<SUBMISSION>
<ACCESSION-NUMBER>0000950123-00-007463
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20000630
<FILING-DATE>20000811
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>STEEL DYNAMICS INC
<CIK>0001022671
<ASSIGNED-SIC>3312
<IRS-NUMBER>351929476
<STATE-OF-INCORPORATION>IN
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-21719
<FILM-NUMBER>693339
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>7030 POINTE INVERNESS WAY
<STREET2>SUITE 310
<CITY>FORT WAYNE
<STATE>IN
<ZIP>46804
<PHONE>2194593553
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>7030 POINTE INVERNERSS WAY
<STREET2>SUITE 310
<CITY>FORT WAYNE
<STATE>IN
<ZIP>46804
</MAIL-ADDRESS>
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<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>e10-q.txt
<DESCRIPTION>STEEL DYNAMICS, INC.
<TEXT>

<PAGE>   1


                                  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 period ended June 30, 2000

                                       OR

[ ]    Transition Report Pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

                         Commission File Number 0-21719

                              STEEL DYNAMICS, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                                <C>
                         Indiana                                                                 35-1929476
(State or other jurisdiction of incorporation or organization)                     (I.R.S. employer Identification No.)

7030 Pointe Inverness Way, Suite 310, Fort Wayne, IN                                                46804
     (Address of principal executive offices)                                                    (Zip code)
</TABLE>

       Registrant's telephone number, including area code: (219) 459-3553

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

<TABLE>
<S>                                                  <C>
       Title of each class                           Name of each exchange on which registered
       -------------------                           -----------------------------------------
             None                                                       None
</TABLE>

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $0.01 par value

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 [ ]

As of August 8, 2000, Registrant had outstanding 46,548,443 shares of Common
Stock.


<PAGE>   2



                              STEEL DYNAMICS, INC.
                                Table of Contents

<TABLE>
<CAPTION>
                          PART I. Financial Information

Item 1.  Consolidated Financial Statements:
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         Consolidated Balance Sheets as of June 30, 2000 (unaudited) and December 31, 1999 ...............       1

         Consolidated Statements of Income for the three and six-month periods ended
         June 30, 2000 and 1999 (unaudited)...............................................................       2

         Consolidated Statements of Cash Flows for the three and six-month periods ended
         June 30, 2000 and 1999 (unaudited)...............................................................       3

         Notes to Consolidated Financial Statements.......................................................       4

Item 2.   Management's Discussion and Analysis of Financial Condition
           and Results of Operations......................................................................       6


Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......................................       9




                           PART II. Other Information

Item 1.  Legal Proceedings ...............................................................................      10

Item 2.  Changes in Securities and Use of Proceeds........................................................      10

Item 4.  Submission of Matters to a Vote of Security Holders..............................................      10

Item 6.  Exhibits and Reports on Form 8-K.................................................................      11

         Signature........................................................................................      12
</TABLE>





<PAGE>   3




                              STEEL DYNAMICS, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)


<TABLE>
<CAPTION>
                                                                                                   June 30          December 31
                                                                                                    2000                1999
                                                                                                 -----------        -----------
                                                                                                 (unaudited)
<S>                                                                                              <C>                <C>
                                     ASSETS

CURRENT ASSETS:
     Cash and cash equivalents ...........................................................       $     9,677        $    16,615
     Accounts receivable, net ............................................................            88,193             74,642
     Accounts receivable-related parties .................................................            27,265             12,007
     Inventories .........................................................................           131,732            106,742
     Deferred taxes ......................................................................             6,083             10,987
     Other current assets ................................................................             3,975              4,808
                                                                                                 -----------        -----------
              Total current assets .......................................................           266,925            225,801

PROPERTY, PLANT, AND EQUIPMENT, NET ......................................................           774,638            742,787

RESTRICTED CASH ..........................................................................             4,576              6,696

OTHER ASSETS .............................................................................            16,339             16,272
                                                                                                 -----------        -----------

              TOTAL ASSETS ...............................................................       $ 1,062,478        $   991,556
                                                                                                 ===========        ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable ....................................................................       $    21,271        $    19,622
     Accounts payable-related parties ....................................................            15,521             18,014
     Accrued interest ....................................................................             5,467              4,941
     Other accrued expenses ..............................................................            22,615             20,077
     Current maturities of long-term debt ................................................            15,501              7,921
                                                                                                 -----------        -----------
              Total current liabilities ..................................................            80,375             70,575

LONG-TERM DEBT, less current maturities ..................................................           531,578            498,042

DEFERRED TAXES ...........................................................................            34,249             29,774

MINORITY INTEREST ........................................................................             4,022              1,795

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
     Class A common stock voting, $.01 par value; 100,000,000 shares authorized;
         49,330,943 and 49,265,078 shares issued; and 46,649,843 and 47,970,978
         shares outstanding, as of June 30, 2000 and December 31, 1999, respectively .....               493                493
     Treasury stock, at cost; 2,681,100 and 1,294,100 shares as of June 30, 2000 and
         December 31, 1999, respectively .................................................           (33,358)           (19,650)
     Additional paid-in capital ..........................................................           335,520            335,237
     Retained earnings ...................................................................           109,599             75,290
                                                                                                 -----------        -----------
              Total stockholders' equity .................................................           412,254            391,370
                                                                                                 -----------        -----------

              TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................................       $ 1,062,478        $   991,556
                                                                                                 ===========        ===========
</TABLE>


                 See notes to consolidated financial statements.



                                       1
<PAGE>   4


                              STEEL DYNAMICS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                         Three Months Ended June 30        Six Months Ended June 30
                                                         --------------------------        ------------------------
                                                            2000             1999             2000            1999
                                                         ---------        ---------        ---------        ---------
                                                                 (unaudited)                       (unaudited)
<S>                                                      <C>              <C>              <C>              <C>
NET SALES:
     Unrelated parties ...........................       $ 145,901        $  90,541        $ 297,576        $ 175,674
     Related parties .............................          44,836           76,120           82,333          108,440
                                                         ---------        ---------        ---------        ---------
         Total net sales .........................         190,737          166,661          379,909          284,114

Cost of goods sold ...............................         138,795          127,799          283,956          226,871
                                                         ---------        ---------        ---------        ---------
GROSS PROFIT .....................................          51,942           38,862           95,953           57,243

Selling, general and administrative expenses .....          14,930           10,919           28,780           19,018
                                                         ---------        ---------        ---------        ---------
OPERATING INCOME .................................          37,012           27,943           67,173           38,225

Interest expense .................................          (5,030)          (5,840)          (9,959)         (11,439)
Other expense, net ...............................          (1,306)          (1,869)          (1,123)          (1,607)
                                                         ---------        ---------        ---------        ---------
INCOME BEFORE INCOME TAXES .......................          30,676           20,234           56,091           25,179

Income taxes .....................................          11,617            8,094           21,783           10,069
                                                         ---------        ---------        ---------        ---------
     NET INCOME ..................................       $  19,059        $  12,140        $  34,308        $  15,110
                                                         =========        =========        =========        =========


BASIC EARNINGS PER SHARE:
Net income per share .............................       $    0.40        $    0.25        $    0.72        $    0.32
                                                         =========        =========        =========        =========
Weighted average common shares outstanding .......          47,570           47,900           47,783           47,889
                                                         =========        =========        =========        =========

DILUTED EARNINGS PER SHARE:
Net income per share .............................       $    0.40        $    0.25        $    0.72        $    0.31
                                                         =========        =========        =========        =========
Weighted average common shares and
     share equivalents outstanding ...............          47,705           48,331           47,954           48,239
                                                         =========        =========        =========        =========
</TABLE>


                 See notes to consolidated financial statements.



                                       2
<PAGE>   5


                              STEEL DYNAMICS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                          Three Months Ended June 30      Six Months Ended June 30
                                                                          --------------------------      ------------------------
                                                                             2000            1999            2000            1999
                                                                          ---------        --------       ---------        --------
                                                                                 (unaudited)                      (unaudited)
<S>                                                                        <C>             <C>             <C>             <C>
OPERATING ACTIVITIES:
     Net income ....................................................       $ 19,059        $ 12,140        $ 34,308        $ 15,110
     Adjustments to reconcile net income to net cash
     provided by operating activities:
         Depreciation and amortization .............................         11,454          10,227          23,357          18,418
         Deferred income taxes .....................................          4,690          10,006           9,379           7,375
         Minority interest .........................................           (562)              -           2,227               -
         Changes in certain assets and liabilities:
              Accounts receivable ..................................        (11,529)         (9,613)        (28,809)         (9,456)
              Inventories ..........................................        (12,809)          3,835         (24,990)         11,486
              Other assets .........................................          2,252           1,929           2,815           5,187
              Accounts payable .....................................        (18,883)         (7,721)           (844)          7,104
              Accrued expenses .....................................         (1,632)            612           3,064            (759)
                                                                           --------        --------        --------        --------
              Net cash provided (used) in operating activities .....         (7,960)         21,415          20,507          54,465
                                                                           --------        --------        --------        --------

