733             Hazardous Waste Small        Expiration Date: June 30, 2003
                                                    Quantity Generator License
- ---------------------------------------------------------------------------------------------------------------------
      Other           MPCA Permit #WTSF-115             Waste Tire Storage          Issue Date: January 23, 1992
                                                                                  Expiration Date: January 23, 1997
- ---------------------------------------------------------------------------------------------------------------------
                                                   Aboveground and Underground
      Other         MPCA Permit No. AST# 11153      Storage Tanks for Storing         Issue Date: March 6, 2000
                                                        Liquid Substances          Expiration Date: March 6, 2005
- ---------------------------------------------------------------------------------------------------------------------
      Other       Minnesota Mineland Reclamation            Dam Safety               Issue Date: March 14, 1986
                        Permit #MN CO49425                                         Expiration Date: March 6, 2005
- ---------------------------------------------------------------------------------------------------------------------
      Other                    DOT                     Hazardous Materials            Issue Date: June 5, 2002
                                                    Certificate of Registration     Expiration Date: June 30, 2003
- ---------------------------------------------------------------------------------------------------------------------
      Other       Minnesota Mineland Reclamation          Permit to Mine             Issue Date: March 14, 1986
                              Permit
- ---------------------------------------------------------------------------------------------------------------------
      Other       State of Minnesota Certificate    Boilers and Pressure Vessels  Expiration Date: December 31, 2002
                     of Exemption No. 257176
- ---------------------------------------------------------------------------------------------------------------------


                                       D-2



                                    Exhibit E

Schedule 2.1(k) to the Purchase Agreement is hereby amended to included the
following items:

National Steel Pellet Company Proprietary Software

NATIONAL STEEL PELLET COMPANY



Location Code/Area                    Application                         System Environment
- ----------------------------------------------------------------------------------------------------------
                                                                    
Accounts Payable                      1099Misc                            AS/400, RPG, CLP (information
                                                                          source: Avantis.XA Accounts
                                                                          Payable)
- ----------------------------------------------------------------------------------------------------------
Accounts Payable, Financial           Sales Tax Refund                    AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Employee Information                AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Employee Progression                AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Employee Protection Plan            AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Group Insurance                     AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Hourly Employee Absenteeism         AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       MSHA Employee Equipment Training    AS/400, RPG, CLP
                                      Records
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Overtime Equalization               AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Pensions - Hourly & Salaried        AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Service Recognition                 AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources                       Workers Compensation                AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Hourly Employee Rate                AS/400, RPG, CLP
                                      Calculations: Special Retirement,
                                      Sub, Vacation
- ----------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Major Medical Reimbursements        AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Pensionable Earnings                AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Safety & Accident                   AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Surviving Spouse Benefits, 1099-R   AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Vacation Eligibility                AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Voluntary Group Life Insurance      AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Maintenance Shop                      Heavy Equipment Hours and           AS/400, RPG, CLP
                                      Descriptions
- ----------------------------------------------------------------------------------------------------------
Payroll                               401(k)                              AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------


                                       E-1



NATIONAL STEEL PELLET COMPANY



Location Code/Area                    Application                         System Environment
- ----------------------------------------------------------------------------------------------------------
                                                                    
Payroll                               Hourly Payroll: Deductions,         AS/400, RPG, CLP
                                      Direct Deposit, Incentives, Shoe
                                      Allowance, Timecards, Vacations,
                                      W-2, Labor Distribution, Union
                                      Dues
- ----------------------------------------------------------------------------------------------------------
Payroll, Financial                    Savings Bonds                       AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Payroll, Financial                    State Quarterly Reporting           AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Payroll, Human Resources              Supplemental Unemployment Benefits  AS/400, RPG, CLP, MS Access
- ----------------------------------------------------------------------------------------------------------
Plant, Mine                           Production Reporting                Client-Server, MS Access, SQL
                                                                          Server, Crystal Reports
- ----------------------------------------------------------------------------------------------------------
Purchasing, Maintenance Shop          Rolling Stock                       AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Safety                                Accident Reporting                  AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------
Safety                                Cardinal Rules of Safety -          AS/400, RPG, CLP
                                      Violations
- ----------------------------------------------------------------------------------------------------------
Safety                                MSDS                                AS/400, RPG, CLP
- ----------------------------------------------------------------------------------------------------------


                                       E-2



                                    Exhibit F

Schedule 2.1(n) to the Purchase Agreement is hereby amended to include the
following items:

    Company Account
        Number(s)                                   Description
- -----------------------     ----------------------------------------------------
190305                      Prepaid Interest
190326                      Deferred Capital Charges
190332                      Advance Royalty Control

                                       F-1



                                    Exhibit G

Item 3 of the Section entitled "Other Properties" on Schedule 2.2(i) to the
Purchase Agreement is hereby amended and restated in its entirety to read as
follows:

     3.   All ore mining properties (including Dober Mine and Buck Mine), other
          than ore mining properties owned by National Steel Pellet Company and
          Hanna Ore Mining Company.

Schedule 2.2(i) to the Purchase Agreement is hereby amended to include the
following items:

   National Steel Pellet Company Leases
     1.   Mississippi #1 Mine Lease (No. 2095-N), dated October 3, 1960, between
          National Steel Pellet Company and the State of Minnesota, including
          amendments thereto
     2.   Stein Mine Lease (No. 3097-N), dated June 3, 1993, between National
          Steel Pellet Company and the State of Minnesota, including amendment
          thereto
     3.   Mesabi Chief Mine Lease (No. 3098-N), dated June 3, 1993, between
          National Steel Pellet Company and the State of Minnesota, including
          amendment thereto
     4.   Mississippi #2 Mine Lease (No. 3099-N), dated June 3, 1993, between
          National Steel Pellet Company and the State of Minnesota, including
          amendment thereto
     5.   Bennett Mine Lease, effective as of January 1, 1966, between Keewatin
          Mining Company and the Company and Amended and Restated Bennett Mine
          Operating Agreement, effective as of July 1, 1994, between Keewatin
          Company and the Company.
     6.   Russell Mine Lease, effective as of January 1, 1966, as amended on
          January 1, 1970 and Amended and Restated Russell Mine Operating
          Agreement, effective as of July 1, 1994, between Sargent Land Company
          Limited Partnership and the Company.
     7.   Russell Annex Lease, effective as of January 1, 1966, between the
          Trustees of the Trust known as Great Northern Iron Ore Properties,
          Trustees of the Trust of James G. Bennett 1944 Mineral Interests, J.
          M. Longyear Heirs and the Company and the Amended and Restated Russell
          Annex Operating Agreement, effective July 1, 1994, between the
          Trustees of the Trust known as Great Northern Iron Ore Properties, J.
          M. Longyear Heirs, A Limited Partnership and the Company, as amended
          by the Letter of Intent, dated February 13, 1996.
     8.   Pooling Agreement, effective as of January 1, 1966, between Sargent
          Land Company, Hanna Ore Mining Company, The Hanna Mining Company,
          Butler Brothers and the Company.

                                       G-1



     9.   South Stevenson Mine Lease, effective April 1, 1966, between Great
          Northern Iron Properties and the Company and South Stevenson Operating
          Agreement, effective April 1, 1966, between Great Northern Iron
          Properties and the Company, including amendments thereto.
     10.  Bennett Annex Lease, dated October 12, 1965, between Great Northern
          Iron Ore Properties and the Company.
     11.  Carmi-Campbell Lease and Operating Agreement, dated July 1, 1959,
          between Great Northern Iron Ore Properties and The Hanna Mining
          Company, including amendments thereto and Assignment and Assumption
          Agreement, dated January 12, 1988, between M.A. Hanna Company,
          formerly The Hanna Mining Company, and Hanna Iron Ore Division of the
          Company.
     12.  Indenture of Lease (Grant Mine), dated April 1, 1962, between Great
          Northern Iron Ore Properties and The Hanna Mining Company and
          Operating Agreement (Grant Mine), dated April 1, 1962, between Great
          Northern Iron Ore Properties and The Hanna Mining Company, including
          amendments thereto and Sublease of Indenture of Lease (Grant Mine),
          dated January 1, 1975, between The Hanna Mining Company and National
          Steel Pellet Company.
     13.  Northern Pacific Railway Company Mining Lease, effective January 1,
          1966, between Northern Pacific Railway Company and Hanna Ore Mining
          Company and Sublease of Northern Pacific Railway Company Mining Lease,
          dated February 26, 1979, between Hanna Ore Mining Company and National
          Steel Pellet Company.
     14.  Indenture of Sublease (Ontario Reserve Sublease), dated May 1, 1981,
          between Bethlehem Hibbing Corporation, Pickands Mather & Co., Ontario
          Hibbing Company, Hibbing Development Company and the Company and
          Sublease of the Indenture of Sublease, dated October 6, 1981, between
          the Company and National Steel Pellet Company
     15.  St. Paul Day Lease, dated January 1, 1966, between National Realty
          Company, The Henapeg Company, the Executors of the Estate of Herbert
          W. Rogers, Catherine Wallin and Theodore F.J. Wallin, Irma McCall, Ada
          Adair Willard, Paul D. Willard, Jr. and Leone Willard, Jean Adair
          Wortz and James M. Wortz, Fred B. Day and Ruth L. Day, Evelyn A. Day,
          Elizabeth Solberg Mohr and G.E. Mohr, Catherine Solberg DeJarlais and
          E.E. DeJarlais, Margaret Solberg Sell and Charles A. Sell, Janet D.
          Lee and Richard Lee, Diane D. Vessey and Jerry Vessey, Kathleen
          Elizabeth Day, Philip Bradley Theisen and Jane Theisen, Thomas George
          Theisen and Donna Theisen, John Hayne Day, Barbara Mary Day, Robert
          Christopher Day, Mary M. Henschel and William Henschel, Elizabeth M.
          Curtis and Carl F. Curtis, Patricia Ann Paczesniak and Brian A.
          Paczesniak, Shirley C. Carlson and Duane Carlson and Hanna Ore Mining
          Company.
     16.  Amended Sargent Mine Lease, dated June 3, 1973, between Sargent Land
          Company and Hanna Ore Mining Company and Sargent Mine Operating

                                       G-2



          Agreement, effective January 1, 1970, between Sargent Land Company and
          Hanna Ore Mining Company, including amendments thereto.
     17.  Great Northern Pooling Agreement, dated July 11, 1963, between Great
          Northern Iron Ore Properties and the Company.
     18.  Mining Lease of the Stevenson Mine, effective January 1, 1961, between
          Great Northern Iron Ore Properties and the Company and Mining Lease of
          the Stevenson Addition Mine, effective January 1, 1961, between Great
          Northern Iron Ore Properties and the Company and Mining Lease of the
          Section 18 Mine, effective January 1, 1961, between Great Northern
          Iron Ore Properties and the Company and Mining Lease of the Section 18
          Extension Mine, effective January 1, 1961, between Great Northern Iron
          Ore Properties and the Company and Mining Lease of the Mississippi #3
          Mine, effective January 1, 1961, between Great Northern Iron Ore
          Properties and the Company and the Operating Agreement, effective
          January 1, 1961, between Great Northern Iron Ore Properties, Hanna Ore
          Mining Company and the Company, including amendments thereto.
     19.  Sublease of Bennett Annex Mine Lease, Russell Mine Lease, Bennett Mine
          Lease, Russell Annex Lease, South Stevenson Mine Lease, Section 18
          Mine Lease, Section 18 Extension Mine Lease, Stevenson Mine Lease and
          Stevenson Addition Mine Lease, dated January 1, 1975, between the
          Company and National Steel Pellet Company.

                                       G-3



                                    Exhibit H

Schedule 2.2(k) to the Purchase Agreement is hereby amended to include the
following new Section XII:

XII. National Steel Pellet Company Agreements

     A. National Steel Pellet Company Real Property Leases
     1.   Mississippi #1 Mine Lease (No. 2095-N), dated October 3, 1960, between
          National Steel Pellet Company and the State of Minnesota, including
          amendments thereto
     2.   Stein Mine Lease (No. 3097-N), dated June 3, 1993, between National
          Steel Pellet Company and the State of Minnesota, including amendment
          thereto
     3.   Mesabi Chief Mine Lease (No. 3098-N), dated June 3, 1993, between
          National Steel Pellet Company and the State of Minnesota, including
          amendment thereto
     4.   Mississippi #2 Mine Lease (No. 3099-N), dated June 3, 1993, between
          National Steel Pellet Company and the State of Minnesota, including
          amendment thereto
     5.   Bennett Mine Lease, effective as of January 1, 1966, between Keewatin
          Mining Company and the Company and Amended and Restated Bennett Mine
          Operating Agreement, effective as of July 1, 1994, between Keewatin
          Company and the Company.
     6.   Russell Mine Lease, effective as of January 1, 1966, as amended on
          January 1, 1970 and Amended and Restated Russell Mine Operating
          Agreement, effective as of July 1, 1994, between Sargent Land Company
          Limited Partnership and the Company.
     7.   Russell Annex Lease, effective as of January 1, 1966, between the
          Trustees of the Trust known as Great Northern Iron Ore Properties,
          Trustees of the Trust of James G. Bennett 1944 Mineral Interests, J.
          M. Longyear Heirs and the Company and the Amended and Restated Russell
          Annex Operating Agreement, effective July 1, 1994, between the
          Trustees of the Trust known as Great Northern Iron Ore Properties, J.
          M. Longyear Heirs, A Limited Partnership and the Company, as amended
          by the Letter of Intent, dated February 13, 1996.
     8.   Pooling Agreement, effective as of January 1, 1966, between Sargent
          Land Company, Hanna Ore Mining Company, The Hanna Mining Company,
          Butler Brothers and the Company.
     9.   South Stevenson Mine Lease, effective April 1, 1966, between Great
          Northern Iron Properties and the Company and South Stevenson Operating
          Agreement, effective April 1, 1966, between Great Northern Iron
          Properties and the Company, including amendments thereto.
     10.  Bennett Annex Lease, dated October 12, 1965, between Great Northern
          Iron Ore Properties and the Company.

                                       H-1



     11.  Carmi-Campbell Lease and Operating Agreement, dated July 1, 1959,
          between Great Northern Iron Ore Properties and The Hanna Mining
          Company, including amendments thereto and Assignment and Assumption
          Agreement, dated January 12, 1988, between M.A. Hanna Company,
          formerly The Hanna Mining Company, and Hanna Iron Ore Division of the
          Company.
     12.  Indenture of Lease (Grant Mine), dated April 1, 1962, between Great
          Northern Iron Ore Properties and The Hanna Mining Company and
          Operating Agreement (Grant Mine), dated April 1, 1962, between Great
          Northern Iron Ore Properties and The Hanna Mining Company, including
          amendments thereto and Sublease of Indenture of Lease (Grant Mine),
          dated January 1, 1975, between The Hanna Mining Company and National
          Steel Pellet Company.
     13.  Northern Pacific Railway Company Mining Lease, effective January 1,
          1966, between Northern Pacific Railway Company and Hanna Ore Mining
          Company and Sublease of Northern Pacific Railway Company Mining Lease,
          dated February 26, 1979, between Hanna Ore Mining Company and National
          Steel Pellet Company.
     14.  Indenture of Sublease (Ontario Reserve Sublease), dated May 1, 1981,
          between Bethlehem Hibbing Corporation, Pickands Mather & Co., Ontario
          Hibbing Company, Hibbing Development Company and the Company and
          Sublease of the Indenture of Sublease, dated October 6, 1981, between
          the Company and National Steel Pellet Company
     15.  St. Paul Day Lease, dated January 1, 1966, between National Realty
          Company, The Henapeg Company, the Executors of the Estate of Herbert
          W. Rogers, Catherine Wallin and Theodore F.J. Wallin, Irma McCall, Ada
          Adair Willard, Paul D. Willard, Jr. and Leone Willard, Jean Adair
          Wortz and James M. Wortz, Fred B. Day and Ruth L. Day, Evelyn A. Day,
          Elizabeth Solberg Mohr and G.E. Mohr, Catherine Solberg DeJarlais and
          E.E. DeJarlais, Margaret Solberg Sell and Charles A. Sell, Janet D.
          Lee and Richard Lee, Diane D. Vessey and Jerry Vessey, Kathleen
          Elizabeth Day, Philip Bradley Theisen and Jane Theisen, Thomas George
          Theisen and Donna Theisen, John Hayne Day, Barbara Mary Day, Robert
          Christopher Day, Mary M. Henschel and William Henschel, Elizabeth M.
          Curtis and Carl F. Curtis, Patricia Ann Paczesniak and Brian A.
          Paczesniak, Shirley C. Carlson and Duane Carlson and Hanna Ore Mining
          Company.
     16.  Amended Sargent Mine Lease, dated June 3, 1973, between Sargent Land
          Company and Hanna Ore Mining Company and Sargent Mine Operating
          Agreement, effective January 1, 1970, between Sargent Land Company and
          Hanna Ore Mining Company, including amendments thereto.
     17.  Great Northern Pooling Agreement, dated July 11, 1963, between Great
          Northern Iron Ore Properties and the Company.
     18.  Mining Lease of the Stevenson Mine, effective January 1, 1961, between
          Great Northern Iron Ore Properties and the Company and Mining Lease of
          the Stevenson Addition Mine, effective January 1, 1961, between Great
          Northern Iron Ore Properties and the Company and Mining Lease of the
          Section 18 Mine, effective January 1, 1961, between Great Northern
          Iron Ore Properties and the Company and Mining Lease of the Section 18
          Extension Mine, effective January 1, 1961, between Great

                                       H-2



          Northern Iron Ore Properties and the Company and Mining Lease of
          the Mississippi #3 Mine, effective January 1, 1961, between Great
          Northern Iron Ore Properties and the Company and the Operating
          Agreement, effective January 1, 1961, between Great Northern Iron Ore
          Properties, Hanna Ore Mining Company and the Company, including
          amendments thereto.
     19.  Sublease of Bennett Annex Mine Lease, Russell Mine Lease, Bennett Mine
          Lease, Russell Annex Lease, South Stevenson Mine Lease, Section 18
          Mine Lease, Section 18 Extension Mine Lease, Stevenson Mine Lease and
          Stevenson Addition Mine Lease, dated January 1, 1975, between the
          Company and National Steel Pellet Company.

     B. National Steel Pellet Company Purchase Contracts
     1.   Electric Service Agreement, dated March 12, 1975, between the Company,
          National Steel Pellet Company and Minnesota Power & Light Company,
          including amendments thereto

     C. National Steel Pellet Company Capital Leases
     1.   Lease agreement for National Steel Pellet Wheel Loader, dated July 26,
          1999, between the Company and GE Capital.
     2.   Lease agreement for National Steel Pellet Haul Truck, dated April 28,
          2000, between the Company and GE Capital.
     3.   Lease agreement for National Steel Pellet Hydraulic Shovel, dated
          April 3, 2001, between the Company and GE Capital.
     4.   Lease agreement for National Steel Pellet Hydraulic Shovel and Haul
          Truck, dated April 9, 1999, between the Company and Comerica Leasing.
     5.   Lease agreement for National Steel Pellet Haul Truck, dated May 7,
          1999, between the Company and Comerica Leasing.
     6.   Lease agreement for National Steel Pellet Wheel Loader, dated March
          15, 2000, between the Company and Heller Financial.

     D. Other National Steel Pellet Company Agreements
     1.   Time Charter for the George A. Stinson, dated March 25, 1988, between
          the Company and Stinson, Inc.

     E. Operating Leases Related to National Steel Pellet Company Equipment



     SCHEDULE                      SERIAL
      NUMBER      LESSOR           NUMBER                      EQUIPMENT DESCRIPTION
   ---------------------------------------------------------------------------------------------
                                           
        40         Atel    3KR00859                 97 Cat D10R Crawler Tractor
        40         Atel    6ZJ00340                 97 Cat 16H Motor Grader
        40         Atel    1KM02478                 97 Cat 938 Front end Loader
        41         Atel    1FDZS86F2WVA23203        97 Ford LT-8513 Lube Truck 5600 GVW
        42         Atel    86722                    97 Grove RT58B Rough Terrain Crane
        42         Atel    10167                    97 P&H RT130 Rough Terrain Crane


                                       H-3





     SCHEDULE                      SERIAL
      NUMBER      LESSOR           NUMBER                      EQUIPMENT DESCRIPTION
   ---------------------------------------------------------------------------------------------
                                           
        04        Cheyane  GPX711-0507-9330         94 Clark GPX40 Forklift
        10        Cheyane  01HL00255                95 Caterpillar 793B Haul Truck
        10        Cheyane  01HL00256                95 Caterpillar 793B Haul Truck
        14         Atel    03SK00906                95 Caterpillar D10 Crawler Dozer w/Ripper
        08        Cheyane  51597                    95 Prentice ATL-425 Scrap Loader
        15         Atel    57178                    95 P&H CN-190 90 Ton Ruff Ter. Crane
        15         Atel    092Z00608                95 Caterpillar 834B RT Dozer
        15         Atel    092Z00610                95 Caterpillar 834B RT Dozer
        15         Atel    092Z00611                95 Caterpillar 834B RT Dozer w/Blade
        27         Atel    7LL00046                 95 Caterpillar 5230 Hydraulic Shovel
        39         Atel    3KR00689                 96 Cat D10R Dozer
        39         Atel    1KM02212                 96 Cat 938F Blaster Loader
        39         Atel    6ZJ00276                 96 Cat 16H Grader
        39         Atel    7MJ00747                 96 Cat 992D Wheel Loader
        39         Atel    7MJ00748                 96 Cat 992D Wheel Loader
        29         Atel    7LL00048                 95 Caterpillar 5230 Hydraulic Shovel
        33         Atel    7LL00050                 95 Caterpillar 5230 Hydraulic Shovel
        48         Atel    4AR00374                 240 Ton Haulage Truck
        48         Atel    4AR00395                 240 Ton Haulage Truck
        48         Atel    4AR00376                 240 Ton Haulage Truck
        48         Atel    7HR212                   Cat 992G Rubber Tired Loader
        48         Atel    7XM3021                  Cat D8R Wide Track Dozer
        22         Atel    1GDL7H1POTJ503427        95 GMC C7H042 Truck & Aerial Basket
        49         Atel    4SN00404                 Cat 824C R.T. Tractor
        38        Boeing   04YS01192                2000 Cat 938G Dozer
        39        Boeing   A52095                   2000 Komatsu WA600-3 Wheel Loader
        40        Boeing   379105                   2000 Broderson IC-80 Crane, 17,000 lbs.


                                       H-4



                                    Exhibit I

Attachment A to Schedule 7.16 to the Purchase Agreement is hereby amended to
include the following item:



                  AGREEMENT FROM SCHEDULE 5.18(vi)(c)                        APPENDIX/PROVISION        SECTIONS
- -------------------------------------------------------------------------------------------------------------------
                                                                                                  
5.18(vi)(c)(19):  National Steel Pellet Company - Local Union 2660 of            Appendix O             A. & B.
USWA - 8/1/99. Termination Date: August 1, 2004.
- -------------------------------------------------------------------------------------------------------------------


Attachment B to Schedule 7.16 to the Purchase Agreement is hereby amended to
include the following item:



                        AGREEMENT FROM SCHEDULE 5.18(vi)(c)                                     SECTION
- -------------------------------------------------------------------------------------------------------------------
                                                                                            
5.18(vi)(c)( 19):  National Steel Pellet Company - Local Union 2660 of USWA -                  Section 17
8/1/99. Termination Date: August 1, 2004.
- -------------------------------------------------------------------------------------------------------------------


                                       I-1



                                    Exhibit J

Schedule 10.1(c) to the Purchase Agreement is hereby amended to include the
following items:

National Steel Pellet Company
1.   The taconite Maximum Achievable Control Technology standard, as proposed by
     EPA on December 18, 2002, would require an upgrade to NSPC's waste gas dust
     control system.
2.   In November 2000, NSPC was contacted by the City of Hibbing regarding drums
     found on property formerly owned by the Hanna Ore Mining Company. NSPC
     notified the City and the Minnesota Pollution Control Agency ("MPCA") that
     subsequent sampling revealed no contamination and to date, no further
     action has been taken against NSPC.
3.   In June 1981, NSPC provided notice to EPA pursuant to section 103(c) of the
     Comprehensive Environmental Response, Compensation, and Liability Act of
     1980, 42 U.S.C. Section 9601 et seq., ("CERCLA"), that approximately 70,000
     gallons of open gear lubricants containing between 1% and 2% lead had been
     disposed in stockpiles throughout NSPC's property.
4.   In October 1999, the EPA Region V Office issued an Information Request to
     NSPC seeking records relating to production rates, fuel usage, physical
     changes and changes in the method of operation of NSPC facilities since
     1978. NSPC responded to the Request in December 1999 and has received no
     further communication from EPA regarding this request.
5.   NSPC has experienced periodic exceedances of its turbidity limit at Outfall
     050.
6.   In August 2002, the MPCA issued an Administrative Penalty Order to NSPC for
     tailings basin fugitive dust emissions. Due to unseasonable weather
     conditions, NSPC continues to experience fugitive dust incidents in the
     area of its tailings basins, and although no further penalties have been
     assessed by MPCA, NSPC has received numerous complaints from local
     residents regarding property damage stemming from these emissions.
7.   NSPC's Title V Air Permit requires NSPC to do air modeling for particulate
     matter. While NSPC has been advised by the state that this modeling is not
     required despite the permit condition, should the state subsequently elect
     to enforce this requirement, there is the potential that modeling would not
     show compliance with the established ambient air standard.

                                       J-1



                                    Exhibit K

Schedule 5.1 of the Disclosure Schedule is hereby amended to include the
following items:



                                    FORM OF            FORMATION        HOLDER(S) OF OUTSTANDING CAPITAL STOCK
         SUBSIDIARY              ORGANIZATION        JURISDICTION               OR OTHER EQUITY INTERESTS
- ---------------------------------------------------------------------------------------------------------------
                                                                  
National Steel Pellet             Corporation          Delaware            NS Holdings Corporation: 100%
 Company
- ---------------------------------------------------------------------------------------------------------------
Hanna Ore Mining Company          Corporation          Minnesota                 The Company: 100%
- ---------------------------------------------------------------------------------------------------------------


                                       K-1



                                    Exhibit L

Section I of Schedule 5.4 of the Disclosure Schedule is hereby amended to
include the following items:

     57.  Agreement between National Steel Pellet Company and Entek IRD
          International Corp.
     58.  Software License and Support Agreement between National Steel Pellet
          Company and Dingo Software Pty. Ltd.
     59.  Program License and Limited Warranty between National Steel Pellet
          Company and Thunderbird Pacific Corporation
     60.  License Agreement (TAPIT) between National Steel Pellet Company and
          TRISYS Inc.
     61.  License Agreement between National Steel Pellet Company and Symantec
          Corporation
     62.  License Agreement between National Steel Pellet Company and T.L.
          Ashford & Associates, Inc.
     63.  End User License Agreement between National Steel Pellet Company and
          WRQ, Inc.
     64.  Software License Agreements (AutoCAD, VoloView) between National Steel
          Pellet Company and Autodesk, Inc.
     65.  Master Agreement for Products and Services between National Steel
          Pellet Company and Norstan Communications, Inc.
     66.  Software License Agreement between National Steel Pellet Company and
          Kronos Inc.
     67.  License Agreement between National Steel Pellet Company and Trimble
     68.  Master Licence Agreement between National Steel Pellet Company and
          Gemcom
     69.  Agreement, dated February 2, 1990, between National Steel Pellet
          Company and Gray-Soft, Inc.
     70.  Agreement between National Steel Pellet Company and Gray-Soft, Inc.
     71.  End User License Agreement between National Steel Pellet Company and
          Modular Mining Systems, Inc.
     72.  Software License Agreement between National Steel Pellet Company and
          Primavera Systems, Inc.
     73.  License Agreement between National Steel Pellet Company and Visual
          Numerics, Inc.
     74.  Software License Agreement, dated December 29, 1998, between National
          Steel Pellet Company and Hyperion Solutions Corporation, including
          amendment thereto
     75.  End-User Software License Agreement, dated May 28, 1999, between
          National Steel Pellet Company and Gensym Corporation
     76.  Software License Agreement between National Steel Pellet Company and
          Matrikon Inc.

                                       L-1



Section II of Schedule 5.4 of the Disclosure Schedule is hereby amended to
include the following items:

     28.  Software License Agreement between National Steel Pellet Company and
          Split Engineering, LLC
     29.  License Agreement between National Steel Pellet Company and Crystal
          Decisions, Inc.
     30.  Software License, Services and Maintenance Agreement between National
          Steel Pellet Company and J.D. Edwards World Solutions Company
     31.  Limited Use Software License Agreement between National Steel Pellet
          Company and Lucent Technologies
     32.  License Agreement between National Steel Pellet Company and Xerox
          Corporation
     33.  End-User License Agreements between National Steel Pellet Company and
          Intellution
     34.  Software License Agreements between National Steel Pellet Company and
          Caterpillar Inc.
     35.  License Agreement between National Steel Pellet Company and
          Help/Systems
     36.  Software License Agreement between National Steel Pellet Company and
          Schneider Automation Inc.
     37.  Software License Agreement, dated December 9, 1999, between Klinge &
          Co Pty Ltd and Michelin North America, for equipment located at
          National Steel Pellet Company

Section III of Schedule 5.4 of the Disclosure Schedule is hereby amended to
include the following items:

     9.   Master License Agreement, dated February 21, 1995, between National
          Steel Pellet Company and Marcam Corporation

Section IV of Schedule 5.4 of the Disclosure Schedule is hereby amended to
include the following items:

     10.  Agreement between National Steel Pellet Company and Ban-Koe Companies
     11.  Open License Agreements between National Steel Pellet Company and
          Microsoft Corp.
     12.  Software License Agreement between National Steel Pellet Company and
          Rasterex (International) a.s
     13.  Software License Agreement between National Steel Pellet Company and
          Adaptec, Inc.

Section V of Schedule 5.4 of the Disclosure Schedule is hereby amended to
include the following items:

                                       L-2



     18.  Software License Agreement (WeatherLink) between National Steel Pellet
          Company and Davis Instruments Corp.
     19.  Software Agreement (Lotus SmartSuite) between National Steel Pellet
          Company and Lotus Development Corporation
     20.  License Agreements between National Steel Pellet Company and
          International Business Machines Corporation*******
     21.  License Agreements (Adobe Acrobat) between National Steel Pellet
          Company and Adobe Systems Inc.
     22.  Open License Agreements between National Steel Pellet Company and
          Microsoft Corporation***** ******
     23.  License Agreement between National Steel Pellet Company and Dazzle
          Inc.
     24.  Program License Agreement between National Steel Pellet Company and
          IMSI
     25.  Software License Agreement between National Steel Pellet Company and
          Digital Origin
     26.  Software License Agreement between National Steel Pellet Company and
          Knowledgepoint
     27.  Software License Agreement (WebJetAdmin) between National Steel Pellet
          Company and Hewlett-Packard Company
     28.  Software License Agreement between National Steel Pellet Company and
          Wall Data Inc.
     29.  License Agreements between National Steel Pellet Company and Visio
          Corporation
     30.  End-User License Agreement (Visio Pro) between National Steel Pellet
          Company and Microsoft Corporation
     31.  End User License Agreement between National Steel Pellet Company and
          ScanSoft, Inc.
     32.  Customer Agreement between National Steel Pellet Company and Quadrant
          Software*******
     33.  Agreement between National Steel Pellet Company and Rockwell Software
          Inc.*****
     34.  Agreement between National Steel Pellet Company and Digital Equipment
          Corporation

*******may require transfer with specific machine to which software is initially
authorized

Section VI of Schedule 5.4 of the Disclosure Schedule is hereby amended to
include the following items:

     4.   Consent of Federal Communications Commission to transfer of Radio
          Station License (Call Sign WPHH785)
     5.   Consent of Federal Communications Commission to transfer of Radio
          Station Authorization (Call Sign WNRD611)
     6.   Consent of Federal Communications Commission to transfer of Radio
          Station Authorization (Call Sign KAF691)

                                       L-3



                                    Exhibit M

Schedule 5.6(a) of the Disclosure Schedule is hereby amended to include the
following items:

National Steel Pellet Company Proprietary Software

NATIONAL STEEL PELLET COMPANY



Location Code/Area                    Application                         System Environment
- -------------------------------------------------------------------------------------------------------------
                                                                    
Accounts Payable                      1099Misc                            AS/400, RPG, CLP (information
                                                                          source: Avantis.XA Accounts
                                                                          Payable)
- -------------------------------------------------------------------------------------------------------------
Accounts Payable, Financial           Sales Tax Refund                    AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Employee Information                AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Employee Progression                AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Employee Protection Plan            AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Group Insurance                     AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Hourly Employee Absenteeism         AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       MSHA Employee Equipment Training    AS/400, RPG, CLP
                                      Records
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Overtime Equalization               AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Pensions - Hourly & Salaried        AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Service Recognition                 AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources                       Workers Compensation                AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Hourly Employee Rate                AS/400, RPG, CLP
                                      Calculations: Special Retirement,
                                      Sub, Vacation
- -------------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Major Medical Reimbursements        AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Pensionable Earnings                AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Safety & Accident                   AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Surviving Spouse Benefits, 1099-R   AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Vacation Eligibility                AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Human Resources, Payroll              Voluntary Group Life Insurance      AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Maintenance Shop                      Heavy Equipment Hours and           AS/400, RPG, CLP
                                      Descriptions
- -------------------------------------------------------------------------------------------------------------
Payroll                               401(k)                              AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------


                                       M-1



NATIONAL STEEL PELLET COMPANY



Location Code/Area                    Application                         System Environment
- -------------------------------------------------------------------------------------------------------------
                                                                    
Payroll                               Hourly Payroll: Deductions,         AS/400, RPG, CLP
                                      Direct Deposit, Incentives, Shoe
                                      Allowance, Timecards, Vacations,
                                      W-2, Labor Distribution, Union
                                      Dues
- -------------------------------------------------------------------------------------------------------------
Payroll, Financial                    Savings Bonds                       AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Payroll, Financial                    State Quarterly Reporting           AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Payroll, Human Resources              Supplemental Unemployment Benefits  AS/400, RPG, CLP, MS Access
- -------------------------------------------------------------------------------------------------------------
Plant, Mine                           Production Reporting                Client-Server, MS Access, SQL
                                                                          Server, Crystal Reports
- -------------------------------------------------------------------------------------------------------------
Purchasing, Maintenance Shop          Rolling Stock                       AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Safety                                Accident Reporting                  AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------
Safety                                Cardinal Rules of Safety -          AS/400, RPG, CLP
                                      Violations
- -------------------------------------------------------------------------------------------------------------
Safety                                MSDS                                AS/400, RPG, CLP
- -------------------------------------------------------------------------------------------------------------


                                       M-2



                                    Exhibit N

Section (ii)3. of Schedule 5.6(b) of the Disclosure Schedule is hereby amended
to include the following items:

        NATIONAL STEEL PELLET COMPANY
- --------------------------------------------------------------------------------
                   VENDOR                               PRODUCT
- --------------------------------------------------------------------------------
Adaptec                                    Easy CD Pro
- --------------------------------------------------------------------------------
Adobe                                      Acrobat
- --------------------------------------------------------------------------------
Media 100/Digital Origin                   Moto DV
- --------------------------------------------------------------------------------
Autodesk                                   AutoCAD
- --------------------------------------------------------------------------------
Autodesk                                   AutoCAD LT
- --------------------------------------------------------------------------------
Autodesk                                   AutoCAD Mechanical
- --------------------------------------------------------------------------------
Autodesk                                   VoloView
- --------------------------------------------------------------------------------
Ban-Koe/ID America Group                   IVIS Plus
- --------------------------------------------------------------------------------
Burns International Security Services -    TOCO Plus
Custom Application
- --------------------------------------------------------------------------------
Custom Application                         AS/400 (various applications)
- --------------------------------------------------------------------------------
Caterpillar                                Caterpillar Electronic Technician
                                           (Truckshop)
- --------------------------------------------------------------------------------
Caterpillar - Custom Application           VIMS (Truckshop) PC
- --------------------------------------------------------------------------------
Davis Instruments                          Weatherlink
- --------------------------------------------------------------------------------
Dazzle                                     Moviestar Digital Video Creator
- --------------------------------------------------------------------------------
DEC/Compaq                                 Digital Visual Fortran
- --------------------------------------------------------------------------------
Dingo Maintenance Systems                  FLEETOIL
- --------------------------------------------------------------------------------
Entek/Rockwell Automation                  Odyssey with Centura for NT
- --------------------------------------------------------------------------------
Freeware (protocol created by Columbia     Kermit
University)
- --------------------------------------------------------------------------------
GemCom                                     Surveying Software
- --------------------------------------------------------------------------------
Gensym                                     G2/GDA/NeurOn-Line Studio/Telewindows
- --------------------------------------------------------------------------------
Global Atmospherics/Vaisala                V.I.S. (Lightening Detection)
- --------------------------------------------------------------------------------
Graysoft                                   GS-Comm 5
- --------------------------------------------------------------------------------
Graysoft                                   Symate Plus
- --------------------------------------------------------------------------------
HC Mingham-Smith LTD                       Tardis Time Synchronization
                                           Software
- --------------------------------------------------------------------------------
Hewlett-Packard                            Web Jet Administration
- --------------------------------------------------------------------------------
Hyperion                                   Pillar
- --------------------------------------------------------------------------------
IBM                                        AS/400 Client Access for
                                           Windows 95/NT
- --------------------------------------------------------------------------------
IBM                                        AS/400 Client Access Express
- --------------------------------------------------------------------------------
IBM                                        OS/400
- --------------------------------------------------------------------------------
IMSI                                       People Scheduler
- --------------------------------------------------------------------------------
Intellution/GE Fanuc Automation            Fix32
- --------------------------------------------------------------------------------
Intellution/GE Fanuc Automation            PlantTV
- --------------------------------------------------------------------------------
Invensys                                   Avantis.XA
- --------------------------------------------------------------------------------
J.D. Edwards                               J.D. Edwards Financials
- --------------------------------------------------------------------------------

