10-Q 1 d10q.htm FORM 10-Q Form 10-Q
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF            
THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2001
 
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)
 
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)
 
212-273-7000
(Registrant’s telephone number, including area code):
 
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, and (2) has been subject to such filing requirements for the past 90 days. Yes  x        No  ¨
 
The number of shares outstanding of the Registrant’s Common Stock $.01 par value, as of November 1, 2001, was 41,288,240 shares, consisting of 22,100,000 shares of Class A Common Stock and 19,188,240 shares of Class B Common Stock.

 
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
 
TABLE OF CONTENTS
 
    PART I.    FINANCIAL INFORMATION
  
Page
          Item 1.    Financial Statements (unaudited)
  
  
3
  
4
  
5
  
6
                Notes to Consolidated Financial Statements
  
7
  
12
  
17
      PART II.    OTHER INFORMATION
  
           Item 1.    Legal Proceedings
  
18
  
19
 

2
 
PART 1.    FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
(In Millions of Dollars, Except Per Share Amounts)
(Unaudited)
 
  
Three Months
Ended September
30,
  
Nine Months Ended
September 30,
  
2001
  
2000
  
2001
  
2000
  
  
  
  
 Net Sales
  
$637.0
  
$ 693.1
  
$1,899.6
  
$2,327.3
 Cost of products sold
  
670.3
  
670.8
  
1,976.8
  
2,141.8
 Selling, general and administrative expense
  
30.6
  
34.2
  
98.6
  
108.9
 Depreciation
  
42.2
  
38.3
  
126.1
  
116.9
 Equity income of affiliates
  
(1.0
)
  
(0.9
)
  
(2.3
)
  
(2.2
)
 Unusual items (credit)
  
10.9
  
—
  
(17.1
)
  
—
  
  
  
  
 Loss from Operations
  
(116.0
)
  
(49.3
)
  
(282.5
)
  
(38.1
)
 Other (income) expense:
  
 
  
 
  
 
  
 
          Interest and other financial income
  
(0.3
)
  
(0.6
)
  
(1.1
)
  
(3.6
)
          Interest and other financial expense
  
16.3
  
11.6
  
48.8
  
29.4
          Net gain on disposal of non-core assets and other related
               activities
  
(0.9
)
  
—
  
(2.4
)
  
(15.1
)
  
  
  
  
  
15.1
  
11.0
  
45.3
  
10.7
  
  
  
  
Loss before Income Taxes, Extraordinary Item and Cumulative
     Effect of Change in Accounting Principle
  
(131.1)
  
(60.3)
  
(327.8)
  
(48.8)
 Income tax expense (credit)
  
19.7
  
(3.0
)
  
59.2
  
(2.4
)
  
  
  
  
 Loss from Continuing Operations before Extraordinary Item
       and Cumulative Effect of Change in Accounting Principle
  
(150.8
)
  
(57.3
)
  
(387.0
)
  
(46.4
)
 Extraordinary item
  
(2.0
)
  
—
  
(2.0
)
  
—
 Cumulative effect of change in accounting principle
  
—
  
—
  
17.2
  
—
  
  
  
  
 Net Loss
  
$(152.8
)
  
$  (57.3
)
  
$   (371.8
)
  
$    (46.4
)
  
  
  
  
 Basic and Diluted Earnings Per Share:
  
 
  
 
  
 
  
 
          Continuing operations
  
$  (3.65
)
  
$  (1.39
)
  
$     (9.37
)
  
$    (1.12
)
          Extraordinary item
  
(0.05
)
  
—
  
(0.05
)
  
—
          Cumulative effect of change in accounting principle
  
—
  
—
  
0.42
  
—
  
  
  
  
          Net loss
  
$  (3.70
)
  
$  (1.39
)
  
$     (9.00
)
  
$    (1.12
)
  
  
  
  
          Weighted average shares outstanding (in thousands)
  
41,288
  
41,288
  
41,288
  
41,288
 Dividends Paid Per Common Share Outstanding
  
$      —
  
$   0.07
  
$        —
  
$     0.21
  
  
  
  
 
See notes to consolidated financial statements.

3
 
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(In Millions of Dollars, Except Share Amounts)
 
    
September 30,
2001
    
December 31,
2000
    
(Unaudited)
    
(Note 1)
Assets
    
 
    
 
 Current assets
    
 
    
 
          Cash and cash equivalents
    
$       5.1
    
$       3.3
          Receivables—net
    
273.8
    
190.6
          Inventories:
    
 
    
 
                    Finished and semi-finished products
    
396.0
    
420.4
                    Raw materials and supplies
    
206.4
    
225.5
    
    
    
602.4
    
645.9
                    Less: LIFO Reserve
    
125.6
    
123.1
    
    
    
476.8
    
522.8
          Deferred tax assets
    
34.5
    
34.5
          Other
    
20.6
    
16.6
    
    
                              Total current assets
    
810.8
    
767.8
 Investments in affiliated companies
    
20.1
    
18.7
 Property, plant and equipment
    
3,922.4
    
3,900.3
          Less accumulated depreciation
    
2,503.1
    
2,383.3
    
    
    
