<SUBMISSION>
<ACCESSION-NUMBER>0000950123-03-003465
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>15
<PERIOD>20021231
<FILING-DATE>20030328
<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-K
<ACT>34
<FILE-NUMBER>000-21719
<FILM-NUMBER>03624461
</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>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>y84794e10vk.txt
<DESCRIPTION>STEEL DYNAMICS, INC.
<TEXT>
<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

|X|   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934 for the fiscal year ended December 31, 2002

||    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)

            INDIANA                                35-1929476
(State or other jurisdiction of         (IRS employer Identification No.)
incorporation or organization)

      6714 POINTE INVERNESS WAY,
      SUITE 200, FORT WAYNE, IN                    46804
 (Address of principal executive offices)        (Zip code)

       Registrant's telephone number, including area code: (260) 459-3553

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


     Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
            NONE                                         NONE

           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 ||

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2. Yes |X| No ||

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 28, 2002, was approximately, $485,988,953. Registrant had
no non-voting shares. For purposes of this calculation, shares of common stock
held by directors, officers and 5% stockholders known to the registrant have
been deemed to be owned by affiliates, but this should not be construed as an
admission that any such person possesses the power, direct or indirect, to
direct or cause the direction of the management or policies of the registrant or
that such person is controlled by or under common control with the registrant.

As of March 21, 2003, Registrant had outstanding 47,631,097 shares of Common
Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of registrant's definitive proxy statement referenced in Part III,
Items 10, 11 and 12 of this report, to be filed prior to April 30, 2003, which
are incorporated by reference herein.
<PAGE>
<TABLE>
                              STEEL DYNAMICS, INC.
<CAPTION>

                                TABLE OF CONTENTS

Part I                                                                                              Page
                                                                                                    ----

<S>                <C>                                                                              <C>
         Item 1.   Business........................................................................   2
         Item 2.   Properties......................................................................  32
         Item 3.   Legal Proceedings...............................................................  32
         Item 4.   Submission of Matters to a Vote of Security Holders ............................  33

Part II
         Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters...........  33
         Item 6.   Selected Financial Data.........................................................  34
         Item 7.   Management's Discussion and Analysis of Financial Condition
                      and Results of Operations....................................................  36
         Item 7A.  Quantitative and Qualitative Disclosures About Market Risk......................  43
         Item 8.   Consolidated Financial Statements...............................................  44
         Item 9.   Changes in and Disagreements with Accountants on
                      Accounting and Financial Disclosures.........................................  67

Part III
         Item 10.  Directors and Executive Officers of the Registrant..............................  67
         Item 11.  Executive Compensation..........................................................  67
         Item 12.  Security Ownership of Certain Beneficial Owners and Management..................  67
         Item 13   Certain Relationships and Related Transactions..................................  67
         Item 14.  Controls and Procedures.........................................................  68
         Item 15   Principal Accountant Fees and Services..........................................  69

Part IV
         Item 16.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K................  69
</TABLE>
<PAGE>
                                     PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      Throughout this report, or in other reports or registration statements
filed from time to time with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, or under the Securities Act of 1933, as well as
in documents we incorporate by reference or in press releases or oral statements
made by our officers or representatives, we may make statements that express our
opinions, expectations, or projections regarding future events or future
results, in contrast with statements that reflect historical facts. These
predictive statements, which we generally precede or accompany by such typical
conditional words as "anticipate," "intend," "believe," "estimate," "plan,"
"seek," "project" or "expect," or by the words "may," "will," or "should," are
intended to operate as "forward looking statements" of the kind permitted by the
Private Securities Litigation Reform Act of 1995, incorporated in Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act. That
legislation protects such predictive statements by creating a "safe harbor" from
liability in the event that a particular prediction does not turn out as
anticipated.

      While we always intend to express our best judgment when we make
statements about what we believe will occur in the future, and although we base
these statements on assumptions that we believe to be reasonable when made,
these forward looking statements are not a guarantee of performance, and you
should not place undue reliance on such statements. Forward looking statements
are subject to many uncertainties and other variable circumstances, many of
which are outside of our control, that could cause our actual results and
experience to differ materially from those we thought would occur.

      The following listing represents some, but not necessarily all, of the
factors that may cause actual results to differ from those anticipated or
predicted:

   -  cyclical changes in market supply and demand for steel; general
      economic conditions; U.S. or foreign trade policy or adverse
      outcomes of pending and future trade cases alleging unlawful
      practices in connection with steel imports or exports, including the
      repeal, lapse or exemptions, from existing U.S. tariffs on imported
      steel; and governmental monetary or fiscal policy in the U.S. and
      other major international economies;

   -  increased competition brought about by excess global steelmaking
      capacity, imports of low priced steel and consolidation in the
      domestic steel industry;

   -  risks and uncertainties involving new products or new technologies,
      such as our Iron Dynamics ironmaking process, in which the product
      or process or certain critical elements thereof may not work at all,
      may not work as well as expected, or may turn out to be uneconomic
      even if they do work;

   -  changes in the availability or cost of steel scrap, steel scrap
      substitute materials or other raw materials or supplies which we use
      in our production processes, as well as periodic fluctuations in the
      availability and cost of electricity, natural gas or other
      utilities;

   -  the occurrence of unanticipated equipment failures and plant outages
      or incurrence of extraordinary operating expenses;

   -  actions by our domestic and foreign competitors, including the
      addition of production capacity, the re-start of previously idled
      production capacity resulting from bankruptcy reorganizations or
      asset purchases out of bankruptcy;

   -  loss of business from one or more of our major customers or
      end-users;

   -  labor unrest, work stoppages and/or strikes involving our own
      workforce, those of our important suppliers or customers, or those
      affecting the steel industry in general;

   -  the effect of the elements upon our production or upon the
      production or needs of our important suppliers or customers;

   -  the impact of, or changes in, environmental laws or in the
      application of other legal or regulatory requirements upon our
      production processes or costs of production or upon those of our
      suppliers or customers, including actions by government agencies,
      such as the U.S. Environmental Protection Agency or the Indiana
      Department of Environmental Management, on pending or future
      environmentally related construction or operating permits;


                                 1
<PAGE>
   -  private or governmental liability claims or litigation, or the
      impact of any adverse outcome of any litigation on the adequacy of
      our reserves, the availability or adequacy of our insurance
      coverage, our financial well-being or our business and assets;

   -  changes in interest rates or other borrowing costs, or the effect of
      existing loan covenants or restrictions upon the cost or
      availability of credit to fund operations or take advantage of other
      business opportunities;

   -  changes in our business strategies or development plans which we may
      adopt or which may be brought about in response to actions by our
      suppliers or customers, and any difficulty or inability to
      successfully consummate or implement as planned any of our projects,
      acquisitions, joint ventures or strategic alliances; and

   -  the impact of regulatory or other governmental permits or approvals,
      litigation, construction delays, cost overruns, technology risk or
      operational complications upon our ability to complete, start-up or
      continue to profitably operate a project, an acquisition or a new
      business, or to operate it as anticipated.

      We also believe that you should read the many factors described in "Risk
Factors" to better understand the risks and uncertainties inherent in our
business or in owning our securities.

      Any forward looking statements which we make in this report or in any of
the documents that are incorporated by reference herein speak only as of the
date of such statement, and we undertake no ongoing obligation to update such
statements. Comparisons of results between current and any prior periods are not
intended to express any future trends or indications of future performance,
unless expressed as such, and should only be viewed as historical data.

ITEM 1. BUSINESS

OUR COMPANY

OVERVIEW

      We are a steel manufacturing company that owns and operates steel
mini-mills. We produce our steel principally from steel scrap, using electric
arc melting furnaces, continuous casting and automated rolling mills.

      During 2002, our sales were approximately $864 million and, at year-end,
we had 869 employees. None of our employees are represented by labor unions.

      BUTLER, INDIANA FLAT-ROLL MILL

      We own and operate a flat-roll mini-mill located in Butler, Indiana, which
produces sheet steel and which we built and have operated since 1996. This mill
has an annual production capacity of 2.2 million tons of flat-rolled steel,
although we actually produced 2.4 million tons during 2002. We produce a broad
range of high quality hot-rolled, cold-rolled and coated steel products,
including a large variety of high value-added and high margin specialty products
such as thinner gauge rolled products and galvanized products. We sell our
flat-rolled products directly to end-users, intermediate steel processors and
service centers primarily in the Midwestern United States. Our products are used
in numerous industry sectors, including the automotive, construction and
commercial industries.

      In May 2002, we announced plans to construct a new coating facility at our
Butler mini-mill, and we expect to complete this facility and to commence
coating operations in the middle of 2003. This $25 to $30 million facility will
have the capacity to coat approximately 240,000 tons of steel, which we plan to
provide through our Butler mill.

      In March 2003, we also purchased the assets of a coating facility formerly
owned by GalvPro II, LLC in Jeffersonville, Indiana for a purchase price of
$17.5 million plus a potential of an additional $1.5 million based on an
earn-out formula. We anticipate that this facility will be capable of producing
between 300,000 and 350,000 tons per year of light-gauge, hot-dipped cold-rolled
galvanized steel. We will operate this new facility as a part of our Butler,
Indiana Flat Roll Division, which we expect will also supply the Jeffersonville
plant with steel coils for coating. We expect to invest between approximately $2
and $6 million of additional capital for certain equipment modifications and
upgrades to the facility, and we anticipate that production will begin in
mid-2003. Our new Jeffersonville facility, together with our new coil-coating
facility in Butler, will enable us to further increase the mix of higher-margin
value-added downstream steel products. This value-added product mix, during
2002, was approximately 60% of our total flat-roll shipments.


                                       2
<PAGE>
      COLUMBIA CITY, INDIANA STRUCTURAL STEEL AND RAIL MILL

      We also own and operate a new structural steel and rail mini-mill in
Columbia City, Indiana. We began construction in May 2001, completed plant
construction in April 2002 and commenced commercial structural steel operations
during the third quarter of 2002. Our Columbia City mini-mill is designed to
have an annual production capacity of up to 1.3 million tons of structural steel
beams, pilings and other steel components for the construction, transportation
and industrial machinery markets, as well as standard and premium grade rails
for the railroad industry. Through regular product introductions and continued
production ramp-up of structural steel products, we have been able to begin to
offer a broad array of wide flange beams and H-piling structural steel products
during the first quarter of 2003. In addition, we performed casting trials for
the production of standard rail products during the first quarter of 2003,
expect to commence product trials during the second quarter of 2003, and plan to
begin shipping trial orders during the second half of 2003. These initial trial
orders will be used by railroad companies to be tested and monitored for product
qualification purposes. This qualification process may take between six and nine
months.