                                       N-1



        NATIONAL STEEL PELLET COMPANY
- --------------------------------------------------------------------------------
                   VENDOR                                PRODUCT
- --------------------------------------------------------------------------------
Klinge                                       Total Tyre Control
- --------------------------------------------------------------------------------
Knowledge Point                              Descriptions Now
- --------------------------------------------------------------------------------
Knowledge Point                              Performance Now
- --------------------------------------------------------------------------------
Kronos                                       Workforce Central
- --------------------------------------------------------------------------------
Lotus/IBM                                    SmartSuite 97
- --------------------------------------------------------------------------------
Lotus/IBM                                    SmartSuite Millenium
- --------------------------------------------------------------------------------
Lucent                                       Terranova ECS Administration
- --------------------------------------------------------------------------------
Matrikon                                     G2-Fix Bridge
- --------------------------------------------------------------------------------
Microsoft                                    Exchange Server
- --------------------------------------------------------------------------------
Microsoft                                    Internet Explorer
- --------------------------------------------------------------------------------
Microsoft                                    Office 97 Professional
- --------------------------------------------------------------------------------
Microsoft                                    Office 97 Standard
- --------------------------------------------------------------------------------
Microsoft                                    Office 2000 Premium
- --------------------------------------------------------------------------------
Microsoft                                    Office 2000 Professional
- --------------------------------------------------------------------------------
Microsoft                                    Project
- --------------------------------------------------------------------------------
Microsoft                                    SQL Server
- --------------------------------------------------------------------------------
Microsoft                                    Visual InterDev
- --------------------------------------------------------------------------------
Microsoft                                    Visual Studio 97
- --------------------------------------------------------------------------------
Microsoft                                    Windows 95
- --------------------------------------------------------------------------------
Microsoft                                    Windows 95 OSR2
- --------------------------------------------------------------------------------
Microsoft                                    Windows 98
- --------------------------------------------------------------------------------
Microsoft                                    Windows 2000
- --------------------------------------------------------------------------------
Microsoft                                    Windows NT Server/2000 Server
- --------------------------------------------------------------------------------
Microsoft                                    Windows NT Workstation
- --------------------------------------------------------------------------------
Modular Mining                               Solaris-Backup (Dispatch)
- --------------------------------------------------------------------------------
Modular Mining                               Solaris-Control (Dispatch)
- --------------------------------------------------------------------------------
Oil Analysis Lab Inc. - Custom Application   OILDATA
- --------------------------------------------------------------------------------
PERI/Split Engineering - Custom Application  Split OnLine
- --------------------------------------------------------------------------------
Primavera                                    SureTrak
- --------------------------------------------------------------------------------
Quadrant Software                            Fast Fax/Blue
- --------------------------------------------------------------------------------
Quadtec - Custom Application                 Quadtec Spyrometer
- --------------------------------------------------------------------------------
RangeOneGroup - Custom Application           DrawDocs
- --------------------------------------------------------------------------------
Rasterex                                     RxView/RxHighlight/RxIndex
- --------------------------------------------------------------------------------
Rockwell                                     RS Linx
- --------------------------------------------------------------------------------
Schneider Electric                           Quantum Concept XL - Modicon
- --------------------------------------------------------------------------------
Seagate                                      Crystal Reports Professional
- --------------------------------------------------------------------------------
Siemens                                      Phone Mail System
- --------------------------------------------------------------------------------
Sophisticated Circuits                       Kick-Off
- --------------------------------------------------------------------------------
SquareD/Schneider Electric                   SyMate Plus
- --------------------------------------------------------------------------------

                                       N-2



        NATIONAL STEEL PELLET COMPANY
- --------------------------------------------------------------------------------
                   VENDOR                                PRODUCT
- --------------------------------------------------------------------------------
Symantec                                     Norton Antivirus Corporate Edition
- --------------------------------------------------------------------------------
Symantec                                     PC Anywhere
- --------------------------------------------------------------------------------
Symantec                                     Win Fax Pro
- --------------------------------------------------------------------------------
SynApp North - Custom Application            MSDS
- --------------------------------------------------------------------------------
SynApp North - Custom Application            Web Log
- --------------------------------------------------------------------------------
Texas Nuclear/TN Technologies/Thermo         CALIB.EXE (NOLA)
MeasureTech - Custom Application
- --------------------------------------------------------------------------------
Texas Nuclear/TN Technologies/Thermo         NALA.EXE
MeasureTech  - Custom Application
- --------------------------------------------------------------------------------
Texas Nuclear/TN Technologies/Thermo         NOLA 1.9.2 TN Tech. 1994
Measure Tech - Custom Application
- --------------------------------------------------------------------------------
Thunderbird Pacific Corp. - Custom           Stratalogger
Application
- --------------------------------------------------------------------------------
Trisys                                       Tapit 2000
- --------------------------------------------------------------------------------
Trisys                                       Tapit EX
- --------------------------------------------------------------------------------
T.L. Ashford                                 T.L. Ashford Barcoding
- --------------------------------------------------------------------------------
Trimble                                      Trimble Office
- --------------------------------------------------------------------------------
Trimble                                      Trimble Survey
- --------------------------------------------------------------------------------
Visio/Microsoft                              Visio Professional
- --------------------------------------------------------------------------------
Visio/Microsoft                              Visio Standard
- --------------------------------------------------------------------------------
Visio/Microsoft                              Visio Technical
- --------------------------------------------------------------------------------
Wall Data                                    Rumba 2000 for MS SNA
- --------------------------------------------------------------------------------
WEW Associates - Custom Application          NATIONAL.EXE
- --------------------------------------------------------------------------------
WRQ                                          Reflection X
- --------------------------------------------------------------------------------
Xerox                                        Centre Ware
- --------------------------------------------------------------------------------
Xerox                                        Text Bridge Pro
- --------------------------------------------------------------------------------

                                       N-3



                                    Exhibit O

Schedule 5.7 of the Disclosure Schedule is hereby amended to include the
following items:

Minnesota OSHA matters - National Steel Pellet Company



                               SIGNIFICANT AND
                                 SUBSTANTIAL                    SUMMARY OF SIGNIFICANT
         INSPECTION               CITATIONS                    AND SUBSTANTIAL CITATIONS
- ------------------------------------------------------------------------------------------------------
                                            
2003 Initial Inspection          4 Citations      Oil spill, maintenance pit not completely railed
                                                  off, employee violations
- ------------------------------------------------------------------------------------------------------
2002 Second Inspection           9 Citations      Fire hose tripping hazard, employee violations,
                                                  broken trouble light, no handrails on work
                                                  platform, poor housekeeping
- ------------------------------------------------------------------------------------------------------
2001 Second Inspection           45 Citations     Spillages, poor housekeeping, tripping hazards,
                                                  guards not maintained, employee violations, fall
                                                  hazards, back up alarms not maintained
- ------------------------------------------------------------------------------------------------------


                                       O-1



                                    Exhibit P

Schedule 5.8(a) of the Disclosure Schedule is hereby amended to include the
following items:

National Steel Pellet Company Owned Real Property
1.       All lands owned in fee by the Company, National Steel Pellet Company
         and Hanna Ore Mining Company in and near Keewatin, Minnesota and used
         in connection with the operation of the National Steel Pellet Company
         Taconite Plant located in both Itasca County, Minnesota and St. Louis
         County, Minnesota and in Townships Fifty-six (56) and Fifty-seven (57)
         North, Range Twenty-one (21) and Twenty-two (22) West.

National Steel Pellet Company Leased Real Property
1.   Mississippi #1 Mine Lease (No. 2095-N), dated October 3, 1960, between
     National Steel Pellet Company and the State of Minnesota, including
     amendments thereto
2.   Stein Mine Lease (No. 3097-N), dated June 3, 1993, between National Steel
     Pellet Company and the State of Minnesota, including amendment thereto
3.   Mesabi Chief Mine Lease (No. 3098-N), dated June 3, 1993, between National
     Steel Pellet Company and the State of Minnesota, including amendment
     thereto
4.   Mississippi #2 Mine Lease (No. 3099-N), dated June 3, 1993, between
     National Steel Pellet Company and the State of Minnesota, including
     amendment thereto
5.   Bennett Mine Lease, effective as of January 1, 1966, between Keewatin
     Mining Company and the Company and Amended and Restated Bennett Mine
     Operating Agreement, effective as of July 1, 1994, between Keewatin Company
     and the Company.
6.   Russell Mine Lease, effective as of January 1, 1966, as amended on January
     1, 1970 and Amended and Restated Russell Mine Operating Agreement,
     effective as of July 1, 1994, between Sargent Land Company Limited
     Partnership and the Company.
7.   Russell Annex Lease, effective as of January 1, 1966, between the Trustees
     of the Trust known as Great Northern Iron Ore Properties, Trustees of the
     Trust of James G. Bennett 1944 Mineral Interests, J. M. Longyear Heirs and
     the Company and the Amended and Restated Russell Annex Operating Agreement,
     effective July 1, 1994, between the Trustees of the Trust known as Great
     Northern Iron Ore Properties, J. M. Longyear Heirs, A Limited Partnership
     and the Company, as amended by the Letter of Intent, dated February 13,
     1996.
8.   Pooling Agreement, effective as of January 1, 1966, between Sargent Land
     Company, Hanna Ore Mining Company, The Hanna Mining Company, Butler
     Brothers and the Company.
9.   South Stevenson Mine Lease, effective April 1, 1966, between Great Northern
     Iron Properties and the Company and South Stevenson Operating Agreement,
     effective April 1, 1966, between Great Northern Iron Properties and the
     Company, including amendments thereto.

                                       P-1



10.  Bennett Annex Lease, dated October 12, 1965, between Great Northern Iron
     Ore Properties and the Company.
11.  Carmi-Campbell Lease and Operating Agreement, dated July 1, 1959, between
     Great Northern Iron Ore Properties and The Hanna Mining Company, including
     amendments thereto and Assignment and Assumption Agreement, dated January
     12, 1988, between M.A. Hanna Company, formerly The Hanna Mining Company,
     and Hanna Iron Ore Division of the Company.
12.  Indenture of Lease (Grant Mine), dated April 1, 1962, between Great
     Northern Iron Ore Properties and The Hanna Mining Company and Operating
     Agreement (Grant Mine), dated April 1, 1962, between Great Northern Iron
     Ore Properties and The Hanna Mining Company, including amendments thereto
     and Sublease of Indenture of Lease (Grant Mine), dated January 1, 1975,
     between The Hanna Mining Company and National Steel Pellet Company.
13.  Northern Pacific Railway Company Mining Lease, effective January 1, 1966,
     between Northern Pacific Railway Company and Hanna Ore Mining Company and
     Sublease of Northern Pacific Railway Company Mining Lease, dated February
     26, 1979, between Hanna Ore Mining Company and National Steel Pellet
     Company.
14.  Indenture of Sublease (Ontario Reserve Sublease), dated May 1, 1981,
     between Bethlehem Hibbing Corporation, Pickands Mather & Co., Ontario
     Hibbing Company, Hibbing Development Company and the Company and Sublease
     of the Indenture of Sublease, dated October 6, 1981, between the Company
     and National Steel Pellet Company
15.  St. Paul Day Lease, dated January 1, 1966, between National Realty Company,
     The Henapeg Company, the Executors of the Estate of Herbert W. Rogers,
     Catherine Wallin and Theodore F.J. Wallin, Irma McCall, Ada Adair Willard,
     Paul D. Willard, Jr. and Leone Willard, Jean Adair Wortz and James M.
     Wortz, Fred B. Day and Ruth L. Day, Evelyn A. Day, Elizabeth Solberg Mohr
     and G.E. Mohr, Catherine Solberg DeJarlais and E.E. DeJarlais, Margaret
     Solberg Sell and Charles A. Sell, Janet D. Lee and Richard Lee, Diane D.
     Vessey and Jerry Vessey, Kathleen Elizabeth Day, Philip Bradley Theisen and
     Jane Theisen, Thomas George Theisen and Donna Theisen, John Hayne Day,
     Barbara Mary Day, Robert Christopher Day, Mary M. Henschel and William
     Henschel, Elizabeth M. Curtis and Carl F. Curtis, Patricia Ann Paczesniak
     and Brian A. Paczesniak, Shirley C. Carlson and Duane Carlson and Hanna Ore
     Mining Company.
16.  Amended Sargent Mine Lease, dated June 3, 1973, between Sargent Land
     Company and Hanna Ore Mining Company and Sargent Mine Operating Agreement,
     effective January 1, 1970, between Sargent Land Company and Hanna Ore
     Mining Company, including amendments thereto.
17.  Great Northern Pooling Agreement, dated July 11, 1963, between Great
     Northern Iron Ore Properties and the Company.
18.  Mining Lease of the Stevenson Mine, effective January 1, 1961, between
     Great Northern Iron Ore Properties and the Company and Mining Lease of the
     Stevenson Addition Mine, effective January 1, 1961, between Great Northern
     Iron Ore Properties and the Company and Mining Lease of the Section 18
     Mine,

                                       P-2



     effective January 1, 1961, between Great Northern Iron Ore Properties and
     the Company and Mining Lease of the Section 18 Extension Mine, effective
     January 1, 1961, between Great Northern Iron Ore Properties and the Company
     and Mining Lease of the Mississippi #3 Mine, effective January 1, 1961,
     between Great Northern Iron Ore Properties and the Company and the
     Operating Agreement, effective January 1, 1961, between Great Northern Iron
     Ore Properties, Hanna Ore Mining Company and the Company, including
     amendments thereto.
19.  Sublease of Bennett Annex Mine Lease, Russell Mine Lease, Bennett Mine
     Lease, Russell Annex Lease, South Stevenson Mine Lease, Section 18 Mine
     Lease, Section 18 Extension Mine Lease, Stevenson Mine Lease and Stevenson
     Addition Mine Lease, dated January 1, 1975, between the Company and
     National Steel Pellet Company.

                                       P-3



                                    Exhibit Q

Schedule 5.10(a)(i) of the Disclosure Schedule is hereby amended include the
following items:



                                                                                    AMOUNT         AMOUNT
                                                                                   NOT PAID       NOT PAID
                                                                                   PRIOR TO     AFTER FILING     TOTAL
            PAYEE         COMPANY       TAX TYPE           TAX PERIOD            FILING CH 11    CHAPTER 11    NOT PAID
                                                                                             
COUNTY PROPERTY TAXES
Crow Wing County        NSPC           Property Tax   Based On 1/1/01-12/31/01           0.00         251.98
Itasca County           NSPC,HIO,HOM   Property Tax   Based On 1/1/01-12/31/01           0.00      31,633.60
St.Louis Count          NSPC,HIO,HOM   Property Tax   Based On 1/1/01-12/31/01           0.00      60,211.18

                                                                                 ---------------------------------------
                                                                                         0.00      92,096.76   92,096.76


                                       Q-1



                                    Exhibit R

Section 5 of Schedule 5.11 of the Disclosure Schedule is hereby amended and
restated in its entirety to read as follows:

     5. Employee Grievance Claims (as of September 30, 2002):



     Location        1/st/ Step      2/nd/ Step    3/rd/ Step    Arbitration    Total
     --------------------------------------------------------------------------------
                                                                
     Great Lakes            23           415        6,887              187      7,512
     Midwest               760           537          220               94      1,611
     Granite City          322            89          693              197      1,301
     NSPC                    0             0           17               49         66
     Headquarters            1             0            1                0          2
     Total               1,106         1,041        7,818              527     10,492
     --------------------------------------------------------------------------------


Section 6 of Schedule 5.11 of the Disclosure Schedule is hereby amended and
restated in its entirety to read as follows:

     6. Workers' Compensation Claims (as of September 30, 2002):



                         Open Claims - Not in        Open Claims - In
     Location                  Dispute                   Dispute            Total
     --------------------------------------------------------------------------------
                                                                     
     Great Lakes                       151                      69            220
     Midwest                            14                       0             14
     Granite City                       79                     357            436
     NSPC                               73                      22             95
     Headquarters                        0                       0              0
     Total                             317                     448            765
     --------------------------------------------------------------------------------


                                       R-1



                                    Exhibit S

Schedule 5.13 of the Disclosure Schedule is hereby amended to include the
following items:

NATIONAL STEEL PELLET COMPANY
       TYPE OF LITIGATION                                PLAINTIFF
- --------------------------------------------------------------------------------
Human Resources                              D. Johnson
- --------------------------------------------------------------------------------
Personal Injury                              Christensen
- --------------------------------------------------------------------------------
Commercial                                   Bigelow
- --------------------------------------------------------------------------------
Environmental                                City of Hibbing
- --------------------------------------------------------------------------------

                                       S-1



                                    Exhibit T

Section I.B of Schedule 5.14 of the Disclosure Schedule is hereby amended and
restated in its entirety to read as follows:

     B. Significant Suppliers

          1. 2001 Significant Suppliers

                RANK                           SUPPLIER
            --------------------------------------------------
                 1        EES Coke Battery Company, Inc.
            --------------------------------------------------
                 2        Precoat Metals
            --------------------------------------------------
                 3        Jewell Coke Co., LP
            --------------------------------------------------
                 4        Tube City, Inc.
            --------------------------------------------------
                 5        The Detroit Edison Company
            --------------------------------------------------
                 6        Burlington Northern Railroad Company
            --------------------------------------------------
                 7        Norfolk Southern Railway Company
            --------------------------------------------------
                 8        Ontario Hibbing Company
            --------------------------------------------------
                 9        Catex Energy Inc.
            --------------------------------------------------
                 10       Minnesota Power
            --------------------------------------------------

          2. 2002 Significant Suppliers (YTD September 30, 2002)

                RANK                          SUPPLIER
            ---------------------------------------------------------------
                 1        EES Coke Battery Company, Inc.
            ---------------------------------------------------------------
                 2        Precoat Metals
            ---------------------------------------------------------------
                 3        Tube City, Inc.
            ---------------------------------------------------------------
                 4        Burlington Northern Railroad Company
            ---------------------------------------------------------------
                 5        US Steel Corporation
            ---------------------------------------------------------------
                 6        The Detroit Edison Company
            ---------------------------------------------------------------
                 7        Norfolk Southern Railway Company
            ---------------------------------------------------------------
                 8        Big River Zinc Corp.
            ---------------------------------------------------------------
                 9        AEP Energy Services, Inc.
            ---------------------------------------------------------------
                 10       Minnesota Power
            ---------------------------------------------------------------

                                       T-1



                                    Exhibit U

                                  SCHEDULE 5.15
                               ACCOUNTS RECEIVABLE
                             AS OF NOVEMBER 30, 2002



 MARKET                      CUSTOMER NAME                     TOTAL OWED       1 TO 30       31 TO 60       61 TO 90    91 TO 120
- ----------     --------------------------------------------   ------------   ------------   -----------   -----------   -----------
                                                                                                      
Automotive     General Motors Corp                            9,729,867.37   7,425,939.13    437,171.98    202,386.29    322,838.59
Automotive     Ford                                           9,623,160.03   9,302,688.11    116,711.92    512,921.21    215,594.80
Automotive     Toyota Motor Mfg                               6,522,424.11   4,733,779.22    631,448.38    645,840.68    185,222.44
Automotive     Chrysler                                       3,882,568.59   4,144,307.77     47,045.69    (12,006.96)  (302,807.95)
Automotive     Toyota Motor Mfg Canada Inc                    1,592,463.37   1,309,019.05    200,955.17     34,229.18     59,726.98
Automotive     Arvin Sango Inc                                1,184,019.17     647,631.60    478,901.01     57,486.56             -
Automotive     Modern Tool & Die                                937,320.18     284,308.30    448,898.76     79,771.96     82,279.38
Automotive     Taylor Steel Inc                                 909,467.30     212,344.24    433,898.48    130,582.72      6,583.92
Automotive     Ogihara America Corp                             851,298.25     537,318.48    313,979.77             -             -
Automotive     Nissho Iwai American Corp                        730,194.39     370,075.06    350,192.69             -             -
Automotive     Toyota Tsusho America Inc - Torrance             673,722.97     548,941.75    122,396.68             -             -
Automotive     Millennium Steel Service L L C                   542,684.51     555,109.98             -             -     (8,387.54)
Automotive     Meridian Automotive Systems-Ionia                471,832.28     219,837.05    108,981.12     16,140.60     41,944.22
Automotive     Transform Automotive L L C                       394,831.84     149,582.10    245,249.74             -             -
Automotive     Marubeni-Itochu Steel America Inc                379,410.12     235,680.11    132,891.84             -             -
Automotive     Steel Technologies De Mexico SA CV               156,254.12              -             -             -     43,821.97
Automotive     Mace Metal Sales Inc                             144,185.03     136,871.67      7,313.36             -             -
Automotive     Magna International                              132,546.72      54,716.63     22,190.65     27,857.79     23,194.75
Automotive     Berwick Steel Co                                 102,483.35      53,322.88     49,160.47             -             -
Automotive     Auto Alliance International Inc                   66,762.94      23,083.32     39,242.12     23,552.92             -
Automotive     Subaru-Isuzu Automotive Group                     64,790.60      64,790.60             -             -             -
Automotive     Msc Laminates & Composites                        62,643.90      10,415.50             -             -             -
Automotive     New Center Stamping Inc                           43,725.12              -     43,725.12             -             -
Automotive     Nissho Iwai Canada Ltd                            40,242.47      40,242.47             -             -             -


  MARKET                     CUSTOMER NAME                     121 TO 150     151 TO 180        181+
- ----------     --------------------------------------------   ------------   ------------   -------------
                                                                                
Automotive     General Motors Corp                               70,902.23   1,089,940.38      180,688.77
Automotive     Ford                                             291,061.92   1,747,807.16   (2,563,625.09)
Automotive     Toyota Motor Mfg                                  59,970.17      60,390.32      205,772.90
Automotive     Chrysler                                         154,311.81      86,342.17     (234,623.94)
Automotive     Toyota Motor Mfg Canada Inc                       12,420.27              -      (23,887.28)
Automotive     Arvin Sango Inc                                           -              -               -
Automotive     Modern Tool & Die                                         -      33,417.10        8,644.68
Automotive     Taylor Steel Inc                                          -      18,264.38      107,793.56
Automotive     Ogihara America Corp                                      -              -               -
Automotive     Nissho Iwai American Corp                          9,926.64              -               -
Automotive     Toyota Tsusho America Inc - Torrance                      -              -        2,384.54
Automotive     Millennium Steel Service L L C                            -      (4,037.93)              -
Automotive     Meridian Automotive Systems-Ionia                 19,125.37      38,146.67       27,657.25
Automotive     Transform Automotive L L C                                -              -               -
Automotive     Marubeni-Itochu Steel America Inc                 10,838.17              -               -
Automotive     Steel Technologies De Mexico SA CV                        -              -      112,432.15
Automotive     Mace Metal Sales Inc                                      -              -               -
Automotive     Magna International                                       -              -        4,586.90
Automotive     Berwick Steel Co                                          -              -               -
Automotive     Auto Alliance International Inc                    (149.60)       8,428.35      (27,394.17)
Automotive     Subaru-Isuzu Automotive Group                             -              -               -
Automotive     Msc Laminates & Composites                                -              -       52,228.40
Automotive     New Center Stamping Inc                                   -              -               -
Automotive     Nissho Iwai Canada Ltd                                    -              -               -


                                       U-1





  MARKET                     CUSTOMER NAME                     TOTAL OWED      1 TO 30       31 TO 60     61 TO 90     91 TO 120
- ----------     --------------------------------------------   ------------   -----------   -----------   -----------   ----------
                                                                                                      
Automotive     Midway Products                                   20,203.30      6,029.35             -             -            -
Automotive     Lapeer Metal Stamping Co                          19,837.20     19,837.20             -             -            -
Automotive     Mitsui & Co (USA) Inc                             18,673.76             -      5,950.80             -            -
Automotive     Shiloh Ind - Wellington Stamping Div              18,408.60             -             -             -            -
Automotive     Nissan North America                              14,588.95      8,868.83      5,720.12             -            -
Automotive     Die-Matic Corp                                     9,510.76      9,510.76             -             -            -
Automotive     Talon Automotive Group                             8,460.42             -             -             -            -
Automotive     Thyssen Inc                                        6,284.61             -     39,154.05             -            -
Automotive     Pullman Industries                                 4,809.24             -      4,809.24             -            -
Automotive     Flex-N-Gate Stamping                               4,111.08      4,111.08             -             -            -
Automotive     Volunteer Automotive                               1,950.30      1,950.30             -             -            -
Automotive     Kentucky Steel Center Inc                        (49,183.99)   (49,183.99)            -             -            -
By Product     Mid-Continent Coal & Coke Co                   1,481,076.20    881,246.80    325,000.00    274,829.40            -
By Product     Tube City Inc                                  1,052,404.89     52,320.13    134,664.03     57,510.04    10,250.63
By Product     Sequa Corporation                                705,286.15    295,460.66     90,276.49     22,906.77    19,720.23
By Product     Imco Recycling                                   360,307.76    111,547.24   (126,209.43)   102,072.08    50,682.47
By Product     Railworks Wood Products Inc                      280,529.45    280,529.45             -             -            -
By Product     Behr Iron & Steel Co                             274,859.04    736,077.37   (354,587.34)  (100,990.21)     (153.66)
By Product     Arvin Industries                                 270,286.22     58,860.10     10,611.50      8,156.70    16,741.85
By Product     Taylor Steel Inc                                 121,412.25      2,450.00     55,468.78     63,493.47            -
By Product     Reilly Industries                                117,775.13    117,775.13             -             -            -
By Product     Philips Services                                  90,807.60   (225,554.14)    76,990.22      5,695.60       622.05
By Product     Hickman Williams                                  83,639.73     83,639.73             -             -            -
By Product     Marathon Ashland Petroleum Co L L C               82,881.56     82,881.56             -             -            -
By Product     Roll Form Building Systems                        42,873.26             -             -             -            -
By Product     Hokin-Katz Metals Service                         10,126.05             -             -             -            -
By Product     Wilson Industrial Sales Co Inc                     8,779.98      8,779.98             -             -            -
By Product     West Homestead Engineering & Machine Co            7,805.36      7,805.36             -             -            -
By Product     Energy Marketing Services                          3,703.92      3,703.92             -             -            -
By Product     Duferco Steel Inc                                  1,402.50             -      1,402.50             -            -
By Product     Levand Steel & Supply Corp                            94.75         94.75             -             -            -


  MARKET                     CUSTOMER NAME                     121 TO 150    151 TO 180       181+
- ----------     --------------------------------------------   ------------   -----------   -----------
                                                                                
Automotive     Midway Products                                           -             -     14,173.95
Automotive     Lapeer Metal Stamping Co                                  -             -             -
Automotive     Mitsui & Co (USA) Inc                                     -             -     12,722.96
Automotive     Shiloh Ind - Wellington Stamping Div                      -             -     18,408.60
Automotive     Nissan North America                                      -             -             -
Automotive     Die-Matic Corp                                            -             -             -
Automotive     Talon Automotive Group                                    -             -      8,460.42
Automotive     Thyssen Inc                                               -             -    (32,869.44)
Automotive     Pullman Industries                                        -             -             -
Automotive     Flex-N-Gate Stamping                                      -             -             -
Automotive     Volunteer Automotive                                      -             -             -
Automotive     Kentucky Steel Center Inc                                 -             -             -
By Product     Mid-Continent Coal & Coke Co                              -             -             -
By Product     Tube City Inc                                             -             -    797,660.06
By Product     Sequa Corporation                                  5,098.46     (3,059.00)   274,882.54
By Product     Imco Recycling                                  (111,386.61)    24,032.54    309,569.47
By Product     Railworks Wood Products Inc                               -             -             -
By Product     Behr Iron & Steel Co                              (5,513.35)        26.23             -
By Product     Arvin Industries                                  15,363.40     14,231.00    146,321.67
By Product     Taylor Steel Inc                                          -             -             -
By Product     Reilly Industries                                         -             -             -
By Product     Philips Services                                   4,852.91             -    228,200.96
By Product     Hickman Williams                                          -             -             -
By Product     Marathon Ashland Petroleum Co L L C                       -             -             -
By Product     Roll Form Building Systems                                -             -     42,873.26
By Product     Hokin-Katz Metals Service                                 -             -     10,126.05
By Product     Wilson Industrial Sales Co Inc                            -             -             -
By Product     West Homestead Engineering & Machine Co                   -             -             -
By Product     Energy Marketing Services                                 -             -             -
By Product     Duferco Steel Inc                                         -             -             -
By Product     Levand Steel & Supply Corp                                -             -             -


                                       U-2





   MARKET                    CUSTOMER NAME                   TOTAL OWED       1 TO 30        31 TO 60       61 TO 90     91 TO 120
- ------------   ------------------------------------------   -------------   ------------   ------------   ------------   ----------
                                                                                                       
Construction   NCI Building Systems                         10,152,721.73   7,495,882.81   1,477,457.00     335,461.92   429,761.27
Construction   Interlock Industries                          7,442,495.50   6,809,057.21      98,525.87      29,573.46   162,453.95
Construction   Magnatrax                                     5,407,097.03   2,670,897.48   2,034,496.36       4,758.07    29,025.62
Construction   Butler Corporation                            5,011,382.25   1,532,201.11     917,236.66   2,636,292.06            -
Construction   Grupo IMSA                                    4,295,296.51   2,134,247.54   1,610,310.40      30,819.71    27,294.69
Construction   Mitsui                                        3,752,667.53   2,552,731.51     282,548.77     139,195.46   282,757.04
Construction   Mcelroy Metal Mill Inc                        3,710,469.72   3,006,934.14     327,647.42     161,041.11    73,846.95
Construction   Euramax International                         3,186,039.22   2,896,422.12      33,017.25      14,195.16    46,375.66
Construction   Midwest Manufacturing                         3,038,181.00   2,743,827.37      22,444.98              -    39,844.45
Construction   Southline Steel Industries Inc                2,634,974.32   1,626,149.53   1,007,593.59              -            -
Construction   Berridge Mfg Co                               2,224,600.25   1,299,021.55     336,847.61              -   406,932.87
Construction   Central States Mfg Inc                        1,735,562.19   1,727,706.95      31,737.23              -   (20,524.37)
Construction   Midwest Metal Coatings (Vp Bldgs)             1,575,865.93     988,614.31     549,800.04      37,451.58            -
Construction   Aep Span                                      1,224,941.43     648,868.02     576,073.41              -            -
Construction   Copper Sales Inc                              1,136,275.57     241,421.44     860,429.85      34,424.28            -
Construction   Mitek Industries Inc                          1,119,686.48   1,127,950.02              -              -            -
Construction   Union Corrugating Co                            766,300.02     752,118.22              -      14,795.83            -
Construction   Consolidated Systems Inc                        711,827.22     567,636.41     144,190.81              -            -
Construction   A C I Building Systems                          705,803.04     351,886.44     252,275.72      98,553.08            -
Construction   Mueller Supply Co Inc                           515,264.63     402,930.91     113,728.63       4,309.76            -
Construction   Marlyn Steel Decks Inc                          480,831.27     327,771.46     153,059.81              -            -
Construction   Baldwin Steel Co.                               480,545.95      40,306.75     434,970.32              -            -
Construction   Sheffield Metals                                461,342.82     282,881.17     178,461.65              -            -
Construction   Rigid Building Systems Ltd                      436,784.40     375,448.79      23,183.77       2,403.25    35,748.59
Construction   Everlast Roofing Inc                            433,234.34     433,134.03         100.31              -            -
Construction   Robertson - Ceco Corporation                    425,111.86     346,967.45      79,129.24              -            -
Construction   Ruffin Building Systems Inc                     406,336.98     238,686.22     167,650.76              -            -
Construction   Southern Structures Inc                         386,731.77      71,434.49     172,322.07              -            -
Construction   Morton Buildings Inc                            377,545.99     377,545.99              -              -            -
Construction   Whx Corporation                                 359,177.42      80,846.10     216,424.63              -       253.20
Construction   Steel Building Supply Inc                       337,529.50     140,731.89     171,864.92              -            -


  MARKET                     CUSTOMER NAME                   121 TO 150      151 TO 180        181+
- ------------   ------------------------------------------   -------------   ------------   ------------
                                                                                 
Construction   NCI Building Systems                             37,218.84      82,127.84     294,812.05
Construction   Interlock Industries                             21,853.46      14,687.45     306,344.10
Construction   Magnatrax                                        10,807.68              -     657,111.82
Construction   Butler Corporation                                       -              -     (74,347.58)
Construction   Grupo IMSA                                       14,562.99      31,001.31     447,059.87
Construction   Mitsui                                          209,474.32      75,317.49     210,642.94
Construction   Mcelroy Metal Mill Inc                           18,963.22      38,585.32      83,451.56
Construction   Euramax International                            28,156.21      52,165.39     115,707.43
Construction   Midwest Manufacturing                            58,420.80       7,673.98     165,969.42
Construction   Southline Steel Industries Inc                           -              -       1,231.20
Construction   Berridge Mfg Co                                          -     142,226.44      39,571.78
Construction   Central States Mfg Inc                                   -              -      (3,357.62)
Construction   Midwest Metal Coatings (Vp Bldgs)                        -              -              -
Construction   Aep Span                                                 -              -              -
Construction   Copper Sales Inc                                         -              -              -
Construction   Mitek Industries Inc                                     -              -      (8,263.54)
Construction   Union Corrugating Co                                     -              -        (614.03)
Construction   Consolidated Systems Inc                                 -              -              -
Construction   A C I Building Systems                            3,087.80              -              -
Construction   Mueller Supply Co Inc                                    -              -      (5,704.67)
Construction   Marlyn Steel Decks Inc                                   -              -              -
Construction   Baldwin Steel Co.                                        -              -       5,268.88
Construction   Sheffield Metals                                         -              -              -
Construction   Rigid Building Systems Ltd                               -              -              -
Construction   Everlast Roofing Inc                                     -              -              -
Construction   Robertson - Ceco Corporation                             -              -        (984.83)
Construction   Ruffin Building Systems Inc                              -              -              -
Construction   Southern Structures Inc                                  -              -     142,975.21
Construction   Morton Buildings Inc                                     -              -              -
Construction   Whx Corporation                                          -              -      61,653.49
Construction   Steel Building Supply Inc                                -      24,932.69              -


                                       U-3





  MARKET                     CUSTOMER NAME                   TOTAL OWED       1 TO 30        31 TO 60       61 TO 90     91 TO 120
- ------------   ------------------------------------------   -------------   ------------   ------------   ------------   ----------
                                                                                                        
Construction   Chief Industries                                300,136.81     277,299.80      22,837.01              -            -
Construction   Morin Corp                                      295,410.78     284,074.08              -      11,336.70            -
Construction   Alpine Engineered Products                      261,832.05     261,832.05              -              -            -
Construction   Steelox Systems Inc                             215,524.80     140,598.23      89,118.84     (14,192.27)           -
Construction   J. Mila Enterprises                             192,126.98      85,595.39      30,931.87      75,599.72            -
Construction   Alliance Steel Mfg Inc                          160,985.55     109,278.35      55,342.75              -            -
Construction   Aluma Shield Industries Inc                     151,404.13     151,404.13              -              -            -
Construction   Standard Structures Inc                         146,339.55     146,339.55              -              -            -
Construction   U S Door & Building Components Inc              142,693.67      64,318.08      47,797.46      30,578.13            -
Construction   Ctb Inc - Brock Grain & Feed Systems            122,167.48     122,167.48              -              -            -
Construction   Sunward Corp                                    100,676.02     100,676.08              -              -            -
Construction   Metalcor Inc                                     97,961.83      97,961.83              -              -            -
Construction   Edco Products Inc                                93,934.39     101,659.53              -              -    (7,698.14)
Construction   Worthington Armstrong Venture                    88,631.15      88,661.12              -              -            -
Construction   Barrington Manufacturing Corp                    83,022.88      38,898.23      44,124.65              -            -
Construction   Davco                                            82,334.16      82,334.16              -              -            -
Construction   Pacesetter Steel Service                         74,925.86     (21,115.65)      4,810.09              -     7,357.56
Construction   Nucor Steel                                      67,014.44      67,013.44              -              -            -
Construction   Ceco Building Systems                            64,128.12              -      64,128.12              -            -
Construction   New Process Steel Corporation                    62,730.30              -       2,074.32              -            -
Construction   Midland Metals Inc                               56,327.68      41,283.12      10,851.24              -            -
Construction   Florida Pre-Fab Inc                              55,091.47      55,091.47              -              -            -
Construction   Steel Service Building Co                        51,598.96      41,552.44      10,046.52              -            -
Construction   American Standard                                45,109.94              -              -              -            -
Construction   Taylor Metal Products Inc                        42,147.00       8,063.82      17,743.52      16,339.66            -
Construction   Jwd Interiors                                    42,006.12      33,238.39       8,767.73              -            -
Construction   Ebc Inc                                          41,659.60              -      32,209.69       9,449.91            -
Construction   Higgins Construction & Supply Co                 39,849.68      39,849.68              -              -            -
Construction   Metallic Products Inc                            39,153.25      28,250.28      28,113.08              -            -
Construction   Vulcan Steel Structures                          37,783.02      13,622.40              -      24,160.62            -
Construction   Union Electric Steel Corp                        36,290.40      36,290.40              -              -            -


  MARKET                       CUSTOMER NAME                 121 TO 150      151 TO 180        181+
- ----------     ------------------------------------------   -------------   ------------   ------------
                                                                                 
Construction   Chief Industries                                         -              -              -
Construction   Morin Corp                                               -              -              -
Construction   Alpine Engineered Products                               -              -              -
Construction   Steelox Systems Inc                                      -              -              -
Construction   J. Mila Enterprises                                      -              -              -
Construction   Alliance Steel Mfg Inc                                   -              -      (3,635.55)
Construction   Aluma Shield Industries Inc                              -              -              -
Construction   Standard Structures Inc                                  -              -              -
Construction   U S Door & Building Components Inc                       -              -              -
Construction   Ctb Inc - Brock Grain & Feed Systems                     -              -              -
Construction   Sunward Corp                                             -              -          (0.06)
Construction   Metalcor Inc                                             -              -              -
Construction   Edco Products Inc                                        -              -         (27.00)
Construction   Worthington Armstrong Venture                            -              -         (29.97)
Construction   Barrington Manufacturing Corp                            -              -              -
Construction   Davco                                                    -              -              -
Construction   Pacesetter Steel Service                                 -       2,173.72      81,700.14
Construction   Nucor Steel                                              -              -           1.00
Construction   Ceco Building Systems                                    -              -              -
Construction   New Process Steel Corporation                            -              -      60,655.98
Construction   Midland Metals Inc                                       -              -       4,193.32
Construction   Florida Pre-Fab Inc                                      -              -              -
Construction   Steel Service Building Co                                -              -              -
Construction   American Standard                                        -              -      45,109.94
Construction   Taylor Metal Products Inc                                -              -              -
Construction   Jwd Interiors                                            -              -              -
Construction   Ebc Inc                                                  -              -              -
Construction   Higgins Construction & Supply Co                         -              -              -
Construction   Metallic Products Inc                                    -              -     (17,210.11)
Construction   Vulcan Steel Structures                                  -              -              -
Construction   Union Electric Steel Corp                                -              -              -