1,419.3
    
1,517.0
 Other assets
    
210.8
    
261.7
    
    
    
$2,461.0
    
$2,565.2
    
    
Liabilities and Stockholders’ Equity
    
 
    
 
 Current liabilities
    
 
    
 
          Accounts payable
    
$   223.2
    
$   231.7
          Current portion of long-term obligations
    
29.5
    
27.9
          Short-term borrowings
    
100.0
    
86.5
          Accrued liabilities
    
238.7
    
243.0
    
    
                              Total current liabilities
    
591.4
    
589.1
 Long-term obligations
    
770.6
    
523.3
 Postretirement benefits other than pensions
    
476.1
    
452.4
 Other long-term liabilities
    
280.8
    
282.7
 Commitments and Contingencies
    
 
    
 
 Stockholders’ equity
    
 
    
 
          Common Stock—par value $.01:
    
 
    
 
                    Class A—authorized 30,000,000 shares, issued and outstanding
                         22,100,000
    
0.2
    
0.2
                    Class B—authorized 65,000,000 shares; issued 21,188,240
    
0.2
    
0.2
 Additional paid-in-capital
    
491.8
    
491.8
 Retained earnings (deficit)
    
(127.7
)
    
244.1
 Treasury stock, at cost: 2,000,000 shares
    
(16.3
)
    
(16.3
)
 Accumulated other comprehensive loss:
    
 
    
 
          Unrealized loss on derivative instruments
    
(3.8
)
    
—
          Minimum pension liability
    
(2.3
)
    
(2.3
)
    
    
                              Total stockholders’ equity
    
342.1
    
717.7
    
    
    
$2,461.0
    
$2,565.2
    
    
 
See notes to consolidated financial statements.

4
 
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions of Dollars)
(Unaudited)
 
  
Nine Months
Ended September 30,
  
2001
  
2000
Cash Flows from Operating Activities
  
 
  
 
          Net loss
  
$(371.8
)
  
$  (46.4
)
          Adjustments to reconcile net loss to net cash provided by (used in) operating
               activities:
  
 
  
 
                    Depreciation
  
126.1
  
116.9
                    Unusual item
  
10.9
  
—
                    Extraordinary item
  
2.0
  
—
                    Cumulative effect of an accounting change
  
(17.2
)
  
—
                    Net gain on disposal of non-core assets
  
(2.4
)
  
(15.1
)
                    Deferred income taxes
  
59.0
  
(3.4
)
          Changes in assets and liabilities:
  
 
  
 
                    Receivables
  
12.1
  
44.5
                    Receivables—sold
  
(95.0
)
  
70.0
                    Inventories
  
46.0
  
(28.5
)
                    Accounts payable
  
(8.5
)
  
57.8
                    Pension liability (net of change in intangible pension asset)
  
23.8
  
(53.1
)
                    Postretirement benefits
  
23.7
  
19.6
                    Accrued liabilities
  
(7.4
)
  
(8.9
)
                    Other
  
(19.8
)
  
2.2
  
  
                              Net Cash Provided by (Used in) Operating Activities
  
(218.5
)
  
155.6
Cash Flows from Investing Activities
     
          Purchases of property and equipment
  
(40.9
)
  
(176.3
)
          Net proceeds from disposal of non-core assets
  
1.9
  
16.9
  
  
                              Net Cash Used in Investing Activities
  
(39.0
)
  
(159.4
)
Cash Flows from Financing Activities
     
          Debt repayments
  
(22.9
)
  
(38.0
)
          Borrowings—net
  
282.2
  
—
          Dividend payments on common stock
  
—
  
(8.7
)
  
  
                              Net Cash Provided by (Used in) Financing Activities
  
259.3
  
(46.7
)
  
  
Net Increase (Decrease) in Cash and Cash Equivalents
  
1.8
  
(50.5
)
 Cash and cash equivalents at the beginning of the period
  
3.3
  
58.4
  
  
Cash and cash equivalents at the end of the period
  
$       5.1  
  
$     7.9  
  
  
Noncash Investing and Financing Activities
     
 Purchase of equipment through capital leases
  
$       3.1
  
$     7.9
  
  
Supplemental Cash Flow Information
     
          Cash paid during the year for:
  
 
  
 
                    Interest and other financing costs
  
$     55.6
  
$   49.0
                    Income taxes refunded, net
  
(17.7
)
  
(3.8
)
 
See notes to consolidated financial statements.
 