      PITTSBORO, INDIANA BAR MILL

      On September 6, 2002, we purchased the special bar quality mini-mill
assets in Pittsboro, Indiana formerly owned by Qualitech Steel SBQ LLC. We paid
$45 million for these assets and currently plan to invest between $70 to $75
million of additional capital to upgrade and modify the Pittsboro facility for
the production of angles, flats, rounds and other merchant bars and shapes, as
well as reinforcing bar, or rebar, products. We may also produce some special
bar quality products at this facility in the future. After completion of the
necessary plant modifications, as well as the issuance of the necessary
operational permits, we expect to begin steel production in the first quarter of
2004. After modification, we expect the Pittsboro facility to have a capacity of
approximately 500,000 to 600,000 tons per year.

      IRON DYNAMICS SCRAP SUBSTITUTE FACILITY

      On February 24, 2003, we announced plans to restart ironmaking operations
at our wholly-owned Iron Dynamics facility adjacent to our Butler, Indiana
mini-mill. Since 1997, we have tried to develop and commercialize a pioneering
process for the production of a virgin form of iron that could serve as a lower
cost substitute for a portion of the metallic raw material mix that goes into
our electric arc furnaces to be melted into new steel. Since initial start-up in
August 1999, we encountered a number of equipment, design and process
difficulties, and on several occasions during 1999 and 2000 shut the facility
down for redesign, re-engineering and retrofitting. In July 2001, we suspended
operations because of higher than expected start-up and process refinement
costs, high energy costs prevailing at that time, low production quantities, and
historically low steel scrap pricing existing at that time. These factors made
the cost of producing and using our Iron Dynamics scrap substitute as a source
of metallics for the melt mix at our flat-roll mini-mill higher than our cost of
purchasing and using steel scrap.

      We continued to make refinements to our systems and processes, and resumed
experimental production trials in the fourth quarter of 2002. After an
evaluation of these production trials, we concluded that improved production
technology, coupled with our new ability to recycle waste materials as a raw
material input, and the current high price of scrap, makes the restart of this
liquid pig iron production facility feasible. We expect that the Iron Dynamics
operation will restart during the second half of 2003 and, if the results of our
restart indicate that we will be able to produce liquid pig iron in sufficient
quantities and at a cost to be competitive with purchased pig iron, we could
begin commercial production in late 2003. We also anticipate that the use of
this liquid pig iron raw material will provide cost and operational benefits to
our Butler, Indiana steelmaking operations. We expect to invest approximately
$14 million of additional capital for modifications and refinements.

      NEW MILLENNIUM BUILDING SYSTEMS

      On February 27, 2003, we announced that we were increasing our ownership
in our consolidated New Millennium Building Systems subsidiary from our existing
46.6% ownership interest to 100%, through the acquisition of the 46.6% interest
in New Millennium previously held by New Process Steel Corporation, a privately
held Houston, Texas steel processor and our purchase of the remaining 6.8% stake
held by some of New Millennium's managers. We have consummated the 46.6% New
Process acquisition, at a cost of $3.5 million, plus the purchase of New Process
Steel's portion of New Millennium's subordinated notes payable, including
accrued interest, for $3.9 million. We plan to consummate the purchase of the
6.8% of minority interest shortly, for a purchase price of $900,000.

      The New Millennium facility, which began production in June of 2000,
produces steel building components, including joists, girders, trusses and steel
roof and floor decking, which we sell primarily in the upper Midwest
non-residential building components market. Our Butler flat-roll mill supplies a
majority of the hot-rolled steel utilized in New Millennium's manufacturing
operations.


                                       3
<PAGE>
      We were incorporated in August 1993, in Indiana, and maintain our
principal executive offices at 6714 Pointe Inverness Way, Suite 200, Fort Wayne,
Indiana 46804. Our telephone number is (260) 459-3553.

FINANCING

      In March 2002, we consummated a $350.0 million senior secured credit
agreement, consisting of a five year $75.0 million revolving credit facility, a
$70.0 million term A loan, with a term of five years, which we prepaid in
December 2002, and a $205.0 million term B loan, with a term of six years, of
which we prepaid $40.0 million. This senior secured facility is secured by liens
and mortgages on substantially all of our personal and real property assets and
by liens and mortgages on substantially all of the personal and real property
assets of our wholly-owned subsidiaries, which have also guaranteed our
obligations under that facility.

      Also in March 2002, we issued $200.0 million of 9 1/2% unsecured senior
notes due 2009.

      During December 2002 and January 2003, we issued $115.0 million of our 4%
convertible subordinated notes due 2012, in an offering exempt from registration
under the Securities Act of 1933. Pursuant to a registration rights agreement
between us and the initial purchasers of the notes, who resold the notes in
offerings exempt from registration under Rule 144A under the Securities Act, we
filed a registration statement on Form S-3 on March 7, 2003, to permit
registered resales by the selling securityholders of the notes and the
approximately 6,762,874 shares of common stock initially issuable upon
conversion of the notes. Approximately $110.0 million of the net proceeds from
this offering were used to prepay our senior secured term A loan and $40 million
of our senior secured term B loan in December 2002 and January 2003.

COMPETITIVE STRENGTHS

      We believe that we have the following competitive strengths:

      ONE OF THE LOWEST COST PRODUCERS IN THE UNITED STATES; STATE-OF-THE-ART
      FACILITIES

      We believe that our facilities are among the lowest-cost steel
manufacturing facilities in the United States. Operating profit per ton at our
facilities was $65, $23 and $74 in 2000, 2001 and 2002, respectively, which we
believe compares favorably with our competitors. Our low operating costs are
primarily a result of our efficient plant designs and operations, our high
productivity rate of between 0.3 to 0.4 man hours per ton at our Butler
mini-mill, low ongoing maintenance cost requirements and strategic locations
near supplies of our primary raw material, scrap steel.

      EXPERIENCED MANAGEMENT TEAM AND UNIQUE CORPORATE CULTURE

      Our senior management team is highly experienced and has a proven track
record in the steel industry, including pioneering the development of thin-slab
flat-rolled technology. Their objectives are closely aligned with our
stockholders through meaningful stock ownership positions and incentive
compensation programs. Our corporate culture is also unique for the steel
industry. We emphasize decentralized decision-making and have established
incentive compensation programs specifically designed to reward employee teams
for their efforts towards enhancing productivity, improving profitability and
controlling costs.

      DIVERSIFIED PRODUCT MIX

      Our current products include hot-rolled and cold-rolled steel products,
galvanized sheet products, light gauge steel products, structural steel and
rails, and joists and deck materials. We plan to broaden our offering of painted
and coated products when we commence production at our recently completed coil
coating facility in Butler and at our recently acquired Jeffersonville, Indiana
facility, and we intend to enter the merchant bar market with an array of
angles, flats, rounds, reinforcing bar and other shapes, as well as some
possible special bar quality products, when our newly acquired Pittsboro,
Indiana bar mill becomes operational. This diversified mix of products will
continue to allow us to access a broad range of end-user markets, serve a broad
customer base and mitigate our exposure to cyclical downturns in any one product
or end-user market.

      STRATEGIC GEOGRAPHIC LOCATIONS

      The strategic locations of our facilities near sources of scrap materials
and our customer base allow us to realize significant pricing advantages due to
freight savings for inbound scrap as well as for outbound steel products
destined for our customers. Our mini-mills are located in the Upper Midwest, a
region which we believe accounts for a majority of the total scrap produced in
the United States. Our new Jeffersonville, Indiana galvanizing facility, on the
Ohio River, will also provide us with expanded geographic reach to Southern
markets.


                                       4
<PAGE>
BUSINESS STRATEGY

      EXPAND PRODUCT OFFERINGS

      The completion of our Columbia City mini-mill and the commencement of
production of structural steel and rails at that facility, the completion of our
Butler coil coating facility and the expansion of production of coated products
as a result of that facility, as well as our recent acquisitions of the
Pittsboro, Indiana bar mill and the Jeffersonville, Indiana galvanizing
facility, are important steps in pursuing our strategy of product line
expansion. The Columbia City structural steel and rail mill is strategically
located to serve the Upper Midwest, Northeast and Canadian markets, which we
believe are attractive and under-served markets. Our strategy to expand our
flat-rolled steel product offerings is to focus on the production of high
value-added thinner gauge products, galvanized products and various coated
products. The margins on high value-added products typically exceed those of the
commodity grade and the number of producers that make them is more limited. Our
Pittsboro, Indiana bar mill is likewise strategically located to position
ourselves to cost-effectively serve our product markets. We will continue to
seek additional opportunities to further expand our range of high value-added
products through the expansion of existing facilities, Greenfield projects and
acquisitions of other steel manufacturers or steelmaking assets that may become
available through the continuing consolidation of the domestic steel industry.

      ENTER NEW GEOGRAPHIC MARKETS

      We may seek to enter new steel markets in strategic geographic locations
such as the Southeastern or Western United States that offer attractive growth
opportunities. Due to the ongoing restructuring of the domestic steel industry,
we believe there are attractive opportunities to grow our business
geographically either through acquisitions of existing assets or through
strategic partnerships and alliances. We may also consider growth opportunities
through greenfield projects, such as our Columbia City structural steel and rail
mill.

      CONTINUE TO MAINTAIN LOW PRODUCTION COSTS

      We are focused on continuing to maintain one of the lowest operating cost
structures in the North American steel industry based upon operating cost per
ton. We will continue to optimize the use of our equipment, enhance our
productivity and explore new technologies to further improve our unit cost of
production at each of our facilities.

      FOSTER ENTREPRENEURIAL CULTURE

      We intend to continue to foster our entrepreneurial corporate culture and
emphasize decentralized decision-making, while rewarding teamwork, innovation
and operating efficiency. We will also continue to focus on maintaining the
effectiveness of our incentive bonus-based plans that are designed to enhance
overall productivity and align the interests of our management and employees
with our stockholders.