                                       U-4





  MARKET                     CUSTOMER NAME                    TOTAL OWED        1 TO 30        31 TO 60      61 TO 90     91 TO 120
- ------------   -------------------------------------------   -------------   -------------   ------------   -----------   ---------
                                                                                                        
Construction   Components Plus                                   35,641.68               -              -             -           -
Construction   Central Texas Metal Roofing                       35,293.84       24,296.82       9,012.52             -           -
Construction   Mitsui Stl Dev Co Inc (Buildings)                 28,304.48       28,304.48              -             -           -
Construction   Dura-Loc Roofing Systems Ltd                      26,013.90               -              -             -   26,013.90
Construction   Sheridan Sheet Metal Co                           24,328.43       24,328.43              -             -           -
Construction   Goldin Industries Inc                             20,828.45       19,221.65       1,440.00             -      166.80
Construction   Raynor Garage Doors                               20,240.05       20,240.05              -             -           -
Construction   United Structures Of America                      19,960.63       21,015.87              -             -           -
Construction   Hirschfeld Steel Co Inc                           12,869.29        7,706.15              -             -           -
Construction   M & M Mfg Co                                      12,697.00       12,697.00              -             -           -
Construction   Arrow Group Industries Inc                        12,648.86       12,648.86              -             -           -
Construction   Powerlight Corp - Berkley                         12,037.03       12,037.03              -             -           -
Construction   Whirlwind Building Systems                        11,954.04               -              -             -           -
Construction   Hutchinson Western                                 9,233.42               -              -      9,233.42           -
Construction   Lehmans Pipe & Steel Inc                           8,638.07        8,638.07              -             -           -
Construction   Ludwig Bldg Systems Inc                            8,539.82               -      15,265.73             -           -
Construction   Metl Span Corp                                     5,669.43               -              -             -           -
Construction   R & M Steel Co                                     1,329.98        1,329.98              -             -           -
Construction   Dale Incor                                         1,151.64               -              -      1,151.64           -
Construction   Ctb Inc.                                              (3.00)              -              -             -           -
Construction   Lane Building Products                              (640.65)              -              -             -           -
Construction   Omni Metals Inc                                     (908.96)              -              -             -           -
Construction   Mfs York                                          (1,863.61)              -              -             -           -
Construction   Owens Corning Fiberglas Corp                      (2,968.38)     (11,199.60)             -             -           -
Construction   Majestic Steel Service Inc                        (4,118.77)              -              -             -    3,324.40
Construction   Hci Steel Bldg Systems Inc                        (7,239.45)              -              -             -           -
Container      Silgan Containers                             23,449,060.10   15,007,026.92   8,128,699.68     39,972.55   38,786.49
Container      Ball Corporation                              11,323,205.02    5,694,281.63   5,325,727.19    250,663.77    4,645.68
Container      Central Can Co                                 2,096,104.49    1,951,374.76      17,887.33     24,928.15    9,918.94
Container      Zapata Industries Inc                          1,395,584.07      898,516.74     497,067.33             -           -
Container      Goodman                                        1,277,936.86      541,884.30     139,397.74    311,882.61   94,049.39


  MARKET                     CUSTOMER NAME                     121 TO 150     151 TO 180        181+
- ------------   -------------------------------------------   -------------   -------------   ------------
                                                                                   
Construction   Components Plus                                           -       24,858.24      10,783.44
Construction   Central Texas Metal Roofing                               -               -       1,984.50
Construction   Mitsui Stl Dev Co Inc (Buildings)                         -               -              -
Construction   Dura-Loc Roofing Systems Ltd                              -               -              -
Construction   Sheridan Sheet Metal Co                                   -               -              -
Construction   Goldin Industries Inc                                     -               -              -
Construction   Raynor Garage Doors                                       -               -              -
Construction   United Structures Of America                              -               -      (1,055.24)
Construction   Hirschfeld Steel Co Inc                                   -               -       5,163.14
Construction   M & M Mfg Co                                              -               -              -
Construction   Arrow Group Industries Inc                                -               -              -
Construction   Powerlight Corp - Berkley                                 -               -              -
Construction   Whirlwind Building Systems                         4,296.94        2,021.80       5,635.30
Construction   Hutchinson Western                                        -               -              -
Construction   Lehmans Pipe & Steel Inc                                  -               -              -
Construction   Ludwig Bldg Systems Inc                                   -               -      (6,725.91)
Construction   Metl Span Corp                                            -               -       5,669.43
Construction   R & M Steel Co                                            -               -              -
Construction   Dale Incor                                                -               -              -
Construction   Ctb Inc.                                                  -               -          (3.00)
Construction   Lane Building Products                                    -               -        (640.65)
Construction   Omni Metals Inc                                           -               -        (908.96)
Construction   Mfs York                                                  -               -      (1,863.61)
Construction   Owens Corning Fiberglas Corp                       3,626.69               -       4,604.53
Construction   Majestic Steel Service Inc                                -        6,319.71     (13,762.88)
Construction   Hci Steel Bldg Systems Inc                                -               -      (7,239.45)
Container      Silgan Containers                                 14,948.86               -     219,625.60
Container      Ball Corporation                                   1,072.21       10,084.26      36,730.28
Container      Central Can Co                                    26,988.33       10,519.98      54,487.00
Container      Zapata Industries Inc                                     -               -              -
Container      Goodman                                          101,005.85       39,202.17      50,514.80


                                       U-5





 MARKET                      CUSTOMER NAME                TOTAL OWED        1 TO 30        31 TO 60       61 TO 90       91 TO 120
- -------------  ---------------------------------------   -------------   -------------   ------------   ------------   ------------
                                                                                                     
Container      Cargill                                      920,417.60      669,176.57     251,253.39              -              -
Container      Can Corp Of America Inc                      761,317.14      759,979.81              -              -     (12,397.08)
Container      Pt Mantrust                                  724,216.18      694,971.81      22,924.44              -              -
Container      South Texas Can Co Inc                       588,167.35       (4,431.17)             -      (4,792.84)             -
Container      Titan Steel Corp                             514,627.72      406,984.96      43,673.60       1,153.16              -
Container      Sony Corporation Of America                  345,721.54      142,509.67     116,043.06      69,477.31              -
Container      Maytag Appliances                            315,998.52      212,240.56      27,939.00       4,702.05              -
Container      Electrolux - Laundry Products                314,199.46      297,133.64      17,065.82              -              -
Container      Pacific Coast Producers                      304,185.01      295,963.87       8,221.14              -              -
Container      Nittetsu Shoji American Inc                  272,584.69      262,345.09              -              -              -
Container      Arbon Steel Service Co                       222,469.38      148,079.36      73,132.42              -       1,257.60
Container      Crown Cork & Seal Inc                        217,846.79      189,569.91              -              -      28,909.84
Container      Brockway Standard Inc                        183,037.43       18,812.68              -      44,614.44              -
Container      Frigidaire Co - Freezer Products             150,879.39      150,879.39              -              -              -
Container      Center Manufacturing Inc                     117,287.12       97,327.90      19,959.22              -              -
Container      J L Clark Mfg Co                             101,895.51       77,290.78      10,261.01              -              -
Container      Donaldson Co                                  79,113.00       53,353.60      25,759.40              -              -
Container      Punch Press                                   78,119.69               -              -              -              -
Container      Berlin Metals L L C                           61,592.80       61,592.80              -              -              -
Container      Harlow Group Ltd                              58,831.33       39,157.06              -      19,674.27              -
Container      Okaya (USA) Inc                               43,698.59       43,698.59              -              -              -
Container      Renown Steel                                  21,240.41       21,240.41              -              -              -
Container      Electrolux - Range Products                   18,436.28       18,436.28              -              -              -
Container      Breen International Inc                        8,872.60        8,872.60              -              -              -
Container      Sanko International                            5,454.68        5,454.68              -              -              -
Container      Amana Appliances                               3,527.32               -       3,527.32              -              -
Container      Dispensing Container Corp                      1,793.02               -              -      26,886.32     (26,436.35)
Container      Viking Industrial Corp                           765.10          765.10              -              -              -
Container      Seneca Foods Corp - Central Div                  243.03               -              -              -              -
Intercompany   National Robinson L L C                    9,972,783.42    2,049,421.90   2,399,741.84   2,117,585.97   3,024,102.30
Miscellaneous  Hayes Lemmerz International                    7,675.89               -       7,675.89              -              -


   MARKET                    CUSTOMER NAME                    121 TO 150     151 TO 180        181+
- -------------  -------------------------------------------   -------------   -----------   ------------
                                                                                 
Container      Cargill                                                   -             -         (12.36)
Container      Can Corp Of America Inc                                   -     13,734.41              -
Container      Pt Mantrust                                               -             -       6,319.93
Container      South Texas Can Co Inc                                    -             -     597,391.36
Container      Titan Steel Corp                                   3,214.96     16,328.85      43,272.19
Container      Sony Corporation Of America                               -             -      17,691.50
Container      Maytag Appliances                                         -      4,818.23      66,298.68
Container      Electrolux - Laundry Products                             -             -              -
Container      Pacific Coast Producers                                   -             -              -
Container      Nittetsu Shoji American Inc                       10,239.60             -              -
Container      Arbon Steel Service Co                                    -             -              -
Container      Crown Cork & Seal Inc                                     -             -        (632.96)
Container      Brockway Standard Inc                                     -             -     119,610.31
Container      Frigidaire Co - Freezer Products                          -             -              -
Container      Center Manufacturing Inc                                  -             -              -
Container      J L Clark Mfg Co                                          -     14,343.72              -
Container      Donaldson Co                                              -             -              -
Container      Punch Press                                               -             -      78,119.69
Container      Berlin Metals L L C                                       -             -              -
Container      Harlow Group Ltd                                          -             -              -
Container      Okaya (USA) Inc                                           -             -              -
Container      Renown Steel                                              -             -              -
Container      Electrolux - Range Products                               -             -              -
Container      Breen International Inc                                   -             -              -
Container      Sanko International                                       -             -              -
Container      Amana Appliances                                          -             -              -
Container      Dispensing Container Corp                                 -      1,343.05              -
Container      Viking Industrial Corp                                    -             -              -
Container      Seneca Foods Corp - Central Div                           -             -         243.03
Intercompany   National Robinson L L C                          104,686.46             -     277,244.95
Miscellaneous  Hayes Lemmerz International                               -             -              -


                                       U-6





  MARKET                     CUSTOMER NAME                    TOTAL OWED       1 TO 30       31 TO 60       61 TO 90     91 TO 120
- -------------  -------------------------------------------   ------------   ------------   ------------   ------------   ----------
                                                                                                       
Miscellaneous  EES Coke Battery Company LLC                  7,523,162.91   5,496,326.46   2,017,418.65              -            -
Miscellaneous  Hayes Lemmerz                                   984,876.37     654,758.67    (202,717.82)    147,419.74   929,767.44
Miscellaneous  Metalloyd Ltd                                   573,141.95     573,141.95              -              -            -
Miscellaneous  Luria Brothers                                  280,794.88      34,807.23     (82,451.47)     18,067.06    42,222.30
Miscellaneous  Amrox                                           229,095.56     112,137.64     116,957.92              -            -
Miscellaneous  Metals Management Ohio Inc                      182,399.28     133,429.75      25,979.35              -            -
Miscellaneous  Tower Automotive                                179,978.19      69,100.09      23,912.69              -            -
Miscellaneous  USX                                             173,417.58     124,074.24      16,735.70       6,627.63     6,627.10
Miscellaneous  Norfolk Southern Corp                           167,996.58      97,916.48       7,807.30              -            -
Miscellaneous  Gm Mfd - Engineering                             50,477.31      15,165.92       9,347.20       1,920.35    (4,607.46)
Miscellaneous  Mid Coast Terminal Co                            49,604.50      49,604.50              -              -            -
Miscellaneous  Thyssenkrupp Budd Co - Detroit                   46,426.74              -       2,191.00              -            -
Miscellaneous  Portside Energy Corporation                      25,000.00      25,000.00              -              -            -
Miscellaneous  Act Laboratories                                 23,300.08       6,350.00      16,950.08              -            -
Miscellaneous  Oakley Industries                                22,346.34              -              -              -            -
Miscellaneous  Ronart Industries                                17,628.00              -       6,448.00      11,180.00            -
Miscellaneous  Proto Craft Inc                                  15,488.17              -              -              -            -
Miscellaneous  Recycling Management Inc                         12,936.34      12,936.34              -              -            -
Miscellaneous  Superior Cam                                     11,490.00              -              -              -       624.00
Miscellaneous  Ak-Isg Steel Coating Co                          10,316.57      10,316.57              -              -            -
Miscellaneous  Union Planters Bank                               8,963.00              -       8,963.00              -            -
Miscellaneous  Abc Sales Inc                                     8,887.51              -              -              -            -
Miscellaneous  Nobles                                            8,123.50              -              -              -            -
Miscellaneous  Cn Rail                                           7,920.64       9,710.40              -              -            -
Miscellaneous  Bethlehem Steel Corp.                             7,814.13              -              -              -            -
Miscellaneous  Detroit Bulk Storage Inc                          5,945.50              -              -              -            -
Miscellaneous  Troy Design                                       5,942.65              -              -              -            -
Miscellaneous  Merkur Inc                                        5,894.10              -              -              -            -
Miscellaneous  Mps Group Inc                                     5,212.87       5,212.87              -              -            -
Miscellaneous  Eagle Bend Mfg Inc                                4,121.04       4,121.04              -              -            -
Miscellaneous  X-Tek Inc                                         3,929.65              -       3,929.65              -            -


   MARKET                    CUSTOMER NAME                     121 TO 150    151 TO 180        181+
- -------------  --------------------------------------------   ------------   -----------   ------------
                                                                                 
Miscellaneous  EES Coke Battery Company LLC                              -             -       9,417.80
Miscellaneous  Hayes Lemmerz                                   (925,204.59)   449,260.98     (68,408.05)
Miscellaneous  Metalloyd Ltd                                             -             -              -
Miscellaneous  Luria Brothers                                    60,666.30     48,776.00     158,707.46
Miscellaneous  Amrox                                                     -             -              -
Miscellaneous  Metals Management Ohio Inc                                -     22,990.18              -
Miscellaneous  Tower Automotive                                          -             -      86,965.41
Miscellaneous  USX                                                5,245.31     14,107.60              -
Miscellaneous  Norfolk Southern Corp                                     -             -      62,272.80
Miscellaneous  Gm Mfd - Engineering                               6,025.80     22,625.50              -
Miscellaneous  Mid Coast Terminal Co                                     -             -              -
Miscellaneous  Thyssenkrupp Budd Co - Detroit                     3,780.00             -      40,455.74
Miscellaneous  Portside Energy Corporation                               -             -              -
Miscellaneous  Act Laboratories                                          -             -              -
Miscellaneous  Oakley Industries                                         -      4,555.90      17,790.44
Miscellaneous  Ronart Industries                                         -             -              -
Miscellaneous  Proto Craft Inc                                           -             -      15,488.17
Miscellaneous  Recycling Management Inc                                  -             -              -
Miscellaneous  Superior Cam                                              -             -      10,866.00
Miscellaneous  Ak-Isg Steel Coating Co                                   -             -              -
Miscellaneous  Union Planters Bank                                       -             -              -
Miscellaneous  Abc Sales Inc                                      1,902.82      2,039.34       4,945.35
Miscellaneous  Nobles                                                    -             -       8,123.50
Miscellaneous  Cn Rail                                                   -             -      (1,789.76)
Miscellaneous  Bethlehem Steel Corp.                                     -             -       7,814.13
Miscellaneous  Detroit Bulk Storage Inc                                  -             -       5,945.50
Miscellaneous  Troy Design                                               -             -       5,942.65
Miscellaneous  Merkur Inc                                                -             -       5,894.10
Miscellaneous  Mps Group Inc                                             -             -              -
Miscellaneous  Eagle Bend Mfg Inc                                        -             -              -
Miscellaneous  X-Tek Inc                                                 -             -              -


                                       U-7





   MARKET                    CUSTOMER NAME                    TOTAL OWED      1 TO 30        31 TO 60      61 TO 90      91 TO 120
- -------------  -------------------------------------------   -------------   -----------   ------------   ------------   ----------
                                                                                                         
Miscellaneous  Fab-All Mfg Inc                                    3,834.40      3,834.40              -              -            -
Miscellaneous  Metal Forming Technology                           3,272.05             -              -              -            -
Miscellaneous  Nsl Inc                                            3,081.15             -              -              -            -
Miscellaneous  Demex Inc                                          3,000.00      1,000.00       1,000.00       1,000.00            -
Miscellaneous  Gm Advanced Technology Vehicles                    2,491.25             -              -              -            -
Miscellaneous  Gm Mfd - Pc&L                                      1,796.08             -              -              -            -
Miscellaneous  Maryland Refractories Co                           1,413.56      1,413.56              -              -            -
Miscellaneous  Procoil Processing                                 1,287.50             -       1,287.50              -            -
Miscellaneous  Ppg Accounts Payable                               1,260.01             -              -       1,260.01            -
Miscellaneous  Great Lakes Towing                                 1,200.00      1,200.00              -              -            -
Miscellaneous  Nuweigh Inc                                          937.00        937.00              -              -            -
Miscellaneous  Sika Canada Inc                                      500.00             -         500.00              -            -
Miscellaneous  Orbseal L L C                                        440.00             -         440.00              -            -
Miscellaneous  Energy Marketing Services                            384.52        384.52              -              -            -
Miscellaneous  City Of Mishawaka - Dept Of Parks                    369.70             -         369.70              -            -
Miscellaneous  Csx Transportation                                   217.24         77.56         310.32              -            -
Miscellaneous  Jo-Ad Industries                                    (756.00)            -              -              -            -
Miscellaneous  Union Electric Steel Corp                         (5,720.23)            -      (3,929.65)     (1,790.58)           -
Miscellaneous  Cleveland Steel Container - Peotone              (94,979.44)            -              -              -            -
Reserved       Trumark                                          131,896.31             -              -              -            -
Reserved       Ltv Steel Company - Inc.                      10,628,553.51    (28,077.59)             -              -            -
Reserved       Huntco Steel Inc                               9,642,572.43             -              -              -            -
Reserved       Tinplate Partners                              6,149,767.94             -              -              -            -
Reserved       Metals USA                                     5,817,066.64     (4,459.48)             -              -            -
Reserved       Hayes Wheels                                   5,309,500.44   (224,950.74)             -              -            -
Reserved       Ottawa River Steel                             1,288,080.95             -              -              -            -
Reserved       A G Simpson                                    1,285,360.35             -              -              -            -
Reserved       Alkar Steel Corp                               1,257,793.79             -              -              -     7,979.40
Reserved       Marbi Inc                                        993,720.53             -              -              -            -
Reserved       Glomar Steel Co                                  547,275.58     (6,264.00)             -       2,661.45     1,568.00
Reserved       Madison Metal Services                           486,092.82             -              -              -            -


   MARKET                    CUSTOMER NAME                     121 TO 150    151 TO 180        181+
- -------------  -------------------------------------------   -------------   -----------   -------------
                                                                               
Miscellaneous  Fab-All Mfg Inc                                           -             -               -
Miscellaneous  Metal Forming Technology                                  -             -        3,272.05
Miscellaneous  Nsl Inc                                                   -             -        3,081.15
Miscellaneous  Demex Inc                                                 -             -               -
Miscellaneous  Gm Advanced Technology Vehicles                           -             -        2,491.25
Miscellaneous  Gm Mfd - Pc&L                                             -             -        1,796.08
Miscellaneous  Maryland Refractories Co                                  -             -               -
Miscellaneous  Procoil Processing                                        -             -               -
Miscellaneous  Ppg Accounts Payable                                      -             -               -
Miscellaneous  Great Lakes Towing                                        -             -               -
Miscellaneous  Nuweigh Inc                                               -             -               -
Miscellaneous  Sika Canada Inc                                           -             -               -
Miscellaneous  Orbseal L L C                                             -             -               -
Miscellaneous  Energy Marketing Services                                 -             -               -
Miscellaneous  City Of Mishawaka - Dept Of Parks                         -             -               -
Miscellaneous  Csx Transportation                                        -             -          170.64)
Miscellaneous  Jo-Ad Industries                                          -             -         (756.00)
Miscellaneous  Union Electric Steel Corp                                 -             -               -
Miscellaneous  Cleveland Steel Container - Peotone                       -             -      (94,979.44)
Reserved       Trumark                                                   -             -      131,896.31
Reserved       Ltv Steel Company- Inc.                                   -      1,463.15   10,655,167.95
Reserved       Huntco Steel Inc                                          -             -    9,642,572.43
Reserved       Tinplate Partners                                         -             -    6,149,767.94
Reserved       Metals USA                                         3,226.15             -    5,818,299.97
Reserved       Hayes Wheels                                              -             -    5,534,451.18
Reserved       Ottawa River Steel                                        -             -    1,288,080.95
Reserved       A G Simpson                                               -             -    1,285,360.35
Reserved       Alkar Steel Corp                                 340,902.70    598,419.64      310,492.05
Reserved       Marbi Inc                                                 -             -      993,720.53
Reserved       Glomar Steel Co                                           -             -      549,310.13
Reserved       Madison Metal Services                                    -             -      486,092.82


                                       U-8





  MARKET                     CUSTOMER NAME                    TOTAL OWED       1 TO 30        31 TO 60       61 TO 90     91 TO 120
- -------------  -------------------------------------------   -------------   ------------   ------------   ------------   ----------
                                                                                                        
Reserved       Maksteel Service Center                          446,142.88              -              -              -            -
Reserved       American Trucking Co                             205,838.34              -              -              -            -
Reserved       Global Engineering Corp                          179,856.07              -              -              -            -
Reserved       Railworks Wood Products Inc                      171,817.00      (7,648.30)             -              -            -
Reserved       Concord Steel                                    155,323.70              -              -              -            -
Reserved       Anton Noll Inc                                   139,571.96              -              -              -            -
Reserved       Harrison Steel Of Memphis Inc                     90,425.75              -              -              -            -
Reserved       Owens Corning Fiberglas Corp                      77,511.81              -              -              -            -
Reserved       Gulf States Tube Div                              70,424.73              -              -              -            -
Reserved       Zinc Corp Of America                              51,538.27              -              -              -            -
Reserved       Hanover Steel Corp                                37,431.50              -              -              -            -
Reserved       Hayes Wheels Acero S A De C V                     20,776.28              -              -              -            -
Reserved       United Materials Co                               20,527.50              -              -              -            -
Reserved       Standard Metal Service Corp                       19,095.60              -              -              -            -
Reserved       Form Tech Steel Inc                               18,659.35              -              -              -            -
Reserved       Tinplate Partners Intl Inc                         9,383.03              -              -              -            -
Reserved       Vail Metal Systems                                 3,309.39              -              -              -            -
Reserved       Metals USA  [Debtor In Possession]              (268,560.93)    (20,123.09)     40,315.82      39,927.74   354,847.56
Sheet Sales    Northwest Pipe                                 4,855,961.55   3,126,660.65   1,517,546.21     150,125.70    36,929.93
Sheet Sales    Heidtman Steel Products Inc                    4,574,685.93   1,159,422.20   3,381,738.90      42,045.48            -
Sheet Sales    Kerry Steel Inc                                4,497,425.88   3,009,935.43   1,330,508.72       7,946.03    17,746.02
Sheet Sales    Ingersoll - Rand Inc                           4,408,940.99   3,588,602.51     797,482.16       1,380.00            -
Sheet Sales    Titan Wheel International                      2,889,156.47   1,802,663.80   1,085,765.27         727.40            -
Sheet Sales    Worthington Industries                         2,887,364.55     451,447.55      16,173.60       8,748.40    42,032.76
Sheet Sales    Valmont Inc.                                   2,181,582.38   2,035,740.64      92,431.91              -    10,782.00
Sheet Sales    Target Steel Inc                               1,990,008.62   1,096,526.28     811,634.82              -    54,563.20
Sheet Sales    Itochu                                         1,888,481.33   1,810,471.66              -       5,485.02            -
Sheet Sales    Robinson Steel Co Inc - E Chicago              1,879,356.12   1,853,737.02      11,020.85              -            -
Sheet Sales    Tyco International                             1,824,355.89   1,790,897.07       1,726.20              -     3,341.76
Sheet Sales    Mst Corp                                       1,820,422.56   1,732,239.63              -              -     7,794.24
Sheet Sales    Ptc                                            1,736,217.21     998,730.84     677,139.60      (6,126.96)           -


  MARKET                     CUSTOMER NAME                    121 TO 150      151 TO 180        181+
- -----------    -------------------------------------------   -------------   ------------   -------------
                                                                                
Reserved       Maksteel Service Center                                   -              -      446,142.88
Reserved       American Trucking Co                                      -              -      205,838.34
Reserved       Global Engineering Corp                                   -              -      179,856.07
Reserved       Railworks Wood Products Inc                               -              -      179,465.30
Reserved       Concord Steel                                             -              -      155,323.70
Reserved       Anton Noll Inc                                            -              -      139,571.96
Reserved       Harrison Steel Of Memphis Inc                             -              -       90,425.75
Reserved       Owens Corning Fiberglas Corp                              -              -       77,511.81
Reserved       Gulf States Tube Div                                      -              -       70,424.73
Reserved       Zinc Corp Of America                              37,773.60      20,540.98       (6,776.31)
Reserved       Hanover Steel Corp                                        -              -       37,431.50
Reserved       Hayes Wheels Acero S A De C V                             -              -       20,776.28
Reserved       United Materials Co                                       -              -       20,527.50
Reserved       Standard Metal Service Corp                               -              -       19,095.60
Reserved       Form Tech Steel Inc                                       -              -       18,659.35
Reserved       Tinplate Partners Intl Inc                                -              -        9,383.03
Reserved       Vail Metal Systems                                        -              -        3,309.39
Reserved       Metals USA  [Debtor In Possession]               304,863.31     238,712.98   (1,227,105.25)
Sheet Sales    Northwest Pipe                                        72.21              -       24,626.85
Sheet Sales    Heidtman Steel Products Inc                               -              -       (8,520.65)
Sheet Sales    Kerry Steel Inc                                   (5,997.70)    126,853.78       10,433.60
Sheet Sales    Ingersoll - Rand Inc                              20,930.00              -          546.32
Sheet Sales    Titan Wheel International                                 -              -               -
Sheet Sales    Worthington Industries                           337,515.15     263,742.98    1,767,704.11
Sheet Sales    Valmont Inc.                                      33,855.58              -        8,772.25
Sheet Sales    Target Steel Inc                                   2,692.30              -       24,592.02
Sheet Sales    Itochu                                                    -      23,418.94       49,105.71
Sheet Sales    Robinson Steel Co Inc - E Chicago                    797.87              -       13,800.38
Sheet Sales    Tyco International                                        -      13,135.06       15,255.80
Sheet Sales    Mst Corp                                                  -              -       80,388.69
Sheet Sales    Ptc                                               13,328.93       5,629.59       47,515.21


                                       U-9





  MARKET                     CUSTOMER NAME                    TOTAL OWED       1 TO 30        31 TO 60       61 TO 90     91 TO 120
- -----------    -------------------------------------------   -------------   ------------   ------------   ------------   ----------
                                                                                                         
Sheet Sales    U S Metals & Supply Inc                        1,475,470.84     868,420.26     545,121.92              -            -
Sheet Sales    New Technology Steel L L C                     1,383,165.29   1,056,987.12     326,178.17              -            -
Sheet Sales    American Basic Industries                      1,355,926.73     610,189.66     651,884.68      89,411.48            -
Sheet Sales    Mitsubishi                                     1,138,349.32   1,008,300.18      22,872.71      33,006.97    52,248.34
Sheet Sales    Riverview Steel Co Ltd                         1,131,399.22     689,995.30     441,403.92              -            -
Sheet Sales    Mako Metals Inc                                1,095,104.78     900,548.29     186,784.59       3,041.60       937.30
Sheet Sales    CSN Companhia Siderurgica Nacional LLC           977,357.86              -      28,787.86     948,570.00            -
Sheet Sales    Ltv - Debtor In Possession                       970,999.06     875,540.50      69,674.65              -       519.65
Sheet Sales    Lee Steel Corp                                   949,070.59     422,302.08     452,408.76      23,770.66    10,841.94
Sheet Sales    A O Smith Corporation                            948,527.57              -     222,795.73     663,859.69            -
Sheet Sales    Itek Steel Trading                               910,846.14     298,196.66     570,616.43      42,033.05            -
Sheet Sales    Tex Tube Co                                      866,552.94     877,717.73      19,969.43       7,266.82            -
Sheet Sales    Trilla Steel Drum Corp                           838,948.13     733,148.63     105,799.50              -            -
Sheet Sales    Custom Steel Processing                          804,316.02     478,833.53     325,482.49              -            -
Sheet Sales    Allied Tube & Conduit - Century Tube             773,190.52     764,885.97       8,304.55              -            -
Sheet Sales    Magic Steel                                      745,861.52     359,008.03     358,756.75              -            -
Sheet Sales    Steel Processors - Springfield                   697,611.05     697,535.13              -              -            -
Sheet Sales    Nesco Container Corp                             668,529.49              -              -              -            -
Sheet Sales    Samuel Metal Trading                             638,875.47     319,001.52     319,873.95              -            -
Sheet Sales    Exor America                                     617,988.64     434,524.84     183,524.80              -            -
Sheet Sales    Int'l Utilities Structures Inc                   590,879.50     102,267.36     136,771.56     351,840.58            -
Sheet Sales    Marubeni                                         561,677.90     156,593.68      83,513.08     249,922.69            -
Sheet Sales    Royal Canadian Steel                             541,112.15     511,704.12      18,007.90       4,059.00       894.56
Sheet Sales    Lindsay Mfg Co                                   508,871.28     514,027.23              -              -            -
Sheet Sales    Lapham Hickey Steel                              490,403.74     438,481.41              -              -    11,407.26
Sheet Sales    Randall Metals Corp                              457,956.87     332,216.03     125,740.84              -            -
Sheet Sales    Sun Steel Co                                     456,717.10     143,430.70     309,541.03              -            -
Sheet Sales    Harper Steel Co                                  440,321.64     326,033.57      94,534.61              -     9,895.16
Sheet Sales    A O Smith Corp - Juarez                          435,715.00     301,765.70     133,949.30              -            -
Sheet Sales    Alliance Steel Mfg Inc                           435,653.82     329,074.54     103,087.34              -     1,881.90
Sheet Sales    Hanson Concrete Products                         424,326.54     344,731.90      72,619.95              -            -


  MARKET                     CUSTOMER NAME                    121 TO 150      151 TO 180        181+
- -----------    -------------------------------------------   -------------   ------------   ------------
                                                                                  
Sheet Sales    U S Metals & Supply Inc                                   -              -      61,928.66
Sheet Sales    New Technology Steel L L C                                -              -              -
Sheet Sales    American Basic Industries                          4,440.91              -              -
Sheet Sales    Mitsubishi                                        12,014.24         929.88       8,977.00
Sheet Sales    Riverview Steel Co Ltd                                    -              -              -
Sheet Sales    Mako Metals Inc                                           -              -       3,793.00
Sheet Sales    CSN Companhia Siderurgica Nacional LLC                    -              -              -
Sheet Sales    Ltv - Debtor In Possession                                -              -      25,264.26
Sheet Sales    Lee Steel Corp                                    10,550.70              -      29,196.45
Sheet Sales    A O Smith Corporation                              4,414.29      27,777.57      29,680.29
Sheet Sales    Itek Steel Trading                                        -              -              -
Sheet Sales    Tex Tube Co                                               -              -     (38,401.04)
Sheet Sales    Trilla Steel Drum Corp                                    -              -              -
Sheet Sales    Custom Steel Processing                                   -              -              -
Sheet Sales    Allied Tube & Conduit - Century Tube                      -              -              -
Sheet Sales    Magic Steel                                       22,553.08              -       5,543.66
Sheet Sales    Steel Processors - Springfield                            -              -          75.92
Sheet Sales    Nesco Container Corp                                      -              -     668,529.49
Sheet Sales    Samuel Metal Trading                                      -              -              -
Sheet Sales    Exor America                                              -              -         (61.00)
Sheet Sales    Int'l Utilities Structures Inc                            -              -              -
Sheet Sales    Marubeni                                                  -      12,216.24      59,432.21
Sheet Sales    Royal Canadian Steel                                      -              -       6,446.57
Sheet Sales    Lindsay Mfg Co                                            -              -      (5,155.95)
Sheet Sales    Lapham Hickey Steel                                       -              -      40,515.07
Sheet Sales    Randall Metals Corp                                       -              -              -
Sheet Sales    Sun Steel Co                                              -       3,745.37              -
Sheet Sales    Harper Steel Co                                    9,858.30              -              -
Sheet Sales    A O Smith Corp - Juarez                                   -              -              -
Sheet Sales    Alliance Steel Mfg Inc                             1,610.04              -              -
Sheet Sales    Hanson Concrete Products                                  -              -       6,974.69


                                      U-10




  MARKET                     CUSTOMER NAME                    TOTAL OWED       1 TO 30       31 TO 60       61 TO 90     91 TO 120
- -----------    -------------------------------------------   -------------   -----------   ------------   ------------   ---------
                                                                                                       
Sheet Sales    Antela                                           417,600.53    347,246.34      44,065.80       1,757.50    4,742.93
Sheet Sales    Lozier Corporation                               399,378.93    363,366.18      36,002.75              -           -
Sheet Sales    Michigan Steel Processing                        395,283.29    200,484.63     143,532.78      51,265.88           -
Sheet Sales    Siegal Steel Co                                  371,150.47    272,969.51      98,180.96              -           -
Sheet Sales    Owen Industries                                  359,451.43    155,718.41      90,558.04       6,602.89    2,041.07
Sheet Sales    Craco Metals Inc                                 340,205.75    219,313.85     117,882.73              -    1,436.84
Sheet Sales    Mitsubishi International Steel Inc               323,076.02    222,905.36              -      79,554.90   50,655.90
Sheet Sales    St Louis Steel Services Inc                      317,278.44    162,226.28     136,495.01              -           -
Sheet Sales    Jefferson Metals                                 311,445.51    297,241.52              -              -           -
Sheet Sales    Premier Steel L L C                              285,961.19    244,920.71      21,961.08              -           -
Sheet Sales    Lyon Metal Products                              273,869.73    150,047.40     123,822.33              -           -
Sheet Sales    Impact Steel Inc                                 271,714.26    245,458.90              -              -           -
Sheet Sales    Worthington Steel Co - Jackson                   260,853.51    229,591.63              -              -           -
Sheet Sales    Capital Steel Inc                                258,029.20    263,879.41      (5,850.21)             -           -
Sheet Sales    Doral Steel                                      240,530.66    120,193.67              -              -      849.24
Sheet Sales    Arlington Metals Corp                            236,287.80    127,764.15      45,697.50              -           -
Sheet Sales    Chappell Steel Co Inc                            218,064.16    153,947.48      49,694.93              -           -
Sheet Sales    Metal Matic Inc                                  213,442.08    190,633.15              -              -           -
Sheet Sales    Mnp Flat Roll Services Corp                      209,493.72    132,886.40      76,607.32              -           -
Sheet Sales    Triorient Trading Inc                            209,369.73    138,815.76      62,531.55              -           -
Sheet Sales    Skyline Steel Pipe Group                         205,001.12    183,875.03              -              -           -
Sheet Sales    The Steelworks L L C                             186,134.11    100,068.29      80,734.90              -   (5,687.55)
Sheet Sales    Lexington Steel Corp                             185,200.31    179,252.93       5,947.38              -           -
Sheet Sales    Charter Steel Trading Co Inc                     183,437.08     55,990.35     127,446.73              -           -
Sheet Sales    Blair Strip Steel Co                             177,858.55    177,858.55              -              -           -
Sheet Sales    Northern Industries Inc                          176,937.92    175,142.17              -              -    1,795.75
Sheet Sales    Steel Warehouse Co. Inc.                         173,355.05             -              -              -           -
Sheet Sales    Waterloo Industries Inc                          171,397.46    161,826.01              -              -           -
Sheet Sales    Holland Usa Inc                                  170,500.61     33,616.94     136,883.67              -           -
Sheet Sales    Mid-West Materials Inc                           170,021.10    170,021.10              -              -           -
Sheet Sales    Jemison Steel Company                            165,370.45     95,069.40              -              -   36,556.80


  MARKET                     CUSTOMER NAME                    121 TO 150     151 TO 180        181+
- -----------    -------------------------------------------   ------------    -----------    -----------
                                                                                 
Sheet Sales    Antela                                           14,071.52       1,599.12       4,117.32
Sheet Sales    Lozier Corporation                                       -              -          10.00
Sheet Sales    Michigan Steel Processing                                -              -              -
Sheet Sales    Siegal Steel Co                                          -              -              -
Sheet Sales    Owen Industries                                  16,972.13       7,316.04      80,242.85
Sheet Sales    Craco Metals Inc                                         -              -       1,572.33
Sheet Sales    Mitsubishi International Steel Inc                       -     (30,040.14)             -
Sheet Sales    St Louis Steel Services Inc                              -              -      18,557.15
Sheet Sales    Jefferson Metals                                         -              -      14,203.99
Sheet Sales    Premier Steel L L C                               7,864.80       2,436.10       8,778.50
Sheet Sales    Lyon Metal Products                                      -              -              -
Sheet Sales    Impact Steel Inc                                         -              -      26,255.36
Sheet Sales    Worthington Steel Co - Jackson                           -              -      31,261.88
Sheet Sales    Capital Steel Inc                                        -              -              -
Sheet Sales    Doral Steel                                              -              -     119,487.75
Sheet Sales    Arlington Metals Corp                                    -              -      62,826.15
Sheet Sales    Chappell Steel Co Inc                                    -      10,311.00       4,110.75
Sheet Sales    Metal Matic Inc                                          -       8,362.00      14,446.93
Sheet Sales    Mnp Flat Roll Services Corp                              -              -              -
Sheet Sales    Triorient Trading Inc                                    -              -       8,022.42
Sheet Sales    Skyline Steel Pipe Group                                 -       2,992.50      18,133.59
Sheet Sales    The Steelworks L L C                                     -              -      11,018.47
Sheet Sales    Lexington Steel Corp                                     -              -              -
Sheet Sales    Charter Steel Trading Co Inc                             -              -              -
Sheet Sales    Blair Strip Steel Co                                     -              -              -
Sheet Sales    Northern Industries Inc                                  -              -              -
Sheet Sales    Steel Warehouse Co. Inc.                                 -              -     173,355.05
Sheet Sales    Waterloo Industries Inc                                  -              -       9,571.45
Sheet Sales    Holland Usa Inc                                          -              -              -
Sheet Sales    Mid-West Materials Inc                                   -              -              -
Sheet Sales    Jemison Steel Company                             7,877.10              -      25,867.15