5
 
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In Millions of Dollars)
(Unaudited)
 
  
Common
Stock—
Class A
  
Common
Stock—
Class B
  
Additional
Paid-In
Capital
  
Retained
Earnings
  
Treasury
Stock
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Total
Stockholders’
Equity
Balance at January 1, 2000
    
$0.2
      
$0.2
      
$491.8
      
$382.6
      
$(16.3
)
        
$  (5.5
)
        
$853.0
 
Comprehensive income (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
    (Note 1)
    
0.2
      
0.2
      
491.8
      
244.1
      
(16.3
)
        
(2.3
)
        
717.7
 
Comprehensive income (loss):
                         
 
      
 
        
 
        
 
 
    Net loss
                         
(371.8
)
      
 
        
 
        
(371.8
)
 
    Other comprehensive income (loss):
                    
 
      
 
        
 
        
 
 
       Cumulative effect of the
           adoption of SFAS 133
                         
 
      
 
        
23.8
        
23.8
 
       Net activity relating to
           derivative instruments
                         
 
      
 
        
(27.6
)
        
(27.6
)
 
                                                  
 
Comprehensive loss
                         
 
      
 
        
 
        
(375.6
)
 
    
      
      
      
      
        
        
 
Balance at September 30, 2001
    (Unaudited)
    
$0.2
      
$0.2
      
$491.8
      
$(127.7
)
      
$(16.3
)
        
$  (6.1
)
        
$342.1
 
    
      
      
      
      
        
        
 
 
See notes to consolidated financial statements.
 

6
 
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 (Unaudited)
 
NOTE 1—BASIS OF PRESENTATION
 
The consolidated financial statements of National Steel Corporation and its majority owned subsidiaries (the “Company”) presented herein are unaudited. However, in the opinion of management, such statements include all adjustments necessary for a fair presentation of the results for the periods indicated. All such adjustments made were of a normal recurring nature except for the items discussed in Notes 2, 4 and 5. The financial results presented for the three month and nine month periods ended September 30, 2001 and 2000 are not necessarily indicative of results of operations for the full year. The Annual Report of the Company on Form 10-K for the year ended December 31, 2000 (the “2000 Form 10-K”) contains additional information and should be read in conjunction with this report.
 
The Company has engaged Ernst & Young LLP to conduct a review of the consolidated financial statements presented herein, in accordance with standards established by the American Institute of Certified Public Accountants. Their review report is included as an exhibit to this Form 10-Q.
 
The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all footnotes required by generally accepted accounting principles for complete financial statements.
 
Certain amounts in the 2000 financial statements have been reclassified to conform to current year presentation.
 
NOTE 2—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 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 for the nine months ended September 30, 2001 was $5.0 million less and the net loss was $6.0 million or $0.15 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 nine months ended September 30, 2000 would have been to increase pension cost by $1.4 million and decrease net income by $1.3 million or $0.03 per share.

7
 
NOTE 3—SEGMENT INFORMATION
 
  
September 30, 2001
  
September 30, 2000
  
Steel
  
All
Other
  
Total
  
Steel
  
All
Other
  
Total
  
Dollars in millions
 Nine months ended:
  
 
  
 
  
 
  
 
  
 
 Revenues from external customers
  
$1,887.0
  
$     12.6
  
$1,899.6
  
$2,317.0
  
$     10.3
  
$2,327.3
 Intersegment revenues
  
377.2
  
1,694.1
  
2,071.3
  
427.7
  
2,412.2
  
2,839.9
 Segment income (loss) from operations
  
(137.1
)
  
(145.4
)
  
(282.5
)
  
89.0
  
(127.1
)
  
(38.1
)
 Segment assets
  
1,601.1
  
859.9
  
2,461.0
  
1,762.1
  
914.3
  
2,676.4
 Three months ended:
  
 
  
 
  
 
  
 
  
 
  
 
 Revenues from external customers
  
$   632.1
  
$       4.9
  
$   637.0
  
$   689.8
  
$       3.3
  
$   693.1
 Intersegment revenues
  
119.7
  
402.6
  
522.3
  
134.3
  
742.1
  
876.4
 Segment loss from operations
  
(71.8
)
  
(44.2
)
  
(116.0
)
  
(13.1
)
  
(36.2
)
  
(49.3
)
 
Included in the “All Other” intersegment revenues for the nine month period is $1,524.0 million in 2001 and $2,224.2 million in 2000 of qualified trade receivables sold to National Steel Funding Corporation, a wholly-owned subsidiary.
 
NOTE 4—UNUSUAL ITEMS
 
During the first nine months of 2001, the Company recognized income from unusual items consisting of the following items:
 
 Gain on sale of natural gas derivative contract (see Note 6)
  
$  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
  
(10.9
)
  
 Unusual items
  
$  17.1
  
 
In the third quarter of 2001, the Company completed an evaluation of certain of its computer system software that is 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 $10.9 million.
 
During the second quarter of 2001, the Company recorded an unusual 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.

8
 
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.
 
NOTE 5—EXTRAORDINARY ITEM
 
On September 28, 2001, the Company closed on a new $450 million credit facility (“Credit Facility”) secured by both accounts receivable and inventory which expires in September 2004. This Credit Facility 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.
 