RISK FACTORS

      Our profitability is subject to the risks described under "Risk Factors"
described elsewhere in this report. The following is a summary of some of the
most significant risks that may adversely affect our future financial
performance and our ability to effectively compete within our industry:

   -  excess imports of steel into the United States that depress U.S.
      steel prices;

   -  intense competition and excess global capacity in the steel industry
      that depress U.S. steel prices;

   -  changes to President Bush's Section 201 Order that may have the
      effect of increasing the level of imports of steel into the United
      States;

   -  reduction of demand for steel or downturn in the industries we
      serve, including the automotive industry;

   -  technology, market, operating and start-up risks associated with our
      Iron Dynamics scrap substitute project;

   -  inability to secure a stable supply of steel scrap;

   -  start-up and operating risks associated with our Columbia City
      structural steel and rail mini-mill;


                                       5
<PAGE>
   -  start-up and operating risks associated with the retrofitting of our
      Pittsboro, Indiana bar mill; and

   -  unexpected equipment failures that could lead to production
      curtailments or shutdowns.

For additional information on these factors and others, we refer you to "Risk
Factors."

INDUSTRY SEGMENTS

      Under Statement of Financial Accounting Standards No. 131 "Disclosures
About Segments of an Enterprise and Related Information," we operate in two
business segments: Steel Operations and Steel Scrap Substitute Operations.

AVAILABLE INFORMATION

      Our internet website address is http://www.steeldynamics.com. We make
available on our internet website, under "Investor Relations--SEC Filings," free
of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and amendments to those reports, as well as our Code
of Ethics for Principal Executive Officers and Senior Financial Officers, and
any amendments to or waivers of our Code of Ethics, filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act as soon as reasonably
practicable after such materials are electronically filed with, or furnished to,
the SEC.

OUR BUSINESS

OUR OPERATIONS

      BUTLER FLAT-ROLL MINI-MILL

      Our Butler flat-roll steel mini-mill manufactures hot-rolled, cold-rolled
and coated steel products. It currently has an annual capacity of 2.2 million
tons, although during 2002 we actually produced approximately 2.4 million tons.
We commenced construction of our Butler mini-mill in October 1994 and began
production of commercial quality steel in January 1996 with an initial annual
capacity of 1.4 million tons. At the end of 1997, we completed construction of a
cold finishing mill contiguous to our Butler hot mill with an annual capacity of
1.0 million tons. In July 1998, we completed construction, installation and
start-up of a second twin-shell melting furnace battery, thin-slab caster,
tunnel furnace and coiler, thus increasing our mini-mill's annual production
capacity to its current level of 2.2 million tons. This additional production
capacity of hot-rolled steel also enables us to take full advantage of the 1.0
million ton rolling and finishing capacity of our cold mill. Our products are
characterized by high quality surface characteristics, precise tolerances and
light gauge. In addition, our Butler mini-mill was one of the first U.S.
flat-roll mini-mills to achieve ISO 9002 and QS 9000 certifications. We believe
that these certifications have enabled us to serve a broader range of customers
and end-users which historically have been almost exclusively served by
integrated steel producers.

      The Hot Mill

      Our hot-rolled mini-mill's electric arc furnace melting process begins
with the charging of a furnace vessel with scrap steel, carbon and lime, or with
a combination of scrap and a scrap substitute or alternative iron product. The
furnace vessel's top is swung into place, electrodes are lowered into the
furnace vessel through holes in the top of the furnace, and electricity is
applied to melt the scrap. The liquid pig iron or hot briquetted iron that we
expect our Iron Dynamics subsidiary to begin producing toward the end of 2003
are examples of scrap substitutes that would be introduced directly into the
melt mix at this stage.

      We have two Fuchs twin-shell electric arc melting furnaces, designed to
substantially reduce both power-off time and tap-to-tap time (the length of time
between successive melting cycles or heats). When melting is being done in one
vessel, we can tap the other vessel and refill it with scrap and steel scrap
substitute to make it ready for the next melt. This results in more heats and
greater productivity per shift. An additional advantage of our twin-shell design
is that if there is a maintenance problem requiring work on one vessel, melting
can proceed in the other vessel without interruption.

      After exiting the furnaces, the liquid steel is transported in a ladle by
overhead crane to an area commonly known as the ladle metallurgy station. At
each metallurgy station, the steel is kept in a molten state while metallurgical
testing, refining, alloying and desulfurizing takes place. We have three
separate ladle metallurgy stations consisting of three furnaces and two
desulfurization stations. Having a separate metallurgy station apart from the
furnaces allows us to maximize the time that the furnaces can be used for
melting scrap.


                                       6
<PAGE>
      The liquid steel is then transported to one of our two continuous
thin-slab casters where it is emptied into a tundish, or reservoir. This
reservoir controls the flow of the liquid steel into a water-cooled copper-lined
mold from which it then exits as an externally solid slab. Our casters were
built by SMS Schloemann-Siemag AG. We have also designed a special nozzle, which
transfers the liquid steel from the reservoir into the mold, that results in
increased productivity and product quality. The slab from the continuous caster
is less than two-inches thick and proceeds directly into one of our two tunnel
furnaces. The tunnel furnaces maintain and equalize the slab's temperature. The
slab leaves the tunnel furnace and is descaled to remove surface scale prior to
its rolling.

      In the hot-rolling operation, the slab is progressively reduced in
thickness. Our hot-rolling mill consists of a seven-stand rolling mill built by
SMS Schloemann-Siemag AG. The mill is equipped with the latest electronic and
hydraulic controls to control such things as gauge, shape, profile and exit
speeds of the steel strip as it moves along the run-out table to help prevent
thinner steel strip from cobbling. The seventh rolling stand which we added
allows us to further roll our sheet steel to even thinner gauges, down to 1.0
mm, with excellent surface quality, and enables us to access markets previously
available only to more costly cold finished material.

      After exiting the hot-rolling mill, the rolled sheet steel is cooled and
wound into coils. The coil form allows the strip to be easily handled and
transported. We sell a portion of our hot band coil production directly to
end-users or to intermediate steel processors or service centers, where they may
be pickled, cold-rolled, annealed, tempered or galvanized. The rest of our hot
band coil production is directed to our cold mill where we add value to this
product through our own pickling, cold-rolling, annealing, tempering or
galvanizing processes, including the additional coating capacity provided by our
recently completed paint line. We will also supply our new Jeffersonville,
Indiana galvanizing facility with material.

      Throughout the hot-rolling process, laser optical measuring equipment and
multiple x-ray devices measure all strip dimensions, allowing adjustments to
occur continuously and providing feedback information to the mill process
controls and computers. The entire production process is monitored and
controlled by both business and process computers. Production schedules are
created based on order input information and transmitted to the mill computers
by the plant business system. As the material is processed, operating and
quality data are gathered and stored for analysis of operating performance and
for documentation of product parameters to the customer. The system then
coordinates and monitors the shipping process and prints all relevant paper work
for shipping when the coil leaves the plant.

      The Cold Mill

      Our cold mill is located adjacent to our hot mill and produces products
that require gauges, properties or surfaces that cannot be achieved in our hot
mill. Cold-rolled sheet is hot-rolled sheet that has been further processed
through a continuous pickle line and then successively passed through a rolling
mill without reheating until the desired gauge and other physical properties
have been achieved. Cold-rolling reduces gauge, hardens the steel and, when
further processed through an annealing furnace and temper mill, improves
uniformity, ductility and formability. Cold-rolling can also add a variety of
finishes and textures to the surface of the steel.

      Our cold-rolled mill process begins with hot-rolled product from our
hot-rolling mill entering our continuous pickle line. At the entry end of the
continuous pickle line, we have two reels to unwind coils and a welder to join
the coils together. We unwind the coils on alternate reels and attach them end
to end by the welder, creating a continuous strip through the pickle tanks. The
center section of the 700-foot pickle line consists of a scale breaker/tension
leveler, pickling tanks where the strip moves through a bath of hydrochloric
acid that thoroughly cleans the strip in preparation for galvanizing and rolling
operations, and rinse tanks. At the delivery end of the line there is a reel for
recoiling the pickled product. After recoiling, each coil is stored in a central
coil storage area. The design of the continuous pickle line allows for the
production of a wide combination of gauges and widths on the light gauge steel
supplied by the hot mill.

      From the central coil storage area, we move our coils in one of three
directions. We can (1) ship pickled and oiled coils directly to customers from
the continuous pickle line as finished product; (2) immediately galvanize some
coils on the hot-rolled galvanizing line which is then sold as finished product;
or (3) process coils through our cold-reversing mill.

      Pickled and oiled coils that are not intended for immediate shipment or
hot-rolled galvanizing are processed in our cold reversing mill. Our cold
reversing mill was built by SMS Schloemann-Siemag AG and is one of only two
semi-tandem two-stand reversing cold-rolling operations in the world. This
configuration provides considerably higher throughput than a conventional
single-stand reversing mill, yet also takes advantage of considerably lower
equipment costs than the conventional four to six-stand tandem cold-rolling
mill. The rolling mill is configured with multiple x-ray gauges, hydraulic
bending systems, rolling solution controls, gauge controls and strip flatness
controls used to produce an extremely high level of product quality parameters.
The cold-rolling mill also uses a process control computer using sophisticated
mathematical models to optimize both quality and throughput.


                                       7
<PAGE>
      Product that exits the cold reversing mill can then be shipped as finished
product, transported to our cold-rolled galvanizing line or transported to our
batch annealing furnaces. In the cold-rolled galvanizing line, cold-rolled coils
are heated in an annealing furnace and coated while still hot in a pot of molten
zinc. As the coil leaves the pot, various coating controls ensure that the
product matches the customer's requirements. The coils are then shipped as
finished product. The cold-rolled galvanizing line and the hot-rolled
galvanizing line are very similar, but the cold-rolled galvanizing line has a
more elaborate and larger strip heating furnace that is required to anneal
cold-rolled product. We designed our continuous pickle line and the two
galvanizing lines concurrently and procured the equipment from the same
manufacturer. As a result, the equipment of our three lines share a commonality
of parts and we have been able to realize a high degree of flexibility and cost
savings in the management of our spare parts.