                                      U-11





  MARKET                     CUSTOMER NAME                    TOTAL OWED       1 TO 30       31 TO 60       61 TO 90      91 TO 120
- -----------    -------------------------------------------   -------------   -----------   ------------   ------------   -----------
                                                                                                        
Sheet Sales    Superior Steel Supply L L C                      150,161.61     69,382.70      61,058.65       5,894.20             -
Sheet Sales    Dofasco Inc                                      149,216.32             -              -              -    149,216.32
Sheet Sales    Gibraltar Steel Corp                             147,509.95     99,036.48      30,081.14       1,192.96     14,669.64
Sheet Sales    Jennmar                                          143,795.25     87,220.00      56,575.25              -             -
Sheet Sales    Olympic Steel                                    132,471.71     59,374.51              -              -             -
Sheet Sales    National Material Ltd Partner                    122,206.59    (10,595.29)     49,950.54      10,042.69        497.39
Sheet Sales    Ak Steel Corp                                    116,844.01    116,844.01              -              -             -
Sheet Sales    Lone Star Steel Co                               114,977.21             -     114,977.21              -             -
Sheet Sales    Tomsin Steel Company                             113,328.39    108,671.20              -              -             -
Sheet Sales    Lakeside Metals Inc                              101,358.67    101,358.67              -              -             -
Sheet Sales    Kane Steel & Iron L L C                           97,800.88     86,698.58              -              -             -
Sheet Sales    Tru Weld Grating Inc                              91,107.75     75,719.70      12,241.50       3,146.55             -
Sheet Sales    Central Illinois Steel Co                         89,350.84     74,771.96      11,620.55              -             -
Sheet Sales    Amsco Steel Co                                    88,302.52             -      32,654.00      28,333.01             -
Sheet Sales    Griffon Steel Corp                                87,719.15     21,266.90      66,452.25              -             -
Sheet Sales    Delta Steel Products                              83,181.05     15,376.70      67,804.35              -             -
Sheet Sales    Ken Greco Inc                                     81,012.20     74,337.00              -       3,717.00             -
Sheet Sales    Ltv Copperweld - Shelby                           80,309.43             -              -        (519.65)            -
Sheet Sales    Ryerson Tull                                      79,912.34     79,912.34              -              -             -
Sheet Sales    Northwest Steel Corp                              74,505.77     53,982.82      17,423.85              -             -
Sheet Sales    Metal Products Of Alabama                         71,059.29     54,597.00       9,795.30              -             -
Sheet Sales    Ratner Steel Supply Co                            68,537.16     45,511.87      23,025.29              -             -
Sheet Sales    Tektube                                           68,413.69             -              -              -             -
Sheet Sales    Agco Corp                                         66,586.38     43,004.66      23,581.72              -             -
Sheet Sales    National Metalwares Inc                           64,460.50     64,460.50              -              -             -
Sheet Sales    Steel Mfg & Whse Co                               59,240.78     17,135.71      42,105.07              -             -
Sheet Sales    Jericho Steel Sales Corp                          57,853.37     34,863.05      22,990.32              -             -
Sheet Sales    Jame Steel Corp                                   57,484.02     42,907.43              -       5,819.20             -
Sheet Sales    Century Steel Corp                                53,884.69     51,479.94              -       2,404.75             -
Sheet Sales    Darco Steel & Wire                                53,084.22     48,470.20              -              -             -
Sheet Sales    Bradford White Corp                               51,502.79     42,080.39              -              -             -


  MARKET                     CUSTOMER NAME                    121 TO 150    151 TO 180       181+
- -----------    -------------------------------------------   ------------   -----------   ----------
                                                                               
Sheet Sales    Superior Steel Supply L L C                              -             -    13,826.06
Sheet Sales    Dofasco Inc                                              -             -            -
Sheet Sales    Gibraltar Steel Corp                                     -      1,728.45       801.28
Sheet Sales    Jennmar                                                  -             -            -
Sheet Sales    Olympic Steel                                      (418.56)            -    73,515.76
Sheet Sales    National Material Ltd Partner                       634.04             -    71,677.22
Sheet Sales    Ak Steel Corp                                            -             -            -
Sheet Sales    Lone Star Steel Co                                       -             -            -
Sheet Sales    Tomsin Steel Company                                918.90             -     3,738.29
Sheet Sales    Lakeside Metals Inc                                      -             -            -
Sheet Sales    Kane Steel & Iron L L C                                  -             -    11,102.30
Sheet Sales    Tru Weld Grating Inc                                     -             -            -
Sheet Sales    Central Illinois Steel Co                                -             -     2,958.33
Sheet Sales    Amsco Steel Co                                           -             -    27,315.51
Sheet Sales    Griffon Steel Corp                                       -             -            -
Sheet Sales    Delta Steel Products                                     -             -            -
Sheet Sales    Ken Greco Inc                                            -             -     2,958.20
Sheet Sales    Ltv Copperweld - Shelby                                  -     80,829.08            -
Sheet Sales    Ryerson Tull                                             -             -            -
Sheet Sales    Northwest Steel Corp                                     -             -     3,099.10
Sheet Sales    Metal Products Of Alabama                                -             -     6,666.99
Sheet Sales    Ratner Steel Supply Co                                   -             -            -
Sheet Sales    Tektube                                                  -             -    68,413.69
Sheet Sales    Agco Corp                                                -             -            -
Sheet Sales    National Metalwares Inc                                  -             -            -
Sheet Sales    Steel Mfg & Whse Co                                      -             -            -
Sheet Sales    Jericho Steel Sales Corp                                 -             -            -
Sheet Sales    Jame Steel Corp                                          -             -     8,757.39
Sheet Sales    Century Steel Corp                                       -             -            -
Sheet Sales    Darco Steel & Wire                               (4,389.67)     9,003.69            -
Sheet Sales    Bradford White Corp                               9,422.40             -            -


                                      U-12





  MARKET                     CUSTOMER NAME                    TOTAL OWED      1 TO 30      31 TO 60      61 TO 90      91 TO 120
- -----------    -------------------------------------------   ------------   -----------   ----------   ------------   ----------
                                                                                                      
Sheet Sales    Bean Steel Corp.                                 49,424.54     20,458.97            -      (2,000.00)           -
Sheet Sales    Samuel Son & Co - Ltd.                           48,335.38     16,320.95    15,641.86              -            -
Sheet Sales    Macsteel Service Centers                         46,775.68             -            -              -       436.78
Sheet Sales    Feralloy Corp - Chicago                          45,902.55     45,902.55            -              -            -
Sheet Sales    Cooper B-Line Systems Inc                        45,228.00     45,228.00            -              -            -
Sheet Sales    Jackson Tube Service Inc                         43,860.27     43,860.27            -              -            -
Sheet Sales    Rolled Steel Products Corp                       43,159.38     43,159.38            -              -            -
Sheet Sales    Metal Processors Inc                             41,927.68             -            -              -            -
Sheet Sales    Horizon Steel Processing                         41,906.72     31,274.27     9,352.80         379.95       899.70
Sheet Sales    Winner Steel                                     34,556.09             -            -              -            -
Sheet Sales    Sennett Steel Corp                               33,841.17      8,916.32    17,007.39              -     7,917.46
Sheet Sales    Sabre Steel Inc                                  33,733.28     33,733.28            -              -            -
Sheet Sales    Miami Valley Steel Service                       33,077.08             -     8,253.61              -     2,164.87
Sheet Sales    Industrial Steel & Fastener Corp                 32,327.41     29,309.01            -              -            -
Sheet Sales    Industrial Steel Co                              31,445.05     27,847.85            -       1,203.20            -
Sheet Sales    Royal Metal Industries Inc                       25,706.14             -            -              -            -
Sheet Sales    M B Steel Co                                     25,190.33             -    25,190.33              -            -
Sheet Sales    Spartan Metals Inc                               23,904.50      3,409.50    20,495.00              -            -
Sheet Sales    Csn Companhia Siderurgica Nacional Llc           23,800.00             -    12,110.00      11,690.00            -
Sheet Sales    H B Steel                                        20,087.25      7,879.15     6,840.80              -            -
Sheet Sales    Lewder Steel Corp                                16,849.86     15,130.34            -              -            -
Sheet Sales    Universal Metals L L C                           15,899.45     15,899.45            -              -            -
Sheet Sales    Dennen Steel                                     15,843.20     15,843.20            -              -            -
Sheet Sales    Metalwest L L C                                  14,794.01             -            -              -            -
Sheet Sales    Hascall Steel Co                                 13,244.63             -            -      13,244.63            -
Sheet Sales    Mid America Steel Corp                           13,148.85     13,148.85            -              -            -
Sheet Sales    Vmf Materials Inc                                12,909.12             -            -              -            -
Sheet Sales    Lawson Steel Inc                                 12,297.88             -     6,583.50              -            -
Sheet Sales    Armalas Sales Inc                                12,061.65     12,061.65            -              -            -
Sheet Sales    Loeffel Steel Products Inc                       10,286.86      3,050.65     7,236.21              -            -
Sheet Sales    Essex Trading Co                                 10,174.50     10,174.50            -              -            -


  MARKET                   CUSTOMER NAME                      121 TO 150     151 TO 180      181+
- -----------    -------------------------------------------   ------------   -----------   ----------
                                                                               
Sheet Sales    Bean Steel Corp.                                         -             -    30,965.57
Sheet Sales    Samuel Son & Co - Ltd.                                   -             -    16,372.57
Sheet Sales    Macsteel Service Centers                                 -             -    46,338.90
Sheet Sales    Feralloy Corp - Chicago                                  -             -            -
Sheet Sales    Cooper B-Line Systems Inc                                -             -            -
Sheet Sales    Jackson Tube Service Inc                                 -             -            -
Sheet Sales    Rolled Steel Products Corp                               -             -            -
Sheet Sales    Metal Processors Inc                                     -             -    41,927.68
Sheet Sales    Horizon Steel Processing                                 -             -            -
Sheet Sales    Winner Steel                                      1,146.74             -    33,409.35
Sheet Sales    Sennett Steel Corp                                       -             -            -
Sheet Sales    Sabre Steel Inc                                          -             -            -
Sheet Sales    Miami Valley Steel Service                               -      3,077.51    19,581.09
Sheet Sales    Industrial Steel & Fastener Corp                         -             -     3,018.40
Sheet Sales    Industrial Steel Co                                      -             -     2,394.00
Sheet Sales    Royal Metal Industries Inc                               -             -    25,706.14
Sheet Sales    M B Steel Co                                             -             -            -
Sheet Sales    Spartan Metals Inc                                       -             -            -
Sheet Sales    Csn Companhia Siderurgica Nacional Llc                   -             -            -
Sheet Sales    H B Steel                                         1,348.20             -     4,019.10
Sheet Sales    Lewder Steel Corp                                        -             -     1,719.52
Sheet Sales    Universal Metals L L C                                   -             -            -
Sheet Sales    Dennen Steel                                             -             -            -
Sheet Sales    Metalwest L L C                                          -             -    14,794.01
Sheet Sales    Hascall Steel Co                                         -             -            -
Sheet Sales    Mid America Steel Corp                                   -             -            -
Sheet Sales    Vmf Materials Inc                                12,909.12             -            -
Sheet Sales    Lawson Steel Inc                                         -             -     5,714.38
Sheet Sales    Armalas Sales Inc                                        -             -            -
Sheet Sales    Loeffel Steel Products Inc                               -             -            -
Sheet Sales    Essex Trading Co                                         -             -            -


                                      U-13





  MARKET                     CUSTOMER NAME                    TOTAL OWED      1 TO 30      31 TO 60      61 TO 90      91 TO 120
- -----------    -------------------------------------------   ------------   -----------   ----------   ------------   ----------
                                                                                                      
Sheet Sales    Monarch Steel - Detroit                           9,043.30       (283.50)           -       9,043.30            -
Sheet Sales    Champion Resources                                8,779.65      8,779.65            -              -            -
Sheet Sales    Harrington & King Perforating Co Inc              8,692.26             -     8,692.26              -            -
Sheet Sales    Weldmet Industries Inc                            7,931.70      7,931.70            -              -            -
Sheet Sales    Mainline Metals Inc                               7,581.60      7,581.60            -              -            -
Sheet Sales    Ltv Copperweld Marion                             7,570.19             -            -              -            -
Sheet Sales    C D W Service Center - D & B Limited              7,519.31      7,519.31            -              -            -
Sheet Sales    Gateway Metal Products L L C                      7,500.60      7,500.60            -              -            -
Sheet Sales    Stupp Corp                                        7,344.00      7,344.00            -              -            -
Sheet Sales    The Metal Exchange Co                             6,982.50      6,982.50            -              -            -
Sheet Sales    S E T Steel Inc                                   6,647.00      6,647.00            -              -            -
Sheet Sales    Caterpillar Inc                                   6,451.51             -            -              -            -
Sheet Sales    Wolverine Steel Inc                               6,311.10      5,390.40            -              -       920.70
Sheet Sales    Macomb Steel Inc                                  6,038.20             -            -              -            -
Sheet Sales    National Metal Resources                          5,219.96             -            -              -            -
Sheet Sales    Minkin Chandler Corp                              4,940.60             -            -              -     4,940.60
Sheet Sales    Hannibal Industries                               4,195.31             -            -              -            -
Sheet Sales    Allegheny Steel Distributors Inc                  3,631.80             -            -              -            -
Sheet Sales    Frontier Steel Co                                 3,383.73             -     3,383.73              -            -
Sheet Sales    Bethlehem Steel Corp - Sparrows Point             2,895.38      2,895.38            -              -            -
Sheet Sales    Bull Moose Tube Company                           2,571.09             -            -              -            -
Sheet Sales    Soudan Metals Co Inc                              2,419.30             -            -              -            -
Sheet Sales    J Allan Steel Co Of Ohio                          1,155.66             -            -              -            -
Sheet Sales    Norfolk Iron & Metal Co                             946.50             -            -              -            -
Sheet Sales    Feralloy                                            813.42     16,130.87    (5,303.35)             -            -
Sheet Sales    Odonnell Steel Co                                   600.00             -            -              -            -
Sheet Sales    Int'l Utility Structures Inc.                       151.20             -            -              -            -
Sheet Sales    Gilbert Ovila                                        13.33             -    24,043.33     (24,030.00)           -
Sheet Sales    Delta Metal Products Inc                            (33.00)            -            -              -            -
Sheet Sales    Steel Technologies Inc - Louisville                (479.80)      (479.80)           -              -            -
Sheet Sales    Renown Steel                                       (926.77)      (771.10)           -        (155.67)           -


  MARKET                     CUSTOMER NAME                    121 TO 150    151 TO 180       181+
- -----------    -------------------------------------------   ------------   -----------   ----------
                                                                              
Sheet Sales    Monarch Steel - Detroit                                  -             -       283.50
Sheet Sales    Champion Resources                                       -             -            -
Sheet Sales    Harrington & King Perforating Co Inc                     -             -            -
Sheet Sales    Weldmet Industries Inc                                   -             -            -
Sheet Sales    Mainline Metals Inc                                      -             -            -
Sheet Sales    Ltv Copperweld Marion                                    -      7,570.19            -
Sheet Sales    C D W Service Center - D & B Limited                     -             -            -
Sheet Sales    Gateway Metal Products L L C                             -             -            -
Sheet Sales    Stupp Corp                                               -             -            -
Sheet Sales    The Metal Exchange Co                                    -             -            -
Sheet Sales    S E T Steel Inc                                          -             -            -
Sheet Sales    Caterpillar Inc                                          -      6,451.51            -
Sheet Sales    Wolverine Steel Inc                                      -             -            -
Sheet Sales    Macomb Steel Inc                                         -             -     6,038.20
Sheet Sales    National Metal Resources                                 -             -     5,219.96
Sheet Sales    Minkin Chandler Corp                                     -             -            -
Sheet Sales    Hannibal Industries                                      -             -     4,195.31
Sheet Sales    Allegheny Steel Distributors Inc                         -             -     3,631.80
Sheet Sales    Frontier Steel Co                                        -             -            -
Sheet Sales    Bethlehem Steel Corp - Sparrows Point                    -             -            -
Sheet Sales    Bull Moose Tube Company                          (1,052.80)            -     3,623.89
Sheet Sales    Soudan Metals Co Inc                              1,057.50             -     1,361.80
Sheet Sales    J Allan Steel Co Of Ohio                                 -             -     1,155.66
Sheet Sales    Norfolk Iron & Metal Co                             224.70        721.80            -
Sheet Sales    Feralloy                                                 -             -   (10,014.10)
Sheet Sales    Odonnell Steel Co                                (4,987.50)            -     5,587.50
Sheet Sales    Int'l Utility Structures Inc.                            -             -       151.20
Sheet Sales    Gilbert Ovila                                            -             -            -
Sheet Sales    Delta Metal Products Inc                                 -             -       (33.00)
Sheet Sales    Steel Technologies Inc - Louisville                      -             -            -
Sheet Sales    Renown Steel                                             -             -            -


                                      U-14





  MARKET                     CUSTOMER NAME             TOTAL OWED         1 TO 30         31 TO 60       61 TO 90       91 TO 120
- -----------    -----------------------------------   --------------   --------------   -------------   -------------   ------------
                                                                                                     
Sheet Sales    Lamination Specialties Co                  (1,965.44)       (1,965.44)              -               -              -
Sheet Sales    Millerbernd Mfg Co                         (2,660.82)               -               -               -              -
Sheet Sales    Voss Taylor                                (4,815.00)               -       (4,815.00)              -              -
Sheet Sales    Newport Steel Corp                         (7,095.00)       (7,095.00)              -               -              -
Sheet Sales    Evapco Inc.                               (10,743.01)               -               -               -              -
Sheet Sales    Deere & Company                           (58,554.32)      (29,426.93)              -               -              -
               Contra and Other                        2,333,440.16

               TOTALS                                300,063,927.31   165,463,881.75   54,245,891.34   11,830,091.12   7,348,545.18


  MARKET                     CUSTOMER NAME             121 TO 150       151 TO 180         181+
- -----------    -----------------------------------   --------------   --------------   -------------
                                                                           
Sheet Sales    Lamination Specialties Co                          -                -               -
Sheet Sales    Millerbernd Mfg Co                                 -                -       (2,660.82)
Sheet Sales    Voss Taylor                                        -                -               -
Sheet Sales    Newport Steel Corp                                 -                -               -
Sheet Sales    Evapco Inc.                                        -                -      (10,743.01)
Sheet Sales    Deere & Company                                    -                -      (29,127.39)
               Contra and Other

               TOTALS                                  1,580,862.93     5,741,695.93   51,519,518.90


                                      U-15



PROCOIL CORPORATION
30-Nov-02



           CUSTOMER NAME                       AMOUNT DUE         0-30          31-60          61-90        91-120     +120 DAYS
- -----------------------------------          --------------    ----------     ----------     ----------    ---------   ----------
                                                                                                     
AK Steel Company                                 166,233.60     73,526.40      70,329.60      22,377.60         0.00         0.00
Ford Motor Company                                 1,000.00          0.00           0.00           0.00         0.00     1,000.00
General Motors Corp.                               7,408.18          0.00           0.00           0.00         0.00     7,408.18
GM of Canada Limited                              49,862.22          0.00           0.00           0.00         0.00    49,862.22
General Motors of Canada Ltd.                    239,465.72    125,495.05     110,298.68       3,671.99         0.00         0.00
Ogihara America Corp                               1,239.00          0.00           0.00           0.00         0.00     1,239.00
New Center Stamping, Inc                          15,659.40      7,539.15           0.00       8,120.25         0.00         0.00
AZ Automotive Corp.                               70,092.58     38,366.25       7,673.25      24,053.08         0.00         0.00
AK Steel Company                                 253,244.29     93,225.12     128,932.32       7,496.90     1,800.00    21,789.95
Berg Steel Corporation                             1,360.13          0.00           0.00           0.00         0.00     1,360.13
Dearborn Stamping Plant                           17,882.19          0.00           0.00           0.00         0.00    17,882.19
Ford Motor Company                                58,797.80          0.00           0.00           0.00         0.00    58,797.80
General Motors Corp.                               6,140.17          0.00           0.00           0.00         0.00     6,140.17
GM of Canada Limited                             -29,465.42          0.00           0.00           0.00         0.00   -29,465.42
Hamilton Steel                                    13,172.24      3,755.69       9,416.55           0.00         0.00         0.00
I/N KOTE                                          20,572.26        216.93         154.95           0.00         0.00    20,200.38
Jericho Steel Sales                               27,541.21      8,820.60       9,898.13       8,822.48         0.00         0.00
Marubeni Metal Blanking Inc.                       1,920.00      1,920.00           0.00           0.00         0.00         0.00
Merkur Steel Supply, Inc.                          2,132.95          0.00       2,132.95           0.00         0.00         0.00
Precise Metal Products Inc                         4,295.05      2,114.55       2,180.50           0.00         0.00         0.00
Promet Steel                                         715.50        715.50           0.00           0.00         0.00         0.00
Pro-Tec Coating Company                           98,029.77     43,487.15      40,306.08       2,317.70         0.00    11,918.84
Summit Metal Processing, Inc.                     17,017.50      5,448.00      11,569.50           0.00         0.00         0.00
Thyssen Steel                                    138,926.99    101,729.15      23,957.30         332.50         0.00    12,908.04
US Steel Gary Works                                9,493.69          0.00           0.00         142.45         0.00     9,351.24
Bethlehem Steel Corp.                            155,316.45     56,752.37           0.00           0.00         0.00    98,564.08
The Budd Company                                  72,654.05     23,783.40      47,358.76       1,307.14         0.00       204.75
Carbon Steel Stainless Inc.                        1,194.28          0.00       1,194.28           0.00         0.00         0.00
DOFASCO USA INC                                  145,220.43     97,214.43      48,006.00           0.00         0.00         0.00


                                      U-16



                                                                                                     
Ford Motor Company                                11,869.62          0.00           0.00           0.00         0.00    11,869.62
Ford Motor Company                                 1,700.00          0.00       1,700.00           0.00         0.00         0.00
Inland Steel                                         423.48          0.00         423.48           0.00         0.00         0.00
Lee Steel Co.                                      4,224.37      1,257.30           0.00         227.67       360.00     2,379.40
Noble MetalProcessing, Inc.                      125,557.50     21,300.90      26,989.90      66,656.80    10,609.90         0.00
Rouge Steel                                       56,179.60     10,342.20      20,412.42      11,833.00         0.00    13,591.98
TWB                                                2,068.08          0.00           0.00           0.00         0.00     2,068.08
Straight Steel Company                             5,456.20          0.00           0.00           0.00         0.00     5,456.20
MST Corporation                                       62.88          0.00          62.88           0.00         0.00         0.00
Unbilled and Other                               544,741.00
        PROCOIL TOTAL                          2,319,404.96    717,010.14     562,997.53     157,359.56    12,769.90   324,526.83

TMH                                        $      19,000.00
NSL                                        $     722,000.00
N Squared                                  $      18,000.00
National Steel Pellet Company              $   1,213,789.98
Allow. For Competitive Pricing             $  (7,635,000.00)
Granite City Steel                         $     (13,000.00)
Mathies Coal Company                       $    (946,000.00)
                                           ----------------

Gross Accounts Receivable                  $ 295,762,122.30

Customer Notes and Miscellaneous           $   4,513,000.00
Allowance - Cash Discounts                 $  (1,000,000.00)
Allowance - Claims                         $  (5,089,000.00)
Allowance - Price and Freight              $  (4,615,000.00)
Allowance - Doubtful Accounts              $ (46,354,000.00)

Net Receivables                            $ 243,217,122.30
Net Receivables per Financials ($
Thousands)                                 $        242,002



                                      U-17



                                    Exhibit V

Section (iii) of Schedule 5.18 of the Disclosure Schedule is hereby amended to
include the following items:

     26.  Electric Service Agreement, dated March 12, 1975, between the Company,
          National Steel Pellet Company and Minnesota Power & Light Company,
          including amendments thereto

Section (iv) of Schedule 5.18 of the Disclosure Schedule is hereby amended to
include the following items:

     21.  Electric Service Agreement, dated March 12, 1975, between the Company,
          National Steel Pellet Company and Minnesota Power & Light Company,
          including amendments thereto
     22.  Gas Operations Program Agreement, effective November 1, 2002, between
          National Steel Pellet Company and Cornerstone Energy, Inc.
     23.  Mississippi #1 Mine Lease (No. 2095-N), dated October 3, 1960, between
          National Steel Pellet Company and the State of Minnesota, including
          amendments thereto
     24.  Stein Mine Lease (No. 3097-N), dated June 3, 1993, between National
          Steel Pellet Company and the State of Minnesota, including amendment
          thereto
     25.  Mesabi Chief Mine Lease (No. 3098-N), dated June 3, 1993, between
          National Steel Pellet Company and the State of Minnesota, including
          amendment thereto
     26.  Mississippi #2 Mine Lease (No. 3099-N), dated June 3, 1993, between
          National Steel Pellet Company and the State of Minnesota, including
          amendment thereto
     27.  Bennett Mine Lease, effective as of January 1, 1966, between Keewatin
          Mining Company and the Company and Amended and Restated Bennett Mine
          Operating Agreement, effective as of July 1, 1994, between Keewatin
          Company and the Company.
     28.  Russell Mine Lease, effective as of January 1, 1966, as amended on
          January 1, 1970 and Amended and Restated Russell Mine Operating
          Agreement, effective as of July 1, 1994, between Sargent Land Company
          Limited Partnership and the Company.
     29.  Russell Annex Lease, effective as of January 1, 1966, between the
          Trustees of the Trust known as Great Northern Iron Ore Properties,
          Trustees of the Trust of James G. Bennett 1944 Mineral Interests, J.
          M. Longyear Heirs and the Company and the Amended and Restated Russell
          Annex Operating Agreement, effective July 1, 1994, between the
          Trustees of the Trust known as Great Northern Iron Ore Properties, J.
          M. Longyear Heirs, A Limited Partnership and the Company, as amended
          by the Letter of Intent, dated February 13, 1996.

                                      V-1



     30.  Pooling Agreement, effective as of January 1, 1966, between Sargent
          Land Company, Hanna Ore Mining Company, The Hanna Mining Company,
          Butler Brothers and the Company.

Section (v) of Schedule 5.18 of the Disclosure Schedule is hereby amended to
include the following items:

     6. National Steel Pellet Company
          a.   Sellers are parties to contracts for industrial maintenance
               services with the following entities:
                    .    OSI
                    .    Safety-Kleen
                    .    Rapid Tooter
          b.   Sellers are parties to contracts for waste and hazardous
               substance management services, including disposal, with the
               following entities:
                    .    Bougalis & Sons Construction
                    .    Lighting Unlimited
                    .    Lamb Composting
                    .    Envirobate
                    .    Recyclights
                    .    Wenzel Construction
                    .    Minnesota Power

Section (vi)(c) of Schedule 5.18 of the Disclosure Schedule is hereby amended to
include the following item:

     19.  National Steel Pellet Company - Local Union 2660 of USWA - 8/1/99.
          Termination Date: August 1, 2004

Section (viii) of Schedule 5.18 of the Disclosure Schedule is hereby amended to
include the following items:

     14.  Lease agreement for National Steel Pellet Wheel Loader, dated July 26,
          1999, between the Company and GE Capital.
     15.  Lease agreement for National Steel Pellet Haul Truck, dated April 28,
          2000, between the Company and GE Capital.
     16.  Lease agreement for National Steel Pellet Hydraulic Shovel, dated
          April 3, 2001, between the Company and GE Capital.
     17.  Lease agreement for National Steel Pellet Hydraulic Shovel and Haul
          Truck, dated April 9, 1999, between the Company and Comerica Leasing.
     18.  Lease agreement for National Steel Pellet Haul Truck, dated May 7,
          1999, between the Company and Comerica Leasing.
     19.  Lease agreement for National Steel Pellet Wheel Loader, dated March
          15, 2000, between the Company and Heller Financial.

                                      V-2



Schedule 5.18 of the Disclosure Schedule is hereby amended to include the
following new Section (x):

     (x)  National Steel Pellet Company Loans
          1.   Loan agreement, dated October 30, 1996, between National Steel
               Pellet Company and the Office of the Commissioner of Iron Range
               Resources and Rehabilitation, including amendments and related
               documents.
          2.   Promissory Note, dated June 11, 1996, between the Company and the
               City of Keewatin.

                                      V-3



                                    Exhibit W

Schedule 5.19 of the Disclosure Schedule is hereby amended to include the
following items:

     National Steel Pellet Company Permits
     1.   Radio Station License (Call Sign WPHH785), issued March 22, 2000, to
          National Steel Pellet Company by the Federal Communications Commission
     2.   Radio Station Authorization (Call Sign WNRD611), granted September 9,
          1998, to National Steel Pellet Company by the Federal Communications
          Commission
     3.   Radio Station Authorization (Call Sign KAF691), granted February 28,
          2002, to National Steel Pellet Company by the Federal Communications
          Commission

NATIONAL STEEL PELLET COMPANY



      MEDIA             APPLICABLE PERMIT             PERMIT INFORMATION                      DATES
- ---------------------------------------------------------------------------------------------------------------------
                                                                      
       Air          Minnesota Pollution Control        Pellet Screening          Issue Date: November 28, 1995
                         Agency ("MPCA")             Construction Permit       Expiration Date: November 28, 2000
                         No. 13700063-006
- ---------------------------------------------------------------------------------------------------------------------
       Air                     MPCA                Total Facility Operating        Issue Date: August 8, 1997
                         No. 13700063-002                   Permit               Expiration Date: August 8, 2002
- ---------------------------------------------------------------------------------------------------------------------
                   National Pollutant Discharge
                   Elimination System ("NPDES")      General Storm Water          Issue Date: November 1, 1997
      Water       Industrial Activity Permit MN           Permit                Expiration Date: October 31, 2002
                             G611000
- ---------------------------------------------------------------------------------------------------------------------
                     NPDES Permit MN 0055948,
                   including MPCA certification                                    Issue Date: January 16, 1996
      Water       under Section 401 of the Clean        Tailings Basin          Expiration Date: September 30, 1997
                            Water Act
- ---------------------------------------------------------------------------------------------------------------------
      Water          NPDES Permit MN 0031879            Mine and Plant            Issue Date: January 16, 1996
                                                                                 Expiration Date: July 31, 1999
- ---------------------------------------------------------------------------------------------------------------------
                                                   Drain, excavate, and/or
      Water         US Army Corp of Engineers     discharge fill material in        Issue Date: April 24, 1997
                    Permit No. 96-04859-IP-TWP        isolated wetlands          Expiration Date: December 31, 2003
- ---------------------------------------------------------------------------------------------------------------------
      Water      Minnesota Department of Natural     Water Appropriation           Issue Date: January 6, 1966
                        Resources ("MDNR")
- ---------------------------------------------------------------------------------------------------------------------
                     U.S. Nuclear Regulatory        Materials License for
     Nuclear          Commission License No.      By-Products, Source and/or     Expiration Date: November 30, 2004
                           22-05587-02             Special Nuclear Material
- ---------------------------------------------------------------------------------------------------------------------
   Explosives     Explosives Permit No. B 28628    Mining Explosives Permit         Issue Date: July 9, 2002
                                                   issued by Hibbing Police      Expiration Date: July 31, 2003
- ---------------------------------------------------------------------------------------------------------------------


                                      W-1



NATIONAL STEEL PELLET COMPANY



      MEDIA             APPLICABLE PERMIT             PERMIT INFORMATION                      DATES
- ---------------------------------------------------------------------------------------------------------------------
                                                                       
                                                    Mining Explosives Permit
   Explosives     Explosives Permit No. B 28079     issued by Itasca County          Issue Date: July 9, 2002
                                                      Sheriff's Department        Expiration Date: July 31, 2003
- ---------------------------------------------------------------------------------------------------------------------
      Other             MPCA MND071344733            Hazardous Waste Small        Expiration Date: June 30, 2003
                                                   Quantity Generator License
- ---------------------------------------------------------------------------------------------------------------------
      Other           MPCA Permit #WTSF-115            Waste Tire Storage          Issue Date: January 23, 1992
                                                                                Expiration Date: January 23, 1997
- ---------------------------------------------------------------------------------------------------------------------
                                                  Aboveground and Underground
      Other         MPCA Permit No. AST# 11153     Storage Tanks for Storing        Issue Date: March 6, 2000
                                                       Liquid Substances          Expiration Date: March 6, 2005
- ---------------------------------------------------------------------------------------------------------------------
      Other       Minnesota Mineland Reclamation           Dam Safety               Issue Date: March 14, 1986
                        Permit #MN CO49425                                       Expiration Date: March 6, 2005
- ---------------------------------------------------------------------------------------------------------------------
      Other                    DOT                    Hazardous Materials            Issue Date: June 5, 2002
                                                  Certificate of Registration     Expiration Date: June 30, 2003
- ---------------------------------------------------------------------------------------------------------------------
      Other       Minnesota Mineland Reclamation         Permit to Mine             Issue Date: March 14, 1986
                              Permit
- ---------------------------------------------------------------------------------------------------------------------
      Other       State of Minnesota Certificate  Boilers and Pressure Vessels  Expiration Date: December 31, 2002
                     of Exemption No. 257176
- ---------------------------------------------------------------------------------------------------------------------


                                      W-2



                                    Exhibit X

Section II of Schedule 5.20 of the Disclosure Schedule is hereby amended to
include the following items:

National Steel Pellet Company
1.   The taconite Maximum Achievable Control Technology standard, as proposed by
     EPA on December 18, 2002, would require an upgrade to NSPC's waste gas dust
     control system.
2.   In November 2000, NSPC was contacted by the City of Hibbing regarding drums
     found on property formerly owned by the Hanna Ore Mining Company. NSPC
     notified the City and the Minnesota Pollution Control Agency ("MPCA") that
     subsequent sampling revealed no contamination and to date, no further
     action has been taken against NSPC.
3.   In June 1981, NSPC provided notice to EPA pursuant to section 103(c) of the
     Comprehensive Environmental Response, Compensation, and Liability Act of
     1980, 42 U.S.C. Section 9601 et seq., ("CERCLA"), that approximately 70,000
     gallons of open gear lubricants containing between 1% and 2% lead had been
     disposed in stockpiles throughout NSPC's property.
4.   In October 1999, the EPA Region V Office issued an Information Request to
     NSPC seeking records relating to production rates, fuel usage, physical
     changes and changes in the method of operation of NSPC facilities since
     1978. NSPC responded to the Request in December 1999 and has received no
     further communication from EPA regarding this request.
5.   NSPC has experienced periodic exceedances of its turbidity limit at Outfall
     050.
6.   In August 2002, the MPCA issued an Administrative Penalty Order to NSPC for
     tailings basin fugitive dust emissions. Due to unseasonable weather
     conditions, NSPC continues to experience fugitive dust incidents in the
     area of its tailings basins, and although no further penalties have been
     assessed by MPCA, NSPC has received numerous complaints from local
     residents regarding property damage stemming from these emissions.
7.   NSPC's Title V Air Permit requires NSPC to do air modeling for particulate
     matter. While NSPC has been advised by the state that this modeling is not
     required despite the permit condition, should the state subsequently elect
     to enforce this requirement, there is the potential that modeling would not
     show compliance with the established ambient air standard.
8.   All other potential violations, releases, and areas of contamination
     referenced in the Draft Environmental Due Diligence Assessment of National
     Steel Pellet Company, Keewatin, Minnesota, Prepared by ENSR, July 2002,
     Document No. 06975-293-208

                                       X-1

EX-10.H

                                                                    EXHIBIT 10-H

                                                               SIGNATURE VERSION
                                                                       12 AUGUST
                      ------------------------------------
                           PURCHASE AND SALE AGREEMENT
                      ------------------------------------

                        GALVATEK AMERICA CORPORATION AND
                          GALVATEK ONTARIO CORPORATION
                                       and
                        NATIONAL ONTARIO CORPORATION AND
                          NATIONAL ONTARIO II, LIMITED

                              Dated August 13, 2002



                               TABLE OF CONTENTS



                                                                                Page(s)
                                                                                -------
                                                                                
SECTION 1.   DEFINITIONS AND INTERPRETATIONS......................................  2
      1.1    Definitions..........................................................  2
      1.2    Interpretations......................................................  6

SECTION 2.   SALE AND PURCHASE OF THE NSC INTERESTS; CONSIDERATION................  7

SECTION 3.   CLOSING..............................................................  7
     3.1     Closing..............................................................  7
     3.2     Closing Deliveries of the NSC SPVs...................................  7
     3.3     Closing Deliveries of the NKK SPVs...................................  8

SECTION 4.   CONDITIONS PRECEDENT.................................................  9
     4.1     Conditions Precedent to Obligations of the NSC SPVs..................  9
               4.1.1  Compliance with Agreement...................................  9
               4.1.2  Execution of the Forbearance Agreement, LAA and Two-Party
                      TPA.........................................................  9
               4.1.3  Bankruptcy Court Approval...................................  9

     4.2     Conditions Precedent to Obligations of the NKK SPVs..................  9
               4.2.1  Compliance with Agreement...................................  9
               4.2.2  Execution of the Forbearance Agreement, LAA and Two-Party
                      TPA.........................................................  9
               4.2.3  Bankruptcy Court Approval...................................  9
               4.2.4  Appropriate Entry on DNN Share Register.....................  9
               4.2.5  Appropriate Entry in DNNLP Record of Limited Partners.......  9
               4.2.6  Issuance of Declaration of Change........................... 10
               4.2.7  Adoption of Enabling DNN Resolutions........................ 10

SECTION 5.   COVENANTS OF THE PARTIES............................................. 10
     5.1     Mutual Covenants of the Parties...................................... 10
     5.2     Additional Covenants of NSC SPVs..................................... 10
     5.3     Additional Covenants of the NKK SPVs................................. 11

SECTION 6.   REPRESENTATIONS AND WARRANTIES....................................... 11
     6.1     Representations and Warranties of the NSC SPVs....................... 11
     6.2     Representations and Warranties of the NKK SPVs....................... 11

SECTION 7.   COSTS................................................................ 11

SECTION 8.   TERMINATION; SURVIVAL OF PROVISIONS OF  AGREEMENT.................... 11
     8.1     Termination of Agreement............................................. 11
     8.2     Survival of Provision of Agreement................................... 12


                                        i




                                                                                Page(s)
                                                                                -------
                                                                                
SECTION 9.   NOTICES.............................................................. 12

     9.1     Addresses............................................................ 12
     9.2     Proof of Notice...................................................... 13

SECTION 10.  [RESERVED]........................................................... 13

SECTION 11.  GOVERNING LAW........................................................ 13

SECTION 12.  MISCELLANEOUS........................................................ 13
     12.1    Entire Agreement..................................................... 13
     12.2    Amendments........................................................... 13
     12.3    Actions Upon Breach.................................................. 13
     12.4    Waivers.............................................................. 13
     12.5    Cumulative Rights.................................................... 14
     12.6    Severability......................................................... 14
     12.7    Counterparts......................................................... 14
     12.8    Assignment........................................................... 14

Schedule 3.2 Documents to be Delivered by the NSC SPVs............................ 16

Schedule 3.3 Documents to be Delivered by the NKK SPVs............................ 17

Schedule 6.1 Warranties Relating to the NSC SPVs.................................. 18

Schedule 6.2 Warranties Relating to the NKK SPVs.................................. 20

Exhibit A [Line Access Agreement]................................................. 22

Exhibit B [Sale Approval Order]................................................... 23


                                       ii



          THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated August 13,
2002, is made by and between:

          (1)  Galvatek America Corporation, a Delaware corporation ("GAC"), and
               Galvatek Ontario Corporation, a Delaware corporation ("GOC"); and

          (2)  National Ontario Corporation, a Delaware corporation ("NOC"), and
               National Ontario II, Limited, a Delaware corporation ("NOII").