NOTE 6—DERIVATIVE INSTRUMENTS
 
On January 1, 2001, the Company adopted Financial Accounting Standards Board Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). As a result, the Company recognized the fair value of all financial derivative contracts as an asset of $23.8 million. This amount was recorded on the balance sheet as an asset and as an adjustment to accumulated other comprehensive income within stockholders’ equity. The adoption of SFAS 133 had no impact on net income.
 
In order to reduce the uncertainty of price movements with respect to the purchase of zinc, the Company enters into financial derivative instruments in the form of swap contracts and zero cost collars with a major global financial institution. These contracts, which typically mature within one year, have been designated as cash flow hedges. Therefore, these contracts are recorded at their fair value as assets 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 same periods during which the hedged forecasted transaction affects earnings.
 
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 and recorded at its fair value of $24.9 million. The 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.
 
NOTE 7—CREDIT ARRANGEMENTS
 
On September 28, 2001 the Company closed on a new $450 million Credit Facility secured by both accounts receivable and inventory which expires in September 2004. The Credit Facility replaces the Receivables Purchase Agreement with commitments of up to $200.0 million that was to expire in September 2002 and a $200.0 million Inventory Facility that was to expire in November 2004. The Credit Facility is in addition to a $100.0 million revolving credit facility with NUF LLC, a wholly-owned subsidiary of NKK Corporation, the Company’s principal stockholder (the “NUF Facility”) that expires in February 2002.
 
Prior to the closing of the Credit Facility, 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 Facility, we purchased the previously sold trade accounts receivable and repaid the outstanding Inventory Facility borrowings.

9
 
On September 30, 2001, there was $268.1 million outstanding under the Credit Facility. 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 September 30, 2001, the outstanding borrowings under the Credit Facility had an annual interest rate of 8.25%.
 
Under the Credit Facility, the maximum amount available from time to time is subject to change based on the level of eligible receivables and inventory and restrictions on concentrations of certain receivables. At September 30, 2001, the maximum amount available, after reduction for letters of credit and outstanding borrowings, was $157.8 million subject to the minimum liquidity requirements set forth below.
 
On September 30, 2001, 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 executes. At September 30, 2001, the outstanding borrowings under the NUF Facility had an annual interest rate of 6.9%.
 
At September 30, 2001, the Company was in compliance with all material covenants of, and obligations under, all debt agreements. Under the most restrictive of the covenants for these debt and certain lease agreements, the Company is prohibited from declaring or paying dividends, has limitations on the amount of capital expenditures and additional debt that can be incurred, has limitations on the repayment of the NUF Facility and has a minimum liquidity requirement of $75 million. NUF has agreed with the lenders under the Credit Facility to refrain from demanding repayment of the NUF Facility until such time as the conditions to such repayment contained in the Credit Facility are met. The Company believes that the conditions to such repayment will not be met in the short term.
 
NOTE 8—ENVIRONMENTAL AND LEGAL PROCEEDINGS
 
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 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. Costs for environmental assessments or remediation activities, or penalties or fines that may be imposed for noncompliance with environmental laws and regulations, 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 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 potentially responsible parties (“PRPs”) at a number of off-site 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.
 
The Company has also recorded the reclamation and other costs to restore its coal mines at its shutdown locations to their original and natural state, as required by various federal and state mining statutes.

10
 
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 described, to the extent they exceed any applicable reserves 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. The Company has recorded an aggregate environmental liability of approximately $17.7 million and $24.7 million at September 30, 2001 and December 31, 2000, respectively. During 2001, the Company settled an environmental matter for $7.5 million.
 
The Company is involved in various non-environmental legal proceedings, most of which occur in the normal course of its business. The Company does not believe that these proceedings will have a material adverse effect, either individually or in the aggregate, on the Company’s financial condition. However, with respect to certain of the proceedings, if reserves prove to be inadequate and the Company incurs a charge to earnings, such charge could have a material adverse effect on the Company’s results of operations and liquidity for the applicable period.
 
NOTE 9—OTHER COMMITMENTS AND CONTINGENCIES
 
In the third quarter, Bethlehem Steel Corporation (Bethlehem) filed for Chapter 11 protection under U.S. bankruptcy laws. The Company has 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. The Company is uncertain what effect, if any, the Bethlehem bankruptcy will have on its future earnings and financial position.
 
On December 31, 2000, LTV Steel Company, Inc. (LTV) filed for Chapter 11 protection under U.S. bankruptcy laws. The Company is jointly liable with LTV for environmental clean-up and certain retiree benefit costs related to the closed Donner Hanna Coke plant. The Company is uncertain what effect, if any, the LTV bankruptcy will have on its future earnings and financial position.
 

11
 
ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                   RESULTS OF OPERATIONS
 
This commentary should be read in conjunction with the third quarter of 2001 consolidated financial statements and selected notes and the 2000 Form 10-K for a full understanding of our financial condition and results of operations.
 