INVESTING ACTIVITIES:
     Purchases of property, plant, and equipment ...................        (25,644)        (28,281)        (54,850)        (76,132)
     Other .........................................................          1,197           2,369            (108)          2,235
                                                                           --------        --------        --------        --------
              Net cash used in investing activities ................        (24,447)        (25,912)        (54,958)        (73,897)
                                                                           --------        --------        --------        --------

FINANCING ACTIVITIES:
     Issuance of long-term debt ....................................         41,388               -          47,039          21,762
     Repayments of long-term debt ..................................         (1,638)         (4,001)         (5,923)         (5,223)
     Issuance of common stock, net of expenses and
         proceeds and tax benefits from exercise of stock options ..             60              78             283             161
     Purchase of treasury stock ....................................        (13,708)              -         (13,708)              -
     Debt issuance costs ...........................................           (178)            (25)           (178)            (39)
                                                                           --------        --------        --------        --------
              Net cash provided (used) in financing activities .....         25,924          (3,948)         27,513          16,661
                                                                           --------        --------        --------        --------

Decrease in cash and cash equivalents ..............................         (6,483)         (8,445)         (6,938)         (2,771)
Cash and cash equivalents at beginning of period ...................         16,160          10,917          16,615           5,243
                                                                           --------        --------        --------        --------
Cash and cash equivalents at end of period .........................       $  9,677        $  2,472        $  9,677        $  2,472
                                                                           ========        ========        ========        ========


SUPPLEMENTAL DISCLOSURE OF
     CASH FLOW INFORMATION:
Cash paid for interest .............................................       $  8,954        $  9,128        $ 18,093        $ 17,374
                                                                           ========        ========        ========        ========
Cash paid for taxes ................................................       $ 10,623        $  1,475        $ 10,978        $  1,785
                                                                           ========        ========        ========        ========
</TABLE>


                 See notes to consolidated financial statements.


                                       3
<PAGE>   6


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION

Principles of Consolidation. The consolidated financial statements include the
accounts of Steel Dynamics, Inc. (SDI), together with its subsidiaries (the
company) after elimination of the significant intercompany accounts and
transactions. Minority interest represents the minority shareholders'
proportionate share in the equity or income of the company's consolidated
subsidiary, New Millennium Building Systems, LLC (NMBS).

Use of Estimates. These financial statements are prepared in conformity with
generally accepted accounting principles and, accordingly, include amounts that
are based on management's estimates and assumptions that affect the amounts
reported in the financial statements and in the notes thereto. Actual results
may differ from those estimates. In the opinion of management, these estimates
reflect all normal recurring adjustments necessary for a fair presentation of
the interim period results. These financial statements and notes should be read
in conjunction with the audited financial statements included in the company's
1999 Annual Report on Form 10-K.

2. INVENTORIES

Inventories are stated at lower of cost (principally standard cost which
approximates actual cost on a first-in, first-out basis) or market. Inventories
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                         June 30         December 31
                                                                           2000              1999
                                                                        ----------        ----------
<S>                                                                     <C>               <C>
Raw Materials....................................................       $   67,440        $   46,171
Supplies.........................................................           40,635            39,981
Work-in-progress.................................................            7,896             3,754
Finished Goods...................................................           15,761            16,836
                                                                        ----------        ----------
                                                                        $  131,732        $  106,742
                                                                        ==========        ==========
</TABLE>

3. EARNINGS PER SHARE

Diluted earnings per share amounts are based upon the weighted average number of
common and common equivalent shares outstanding during the year. Common
equivalent shares are excluded from the computation in periods in which they
have an anti-dilutive effect. The difference between basic and diluted earnings
per share for the company is solely attributable to the dilutive effect of stock
options. The reconciliations of the weighted average common shares for basic and
diluted earnings per share for the three and six months ended June 30 are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                   Three Months Ended                      Six Months Ended
                                                              ---------------------------           ----------------------------
                                                                 2000             1999                 2000              1999
                                                              -----------     -----------           ----------        ----------
<S>                                                           <C>             <C>                   <C>               <C>
Basic weighted average common shares outstanding.........          47,570         47,900                47,783            47,889
Dilutive effect of stock options.........................             135            431                   171               350
                                                              -----------     ----------            ----------        ----------
Diluted weighted average common shares
   and share equivalents outstanding.....................          47,705         48,331                47,954            48,239
                                                              ===========     ==========            ==========        ==========
</TABLE>


4. NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," was issued in June 1998 and then was
amended by SFAS No. 137 in June 1999. SFAS No. 137 deferred the effective date
of SFAS No. 133 to all fiscal years beginning after June 15, 2000. This
statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
condition and measure those instruments at fair value. If certain conditions are
met a derivative may be specifically designated as a fair value hedge, a cash
flow hedge, or a hedge of foreign currency exposure. The accounting for changes
in the fair value of a derivative (that is, gains and losses) is dependent upon
the intended use of the derivative and the resulting designation. Management has
not yet quantified the effect, if any, of the new standard on the financial
statements.



                                       4
<PAGE>   7


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. SEGMENT INFORMATION

The company has two operating segments: Steel Operations and Steel Scrap
Substitute Operations. Steel Operations include all revenues from the flat roll
mill facility, which produces and sells hot rolled, cold rolled, and galvanized
sheet steel; and also includes all start-up costs associated with the structural
and rail mill, which will produce structural steel and rail products. Steel
Scrap Substitute Operations include revenues from Iron Dynamics, Inc., which
will provide liquid pig iron to the company. In addition, Corporate and
Eliminations include certain unallocated corporate accounts, such as SDI senior
bank debt and certain other investments, which include the start-up operation of
NMBS. The company's operations are primarily organized and managed by operating
segment. The company evaluates performance and allocates resources based on
operating profit or loss before income taxes. The accounting policies of the
operating segments are consistent with those described in Note 1 to the 1999
financial statements. Intersegment sales and transfers are accounted for at
standard prices and are eliminated in consolidation. Segment results for the
three and six months ended June 30, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED                      SIX MONTHS ENDED
                                                -------------------------------         -------------------------------
                                                  2000                  1999                2000                1999
                                                -----------         -----------         -----------         -----------
<S>                                             <C>                 <C>                 <C>                 <C>
STEEL OPERATIONS
Net sales
     External                                   $   190,737         $   166,661         $   379,909         $   284,114
     Other segments                                   1,273                   -               1,273                   -
Operating income                                     46,461              34,056              85,223              48,216
Assets                                              901,493             820,727             901,493             820,727

-----------------------------------------------------------------------------------------------------------------------
STEEL SCRAP SUBSTITUTE OPERATIONS
Net sales
     External                                   $         -         $         -         $         -         $         -
     Other segments                                   2,283                 289               5,547                 342
Operating loss                                       (3,716)             (3,141)             (7,826)             (6,102)
Assets                                              129,867             111,169             129,867             111,169

-----------------------------------------------------------------------------------------------------------------------
CORPORATE AND ELIMINATIONS
Net sales
     External                                   $         -         $         -         $         -         $         -
     Other segments                                  (3,556)               (289)             (6,820)               (342)
Operating loss                                       (5,733)             (2,972)            (10,224)             (3,889)
Assets                                               31,118              22,578              31,118              22,578

-----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED
Net sales
     External                                   $   190,737         $   166,661         $   379,909         $   284,114
Operating income                                     37,012              27,943              67,173              38,225
Assets                                            1,062,478             954,474           1,062,478             954,474

-----------------------------------------------------------------------------------------------------------------------
</TABLE>


The external net sales of the company's Steel Operations include sales to
Non-U.S. companies of $2.0 million and $294,000 for the three months ended June
30, 2000 and 1999, respectively, and $8.1 million and $738,000 for the six
months ended June 30, 2000 and 1999, respectively.



                                       5
<PAGE>   8


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

The following discussion contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
discussed in the forward-looking statement as a result of risks and
uncertainties, including those incorporated by reference herein from "Exhibit
99.1" filed with our Report on Form 10-K for the year ended December 31, 1999.
You should read this commentary in conjunction with our Annual Report on Form
10-K, for the year ended December 31, 1999 for a full understanding of our
financial condition and results of operations.

Overview

We operate a technologically advanced flat-rolled steel mini-mill in Butler,
Indiana with an annual production capacity of 2.2 million tons. We manufacture
and market a broad range of high quality flat-rolled carbon steel products. We
sell hot rolled, cold rolled and coated steel products, including high strength
low alloy and medium carbon steels. We sell these products directly to end users
and through steel service centers primarily in the Midwestern United States. Our
products are used for various applications, including automotive, appliance,
manufacturing, consumer durable goods, industrial machinery, and various other
applications.