                                   RECITALS:

          A.   National Steel Corporation, a Delaware corporation ("NSC"), and
               certain of its affiliates, filed for bankruptcy protection in the
               United States on March 6, 2002.

          B.   Following notice of the resulting Financial Default of the
               Partnership Agreement made as of September 18, 1990, as amended
               by Amendment No. 1 dated as of May 31, 1991 ("LPA") among Dofasco
               Inc., a Canadian corporation ("Dofasco"), NOII, GOC and DNN
               Galvanizing Corporation, an Ontario corporation ("DNN"), by
               Dofasco to NOII on April 12, 2002, as affirmed and adopted by GOC
               on May 3, 2002, a "Matured Default" occurred on April 18, 2002.

          C.   BBK, Inc., a Michigan corporation (the "Valuator"), was appointed
               by the NKK SPVs (defined below), the appointment of which has
               been consented to by the NSC SPVs (defined below), to serve as
               the independent valuator prescribed by section [sic] 8.5(1) of
               the LPA and Section 5.4 of the SA (defined below) to determine
               the purchase price for the NSC Interests (defined below) to be
               acquired by the NKK SPVs. BBK signed an engagement letter with
               the NKK SPVs dated May 20, 2002 (the "Engagement Letter") and
               delivered its valuation of each of the NSC Interests on July 3,
               2002.

          D.   Pursuant to section 8.5(1) of the LPA, GOC must acquire the 9.5%
               Partnership Interest in DNN Galvanizing Limited Partnership
               ("DNNLP") owned by NOII and pursuant to Section 5.4 of the
               Shareholders' Agreement ("SA") made as of September 18, 1990
               among DNN, 904153 Ontario Inc., an Ontario corporation, NOC and
               GAC, GAC must acquire the 50 Class B Shares of DNN owned by NOC
               (the 50 Class B Shares together with the 9.5% Partnership
               Interest, collectively the "NSC Interests"), all in the manner
               prescribed by the LPA and in accordance with the terms set forth
               herein.

          E.   On July 9, 2002, Dofasco, NKK Corporation, a Japanese corporation
               ("NKK"), and NSC entered into a Letter Agreement the ("Letter
               Agreement") which in part extended the date on or before which
               the NSC Interests must be purchased from July 16, 2002 to August
               16, 2002. Such Letter Agreement was followed by a Forbearance
               Agreement dated as of



               the date of this agreement entered into among Dofasco, NSC,
               the NSC SPVs and the NKK SPVs, among others (the "Forbearance
               Agreement"), which, in part, effects certain amendments to the
               LPA, SA and TPA (defined below).

          F.   The parties desire to enter into this Agreement for the purpose
               of setting out the terms for the acquisition of the NSC Interests
               and various related matters attendant therewith.

          SECTION 1. DEFINITIONS AND INTERPRETATIONS

          1.1  Definitions.

               IN THIS AGREEMENT:

               "action(s)" means claims, suits, proceedings and investigations,
               whether at law or in equity, before any court, tribunal,
               regulatory body, arbitrator,arbitration panel or Governmental
               Body.

               An "affiliate" of a person means another person, directly or
               indirectly, controlling or controlled by or under common control
               with, such person. With respect to an individual, the term
               "affiliate" shall also mean his or her spouse, parents and
               children (natural or adopted).

               "Bankruptcy Court" means the United States Bankruptcy Court for
               the Northern District of Illinois, Eastern Division.

               "Business Day" means a day during which commercial banks are open
               for business in New York, New York and in Toronto, Ontario.

               "Canadian dollar" or "CN$" means the lawful currency of Canada.

               "Class B Shares" has the meaning used in the SA.

               "50 Class B Shares" means the 50 Class B Shares owned by NOC.

               "50 Class B Shares Purchase Price" means the amount equivalent to
               the fair value of the 50 Class B Shares as determined by the
               Valuator pursuant to the Engagement Letter.

               "Closing" has the meaning specified in Section 3.1.

               "Closing Date" has the meaning specified in Section 3.1.

               "control" means the possession, directly or indirectly, of the
               power to direct or cause the direction of the management and
               policies of a person, whether through the ownership of a majority
               of voting shares, the ability

                                        2



               to appoint a majority of the directors of such person, or by
               contract or otherwise.

               "DNN" has the meaning assigned to it in the recitals.

               "DNN Agreements" means the LAA, LPA, the SA, the TPA, the Letter
               Agreement, the Forbearance Agreement the Two-Party TPA, and all
               agreements incidental thereto.

               "DNNLP" has the meaning assigned to it in the recitals.

               "Dofasco" has the meaning assigned to it in the recitals.

               "Dofasco Participant" means 904153 Ontario Inc., an Ontario
               corporation.

               "Encumbrance" means any mortgage, charge, pledge, lien,
               assignment, hypothecation, security interest, title retention,
               third party right or any other security agreement or arrangement
               and includes any interest or equity of any person (including,
               without prejudice to the generality of the foregoing, any right
               to acquire, option or rights of preemption or first refusal).

               "Engagement Letter" has the meaning assigned to it in the
               recitals.

               "Financial Default" has the meaning assigned to it in the LPA.

               "Forbearance Agreement" has the meaning assigned to it in the
               recitals.

               "GAC" has the meaning assigned to it in the preordium.

               "GOC" has the meaning assigned to it in the preordium.

               "Governmental Body" means any national, state, county, municipal
               or other local government department, commission, board, bureau,
               agency, authority of Ontario, of Canada or of the United States,
               and any person exercising executive, legislative, judicial or
               regulatory functions of or pertaining to any of the foregoing
               entities, including, without limitation, all commissions, boards,
               bureaus, arbitrators and arbitration panels, and any authority or
               other person controlled by any of the foregoing.

               "Income Tax Act (Canada)" or "ITA" means the Income Tax Act,
               R.S.C. 1985 (5th Supp.), as amended, the Income Tax Application
               Rules, R.S.C. 1985 (5th Supp.), c. 2, the Income Tax Regulations
               as amended to the date hereof and where a reference is made to a
               provision under the Income Tax Act it shall be deemed to include
               where applicable the Income Tax Application Rules, the Income Tax
               Regulations, any Notice of Ways and Means Motion or Bill tabled
               in the House of Commons or any press

                                        3



               release or publicly disseminated statement by or on behalf of the
               Minister of Finance, which may result in an amendment to the
               Income Tax Act, the Income Tax Application Rules or the Income
               Tax Regulations.

               "Joint Voting Agreement" means the Joint Venture Voting Agreement
               made as of March 15, 1990 between NKK and NSC.

               "LAA" means the Line Access Agreement to be entered into at the
               Closing by and among Dofasco, DNN, NAC and NSC substantially in
               the form of Exhibit A hereto.

               "Law(s)" means laws, rules, regulations, codes, orders,
               ordinances, judgments, injunctions, decrees and policies
               (including, without limitation, any foreign exchange controls).

               "Letter Agreement" has the meaning assigned to it in the
               recitals.

               "LPA" has the meaning assigned to it in the recitals.

               "Matured Default" has the meaning assigned to it in the LPA.

               "Minister of National Revenue" means the Minister of National
               Revenue of Canada.

               "NAC" means NKK U.S.A. Corporation, a Delaware corporation.

               "NKK" means NKK Corporation, a Japanese corporation.

               "NKK SPVs" means GAC and GOC.

               "NOII" has the meaning assigned to it in the preordium.

               "NOC" has the meaning assigned to it in the preordium.

               "NSC" has the meaning assigned to it in the recitals.

               "NSC Interests" has the meaning assigned to it in the recitals.

               "NSC SPVs" means NOC and NOII.

               "Ontario" means the Province of Ontario, Canada.

               "person" means any individual, corporation, company, partnership,
               joint venture, association, joint stock company, trust or
               unincorporated organization.

               "Partnership Interest" has the meaning assigned to it in the LPA.

                                        4



               "9.5% Partnership Interest" means the Partnership Interest owned
               by NOII.

               "Purchase Price" means the aggregate of the 9.5% Partnership
               Interest Purchase Price and the 50 Class B Shares Purchase Price,
               less the fees and expenses paid or payable to the Valuator in
               accordance with the Engagement Letter.

               "9.5% Partnership Interest Purchase Price" means the amount
               equivalent to the fair value of the 9.5% Partnership Interest as
               determined by the Valuator pursuant to the Engagement Letter.

               "Remittance Date" has the meaning assigned to it in Section
               3.2(f) hereof.

               "SA" has the meaning assigned to it in the recitals.

               "Sale Approval Order" means an Order of the Bankruptcy Court
               substantially in the form of Exhibit B hereto.

               "Tax" or "Taxes" means (a) all taxes payable under the Income Tax
               Act (Canada) and all federal, provincial, territorial, municipal,
               local, foreign and other taxes, imposts, rates, levies,
               assessments and government fees, charges or dues lawfully levied,
               assessed or imposed against the NSC SPVs including without
               limitation, income taxes, gross receipts taxes, excise taxes,
               sales taxes, goods and service tax, use taxes, franchise taxes,
               withholding taxes, payroll taxes, employment taxes (including
               CPP, EI and worker's compensation premiums), severance taxes,
               transfer taxes, property or windfall profits taxes, capital
               taxes, customs and import duties and other governmental charges
               and assessments, together with any interest and any penalties,
               additions to tax or additional amounts imposed by any taxing
               authority (domestic or foreign) upon the NSC SPVs with respect to
               all periods or portions thereof ending on or before the Closing
               and/or (b) any liability of the NSC SPVs for the payment of any
               amounts of the types described in the immediately preceding
               clause (a) as a result of being a member of an affiliated or
               combined group.

               "Tax Legislation" means collectively, the Income Tax Act (Canada)
               and all provincial, state, municipal, county, territorial or
               other Tax statutes including all treaties, conventions, case law,
               interpretation bulletins, circulars and releases, rules,
               regulations, orders and decrees of any jurisdiction.

               "Tax Returns" means all reports, returns and other documents
               required to be filed under the provisions of any Tax Legislation
               and any tax forms required to be filed, whether in connection
               with a tax return or not, under any provisions of any applicable
               Tax Legislation.

                                        5



               "TPA" means Amended and Restated Toll Processing Agreement made
               as of July 26, 1996 between [sic] NAC, NSC and DNN.

               "Two-Party TPA" means the Toll Processing Agreement to be entered
               into between NAC and DNN at the Closing.

               "Transaction Documents" means this Agreement, the Forbearance
               Agreement, LAA and the Two-Party TPA and any other agreements
               that are entered into to consummate the transactions contemplated
               by this Agreement.

               "transfer" means any sale, bequest, exchange, assignment or gift,
               the creation of any Encumbrance, and any other disposition of any
               kind, whether voluntary or involuntary, affecting title to or
               possession of the subject item accomplished directly or
               indirectly.

               "United States" means the United States of America.

               "U.S. dollars" or "US$" means the lawful currency of the United
               States of America.

               "Valuation Date" means the date on which the valuator delivers
               the valuation of each of Class B Shares and of the 9.5%
               Partnership Interest pursuant to the terms of the Engagement
               Letter.

               "Valuator" has the meaning assigned to it in the recitals.

          1.2  Interpretations.

          In this Agreement:

               (a) a reference to this Agreement or any other document or to any
specified provision of this Agreement or any other document is to this
Agreement, that document or that provision as in force for the time being and as
amended from time to time in accordance with the terms of this Agreement or that
document or, as the case may be, with the agreement of the relevant parties;

               (b) words importing the singular include the plural and vice
versa, words importing a gender include every gender and references to persons
include corporations, partnerships and other unincorporated associations or
bodies of persons;

               (c) the contents table and the descriptive headings to sections,
exhibits and schedules are inserted for convenience only, have no legal effect
and shall be ignored in the interpretation of this Agreement;

               (d) references to a section, exhibit or a schedule are to a
section of, exhibit to or a schedule to this Agreement; references to this
Agreement include its schedules,

                                       6



and references in an exhibit or in a schedule or part of an exhibit or a
schedule to a paragraph are to a paragraph of that schedule or exhibit or part
of that schedule or exhibit; and

               (e) where any representation or warranty contained in this
Agreement is expressly qualified by reference to the knowledge of a party, that
party confirms that it has made due and diligent inquiry as to the matters that
are the subject of any such representation or warranty.

          SECTION 2. SALE AND PURCHASE OF THE NSC INTERESTS; CONSIDERATION

          Subject to the terms and conditions of this Agreement and in reliance
on the representations and warranties set forth herein, the NKK SPVs agree to
purchase from the NSC SPVs and the NSC SPVs agree to sell to the NKK SPVs the
NSC Interests free from any Encumbrance and having all rights of ownership.

          SECTION 3. CLOSING

          3.1  Closing.

          The closing of the sale and purchase of the NSC Interests (the
"Closing") will take place at the offices of Kaye Scholer LLP in Chicago on the
Closing Date. "Closing Date" means the earlier of (i) the date on which the
Bankruptcy Court has docketed entry of the Sale Approval Order, or (ii) August
16, 2002.

          3.2 Closing Deliveries of the NSC SPVs.

               (a) At the Closing, the NSC SPVs shall deliver or cause to be
delivered to the NKK SPVs (i) against payment of the Purchase Price (as
adjusted, if adjusted, pursuant to Sections 3.2(b) through (f) below), one or
more duly executed certificates, and appropriately completed and signed transfer
forms relating thereto, representing the Class B Shares, (ii) the documents set
forth in Schedule 3.2 hereto, (iii) certificates issued pursuant to Section 116
of the Income Tax Act (Canada) in respect of the sale of the NSC Interests
containing certificate limits at least equal to the 9.5% Partnership Interest
Purchase Price, with respect to NOII, and at least equal to the 50 Class B
Shares Purchase Price, with respect to NOC, and (iv) such other documents and
instruments as may be reasonably requested by the NKK SPVs.

               (b) Each of the NSC SPVs shall provide the NKK SPVs on or before
the Closing with certificates of compliance for the purposes of Section 116 of
the ITA with respective certificate limits (as defined in subsection 2 of
Section 116 of the ITA) fixed by the Minister of National Revenue in such
certificates equal to the 50 Class B Purchase Price and the 9.5% Partnership
Interest Purchase Price, respectively.

               (c) If certificates of compliance have not been obtained by the
NSC SPVs and provided to the NKK SPVs on or before the Closing, the respective
NKK SPVs shall withhold 25% from each of the 50 Class B Purchase Price and the
9.5% Partnership Interest

                                       7



Purchase Price (or any greater or lesser percentage that may be required at the
applicable time) and remit such amounts as required to be remitted in accordance
with paragraph (f).

               (d) If certificates of compliance are so delivered to the NKK
SPVs by the NSC SPVs, the NKK SPVs shall be entitled to withhold from the 50
Class B Purchase Price and the 9.5% Partnership Interest Purchase Price
respectively at Closing an amount equal to 25% (or any greater or lesser
percentage that may be required at the applicable time) of the amount, if any,
by which the 50 Class B Purchase Price and the 9.5% Partnership Interest
Purchase Price respectively exceeds the respective certificate limit.

               (e) If NSC SPVs either deliver no certificates at Closing or
deliver certificates for less than the amounts of the 50 Class B Purchase Price
and the 9.5% Partnership Interest Purchase Price respectively and subsequently
deliver to the NSC SPVs a certificate on or before the date that is 30 days
after the end of the month in which the Closing occurs, the NKK SPVs shall pay
to the NSC SPVs forthwith upon the delivery of such certificates by NSC SPVs to
the NKK SPVs an amount equal to the lesser of:

                    (i)  The withheld amount; and

                    (ii) 25% (or any greater or lesser percentage that may be
                         required at the applicable time) of the respective
                         amounts of the certificate limits if no certificates
                         were previously issued and 25% (or any greater or
                         lesser percentage that may be required at the
                         applicable time) of the amounts by which the
                         certificate limits exceed the aggregate certificate
                         limits of all certificates previously issued if one or
                         more certificates were previously issued.

               (f) If the NSC SPVs fail to deliver to the NKK SPVs one or more
certificates which satisfy the provisions of Section 3.3(b) above, on or before
the date that is 30 days after the end of the month in which the Closing occurs
(the "Remittance Date"), the NKK SPVs shall, on the Remittance Date, pay to the
Receiver General for Canada an amount equal to the amount which is not refunded
to the NSC SPVs in accordance with paragraph (e) and the amount so paid by the
respective NKK SPVs shall be considered for all purposes to be a payment made by
the NKK SPVs to the NSC SPVs on account of the Purchase Price.

          3.3  Closing Deliveries of the NKK SPVs.

          At the Closing, the NKK SPVs will deliver or cause to be delivered to
the NSC SPVs (i) the Partnership Interest Purchase Price and the Class B Shares
Purchase Price, subject to any adjustment, if any, pursuant to this Section by
certified or official bank check or by wire transfer in immediately available
Canadian dollar funds, (ii) the documents set forth in Schedule 3.3 hereto, and
(iii) such other documents and instruments as may be reasonably requested by the
NSC SPVs. If delivery will be made by wire transfer, the NSC SPVs shall timely
furnish to the NKK SPVs all information reasonably required to complete the wire
transfers timely.

                                       8



          SECTION 4. CONDITIONS PRECEDENT

          4.1  Conditions Precedent to Obligations of the NSC SPVs.

          The obligation of the NSC SPVs to sell the NSC Interests to the NKK
SPVs on the Closing Date pursuant to this Agreement shall be subject to the
satisfaction or waiver in writing by either of the NSC SPVs at or prior to
Closing of each of the following conditions:

               4.1.1  Compliance with Agreement. Each of the covenants and
agreements of either of the NKK SPVs to be performed or complied with pursuant
to this Agreement at or prior to Closing shall have been fully performed and
complied with in all material respects.

               4.1.2  Execution of the Forbearance Agreement, LAA and Two-Party
TPA. Each of the parties to the Forbearance Agreement, LAA and Two-Party TPA
(except with respect to NSC as a party to the Forbearance Agreement and the LAA)
shall have signed such documents and the Two-Party TPA as signed shall be in
form and substance reasonably satisfactory to the NSC SPVs.

               4.1.3  Bankruptcy Court Approval. The Bankruptcy Court shall have
docketed the Sale Approval Order.

          4.2  Conditions Precedent to Obligations of the NKK SPVs.

          The obligations of the NKK SPVs to purchase the NSC Interests from the
NSC SPVs on the Closing Date pursuant to this Agreement shall be subject to the
satisfaction or waiver in writing by either of the NKK SPVs at or prior to
Closing of each of the following conditions:

               4.2.1  Compliance with Agreement. Each of the covenants and
agreements of either of the NSC SPVs to be performed or complied with pursuant
to this Agreement at or prior to Closing shall have been fully performed and
complied with in all material respects.

               4.2.2  Execution of the Forbearance Agreement, LAA and Two-Party
TPA. Each of the parties to the Forbearance Agreement, LAA and Two-Party TPA
(except with respect to NAC as a party to the Forbearance Agreement, the LAA and
the Two-Party TPA) shall have signed such documents.

               4.2.3  Bankruptcy Court Approval. The Bankruptcy Court shall have
docketed the Sale Approval Order.

               4.2.4  Appropriate Entry on DNN Share Register. The share
register of DNN at Closing shall specify that GAC is the owner of the Class B
Shares.

               4.2.5  Appropriate Entry in DNNLP Record of Limited Partners. The
record of limited partners of DNN LP shall show GOC and Dofasco as the sole
limited partners.

                                       9



               4.2.6  Issuance of Declaration of Change. The NKK SPVs shall have
received a notarial/certified copy of Declaration of Change showing the change
of limited partners of DNN LP.

               4.2.7  Adoption of Enabling DNN Resolutions. The NKK SPVs shall
have received a certified copy of a resolution of the Board of Directors of DNN
authorizing the transfer of the 9.5% Partnership Interest to GOC and of the 50
Class B Shares to GAC.

          SECTION 5. COVENANTS OF THE PARTIES

          5.1  Mutual Covenants of the Parties.

               (a) Each of the NSC SPVs and of the NKK SPVs agree that at all
times it will cooperate fully with the other parties to endeavor to bring to
full fruition the objectives of this Agreement, and at all times regarding the
transactions contemplated by this Agreement act in good faith and take such
actions as may be necessary or appropriate to effect fully the provisions of
this Agreement, except that no party shall be required hereby to take any
unlawful act, or to act contrary to public policy or to that party's established
institutional policies or guidelines. Without limiting the generality of the
foregoing, each of the parties agrees to use all reasonable commercial efforts
to make their respective representations and warranties true and correct at
Closing and to satisfy their respective conditions to Closing.

               (b) Without limiting the generality of Section 5.1(a), the NKK
SPVs shall cause NKK to, and the NSC SPVs shall cause NSC to, terminate the
Joint Voting Agreement effective as of the Closing.

               (c) NOII and GOC will use reasonable commercial efforts to cause
DNNLP to make election described in Section 754 of the United States Internal
Revenue Code of 1986, as amended, beginning with respect to the taxable year of
DNNLP in which the Closing takes place.

          5.2 Additional Covenants of NSC SPVs.

               (a) [Reserved]

               (b) The NSC SPVs shall cause all directors of DNN nominated by
the holders of the Class B Shares within their or any of their affiliates'
control to vote so as to avoid taking any action intended by any such director
that knowingly or reasonably foreseeably would result in a breach of a warranty
of the NSC SPVs or in a breach of any of the DNN Agreements.

               (c) The NSC SPVs shall cause NSC to enter into the LAA and the
Forbearance Agreement at the Closing.

               (d) The NSC SPVs each hereby irrevocably waives, and both jointly
shall cause NSC to waive, any and all rights under applicable laws of the United
States or any other jurisdiction to seek a determination from any court,
judicial tribunal or Governmental Body that any of NSC, NOC or NO II can assume,
assume and assign, sell or otherwise transfer any right or delegate any
obligation they have under the LAA, LPA, SA or TPA.

                                       10



               (e) [Reserved]

               (f) The NSC SPVs shall use all reasonable commercial efforts to
obtain a Sale Approval Order by filing a motion or amending the currently
pending motion seeking authorization to consummate this transaction.

               (g) The NSC SPVs shall cause NSC to pay promptly all amounts
payable through the December 31, 2002 by NSC pursuant to the terms of the TPA
and the Forbearance Agreement upon notice thereof by NAC or DNN in the currency
stated in the invoice.

          5.3 Additional Covenants of the NKK SPVs.

               (a) The NKK SPVs shall cause NAC to enter into the Forbearance
Agreement, the LAA and the Two-Party TPA at Closing.

               (b) The NKK SPVs shall cause NAC in turn to use all reasonable
efforts to cause DNN to pay at the customary time to NSC all amounts payable to
NSC under the terms of the TPA through December 31, 2002.

          SECTION 6. REPRESENTATIONS AND WARRANTIES

          6.1  Representations and Warranties of the NSC SPVs.

          Each of the NSC SPVs jointly and severally makes as of the date hereof
and as of the Closing Date for the benefit of the NKK SPVs the representations
and warranties set forth in Schedule 6.1.

          6.2  Representations and Warranties of the NKK SPVs.

          Each of the NKK SPVs jointly and severally makes as of the date hereof
and as of the Closing Date for the benefit of the NSC SPVs the representations
and warranties set forth in Schedule 6.2.

          SECTION 7. COSTS

          Subject to Section 8 below, each of the parties hereto shall be
responsible for its own costs relating to the negotiation, preparation,
execution and performance by it of this Agreement.

          SECTION 8. TERMINATION; SURVIVAL OF PROVISIONS OF AGREEMENT

          8.1  Termination of Agreement.

               (a) If by 7 p.m. in New York on August 16, 2002 any of the
conditions to the obligations of the NSC SPVs or the NKK SPVs, set forth in
Sections 4.1 and 4.2 respectively, has not been satisfied, either party may
terminate this Agreement by notice to the

                                       11



other party; provided that the party seeking to terminate this Agreement is then
not in breach of this Agreement. Nonetheless, the parties agree and covenant
that in the event Closing is not achieved for whatever reason other than by the
breach of this Agreement by either party, the parties shall allocate the costs
of the Valuator proratably among themselves and the NSC SPVs shall promptly
reimburse the NKK SPVs their allocated portion. In the event Closing is not
achieved by reason of the breach of this Agreement by a party, the breaching
party and its affiliate which is a party hereto shall be responsible for the
entire costs of the Valuator. If one of the NSC SPVs is the breaching party, the
NSC SPVs shall promptly reimburse (jointly or severally) the NKK SPVs for the
costs of the Valuator.

               (b) This Agreement may be terminated by the mutual agreement of
the parties hereto expressed in writing.

               (c) If this Agreement is terminated pursuant to this Section 8,
no party shall have any claim of any nature whatsoever under this Agreement
except any liability which at the time of termination has already accrued, or
which thereafter may accrue in relating to acts, omissions or breaches occurring
prior to the date of termination.

          8.2  Survival of Provision of Agreement.

          Sections 1, 5.2(g), 5.3(b), 6, 7, 8, 9, 11 and 12 shall survive any
termination of this Agreement or Closing; additionally, Sections 3.2(e), 3.2(f)
and 5.1(c) shall survive the Closing.

          SECTION 9. NOTICES

          9.1  Addresses.

          Any notice or other document to be given under this Agreement shall be
in writing and be deemed duly given to the other party if sent by the respective
representatives and at the respective addresses set out below by facsimile
transmission, mail or courier delivery service to:

                  (a)    GAC or GOC:
                         Address:  c/o NKK America Inc.
                         Suite 25
                         450 Park Avenue
                         New York, New York USA  10022
                         Attention:  Corporate Secretary
                         Facsimile:  (212) 826-6358

                  (b)    NOC or NOII:
                         Address:  c/o National Steel Corporation
                         4100 Edison Lakes Parkway
                         Mishiwaka, IN  46545
                         Attention:  Corporate Secretary
                         Facsimile:  (574) 273-7609

                                       12



(or such other representative and address as one party may by notice in writing
to the other party expressly substitute). Any notice so served by hand, fax, or
courier shall be deemed to have been duly given (i) in the case of delivery by
hand or by courier, when delivered; (ii) in the case of fax, at the time of
transmission.

          9.2 Proof of Notice.

          In proving the giving of a notice, it shall be sufficient to prove
that the overnight envelope containing such notice was properly addressed and
that the facsimile transmission was sent to the proper facsimile number.

          SECTION 10. [RESERVED]

          SECTION 11. GOVERNING LAW

          This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, United States of America.

          SECTION 12. MISCELLANEOUS

          12.1 Entire Agreement.

          The Transaction Documents set out the entire agreement and
understanding among the parties relating to the subject matter of this Agreement
and supersede all prior communications, written or oral, and all contemporaneous
oral communications, with respect thereto among the parties or any assignor of
the parties.

          12.2 Amendments.

          Any alteration, amendment, modification or variation of this Agreement
shall be valid only if it is in writing and signed by or on behalf of each
party.

          12.3 Actions Upon Breach.

          The parties affirm that any action for a breach of the provisions of
this Agreement shall be maintained in contract law (or equity) and shall not be
maintained in tort.

          12.4 Waivers.

          The single or partial exercise, or temporary or partial waiver, by any
party of any right or the discontinuance, abandonment or adverse determination
of any proceedings commenced by any party to enforce any right or provision
shall not (except to the extent and for the period of any temporary or partial
waiver) operate as a waiver of, or preclude any exercise or enforcement or
further exercise or enforcement by, that party of any other right, provision or
remedy.
                                       13



          12.5 Cumulative Rights.

          The rights and remedies of each party contained in this Agreement are
cumulative and are not exclusive of rights or remedies provided by law.

          12.6 Severability.

          Each provision of this Agreement is distinct and severable from the
others. It is the intention of the parties that each provision shall be and
shall remain valid to the fullest extent permitted by law. If any provision is
or becomes invalid, illegal or unenforceable under any enactment or rule of law,
it shall to the extent invalid be deemed not to form part of this Agreement and
all other provisions of this Agreement shall continue in full force and effect.

          12.7 Counterparts.

          This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same instrument.

          12.8 Assignment.

          Without the prior written consent of the non-assigning party, which
consent shall not unreasonably withheld, neither party hereto shall assign any
of its rights or obligations under this Agreement.

               [SIGNATURE PROVISIONS APPEAR ON THE FOLLOWING PAGE]

                                       14



               IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.

NKK SPVs:                                    NSC SPVs:


GALVATEK AMERICA CORPORATION                 NATIONAL ONTARIO CORPORATION
                                               Debtor and Debtor in Possession


By: /s/ Mineo Shimura                          By: Kirk A. Sobecki
    -----------------                              ---------------
    Name: Mineo Shimura                            Name: Kirk A. Sobecki
    Title: President                               Title: VP & CFO


GALVATEK ONTARIO CORPORATION                   NATIONAL ONTARIO II, LIMITED
                                                 Debtor and Debtor in Possession


By: /s/ Mineo Shimura                          By: Kirk A. Sobecki
    -----------------                              ---------------
    Name: Mineo Shimura                            Name: Kirk A. Sobecki
    Title: President                               Title: VP & CFO

                                       15



                                  SCHEDULE 3.2

                    DOCUMENTS TO BE DELIVERED BY THE NSC SPVs

(i)       letters of resignation of each director of DNN nominated by the
          holders of Class B Shares controlled by the NSC SPVs

                                       16



                                  SCHEDULE 3.3

                    DOCUMENTS TO BE DELIVERED BY THE NKK SPVs

(i)       the minutes of the board of directors of each of the NKK SPVs, NAC
          and NKK which, inter alia, to the extent pertinent approve the
          transactions contemplated by this Agreement and authorize the
          signature, execution and completion (as appropriate) of this Agreement
          and the documents ancillary to this Agreement

                                       17



                                  SCHEDULE 6.1

                       WARRANTIES RELATING TO THE NSC SPVs

DISCLOSURE

1.1       The information provided to the Valuator by or on behalf of the NSC
          SPVs was provided in good faith and when read as a whole is in all
          material respects true, complete, accurate and not misleading.

1.2       There has been no intentional withholding by the NSC SPVs or any of
          their affiliates of any information relating to DNN or the toll
          processing facility that would, if disclosed, make the contents of the
          information provided to the Valuator when read as a whole misleading.

VALID EXISTENCE AND DUE ORGANIZATION; CORPORATE POWER AND AUTHORITY

2.1       Each of NOII, NOC and NSC is duly incorporated, validly existing and
          in good standing under the laws of the State of Delaware, United
          States.

2.2       Each of NOII and NOC has all requisite corporate power and authority
          and all necessary consents to own its properties and to carry on its
          business as is currently conducted.

ABSENCE OF ENCUMBRANCE ON THE NSC INTERESTS

3.1       The NSC Interests when delivered to the NKK SPVs against payment
          therefor will be free from any Encumbrance, there is no agreement or
          commitment to give or create any such Encumbrance and no claim has
          been made by any person entitled to any of the foregoing.

3.2       All of the NSC Interests are fully-paid or properly credited as
          fully-paid; NOII is the sole legal and beneficial owner of the 9.5%
          Partnership Interest and NOC is the sole legal and beneficial owner of
          the 50 Class B Shares.

ENFORCEABILITY

4         Subject only to the entry of the Sale Approval Order, the execution,
          delivery and performance of each of the Transaction Documents to which
          either of the NSC SPVs or any of their affiliates are a party and the
          transactions contemplated herein and therein, have been duly
          authorized by the NSC SPVs and by such affiliates (as applicable), and
          when executed and delivered by the NSC SPVs or by one of their
          affiliates (as applicable), each of the Transaction Documents to which
          it or one of its affiliates is party will constitute valid and binding
          obligations of such entity.

                                       18



CONSENTS

5         No consent of any Governmental Body or any court is required of either
          of the NSC SPVs, or of NSC, for the consummation of the transactions
          contemplated by the Transaction Documents other than the Sale Approval
          Order.

NO CONFLICTS

6         There is no provision of the organizational documents of either of the
          NSC SPVs or of NSC and no provision of any Law, mortgage, indenture,
          contract or other agreement binding on either of the NSC SPVs or on
          NSC or affecting any of their respective properties, which would
          prohibit, conflict with or in any way prevent the execution, delivery
          or performance of the terms of any of the Transaction Documents to
          which either of the NSC SPVs or NSC is a party.

                                       19



                                  SCHEDULE 6.2

                       WARRANTIES RELATING TO THE NKK SPVs

DISCLOSURE

1.1       The information provided to the Valuator by or on behalf of the NKK
          SPVs was provided in good faith and when read as a whole is in all
          material respects true, complete, accurate and not misleading.

1.2       There has been no intentional withholding by the NKK SPVs or any of
          their affiliates of any information relating to DNN or the toll
          processing facility that would, if disclosed, make the contents of the
          information provided to the Valuator when read as a whole misleading.

VALID EXISTENCE AND DUE ORGANIZATION

2         Each of the NKK SPVs and NAC is a company duly incorporated, validly
          existing and in good standing under the laws of the State of Delaware,
          United States. NKK is a company duly incorporated, validly existing
          and in good standing under the laws of Japan.

CORPORATE POWER AND AUTHORITY

3         Each of the NKK SPVs, NAC and NKK has all requisite corporate power
          and authority and all necessary consents to own its properties and to
          carry on its business as is currently conducted.

ENFORCEABILITY

4         The execution, delivery and performance of each of the Transaction
          Documents to which either of the NKK SPVs or any of their affiliates
          is a party and the transactions contemplated herein and therein, have
          been duly authorized by each of the NKK SPVs and by such affiliates
          (as applicable), and when executed and delivered by the NKK SPVs or by
          one of their affiliates (as applicable), each of the Transaction
          Documents to which it or one of its affiliates is a party will
          constitute valid and binding obligations of such entity enforceable
          against such entity, in accordance with its terms except as such
          enforceability may be limited by bankruptcy, insolvency, fraudulent
          transfer, reorganization, moratorium and other laws of general
          applicability relating to or affecting creditors' rights and by
          general equity principles (regardless of whether considered in a
          proceeding in equity or at law), including, without limitation, (i)
          the possible unavailability of specific performance, injunctive relief
          or any other equitable remedy; and (ii) concepts of materiality,
          reasonableness, good faith and fair dealing.

                                       20



CONSENTS

5         No consent of any Governmental Body or any court is required of either
          of the NKK SPVs, or one of its affiliates, for the consummation of the
          transactions contemplated by the Transaction Documents.

NO CONFLICTS

6         There is no provision of the organizational documents of either of the
          NKK SPVs, or of NAC or NKK, and no provision of any Law, mortgage,
          indenture, contract or other agreement binding on either of the NKK
          SPVs, or on NAC or NKK, or affecting any of its properties, which
          would prohibit, conflict with or in any way prevent the execution,
          delivery or performance of the terms of any of the Transaction
          Documents to which either of the NKK SPVs or one of its affiliates is
          a party.

NO INSOLVENCY

7         No order has been made, petition presented or meeting convened for the
          purpose of considering a resolution for the winding up of or for the
          appointment of any receiver, liquidator or provisional liquidator. No
          distress, distraint, charging order, garnishee order, execution or
          other process has been levied or applied for in respect of the whole
          or any part of any of the property, assets and/or undertaking of
          either of the NKK SPVs, or of NAC or NKK. Neither of the NKK SPVs, nor
          NAC nor NKK, has ceased trading or stopped payment to its creditors
          and there are no grounds on which either of the NKK SPVs, or of NAC or
          NKK could be found to be unable to pay its debt.

LITIGATION

8         There are no actions pending or to the knowledge of the NKK SPVs
          threatened against or affecting the NKK SPVs, NAC, NKK, DNN or DNNLP
          in any court, before any Governmental Body or before any arbitrator
          which with the passage of time could reasonably be expected to have a
          material adverse impact either on the transactions contemplated by
          this Agreement or on the DNN facility; and there is no existing
          default by any of the NKK SPVs, NAC or NKK under any applicable order,
          writ, injunction or decree of any court, Governmental Body or any
          arbitrator.

                                       21



                                    EXHIBIT A

                             [LINE ACCESS AGREEMENT]



                                    EXHIBIT B

                              [SALE APPROVAL ORDER]

EX-10.I

                                                                    EXHIBIT 10.I

                              LINE ACCESS AGREEMENT

     THIS AGREEMENT made as of August 13, 2002, among National Steel
Corporation, a corporation incorporated under the laws of Delaware ("NSC"), NKK
U.S.A. Corporation, a corporation incorporated under the laws of Delaware
("NAC"), Dofasco Inc., a corporation incorporated under the laws of Canada
("Dofasco"), and DNN Galvanizing Corporation, a corporation incorporated under
the laws of Ontario ("Processor"), in its capacity as general partner of DNN
Galvanizing Limited Partnership, a limited partnership established pursuant to
the laws of Ontario ("DNN Partnership").