Results of Operations—Three Months Ended September 30, 2001 and 2000
 
Net Sales
 
Net sales for the third quarter of 2001 decreased $56.1 million, or 8%, compared to the third quarter of 2000. The decrease resulted from a $71 per ton or 15% decrease in our average selling price due to depressed market prices and a shipment mix change from coated and cold rolled products to lower priced hot rolled products. Partially offsetting the average selling price impact was an increase in shipments of 102,000 tons or 7%.
 
Income (Loss) from Operations
 
We reported an operating loss of $116.0 million for the third quarter of 2001, a decrease of $66.7 million compared to the corresponding 2000 period. This decrease resulted primarily from lower selling prices discussed above and an unusual item of $10.9 million that was recorded this year. The unusual item relates to the write-off of a portion of a computer system that we decided not to install at this time (see Note 4 to the financial statements for additional information). In addition, higher shipment volumes, increases in the price of energy and raw materials (primarily natural gas prices) and the underabsorption of fixed costs related to lower production volumes resulted in higher costs. Bad debt of $1.4 million was expensed during the third quarter most of which was for one customer that filed for bankruptcy protection. Improved yields, decreased material usage, an improved cost mix, reduced employee levels and lower spending partially offset the impact discussed above.
 
Net Financing Costs
 
Net financing costs increased $5 million in the third quarter of 2001 as compared to the same period in 2000. The increase is due to lower levels of capitalized interest and higher interest expense resulting from increased levels of short-term borrowings in 2001.
 
Net Gain on Disposal of Non-Core Assets
 
During the third quarter of 2001, we sold property and certain assets related to a discontinued pickling operation and recognized a net gain of $0.9 million.
 
Income Taxes
 
In the third quarter of 2001, we recorded a non-cash tax expense of $19.7 million utilizing a negative effective tax rate of 15%. After reviewing our future taxable income and tax planning strategies, we determined that the use of a negative effective tax rate was necessary in order to increase our valuation allowance on our deferred tax asset. This change in the effective tax rate, from a rate of positive 5% in 2000, adversely impacted third quarter 2001 results by approximately $26 million or $0.64 per share (basic and diluted) as compared to the year earlier quarter.
 
Extraordinary Item
 
On September 28, 2001 we closed on a new $450 million credit facility (“Credit Facility”) secured by both accounts receivable and inventory which expires in September 2004. The Credit Facility replaced our previous $200 million Receivables Purchase Agreement with an expiration date of September 2002 and the $200 million revolving credit facility secured by our inventories (“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 5 to the financial statements for additional information.)
 

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Results of Operations—Nine Months Ended September 30, 2001 and 2000
 
Net Sales
 
Net sales for the first nine months of 2001 decreased $427.7 million, or 18%, compared to the first nine months of 2000. The decrease resulted from a $63 per ton, or 14% decrease in average selling prices and a 313,000 ton, or 7%, decrease in shipments. The decrease in average selling prices resulted from a combination of depressed market prices and a change in our product mix toward lower value-added hot rolled and non-prime products. 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 affected our shipments and pricing.
 
Income (Loss) from Operations
 
We reported an operating loss of $282.5 million for the first nine months of 2001, a decrease of $244.4 million from the corresponding 2000 period. This decrease results primarily from depressed sales levels and prices, as discussed above. The underabsorption of fixed costs related to lower production volumes negatively impacted the first nine months of 2001. Natural gas costs remained high, exceeding the prior year by approximately $40 million. Depreciation expense also increased by approximately $9 million due to prior year capital additions including the new hot dip galvanized facility that began production at the end of the second quarter of 2000. Partially offsetting these items were savings of approximately $108 million or $24 per ton from our cost reduction efforts during the first nine months of 2001. Our production costs have been reduced by $98 million and Selling, General and Administration expenses were $10 million lower than last year. Labor cost, material expenses, and other spending were the primary drivers of the reduction. Some of our accomplishments include the reduction of overtime by over 37% compared to average levels in the prior year, the elimination of approximately 700 employees, which is 8% of our workforce, and reductions in other spending.
 
In addition, in the first nine months of 2001, we recognized an aggregate $17.1 million of unusual credits. This was related to the sale of a natural gas derivative contract and favorable property tax settlements. These positive items were partially offset by certain expenses relating 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 4 to the financial statements for additional information).
 
Net Gain on Disposal of Non-Core Assets
 
During the first nine months of both years, we sold certain non-core assets and recorded net gains on the disposals. In the third quarter of 2001, we sold property and certain assets related to a discontinued pickling operation and in the second quarter we sold certain assets related to our Granite City Division building products line and certain trademarks used in that business to one of our customers. The combined net gain that we recognized was $2.4 million. During the second quarter of 2000, we sold our 30% equity interest in the Presque Isle Corporation 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 $21.9 million in the first nine months of 2001 as compared to the same period in 2000. Approximately $13 million of the increase relates to lower capitalized interest in 2001 as compared to the same period in 2000 during which time the new hot dip galvanizing facility was under construction. Additionally, higher levels of short-term borrowings increased our interest costs and lower levels of cash and cash equivalents reduced our interest income during 2001.
 