      Cold-rolled coils that do not require galvanizing proceed to our batch
annealing furnaces. The batch annealing furnaces heat and then cool the coils in
a controlled manner to reduce the hardness of the steel that is created in the
cold-rolling process. The batch annealing furnaces heat the steel in a hydrogen
environment that optimizes the efficiency of the heating process and produces a
product that is superior to conventional batch annealing with regard to
cleanliness and uniform metallurgical characteristics. Computer models determine
and control the heating and cooling the coils based on current knowledge of heat
transfers and steel characteristics.

      Coils from the annealing furnaces are then temper-rolled and shipped as
finished product. The temper mill consists of a single stand four-high rolling
mill designed for relatively light reduction of the product. The temper mill
introduces a small amount of hardness into the product and further enhances the
overall flatness and surface quality of the product. The temper mill also has an
x-ray gauge to monitor strip thickness. This mill was purchased concurrently
with the two-stand cold-rolling mill from SMS Schloemann-Siemag AG, enabling us
to realize a high degree of flexibility and cost savings with regard to
management of spare parts.

      As with our hot mill, our cold mill is linked by means of business and
process computers. We expanded our computer systems to comprehend order entry of
the additional cold mill products, and we accomplish all of our line scheduling
in the computer systems through schedules transmitted to the appropriate process
related computers. We collect operating and quality data for analysis and
quality control purposes, and for reporting product data to customers.

      Our New On-Site Coating Facility

      Our new $25 to 30 million on-site paint line expansion, located
immediately adjacent to our existing cold mill building, will be completed in
August 2003 and will have a coating capacity of 240,000 tons per year, in gauges
from .010 to .070 inches and in widths ranging from 36 to 64 inches. The paint
line will receive material directly from our other processing lines and will be
capable of painting hot rolled galvanized coil, cold rolled coil and cold rolled
galvanized coil. The line incorporates state-of-the-art coil coating equipment
with quick color change capability, in-line tension leveling, direct heat
catenary ovens and a thermal recuperative oxidizer.

      We believe that we will be the only mill in North America with an on-site
paint line, which should not only enable us to realize substantial savings in
overhead, maintenance, engineering, sales and marketing, capital cost and
infrastructure, but will eliminate the typical cost of transfer freight,
approximately $10-15 per ton, that a customer must otherwise pay to transport
coils to other remote coating facilities. These advantages will further enable
us to continue to be a low cost supplier of coated products. The addition of our
new paint line further expands our high margin value added product offerings, as
we previously sent approximately 10,000 tons per month of our product to other
companies for coating.

      OUR NEW JEFFERSONVILLE, INDIANA GALVANIZING FACILITY

      Our new Jeffersonville, Indiana cold rolled galvanizing facility, which we
purchased in March 2003 from GalvPro II, LLC, for $17.5 million plus up to an
additional $1.5 million based on an earn-out formula, is located within the
Clark Maritime Center on the Ohio River. The galvanizing line has a capacity of
between 300,000 and 350,000 tons per year and is capable of coating cold rolled
steel in gauges from .008 to .045 inches and in widths between 24 and 60 inches.
This gauge range is lighter than that available from our Butler facility and
will, therefore, create a further expansion of our value added product
offerings, particularly in the light gauge building products arena.

      The galvanizing line was built in 1999, has been well maintained and is
almost identical to the cold rolled galvanizing line at our Butler mill. This
familiarity will help us facilitate a rapid start-up, once we complete our
previously announced equipment modifications and upgrades to the facility, at a
cost of between $2 and $6 million, and we anticipate that production will be
able to begin in mid-2003. This facility will enable us to continue to serve
existing cold rolled galvanized customers, whose needs we


                                       8
<PAGE>
might have otherwise been unable to meet. The Ohio River location of this
facility will also create opportunities for market expansion into other
geographic regions. Our Butler cold mill will provide the new Jeffersonville
facility with cold rolled material.

      COLUMBIA CITY STRUCTURAL STEEL AND RAIL MINI-MILL

      We began construction of our new structural steel and rail mini-mill in
Columbia City, Indiana in May 2001, completed plant construction in April 2002
and commenced commercial structural steel operations during the third quarter of
2002. Our Columbia City mini-mill is designed to have an annual production
capacity of up to 1.3 million tons of structural steel beams, pilings and other
steel components for the construction, transportation and industrial machinery
markets, as well as standard and premium grade rails for the railroad industry.
Through regular product introductions and continued production ramp-up of
structural steel products, we have been able to continuously broaden our
complement of wide flange beams and H-piling structural steel products through
the first quarter of 2003. In addition, we expect to begin production of
standard rail products during the second quarter of 2003. Initial rail
production will be used in a testing capacity to be monitored by individual
railroad companies for product qualification purposes. This qualification
process may take between six and nine months. We spent approximately $315
million, excluding capitalized interest costs, on this facility.

      Mill Operation

      Our structural steel and rail mini-mill melts scrap and scrap substitutes
in an electric arc furnace much the same way as in our flat-roll mini-mill. We
use a single shell furnace but have purchased and installed a second furnace,
which provides us with back-up melting capability in case of a furnace breakdown
or during one of our periodic maintenance outages. At present, our operating
permit only enables us to use one furnace at a time. While we plan to use 100%
scrap as the primary raw material, the system is also configured to accept
liquid pig iron should we eventually determine that it is cost effective to
place an Iron Dynamics module at the Columbia City plant site. The furnace was
built by SMS Demag AG and includes features that permit us to employ more
thermally efficient melting practices. The furnace features a removable shell
that enables us to do off-line repair and refractory relining, comes equipped
with a unique quick-change roof configuration, and also features a fast tap hole
tube change configuration that shortens the time required for periodic
replacement.

      From the furnace the molten metal is transported to a separate ladle
metallurgy furnace where, as in the flat-roll mini-mill, we adjust the mix for
temperature and chemistry. We then take the liquid steel to a continuous caster,
where, unlike our Butler mini-mill that produces a single strand of flat stock,
our structural steel caster casts three strands, expandable to four, of blooms
and beam blanks. The caster utilizes a curved mold that produces five sizes of
material--one bloom, which is rectangular shaped, and four beam blanks, which
are dog bone shaped, in varying lengths of 17-48 feet. The caster design
accommodates a quick-change tundish nozzle system designed to optimize the
continuous casting process and to achieve a low operational cost per ton. The
tundish bottoms are also designed to change from a bloom opening to any of four
beam blank sizes to allow greater flexibility in product choice. The caster was
built by SMS Concast.

      After exiting the mold, the multiple strands continue through a series of
sprays and roller supports to precisely cool and contain the cast shapes.
Straightener rolls then unbend the curved strands onto a horizontal pass-line,
where they are cut to length by automatic torches. We then weigh the cast pieces
and transport them either directly through a reheat furnace, built by A.C.
Leadbetter, to a hot-rolling mill, or into a storage area for rolling at a later
time. In the hot-rolling mill, the product passes through a breakdown stand
where it is rolled into either a structural steel product or a rail product,
depending on the roll-configuration and number of passes. The product is then
transferred to a 3-stand tandem mill, which consists of a universal rougher, an
edger and a universal finisher. The hot-rolling mill is an advanced four-stand,
all reversing mill built by SMS Demag AG. The mini-mill is capable of producing
wide flange beams from 6" x 4" to 36" x 12", standard beams, piling sections,
M-shape sections, sheet piling, channels, car building shapes, bulb angles and
zee's and rail sections.

      Downstream of the hot-rolling mill, a hot saw cuts the structural steel to
a maximum 246-foot length before it enters a cooling bed. After cooling, the
structural steel product is straightened on a roller straightener and cut to
length as required by a particular order. The product is then piled and bundled
and shipped as finished product.

      For the production of rail products, we have fitted our caster with new
molds and segments to cast the new 13" x 10" blooms required for rail
production. We have also added electro magnetic stirring within the caster to
improve surface quality and reduce internal cracking. The reheat furnace, which
heats the blooms to the proper rolling temperature, is also fitted with
automation changes for the charging and discharging machines. We also operate
additional descaling equipment prior to the rolling process, as well as a rail
stamper and manipulator. Both vertical and horizontal straighteners are used to
produce a rail that is true along all axes. After straightening, the rail
product is tested, cut to length and drilled. In our testing center, we provide
ultrasonic testing for the detection of internal defects, an eddy current
machine to spot surface cracks, a profile gauge for dimensional accuracy, and a
straightness/waviness measurement machine. We are also in the process of
installing additional cooling and


                                       9
<PAGE>
handling equipment to manufacture highly desirable 320-foot rail lengths, which
no one else produces in or imports into the U.S. or Canadian rail markets.

      IRON DYNAMICS STEEL SCRAP SUBSTITUTE FACILITY

      Since 1997, Iron Dynamics has tried to develop and commercialize a
pioneering process of producing a virgin form of iron that might serve as a
lower cost substitute for a portion of the metallic raw material mix that goes
into our electric arc furnaces to be melted into new steel. Historically, the
price of steel scrap, as a commodity, has tended to be volatile, rising and
falling with supply and demand and not always in lock step with or in proportion
to the market price of new steel. Therefore, having a lower cost alternative
source of virgin iron for a portion of a mini-mill's melt mix, if realizable,
would partially buffer some of the effects of scrap price volatility. With the
growing proportion of electric furnace steelmaking, both worldwide and
domestically, we believe that the benefits of developing a cost-effective
alternate iron source to augment scrap, our primary raw material, makes good
economic sense in the long run.

      We initially funded our Iron Dynamics subsidiary with a $30 million equity
investment. Iron Dynamics also secured a $65 million bank credit facility. Iron
Dynamics established a plant site contiguous to and partially within our Butler,
Indiana plant campus, and in October 1997 began construction of a facility for
the production of direct reduced iron and liquid pig iron.

      Direct reduced iron is a metallic product made from iron ore or iron ore
"fines" that have been treated in a "direct reduction" furnace, such as a rotary
hearth furnace, with either natural gas or coal to reduce the iron oxide to
metallic iron. The method selected by Iron Dynamics is one that uses coal as the
reducing agent. Liquid pig iron, the ultimate end product intended to be
produced by Iron Dynamics, is a pure metal product produced by smelting the
direct reduced iron in a submerged arc furnace. Our Iron Dynamics facility was
designed and built for the production of direct reduced iron and its conversion
into liquid pig iron. We planned to use all of Iron Dynamics' liquid pig iron in
our own steelmaking operations at Butler.