     WHEREAS, Processor operates a hot dip continuous galvanizing line and
related facilities located in Southwestern Ontario, Canada (the "Facilities");
and

     WHEREAS, NSC, NAC and DNN entered into that certain Amended and Restated
Toll Processing Agreement made as of July 26, 1996 (the "Current TPA"),
regarding the use by NSC and NAC of a portion of the line time at the Facilities
and other services offered by Processor; and

     WHEREAS, on March 6, 2002, NSC and certain of its affiliates filed under
Chapter 11 for protection under U.S. bankruptcy laws; and

     WHEREAS, on April 12, 2002, Dofasco gave notice of the occurrence of a
Financial Default under the Partnership Agreement made as of September 18, 1990,
among Dofasco and certain Affiliates (as defined herein) of NAC and NSC (the
"Partnership Agreement"), which notice resulted in a Matured Default (as such
terms are defined in the Partnership Agreement) on April 18, 2002, and was
subsequently affirmed and adopted by an Affiliate of NAC; and

     WHEREAS, on July 9, 2002, an Affiliate of NAC, NSC and Dofasco entered into
a letter agreement which extended the date by which certain Affiliates of NAC
were to acquire the interests of certain Affiliates of NSC in the Facilities,
pursuant to the terms of the Partnership Agreement and the Shareholders'
Agreement made as of September 18, 1990, among Processor and an Affiliate of
each of Dofasco, NAC and NSC (the "Shareholder Agreement"); and

     WHEREAS, concurrently with the date hereof, NKK, NSC and Dofasco (and
certain of their Affiliates) have entered into a Forbearance Agreement (the
"Forbearance Agreement") which, inter alia, effects certain amendments to the
Current TPA, the Shareholder Agreement and the Partnership Agreement; and

     WHEREAS, concurrently with the date hereof, Affiliates of NAC have acquired
the interests of certain Affiliates of NSC in the Facilities pursuant to the
terms of the Shareholder Agreement and the Partnership Agreement, both as
amended by the Forbearance Agreement, and have entered into the Two Party TPA
(defined herein); and

     WHEREAS, after December 31, 2002, the Amended Current TPA will terminate
and NSC will cease to have access to the Facilities thereunder; and



     WHEREAS, NSC wishes to use a portion of the available line time at the
Facilities and other services offered by Processor during calendar year 2003 for
the toll processing of steel substrate to produce galvanized steel products; and

     WHEREAS, NAC, Dofasco and Processor currently wish to enter into an
agreement with NSC for the use by NSC of a portion of the available line time at
the Facilities allocated to NAC under the Two Party TPA and other services
offered by Processor during calendar year 2003 for the toll processing of steel
substrate to produce galvanized steel products on the terms and conditions set
forth hereinafter.

     WITNESSETH, that in consideration of the premises, covenants and agreements
herein contained, the parties hereto hereby agree as follows.

                                   ARTICLE ONE

                         DEFINITIONS AND INTERPRETATION

     1.1  In and for the purposes of this Agreement:

     "Additional Line Time Notice" shall have the meaning set forth in Section
     3.4 hereof;

     "Adjusted Yield Loss" shall have the meaning set forth in Section 10.1
     hereof.

     "Affiliate" means an entity which is a Subsidiary of NSC, NAC, JFE Holding,
     JFE Steel or Dofasco, as the case may be;

     "Agreement", "this Agreement" and "herein" and similar expressions mean and
     refer to Articles One to Thirteen, Exhibits A and B and Schedule 1.4 hereof
     as a whole and not to any particular Article, Section or Subsection;

     "Amended Current TPA" means the Current TPA as amended pursuant to the
     Forbearance Agreement which shall terminate pursuant to the terms of the
     Two Party TPA on December 31, 2002;

     "Applicable Policy" shall have the meaning set forth in Section 1.4 hereof;

     "Applicable Time Period" means a Month or Quarter, as applicable, during
     the Term;

     "Article", "Section" or "Subsection" means and refers to the specified
     article, section or subsection of this Agreement;

     "Available Line Time" means, in respect of each Applicable Time Period, the
     total number of Hours during such Applicable Time Period less (1) the
     number of scheduled Hours of downtime, (2) an estimate of unplanned
     downtime, and (3) an estimate of time to be spent running dummy and
     transition coils, as determined by Processor and advised to NSC in
     accordance with Section 6.2;

                                        2



     "Business Day" shall mean a day during which commercial banks are open for
     business in New York City and in Toronto, Ontario.

     "Committed Line Time" means, in respect of each Applicable Time Period, the
     amount of Available Line Time set forth in the notification from NSC to
     Processor in accordance with Sections 3.4 and 6.2;

     "Current TPA" has the meaning set forth in the Recitals;

     "Customer Manual" means the document entitled "Partners in Performance"
     referred to in Subsection 8.1(b);

     "Customer Service Line" means the recoil line included in the Facilities;

     "Customer Specifications" means the product specifications supplied by each
     Customer to Processor as part of each Work Order or by the Customer Manual;

     "Customers" means NSC and its Affiliates, and "Customer" means any one of
     the Customers;

     "DNN Partnership" has the meaning set forth in the Preamble;

     "Dofasco" has the meaning set forth in the Preamble;

     "Effective Date" shall mean January 1, 2003;

     "Facilities" has the meaning set forth in the Recitals;

     "Forbearance Agreement" means the Forbearance Agreement dated concurrently
     with the date hereof by and among NKK, NSC and Dofasco (and certain of
     their Affiliates);

     "Force Majeure Event" shall have the meaning set forth in Section 11.1
     hereof;

     "Galvanizing Line" means the hot dip continuous galvanizing line included
     in the Facilities;

     "Hour" means a period of 60 minutes;

     "Hourly Rate" means the rate per Hour payable for the use of the
     Facilities' galvanizing line which is fixed by Processor on the basis
     provided in Exhibit A;

     "JFE Holding" means JFE Holding Inc., a corporation incorporated under the
     laws of Japan;

     "JFE Steel" means JFE Steel Inc., a corporation incorporated under the laws
     of Japan;

     "Maximum NSC Line Time" means the Available Line Time made available to NSC
     and its Affiliates hereunder, which as to each Quarter shall be a
     percentage (as set forth

                                        3



     hereinafter) of Available Line Time for such Quarter: from January 1, 2003,
     through March 31, 2003, 43.75% of the Available Line Time for such Quarter;
     from April 1, 2003, through June 30, 2003, 31.25% of the Available Line
     Time for such Quarter; from July 1, 2003, through September 30, 2003,
     18.75% of the Available Line Time for such Quarter; and from October 1,
     2003, through December 31, 2003, 6.25% of the Available Line Time for such
     Quarter;

     "Month" means a calendar month;

     "NAC" has the meaning set forth in the Recitals;

     "NKK" means NKK Corporation, a corporation incorporated under the laws of
     Japan;

     "Non-Prime Products" means Products (other than dummy and transition coils
     and Scrap) which do not meet the requirements and criteria for Prime
     Products;

     "NSC Scrap" has the meaning set forth in Subsection 2.4(b) hereof;

     "NSC Steel" means NSC's own Steel, as well as the Steel of its Affiliates
     which, after being processed at the Facilities, is sold (either directly or
     indirectly by or on behalf of NSC or its Affiliates) to a customer of NSC
     or of one of its Affiliates other than another steel mill;

     "Other Services" means the services to be provided by Processor which are
     described in Subsections 2.3(a), (b) and (c);

     "Partnership Agreement" means the Partnership Agreement made as of
     September 18, 1990, among Dofasco and certain Affiliates of NAC and NSC;

     "Prime Products" means those Products which meet all Customer requirements
     as specified in the applicable Work Order and Customer Manual which are
     established with the objective of ensuring that such Products are capable
     of being sold at their full price;

     "Processor" has the meaning set forth in the Recitals;

     "Products" means exposed and unexposed galvanized steel products to be
     produced by processing Steel through the Galvanizing Line;

     "Quarter" means any three (3) Month period during the Term ending on the
     last day of March, June, September or December;

     "Scheduling Notice" has the meaning set forth in Section 6.2 hereof;

     "Scrap" means residual product (coated or uncoated) weighing less than one
     thousand (1,000) pounds which due to its size, shape or physical properties
     is unsuitable for sale as Prime Product or Non-Prime Product;

                                        4



     "Services" means the Toll Processing Services and the Other Services,
     collectively,

     "Shareholder Agreement" means the Shareholders' Agreement made as of
     September 18, 1990, among Processor and an Affiliate of each of Dofasco,
     NAC and NSC;

     "Steel" means cold rolled steel substrate suitable for the production of
     Products;

     "Subsidiary" means a corporation, all of the issued and outstanding voting
     shares of which, or a limited liability company, all of the voting
     interests of which, are beneficially owned, either directly or indirectly,
     by NAC, JFE Holdings, JFE Steel, NSC or Dofasco, as the case may be;

     "Take or Pay Obligations" means the obligations of NSC contained in Article
     Three of this Agreement;

     "Term" means the period specified in Article Twelve hereof;

     "Toll Processing Services" means the toll processing services to be
     provided and performed by Processor which are described in Section 2.2;

     "Two Party TPA" means the Restated Toll Processing Agreement made as of the
     date of this Agreement between NAC and Processor and effective January 1,
     2003;

     "Work Order" means a written work order issued by NSC to Processor setting
     forth detailed processing requirements.

     "Yield Loss" shall have the meaning set forth in Section 10.1 hereof.

     1.2  All references to "money" "dollars" or "$" in this Agreement shall be
deemed to be references to Canadian dollars, unless expressly stated otherwise.

     1.3  In case of conflict, the provisions of this Agreement shall prevail
over those contained in the Two Party TPA, any Applicable Policy, the Customer
Manual or any Work Order, provided however that as between NAC and Processor, in
case of any conflict the provisions of the Two Party TPA shall prevail.

     1.4  The parties recognize and agree that from time to time, it will be
necessary to interpret and/or clarify the provisions of this Agreement, and the
parties agree to do so by means of issuance of policy documents, each of which
must be approved in writing by each and every party hereto. Each such policy is
hereinafter referred to as an "Applicable Policy." As of the date hereof, the
parties agree that the Applicable Polices set forth on Schedule 1.4 hereto are
in effect.

                                        5



                                   ARTICLE TWO

                               PROCESSOR SERVICES

     2.1  During the Term, Processor shall, and NAC shall use commercially
reasonable efforts to cause Processor to:

          (a)  offer and make available to the Customers the Toll Processing
     Services;

          (b)  offer and make available to the Customers the Other Services;

          (c)  deal with all Scrap, as described and provided for in Section
     2.4; and

          (d)  perform the other obligations relating to the Services on its
     part herein contained;

     all in accordance with the terms of this Agreement.

     2.2  The Toll Processing Services shall consist of:

          (a)  receiving and storing all Steel supplied for processing in
     accordance with the scheduling requirements set forth in Article Six;

          (b)  inspecting in accordance with the Customer Manual all Steel
     delivered for processing;

          (c)  processing all Steel so supplied through the Galvanizing Line in
     accordance with the requirements specified by the Customer and the
     scheduling procedures in effect from time to time;

          (d)  providing to the Customer, on a timely basis via compatible
     electronic or written format, scheduling, product quality, metallurgical,
     production and shipping information required by such Customer in accordance
     with Work Orders and Customer Manual;

          (e)  statistical process control testing in accordance, with Customer
     Specifications;

          (f)  labeling, including bar coding, of all processed Steel in
     accordance with Customer's instructions;

          (g)  mechanical property testing and reports with respect to each
     Customer's Steel in accordance with the Customer Manual and Work Orders;

          (h)  inspecting all processed Steel prior to shipping, except Steel
     which is inspected at the Facilities in accordance with Subsection 2.3(a)
     or which is inspected by Customer's inspector;

                                        6



          (i)  making trucking arrangements for shipping processed Steel to such
     location as Customer may designate and loading Products on to trucks for
     shipment FOB the Facilities in accordance with Customer's instructions and
     procedures; and

          (j)  services necessarily incidental to the foregoing which are not
     Other Services.

     2.3  The Other Services to be offered and provided by the Processor to
Customers shall consist of:

          (a)  rewinding and inspection of processed Steel on the Customer
     Service Line in accordance with the instructions and procedures contained
     in the Work Orders and Customer Manual;

          (b)  packaging of all processed Steel for shipping in accordance with
     the instructions and procedures contained in the Work Orders and Customer
     Manual; and

          (c)  such other services as Processor may offer to Customers from time
     to time.

     2.4  In respect of Scrap produced in the course of performing the Services:

          (a)  Processor shall take all reasonable steps to minimize the amount
     of Scrap generated in the course of processing the Products;

          (b)  Processor shall account to NSC in respect of each coil of Steel
     for coated and uncoated Scrap generated in the course of processing the
     Products ("NSC Scrap");

          (c)  if notified by NSC in writing to do so, Processor shall return to
     NSC, in accordance with NSC's instructions, any and all NSC Scrap or Scrap
     equivalent tonnage generated by the Processor for NSC's account; provided,
     however, that NSC shall provide such written notice to Processor at least
     thirty (30) days in advance of the date on which Processor is to begin
     returning such NSC Scrap or Scrap equivalent tonnage to NSC;

          (d)  NSC will be entitled to a credit for NSC Scrap which is not
     returned to NSC in accordance with Subsection (c) based on the best price
     available on the first working day of each month for similar Scrap for the
     geographic area closest to the Facilities, less such reasonable allowance
     per net ton as may be agreed from time to time; such credit for NSC Scrap
     will appear on the face of the applicable invoice issued by Processor and
     ownership of NSC Scrap will pass to Processor only after credit therefor is
     received by NSC and the credit risk of all sales of NSC Scrap by Processor
     shall be Processor's; and

          (e)  The remedies contained in this Section 2.4 shall constitute
     Customer's sole remedies for Scrap produced in the course of provision of
     the Services.

                                        7



                                  ARTICLE THREE

                       TAKE OR PAY AND RELATED OBLIGATIONS

     3.1  During the Term, NAC shall cause Processor to, and Processor shall,
upon and subject to the terms and conditions of this Agreement, make available
to NSC, for use by NSC and its Affiliates, Available Line Time equal to the
Committed Line Time, provided that, notwithstanding any other provision of this
Agreement, (i) Committed Line Time in any Quarter shall not exceed Maximum NSC
Line Time and (ii) Committed Line Time in any Month shall not exceed 50% of
Available Line Time for such Month. Subject to the foregoing, Committed Line
Time for any Month, expressed as a percentage of Available Line Time for such
Month, may exceed the percentage of Maximum NSC Line Time applicable to the
Quarter during which such Month occurs. Processor shall use make reasonable
commercial efforts to assist NSC in satisfying the Committed Line Time,
including scheduling adjustments, outage relocations, line hour makeup
mechanisms and holiday operations.

     3.2  During the Term, NSC shall be obligated, upon and subject to the terms
and conditions of this Agreement, to:

          (a)  make use (itself and/or with its Affiliates) of the Available
     Line Time to process NSC Steel in each Quarter, in accordance with the
     terms of this Agreement, not in excess of the Maximum NSC Line Time for
     such Quarter;

          (b)  sixty-seven (67) days prior to the first day of each Quarter,
     advise NAC and Processor NSC's non-binding good faith estimate of the
     amount of Available Line Time that NSC expects to use during such Quarter,
     it being agreed that such estimate shall not be binding on NSC for any
     purpose under this Agreement;

          (c)  sixty-seven (67) days prior to the first day of each Month,
     notify NAC and Processor of the Committed Line Time for such Month and the
     estimated product mix for such Month, all in accordance with Section 6.2;
     and

          (d)  pay, or cause to be paid, to Processor or NAC (as the case may
     be), at the times and in the manner provided in Article Five hereof, the
     compensation determined in accordance with Article Four hereof.

     3.3  NSC's obligations to make use of a portion of the Available Line Time
to process NSC Steel pursuant to Section 3.2 above will be deemed to have been
satisfied through a combination of:

          (a)  actual use of and payment for such portion of the Available Line
     Time by NSC and its Affiliates; and

          (b)  to the extent that Committed Line Time is not used by NSC or its
     Affiliates and NAC and Dofasco do not use some or all of the Committed Line
     Time not used by NSC or its Affiliates, payment by NSC for such portion of
     the Committed Line Time. It is agreed by NSC that if, as to any Month, NAC
     is offering for sale to third

                                        8



     parties Hours of Committed Line Time that are not used by NSC or its
     Affiliates and also is offering for sale to third parties Hours of
     Available Line Time that NAC is obligated to pay for under the Two Party
     TPA but which NAC and its Affiliates will not use, NAC may sell the Hours
     of Available Line Time that NAC is obligated to pay for under the Two Party
     TPA but which NAC and its Affiliates will not use before NAC sells any
     Hours of Committed Line Time that are not used by NSC or its Affiliates.

     3.4  In the event that NSC and its Affiliates elect to use less than the
Maximum NSC Line Time for any Month, the Hours of Available Line Time
constituting the difference between 50% of Available Line Time and Committed
Line Time for such Month shall be governed by the provisions of Article Ten of
the Two Party TPA relating to Dofasco's right of first refusal. If Dofasco
elects affirmatively not to exercise its right of first refusal under Article
Ten of the Two Party TPA or, by the end of the fifteenth (15th) day after
receipt of the Offer, Dofasco has not exercised such right of first refusal to
use the Hours which constitute such difference, NAC will notify NSC to that
effect (on the next Business Day following such affirmative election by Dofasco
or on the next Business Day after the fifteenth (15th) day after receipt of the
Offer, as the case may be), and NSC shall thereupon have the option to notify
NAC and Processor (the "Additional Line Time Notice") that NSC and/or its
Affiliates will use some or all of such Hours to process NSC Steel. Upon the
delivery to NAC and Processor of an Additional Line Time Notice, and subject to
the next sentence, the amount of additional line time identified by NSC in the
Additional Line Time Notice shall be deemed for all purposes of this Agreement
to be Committed Line Time (in addition to any Hours previously included as
Committed Line Time in the Scheduling Notice for that Month). Notwithstanding
the foregoing, (i) the amount of such additional line time which is the subject
of Additional Line Time Notices during any Quarter, when added to the amount of
Committed Line Time set forth in the Scheduling Notices for the three Months
which constitute that Quarter, cannot exceed the Maximum NSC Line Time
applicable to that Quarter, (ii) no Additional Line Time Notice can be sent in
respect of any line time as to which NAC has entered into an agreement to sell
to a third party which is not an Affiliate of NAC, and (iii) any Additional Line
Time Notice must be delivered by NSC to Processor and NAC no later than thirty
(30) days prior to the Month to which such Additional Line Time Notice applies.

                                  ARTICLE FOUR

                                  COMPENSATION

     4.1  NSC shall pay to Processor, at the times and in the manner provided in
Article Five hereof, the aggregate of the amounts set out in this Article Four.

     4.2  NSC shall pay to Processor or NAC (as the case may be), as NSC's sole
obligation for the Toll Processing Services performed by Processor for NSC and
its Affiliates and in satisfaction of NSC's Take or Pay Obligations, the amounts
determined in accordance with the provisions set out in Exhibit A.

                                        9



     4.3  NSC shall pay to Processor, as NSC's sole obligation for the Other
Services performed by Processor for NSC and its Affiliates, the amounts
determined in accordance with the provisions set out in Exhibit B.

                                  ARTICLE FIVE

                                     PAYMENT

     5.1  NSC shall be invoiced:

          (a)  as provided in Exhibit A for Toll Processing Services performed
     by Processor for NSC and its Affiliates and for NSC's Take or Pay
     Obligations; and

          (b)  at the times required by the provisions of Exhibit B in respect
     of amounts payable, as determined in accordance therewith, for Other
     Services performed by Processor for NSC and its Affiliates.

     5.2  Each invoice submitted to NSC shall include all applicable taxes and
shall be accompanied by such supporting documentation as NSC shall reasonably
require to satisfy itself that the amounts for which payment is claimed are due
and payable.

     5.3  Processor shall provide NSC and NAC with monthly reports specifying
the number of Hours of Available Line Time used by each Customer. In respect of
any Month in which NSC is obligated to make a payment for an unused portion of
the Committed Line Time, such report shall specify the number of Hours of the
shortfall and any cost savings achieved in respect of the Month when the
Galvanizing Line would have been operated but for the shortfall.

                                   ARTICLE SIX

                             SCHEDULING AND DELIVERY

     6.1  It is understood and agreed that it is desirable that maximum use be
made of the Galvanizing Line and the remainder of the Facilities and that the
scheduling of the use of the Galvanizing Line shall be designed to ensure that
NSC shall have proportional access to Available Line Time during each Applicable
Time Period based on the Committed Line Time. The provisions of this Article Six
are intended to achieve this objective.

     6.2  Not later than ninety (90) days prior to the beginning of each Month
and each Quarter during the Term, Processor shall notify NSC, NAC and Dofasco as
to the scheduled number of Hours of Available Line Time for such Month and such
Quarter. Subject thereto and in addition to its non-binding good faith estimate
of the amount of the Available Line Time that NSC expects to use during the
relevant Quarter as provided for in Subsection 3.2(b), NSC shall deliver to NAC
and Processor, not later than sixty-seven (67) days prior to the beginning of
each Month, a notice (the "Scheduling Notice") setting forth NSC's Committed
Line Time as well as its estimated product mix and scheduling requirements for
the processing of Steel by the Facilities during such Month.

                                       10



     6.3  NSC shall, not later than fifteen (15) days prior to the commencement
of each Month, advise Processor of the product mix and current assessment of
actual line time requirements it will require for such Month in order that
Processor can finalize its scheduling for the Galvanizing Line. Unless otherwise
specified by NSC, all Steel supplied hereunder shall be delivered to the
Facilities by NSC and/or its Affiliates, and the scheduling of such deliveries
of Steel shall be coordinated between NSC and Processor as to maximize the use
of Available Line Time.

     6.4  NSC shall purchase at its own cost, and deliver to the Processor at
the Facilities, zinc in amounts and quality sufficient to enable Processor to
process Steel for NSC and its Affiliates in accordance with the applicable Work
Orders and Customer Manual. The zinc will at all times be the property of NSC
and any unused zinc will be returned to NSC at the end of the Term of this
Agreement.

                                  ARTICLE SEVEN

                                 TITLE AND RISK

     7.1  Title and risk of loss or damage to all Steel delivered by a Customer
for processing shall remain at all times with such Customer subject to
compliance by Processor with the provisions of this Article and to Processor's
liabilities herein.

     7.2  Processor shall be obligated to inspect all Steel upon receipt thereof
and to notify Customer and its carrier of any damage or loss which occurred
during transit and shall, if so requested by Customer, co-operate with Customer
in filing and expediting any claims against a carrier for loss or damage.

     7.3  Processor shall be liable for any demurrage, detention or other delay
charges incurred in connection with deliveries of Steel to the Facilities for
processing unless such charges arise from deliveries being made in excess of
scheduled deliveries.

     7.4  Processor shall promptly and properly unpack and inspect in accordance
with the Customer Manuals all Steel delivered for processing. The commencement
of processing of any Steel shall constitute Processor's representation that such
Steel is not damaged or defective, unless such damage or defect could not have
been discovered in the course of a reasonably diligent inspection by Processor
in accordance with the applicable provisions of the Customer Manual. Damaged or
defective Steel shall be set aside in a safe and suitable location for
examination by Customer. Processor shall follow Customer's instructions with
respect to any Steel which Customer accepts as being damaged, defective or
otherwise unsuitable for processing. Steel rejected by Processor shall be
considered "prime" and will remain "prime" until Customer has notified Processor
of material disposition. Without limitation of the foregoing requirements,
Processor shall comply with the more detailed requirements of the quality and
claims procedures set out in the Customer Manual and any Applicable Policy.

                                       11



                                  ARTICLE EIGHT

     REPRESENTATIONS, WARRANTIES AND COVENANTS OF PROCESSOR, DOFASCO AND NAC

     8.1  Processor, as of the date of this Agreement and as of the Effective
Date, represents and warrants to and covenants with NSC that:

          (a)  the Facilities at all times during the Term shall be capable of
     processing Steel which meets the Customer Specifications for the Products
     agreed to by the parties;

          (b)  Processor is familiar with and acknowledges having received
     copies of NSC's "Partners in Performance" including all revisions as of the
     date hereof and shall, unless instructed otherwise by NSC in writing,
     diligently perform the Services in accordance with the terms of the
     Customer Manual and the Work Orders and shall otherwise observe and comply
     with the provisions thereof, subject to any revisions agreed upon by NSC
     and Processor from time to time that relate to the Services;

          (c)  the Toll Processing Services and the Other Services will be
     performed in a skillful and workmanlike manner, and will conform in all
     respects to those requirements set out in the Customer Manual or as
     otherwise agreed to from time to time; and

          (d)  all supplements and revisions to the Customer Manual provided by
     a Customer to Processor and not objected to in writing by Processor within
     thirty (30) days of receipt shall be deemed to have been accepted and
     agreed to by the parties.

     8.2  Processor and NAC agree not to amend the Two Party TPA so as to limit,
restrict or otherwise circumvent the rights, or in any manner expand or modify
the obligations, of NSC under this Agreement.

     8.3  Subject to Article Eleven, NAC agrees to use reasonable commercial
efforts to maintain NSC's access to the Facilities in accordance with the terms
of this Agreement.

                                  ARTICLE NINE

                 NSC'S REPRESENTATIONS, WARRANTIES AND COVENANTS

     9.1  NSC, at the date of this Agreement and as of the Effective Date,
represents and warrants to and covenants with:

          (a)  NAC and Processor that all Steel delivered by NSC and its
     Affiliates for toll coating by the Facilities will be suitable for the
     processing of Products by the Facilities;

          (b)  Dofasco, NAC and Processor that neither the entering into of this
     Agreement nor the performance by NSC of its obligations hereunder will
     constitute a breach of any agreement or undertaking to which it is a party
     or by which any of its properties or assets are bound; and

                                       12



          (c)  Processor that NSC shall supply Processor with copies of all
     supplements and revisions to the Customer Manual that may be issued from
     time to time.

                                   ARTICLE TEN

                                    LIABILITY

     10.1 Processor shall take all reasonable steps to avoid damage or loss to
Steel while in Processor's possession. NSC (which for purposes of this Section
10.1 shall be deemed to include any Affiliate of NSC) and the other parties
hereto acknowledge that the standard yield loss for 2003 shall be determined as
part of the annual budget for 2003 for DNN, as to which budget NSC will consult
(the "Yield Loss"), and further acknowledge that, following the conclusion of
each Month, the Yield Loss will be adjusted for such Month based on the product
mix for such Month (the "Adjusted Yield Loss"). With respect to any damage to or
loss of NSC Steel in any Month in excess of the Adjusted Yield Loss or which is
the subject of a product liability claim by NSC, NSC shall be reimbursed as
follows: (i) if at least a portion of the damage or loss is covered by
Processor's then current insurance coverage, by (a) payment from the relevant
insurer in the ordinary course to the extent of coverage, and (b) payment from
NAC concurrently with the payment referenced in (a) in the amount of any
applicable deductible; and (ii) if at least a portion of the damage or loss is
not covered by Processor's then current insurance coverage, either (a) through
supplemental insurance coverage obtained at NAC's sole cost, in which case
payment shall be made in the same manner as in clause (i) above, and/or (b) by
payment of any uninsured portion of such damage or loss directly by NAC within
thirty (30) days of the notice of claim referenced below. NAC agrees to
reimburse DNN for any additional costs incurred by DNN as a consequence of any
claim for damage to or loss of NSC Steel in accordance herewith, including
increases in the costs incurred by DNN in obtaining insurance. The parties agree
that if NSC Steel is coated by DNN in a manner other than as required in the
applicable Work Order and the resulting Product is rejected by NSC's customer,
the costs incurred by NSC in connection therewith (such as loss in the value of
the damaged or lost NSC Steel (measured as the lesser of net replacement cost or
rework cost or in such other manner as the parties may agree), freight charges
incurred in connection with shipping the Product to and from the customer and/or
to other processors and/or final destination, freight costs incurred in shipping
material to Processor, duties for the originally intended order, and reasonable
fees paid to another party to rework the defective material) shall be included
in NSC's damages and losses for purposes of this Section 10.1. In all cases, any
claim by NSC for damage to or loss of NSC Steel shall be made by notice to NAC
and to Processor and accompanied by appropriate supporting documentation. For
purposes of this Section 10.1, the phrase "damage to or loss of NSC Steel" shall
exclude all indirect, consequential, punitive and special damages and exclude
any damage to or loss of Scrap. NSC shall have no ability to make a claim under
this Section 10.1 as to any of its Steel which has damaged the Facilities. The
procedures to be followed under this Section 10.1 shall be those in the
Applicable Policy; provided that in the case of any conflict between this
Section 10.1 and any Applicable Policy, the provisions of this Section 10.1
shall prevail.

     10.2 NSC shall indemnify and hold NAC harmless from any damage to the
Facilities resulting solely from defects in Steel delivered by NSC to Processor
for processing at the

                                       13



Facilities. NSC agrees not to hold NAC liable in the event NSC is unable to
access the Facilities for any reason whatsoever which is reasonably beyond the
control of NAC or its Affiliates.

     10.3 The remedies contained in Section 10.1 shall constitute Customer's
sole remedies for damaged or lost Steel and for defective Product. For greater
certainty, it is hereby agreed that no party shall have any liability to another
pursuant to this Agreement for indirect or consequential damages of any nature,
however caused.

                                 ARTICLE ELEVEN

                                  FORCE MAJEURE

     11.1 For the purposes of this Agreement, a Force Majeure Event shall mean
Acts of God, wars, riots, fires, explosions, breakdowns or accidents; strikes,
lockouts or other labor difficulties; lack or shortages of labor, materials,
utilities, energy sources or transportation facilities; equipment failures;
delays of carriers; compliance with governmental rules, regulations, priorities,
allocations or other governmental requirements (including, without limitation,
environmental regulations); and any other causes beyond the reasonable control
of Processor or NSC, as the case may be; provided that (1) the occurrence or
cause in question shall have continued for a period of not less than ninety-six
(96) consecutive hours before it constitutes a Force Majeure Event, (2) the
party so prevented (or to be prevented) from performing shall give prompt
written notice to the other party of the nature and probable duration of such
Force Majeure Event, and of the extent of its effects of such party's
performance hereunder, (3) each party shall, in the event it experiences a Force
Majeure Event, make all reasonable efforts to remove such disability as soon as
possible (except for a Force Majeure Event resulting from a labor dispute, the
removal of which shall be solely within the affected party's discretion), and
(4) a Force Majeure Event shall, subject to the foregoing, be deemed for the
purposes of this Agreement to have commenced at the beginning of the period
specified in clause (1).

     11.2 In the event of the occurrence of a Force Majeure Event the existence
of which (a) prevents Processor from making available Available Line Time to
NSC, or (b) prevents NSC from making use of all or any part of its Committed
Line Time in respect of any Applicable Time Period, NSC shall be under no
obligation for the duration of such Force Majeure Event to pay Processor or NAC
for any Committed Line Time not in fact made available to NSC and its Affiliates
as a result of such Force Majeure Event.

                                 ARTICLE TWELVE

                                      TERM

     12.1 Subject to Sections 12.2 and 12.3, assuming (i) no Matured Default (as
defined in the Amended Current TPA) has occurred prior to the Effective Date and
(ii) the Amended Current TPA has not been terminated pursuant to Section 14.4
thereof, the Term of this Agreement shall commence at the beginning of business
at the Facilities on the Effective Date and expire at the close of business at
the Facilities on December 31, 2003.

                                       14



     12.2 Notwithstanding the provisions of Section 12.1 and subject to Section
12.3, the term of this Agreement shall expire on the earlier (if prior to
December 31, 2003) of (i) the date on which NSC fails to make any payment
payable to Processor when due under this Agreement, which failure has continued
for a period of five (5) Business Days after notice thereof by NAC, Processor or
Dofasco to NSC (provided that if the payment is disputed by NSC in good faith,
the date shall be extended for an additional five (5) Business Days during which
the parties will endeavor in good faith to resolve such dispute), and (ii) one
hundred eighty (180) days after (A) the entry of an order terminating all
proceedings in connection with Case No. 02-08699 (captioned In re: National
Steel Corporation et al., Debtors) in the United States Bankruptcy Court for the
Northern District of Illinois, Eastern Division, (B) the date on which NKK (or
its successor) ceases to have beneficial ownership (within the meaning of
Schedule 13D promulgated under the United States Securities Exchange Act of
1934) of at least a majority of the issued and outstanding voting capital stock
of NSC by reason of an order of the U.S. bankruptcy court having jurisdiction
over NSC confirming a plan of reorganization, or (C) an asset sale of
substantially all of the assets of NSC and its subsidiaries by reason of an
order of the United States Bankruptcy Court having jurisdiction over NSC
confirming a plan of reorganization; provided that NSC may at its election and
in its sole discretion terminate this Agreement during the aforesaid one hundred
eighty (180) days following the occurrence of any of the events described in
(A), (B) and (C) by providing notice of such an election to NAC, Dofasco and DNN
at least sixty-seven (67) days prior to the date such election is to become
effective.

     12.3 Notwithstanding Sections 12.1 and 12.2, this Agreement may be
terminated by NSC or NAC at its option in the event of the destruction of the
Facilities, which term shall mean that the Facilities have been destroyed
completely or have suffered damage which is such that the Facilities cannot be
rebuilt or repaired so as to be usable within a period of sixty (60) days (it
being understood and agreed that, in case of damage or partial destruction, the
provisions of Article Eleven shall apply).

                                ARTICLE THIRTEEN

                                     GENERAL

     13.1 Except for the ability of NAC to assign its rights and delegate its
obligations to one of its Affiliates or an Affiliate of JFE Holdings or JFE
Steel to whom the Two Party TPA is assigned in connection with the corporate
restructuring of NKK's business activities in North America following its merger
with Kawasaki Steel Corporation, neither this Agreement nor any of the rights or
obligations hereunder may be assigned, in whole or in part without the prior
written consent of the other parties. Subject thereto and to Section 13.2 below,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto, their successors and permitted assigns. The assignee of any assignment
permitted hereby shall agree to be bound by the terms hereof as a condition to
the effectiveness of any such assignment.

     13.2 Notwithstanding Section 13.1 above, Processor may assign its interest
in this Agreement, either in whole or in part, as required for security for
money borrowed in respect of

                                       15



the Facilities; provided however, that any such lender shall agree to be bound
by the terms hereof.

     13.3 This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.

     13.4 Each of the parties hereto, its successors and permitted assigns,
shall execute such further documents and perform or caused to be done and
performed such further and other acts as may be necessary or desirable from time
to time in order to give full effect to the provision of this Agreement.

     13.5 Headings used herein are used for convenience of reference only and
shall not be considered in construing or interpreting this Agreement.

     13.6 Words herein shall be construed to be of such gender and number as the
circumstances may require.

     13.7 All notices, demands, reports and other communications required or
permitted to be made or given under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered personally, couriered by
overnight delivery, prepaid, or sent by electronic telecommunication, to the
address or telecommunication number of the other party specified below or such
other address or telecommunication number as specified by that party by written
notice in accordance with this Section:

     (a)  If to Dofasco, to:        1330 Burlington Street East
                                    Hamilton, Ontario
                                    L8N 3J5
                                    Attention: Corporate Secretary
                                    Telecopier: (905) 548-4249

     (b)  If to NAC, to:            25th Floor,
                                    450 Park Avenue
                                    New York, New York 10022
                                    Attention: President
                                    Telecopier: (212) 826-6358

     (c)  If to NSC, to:            4100 Edison Lakes Parkway
                                    Mishawaka, Indiana 46545.
                                    Attention: Kirk Sobecki
                                    Telecopier: (574) 273-7868

          With a copy to:           Piper Rudnick
                                    203 North LaSalle Street

                                       16



                                    Chicago, Illinois 60601
                                    Attention: Mark Berkoff
                                    Telecopier: (312) 236-7516

     (d)  If to Processor, to:      300 Sprucewood Avenue
                                    P.O. Box 7069
                                    Windsor, Ontario
                                    N9G 3Y6
                                    Attention: Vice President, General Manager
                                    Telecopier:  (519) 250-2149

All communications shall be conclusively deemed to have been received: if
delivered, when delivered; if sent by electronic telecommunication, when
received; and if couriered, on the fifth day after deposited with the courier.

     13.8 This Agreement shall not be modified or amended except by an
instrument in writing signed by the parties hereto.

     13.9 No failure by a party to exercise, nor any delay in exercising nor any
partial exercise by such party of, any right, power or privilege available to
such party hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise by such party of any other right, power
or privilege.

     13.10 If any provision of this Agreement, or the application thereof to a
party hereto, is held illegal, unenforceable or otherwise invalid by any court
or government authority, such holding shall not affect or invalidate any other
provision of this Agreement and, to this end, the parties agree that the
provisions of this Agreement are and shall be severable; provided that, if such
holding affects or invalidates any provision deemed essential by a party to the
satisfactory performance of this Agreement, then upon written notice being given
by such party to the other party, the parties shall promptly negotiate in good
faith to the end that this Agreement may be amended in such manner as may be
necessary to make it fair and equitable to both parties.

                                       17



     IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers or signatories to execute this Agreement on the date first mentioned
above.

                                DOFASCO INC.

                                By:  John T. Mayberry
                                     ------------------------
                                     Title: Chair and Chief Executive Officer

                                By:  /s/ Joan M.H. Weppler
                                     ------------------------
                                     Title: Vice President
                                            Corporate Administration

                                NKK U.S.A. CORPORATION

                                By:  /s/ Mineo Shimura
                                     ------------------------
                                     Title: President

                                NATIONAL STEEL CORPORATION

                                By:  /s/ Kirk A. Sobecki
                                     ------------------------
                                     Title: Sr. VP & CFO

                                DNN GALVANIZING CORPORATION

                                By:  /s/ Robert Nuttall
                                     ------------------------
                                     Title:  Director

                                       18



                                    EXHIBIT A

The payments to be made by NSC for Toll Processing Services performed by
Processor for NSC and its Affiliates and in satisfaction of NSC's Take or Pay
Obligations shall be calculated as follows.

Hourly Rate and Other Charges for Line Time:

a)   The rate per Hour for line time (the "Hourly Rate") has been determined
prior to January 1, 2003, based on the budgeted variable cost of running the
Facilities utilizing formulae in use at the time of execution of this Agreement,
and shall be the same rate as is charged to Dofasco and NAC by Processor for use
of Available Line Time. The budget will be reviewed with NSC and comments from
NSC will be included in revising the budget if appropriate.

b)   NSC will be invoiced weekly by Processor for Hourly Rate charges for
Available Line Time used by NSC and its Affiliates for processing each coil of
NSC Steel when shipped from Processor.

c)   NSC will be invoiced monthly by Processor for Hourly Rate charges for the
number of Hours of Committed Line Time in excess of the number of Hours of
Available Line Time actually used by NSC or its Affiliates during such Month,
provided however that, for these purposes, Committed Line Time shall be reduced
to reflect any Hours of Committed Line Time not used by NSC or its Affiliates
but which are used by NAC or Dofasco (or the Affiliates of either of them) or
which are sold by NAC as contemplated in Subsection 3.3(b). Such adjusted
Committed Line Time is referred to in this Exhibit A as Adjusted Committed Line
Time.

d)   NSC will be invoiced weekly by Processor for coating oil charges applicable
to coils of Steel shipped during such week.