Income Taxes
 
In the first nine months of 2001, we recorded a non-cash tax expense of $59.2 million utilizing an average negative effective tax rate of 18.1%. After reviewing our future taxable income and tax planning strategies, we determined that the use of a negative effective tax rate was necessary in order to increase our valuation allowance on our deferred tax asset. This change in the effective tax rate, from a rate of positive 5% in 2000, adversely impacted 2001 year to date results by approximately $76 million or $1.83 per share (basic and diluted) as compared to the year earlier period.

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Extraordinary Item
 
On September 28, 2001 we closed on a new $450 million Credit Facility secured by both accounts receivable and inventory which expires 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 5 to the financial statements for additional information.)
 
Accounting Change
 
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 credit of $17.2 million. The net loss in the nine months of 2001 improved by $6 million or $0.15 per share (basic and diluted) as a result of lower pension expense due to this accounting change. Net income for the first nine months of 2000 would have been negatively impacted by $1.3 million or $0.03 per share (basic and diluted) had this accounting change been applied retroactively. This accounting change is discussed in further detail in Note 2 to the financial statements.
 
Liquidity and Sources of Capital
 
Our liquidity needs arise primarily from working capital requirements, capital investments, principal and interest payments on our indebtedness, and pension funding requirements. We have satisfied these liquidity needs with funds provided from borrowings, the sale of trade accounts receivable, the sale of non-core assets and cash provided by operations. Additionally, in the first nine months of 2001, we received $18.2 million in federal income tax refunds.
 
On September 28, 2001 we closed on a new $450 million Credit Facility secured by both accounts receivable and inventory which expires in September 2004. The Credit Facility replaces the Receivables Purchase Agreement with commitments of up to $200.0 million that was to expire in September 2002 and a $200.0 million Inventory Facility that was to expire in November 2004. This Credit Facility is in addition to a $100.0 million revolving credit facility with NUF LLC, a wholly-owned subsidiary of NKK Corporation, our principal stockholder (the “NUF Facility”) that expires in February 2002.
 
Under the Credit Facility, the maximum amount available from time to time is subject to change based on the level of eligible receivables and inventory and restrictions on concentrations of certain receivables. At September 30, 2001, the maximum amount available, subject to a $75 million minimum liquidity requirement, after reduction for letters of credit and outstanding borrowings, was $157.8 million. Total liquidity, which includes cash balances plus available borrowing capacity under the Credit Facility, was $159.7 million as compared to $112 million at December 31, 2000.
 
We are currently in compliance with all material covenants of, and obligations under, our various debt instruments. On September 30, 2001, cash borrowings outstanding under our credit facility were $268.1 million with an annual interest rate of 8.25% and $100 million under the NUF Facility with an annual interest rate of 6.9%.
 
At September 30, 2001, total debt as a percentage of total capitalization increased to 72.5% as compared to 47.0% at December 31, 2000 resulting from additional borrowings and reduced stockholders’ equity due to net losses. Cash and cash equivalents totaled $5.1 million at September 30, 2001, as compared to $3.3 million at December 31, 2000.

14
 
Cash Flows from Operating Activities
 
For the nine months of 2001, cash used in operating activities amounted to $218.5 million, which is primarily attributable to the net loss and the purchase of previously sold accounts receivables. Partially offsetting these uses of cash were positive impacts resulting from reduced inventories and receivables, and increases in certain liability accounts. Our inventories decreased by $46 million as we continue to focus on reducing our raw material and steel inventories.
 
Cash Flows from Investing Activities
 
Capital investments for the nine months ended September 30 amounted to $40.9 million in 2001, significantly below the $176.3 million in 2000. The 2001 spending includes the replacement of a BOF steam drum at Great Lakes, new computer systems, and various other small projects. Additionally, $3.1 million of machinery and equipment was acquired at the National Steel Pellet Company through a three-year capital lease in the second quarter of 2001.
 
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 to one of our customers 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 which included the assumption of certain liabilities and cash in excess of the net book value of the assets sold. During the second quarter of 2000, we sold our 30% equity interest in the Presque Isle Corporation and received proceeds of $16.9 million (net of expenses) and recognized a net gain of $15.1 million. The proceeds were used for general corporate purposes.
 
Cash Flows from Financing Activities
 
During the first nine months of 2001, net cash provided by financing activities amounted to $259.3 million. Financing activities included additional short-term borrowings of $100 million and long-term borrowings, offset by scheduled debt repayments, of $182.2 million.
 
Other Contingencies
 
In the third quarter Bethlehem Steel Corporation (Bethlehem) filed for Chapter 11 protection under bankruptcy laws. 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. We are uncertain what effect, if any, the Bethlehem bankruptcy will have on our future earnings and financial position.
 
On December 31, 2000, LTV Steel Company, Inc. (LTV) filed for Chapter 11 protection under U.S. bankruptcy laws. We are jointly liable with LTV for environmental clean-up and certain retiree benefit costs related to the closed Donner Hanna Coke plant. We are uncertain what effect, if any, the LTV bankruptcy will have on our future earnings and financial position.
 