      The plant commenced initial start-up in August 1999. During this
preliminary start-up, however, we encountered a number of equipment and design
deficiencies, which required Iron Dynamics to undertake some costly and
time-consuming redesign, re-engineering and equipment replacement work and to
operate this new facility at greatly reduced output levels. A design and
retrofit program began in late 1999 and continued throughout 2000. In July 2000,
Iron Dynamics suspended operations to effect certain pre-planned repairs,
including the installation of a new submerged arc furnace and a number of
additional capital projects, including the installation of two hot briquetters,
a new off-gas system for the submerged arc furnace, a sludge reclamation system,
and a hot pan conveyance system. In March 2001, Iron Dynamics restarted the
facility. However, in July 2001, we suspended operations because of higher than
expected start-up and process refinement costs, then high prevailing energy
costs, low production quantities and historically low steel scrap pricing at
that time. These factors made the cost of producing and using Iron Dynamics'
scrap substitute product at our flat-roll mini-mill higher than the cost of
purchasing and using steel scrap.

      We continued to make refinements to our systems and processes,
notwithstanding the shut-down, and began experimental production trials again
during the fourth quarter of 2002. After an evaluation of these production
trials, we concluded that the improved production technology, coupled with our
ability to recycle waste materials as part of our raw material mix, and the
current high price of scrap, makes the restart and operation of this liquid pig
iron production facility feasible. Accordingly, on February 24, 2003, we
announced that we plan to restart ironmaking operations at Iron Dynamics and
currently expect that the Iron Dynamics facility will restart during the second
half of 2003. If the results of our restart indicate that we will be able to
produce liquid pig iron in sufficient quantities and at a cost to be competitive
with purchased pig iron, we could begin commercial production in late 2003. We
also anticipate that the use of this liquid pig iron raw material will produce
cost and operational benefits for our Butler, Indiana steelmaking operations. We
expect to invest an additional $14 million into further modifications and
refinements, including the installation of three additional briquetting machines
in the facility, which will enable us to stockpile iron briquettes after
reduction in the rotary hearth furnace, as well as to introduce the hot
briquettes directly into our submerged arc furnace if we wish to do so. After
the briquettes are liquefied, the hot liquid pig iron will be transferred in
ladles to the flat-roll mill's meltshop and combined with scrap steel in the
mill's electric arc furnaces.

      As of December 31, 2002, our equity investment in the Iron Dynamics
project was $160 million.

      OUR PITTSBORO, INDIANA BAR MILL

      We purchased our Pittsboro, Indiana bar mini-mill from Qualitech Steel SBQ
LLC in September 2002, and we are planning to upgrade and retrofit the mill so
that it will be capable of producing a broad array of merchant bars and shapes
and reinforcing bar products, as well special bar quality, or SBQ, products. The
mill was originally constructed in 1997 as an SBQ mill and consists generally of
a 100 ton single shell AC melting furnace by SMS Demag, a three strand SMS Demag
continuous caster capable of casting both a 7" x 7" billet and a 14" x 10"
bloom, a reheat furnace, and a rolling mill consisting of a Pomini roughing


                                       10
<PAGE>
mill and intermediate mill, and Kocks reducing and sizing blocks used in the
production of SBQ rounds. The meltshop is also equipped with a separate ladle
metallurgy facility, or LMF, where metallurgical testing, refining, alloying and
desulfurizing takes place, and a vacuum tank degasser, which is used to degas
steel to produce ultra low carbon and ultra high purity products.

      We are currently reviewing proposals for the addition of an eight stand
finishing mill, together with ancillary equipment such as abrasive saws, shears,
a straightener and magnetic stacking equipment, which will enable us to produce
merchant bars and shapes, as well as reinforcing bar products.

      After completion of the necessary plant modifications and the issuance of
the necessary operating permits, we anticipate that steel production will
commence during the first quarter of 2004. We expect that the Pittsboro facility
will have a capacity of approximately 500,000 to 600,000 tons per year.

      NEW MILLENNIUM FACILITY

      In February 2003, we increased our ownership percentage in our
consolidated New Millennium Building Systems subsidiary from our pre-existing
46.6% ownership interest to 93.2%, through our acquisition of the 46.6% interest
in New Millennium previously held by New Process Steel Corporation, a privately
held Houston, Texas steel processor. We also announced that we are acquiring the
remaining 6.8% stake currently owned by certain New Millennium management
employees, and consummated this remaining purchase during the first quarter of
2003. After completion of the final purchase, and including our original
investment, we will have invested approximately $13 million in our New
Millennium subsidiary.

      New Millennium produces steel building components for the construction
industry, including joists, girders, trusses and steel roof and floor decking.
These products are sold primarily in the Upper Midwest non-residential building
components market. Our Butler flat-roll mill supplies a majority of the
hot-rolled steel utilized in New Millennium's manufacturing operations.

      New Millennium began construction of its Butler, Indiana facility in
December 1999 and substantially completed it in the second quarter of 2000, at a
total capital cost of approximately $23 million.

PRODUCTS AND CUSTOMERS

      BUTLER FLAT-ROLL MINI-MILL

      Products. Our Butler mini-mill produces hot-rolled products that include a
variety of high quality mild and medium carbon and high strength low alloy
hot-rolled bands in 40 inch to 62 inch widths and in thicknesses from .500 inch
down to .080 inch. We also produce an array of lighter gauge hot-rolled
products, ranging in thickness from .080 inch and thinner, including high
strength low alloy 80,000 minimum yield and medium carbon steels made possible
by the addition of our seventh hot-rolling stand. These products are suitable
for automobile, truck, trailer and recreational vehicle parts and components,
mechanical and structural steel tubing, gas and fluid transmission piping, metal
building systems, rail cars, ships, barges, and other marine equipment,
agricultural equipment and farm implements, lawn, garden, and recreation
equipment, industrial machinery and shipping containers.

      We believe that our basic production hot band material has shape
characteristics that exceed those of the other thin-slab flat-roll mini-mills
and compares favorably with those of the integrated mills. In addition, as a
result of our lighter gauge hot-rolling capabilities, we are now able to produce
hot-rolled hot-dipped galvanized and galvannealed steel products. These products
are capable of replacing products that have traditionally only been available as
more costly cold-rolled galvanized or cold-rolled galvannealed steel. During
2001 and 2002, we produced 751,000 tons and 849,000 tons of these lighter gauge
hot-rolled products, respectively. Our new Jeffersonville, Indiana galvanizing
facility will also further enable us to add to our mix of higher margin value
added products through our ability to coat additional material that would
otherwise not be coated due to the galvanizing capacity limitations at our
Butler mill. During 2002, approximately 60% of our flat-roll shipments consisted
of value-added products.

      In our cold mill, we also produce hot-rolled pickled and oiled, hot-rolled
hot dipped galvanized, hot-rolled galvannealed, cold-rolled hot dipped
galvanized, cold-rolled galvannealed and fully processed cold-rolled sheet. Our
new paint line will paint hot rolled galvanized coil, cold rolled coil and cold
rolled galvanized coil in gauges from .010 to .070 inches and widths ranging
from 36 inches to 64 inches. This material will typically be used in
transportation products, building products such as raised garage door panels,
heating and cooling products, appliances, furniture and lighting equipment.


                                       11
<PAGE>
      Customers. The following tables show information about the types of
products we produced and the types of customers we sold to in 2001 and 2002:

<TABLE>
<CAPTION>
                                                           2001   2002
                                                           ----   ----
<S>                                                        <C>    <C>
      PRODUCTS:

      Hot band .........................................    40%    43%
      Pickled and oiled ................................    12%    11%
      Cold-rolled ......................................    14%    13%
      Hot-rolled galvanized ............................    17%    17%
      Cold-rolled galvanized ...........................    17%    12%
      Post anneal ......................................    --      4%
                                                           ---    ---
           Total .......................................   100%   100%
                                                           ===    ===

      CUSTOMERS:
      Service center (including end-user intermediaries)    82%    88%
      Pipe and tube ....................................     5%     4%
      Original equipment manufacturer ..................    13%     8%
                                                           ---    ---
           Total .......................................   100%   100%
                                                           ===    ===
</TABLE>

      During 2002, we sold our products to approximately 170 customers. In 2002,
our largest customers were Heidtman, Worthington Steel and Straightline, which
in the aggregate accounted for approximately 32% of our total net sales.
Heidtman accounted, individually, for approximately 21%, 18% and 17% of our net
sales in 2000, 2001 and 2002, respectively.

      Steel processors and service centers typically act as intermediaries
between primary steel producers, such as us, and the many end-user manufacturers
that require further processing of hot bands. The additional processing
performed by the intermediate steel processors and service centers include
pickling, galvanizing, cutting to length, slitting to size, leveling, blanking,
shape correcting, edge rolling, shearing and stamping. Notwithstanding the
completion of our cold mill and our increased utilization in our own cold
finishing facility for a considerable portion of our hot band production, we
expect that our intermediate steel processor and service center customers will
remain an integral part of our customer base. Our sales outside the continental
United States accounted for approximately 1% of our total net sales in 2002.

      COLUMBIA CITY STRUCTURAL STEEL AND RAIL MINI-MILL

      Products. We produce various structural steel products such as wide flange
beams, American Standard beams, miscellaneous beams, "H" Piling material, sheet
piling material, American Standard and miscellaneous channels, bulb angles, and
"zee's." The following listing shows each of our structural steel products and
their intended markets:

<TABLE>
<CAPTION>
      PRODUCTS                                                  MARKETS

<S>                                                             <C>
      Wide flange, American Standard and                        Framing and structural girders, columns, bridge
      miscellaneous beams...................................    stringers, ribs or stiffeners, machine bases or skids,
                                                                truck parts, and construction equipment, parts

      "H" Piling............................................    Foundational supports

      Sheet Piling..........................................    Temporary or permanent bulkhead walls,
                                                                cofferdams, shore protection structures, dams and
                                                                core walls

      Channel sections......................................    Diaphragms, stiffeners, ribs and components in
                                                                built-up sections

      Bulb angles and zee's.................................    Steel building components
</TABLE>

      We have gradually been ramping up production of different structural
products, in various sizes and foot weights, since we commenced initial
production in July 2002. During February 2003, we rolled approximately 33,000
tons and shipped approximately 23,000 tons of product. During the first quarter
of 2003, we initiated certain value added services for the Midwestern fabricator
market, including exact length and exact piece count capabilities.