In addition to our flat-rolled mini-mill, we continue to do design modification
and completion work on a second facility; we continue to await the conclusion of
the administrative appeals process in connection with the issuance of a required
permit to enable us to commence construction on a third facility; and we have an
investment in a steel fabrication plant. Our second facility, operated by our
subsidiary, Iron Dynamics Inc., involves the pioneering of a process to produce
direct reduced iron, which we plan to convert into liquid pig iron, a high
quality, lower-cost steel scrap substitute for use in our flat-rolled facility.
During 1999, we determined that certain of Iron Dynamics' equipment and
processes would require design modifications. The modifications are planned to
occur during the second half of 2000. During the first six months of 2000, Iron
Dynamics operated at limited production levels, in order to demonstrate its
ability to achieve superior metallurgical results and to verify the operational
and product benefits of using liquid pig iron in the flat-rolled mill's melt
shop. Iron Dynamics suspended limited production in July 2000 to prepare for the
necessary design modifications in the later half of the year.

Our third facility, a planned structural and rail mill, and our investment in
New Millennium Building Systems, LLC, (NMBS) will provide an opportunity for
further product diversification and market penetration. Upon completion of the
structural and rail mill, which we now anticipate will take approximately twelve
to fourteen months from the final issuance of a construction permit which we
believe will be resolved within the next four to five months, we plan to
manufacture structural steel beams, pilings and rails for the construction and
railroad markets. In addition, our investment in New Millennium provides a like
opportunity for our steel to access the non-residential construction markets
with steel joists, trusses and girders and roof and floor decking products.
Successful test-production occurred in June 2000, only six months after NMBS
plant construction began, with commercial production beginning in the third
quarter 2000.

NET SALES

Our sales are a factor of net tons shipped, product mix and related pricing. Our
net sales are determined by subtracting product returns, sales discounts, return
allowances and claims from total sales. We charge premium prices for certain
grades of steel, dimensions of product, or certain smaller volumes, based on our
cost of production. We also provide further value-added products from our cold
mill. These products include hot rolled and cold rolled galvanized products,
along with cold rolled products, allowing us to charge marginally higher prices
compared to hot-rolled products.

In order to ensure consistent and efficient hot band plant utilization, we have
entered into a multi-year "off-take" sales and distribution agreement with
Heidtman Steel Products, Inc. which accounts for approximately 30,000 tons of
our monthly flat-rolled production at prevailing market prices. We do not enter
into material fixed price, long-term, exceeding one calendar quarter, contracts
for the sale of steel. Although fixed price contracts may reduce risks related
to price declines, these contracts may also limit our ability to take advantage
of price increases.

COST OF GOODS SOLD

Our cost of goods sold represents all direct and indirect costs associated with
the manufacture of our flat-rolled carbon steel, and hot rolled, cold rolled and
coated products. The principal elements of these costs are:

       - Alloys                                             - Electricity
       - Natural gas                                        - Oxygen
       - Argon                                              - Electrodes
       - Steel scrap and scrap substitutes                  - Depreciation
       - Direct and indirect labor and benefits

Steel scrap and scrap substitutes represent the most significant component of
our cost of goods sold.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

Selling, general and administrative expenses are comprised of all costs
associated with the sales, finance and accounting, materials and transportation,
and administrative departments. These costs include labor and benefits,
professional services, financing cost amortization, property taxes, profit
sharing expense and start-up costs associated with new projects.


                                       6
<PAGE>   9


INTEREST EXPENSE

Interest expense consists of interest associated with our senior credit facility
and other debt agreements as described in our notes to financial statements, net
of capitalized interest costs that are related to construction expenditures
during the construction period of capital projects.

OTHER INCOME (EXPENSE)

Other income consists of interest income earned on our cash balance and any
other non-operating income activity. Other expense consists of any non-operating
costs, including permanent impairments of reported investments.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999

Net Sales. Our net sales were $190.7 million, with total shipments of 503,700
net tons for the three months ended June 30, 2000, as compared to net sales of
$166.7 million, with total shipments of 505,900 net tons for the three months
ended June 30, 1999, an increase in net sales of $24.0 million, or 14%. This
increase was primarily attributable to an increase of approximately $52, or 16%,
in our average price per ton, for the three months ended June 30, 2000, as
compared to the same period in 1999. These price increases were experienced
throughout our product lines, and most significantly within our cold rolled
products, which drove a slight product mix change during the second quarter 2000
to these higher margin products.

Cost of Goods Sold. Cost of goods sold was $138.8 million for the three months
ended June 30, 2000, as compared to $127.8 million for the three months ended
June 30, 1999, an increase of $11.0 million, or 9%. Steel scrap represented
approximately 52% and 46% of our total cost of goods sold for the three months
ended June 30, 2000 and 1999, respectively. Our costs associated with steel
scrap averaged $20 per ton more during the second quarter of 2000 than during
the second quarter of 1999 and $8 per ton less than during the first quarter of
2000.

As a percentage of net sales, cost of goods sold represented approximately 73%
and 77% for the three months ended June 30, 2000 and 1999, respectively,
reflecting the increase in our average price per ton and in our constant focus
on production efficiencies and cost savings.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $14.9 million for the three months ended June 30,
2000, as compared to $10.9 million for the three months ended June 30, 1999, an
increase of $4.0 million, or 37%. This increase was partially attributable to an
increase in start-up costs related to our expansion projects. Start-up costs
related to our structural mill project, NMBS project and IDI were $6.4 million
for the three months ended June 30, 2000, as compared to $4.5 million for the
three months ended June 30, 1999, an increase of $1.9 million, or 42%.

As a percentage of net sales, selling, general and administrative expenses
represented approximately 8% and 7% for the three months ended June 30, 2000 and
1999, respectively.

Interest Expense. Interest expense was $5.0 million for the three months ended
June 30, 2000, as compared to $5.8 million for the three months ended June 30,
1999, a decrease of $800,000, or 14%. This decrease was the direct result of
increased capitalized interest of $892,000, or 49%, offsetting interest costs
which were substantially level when comparing the three months ended June 30,
2000 to the same period in 1999.

Other Income (Expense). For the three months ended June 30, 2000, other income,
composed of interest income, was $90,000, as compared to $241,000 for the three
months ended June 30, 1999, a decrease of $151,000, or 63%.

Other expense was $1.4 million, for the three months ended June 30, 2000,
representing the write-off of our remaining investment in Nakornthai Strip Mill
Public Company, Limited (NSM) and $2.1 million, for the three months ended June
30, 1999, of which $1.8 million represented the write-off of our entire
cost-basis investment in Qualitech Steel Corporation (Qualitech). On May 8,
2000, the Central Bankruptcy Court of Thailand issued an order for the business
reorganization of NSM and appointed an independent firm to manage the process.
During the second quarter of 2000, active trading of NSM shares on the Stock
Exchange of Thailand was also suspended. It is our belief that our investment in
NSM was permanently and fully impaired at June 30, 2000.

Federal Income Taxes. Our federal income tax provision was $10.7 million for the
three months ended June 30, 2000, as compared to $7.1 million for the same
period in 1999. This federal tax provision reflects income tax expense at the
statutory income tax rate.



                                       7
<PAGE>   10


SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999

Net Sales. Our net sales were $379.9 million, with total shipments of 1,014,900
net tons for the six months ended June 30, 2000, as compared to net sales of
$284.1 million, with total shipments of 875,400 net tons for the six months
ended June 30, 1999, an increase in net sales of $95.8 million, or 34%. These
increases were attributable in part to increased volumes of 139,500 net tons, or
16%, in conjunction with an increase in our average price per ton experienced
throughout all product lines.

Cost of Goods Sold. Cost of goods sold was $284.0 million for the six months
ended June 30, 2000, as compared to $226.9 million for the six months ended June
30, 1999, an increase of $57.1 million, or 25%. Steel scrap represented
approximately 54% and 48% of our total cost of goods sold for the six months
ended June 30, 2000 and 1999, respectively. As a percentage of net sales, cost
of goods sold represented approximately 75% and 80% for the six months ended
June 30, 2000 and 1999, respectively, reflecting the increase in our average
price per ton and in our constant focus on production efficiencies and cost
savings.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $28.8 million for the six months ended June 30,
2000, as compared to $19.0 million for the six months ended June 30, 1999, an
increase of $9.8 million, or 52%. This increase was partially attributable to an
increase in start-up costs related to our expansion projects. Start-up costs
related to our structural mill project, NMBS project and IDI were $12.5 million
for the six months ended June 30, 2000, as compared to $8.5 million for the six
months ended June 30, 1999, an increase of $4.0 million, or 47%. As a result of
significantly improved operating results during the first quarter of 2000 as
compared to 1999, employee performance-based incentives also comprised
approximately $2.4 million of the total selling, general and administrative
expense increase. As a percentage of net sales, selling, general and
administrative expenses represented approximately 8% and 7% for the six months
ended June 30, 2000 and 1999, respectively.

Interest Expense. Interest expense was $10.0 million for the six months ended
June 30, 2000, as compared to $11.4 million for the six months ended June 30,
1999, a decrease of $1.4 million, or 12%. This decrease was the direct result of
increased capitalized interest of $1.5 million, or 43%, offsetting interest
costs which were substantially level when comparing the first six months of 2000
to the same period in 1999.

Other Income (Expense). For the six months ended June 30, 2000, other income,
composed of interest income, was $273,000, as compared to $503,000 for the six
months ended June 30, 1999, a decrease of $230,000, or 46%.