Forward Looking Information
 
We continue to be optimistic regarding the outcome of the government’s Section 201 trade case and are encouraged with the International Trade Commission’s finding that imports of finished steel threatened the financial health of the domestic steel industry. We feel that quick strong actions in the coming months are needed to ensure the long-term viability of the domestic steel industry, however, we do not expect to begin to see market and financial benefits of the trade case until the second quarter of next year.

15
 
As we look to the fourth quarter, we are seeing continued softening in the general economy and are experiencing a decrease in the demand for our products. On October 18, 2001, we announced that we were temporarily idling the A blast furnace at our Great Lakes operations and extending a planned maintenance outage at the National Steel Pellet Company in an effort to more closely match production with forecasted demand. These outages are expected to allow us to reduce both finished goods and raw materials inventory levels during the fourth quarter. This will negatively impact the income statement due to the underabsorption of fixed costs but will positively impact cash flow and liquidity. We anticipate that our average selling prices will modestly increase during the fourth quarter mainly as the result of improved value-added product mix, but will remain below 2000 levels due to continuing depressed market conditions. We expect to see shipment levels decrease in the fourth quarter to levels approximately 5% to 7% lower than levels reported in the third quarter of the year. We believe that we will see further cost improvements due to our aggressive cost reduction initiatives and due to lower natural gas prices. However, the impact of lower production volumes on our fixed cost absorption will partially offset these improvements. We do not believe that these improvements will be significant enough to result in operating income for the fourth quarter 2001.
 
Our liquidity position remains our highest priority. Our goal for the fourth quarter will be to keep our net cash outflow to a range of $0 to $20 million. Capital spending will remain at low levels, with a $14 million spending forecast for the fourth quarter. The outages at our blast furnace and pellet operation are expected to allow us to reduce inventories during the quarter. Continued cost reductions and the timing of accounts receivable collections are expected to improve our cash flow. We continue to closely monitor our accounts receivable balances with our customers, but it is possible that the continued weakening of the economy will cause additional customers to file for bankruptcy protection or otherwise default in their payment to us.
 
Under these severe market conditions, we believe our liquidity will be further constrained. Further rationalization of facilities, selling non-core assets, increasing our sources of financing and favorable financial benefits of the government’s Section 201 trade case may likely be necessary to maintain sufficient liquidity balances throughout the first half of next year and future periods. The commitment under our NUF Facility expires in February 2002. Our ability to repay any outstanding borrowings under this facility is restricted by our Credit Facility. NUF has agreed with the lenders under the Credit Facility to refrain from demanding repayment of the NUF Facility until such time as the conditions to such repayment contained in the Credit Facility are met. We are not expecting to repay any outstanding borrowings under the NUF facility in the short-term, or until such time as the restrictions are exceeded. Our future liquidity remains dependent on our sources of financing, possible assets sales, our operating performance and overall economic conditions.
 
Other
 
Impact of Recently Issued Accounting Standards
 
In August 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (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. SFAS 143 is required to be adopted in fiscal years beginning after June 15, 2002. We have not yet determined the effect, if any, that adopting SFAS 143 will have on our future earnings and financial position.
 
In July 2001, the FASB issued SFAS No. 142, Goodwill and Intangible Assets, which requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. We will adopt SFAS No. 142 on January 1, 2002 as required, and do not expect a material effect on our consolidated financial statements.

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On April 1, 2001 we adopted SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement revises the accounting standards for securitizations and other transfers of financial assets and collateral and requires certain disclosures. This statement was effective for transfers and servicing of financial assets occurring after March 31, 2001. Adoption of SFAS No. 140 did not have a material effect on our consolidated financial statements or liquidity.
 
On January 1, 2001, we adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. As a result, we recognized the fair value of all financial derivative contracts as an asset of $23.8 million. This amount was recorded on the balance sheet as an asset and an adjustment to accumulated other comprehensive income within stockholders’ equity. The adoption of SFAS 133 had no impact on net income.
 
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
 
Statements made in our reports, such as this Form 10-Q, in press releases and in statements made by employees in oral discussions, 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 experience to differ materially from those we expect or expressed in our forward looking statements. These factors include, but are not limited to, the following:
 
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 the raw materials and other supplies used by us in the
manufacture of our products;
4.
 
Equipment failures or outages at our steelmaking 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;
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; and
13.
 
The effects of extreme weather conditions.
 
 
In the normal course of business, our operations are exposed to continuing fluctuations in commodity prices, foreign currency values 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. Our market risk has not changed materially from that reported in the 2000 Form 10-K.

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PART II.    OTHER INFORMATION
 
 
Trade Litigation
 
This matter was reported in the Company’s 2000 Form 10-K and Forms 10-Q for the first and second quarters of 2001. The proceedings previously reported on generally originated with petitions filed by the Company and a number of other U.S. steel producers with the Department of Commerce (the “DOC”) and the International Trade Commission (the “ITC”). The investigation of steel imports being conducted by the ITC pursuant to Section 201 of the Trade Act of 1974 originated with requests for an investigation by the United States Trade Representative and the U.S. Senate Finance Committee.
 