                                       12
<PAGE>
      Customers. The principal customers for our structural steel products are
steel service centers, steel fabricators and various manufacturers. Service
centers, though not the ultimate end-user, provide valuable mill distribution
functions to the fabricators and manufacturers, including small quantity sales,
repackaging, cutting, preliminary processing and warehousing. We expect that a
majority of our structural steel products will be sold to service centers.

      The marketplace for steel rails in the United States and Canada is
relatively small, approximately 800,000 tons in 2001, and is also specialized,
with only approximately six Class 1 railroad purchasers: Burlington
Northern/Santa Fe, Union Pacific, Canadian Pacific Railway, Norfolk Southern,
CSX Transportation and Canadian National Railway. These purchasers account for
approximately 600,000 tons of annual production. Rail contractors, transit
districts and short-line railroads purchase the rest of the rail products.

      We intend to produce rail in standard and premium or head-hardened grades,
in a range of weights from 115 lbs. per yard to 141 lbs. per yard, in lengths
from the traditional 80 feet up to 240 feet initially and, ultimately, to 320
feet. We also intend to weld these 240/320 foot rails into 1,600 foot strings
for delivery to the installation site. Such long strings offer substantial
savings both in terms of initial capital cost and through reduced maintenance.
In contrast, current production of rail in the United States, and available
imported rail, is limited to 80-foot lengths, as a result of existing plant
layout restrictions and the physical limitations of ocean freight. The more
welded joints there are in a mile of track, the greater the maintenance cost to
the railroad due to excessive wear and fatigue cracking at the welds.

      PITTSBORO BAR MILL

      Products. After the necessary plant modifications are completed, we expect
to be able to produce a broad line of merchant bar products such as angles,
flats, channels, T's and rounds, as well as rebar products in sizes from #3 to
#18. We also plan to produce various SBQ products.

      Merchant bar products are used in a wide variety of applications,
including automotive, fasteners, conveyor assemblies, rack systems, transmission
towers, gratings, safety walkways, stair railings, farm and lawn and garden
equipment, light steel fabrication, machinery, ornamental iron projects and
construction equipment. SBQ alloyed steel bars are predominantly used in
automotive parts such as crankshafts and drive shafts, aerospace products, and
in various types of machinery, construction and transportation equipment.

      Rebar is used principally for strengthening concrete. Approximately half
of rebar consumption is in construction projects involving the private sector,
including commercial and industrial buildings, apartments and hotels, utility
construction, agricultural projects, and various repair and maintenance
applications. The other half of rebar consumption is accounted for by public
works projects, such as highway and street construction, public buildings,
bridges, municipal water and sewer treatment facilities and similar projects.

      Customers. Merchant bar products are generally sold to fabricators, steel
service centers and original equipment manufacturers. Rebar is generally sold to
fabricators and manufacturers, who cut, bend, shape and fabricate the steel to
meet engineering, architectural and end-product specifications. SBQ products are
principally consumed by fabricators, intermediate processors, and steel service
centers. SBQ products are principally consumed by forgers, heavy machinery and
electrical machinery manufacturers, and transportation, construction and
agricultural equipment manufacturers.

      NEW MILLENNIUM FACILITY

      Products. New Millennium fabricates trusses, girders, steel joist and
steel decking for the construction industry. Specifically, New Millennium
manufactures a complete line of joist products, including bowstring, arched,
scissor, double-pitched and single-pitched joists. Decking products include a
full range of roof, form, and composite floor decks.

      Customers. New Millennium's primary customers are non-residential
contractors. Significant portions of New Millennium's sales are to customers
from outside Indiana, with a concentration in the Upper Midwest area of the
United States. We believe that the Upper Midwest presently enjoys the highest
non-residential building spending in the country.

COMPETITION

      BUTLER FLAT-ROLL MINI-MILL

      Our hot-rolled products compete with many North American integrated
hot-rolled coil producers, such as National Steel Corporation's plants near
Detroit, Michigan and Granite City, Illinois; Ispat Inland Inc.'s plant in East
Chicago, Indiana; Bethlehem Steel Corporation's plants in Burns Harbor, Indiana
and Sparrows Point, Maryland; U.S. Steel's plants in Gary, Indiana, Dravosburg,
Pennsylvania and Fairfield, Alabama; and AK Steel Corporation's plant in
Middletown, Ohio. We also compete with International Steel Group, or ISG, which
has purchased out of bankruptcy LTV Steel Corporation's former steelmaking
facilities at Cleveland, Ohio and Indiana Harbor, Indiana and Acme Steel's
rolling facility in Chicago. ISG also has a pending agreement to purchase
Bethlehem Steel Corporation's assets. U.S. Steel has a pending agreement to
purchase the assets of National Steel


                                       13
<PAGE>
Corporation. We also compete with companies that convert steel slabs into sheet
steel, such as Duferco Steel in Farrell, Pennsylvania.

      Our hot-rolled products also compete with the products of a number of
hot-rolled mini-mills, such as Nucor Corporation's 1.6 million ton capacity
plant in Crawfordsville, Indiana, its 1.7 million ton capacity plant in Hickman,
Arkansas and its 2.0 million ton capacity plant in Berkeley, South Carolina;
Gallatin Steel Company's 1.2 million ton capacity plant in Ghent, Kentucky; and
North Star BHP Steel LLC's 1.2 million ton capacity plant in Delta, Ohio. These
mini-mills have low cost structures and flexible production capabilities that
are more akin to ours than to those of the integrated producers.

      With the exception of Gallatin Steel, we compete with these same producers
for the sale of our cold-rolled and coated products. We also compete with a
number of companies, such as Worthington Steel of Columbus, Ohio, Winner Steel
of Youngstown, Ohio and Metaltech of Pittsburgh, Pennsylvania, which buy their
hot-rolled or cold-rolled bands from other producers and then convert them into
products that are competitive with ours.

      COLUMBIA CITY STRUCTURAL STEEL AND RAIL MINI-MILL

      Sales of structural steel products are sensitive to the level of
construction activity, which is in turn affected by such cyclical factors as
general economic conditions, interest rates, inflation, consumer spending and
employment.

      Our structural steel products compete with a sizable number of electric
arc furnace structural steelmakers, some of which have cost structures and
flexible management cultures similar to our own. Notable competitors include
Nucor Steel in Berkeley, South Carolina; Nucor-Yamato Steel in Blytheville,
Arkansas; and TXI-Chaparral Steel in Midlothian, Texas and Petersburg, Virginia.
There are also a number of smaller competitors, including Ameristeel in
Cartersville, Georgia; Bayou Steel in Laplace, Louisiana; and J&L Structural
Steel in Aliquippa, Pennsylvania. The Nucor mini-mills and the TXI-Chaparral
mini-mills accounted for over 89% of the tons produced in North America in 2001.
We also believe, however, that both geography and product choice will play
significant roles. There are currently no other structural mills located in the
Midwest, one of the largest structural steel consuming regions in the United
States, and we believe we will be able to provide freight-saving and customer
service benefits to end users, service centers and fabricators located in the
region. We also believe that most of Canada's structural steel consumption is
located in Canada's eastern provinces, closer to us than to either of our two
largest competitors. Moreover, we intend to provide a broad product mix,
focusing on the mid-range and larger section served only by Nucor-Yamato Steel
and TXI-Chaparral from locations more remote than our mini-mill.

      At present, the rail market is principally served by two producers: Rocky
Mountain Steel, a division of Oregon Steel Mills, Inc. in Pueblo, Colorado, and
Pennsylvania Steel Technologies, a subsidiary of Bethlehem Steel Corporation in
Steelton, Pennsylvania. Each of these producers has the capability to produce
either standard or premium rail, although neither is equipped to produce rail in
240-foot or 320-foot lengths as we will do. Our rail products will also compete
with similar products from a number of high quality integrated and electric
furnace steel producers in Europe and Asia, including British Steel,
Voest-Alpine Schienen, Nippon Steel and NKK.

      PITTSBORO, INDIANA BAR MILL

      We anticipate that our major competitors for merchant bar, shapes and
reinforcing bar product sales, generally within a 500 mile radius of Pittsboro,
Indiana, will include Ameristeel plants in Knoxville and Jackson, Tennessee,
Marion Steel in Marion, Ohio, North Star Steel plants in St. Paul, Minnesota,
Calvert City, Kentucky, and Wilton, Iowa, Nucor Corporation plants in Kankakee,
Illinois (formerly Birmingham Steel) and Darlington, South Carolina, and SMI
Steel in Cayce, South Carolina.

      We expect that our major competitors for SBQ product sales, likewise
within a 500 mile radius of Pittsboro, will include Republic Technologies
International of Akron, Ohio, the Timken Company of Canton, Ohio,
Quanex/Macsteel in Jackson, Michigan, North Star Steel in Monroe, Michigan and
Ispat/Inland Steel in East Chicago, Indiana.

      NEW MILLENNIUM FACILITY

      New Millennium's main competitors on a national level in the joist
business are Vulcraft, a division of Nucor; Canam; and SMI, a division of
Commercial Metals. In the steel decking business, New Millennium's main
competitors on a national level are Vulcraft; Wheeling Corrugating Co., a
division of Wheeling- Pittsburgh Steel Corp.; and United Steel Deck, Inc. New
Millennium also has a number of competitors on a regional basis, located in the
Upper Midwest, including Canam, Socar and Gooder-Henderson, as well as several
local suppliers with facilities located in Pittsburgh, Cleveland, Detroit,
Indianapolis, Chicago and Milwaukee.


                                       14
<PAGE>
SOURCES AND AVAILABILITY OF SCRAP AND SCRAP SUBSTITUTE

      Our principal raw material is scrap metal derived from, among other
sources, junked automobiles, industrial scrap, railroad cars and railroad track
materials, agricultural machinery and demolition scrap from obsolete structures,
containers and machines.

      SCRAP

      Scrap is the single most important raw material used in our steelmaking
process. The percentage of scrap used in our steelmaking operations may decline
somewhat in future years, depending upon the proportion of scrap substitute
products that may be used from time to time.