Fixed Costs:

a)   An administrative fee (the "Administrative Fee") will be determined prior
to January 1, 2003, based on the budgeted cost of running the Facilities, and
shall be determined on the same basis and in the same manner as the
administrative fee charged to Dofasco and NAC by Processor.

b)   NSC will be invoiced monthly by Processor for the Administrative Fee for
each Month based on the ratio of Adjusted Committed Line Time for such Month to
the Available Line Time during such Month.

c)   NSC will be invoiced by NAC in May 2003 US$1,271,527.93 in respect of Debt
Costs (as defined in the Two Party TPA) and invoiced in November 2003
US$1,239,727.45 in respect of Debt Costs. Such amounts were calculated assuming
NSC would use twenty-five percent (25%) of Available Line Time during each Month
of calendar year 2003, it being understood that such assumption was made solely
for purposes of determining the amount to be set forth in the

                                       19



aforesaid invoices, and the amount set forth in such invoices if twenty-five
percent (25%) of all Debt Costs due for the period covered thereby. In the event
the Agreement terminates before an invoice date, NSC shall nevertheless be
obligated to pay a pro rated portion of the invoice amount based on the ratio of
(A) the number of days during 2003 which the Agreement was in effect to (B) 365,
and the obligation of NSC to pay the pro rated portion of the invoice shall
survive the termination of the Agreement. No later than April 30, 2004, NAC and
NSC will recalculate NSC's portion of Debt Costs utilizing the Adjusted
Committed Line Time for the calendar year 2003 (the "Recalculated Debt Cost
Obligation") for purposes of such calculation and NSC shall pay to NAC or NAC
shall pay to NSC (as the case may be) such amounts as are necessary to reconcile
the aggregate amount paid by NSC in respect of Debt Costs (including the amounts
paid in connection with the May invoice and the November invoice and the Rate
Differential calculations set forth in Exhibit B to the Two Party TPA) with the
Recalculated Debt Cost Obligation. The obligation to reconcile the Debt Cost
payments shall survive termination of the Agreement.

d)   NSC will be invoiced following the close of calendar year 2003 for its
proportionate share of RONE Costs and ROFE Costs (each as defined in Exhibit B
to the Two Party TPA) invoiced to NAC under the Two Party TPA. NSC's
proportionate share thereof shall be based on the ratio of Adjusted Committed
Line Time for the calendar year 2003 to 50% of Available Line Time for the
calendar year 2003. In the event that this Agreement terminates before the
invoice date, NSC shall nevertheless be obligated to pay a pro rated portion of
the invoice amount based on the ratio of (A) the number of days during calendar
year 2003 which the Agreement was in effect to (B) 365, and the obligation of
NSC to pay the pro rated portion of the invoice shall survive the termination of
the Agreement.

Adjustments for Variances Between Operating Costs and Total Revenues:

In the event NAC is entitled to a credit or a payment pursuant to Section 5.8 of
the Two Party TPA in respect of a positive variance between Processor's actual
operating costs and Total Revenues (as defined in the Two Party TPA) for 2003 ,
NAC shall pay to NSC a portion of the amount of such credit or payment; and in
the event of a negative variance, NSC shall pay to NAC a portion of the amount
required to be paid by NAC pursuant to Section 5.8 of the Two Party TPA. The
portion to be paid shall be based on the ratio of Adjusted Committed Line Time
for 2003 to the Available Line Time for 2003. Such payment from NAC to NSC or
from NSC to NAC shall be made no later than April 30, 2004 and the obligation to
make such payment shall survive the termination of the Agreement.

Reconciliation:

No later than April 30, 2004, NAC and NSC shall reconcile all outstanding claims
for payment in accordance with the Applicable Policies, including reconciliation
of any adjustments with respect to the Blended Rate (as defined in Exhibit B,
Section 5 of the Two Party TPA).

                                       20



Invoices and Payment Terms:

a)   Except as set forth in c) below, payments of invoices for Fixed Costs shall
be due ten (10) days after the invoice date.

b)   Payments of invoices for Hourly Rate and Other Charges for Line Time shall
be due within thirty (30) days after the invoice date.

c)   Payments for invoices for Debt Costs shall be due as to the May 2003
invoice on or before June 30, 2003, and as to the November 2003 invoice on or
before December 31, 2003, and payment for the invoice for RONE Costs and ROFE
Costs shall be due within ten (10) days after the invoice date.

                                       21



                                    EXHIBIT B

The payments to be made by NSC to Processor as full compensation for the Other
Services performed by Processor for NSC or its Affiliates shall be calculated as
follows:

NSC will be invoiced weekly in respect of amounts payable for Other Services
performed by Processor for NSC and its Affiliates. Such invoices shall contain
the same type and detail of information as has been included in such invoices as
delivered by Processor to NSC prior to the date of this Agreement for services
in the nature of Other Services. The rates to be charged for Other Services
shall be designed to recover the cost of providing such Other Services, and
shall not exceed the rates charged by Processor to Dofasco and NAC for such
Other Services. The rates to be charged for the rewinding and inspection
services and for the packaging services of the nature described in Subsections
2.3(a) and (b) shall be determined in the same manner as determined as of the
date of this Agreement for purposes of the Current TPA, it being understood that
the rates determined in such manner for purposes of this Agreement for the
rewinding and inspection services and for the packaging services of the nature
described in Subsections 2.3(a) and (b) may differ from the rates charged
therefor under the Current TPA. The rates to be charged for any other services
as contemplated in Subsection 2.3(c) shall be determined by mutual agreement
from time to time of Processor and Customer.

                                       22



                                  SCHEDULE 1.4

                               Applicable Policies

          1. The Claims Policy and Procedure

          2. The Cost Savings Policy

          3. The Line Time Policy

          all as further identified in the Two Party TPA

                                       23

EX-10.J

                                                                    EXHIBIT 10.J

                                                               SIGNATURE VERSION
                                                                       12 AUGUST

                              FORBEARANCE AGREEMENT

               DOFASCO INC., incorporated under the laws of Canada ("Dofasco"),
GALVATEK ONTARIO CORPORATION, incorporated under the laws of Delaware ("GOC"),
NATIONAL ONTARIO II, LIMITED, incorporated under the laws of Delaware ("NO II"),
DNN GALVANIZING CORPORATION, incorporated under the laws of Ontario ("DNN"),
904153 ONTARIO INC., incorporated under the laws of Ontario ("Dofasco
Participant"), GALVATEK AMERICA CORPORATION, incorporated under the laws of
Delaware ("GAC"), NATIONAL ONTARIO CORPORATION, incorporated under the laws of
Delaware ("NOC"), NKK U.S.A. CORPORATION, incorporated under the laws of
Delaware ("NAC"), NATIONAL STEEL CORPORATION, incorporated under the laws of
Delaware ("NSC"), and NKK CORPORATION, incorporated under the laws of Japan
("NKK"), this August 13, 2002 enter into this Forbearance Agreement.

                                    Recitals

(i)       Dofasco, GOC, NO II and DNN have entered into a Limited Partnership
          Agreement made as of September 18, 1990 as amended on May 31, 1991
          ("LPA") with respect to DNN Galvanizing Limited Partnership, an
          Ontario limited partnership (the "Limited Partnership").

(ii)      Dofasco Participant, GAC, NOC and DNN have entered into a
          Shareholders' Agreement made as of September 18, 1990 ("SA").

(iii)     NAC, NSC and DNN have entered into an Amended and Restated Toll
          Processing Agreement made as of July 26, 1996 ("TPA").

(iv)      On March 6, 2002, NSC and NO II filed for Chapter 11 protection under
          U.S. bankruptcy laws ("NSC's Chapter 11 Proceeding").

(v)       On April 12, 2002, Dofasco gave notice (the "Dofasco Notice") to NO II
          of the occurrence of a Financial Default, which notice resulted in the
          occurrence of a Matured Default (as such terms are defined in the LPA)
          on April 18, 2002.

(vi)      On May 3, 2002, GOC delivered a notice (the "GOC Notice") to NO II
          affirming and adopting the Dofasco Notice.

(vii)     As a result of the occurrence of the Matured Default referred to in
          recital (v) above, GAC and GOC are required to purchase the interests
          of NOC and NO II in DNN and in the Limited Partnership, on or before
          July 16, 2002.

(viii)    On July 3, 2002, the valuations required by the LPA and SA were
          delivered by BBK, Ltd., a Michigan corporation, as the "valuator"
          within the meaning of section 8.5(1) of the LPA.



(ix)      On July 9, 2002, Dofasco, NKK and NSC entered into a Letter Agreement
          (the "Letter Agreement") which in part extended the date on or before
          which the NSC interests referred in recital (vii) must be purchased
          from July 16, 2002 to August 16, 2002.

(x)       Concurrently with the date of this Forbearance Agreement, GAC and GOC
          are purchasing the interests of NOC and NO II in DNN and in the
          Limited Partnership; nonetheless, the parties hereto desire to allow
          NSC in accordance with the terms hereof to continue to be a party to
          the TPA and have the rights and preferences thereunder for a limited
          period of time following such purchase.

               Accordingly, each of the parties hereto in consideration of the
promises made by the other parties agrees as set forth below. Any term used in
this Forbearance Agreement and not otherwise defined has the meaning assigned to
it in the LPA.

               1. Purchase of NSC's Interests.

                  1.1 The parties acknowledge and agree that the recitals are
true and correct and, without limiting the foregoing, acknowledge and agree that
the Dofasco Notice was properly given and was effective to create a Matured
Default under the LPA, that the Matured Default referenced in recital (v) above
has occurred, and that as matters currently stand GAC and GOC are required to
purchase the interests of NOC and NO II in DNN and the Limited Partnership as
referenced in recital (vii) above.

                  1.2 For greater certainty, as of the date of the purchase of
the 9.5% Partnership Interest owned by NO II and the 50 Class B Shares owned by
NOC, NO II and NOC shall have no further rights or obligations under the LPA or
the SA (except for those, if any, which were vested or imposed in accordance
with the terms of such agreements prior to such date) and NOC shall cause the
directors nominated by it to resign from the board of DNN as provided for in
Section 6.1 of the SA.

                  1.3 GOC, GAC, NOC and NO II acknowledge and agree as well as
ratify that, with respect to the purchase of the 9.5% Partnership Interest owned
by NO II and the 50 Class B Shares owned by NOC, they have agreed upon the
appointment of BBK, Ltd. as valuator pursuant to section 8.5(1) of the LPA and
affirm that GAC and GOC retained BBK, Ltd. to deliver a valuation pursuant to
the terms of a retainer letter dated May 20, 2002 (the "BBK Valuation").
Further, such entities as well as Dofasco and DNN respectively acknowledge their
receipt of the BBK Valuation and respectively affirm that they have no
disagreement with it.

                  1.4 The parties acknowledge and agree that in the event that
the purchase of the 9.5% Partnership Interest and the 50 Class B Shares by GOC
and GAC, respectively, is not consummated on or before August 16, 2002, Dofasco
will be in a position to deliver notice of default pursuant to paragraph (f) of
the definition of Matured Default contained in section 8.1 of the LPA, and that
Dofasco would thereafter have the option, pursuant to section 8.5(1)(b) of the
LPA, to purchase the Partnership Interests of both GOC and NO II (concurrently
with which Dofasco Participant would purchase the shares of DNN owned by each of
GAC and NOC pursuant to Section 5.5 of the SA). The relevant parties agree that
in the event that Dofasco exercises its option to purchase:

                                        2



                  (a) for the purposes of determining the fair market value of
the Partnership Interests and shares of DNN for such purchases, the parties
confirm that Dofasco in accordance with the requirements of section 8.5 of the
LPA, shall obtain a new valuation of the Class B shares as a whole and of the
cumulative Partnership Interest then owned by GOC and NOII in accordance with
the provisions of section 8.1 of the LPA; and

                  (b) as of the date of the purchases, GAC, GOC, NO II and NOC
shall have no further rights or obligations under the LPA, the SA or the TPA
(except for those, if any, which were vested or imposed in accordance with the
terms of such agreements prior to such date) and both NOC and GAC shall cause
the directors nominated by them to resign from the board of DNN as provided for
in Section 6.2 of the SA.

               2. Ability of NSC to Continue to Use the DNN Facility.

                  2.1 With respect to the Matured Default referenced in recital
(v) above, section 8.5(2) of the LPA shall be hereby deemed to be amended so as
to give effect to section 2.2 hereof.

                  2.2 A new Section [sic] 14.4 of the TPA is hereby added which
shall read in its entirety as follows:

                  "14.4 Notwithstanding any other provision in this Article
                  Fourteen, all rights and obligations of NSC under this
                  Agreement shall terminate automatically on or after the date
                  of purchase of the 9.5% Partnership Interest owned by NO II as
                  defined in, and pursuant to the terms of section 8.5(1) of,
                  the Partnership Agreement on the earliest to occur of (i) the
                  date on which (a) NKK Corporation, a Japanese corporation
                  ("NKK"), ceases to have beneficial ownership (within the
                  meaning of Schedule 13D promulgated under the U.S. Securities
                  Exchange Act of 1934) of at least a majority of the issued and
                  outstanding voting capital stock of NSC or (b) NSC sells
                  substantially all of its assets and those of its subsidiaries,
                  in either case by reason of an order of the U.S. bankruptcy
                  court having jurisdiction over NSC, confirming a plan of
                  reorganization of NSC, (ii) the close of business in New York,
                  New York on December 31, 2002; and (iii) the date NSC fails to
                  make any payment which it is required to make pursuant to this
                  Agreement or pursuant to Section 5.3 of a Forbearance
                  Agreement entered into by the parties hereto, among others,
                  dated August 13, 2002, and such failure to pay continues for a
                  period of five business days (days during which commercial
                  banks are open for business in Toronto, Ontario and New York,
                  New York) after notice by Dofasco to NSC and NAC, if not
                  terminated earlier pursuant to Section 14.2 or Section 14.3
                  above.

               3. Waiver of Certain Rights.

                  3.1 NSC, NOC and NO II each hereby irrevocably waives any and
all rights under applicable laws of the United States or any other jurisdiction
to seek a determination

                                        3



from any court, judicial tribunal or Governmental Body (defined below) that any
of NSC, NOC or NO II can assume, assume and assign, sell or otherwise transfer
any right or delegate any obligation they have under the LPA, SA or TPA.

               4. Representations and Warranties.

                  4.1 Each of Dofasco and Dofasco Participant jointly and
severally makes the representations and warranties set forth in sections 4.3.1
through 4.3.4 below and acknowledges that the other parties are entering into
this Forbearance Agreement in reliance upon such representations and warranties.

                  4.2 Each of NKK, NAC, GAC and GOC jointly and severally makes
the representations and warranties set forth in sections 4.3.1 through 4.3.4
below and acknowledges that the other parties are entering into this Forbearance
Agreement in reliance upon such representations and warranties.

                  4.3 Each of NSC, NOC and NO II jointly and severally makes the
representations and warranties set forth in sections 4.3.1, through 4.3.4 below,
(provided that the representations and warranties in sections 4.3.2 and 4.3.4
below shall be qualified by the existence of NSC's Chapter 11 Proceeding) and
acknowledges that the other parties are entering into this Forbearance Agreement
in reliance upon such representations and warranties.

                  4.3.1 It is a company duly organized and existing and in good
standing under the laws of the jurisdiction of its organization.

                  4.3.2 The execution and delivery of this Forbearance Agreement
and the transactions contemplated herein, have been duly authorized, and, when
executed and delivered by it, this Forbearance Agreement will constitute valid
and binding obligations of it, enforceable against it in accordance with the
terms hereof, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and by general
equity principles (regardless of whether considered in a proceeding in equity or
at law), including, without limitation, (i) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy and (ii)
concepts of materiality, reasonableness, good faith and fair dealing.

                  4.3.3 No Consent of any Governmental Body (as such terms are
defined in section 4.3.5 below), judicial tribunal or any court is required of
it, other than those which have already been obtained, for the consummation of
the transactions contemplated by this Forbearance Agreement.

                  4.3.4 There are no Actions (as defined in section 4.3.5 below)
in law or in equity pending or, to the knowledge of it, threatened against or
affecting it, in any court, before or by any Governmental Body or before any
arbitrator, and there is no existing default by it under any applicable order,
writ, injunction or decree of any court, judicial tribunal or Governmental Body,
in each case which could reasonably be expected to materially and adversely
affect its ability to achieve the objectives of this Forbearance Agreement.

                                        4



                  4.3.5 "Actions" means claims, suits, proceedings and
investigations, whether at law or in equity, before any court, judicial tribunal
or Governmental Body. "Consent" means a consent, waiver, approval, allowance,
novation, authorization, permit, filing, order, registration or notification.
"Governmental Body" means any national, state, county, municipal or other local
government department, commission, board, bureau, agency, or authority of the
United States, Canada or the Province of Ontario, and any person exercising
executive, legislative, judicial or regulatory functions of or pertaining to any
of the foregoing entities, including, without limitation, all commissions,
boards, bureaus, arbitrators and arbitration panels, and any authority or other
person controlled by any of the foregoing.

               5. Covenants of the Parties.

                  5.1 Each of the parties agrees that at all times it will
cooperate fully with the other parties to endeavor to bring to full fruition the
objectives of this Forbearance Agreement, and at all times regarding the
transactions contemplated by this Forbearance Agreement act in good faith and
take such actions as may be necessary or appropriate to effect fully the
provisions of this Forbearance Agreement, except that no party shall be required
hereby to take any unlawful act, or to act contrary to public policy or to that
party's established institutional policies or guidelines. Without limiting the
generality of the foregoing, each of the parties agrees to use all reasonable
commercial efforts to cause their appropriate respective affiliates in turn to
cause DNN to adopt any and all appropriate resolutions.

                  5.2 During the period extending from the date on which the NSC
interests in the DNN facility are acquired through the close of business on
December 31, 2002, neither NAC nor Dofasco will allow their respective nominees
to the board of directors of DNN to increase the amount of capital expenditures
not already budgeted by the DNN board of directors or in the annual budget for
the DNN facility which would be expensed during such period without the prior
written consent of NSC, which consent shall not be unreasonably withheld.

                  5.3 NSC shall pay against receipt of appropriate documentation
therefor 50% of the fees and costs of an outside contractor reasonably
acceptable to NSC retained by DNN, as processor for the Facilities (as defined
in the TPA), for the sole purpose of enabling DNN to perform its obligations to
NSC set forth in a Line Access Agreement dated the date of this Forbearance
Agreement among DNN, NSC, NAC and Dofasco within 30 days of being invoiced for
such fees and costs by DNN. The balance of such fees and costs shall be payable
by NAC and the maximum aggregate amount payable by NSC under this section 5.3
shall be CN$50,000.

               6. General.

                  6.1 Except as expressly provided herein, this Forbearance
Agreement does not amend any provision of any of the LPA, SA or TPA, each of
which shall continue to be of full force and effect as amended.

                                        5



                  6.2 This Forbearance Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the laws of
Canada applicable therein.

                  6.3 This Forbearance Agreement shall not be modified or
amended except by an instrument in writing signed by the parties.

                  6.4 If any provision of this Forbearance Agreement, or the
application thereof to any party hereto, is held illegal, unenforceable or
otherwise invalid by any court or government authority, such holding shall not
affect or invalidate any other provision of this Forbearance Agreement and to
this end, the parties agree that the provisions of this Forbearance Agreement
are and shall be severable; provided that, if such holding affects or
invalidates any provision deemed essential by any party to the satisfactory
performance of this Forbearance Agreement, then upon written notice being given
by such party to the other parties (as provided in the LPA, the SA or the TPA,
as appropriate), the parties shall promptly negotiate in good faith to the end
that this Forbearance Agreement may be amended in such manner as may be
necessary to make it fair and equitable to the other parties.

                  6.5 This Forbearance Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                [SIGNATURE PROVISIONS APPEAR ON FOLLOWING PAGES]

                                        6



               The parties have executed or caused their duly authorized
officers or attorneys-in-fact to execute this Forbearance Agreement as of the
date set forth above.

                                DOFASCO INC.

                                By: /s/ John T. Mayberry
                                    --------------------------------------------
                                    Name: John T. Mayberry
                                    Title: Chair and Chief Executive Officer

                                By: /s/ Joan M. H. Weppler
                                    --------------------------------------------
                                    Name: Joan M. H. Weppler
                                    Title: Vice President
                                           Corporate Administration

                                GALVATEK ONTARIO CORPORATION

                                By: /s/ Mineo Shimura
                                    --------------------------------------------
                                    Name: Mineo Shimura
                                    Title: President

                                NATIONAL ONTARIO II, LIMITED

                                By: /s/ Kirk A. Sobecki
                                    --------------------------------------------
                                    Name: Kirk A. Sobecki
                                    Title: VP & CFO

                                DNN GALVANIZING CORPORATION

                                By: /s/ Robert Nuttall
                                    --------------------------------------------
                                    Name: Robert Nuttal
                                    Title: Director

                                904153 ONTARIO INC.

                                By: /s/ Raymond P. d'Andrade
                                    --------------------------------------------
                                    Name: Raymond P. d'Andrade
                                    Title: President

                                By: /s/ Urmas Soomet
                                    --------------------------------------------
                                    Name:  Urmas Soomet
                                    Title:  Secretary



                                GALVATEK AMERICA CORPORATION

                                By: /s/ Mineo Shimura
                                    --------------------------------------------
                                    Name: Mineo Shimura
                                    Title: President

                                NATIONAL ONTARIO CORPORATION

                                By: /s/ Kirk A. Sobecki
                                    --------------------------------------------
                                    Name: Kirk A. Sobecki
                                    Title:VP & CFO

                                NKK U.S.A. CORPORATION

                                By: /s/ Mineo Shimura
                                    --------------------------------------------
                                    Name: Mineo Shimura
                                    Title: President

                                NATIONAL STEEL CORPORATION

                                By: /s/ Kirk A. Sobecki
                                    --------------------------------------------
                                    Name: Kirk A. Sobecki
                                    Title: Sr. VP & CFO

                                NKK CORPORATION

                                By: /s/ Hiroyuki Tezuka
                                    --------------------------------------------
                                    Name: Hiroyuki Tezuka
                                    Title: Director, American & Europe Section
                                           International Business Planning Dept.

EX-10.R

                                                                    EXHIBIT 10.R
                                 AMENDMENT NO. 7
                   TO AGREEMENT FOR THE TRANSFER OF EMPLOYEES

     This Amendment No. 7 to the Agreement for the Transfer of Employees dated
as of December 18, 2002 (the "Amendment") is made by and between NKK Corporation
("NKK") and National Steel Corporation ("NSC").

     WHEREAS, NKK and NSC are parties to the Agreement for the Transfer of
Employees effective May 1, 1995 (such Agreement, as amended prior to the date
hereof, the "Transfer Agreement");

     WHEREAS, NSC is currently under the protection afforded by Chapter 11 of
the U.S. Bankruptcy Code and, as the debtor in possession, is exploring various
alternatives to reorganize NSC's businesses, including the sale of NSC's assets
and businesses to another company; and

     WHEREAS, NSC and NKK wish to extend the term of the Transfer Agreement so
that NSC can continue to receive NKK's technical and business assistance through
Transferred Employees (as defined in the Transfer Agreement) during the pendency
of the Chapter 11 case and until a Termination Event (as defined below) occurs,
but in no event later than April 7, 2003.

     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.   Terms used herein, but not otherwise defined herein shall have the meanings
assigned thereto in the Transfer Agreement.

2.   In Section 1 of the Transfer Agreement (Definitions), the following
definitions shall be inserted:

     2.1. "Bankruptcy Code" means SECTIONS 101-1330 of Title 11 of the United
     States Code, as amended.

     2.2. "Extended Contract Period" means a period commencing on January 1,
     2003 and ending on the earlier of (x) 30 days after the first day on which
     any of the Termination Events has occurred and (y) April 7, 2003.

     2.3. "Termination Event" means any of the following events: (a) sale or
     transfer of all or substantially all of the assets of NSC to any person or
     group (other than any group consisting solely of NKK and/or its
     affiliates); (b) confirmation of a reorganization plan; (c) conversion of
     the Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code; (d)
     dismissal of the Chapter 11 case; (e) appointment of a Chapter 11 trustee;
     or (f) merger, consolidation or



     acquisition of 50% or more of the voting securities of NSC by any person or
     group (other than any group consisting solely of NKK and/or its
     affiliates).

3.   In accordance with Section 15 of the Transfer Agreement, the term of the
Transfer Agreement is hereby extended for the Extended Contract Period.

4.   The Reimbursable Expenses Cap for the Extended Contract Period shall be
$1,500,000.

5.   Except as modified hereby, all the terms and provisions of the Transfer
Agreement and the other documents executed in connection therewith shall remain
in full force and effect.

6.   Each party agrees to pay all reasonable costs and expenses that it has
incurred in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, the reasonable fees and expenses of
counsel.

7.   This Amendment may be executed in counterparts.

8.   THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

IN WITNESS WHEREOF, each of the undersigned has caused a counterpart of this
Amendment to be duly executed and delivered as of the date referenced above.

                                  NKK CORPORATION

                                  By:   /s/ Mitsugu Aikawa
                                        ----------------------------------------
                                  Name: Mitsugu Aikawa
                                  Title:General Manager, Human Resources Dept.


                                  NATIONAL STEEL CORPORATION

                                  By:   /s/ Ronald J. Werhnyak
                                        ----------------------------------------
                                  Name: Ronald J. Werhnyak
                                  Title:Senior Vice President, General
                                        Counsel & Secretary

EX-10.S

                                                                    EXHIBIT 10.S
                                 AMENDMENT NO. 8
                   TO AGREEMENT FOR THE TRANSFER OF EMPLOYEES

     This Amendment No. 8 to the Agreement for the Transfer of Employees dated
as of February 25, 2003 (the "Amendment") is made by and between NKK Corporation
("NKK") and National Steel Corporation ("NSC").

     WHEREAS, NKK and NSC are parties to the Agreement for the Transfer of
Employees effective May 1, 1995 (such Agreement, as amended prior to the date
hereof, the "Transfer Agreement");

     WHEREAS, NSC and NKK wish to further amend the terms of the Transfer
Agreement.

     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.   Terms used herein, but not otherwise defined herein shall have the meanings
assigned thereto in the Transfer Agreement.

2.   In Section 1 of the Transfer Agreement (Definitions), the definition of the
term "Extended Contract Period" shall be amended and restated in its entirety as
follows:

     "Extended Contract Period" means a period commencing on January 1, 2003 and
     ending on the earlier of (x) 30 days after the first day on which any of
     the Termination Events has occurred and (y) June 30, 2003.

3.   Except as modified hereby, all the terms and provisions of the Transfer
Agreement and the other documents executed in connection therewith shall remain
in full force and effect.

4.   Each party agrees to pay all reasonable costs and expenses that it has
incurred in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, the reasonable fees and expenses of
counsel.

5.   This Amendment may be executed in counterparts.

6.   THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.



IN WITNESS WHEREOF, each of the undersigned has caused a counterpart of this
Amendment to be duly executed and delivered as of the date referenced above.

                                  NKK CORPORATION

                                  By:   /s/ Mitsugu Aikawa
                                        ----------------------------------------
                                  Name: Mitsugu Aikawa
                                  Title:General Manager, Human Resources Dept.

                                  NATIONAL STEEL CORPORATION

                                  By:   /s/ Ronald J. Werhnyak
                                        ----------------------------------------
                                  Name:  Ronald J. Werhnyak
                                  Title:Senior Vice President, General
                                        Counsel & Secretary

EX-10.UU

                                                                   EXHIBIT 10.UU

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of March 1,
2001, by and between National Steel Corporation, a Delaware corporation (the
"Company"), with its principal office in Mishawaka, Indiana, Tamara J. Freeman,
a resident of Indiana ("Executive").

     WHEREAS, the parties desire to enter into an agreement to reflect
Executive's executive capacities and to provide for Executive's continued
employment by the Company, upon the terms and conditions set forth herein:

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.   Employment. The Company hereby agrees to continue to employ Executive,
and Executive hereby agrees to continue to perform Executive's duties and
responsibilities, in accordance with the terms, conditions and provisions
hereinafter set forth.

     1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of the date hereof (the "Effective Date") and shall
continue until February 28, 2003, and thereafter for successive one-year
periods, unless sooner terminated (i) by written notice given by either party
not less than 60 days prior to February 28, 2003 or any subsequent February 28,
or (ii) in accordance with Section 5 hereof. The period commencing as of the
Effective Date and ending on the date on which the term of Executive's
employment under the Agreement shall terminate is hereinafter referred to as the
"Employment Term."

     1.2. Duties and Responsibilities. Executive shall serve as General
Manager-Safety, Health and Employee Welfare for the Company and/or in such other
senior positions, if any, to



which he may be appointed during the Employment Term. During the Employment
Term, Executive shall perform, on a full time basis, all duties and accept all
responsibilities incident to such positions as may be assigned to him by the
Company's Chief Executive Officer, or, if the Company's Chief Executive Officer
so specifies from time to time, by the Company's President.

     1.3. Base Salary. For all the services rendered by Executive hereunder, the
Company shall pay Executive the base salary in effect as of the Effective Date
("Base Salary"), payable in installments at such times as the Company
customarily pays its other comparable level employees (but in any event no less
often than monthly). Executive's Base Salary shall be reviewed annually for
appropriate adjustment (but shall not be reduced below that in effect on the
Effective Date without Executive's written consent) by the Company's President,
Chief Executive Officer and Board of Directors (the "Board") pursuant to normal
performance review policies for comparable level employees.

     1.4. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (i) employee pension and
retirement plans and programs ("Retirement Plans") and (ii) welfare benefit
plans and programs ("Benefit Coverages"), in each case made available to the
Company's employees generally, as such Retirement Plans or Benefit Coverages may
be in effect from time to time.

     1.5. Reimbursement of Expenses and Dues; Vacation; Perquisites. Executive
shall be provided with reimbursement of expenses related to Executive's
employment by the Company on a basis no less favorable than that which may be
authorized from time to time for comparable level employees as a group, and
shall be entitled to annual vacation and holidays in accordance with the
Company's normal personnel policies in effect from time to time. In addition,
Executive

                                       -2-



shall be entitled to such indemnification for authorized actions incident to his
responsibilities for the Company as is generally provided to employees of the
Company of comparable status.

     1.6. Short-term Incentive Compensation. Executive shall be entitled to
participate in the Company's Key Management Incentive Compensation Plan as in
effect from time to time, or any other short-term incentive compensation
programs established by the Company for its comparable level employees
generally, and shall be eligible to receive such short-term incentive
compensation, depending upon achievement of certain annual individual or
business performance objectives specified and approved by the Board (or a
Committee thereof) in its sole discretion and as otherwise determined in
accordance with the terms of such plan(s) or program(s).

     1.7. Long-term Incentive Compensation. Executive shall be entitled to
participate in the Company's 1993 Long-Term Incentive Plan or any other
long-term incentive compensation programs established by the Company for its
comparable level employees generally.

     2.   Confidential Information. Executive recognizes and acknowledges that
by reason of Executive's employment by and service to the Company during and, if
applicable, after the Employment Term, Executive will continue to have access to
certain confidential and proprietary information relating to the business of the
Company, which may include, but is not limited to, trade secrets, trade
"know-how," customer information, supplier information, cost and pricing
information, marketing and sales techniques, strategies and programs,
manufacturing processes and equipment, computer programs and software and
financial information (collectively referred to as "Confidential Information").
Executive acknowledges that such Confidential Information is a valuable and
unique asset of the Company and Executive covenants that Executive will not,
unless expressly authorized in writing by the Company's Chief Executive Officer,
at any time

                                       -3-



during the course of Executive's employment use any Confidential Information or
divulge or disclose any Confidential Information to any person, firm or
corporation except in connection with the performance of Executive's duties for
the Company and in a manner consistent with the Company's policies regarding
Confidential Information. Executive also covenants that at any time after the
termination of such employment, directly or indirectly, Executive will not use
any Confidential Information or divulge or disclose any Confidential Information
to any person, firm or corporation, unless such information is in the public
domain through no fault of Executive or except when required to do so by a court
of law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) with apparent jurisdiction to order Executive to divulge,
disclose or make accessible such information, in which case Executive will
inform the Company in writing promptly of such required disclosure, but in any
event at least two business days prior to disclosure. All written Confidential
Information (including, without limitation, in any computer or other electronic
format) which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Except as required in the
performance of Executive's duties for the Company, or unless expressly
authorized in writing by the Company's President or Chief Executive Officer,
Executive shall not remove any written Confidential Information from the
Company's premises, except in connection with the performance of Executive's
duties for the Company and in a manner consistent with the Company's policies
regarding Confidential Information. Upon termination of Executive's employment,
Executive agrees immediately to return to the Company all written Confidential
Information in Executive's possession.

                                       -4-



     3.   Non-competition; Non-solicitation; No Unfavorable Publicity;
Cooperation.

          (a)  During Executive's employment by the Company and for a period of
one year after Executive's termination of employment under Section 5.5 of this
Agreement, within the "Geographic Area," as defined below, Executive will not,
except with the prior written consent of the Company's Chief Executive Officer,
directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit Executive's name
to be used in connection with, any business or enterprise which is engaged in
making, producing, manufacturing or finishing steel products that are in direct
competition with steel products made, produced, manufactured or finished by the
Company. For the purposes of this Section, "Geographic Area" shall mean the
continental United States; provided, however, that if any court of competent
jurisdiction determines that the Geographic Area is too extensive to require
enforcement of this Subsection 3(a), the Geographic Area shall be the portion of
the United States east of the Mississippi River (or the largest other such
portion of the United States that such court deems not too extensive to require
enforcement of this Subsection 3(a)).

          (b)  The foregoing restrictions shall not be construed to prohibit the
ownership by Executive of less than one percent (1%) of any class of securities
of any corporation which is engaged in any of the foregoing businesses having a
class of securities registered pursuant to the Securities Exchange Act of 1934,
provided that such ownership represents a passive investment and that neither
Executive nor any group of persons including Executive in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its

                                       -5-



financial obligations, otherwise takes any part in its business, other than
exercising Executive's rights as a shareholder, or seeks to do any of the
foregoing.

          (c)  Executive further covenants and agrees that during Executive's
employment by the Company and for the period of one year thereafter, Executive
will not, directly or indirectly, (i) solicit, divert, take away, or attempt to
solicit, divert or take away, any of the Company's customers, or (ii) encourage
any customer to reduce its patronage of the Company.

          (d)  Executive further covenants and agrees that during Executive's
employment by the Company and for the period of one year thereafter, Executive
will not, except with the prior written consent of the Company's Chief Executive
Officer, directly or indirectly, solicit or hire, or encourage the solicitation
or hiring of, any person who was a managerial or higher level employee of the
Company at any time during the term of Executive's employment by the Company by
any employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. The foregoing covenant of Executive shall
not apply to any person after 12 months have elapsed subsequent to the date on
which such person's employment by the Company has terminated.

          (e)  During the Term and subsequent to Executive's termination of
employment with the Company, Executive agrees not to make any negative or
unfavorable statements or communications, and not to issue any written
communications or release any other written materials which would be materially
damaging to the Company, its officers, directors or affiliates, or its or their
reputation or standing, whether in the investor or financial community, the
steel industry or otherwise.

                                       -6-



          (f)  Executive agrees to cooperate with the Company for a reasonable
period of time after the Employment Term by making himself available to testify
on behalf of the Company, in any action, suit or proceeding. In addition, for a
reasonable period of time, Executive agrees to be available at reasonable times
to meet and consult with the Company on matters reasonably within the scope of
his prior duties with the Company so as to facilitate a transition to his
successor. The Company agrees to compensate Executive at the highest rate of
Base Salary applicable under Section 1.3 of this Agreement during the Employment
Term and to reimburse Executive for all expenses actually incurred in connection
with his provision of testimony or consulting assistance.

     4.   Equitable Relief and Damages.

          (a)  Executive acknowledges and agrees that the restrictions contained
in Sections 2 and 3 are reasonable and necessary to protect and preserve the
legitimate interests, properties, goodwill and business of the Company, that the
Company would not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by the Company should
Executive breach any of the provisions of those Sections. Executive represents
and acknowledges that (i) Executive has been advised by the Company to consult
Executive's own legal counsel in respect of this Agreement, and (ii) that
Executive has had full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with Executive's counsel.

          (b)  Executive further acknowledges and agrees that a breach of any of
the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all

                                       -7-



earnings, profits and other benefits arising from any violation of Sections 2 or
3 hereof, which rights shall be cumulative and in addition to any other rights
or remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 or 3 hereof should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by applicable law in
any jurisdiction, it is the intention of the parties that the provision shall be
amended to the extent of the maximum time, geographic, service, or other
limitations permitted by applicable law, that such amendment shall apply only
within the jurisdiction of the court that made such adjudication and that the
provision otherwise be enforced to the maximum extent permitted by law.

          (c)  Damages. If Executive breaches any of Executive's obligations
under Sections 2 or 3 hereof, and such breach constitutes "Cause," as defined in
Section 5.3 hereof, or would constitute Cause if it had occurred during the
Employment Term, the Company shall thereafter remain obligated only for such
compensation and other benefits, if any, as may otherwise be required in any
plans, policies or practices then applicable to Executive in accordance with the
terms thereof, and not for any compensation or other benefits under this
Agreement.

          (d)  Executive irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the United States District Court for the Northern District of
Indiana, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Indiana, (ii) consents to
the non-exclusive jurisdiction of any such court in

                                       -8-



any such suit, action or proceeding, and (iii) waives any objection which
Executive may have to the laying of venue of any such suit, action or proceeding
in any such court.

     5.   Termination. The Employment Term shall terminate upon the occurrence
of any one of the following events:

     5.1. Disability. The Company may terminate the Employment Term if Executive
is unable substantially to perform Executive's duties and responsibilities
hereunder to the full extent required by the Company's President or Chief
Executive Officer by reason of illness, injury or incapacity for six consecutive
months, or for more than six months in the aggregate during any period of twelve
calendar months; provided, however, that the Company shall continue to pay
Executive's Base Salary until the Company acts to terminate the Employment Term.
If the Company terminates the Employment Term, Executive shall be entitled to
receive (i) any amounts earned, accrued or owing but not yet paid under Section
1 above (including but not limited to unused vacation pay), and (ii) any other
benefits, all in accordance with the terms of any applicable plans and programs
(or related agreements) of the Company referred to in Section 1 above.
Otherwise, the Company shall have no further liability or obligation to
Executive for compensation or benefits under this Agreement. Executive agrees,
in the event of a dispute under this Section 5.1, to submit to a physical
examination by a licensed physician selected by the Company's President or Chief
Executive Officer.