Regarding the investigations of hot-rolled carbon steel flat products (“Hot-Rolled Steel”) that were initiated in 2000, 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 those two countries on September 11, 2001. A countervailing duty order with respect to Argentina was published on the same day. A duty to offset the unfair trade practices will now be charged on those imports. 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. Antidumping and countervailing duty orders in these cases are expected to be published by mid-November 2001.
 
Regarding the investigation of steel imports being conducted by the ITC pursuant to Section 201 of the Trade Act of 1974, on October 22, 2001 the ITC unanimously determined that increased imports had caused or threatened to cause serious injury to producers of several steel products, including slabs, plate, hot-rolled steel, cold-rolled steel, and corrosion-resistant steel. The ITC is evenly divided as to whether increased imports caused or threatened to cause serious injury to producers of tin-mill products. The ITC is scheduled to transmit its recommendations for relief to the President at the end of December. The President is currently scheduled to announce whether relief will be provided, and in what form, early in 2002.
 
On September 28, 2001, a number of U.S. steel producers filed petitions alleging dumping of cold-rolled carbon steel flat products (“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. The Company joined in all of the petitions except the one regarding Japan. The ITC is scheduled to make its preliminary injury determination regarding these petitions on November 13, 2001. If the ITC’s preliminary determination is affirma­tive, the DOC will make preliminary determinations regarding dumping and subsidi­zation early in 2002. Antidumping and/or countervailing duties will be imposed against those imports for which the DOC makes an affirmative final dumping or subsidization determination and for which the ITC makes an affirmative final injury determination.
 
Donner Hanna Coke Plant
 
This matter was reported in the Company’s 2000 Form 10-K and relates to (i) the environmental remediation being undertaken by the Company’s wholly owned subsidiary, Hanna Furnace Corporation (“Hanna Furnace”), and LTV Steel Company, Inc. (“LTV”) at the former site of the Donner Hanna Coke Plant and (ii) certain litigation related to that site. In August 2001, National Steel Corporation was named as a defendant in four lawsuits (Blake, Acuff, Andriaccio and Gilmour) 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. Hanna Furnace, LTV, the City of Buffalo, the Buffalo Urban Renewal Agency and Donner-Hanna Coke Corporation were already defendants in these

18
cases. 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.
 
Detroit Water and Sewerage Department NOVs
 
This matter was reported in the Company’s 2000 Form 10-K and Forms 10-Q for the first and second quarters of 2001 and involves certain notices of violation (“NOVs”) issued to the Company’s Great Lakes Division by the Detroit Water and Sewerage Department (the “DWSD”), alleging that the Company’s discharge to the DWSD contained levels of zinc, cyanide and mercury in excess of the permitted limits. Additional NOVs have been issued by the DWSD to the Company (i) on July 19, 2001, alleging two exceedances of the mercury limit, one in April 2001 and another in May, 2001; (ii) on August 15, 2001, alleging nine exceedances of the cyanide limit in April, May and July 2001; and (iii) on September 6, 2001, alleging six exceedances of the mercury limit in July 2001. Negotiations are ongoing with the DWSD.
 
 
(a)  See attached Exhibit Index
 
(b)  Reports on Form 8-K
 
 
          The Company filed a report on Form 8-K dated July 27, 2001 reporting on Item 5, Other Events and Regulation FD Disclosure and Item 7, Financial Statements and Exhibits.
 
 
          The Company filed a report on Form 8-K dated September 10, 2001 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 the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
NA
TIONAL STEEL CORPORATION
 
 
/S/    JOHN A. MACZUZAK
 
BY 
                                                                                                      
 
John A. Maczuzak
 
President and Chief Operating Officer
 
 
/S/    KIRK A. SOBECKI
 
BY 
                                                                                                      
 
Kirk A. Sobecki
 
Vice President and Corporate Controller
 
Da
te:  November 12, 2001

20
 
NATIONAL STEEL CORPORATION
 
QUARTERLY REPORT ON FORM 10-Q
 
EXHIBIT INDEX
 
For the quarterly period ended September 30, 2001
 
Exhibit
Number
 
Description
4-A




 
$450,000,000 Credit Agreement dated as of September 28, 2001, among the Company, Citicorp USA,
Inc., as Administrative Agent, Fleet Capital Corporation and The CITGroup/Business Credit, Inc., as
Documentation Agents, Heller Financial, Inc. and GMAC Business Credit, LLC, as Syndication
Agents, The Fuji Bank, Limited, as Co-Arranger, and Salomon Smith Barney, Inc., as Sole Book
Manager and Sole Lead Arranger, and the other lenders party thereto.
15-A
 
Independent Accountants’ Review Report.
15-B
 
Acknowledgment Letter on Unaudited Interim Financial Information.

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