Other expense was $1.4 million, for the six months ended June 30, 2000,
representing the write-off of our remaining investment in Nakornthai Strip Mill
Public Company, Limited (NSM) and $2.1 million, for the six months ended June
30, 1999, of which $1.8 million represented the write-off of our entire
cost-basis investment in Qualitech Steel Corporation (Qualitech). On May 8,
2000, the Central Bankruptcy Court of Thailand issued an order for the business
reorganization of NSM and appointed an independent firm to manage the process.
During the second quarter of 2000, active trading of NSM shares on the Stock
Exchange of Thailand was also suspended. It is our belief that our investment in
NSM was permanently and fully impaired at June 30, 2000.

Federal Income Taxes. Our federal income tax provision was $19.6 million for the
six months ended June 30, 2000, as compared to $8.8 million for the same period
in 1999. This federal tax provision reflects income tax expense at the statutory
income tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Our business is capital intensive and requires substantial expenditures for,
among other things, the purchase and maintenance of equipment used in our
steelmaking and finishing operations and to remain compliant with environmental
laws. Our short-term and long-term liquidity needs arise primarily from capital
expenditures, working capital requirements and principal and interest payments
related to our outstanding indebtedness. We have met these liquidity
requirements with cash provided by operations, equity, long-term borrowings,
state and local grants and capital cost reimbursements.

For the six months ended June 30, 2000, cash provided by operating activities
was $20.5 million, as compared to $54.5 million for the six months ended June
30, 1999, a decrease of $34.0 million. Increasing inventory and accounts
receivable levels were the primarily drivers of this decrease. We increased
steel scrap inventories to take advantage of the lower steel scrap pricing
experienced throughout the first half of 2000. Cash used in investing activities
was $55.0 million, as compared to $73.9 million for the six months ended June
30, 2000 and 1999, respectively. Substantially all of these funds were invested
in our capital projects. Approximately 53% of our capital investment costs
incurred during the first six months of 2000 were utilized in site preparation
and other pre-construction activities for the structural mill. Cash provided by
financing activities was $27.5 million for the six months ended June 30, 2000,
as compared to $16.7 million for the same period in 1999. This increase in funds
provided was the direct result of increased borrowings to fund steel scrap
purchases and treasury stock purchases which totaled $13.7 million during the
second half of 2000.

We believe the liquidity of our existing cash and cash equivalents, cash from
operating activities and our available credit facilities will provide sufficient
funding for our working capital and capital expenditure requirements during
2000. However, we may, if we believe circumstances warrant, increase our
liquidity through the issuance of additional equity or debt to finance growth or
take advantage of other business opportunities.

We have not paid dividends on our common stock.



                                       8
<PAGE>   11


INFLATION

We believe that inflation has not had a material effect on our results of
operation.

ENVIRONMENTAL AND OTHER CONTINGENCIES

We have incurred, and in the future will continue to incur, capital expenditures
and operating expenses for matters relating to environmental control,
remediation, monitoring and compliance. We believe, apart from our dependence on
environmental construction and operating permits for our existing and proposed
manufacturing facilities, such as our planned structural and rail mill project
in Whitley County, Indiana, that compliance with current environmental laws and
regulations is not likely to have a material adverse effect on our financial
condition, results of operations or liquidity; however, environmental laws and
regulations have changed rapidly in recent years and we may become subject to
more stringent environmental laws and regulations in the future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

In the normal course of business our market risk is limited to changes in
interest rates. We utilize long-term debt as a primary source of capital. A
portion of our debt has an interest component that resets on a periodic basis to
reflect current market conditions. We manage exposure to fluctuations in
interest rates through the use of an interest rate swap. We agree to exchange,
at specific intervals, the difference between fixed rate and floating rate
interest amounts calculated on an agreed upon notional amount. This interest
differential paid or received is recognized in the consolidated statements of
income as a component of interest expense. At June 30, 2000, no material changes
had occurred related to our interest rate risk from the information disclosed in
the Annual Report of Steel Dynamics, Inc. and on Form 10-K for the year ended
December 31, 1999.



                                       9
<PAGE>   12


                                     PART II
                               OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We incorporate by reference Part I, Item III of our 1999 Form 10-K Annual
Report, filed with the Securities and Exchange Commission on March 29, 2000, the
description of our pending litigation involving the nine related lawsuits,
aggregating some $240 million in claims, brought against us and various
investment banking firms, relating to a note offering in March 1998 by
Nakornthai Strip Mill Public Company Ltd. ("NSM") and its investment bankers
(the other co-defendants in the litigation). Discovery is proceeding in all of
these cases.

We also incorporate by reference the description of a pending lawsuit brought by
our Iron Dynamics subsidiary, for declaratory relief against Taft Contracting
Company, involving a $1 million commercial dispute over some work Taft was
contracted to provide. This suit is also in the discovery stage.

A copy of the foregoing is annexed to this report as Exhibit 99.2.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On June 13, 2000, we granted a one time non-statutory stock option to Larry J.
Lehtinen, incident to his resignation as an officer and employee of Steel
Dynamics, Inc. and its subsidiary Iron Dynamics, Inc., for 30,000 shares of our
common stock, at an exercise price of $9.625 per share, the fair market value of
the shares at date of grant. The option is for 21 months and expires at 5:00
p.m. EST on March 12, 2002.

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

The Annual Meeting of Shareholders was held on May 18, 2000. Proxies were
solicited for the Annual Meeting in accordance with the requirements of the
Securities Exchange Act 1934.

At the Annual Meeting, the following occurred:

       -      With respects to Item 1 in our Proxy Statement (Election of
              Directors)

                  <TABLE>
                  <CAPTION>
                                                                           Shares Voted Against
                         Director                   Shares Voted For           or Withheld
                  <S>                               <C>                    <C>
                  Keith E. Busse                       39,863,071                   58,350
                  Richard P. Teets, Jr.                39,863,671                   57,750
                  Mark D. Millett                      39,863,071                   58,350
                  Tracy L. Shellabarger                36,517,450                3,403,971
                  Leonard Rifkin                       39,626,524                  294,897
                  John C. Bates                        39,863,071                   58,680
                  Kazuhiro Atsushi                     36,516,850                3,404,571
                  Dr. Jurgen Kolb                      39,918,641                    2,780
                  Joseph D. Ruffolo                    36,566,192                3,355,229
                  Richard J. Freeland                  36,535,112                3,386,309
                  James E. Kelley                      36,586,147                3,335,274
                  </TABLE>

       -      With respect to Item 2 in our Proxy Statement (Ratification of the
              Appointment of Independent Auditors) Ernst & Young LLP was
              approved as our independent auditors for the year 2000:

                  <TABLE>
                  <S>                               <C>
                  Shares Voted For                  40,239,194
                  Shares Voted Against                   8,273
                  Abstentions                            9,604
                  </TABLE>

       -      With respect to Item 3 in our Proxy Statement (Approval of the
              Amended and Restated Officer and Manager Cash and Stock Bonus
              Plan):

                  <TABLE>
                  <S>                               <C>
                  Shares Voted For                  35,535,857
                  Shares Voted Against               1,693,362
                  Abstentions                           27,852
                  </TABLE>


                                       10
<PAGE>   13


       -      With respect to Item 4 in our Proxy Statement (Approval of
              Non-Employee Director Stock Option Plan):

                  <TABLE>
                  <S>                               <C>
                  Shares Voted For                  36,056,633
                  Shares Voted Against               1,171,268
                  Abstentions                           29,170
                  </TABLE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<S>           <C>          <C>
(A)           Exhibits -
                 *10.23    (Revised) Officer and Manager Cash and Stock Bonus Plan
                 *10.40    Non-Employee Director Stock Option Plan
                 *27.1     Financial Data Schedule
                 *99.2     Part I, Item III "Legal Proceedings" of Steel Dynamics, Inc. 1999 Form 10-K Annual Report

       (B) Reports on Form 8-K for the quarter ended June 30, 2000:
           None
</TABLE>

                  --------------------------
*Filed herewith

Items 3 and 5 of Part II are not applicable for this reporting period and have
been omitted.



                                       11
<PAGE>   14


SIGNATURE

       Pursuant to the requirements of Section 13 or 15(d) of Securities
Exchange Act of 1934, Steel Dynamics, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

August 11, 2000



                                            STEEL DYNAMICS, INC.


                               By:  /s/ TRACY L. SHELLABARGER
                                   ------------------------------------------
                                            Tracy L. Shellabarger
                                   Vice President and Chief Financial Officer
                                  (Principal Financial and Accounting Officer
                                          and Duly Authorized Officer)



                                       12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>2
<FILENAME>ex10-23.txt
<DESCRIPTION>REVISED OFFICER & MANAGER CASH & STOCK BONUS PLAN
<TEXT>

<PAGE>   1


                                                                   EXHIBIT 10.23


                              STEEL DYNAMICS, INC.
                              AMENDED AND RESTATED
                               OFFICER AND MANAGER
                            CASH AND STOCK BONUS PLAN


       1.     PURPOSE. The purpose of the Plan is to provide incentives for
Officers and Managers of the Company to increase the profitability and growth of
the Company and to provide Officers and Managers an opportunity for an ownership
interest in the Company.