      As it relates to final product quality, electric arc furnace steel
producers, such as we, can normally only tolerate a maximum .2% level of
residual materials such as non-ferrous metallic contamination from copper,
nickel, tin, chromium, and molybdenum, which, once having been dissolved into
steel cannot be refined out. In order for the scrap melt to provide this level
of quality under present circumstances, the mill must use approximately 60% of
"low residual" scrap or an equivalent material. Such low residual scrap
generally takes the form of No. 1 dealer bundles, No. 1 factory bundles,
busheling, and clips. We may then use various grades of higher residual, and
thus less expensive, scrap, which can be blended with low residual scrap to keep
within impurity tolerances.

      Many variables impact scrap prices, the most critical of which is U.S.
steel production. Generally, as steel demand increases, so does scrap demand and
resulting scrap prices. The reverse is also normally but not always true, with
scrap prices following steel prices downward where supply exceeds demand. During
late 2000, the flood of imported steel, much of it unfairly traded, resulted in
sharply reduced new steel production with corresponding decreases in the need
for, and thus the price of scrap. This corresponding decrease in the price of
scrap mitigated somewhat the impact of sharply declining prices for new steel
products during 2000 and 2001 and enabled us to maintain some modest profit
margins despite the severe market dislocation. The precipitous decline in scrap
prices in 1999 and 2000, however, caused dealers to retain their inventories and
to withhold them from sale, thus causing some short-term supply shortages even
in the face of a supply/demand inversion at the consumer levels. On the other
hand, during the latter part of 2002 and continuing during the first quarter of
2003, the price of scrap has risen sharply upward, largely as a result of
foreign scrap demand, particularly from China.

      We believe that the demand for low residual scrap will rise more rapidly
than the supply in the coming years, especially with the increased number of
electric arc furnace mini-mills, both here and abroad, that have been built or
commenced operations in recent years. As a result, in order to maintain an
available supply of scrap at competitive market prices, we seek to maintain a
strong and dependable source through which to purchase scrap of all grades,
including low residual scrap, and have also been attempting to develop our own
"captive" scrap substitutes supply.

      Since our inception, we have been able to ensure a stable scrap supply for
our Butler mini-mill through a reliable scrap supply agreement with OmniSource
Corporation, one of the largest suppliers of scrap in the nation. In August, we
entered into a new agreement with OmniSource, effective as of July 1, 2002,
which extends through December 31, 2004. Either party may terminate the contract
at anytime on or after July 1, 2003, provided that the terminating party gives
at least three full calendar months prior notice to the other party. Our new
scrap supply agreement extends as well to our Columbia City and Pittsboro
facilities.

      SCRAP SUBSTITUTES

      Direct reduced iron, hot briquetted iron and pig iron can substitute for a
limited portion of the steel scrap used in electric furnace mini-mill steel
production. Historically, we have used a relatively small percentage of scrap
substitutes in our melt mix. Generally, we use approximately 15% by weight of
scrap substitutes in our melt mix, mainly solid and generally imported pig iron.
During 2002, we consumed approximately 417,000 tons of solid pig iron, of the
2.8 million tons of metallics that we used. We also bought minimal quantities of
direct reduced iron and hot briquetted iron. All of these scrap substitute
purchases were made on the spot market at prevailing market prices.

      We anticipate that if the results of our planned restart of hot briquetted
iron and liquid pig iron production at our Butler, Indiana Iron Dynamics
Subsidiary is successful, we will begin utilizing all of Iron Dynamics' scrap
substitute product output, which, at full production we estimate to be
approximately 30,000 tonnes of liquid pig iron per year, in our Butler, Indiana
steelmaking operations.


                                       15
<PAGE>
OUR INDUSTRY

OVERVIEW

      The U.S. steel industry has historically been and continues to be highly
cyclical in nature, influenced by a combination of factors, including periods of
economic growth or recession, strength or weakness of the U.S. dollar, worldwide
production capacity and levels of steel imports and applicable tariffs. The
steel industry has also been affected by various company-specific factors, such
as a company's ability or inability to adapt to technological change, plant
inefficiency and high labor costs.

      During the second half of 2000 and throughout 2001, the U.S. steel
industry experienced a severe downward cycle, largely as a result of increased
imports of steel at depressed prices, weak economic conditions and excess global
steel production capacity. On the other hand, during the first half of 2002,
domestic flat-rolled steel prices increased dramatically from historical
cyclical lows in 2001. This increase resulted from a number of factors,
including (1) a temporary reduction in domestic steel production capacity as a
result of certain bankruptcies and shutdowns of other U.S. steel producers, (2)
a reduction in imports, driven in part by certain favorable rulings and
executive actions with respect to tariffs and quotas on foreign steel, and (3) a
brief strengthening of the overall U.S. economy and the need for end-users of
steel products to replenish their depleted inventories. The cycle began to turn
downward again toward the end of 2002, however, largely as a result of softening
product demand brought about by a still weak economy and war concerns, and steel
pricing has continued to fall during the first quarter of 2003.

      The U.S. steel industry experienced further change during 2002 as a result
of consolidation. International Steel Group added to its acquisition of the
bankrupt steel assets of LTV Steel with its acquisition of Acme Steel's assets
and its planned acquisition of the assets of Bethlehem Steel. All three of these
acquisitions resulted from the prior bankruptcies of the predecessor steel
companies. Similarly, U.S. Steel has announced its planned acquisition of the
bankrupt assets of National Steel. These and similar developments are causing
formerly idled or inefficient production facilities to come back into the market
with substantially lower capital costs, with lower renegotiated labor costs, and
shorn of many previously burdensome health care and retirement legacy costs and
other liabilities. The result of this consolidation, which we expect to
continue, is a more competitive and more price sensitive U.S. steel market, with
a narrowing of production cost differentials between mini-mills and some of
these integrated producers. Moreover, other U.S. steel producers, of the
approximately thirty that entered bankruptcy since 1997, may emerge from
bankruptcy and continue to operate, after reorganization, with lower cost
structures.

ANTI-DUMPING INITIATIVES

      U.S. steel producers compete with many foreign producers. Competition from
foreign producers is typically strong, but is also substantially affected by the
relative strength of foreign economies and fluctuation in the value of the U.S.
dollar against foreign currencies, with steel imports tending to increase when
the value of the dollar is strong in relation to foreign currencies. The
situation has been exacerbated by reason of a weakening of certain economies,
particularly in Eastern Europe, Asia and Latin America. Because of the
ownership, control or subsidization of some foreign steel producers by their
governments, decisions by such producers with respect to their production, sales
and pricing decisions are often influenced to a greater degree by political and
economic policy consideration than by prevailing market conditions, realities of
the marketplace or consideration of profit or loss. Since 1998, when imports of
hot-rolled and cold-rolled products increased 43% compared to the prior year,
domestic steel producers, including us, have been adversely affected by
illegally "dumped" imported steel. Dumping involves selling a product below cost
or for less than in the exporter's home country and is a violation of U.S. trade
laws. Most foreign markets are less open than the U.S. market, allowing foreign
producers to maintain higher prices in their own markets, while dumping excess
production at lower and often subsidized prices into the U.S. market. A number
of steel industry anti-dumping initiatives, or trade cases, have been brought in
recent years in an attempt to stem the flow of these unlawful imports. Some have
been successful and some have not.

      HOT-ROLLED SHEET

      In September 1998, eleven U.S. steel companies, including us, as well as
two labor unions, filed anti-dumping complaints with the ITC and the U.S.
Department of Commerce against hot-rolled coiled steel imports from Japan,
Russia and Brazil, seeking determinations that those three countries were
dumping hot-rolled carbon steel in the U.S. market at below fair market prices.
The group also filed a subsidy, or countervailing duty, complaint against
Brazil.

      In April 1999, the Department of Commerce issued a final determination
that imports of hot-rolled steel from Japan were dumped at margins ranging from
17% to 65%, and in June 1999, the ITC reached a final determination that imports
of hot-rolled sheet from Japan caused injury to the U.S. steel industry. As a
consequence, the Department of Commerce issued an anti-dumping order against
imports from Japan.


                                       16
<PAGE>
      In July 1999, the Department of Commerce also issued suspension agreements
and final anti-dumping duty determinations as to imports of hot-rolled sheet
from Brazil and Russia. "Suspension" agreements generally impose price and/or
quantity restrictions on imports from the subject country for the purpose of
removing the injurious impact of the dumping or subsidies and are often
negotiated with the subject country either in lieu of the imposition of
anti-dumping or countervailing duties or as an alternate remedy to suspend a
previously imposed duty. In February 2002, the Department of Commerce, having
found violations of the suspension agreement by Brazilian producers, revoked the
agreement and reimposed dumping duties of 48%.

      While we and the U.S. steel industry benefited from these rulings, with
hot-rolled sheet imports from these three countries, which accounted for
approximately 70% of 1998's hot-rolled import tonnage, declining by
approximately 90%, the benefit was significantly thwarted by the shifting of
imports to hot-rolled sheet from countries other than Japan, Russia and Brazil,
which increased significantly during 2000. Therefore, in November 2000, we
joined three other mini-mills and four integrated producers and filed
anti-dumping cases against imports of hot-rolled sheet from 11 countries
(Argentina, India, Indonesia, Kazakhstan, the Netherlands, the People's Republic
of China, Romania, South Africa, Taiwan, Thailand and Ukraine) and
countervailing duty cases against five countries (Argentina, India, Indonesia,
South Africa and Thailand). On August 17, 2001, the ITC made final affirmative
injury determinations on imports of hot-rolled steel from Argentina and South
Africa, and the Department of Commerce imposed anti-dumping duty orders of
40-45% on hot-rolled steel imported from Argentina and 9.3% on hot-rolled steel
imported from South Africa. On September 23, 2001, the Department of Commerce
issued the following final dumping margins, although these margins are subject
to modification from pending litigation: on hot-rolled steel imported from India
-- 29-43%, Indonesia -- 48%, Kazakhstan -- 243.5%, the Netherlands -- 3%, China
-- 64-91%, Romania -- 17-80%, Taiwan -- 20-29%, Thailand -- 4-20% and Ukraine --
90%. In addition, the Department of Commerce issued the following final
countervailing duties on hot-rolled steel imported from the following countries:
India -- 8-32%, Indonesia -- 10%, South Africa -- 6.3% and Thailand -- 2.4%. The
ITC made final affirmative injury determinations on these remaining cases in
November 2001, and the Department of Commerce imposed anti-dumping duty orders.
These orders are supposed to remain in effect for at least five years, although
they are subject to annual administrative review and may be shortened. At the
end of five years, the ITC will conduct a sunset review, to the extent that any
of the foregoing duty orders remain in effect. Of the foregoing final orders by
the ITC, only one, involving The Netherlands, was appealed to the Court of
International Trade, and the ITC determination was recently upheld. In June
2002, the U.S. granted "market economy" status to Russia, which may enable
Russia to more effectively defend itself against future dumping actions on the
basis of Russian production costs rather than on the basis of comparison with
surrogate country production costs.