     5.2. Death. The Employment Term shall terminate in the event of Executive's
death. In such event, the Company shall pay to Executive's executors, legal
representatives or administrators, as applicable, an amount equal to the
installment of Executive's Base Salary set forth in Section 1.4 hereof for the
month in which Executive dies. In addition, Executive's estate or other
appropriate beneficiary (as designated by Executive in accordance with the terms
of any applicable benefit plans or programs of the Company) shall be entitled to
receive (i) any other amounts earned, accrued or owing but not yet paid under
Section 1 above (including but not limited to unused vacation pay) and (ii) any
other benefits, all in accordance with the terms of any

                                       -9-



applicable plans and programs (or related agreements) of the Company referred to
in Section 1 above. Otherwise, the Company shall have no further liability or
obligation under this Agreement to Executive's executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
Executive.

     5.3. Cause. The Company may terminate the Employment Term, at any time, for
"Cause" upon written notice, in which event all payments under this Agreement
shall cease, except for Base Salary and unused vacation pay to the extent
already earned by reason of services actually performed, but Executive shall
remain entitled to any other benefits in accordance with the terms of any
applicable plans and programs of the Company. For purposes of this Agreement,
Executive's employment may be terminated for "Cause" if (i) Executive is
convicted of a felony, (ii) in the reasonable determination of the Board,
Executive has (x) committed an act of fraud, embezzlement, or theft in
connection with Executive's duties in the course of Executive's employment with
the Company, or (y) caused intentional damage or harm to the property, business
or reputation of the Company, or intentionally disclosed Confidential
Information in breach of this Agreement, or (iii) Executive has otherwise
materially breached Executive's obligations under this Agreement and shall not
have remedied such breach within 15 days after receiving written notice from the
Board specifying the details thereof. For purposes of this Agreement, an act or
omission on the part of Executive shall be deemed "intentional" only if it was
not due primarily to an error in judgment or negligence and was done by
Executive not in

                                      -10-



good faith and without reasonable belief that the act or omission was in the
best interest of the Company.

     5.4. Termination Without Cause and Constructive Discharge.

          (a)  The Company may remove Executive at any time, without Cause, from
the position in which Executive is employed hereunder, or Executive may
terminate employment with the Company at any time under circumstances comprising
Constructive Discharge, as defined in this Section 5.4, and in either such case
the Employment Term shall be deemed to have ended, by written notice to the
other party. If such notice is given by the Company to Executive, the Employment
Term shall end no earlier than the 60th day following the date such notice is
given. If such notice is given by Executive, the Employment Term shall end on
the date such notice is given. In the event that such notice is given, Executive
shall be under no obligation to render any additional services to the Company
and, subject to the provisions of Section 3 hereof, shall be allowed to seek
other employment. Upon any such termination by the Company or Executive, in
addition to payment of any amounts earned, accrued or owing but not yet paid
under Section 1 above (including but not limited to unused vacation pay),
Executive shall be entitled, as liquidated damages for the failure of the
Company to continue to employ Executive, to (i) a single sum payment in cash,
within 30 days after the end of the Employment Term, in the amount of
Executive's annual Base Salary as of the last day of the Employment Term (unless
Executive has terminated employment with the Company under circumstances
comprising Constructive Discharge by reason of a reduction to Base Salary, in
which case payment under this clause (i) shall be in the amount of Executive's
annual Base Salary immediately prior to such reduction); (ii) a single sum
payment in cash, within 30 days after the end of the Employment Term, in the
amount of the greater of (A) the average annual amount

                                      -11-



paid to Executive under Section 1.6 of this Agreement for the three calendar
years preceding the calendar year in which the Employment Term ends, or (B)
Executive's highest target bonus percentage for purposes of Section 1.6 of this
Agreement for any calendar year during the Employment Term (or, if greater,
30%), multiplied by the annual Base Salary determined for purposes of clause (i)
of this Subsection 5.4(a); (iii) a single sum payment in cash, within 30 days
after the end of the Employment Term, of all amounts accrued to Executive under
the Executive Deferred Compensation Plan, whether or not otherwise forfeitable,
acceptance of which single sum payment shall constitute Executive's waiver of
any claim or entitlement to benefits under the Executive Deferred Compensation
Plan; (iv) executive outplacement services at a cost not to exceed 30% of Base
Salary determined for purposes of clause (i) of this Subsection 5.4(a); (v)
continued participation for Executive and Executive's eligible dependents in the
Benefits Coverages, including but not limited to the Company sponsored health
care plan, in which Executive participated on the last day of the Employment
Term, for a period of 12 months (or with respect to the Company sponsored health
care plan only, if Executive has not reached age 55 at the end of such 12-month
period, for an additional period ending on the earlier of Executive's 55th
birthday or the second anniversary of the last day of the Employment Term),
provided that all such Benefit Coverages shall in any case cease if Executive
becomes covered under a group health care plan sponsored by another employer;
(vi) monthly payments for the life of Executive, beginning as of the earliest
date Executive is eligible following the end of the Employment Term to begin to
receive benefits under the National Steel Corporation Retirement Program (the
"Pension Plan"), in an amount equal to the difference (if any) between (A) the
monthly amount payable under the Pension Plan as of such date in the form of a
single life annuity and (B) the monthly amount that would have been payable
under the Pension Plan in the

                                      -12-



form of a single life annuity without reduction for early commencement; (vii)
coverage for Executive and Executive's dependents who would be eligible if
Executive were otherwise eligible for such coverage, under the Company sponsored
health care plan in effect from time to time for non-represented retirees,
beginning as of the earliest date Executive is eligible following the end of the
Employment Term to begin to receive benefits under the Pension Plan; and (viii)
continued vesting of previously granted stock options, in accordance with the
vesting schedule under such grants, and continued exercisability of such stock
options as are or become vested, in each case until the earlier of the second
anniversary of the last day of the Employment Term or the expiration of the
respective terms of such stock options. Continued health care coverage under
clause (v) of this Subsection 5.4(a) shall not reduce the period of health care
continuation coverage to which Executive would otherwise be entitled under
applicable federal law. If the Company sponsored health care plan described in
either clause (v) or clause (vii) of this Subsection 5.4(a) does not by its
terms allow Executive's participation or continued participation, the Company
shall obtain and pay all premiums for insurance coverage on behalf of Executive
and/or Executive's eligible dependents that provides equivalent benefits as
provided under such Company sponsored health care plan or, at the Company's
election, shall provide such benefits from its own assets. In the latter case,
the Company shall treat Executive as receiving taxable income equal to the
premium cost calculated by the Company under applicable federal law for health
care continuation under the applicable Company sponsored health care plan, and
shall pay Executive additional amounts equal to Executive's incremental tax
liability attributable to such taxable income. Notwithstanding anything in this
Agreement to the contrary, on or after the date Executive attains age 65, no
action by the Company shall be treated as a removal from employment or
Constructive Discharge if on the effective date of such action Executive
satisfies

                                      -13-



all of the requirements for the executive or high policy-making exception to
applicable provisions of state and federal age discrimination legislation.

          (b)  Notwithstanding any other provision of this Agreement to the
contrary, Executive shall not be entitled to any of the payments or benefits
described in Subsection 5.4(a) unless Executive executes a written release upon
such removal or Constructive Discharge, substantially in the form attached
hereto as Annex 1 (the "Release"), of any and all claims against the Company and
all related parties with respect to all matters arising out of Executive's
employment by the Company (other than any entitlements under the terms of this
Agreement or under any other plans or programs of the Company in which Executive
participated and under which Executive has accrued a benefit), or the
termination thereof.

          (c)  The term "Constructive Discharge" means a termination of the
Executive's employment by the Executive due to (i) non-payment or reduction of
compensation or benefits then in effect and described in Sections 1.3-1.7; (ii)
reduction or diminution of Executive's duties or responsibilities without
Executive's prior consent, including but not limited to a change in Executive's
reporting relationships; (iii) notice by the Company of termination of this
Agreement in accordance with Section 1.1; (iv) relocation of Executive's
principal workplace by twenty-five miles or more; or (v) a failure by the
Company or its successors without the prior consent of the Executive to fulfill
the obligations under this Agreement in any material respect.

     5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term under circumstances that do not comprise Constructive Discharge,
upon written notice for any reason, and the Employment Term shall end on the
date such notice is given. In such event, no further payments shall be due under
this Agreement, except that Executive shall be entitled to

                                      -14-



any benefits due in accordance with the terms of any applicable plan and
programs of the Company.

     6.   Payments Upon a Change of Control.

     6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 unless the context
otherwise clearly requires:

          (a)  "Change of Control." For purposes of this Agreement, a "Change of
Control" shall mean:

               (i) (A) If any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") acquires (by purchase, tender offer or
otherwise) or becomes the "beneficial owner" (as defined in rule 13d-3 under the
Exchange Act) of thirty percent (30%) or more of the combined voting power of
the then-outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities") and
(B) NKK Corporation ceases to be the beneficial owner, directly or indirectly,
of more than fifty percent (50%) of the total voting power of all the then
Outstanding Company Voting Securities; provided, however, that for purposes of
this subsection (i), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company, or (2) any acquisition by any entity
pursuant to a transaction which complies with each of clauses (A), (B) and (C)
of paragraph (iii) of this Subsection (a).

               (ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board, provided, however, that any individual becoming a director
subsequent to the date hereof whose election,

                                      -15-



or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board.

               (iii) Consummation of a reorganization, recapitalization, merger,
acquisition of securities or assets by the Company or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) the individuals and entities who were the beneficial owners,
respectively, of the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of, respectively, the then outstanding
shares of common stock (in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock) and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, the Company or a corporation which as a result
of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries), and (B)
no Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, thirty

                                      -16-



percent (30%) or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination, or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (C) at least two-thirds of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

               (iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

               (b)   "Termination upon a Change of Control" shall mean a
termination of Executive's employment under Section 5.4 of this Agreement upon
or within two years after a Change of Control.

     6.2. Certain Increase in Payments.

               (a)   Anything in this Agreement to the contrary notwithstanding,
in the event that Executive experiences a Termination upon a Change of Control
and it shall be determined that any payment or distribution by the Company to or
for the benefit of Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the
"Payment"), would constitute an "excess parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
Executive shall be paid an additional amount (the "Gross-Up Payment") such that
the net amount retained by Executive from the Payment and the Gross-Up Payment,
after deduction of any excise tax imposed under Section 4999 of the Code and any
federal, state and local income and employment tax and excise tax imposed upon
the Gross-Up Payment, shall be equal to the Payment. For purposes of

                                      -17-



determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
federal income tax and employment taxes at the highest marginal rate of federal
income and employment taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive's residence on the date
of Executive's Termination upon a Change of Control, net of the maximum
reduction in federal income taxes that may be obtained from the deduction of
such state and local taxes.

               (b)   All determinations to be made under this Section 6.2 shall
be made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and Executive
within 10 days of the date of Executive's Termination upon a Change of Control.
Within five days after the Accounting Firm's determination, the Company shall
pay (or cause to be paid) or distribute (or cause to be distributed) to or for
the benefit of Executive such amounts as are then due to Executive under this
Agreement.

               (c)   In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by Executive, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to Executive after taking into account
the provisions of Section 4999 of the Code shall reflect the intent of the
parties as expressed in subsection (a) above, in the manner determined by the
Accounting Firm.

               (d)   All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company.

     7.   Survivorship. The respective rights and obligations of the parties
under this

                                      -18-



Agreement shall survive any termination of Executive's employment to the extent
necessary to the intended preservation of such rights and obligations.

     8.   Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Mishawaka, Indiana, in accordance with National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be final,
binding and nonappealable, and judgment may be entered thereon by either party
in accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. If Executive prevails on any
material issue which is the subject of such arbitration or lawsuit, the Company
shall be responsible for all of the fees of the American Arbitration Association
and the arbitrators and any expenses relating to the conduct of the arbitration
(including the Company's and Executive's reasonable attorneys' fees and
expenses). Otherwise, each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys' fees
and expenses) and shall share the fees of the American Arbitration Association.

     9.   Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be

                                      -19-



deemed to have been given when hand delivered or mailed by registered or
certified mail, as follows (provided that notice of change of address shall be
deemed given only when received):

     If to the Company, to:

               Vice President, General Counsel and Secretary
               National Steel Corporation
               4100 Edison Lakes Parkway
               Mishawaka, Indiana   46545-3440

     If to Executive, to:

               Tamara J. Freeman
               5457 Lindsay
               LaPorte, IN 46350

or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

     10.  Contents of Agreement; Amendment and Assignment.

               (a)   This Agreement sets forth the entire understanding between
the parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment approved
by the Board and executed on its behalf by a duly authorized officer and by
Executive.

               (b)   All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Executive
under this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company shall require any

                                      -20-



successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the extent the Company would be required to perform if no such
succession had taken place.

     11.  Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.

     12.  Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or power
under this Agreement or existing at law or in equity shall be construed as a
waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.

     13.  Beneficiaries/References. Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any

                                      -21-



compensation or benefit payable under this Agreement following Executive's death
by giving the Company written notice thereof. In the event of Executive's death
or a judicial determination of Executive's incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer to
Executive's beneficiary, estate or other legal representative.

     14.  Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.

     15.  Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive shall
bear all expense of, and be solely responsible for, all federal, state and local
taxes due with respect to any payment received under this Agreement.

     16.  Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Indiana without giving effect to any conflict of
laws provisions.

     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

                                    NATIONAL STEEL CORPORATION

    /s/ Tamara J. Freeman           By:  /s/ John A. Maczuzak
- -------------------------------        -----------------------------------------
                                    Name: John A. Maczuzak
                                    Title:President and Chief Operating Officer

                                      -22-

EX-10.VV

                                                                   EXHIBIT 10.VV

January 24, 2003

Scott Montross
National Steel Corporation
4100 Edison Lakes Parkway
Mishawaka, Indiana 46545

Dear Mr. Montross:

National Steel Corporation ("Company") and you ("Employee") are currently
parties to a letter agreement dated as of February 11, 2002 (the "Original
Agreement"). The parties now wish to amend and restate the Original Agreement in
its entirety. Therefore, the parties hereby agree as follows:

(1)  When used herein, the following capitalized terms shall have the meanings
set forth below:

     (a)  "Cause" shall mean (i) Employee is convicted of a felony, (ii) in the
     reasonable determination of the Company, Employee has (x) committed an act
     of fraud, embezzlement or theft in connection with Employee's duties in the
     course of Employee's employment with the Company, (y) caused intentional
     damage or harm to the property, business or reputation of the Company, or
     (z) intentionally disclosed Confidential Information (as hereinafter
     defined) in breach of this Agreement, or (iii) Employee has otherwise
     materially breached Employee's obligations under this Agreement and shall
     not have remedied such breach within 15 days after receiving written notice
     from the Company specifying the details thereof. For purposes of this
     Agreement, an act or omission on the part of Employee shall be deemed
     "intentional" only if it was not due primarily to an error in judgment or
     negligence and was done by Employee not in good faith and without
     reasonable belief that the act or omission was in the best interest of the
     Company.

     (b)  "Termination Event" shall mean (i) termination of Employee's
     employment with the Company, within two years following the closing of a
     Transaction, either (a) by Employee following a reduction of Employee's
     base salary from the base salary then in effect, (b) by Employee following
     a reduction or diminution of Employee's duties or responsibilities without
     Employee's prior written consent, or (c) by Company other than for Cause;
     or (ii) termination of this Agreement by the Company in accordance with
     Section (4) hereof.

     (c)  "Termination Date" shall mean the date on which a Termination Event
     occurs.

     (d)  "Transaction" shall mean any transaction pursuant to which any third
     party acquires a majority of the stock or assets of the Company, including
     any such transaction



     pursuant to which the Company is merged into a wholly owned subsidiary of
     such third party.

(2)  If a Termination Event occurs, the Company shall:

     (a)  pay to Employee any unused vacation pay, in accordance with the
     Company's standard policies and practices;

     (b)  reimburse Employee, in accordance with the Company's standard expense
     reimbursement policy, for any reasonable expenses incurred by Employee
     prior to the Termination Date that have not theretofore been reimbursed;

     (c)  pay to Employee a single sum payment in cash, within 30 days after the
     Termination Date, in an amount equal to Employee's annual base salary as in
     effect immediately prior to the Termination Date;

     (d)  pay to Employee a single sum payment in cash, within 30 days after the
     Termination Date, in an amount equal to Employee's target bonus percentage
     pursuant to the Company's Key Management Incentive Compensation Plan, or
     any successor plan thereto, multiplied by the Employee's annual base salary
     as in effect immediately prior the Termination Date; and

     (e)  provide continued participation for Employee and Employee's eligible
     dependents in the Company sponsored health care plan, in which Employee
     participated immediately prior to the Termination Date, for a period of 12
     months following the Termination Date, provided that such participation
     shall in any case cease if Employee becomes covered under a group health
     care plan sponsored by another employer. If the Company sponsored health
     care plan does not by its terms allow participation or continued
     participation by Employee or Employee's eligible dependents, the Company
     shall obtain and pay all premiums for insurance coverage on behalf of
     Employee and/or Employee's eligible dependents that provides equivalent
     benefits as provided under such Company sponsored health care plan or, at
     the Company's election, shall provide such benefits from its own assets.

     (f)  Notwithstanding any other provision of this Agreement to the contrary,
     Employee shall not be entitled to any of the payments or benefits described
     in Sections (2)(c) - (2)(e) unless Employee executes a written release upon
     the Termination Date, substantially in the form attached hereto as Annex 1
     (the "Release"), of any and all claims against the Company and all related
     parties with respect to all matters arising out of Employee's employment by
     the Company (other than any entitlements under the terms of this Agreement
     or under any other plans or programs of the Company in which Employee
     participated and under which Employer has accrued a benefit), or the
     termination thereof.

(3)  In consideration of the agreements of the Company set forth in Section (2)
above, Employee hereby agrees as follows:

     (a)  Employee recognizes and acknowledges that by reason of Employee's
     employment by and service to the Company during and, if applicable, after
     the Termination Date, Employee will continue to have access to certain
     confidential and proprietary information relating to the business of the
     Company, which may include, but is not limited to, trade secrets, trade
     "know-how," customer information, supplier

                                        2



     information, cost and pricing information, marketing and sales techniques,
     strategies and programs, manufacturing processes and equipment, computer
     programs and software and financial information (collectively referred to
     as "Confidential Information"). Employee acknowledges that such
     Confidential Information is a valuable and unique asset of the Company and
     Employee covenants that Employee will not, unless expressly authorized in
     writing by the Company's President or Chief Executive Officer, at any time
     during the course of Employee's employment use any Confidential Information
     or divulge or disclose any Confidential Information to any person, firm or
     corporation except in connection with the performance of Employee's duties
     for the Company and in a manner consistent with the Company's policies
     regarding Confidential Information. Employee also covenants that at any
     time after the Termination Date, Employee will not use any Confidential
     Information or divulge or disclose any Confidential Information to any
     person, firm or corporation, unless such information is in the public
     domain through no fault of Employee or except when required to do so by a
     court of law, by any governmental agency having supervisory authority over
     the business of the Company or by any administrative or legislative body
     (including a committee thereof) with apparent jurisdiction to order
     Employee to divulge, disclose or make accessible such information, in which
     case Employee will inform the Company in writing promptly of such required
     disclosure, but in any event at least two business days prior to
     disclosure. All written Confidential Information (including, without
     limitation, in any computer or other electronic format) which comes into
     Employee's possession during the course of Employee's employment shall
     remain the property of the Company. Except as required in the performance
     of Employee's duties for the Company, or unless expressly authorized in
     writing by the Company's President or Chief Executive Officer, Employee
     shall not remove any written Confidential Information from the Company's
     premises, except in connection with the performance of Employee's duties
     for the Company and in a manner consistent with the Company's policies
     regarding Confidential Information. Upon termination of Employee's
     employment, Employee agrees immediately to return to the Company all
     written Confidential Information in Employee's possession.

     (b)  During Employee's employment by the Company and for a period of three
     months after the Termination Date, within the "Geographic Area," as defined
     below, Employee will not, except with the prior written consent of the
     Company's President or Chief Executive Officer, directly or indirectly,
     own, manage, operate, join, control, finance or participate in the
     ownership, management, operation, control or financing of, or be connected
     as an officer, director, employee, partner, principal, agent,
     representative, consultant or otherwise with, or use or permit Employee's
     name to be used in connection with, any business or enterprise which is
     engaged in making, producing, manufacturing or finishing steel products
     that are in direct competition with steel products made, produced,
     manufactured or finished by the Company. For the purposes of this Section,
     "Geographic Area" shall mean the continental United States; provided,
     however, that if any court of competent jurisdiction determines that the
     Geographic Area is too extensive to require enforcement of this Subsection
     3(b), the Geographic Area shall be the portion of the United States east of
     the Mississippi River (or the largest other such portion of the United
     States that such court deems not too extensive to require enforcement of
     this Subsection 3(b)). The foregoing restrictions shall not be construed to
     prohibit the ownership by Employee of less than one percent (1%) of any
     class of securities of any corporation which is engaged in any of the
     foregoing businesses having a class of securities registered pursuant to
     the Securities Exchange Act of 1934, provided that such ownership
     represents a passive investment and that neither Employee nor any group of
     persons including Employee in any way, either directly or indirectly,
     manages or

                                        3



     exercises control of any such corporation, guarantees any of its financial
     obligations, otherwise takes any part in its business, other than
     exercising Employee's rights as a shareholder, or seeks to do any of the
     foregoing.

     (c)  Employee further covenants and agrees that during Employee's
     employment by the Company and for the period of one year after the
     Termination Date, Employee will not, directly or indirectly, (i) solicit,
     divert, take away, or attempt to solicit, divert or take away, any of the
     Company's customers, or (ii) encourage any customer to reduce its patronage
     of the Company.

     (d)  Employee further covenants and agrees that during Employee's
     employment by the Company and for the period of one year after the
     Termination Date, Employee will not, except with the prior written consent
     of the Company's President or Chief Executive Officer, directly or
     indirectly, solicit or hire, or encourage the solicitation or hiring of,
     any person who was a managerial or higher level employee of the Company at
     any time during the term of Employee's employment by the Company by any
     employer other than the Company for any position as an employee,
     independent contractor, consultant or otherwise. The foregoing covenant of
     Employee shall not apply to any person after 12 months have elapsed
     subsequent to the date on which such person's employment by the Company has
     terminated.

     (e)  During the Term and subsequent to the Termination Date, Employee
     agrees not to make any negative or unfavorable statements or
     communications, and not to issue any written communications or release any
     other written materials which would be materially damaging to the Company,
     its officers, directors or affiliates, or its or their reputation or
     standing, whether in the investor or financial community, the steel
     industry or otherwise.

     (f)  Employee agrees to cooperate with the Company for a reasonable period
     of time after the Termination Date by making himself available to testify
     on behalf of the Company, in any action, suit or proceeding. In addition,
     for a reasonable period of time after the Termination Date, Employee agrees
     to be available at reasonable times to meet and consult with the Company on
     matters reasonably within the scope of his prior duties with the Company so
     as to facilitate a transition to his successor. The Company agrees to
     compensate Employee for any such services at the rate of base salary
     applicable to Employee immediately prior to the Termination Date and to
     reimburse Employee for all expenses actually incurred in connection with
     his provision of testimony or consulting assistance.

     (g)  Employee acknowledges and agrees that the restrictions contained in
     this Section 3 are reasonable and necessary to protect and preserve the
     legitimate interests, properties, goodwill and business of the Company,
     that the Company would not have entered into this Agreement in the absence
     of such restrictions and that irreparable injury will be suffered by the
     Company should Employee breach any of the provisions of this Section.
     Employee represents and acknowledges that (i) Employee has been advised by
     the Company to consult Employee's own legal counsel in respect of this
     Agreement, and (ii) that Employee has had full opportunity, prior to
     execution of this Agreement, to review thoroughly this Agreement with
     Employee's counsel.

     (h)  Employee further acknowledges and agrees that a breach of any of the
     restrictions in this Section (3) cannot be adequately compensated by
     monetary damages. Employee agrees that the Company shall be entitled to
     preliminary and permanent

                                        4



     injunctive relief, without the necessity of proving actual damages, as well
     as an equitable accounting of all earnings, profits and other benefits
     arising from any violation of Section (3) hereof, which rights shall be
     cumulative and in addition to any other rights or remedies to which the
     Company may be entitled. In the event that any of the provisions of Section
     (3) hereof should ever be adjudicated to exceed the time, geographic,
     service, or other limitations permitted by applicable law in any
     jurisdiction, it is the intention of the parties that the provision shall
     be amended to the extent of the maximum time, geographic, service, or other
     limitations permitted by applicable law, that such amendment shall apply
     only within the jurisdiction of the court that made such adjudication and
     that the provision otherwise be enforced to the maximum extent permitted by
     law.

     (i)  If Employee breaches any of Employee's obligations under Section (3)
     hereof, and such breach constitutes Cause, or would constitute Cause if it
     had occurred prior to the Termination Date, the Company shall thereafter
     remain obligated only for such compensation and other benefits, if any, as
     may otherwise be required in any plans, policies or practices then
     applicable to Employee in accordance with the terms thereof, and not for
     any compensation or other benefits under this Agreement.

     (j)  Employee irrevocably and unconditionally (i) agrees that any suit,
     action or other legal proceeding arising out of Section (3) hereof,
     including without limitation, any action commenced by the Company for
     preliminary and permanent injunctive relief and other equitable relief, may
     be brought in the United States District Court for the Northern District of
     Indiana, or if such court does not have jurisdiction or will not accept
     jurisdiction, in any court of general jurisdiction in Indiana, (ii)
     consents to the non-exclusive jurisdiction of any such court in any such
     suit, action or proceeding, and (iii) waives any objection which Employee
     may have to the laying of venue of any such suit, action or proceeding in
     any such court.

(4)  The term of this Agreement shall commence as of the date hereof and shall
continue thereafter for successive one year periods, unless sooner terminated by
written notice given by either party not less than 60 days prior to January 24,
2004, or any subsequent January 24; provided, however, that the respective
rights and obligations of the parties under this Agreement shall survive any
termination of this Agreement or of Employee's employment to the extent
necessary to the intended preservation of such rights and obligations.

(5)  In the event of any dispute under the provisions of this Agreement other
than a dispute in which the primary relief sought is an equitable remedy such as
an injunction, the parties shall be required to have the dispute, controversy or
claim settled by arbitration in Mishawaka, Indiana, in accordance with National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Any award entered by the
arbitrators shall be in writing and accompanied by a written finding of facts.
Such award shall be final, binding and nonappealable, and judgment may be
entered thereon by either party in accordance with applicable law in any court
of competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrators shall have no authority to modify any provision of
this Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. If
Employee prevails on any material issue which is the subject of such arbitration
or lawsuit, the Company shall be responsible for all of the fees of the American
Arbitration Association and the arbitrators and any expenses relating to the
conduct of the

                                        5



arbitration (including the Company's and Employee's reasonable attorneys' fees
and expenses). Otherwise, each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys' fees
and expenses) and shall share the fees of the American Arbitration Association.

(6)  All notices and other communications required or permitted under this
Agreement or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

     If to the Company, to:

          President and Chief Operating Officer
          National Steel Corporation
          4100 Edison Lakes Parkway
          Mishawaka, Indiana   46545-3440

     If to Employee, to:

          Scott Montross
          5902 Larkspur Circle
          Granger, Indiana 46530

or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

(7)  This Agreement amends and restates the Original Agreement and sets forth
the entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by the Company and by Employee.

(8)  All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective heirs, executors,
administrators, legal representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of Employee under this
Agreement are of a personal nature and shall not be assignable or delegatable in
whole or in part by Employee.

(9)  If any provision of this Agreement or application thereof to anyone or
under any circumstances is adjudicated to be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect any other
provision or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate or
render unenforceable such provision or application in any other jurisdiction. If
any provision is held void, invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.

(10) No remedy conferred upon a party by this Agreement is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given under this
Agreement or now or hereafter existing at law or in equity. No delay or omission
by a party in exercising any right, remedy or power under this Agreement or
existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or

                                        6



power may be exercised by such party from time to time and as often as may be
deemed expedient or necessary by such party in its sole discretion.

(11) Employee shall be entitled, to the extent permitted under any applicable
law, to select and change a beneficiary or beneficiaries to receive any
compensation or benefit payable under this Agreement following Employee's death
by giving the Company written notice thereof. In the event of Employee's death
or a judicial determination of Employee's incompetence, reference in this
Agreement to Employee shall be deemed, where appropriate, to refer to Employee's
beneficiary, estate or other legal representative.

(12) All section headings used in this Agreement are for convenience only. This
Agreement may be executed in counterparts, each of which is an original. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

(13) The Company may withhold from any payments under this Agreement all
federal, state and local taxes as the Company is required to withhold pursuant
to any law or governmental rule or regulation. Employee shall bear all expense
of, and be solely responsible for, all federal, state and local taxes due with
respect to any payment received under this Agreement.

(14) This Agreement shall be governed by and interpreted under the laws of the
State of Indiana without giving effect to any conflict of laws provisions.

If the terms of this letter are acceptable to you, please so indicate by signing
in the space provided below, whereupon this letter shall constitute an agreement
between us.

Sincerely,

NATIONAL STEEL CORPORATION

By:    /s/ John A. Maczuzak
       ----------------------------------------
Title: President and Chief Operating Officer
       ----------------------------------------

Accepted and Agreed To:

       /s/ Scott Montross
       ----------------------------------------
       Scott Montross

                                        7



ANNEX 1

                                     RELEASE

     This Release, dated_____________, is by Scott Montross ("Employee").

     1.  Employee does hereby knowingly and voluntarily release, acquit and
forever discharge National Steel Corporation (the "Company"), its present and
former officers, directors, subsidiaries, divisions, parents, affiliates,
employees, agents, servants, associates, attorneys, accountants, auditors,
consultants, counselors, partners, representatives, predecessors, successors,
heirs, executors, administrators, transferees, trustees, assigns, shareholders
(including without limitation NKK Corporation, NKK U.S.A. Corporation and their
respective directors, officers, employees, trustees and shareholders), and any
and all persons in privity with such persons or entities ("Releasees"), from and
against any and all charges, complaints, claims, cross-claims, third-party
claims, counterclaims, contribution claims, contracts, liabilities, obligations,
promises, agreements, controversies, damages, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses of any nature whatsoever,
known or unknown, suspected or unsuspected, foreseen or unforeseen, matured or
unmatured, which exist, have existed, or may arise from any matter whatsoever
occurring at any time up to and including the date hereof, including, but not
limited to, any claims arising out of or in any way related to Employee's
employment with the Company. Employee acknowledges that, in exchange for this
Release, the Company is providing Employee with consideration, financial and
otherwise, which exceeds what Employee would have received had Employee not
given this release. By executing this Release, Employee waives all claims
against the Releasees arising under federal, state and local labor and
anti-discrimination laws and any other restrictions on the right to terminate
employment, including, without limitation, Title VII of the Civil Rights Act of
1964, as amended, the Americans with Disabilities Act of 1990, as amended, and
claims for breach of contract, promissory estoppel, defamation, tortious
interference, intentional infliction of emotional distress, tortious injury to
reputation, misrepresentation and fraud.

     2.  EMPLOYEE SPECIFICALLY WAIVES AND RELEASES THE RELEASEES FROM ALL CLAIMS
EMPLOYEE MAY HAVE AS OF THE DATE EMPLOYEE SIGNS THIS RELEASE REGARDING CLAIMS OR
RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS
AMENDED, 29 U.S.C. Section 621 et seq. ("ADEA"). EMPLOYEE FURTHER AGREES: (a)
THAT EMPLOYEE'S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND VOLUNTARY AND
IN COMPLIANCE WITH THE OLDER WORKERS' BENEFIT PROTECTION ACT OF 1990; (b) THAT
EMPLOYEE UNDERSTANDS THE TERMS OF THIS RELEASE; (c) THAT PAYMENTS AND OTHER
BENEFITS PROVIDED BY THE COMPANY TO THE EMPLOYEE WOULD NOT HAVE BEEN PROVIDED
HAD EMPLOYEE NOT SIGNED THIS RELEASE, AND THAT THE PAYMENTS AND BENEFITS ARE IN
EXCHANGE FOR THE SIGNING OF THIS RELEASE; (d) THAT EMPLOYEE HAS BEEN ADVISED IN
WRITING BY THE COMPANY TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE; (e) THAT THE COMPANY HAS GIVEN EMPLOYEE A PERIOD OF AT LEAST TWENTY-ONE
(21) DAYS WITHIN WHICH TO CONSIDER THIS RELEASE; (f) THAT EMPLOYEE REALIZES THAT
FOLLOWING EMPLOYEE'S EXECUTION OF THIS RELEASE, EMPLOYEE HAS SEVEN (7) DAYS IN
WHICH TO REVOKE THIS RELEASE BY WRITTEN NOTICE

                                        8



TO THE VICE PRESIDENT AND GENERAL COUNSEL OF THE COMPANY; AND (g) IF EMPLOYEE
CHOOSES TO REVOKE THIS RELEASE, THE COMPANY SHALL HAVE NO OBLIGATION TO PROVIDE
EMPLOYEE THE BENEFITS SET FORTH IN THE SETTLEMENT AGREEMENT.

     3.  Employee agrees that he will not commence any action or proceeding of
any nature whatsoever against any Releasee, and that he will not seek or be
entitled to any award of equitable or monetary relief in any action or
proceeding brought on his behalf, arising out of the matters released by
Employee under this Release.


                                                __________________________
                                                Scott Montross

                                        9

EX-21

                                                                      EXHIBIT 21

                     NATIONAL STEEL CORPORATION SUBSIDIARIES

                                                 Jurisdiction        Percentage
                                                      of            Outstanding
               Name                              Incorporation      Stock Owned
- ------------------------------------------       -------------      -----------
American Steel Corporation                        Michigan             100%
D. W. Pipeline Company                            Michigan             100%
Delray Connecting Railroad Company                Michigan             100%
Granite City Steel Company                        Illinois             100%
Granite Intake Corporation                        Delaware             100%
Great Lakes Steel Corporation                     Delaware             100%
The Hanna Furnace Corporation                     New York             100%
Hanna Ore Mining Company                          Minnesota            100%
Ingleside Channel & Dock Co.                      Texas                100%
Ingleside Point Corporation                       Texas                100%
Ingleside Holdings L. P.                          Texas                100%
Liberty Pipe and Tube, Inc.                       Texas                100%
Mathies Coal Company                              Pennsylvania       86.67%
Mid-Coast Minerals Corporation                    Delaware             100%
Midwest Steel Corporation                         Pennsylvania         100%
N Squared Aviation LLC                            Delaware           66.67%
NS Holdings Corporation                           Delaware             100%
NS Land Company                                   New Jersey           100%
NS Technologies, Inc.                             Delaware             100%
NSC Realty Corporation                            Delaware             100%
NSL, Inc.                                         Delaware             100%
Natcoal, Inc.                                     Delaware             100%
National Acquisition Corporation                  Delaware             100%
National Caster Acquisition Corporation           Delaware             100%
National Caster Operating Corporation             Delaware             100%
National Casting Corporation                      Delaware             100%
National Coal Mining Company                      Delaware             100%
National Coating Limited Corporation              Delaware             100%
National Coating Line Corporation                 Delaware             100%
National Materials Procurement Corporation        Illinois             100%
National Mines Corporation                        Pennsylvania         100%
National Ontario Corporation                      Delaware             100%
National Ontario II, Limited                      Delaware             100%
National Pickle Line Corporation                  Delaware             100%
National Steel Corporation (New York)             New York             100%
National Steel Funding Corporation                Delaware             100%
National Steel Pellet Company                     Delaware             100%
Natland Corporation                               Delaware             100%
Peter White Coal Mining Corp.                     West Virginia        100%
ProCoil Corporation                               Delaware             100%
Puritan Mining Company                            Michigan             100%
Rostraver Corporation                             Delaware             100%
Skar-Ore Steamship Corporation                    Delaware             100%
The Teal Lake Iron Mining Company                 Michigan             100%

EX-23

                                                                      Exhibit 23

                         CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the following Registration
Statements:

..    Form S-8 No. 33-51991 pertaining to the 1994 and 1995 Stock Grants to Union
     Employees,

..    Form S-8 No. 33-51081 pertaining to the 1993 National Steel Corporation
     Long Term Incentive Plan,

..    Form S-8 No. 33-51083 pertaining to the 1993 National Steel Corporation
     Non-Employee Director's Stock Option Plan, and

..    Form S-8 No. 33-61087 pertaining to the National Steel Retirement Savings
     Plan and National Steel Represented Employee Retirement Savings Plan;

of our report dated February 5, 2003, except for Notes 1 and 10, as to which the
date is March 25, 2003, with respect to the consolidated financial statements of
National Steel Corporation and subsidiaries included in the Annual Report (Form
10-K) for the year ended December 31, 2002.

                                                  /s/ Ernst & Young LLP

Indianapolis, Indiana
March 27, 2003

EX-99.A

                                                                    Exhibit 99-A


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
           PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



     The undersigned, being the Chief Executive Officer of National Steel
Corporation (the "Company"), hereby certifies pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the
best of his knowledge:

     (1) The Company's Form 10-K for the period ended December 31, 2002 (the
     "Report") fully complies with the requirements of Section 13(a) or 15(d) of
     the Securities and Exchange Act of 1934; and

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

     Executed as of this 28th day of March 2003.

                                            /s/  Mineo Shimura
                               -------------------------------------------------
                               Mineo Shimura
                               Chairman of the Board and Chief Executive Officer






This Certification accompanies the Report pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of ss.
18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been
provided to National Steel Corporation and will be retained by National Steel
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.

EX-99.B

                                                                    Exhibit 99-B

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
           PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



     The undersigned, being the Chief Financial Officer of National Steel
Corporation (the "Company"), hereby certifies pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the
best of his knowledge:

     (1) The Company's Form 10-K for the period ended December 31, 2002 (the
     "Report") fully complies with the requirements of Section 13(a) or 15(d) of
     the Securities and Exchange Act of 1934; and

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

     Executed as of this 28th day of March 2003.

                                            /s/  Kirk A. Sobecki
                               -------------------------------------------------
                               Kirk A. Sobecki
                               Senior Vice President and Chief Financial Officer






This Certification accompanies the Report pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of ss.
18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been
provided to National Steel Corporation and will be retained by National Steel
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.