       2.     EFFECTIVE DATE AND TERM OF PLAN. The Effective Date of the Plan is
October 28, 1996, the date the Plan was originally adopted and approved of by
the Board and shareholders of the Company. The effective date of the Amended and
Restated Officer and Manager Cash and Stock Bonus Plan shall be January 1, 2000.
All bonus amounts paid for Years prior to 2000 shall be governed by the terms of
the original Plan in effect prior to January 1, 2000. The Plan commenced at the
beginning of the Company's fiscal year beginning January 1, 1997, and no cash or
stock bonuses under this Plan accrued until after conclusion of the Company's
1997 fiscal year. The Plan shall terminate on October 27, 2001, unless extended
or earlier terminated by the Board.

       3.     DEFINITIONS.

              3.1 "Adjusted Distribution Pool" has the meaning assigned to such
       term in Section 6.2.

              3.2 "Adjusted Pre-Tax Net Income" means, for any Year, net income
       of the Company, before taxes, extraordinary items and bonuses payable to
       Participants under this Plan, as determined by the Company's outside
       auditors; provided, however, that, to the extent reasonably determinable,
       the effect upon Adjusted Pre- Tax Net Income of any income and start-up
       expenses associated with significant capital expenditures, for a period
       not to exceed twelve (12) months following start-up, shall be excluded
       from and not taken into account in determining such Adjusted Pre-Tax Net
       Income.

              3.3 "Base Salary" means, with respect to a Participant, the
       regular annual salary paid in a Year for services rendered without
       including any bonus (paid under this Plan or otherwise) or severance pay.

              3.4 "Board" means the Board of Directors of the Company.

              3.5 "Code" means the Internal Revenue Code of 1986, as amended
       from time to time.

              3.6 "Committee" means a Committee of the Board as contemplated by
       Section 5.

              3.7 "Company" means Steel Dynamics, Inc., an Indiana corporation,
       and its subsidiaries.

              3.8 "Distribution Pool" means, for any Year, an amount determined
       by multiplying [Adjusted Pre-Tax Net Income, minus an amount equal to ten
       percent (10%) of "Stockholders Equity" as determined by Company's audited
       Consolidated Balance Sheets] by six percent (6%).

              3.9 "Effective Date" has the meaning assigned to such term in
       Section 2.

              3.10 "Exchange Act" means the Securities Exchange Act of 1934, as
       amended from time to time.

              3.11 "Executive Officer" means an officer of the Company who is
       from time to time designated as an "Executive Officer" Participant by the
       Committee. Participant's status may be changed from year to year.



                                      -1-
<PAGE>   2


              3.12 "Fair Market Value" means, as of any date, the value of the
       Stock determined as follows:

                   (i) If the Stock is listed on any established stock exchange
          or a national market system, including without limitation the NASDAQ
          National Market of the National Association of Securities Dealers,
          Inc. Automated Quotation (NASDAQ) System, the Fair Market Value of a
          share of Stock shall be the closing sales price for such Stock (or the
          closing bid, if no sales were reported) as quoted on such system or
          exchange (or the exchange with the greatest volume of trading in the
          Stock) on the last market trading day prior to the day of
          determination, as reported in the Wall Street Journal or such other
          source as the Committee deems reliable;

                   (ii) If the Stock is quoted on the NASDAQ System (but not on
          the NASDAQ National Market thereof) or is regularly quoted by a
          recognized securities dealer but selling prices were not reported, the
          Fair Market Value of a share of Common Stock shall be the mean between
          the high bid and low asked prices for the Stock on the last market
          trading day prior to the day of determination, as reported in the Wall
          Street Journal or such other source as the Committee deems reliable;

                   (iii) In the absence of an established market for the Stock,
          the Fair Market Value shall be determined in good faith by the
          Committee.

              3.13 "Manager" means a manager of the Company who is from time to
       time designated as a "Manager" Participant by the Committee. A
       Participant's status may be changed from year to year.

              3.14 "Officer" means an officer of the Company who is from time to
       time designated as an "Officer" Participant by the Committee. A
       Participant's status may be changed from year to year.

              3.15 "Participant" means those Executive Officers, Officers and
       Managers selected from time to time to participate in the Plan by the
       Committee.

              3.16 "Participant's Adjusted Base Salary" (a) for purposes of the
       cash portion of the bonus described in Section 6.1, means, with respect
       to any Executive Officer who is a Participant, two (2) times the
       Executive Officer's Base Salary, with respect to an Officer who is a
       Participant, one and one-half (1 1/2) times the Officer's Base Salary,
       and, with respect to any Manager who is a Participant, the Manager's Base
       Salary, and (b) for purposes of the stock portion of the bonus described
       in Section 6.2, means, with respect to an Executive Officer, the
       Executive Officer's Base Salary, with respect to an Officer, seventy-five
       percent (75%) of the Officer's Base Salary, and, with respect to a
       Manager, fifty percent (50%) of the Manager's Base Salary.

              3.17 "Participant's Bonus Percentage" means, in any Year with
       respect to a Participant, a fraction, the numerator of which is equal to
       the Participant's Adjusted Base Salary and the denominator of which is
       equal to the sum of all the Participants' Adjusted Base Salaries,
       calculated separately for purposes of the separate bonus portions
       described in Sections 6.1 and 6.2.

              3.18 "Plan" means the Steel Dynamics, Inc. Amended and Restated
       Officer and Manager Cash and Stock Bonus Plan, as it may be further
       amended from time to time.

              3.19 "Restricted Stock" means Stock issued pursuant to the Plan as
       contemplated by Section 6.2.

              3.20 "Retirement" means voluntary retirement by a Participant who
       is at least 60 years old.



                                      -2-
<PAGE>   3


              3.21 "Stock" means the $0.01 par value common stock of the
       Company.


              3.22 "Ten Percent Return on Stockholders' Equity" means for any
       Year an amount determined by multiplying "Stockholder's Equity" as
       determined by the Company's audited Consolidated Balance Sheets by ten
       percent (10%).

              3.23 "Vested Shares" has the meaning assigned to such term in
       Section 7.

              3.24 "Year" means the Company's fiscal year, with the first Year
       beginning on January 1, 1997.

       4.     SHARES OF STOCK SUBJECT TO THE PLAN.

              4.1 The total number of shares of Stock of the Company reserved
       and available for distribution pursuant to the Plan shall not exceed, in
       the aggregate, 450,000 shares of the authorized Stock of the Company,
       subject to adjustment as described below.

              4.2 Stock which may be acquired under the Plan may be either
       authorized but unissued shares or shares of issued Stock held by the
       Company's treasury, or both, at the discretion of the Committee. Whenever
       any Stock is forfeited under the Plan, the shares forfeited may again be
       issued hereunder.

              4.3 In the event of any stock dividend, stock split, combination
       or exchange of shares, recapitalization or other change in the capital
       structure of the Company, corporate separation or division (including,
       but not limited to, split-up, split-off, spin-off or distribution to
       Company stockholders other than a normal cash dividend), sale by the
       Company of all or a substantial portion of its assets, rights offering,
       merger, consolidation, reorganization or partial or complete liquidation,
       or any other corporate transaction or event having an effect similar to
       any of the foregoing, the aggregate number of shares reserved for
       issuance under the Plan, as the Committee shall deem necessary or
       appropriate to reflect equitably the effects of such changes, shall be
       appropriately substituted for new shares or adjusted, as determined by
       the Committee in its discretion.

       5.     ADMINISTRATION. If appointed by the Board, the Plan shall be
administered by a committee of directors (the "Committee") of the Company,
consisting of at least two (2) members of the Board, each of whom shall be both
(i) a "non-employee director" as such term is defined in Rule 16b-3 promulgated
under Section 16 of the Exchange Act or any successor provision, and (ii) an
"outside director" as that term is used in Section 162 of the Code and the
regulations promulgated thereunder. In the absence of an appointment of a
Committee, however, the Board shall serve as the Committee.

       The Committee shall administer the Plan so as to comply at all times with
Rule 16b-3 of the Exchange Act, and Section 162(m) of the Code or any other
qualifying laws or rules that may be applicable from time to time. To the extent
that any provision hereof is found not to be in compliance with any such Rule or
requirement, the Committee shall have the full power and authority to effect
such changes or amendments, without the necessity of any further approval by
Shareholders. Subject to the foregoing, the Board may from time to time increase
the size of the Committee and appoint additional members, remove members (with
or without cause), substitute new members, and fill vacancies (however caused).
A majority of the members of the Committee shall constitute a quorum, and the
actions of a majority of the members of the Committee at a meeting at which a
quorum is present shall be the actions of the Committee.

       The Committee has the exclusive power, authority and discretion to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall from time to time deem advisable and to interpret the terms
and provisions of the Plan. The Committee may require that a Participant sign a
contract or agreement evidencing the terms and conditions of the Participant's
rights to receive a bonus under this Plan. The Committee's interpretation of the



                                      -3-
<PAGE>   4


Plan shall be final, binding and conclusive on all parties.

       The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any

computation received from any such consultant or agent. Expenses incurred by the
Committee in engaging such counsel, consultant or agent shall be paid by the
Company.

       The Committee shall have the right, in its sole discretion, to waive the
forfeiture provisions found in Section 7 below.

       6.     CASH AND STOCK BONUS. Subject to the terms, conditions and
limitations set forth in this Plan each Year, if the Distribution Pool is a
positive number, the Participants may receive a cash and stock bonus as follows:

              6.1 CASH BONUS. Each Participant shall receive a cash bonus in an
       amount equal to the product of (i) the Participant's Bonus Percentage and
       (ii) the Distribution Pool; provided, however, that with respect to an
       Executive Officer, the cash bonus shall not exceed two (2) times the
       Executive Officer's Base Salary, with respect to an Officer, the cash
       bonus shall not exceed one and one-half (1 1/2) times the Officer's Base
       Salary, and, with respect to a Manager, the cash bonus shall not exceed
       the Manager's Base Salary.

              6.2 STOCK BONUS. The excess of the Distribution Pool over the sum
       of the aggregate cash bonuses payable under Section 6.1 to all
       Participants (the "Adjusted Distribution Pool"), if any, shall be
       distributed to the Participants in the form of Restricted Stock, as
       follows: Each Participant shall receive that number of shares of
       Restricted Stock having, at the time of issuance, a Fair Market Value
       equal to the product of (i) the Participant's Bonus Percentage and (ii)
       the Adjusted Distribution Pool; provided that, with respect to an
       Executive Officer, the aggregate Fair Market Value of the Restricted
       Stock so issued shall not exceed the Executive Officer's Base Salary,
       with respect to an Officer, the aggregate Fair Market Value of the
       Restricted Stock so issued shall not exceed seventy-five percent (75%) of
       the Officer's Base Salary, and, with respect to a Manager, the aggregate
       Fair Market Value of the Restricted Stock so issued shall not exceed
       fifty percent (50%) of the Manager's Base Salary.

       7.     FORFEITURE AND VESTING OF RESTRICTED STOCK. Restricted Stock
issued to a Participant shall vest and become nonforfeitable as follows:
one-third (1/3) of the Restricted Stock shall vest immediately upon issuance, an
additional one-third (1/3) will vest one year later, and the balance will vest
on the second anniversary of the initial issuance date. Upon termination of the
Participant's employment for any reason other than Retirement, all shares of
Restricted Stock of the Participant which are not Vested Shares at the time of
termination of employment shall be forfeited and returned to the Company, and
the Participant shall no longer be the owner of or have any interest whatsoever
in the forfeitable Restricted Stock.

       The Committee, in its sole discretion, may waive the forfeiture
provisions of this Section 7 with respect to the Restricted Stock of a
Participant whose employment has terminated for reasons other than Retirement.

       8.     RESTRICTION ON TRANSFER OF RESTRICTED STOCK. Restricted Stock that
is forfeitable under the terms of this Plan may not be transferred, assigned,
sold, pledged, hypothecated, or otherwise disposed of in any manner and shall
not be subject to levy, attachment, or other legal process.

       9.     CERTIFICATES. Restricted Stock issued under this Plan shall be
registered in the name of each Participant. Stock certificates so issued shall
be held by the Company. Stock certificates shall bear such restrictive legends
as the Committee may prescribe.

      Subject to all the terms, conditions, and limitations of this Plan,



                                      -4-
<PAGE>   5


including provisions concerning forfeiture and restrictions on transfer, the
Participant shall be the owner of the Restricted Stock with full dividend and
voting rights. Upon the request of a Participant, separate stock certificates
shall be issued and delivered to the Participant with respect to Vested Shares.

       10.    GENERAL PROVISIONS.

              10.1 NONGUARANTY OF EMPLOYMENT. The adoption of the Plan shall not
       confer upon any Participant any right to continued employment with the
       Company nor shall it interfere in any way with the right of the Company
       to terminate its relationship with any Participant at any time.

              10.2 WITHHOLDING OF TAXES. No later than the date as of which an
       amount first becomes includible in the gross income of a Participant for
       federal income tax purposes with respect to any Restricted Stock under
       the Plan, the Participant shall pay to the Company or make arrangements
       satisfactory to the Committee regarding the payment of any federal state
       or local taxes of any kind required by law to be withheld with respect to
       such amount. The obligations of the Company under the Plan shall be
       conditioned on such payment or arrangements and the Company, to the
       extent permitted by law, shall have the right to deduct any such taxes
       from any payment of any kind otherwise due to the Participant.

              10.3 EXPENSES. The expenses of administering the Plan shall be
       borne by the Company.

              10.4 FRACTIONAL SHARES. No fractional shares of Stock shall be
       issued, and the Committee shall determine, in its discretion, whether
       cash shall be given in lieu of fractional shares or whether such
       fractional shares shall be eliminated by rounding up.

              10.5 GOVERNING LAW. To the extent not governed by federal law, the
       Plan shall be construed in accordance with and governed by the laws of
       the State of Indiana.

       IN WITNESS WHEREOF, Steel Dynamics, Inc., acting by and through its duly
authorized officers, has executed this instrument as of the 17th day of
February, 2000.



                                      -5-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.40
<SEQUENCE>3
<FILENAME>ex10-40.txt
<DESCRIPTION>NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<TEXT>

<PAGE>   1



                                                                   EXHIBIT 10.40


                              STEEL DYNAMICS, INC.

                     NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

       1.     PURPOSE. This Non-Qualified Stock Option Plan, to be known as the
Steel Dynamics, Inc. Non-Employee Director Stock Option Plan (the "Plan") is
intended to promote the interests of Steel Dynamics, Inc. (the "Company") by
providing an inducement to attract and retain the services of qualified persons
who are not employees or officers of the Company to serve as members of its
Board of Directors (the "Board") and by strengthening the mutuality of interests
between such directors and the Company's Stockholders.

       2.     AVAILABLE SHARES. The total number of shares of the Company's $.01
per share par value Common Stock (the "Common Stock") for which options may be
granted under this Plan shall not exceed 100,000 shares, subject to adjustment
in accordance with Section 10 of this Plan. Shares subject to this Plan may be
authorized but unissued shares or shares that were once issued and subsequently
reacquired by the Company. If any options granted under the Plan shall expire,
terminate or be canceled for any reason without having been exercised in full,
the number of unpurchased shares shall again become available for purposes of
the Plan.

       3.     ADMINISTRATION. This Plan shall be administered by the Board or by
a committee appointed by the Board (the "Committee"). In the event the Board
fails to appoint or refrains from appointing a Committee, the Board shall have
all power and authority to administer this Plan. In such event, the word
"Committee," wherever used herein, shall be deemed to mean the Board. Subject to
the provisions of the Plan, the Committee shall have the power to construe this
Plan, to determine all questions hereunder, to accelerate the vesting or
exercise of an option, and to adopt and amend such rules and regulations for the
administration of this Plan as it may deem desirable. The Committee may also
correct any defect, supply any omission, amend or conform the Plan to any change
in law or regulation, or reconcile any inconsistency or ambiguity in the Plan or
in any option in such manner and to the extent it shall deem necessary to carry
the Plan into effect as intended. No member of the Board or the Committee shall
be liable for any action or determination made in good faith with respect to
this Plan or any option granted under it. Any decision, interpretation or other
action made or taken in good faith by the Committee in accordance with this Plan
shall be final, binding and conclusive on the Company, all members of the Board
and Committee, if any, all optionees, and their respective heirs, executors,
administrators, successors and assigns.

       4.     AUTOMATIC GRANT OF OPTIONS. Subject to the availability of shares
under this Plan: (a) each person who is a member of the Board on the day
following the Company's 2000 Annual Meeting of Stockholders and who is not an
employee or officer of the Company (a "Non-Employee Director") and each person
who is a Non-Employee Director on November 15, 2000 (each an "Initial Grant
Date") shall be automatically granted an option to purchase Common Stock of the
Company on each such Initial Grant Date equal to the number of whole shares,
rounded up from .50 or down from .49, calculated by dividing a grant value of
$15,000 on each of the Initial Grant Dates by the fair market value of the
Company's Common Stock on each such date, and (b) each person who is a
Non-Employee Director on May 15 and on November 15 (each a "Grant Date") in each
year beginning on January 1, 2001 during the term of this Plan shall be
automatically granted on each such date a like option to purchase Common Stock
of the Company equal to the number of whole shares, rounded up or down as
previously described, calculated by dividing a grant value of $15,000, or such
other amount, whether higher or lower, as is specified from time to time for
"Grade 3 Supervisors/Professionals" under the Company's 1996 Incentive Stock
Option Plan (or, in lieu thereof, as may be specified from time to time by the
Committee), by the fair market value of the Company's Common Stock on each such
Grant Date. The number of shares covered by options granted under this Section 4
shall be subject to adjustment in accordance with the provisions of Section 10
of this Plan.



                                      -1-
<PAGE>   2


       5.     OPTION PRICE. The purchase price of the stock covered by options
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of Section 10 of this Plan. For
purposes of this Plan, "fair market value" shall be determined as of the last
trading day for which the prices or quotes for the Company's publicly traded
stock are available prior to the date such option is granted and shall mean (i)
the last reported sale price (on that
         29
date) of the Company's Common Stock on the Nasdaq National Market, if the Common
Stock is traded on that market; or (ii) the average (on that date) of the high
and low prices of the Company's Common Stock on the principal national
securities exchange on which the Common Stock is traded if it is in fact traded
on such an exchange; or (iii) the closing bid price (or average of bid prices)
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Company's Common Stock is not reported on
the Nasdaq National Market List.

       6.     PERIOD OF OPTION. Unless sooner terminated in accordance with the
provisions of Section 8 of this Plan, an option granted hereunder shall expire
on the date which is five (5) years after the date of grant of the option.

       7.     VESTING OF SHARES AND NON-TRANSFERABILITY OF OPTIONS.

              (a) VESTING. Options granted under this Plan shall not be
       exercisable until they become vested. Options granted under this Plan
       shall become fully vested in the optionee and thus become exercisable six
       (6) months after the date of grant.

              (b) NON-TRANSFERABILITY. Any option granted pursuant to this Plan
       shall not be assignable or transferable other than by will or the laws of
       descent and distribution, pursuant to a valid domestic relations order,
       or otherwise in accordance with the terms of the optionee's stock option
       agreement, and shall be exercisable during the optionee's lifetime only
       by him or her and then only in accordance with the provisions of the
       Securities Act of 1933 and the rules promulgated thereunder.

       8.     TERMINATION OF OPTION RIGHTS.

              (a) If an optionee ceases to be a director of the Company, for
       whatever reason, no further grants of options shall be made to that
       optionee pursuant to this Plan.

              (b) Subject to the provisions of Section 8(d) and except as may
       otherwise be specified in the option agreement, in the event that an
       optionee ceases to be a director for any reason other than death, any
       portion of an option which is then vested but has not been exercised at
       the time the optionee so ceases to be a director may be exercised by the
       optionee, to the extent it is then vested, at any time prior to the
       scheduled expiration date of the option.

              (c) Except as may be otherwise specified in the option agreement,
       in the event that an optionee ceases to be a director by reason of his or
       her death, any unexercised options shall be exercisable by the optionee's
       personal representative, heir or legatee at any time prior to the
       scheduled expiration date of the option.

              (d) Except as may be otherwise specified in the option agreement,
       no portion of an option may be exercised if the optionee is removed from
       the Board for any of the following reasons: (i) disloyalty, gross
       negligence, dishonesty or breach of fiduciary duty to the Company; (ii)
       the commission of an act of embezzlement, fraud or deliberate disregard
       of the rules or policies of the Company; or (iii) the unauthorized
       disclosure or misappropriation of any trade secret or confidential
       information of the Company.


                                      -2-
<PAGE>   3

       9.     EXERCISE OF OPTION.

              (a) Subject to the terms and conditions of this Plan and the
       option agreements, an option granted hereunder, to the extent then
       exercisable, shall be exercisable only for the full number of shares
       covered by that option, by giving written notice to the Company by mail
       or in person, at its principal executive offices, accompanied by payment
       in full for such shares in cash or by check in United States dollars.

              (b) Subject to the applicable requirements of the Securities and
       Exchange Commission, Regulation T, the Internal Revenue Code, and other
       federal, state and local tax and securities laws, and notwithstanding the
       requirements for cash payment set forth in Section 9(a) of this Plan, the
       Committee shall have the authority to determine any other methods, if
       any, by which the exercise price of an option may be paid by the
       optionee, including the form of payment and the methods by which shares
       of the Company's stock may be delivered or deemed to be delivered to the
       optionee. Likewise, the Committee, in the exercise of its discretion, may
       also allow an optionee to pay the exercise price of an option by
       delivering previously issued shares of the Company's Common Stock or by
       directing the Company to withhold from the shares of Common Stock that
       would otherwise be issued upon exercise of the option that number of
       shares having an fair market value on the exercise date equal to the
       exercise price, all as determined pursuant to rules and procedures
       established from time to time by the Committee.

              (c) An optionee shall not exercise an option at any one time as to
       fewer than five hundred (500) shares, or all of the remaining shares then
       purchasable by the person or persons exercising the option, if fewer than
       five hundred (500) shares.

              (d) The holder of an option shall not have any rights of a
       stockholder with respect to the shares covered by the option, except to
       the extent that shares shall have been actually issued and transferred to
       him or her upon the exercise of the option.

       10.    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION AND OTHER EVENTS. Upon
the occurrence of any of the following events, an optionee's rights with respect
to options granted to him or her hereunder shall be adjusted as hereinafter
provided:

              (a) STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common
       Stock shall be subdivided or combined into a greater or smaller number of
       shares or if the Company shall issue any shares of Common Stock as a
       stock dividend on its outstanding Common Stock, the number of shares of
       Common Stock deliverable upon the exercise of options shall be
       appropriately increased or decreased proportionately, and appropriate
       adjustments shall be made in the purchase price per share to reflect such
       subdivision, combination or stock dividend.

              (b) OTHER ADJUSTMENTS. In the event of a reorganization,
       recapitalization, merger, consolidation, or any other change in the
       corporate structure or shares of the Company, to the extent permitted by
       Rule 16b-3 under the Securities Exchange Act of 1934, there shall be an
       automatic adjustment in the number and kind of shares authorized by this
       Plan and in the option price of outstanding options under this Plan in
       such manner as will be necessary to maintain the proportionate interest
       of the optionee and to preserve, without exceeding, the value of such
       option.

              (c) OTHER ADJUSTMENTS. Upon the happening of any of the foregoing
       events, the class and aggregate number of shares set forth in Sections 2
       and 4 of this Plan that are subject to options shall also be
       appropriately adjusted to reflect such events, including the conversion
       of the underlying shares into another class of securities, into
       securities of another person, into cash or into other property. The Board
       shall determine the specific adjustments to be made under this Section 10
       and its determination shall be conclusive.



                                      -3-
<PAGE>   4


       11.    RESTRICTIONS ON ISSUANCE OF SHARES. Notwithstanding the provisions
of Sections 4 and 9 of this Plan, the Company shall have no obligation to
deliver any certificate or certificates or to cause the electronic transfer of
shares upon exercise of an option until one of the following conditions shall be
satisfied:

              (i) The issuance of the underlying shares with respect to which
       the option has been exercised is at the time of the issuance of such
       shares effectively registered under applicable federal and state
       securities laws as now in force or hereafter amended; or

              (ii) Counsel for the Company shall have rendered an opinion that
       the issuance of such shares is exempt from registration under applicable
       federal and state securities laws as now in force or hereafter amended;
       and the Company has complied with all applicable laws and regulations
       with respect thereto, including without limitation, all regulations
       required by the Nasdaq National Market or by any stock exchange upon
       which the Company's outstanding Common Stock is then listed.

       12.    LEGEND ON CERTIFICATES. The certificates representing shares
issued pursuant to the exercise of an option granted hereunder may, if
restricted, carry such appropriate legend, or appropriate restrictions may be
noted electronically, as may be deemed necessary or advisable by counsel to the
Company in order to comply with the requirements of the Securities Act of 1933
or any state securities laws.

       13.    OPTION AGREEMENT. Each option granted under the provisions of this
Plan shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with this Plan as may be determined by the Committee
or by its designee executing such option.

       14.    TERMINATION AND AMENDMENT OF PLAN. Options may no longer be
granted under this Plan after January 1, 2010, and this Plan shall terminate
when all options granted or to be granted hereunder are no longer outstanding.
The Board may at any time terminate this Plan or make such modification or
amendment thereof as it deems advisable. Subject to the provisions of Section
10, termination or any modification or amendment of this Plan shall not, without
consent of a participant, affect his or her rights under any option already
granted to him or her.

       15.    WITHHOLDING OF INCOME TAXES. Upon the exercise of an option, the
Company, in accordance with Section 3402(a) of the Internal Revenue Code, may
require the optionee to pay withholding taxes in respect of amounts considered
to be compensation includible in the optionee's gross income.

       16.    COMPLIANCE WITH REGULATIONS. It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor or amended provision thereof) and any applicable
Securities and Exchange Commission interpretations thereof. If any provision of
this Plan is deemed not to be in compliance with Rule 16b-3, the provision shall
be null and void and may be modified and corrected by the Committee without the
necessity of securing further stockholder approval.

       17.    NONQUALIFIED OPTIONS. All options granted under this Plan shall be
nonqualified stock options (i.e., options that do not qualify as "incentive
stock options" under Section 422 of the Internal Revenue Code).

       18.    NO RIGHT TO CONTINUE RELATIONSHIP. Neither the Plan nor the grant
of an option under the Plan shall confer upon any person any right to continue
as a director of the Company or to obligate the Company to nominate any director
for reelection by the Company's stockholders.

       19.    COSTS. The Company shall bear all expenses incurred in
administering



                                      -4-
<PAGE>   5


the Plan, including the expenses of issuing Common Stock upon the exercise of
options and of registering the same.

       20.    SEVERABILITY. If any part of this Plan shall be determined to be
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of this Plan, which shall
continue in full force and effect and may be adjusted, in the Committee's
discretion, so as to most closely approximate the original intent expressed
herein.

       21.    GOVERNING LAW. The validity and construction of this Plan and the
instruments evidencing options shall be governed by the laws of the State of
Indiana, without giving effect to the principles of conflicts of law thereof.

       22.    EFFECTIVE DATE. This Plan shall be effective as of the 1st day of
January, 2000, subject, however, to stockholder approval at the Company's annual
meeting of stockholders on May 18, 2000, or any adjournment thereof, or pursuant
to any special meeting of stockholders held thereafter but prior to December 31,
2000. In the event that such approval is not obtained, all option grants made
hereunder shall be deemed null and void and the Plan shall be deemed terminated
on the earlier to occur of stockholder nonapproval, if any, or December 31,
2000.



                                      -5-



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>4
<FILENAME>ex27-1.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5

<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               JUN-30-2000
<CASH>                                       9,677,092
<SECURITIES>                                         0
<RECEIVABLES>                              115,457,944
<ALLOWANCES>                                 1,555,382
<INVENTORY>                                131,731,954
<CURRENT-ASSETS>                           266,924,835
<PP&E>                                     906,278,868
<DEPRECIATION>                             131,640,999
<TOTAL-ASSETS>                           1,062,477,847
<CURRENT-LIABILITIES>                       80,375,402
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                       493,309
<OTHER-SE>                                 411,760,801
<TOTAL-LIABILITY-AND-EQUITY>             1,062,477,847
<SALES>                                    379,909,118
<TOTAL-REVENUES>                           379,909,118
<CGS>                                      283,955,720
<TOTAL-COSTS>                               28,780,550
<OTHER-EXPENSES>                             1,123,571
<LOSS-PROVISION>                               150,000
<INTEREST-EXPENSE>                           9,958,470
<INCOME-PRETAX>                             56,090,807
<INCOME-TAX>                                21,783,133
<INCOME-CONTINUING>                         34,307,674
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                34,307,674
<EPS-BASIC>                                        .72
<EPS-DILUTED>                                      .72


</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>5
<FILENAME>ex99-2.txt
<DESCRIPTION>LEGAL PROCEEDINGS - 1999 FORM 10-K ANNUAL REPORT
<TEXT>

<PAGE>   1


                                                                    EXHIBIT 99.2

ITEM 3. LEGAL PROCEEDINGS

We have been sued in a total of eight separate but related lawsuits, aggregating
approximately $240 million in claims (one of which is a duplicative filing) in
either state or federal courts in California, New York, New Jersey, Minnesota,
Connecticut and Illinois. The suits have been brought by various institutional
investors which purchased certain high risk notes or "junk bonds" issued in
March 1998 by two affiliates of Nakornthai Strip Mill Public Company, Limited,
or "NSM," a Thailand owner and operator of a steel mini-mill project. Our
president, Keith E. Busse, has also been named as a defendant in the New Jersey
and Connecticut (duplicative) cases. Under our company's bylaws and pursuant to
authorization of our board of directors, Mr. Busse is entitled to be indemnified
by us for any costs or expenses that he may incur, as well as in respect of any
judgments that may be rendered against him in connection with this litigation,
subject to applicable legal procedures required by the Securities and Exchange
Commission for submission of any such indemnity claim, if asserted, to a court
of appropriate jurisdiction for a determination of whether such indemnity claim
is against public policy as expressed in the Securities Act of 1933.

The purchases were part of a U.S. $452 million financing marketed and sold to
these and other institutional investors in a privately placed non-registered
offering, pursuant to the SEC's Regulation D, and then resold by NatWest Capital
Markets Limited, McDonald & Company Securities, Inc., PaineWebber Incorporated
and ECT Securities Corp. pursuant to SEC Rule 144A.

Although we were neither an issuer, a guarantor, a seller or an investment
banker with respect to these notes, did not draft any of the offering materials
in connection with the offering, were not listed as an expert, did not render
any reports or evaluations of NSM prior to the offering; and only had a
contractual relationship with the NSM mini-mill project--as a technical and
operational advisor and consultant from and after the close of the financing--we
have nonetheless been named as defendants on the basis of a variety of alleged
state or federal statutory and common law fraud and related claims that posit
that the plaintiffs were misled into purchasing and overpaying for the notes by
reason of various alleged misrepresentations or omissions in the offering
materials, or at one or more of the "road shows" in connection with the offering
(some of which were attended by Mr. Busse).

We deny any liability in connection with these cases, believe that we have ample
legal and factual defenses and will defend ourselves in each such case to the
limit of our ability. The eight pending lawsuits include Farallon Capital
Partners, LP, et al v. Gleacher & Co., Inc., et al filed in the Superior Court
of the State of California for the County of Los Angeles - Central District in
August 1999 as Case No. BC 215260 (involving a $33 million claim); Merrill Lynch
Global Allocation Fund, Inc., et al v. Natwest Finance, Inc., et al filed in the
Superior Court of New Jersey, Law Division - Middlesex County, as Case No.
MID-L-8457-99 in September 1999 (involving an $85 million claim), which also
names a number of individuals as defendants, including our president, Keith E.
Busse; a duplicative lawsuit covering approximately half of the claims in the
Merrill Lynch New Jersey lawsuit, filed in the Superior Court for the Judicial
District of Fairfield at Bridgeport, Connecticut, also in September 1999, under
the caption Turnberry Capital Partners, LP, et al v. Natwest Finance, Inc. et
al, which we anticipate will either be dismissed in its entirety or, if it
proceeds, would transfer $42 million of the Merrill Lynch claims to Turnberry
and would reduce the claim in the Merrill Lynch New Jersey litigation to $43
million; Zuri-Invest AG v. Nat West Finance, Inc., et al, filed in the United
States District Court for the District of Minnesota, Fourth Division, as Civil
File No. 99-CV-1452 DWF/AJB in September 1999 (involving an approximate $2
million claim); IDS Bond Fund, Inc., et al v. Gleacher Natwest, Inc., et al,
also filed in the United States District Court for the District of Minnesota,
Fourth Division, as Civil File No. 99-116 MJD/JGL (involving a $62 million
claim); Gabriel Capital, LP, et al v. Natwest Finance, Inc., et al, filed in the
United States District Court for the Southern District of New York in October
1999 as Cause No. 99-CV-10488 (SAS) (involving


<PAGE>   2


an approximate $15 million claim); Legg Mason Income Trust, Inc., et al v.
Gleacher & Co., Inc., et al, filed in October 1999 in the Superior Court of the
State of California for the County of Los Angeles - Central District as Case No.
BC 218294 (a $5 million claim); and Kemper High Yield Series - Kemper High Yield
Fund, et al v. Gleacher Natwest, Inc., et al, filed November 24, 1999 in the
Circuit Court of Cook County, Illinois as Cause No. 99L13363 (a $42 million
claim). There is also a peripheral lawsuit pending in the Court of Common Pleas
of Cuyahoga County (Cleveland) Ohio, as Case No. 385421, in which John W.
Schultes, the former president and chief executive officer of NSM, has sued both
McDonald and us for damages "in excess of $25,000," alleging that we bear
contractual responsibility for causing his termination of employment and that we
slandered his reputation. We deny that we have any liability to Mr. Schultes in
connection with this lawsuit.

In several unrelated matters, our Iron Dynamics subsidiary has brought several
lawsuits relating to the construction of its plant facility in Butler, Indiana:

In February 1999, we brought a lawsuit in the Superior Court of DeKalb County,
Indiana, against Taft Contracting Company, Inc. The complaint is for damages and
for a declaration of rights that a mechanic's lien for approximately $1.0
million filed in November 1998 by Taft, a former contractor working on the Iron
Dynamics plant construction project, is invalid and should be declared null and
void. The Taft lien covers alleged "extras," which Iron Dynamics contends are
unsupportable under the contract, and we consider the lien to be entirely
without merit. The lien was subsequently bonded and discharged.

Also, in January 2000, we brought a lawsuit in the United States District Court,
Northern District of Indiana, Fort Wayne Division, against Dover Conveyer, Inc.
The complaint is for damages and for a declaration that the iron ore, coal and
limestone conveying system manufactured by Dover does not comply with
contractual specifications. We seek an order requiring Dover to honor its
warranty and cure the defects. Dover has filed a counterclaim for damages
totaling approximately $200,000 for retainages and out-of-pocket expenses. Iron
Dynamics contends that Dover's counterclaim is entirely unsupportable under the
contract.






</TEXT>
</DOCUMENT>
</SUBMISSION>