      COLD-ROLLED SHEET

      In June 1999, we, together with other domestic producers and the United
Steel Workers of America, also filed a complaint with the ITC and the Department
of Commerce seeking a determination that cold-rolled steel products from
Argentina, Brazil, China, Indonesia, Japan, Slovakia, South Africa, Taiwan,
Thailand, Turkey, and Venezuela were being dumped in the U.S. market at below
fair market prices. On July 19, 1999, the ITC made unanimous affirmative
preliminary determinations of a reasonable indication of injury by reason of
such imports. The Department of Commerce announced preliminary dumping
determinations, which required the posting of dumping duties in November and
December of 1999. In January 2000, the Department of Commerce issued a
determination that imports of cold-rolled steel from six of the countries were
dumped at margins ranging from 17% to 81%. We were ultimately not successful in
these cold-rolled cases, however, and on March 3, 2000 and thereafter, the ITC
made negative final injury determinations against these eleven countries, ruling
that the industry was not being injured by these imports. These negative
outcomes resulted in a resurgence of dumped cold-rolled imports in the second
half of 2000 and depressed cold-rolled prices caused by these unfair practices.
As a consequence of the approximate 50% increase in imports of cold-rolled sheet
steel from 20 countries during the first half of 2001, at prices averaging $50
or more below their 1998 prices that the Department of Commerce had determined
at that time to have been dumped, we, together with Nucor, United States Steel,
Bethlehem, LTV, National, Weirton and WCI, brought anti-dumping petitions on
September 28, 2001 against imports from these 20 countries and countervailing
duty petitions against five countries. These countries, including Argentina,
Australia, Belgium, Brazil, China, France, Germany, India, Japan, South Korea,
the Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan,
Thailand, Turkey and Venezuela, represented nearly 80% of the imported
cold-rolled sheet. In a preliminary ruling in November 2001, the ITC found in
favor of the petitioners, and, between March and May 2002, the U.S. Department
of Commerce found that these imports had been sold in the United States at less
than fair value and that those from Brazil, France and South Korea had also been
subsidized. Accordingly, the U.S. Department of Commerce issued various
preliminary anti-dumping duty or countervailing duty margin orders directed at
most of these countries.

      However, on August 27, 2002, the ITC made a negative injury determination
on cold-rolled imports from Australia, India, Japan, Sweden and Thailand, and on
October 17, 2002, determined that no material injury or threatened injury
resulted from cold-rolled steel under investigation from Argentina, Belgium,
Brazil, France, Germany, South Korea, The Netherlands, New Zealand, Russia,
South Africa, Spain, Taiwan, Turkey and Venezuela. These negative injury
determinations by the ITC had the effect of reversing the U.S. Department of
Commerce's imposition of anti-dumping and countervailing duty margins on
products of these countries. The steel industry petitioners have appealed these
negative injury determinations by the ITC to the Court of International Trade,
and briefing is expected to occur between May and September 2003.


                                       17
<PAGE>
      STRUCTURAL STEEL AND RAIL

      In addition to the various hot and cold flat-rolled steel cases, a number
of structural steel producers have prosecuted anti-dumping cases against imports
of structural steel. In July 1999, Nucor-Yamato, TXI-Chaparral, and Northwestern
Steel and Wire filed anti-dumping cases on imports of structural steel products
from Germany, Japan, Korea and Spain. Germany and Spain were subsequently
dropped from these cases. In April 2000, the Department of Commerce found duties
of 32-65% on imports from Japan and 15-45% on imports from Korea. In June 2000,
in a 6-0 vote, the ITC found injury, or threat of injury, to the U.S. structural
steel industry and the Department of Commerce imposed anti-dumping duty orders.
These orders can remain in effect for at least five years, subject, however, to
annual administrative review. At the end of five years, the ITC will conduct a
sunset review. In May 2001, a coalition of U.S. structural steel beam producers
filed anti-dumping petitions with the Department of Commerce and the ITC,
alleging that imports of structural steel beams from eight other countries,
China, Germany, Italy, Luxembourg, Russia, South Africa, Spain and Taiwan, are
being sold at less than fair value and are causing or threatening to cause
material injury to the U.S. structural steel beam industry. While the Department
of Commerce found that these imports were being sold in the United States at
less than fair value, and, therefore, made affirmative dumping findings, the ITC
on June 17, 2002 determined that such imports did not materially injure or
threaten with material injury an industry in the United States. As a result, the
ITC made final negative injury determinations in all such cases, thus ending
these investigations without the imposition of duties.

      REBAR

      In July 2000, certain rebar manufacturers filed a petition with the ITC
against the dumping of rebar in certain United States markets. In August 2000,
the ITC issued a preliminary determination of injury or threatened injury,
resulting in an imposition of duties by the U.S. Department of Commerce ranging
from 17% to 133% on imports from eight countries. These orders will remain in
effect for five years, subject to sunset review as well as the normal annual
administrative review that could result in a shortening of the duty orders.

      There are anti-dumping duty and countervailing duty orders against imports
of rails from Canada. However, there are currently no Canadian steel makers
producing rails. There are no anti-dumping duty or countervailing duty orders
outstanding against imports of rails from any other country nor are there any
current investigations.

      Although there are a number of additional trade cases pending before the
ITC, involving various groups of imported steel products, most rulings, since
the March 2002 imposition by President Bush of the Section 201 tariffs described
below, have been against the U.S. steel industry regarding incremental duties
and tariffs.

SECTION 201 INVESTIGATION

      On June 5, 2001, President Bush announced a three-part program to address
the excessive imports of steel that were depressing markets in the United
States. The program involves (1) negotiations with foreign governments seeking
near-term elimination of inefficient excess steel production capacity throughout
the world, (2) negotiations with foreign governments to establish rules that
will govern steel trade in the future and eliminate subsidies, and (3) an
investigation by the ITC under Section 201 of the Trade Act of 1974 to determine
whether steel is being imported into the United States in such quantities as to
be a substantial cause of serious injury to the U.S. steel industry. Therefore,
on June 22, 2001, the Bush Administration requested that the ITC initiate an
investigation under Section 201 of the Trade Act of 1974. Products included in
the request were in the following categories, subject to exclusion of certain
products:

      (1)   carbon and alloy flat products;

      (2)   carbon and alloy long products;

      (3)   carbon and alloy pipe and tube; and

      (4)   stainless steel and alloy tool steel products.

      HOT-ROLLED, COLD-ROLLED AND COATED STEEL

      On October 22, 2001, in the first step of the three-step Section 201
process, the ITC ruled that approximately 80% of the U.S. steel industry
suffered material injury due to imported steel products, including carbon and
alloy hot-rolled, cold-rolled, coated and semi-finished slab products, as well
as hot rolled bars, reinforcing bars and light shapes. Of the 33 steel products
included in the petition brought by the U.S. Trade Representative and President
Bush, 12 products, including the products we produce, were affirmed for injury
by unanimous 6-0 votes. On December 7, 2001, in the second step of the process,
the ITC recommended tariffs


                                       18
<PAGE>
of approximately 20%-40% as well as tariff quotas in some cases, and these
recommendations were transmitted to President Bush for final action. On March 5,
2002, in the third and final step of the Section 201 process, President Bush
imposed a three year tariff of 30% for the first year, 24% for the second year
and 18% for the third year on imports of hot-rolled, cold-rolled and coated
sheet. He also imposed a tariff of 15% for the first year, 12% for the second
year and 9% for the third year on imports of tubular steel products, and a
tariff on imported steel slabs of 30%, 24% and 18% in the first, second and
third years, respectively, on tons in excess of an annual quota of 5.4 million
in 2002, 5.9 million in 2003 and 6.4 million in 2004. North American Free Trade
Agreement partners of the United States, principally Canada and Mexico, were
excluded from the tariffs, as were "developing countries" which, in the
aggregate, account for less than 3% of imported steel. These Section 201
remedies are cumulative with any existing tariffs or quotas in the anti-dumping
cases. They are also directed at products rather than the countries that produce
those products, thereby providing some import relief even if some steel products
find their way to exporting countries not covered by anti-dumping margin or
countervailing duty orders.

      The President's decision to implement a Section 201 remedy is not
appealable to U.S. courts. However, foreign governments may appeal to the WTO,
and the European Union, Japan and other countries prosecuted such appeals. These
dispute settlement proceedings at the WTO and further appeals to the Appellate
Body of the WTO generally take 15-24 months. The WTO is expected to announce its
initial decision on the pending challenges against the Section 201 tariffs by
April 2003. However, a country or an importer may request specific exemptions
from the operation of a Section 201 tariff, and, to date, more than 800 of such
exemption requests have been filed and granted. A second round of exemption
requests is currently underway and may result in further product exemptions.
Moreover, a number of countries have imposed or threatened to impose various
retaliatory tariffs on U.S. steel or other products, and there is intense
political pressure from steel consumers to prematurely terminate the Section 201
relief. Accordingly, there is a risk that rulings adverse to the United States
or these substantial political pressures could result in the President changing
the remedy, granting substantial additional exemptions from the remedy or
terminating the remedy entirely prior to the full three years, although any such
modification would apply only prospectively.

      STRUCTURAL STEEL AND RAIL

      By a vote of 4-2, the ITC determined on October 22, 2001, that structural
steel and rails were not being imported into the United States in such increased
quantities as to be a substantial cause of serious injury or the threat of
serious injury to the U.S. industry. Consequently, the U.S. structural steel and
rail producers are not directly eligible for any relief imposed by the President
as a result of the Section 201 investigations. The ITC determined that the U.S.
structural steel and rail industry was not seriously injured primarily because
of its "double-digit operating margins," and positive performance trends
including, increased capacity and shipments, higher employment and new
investment. With regard to threat of injury, the ITC found that the existing
orders and the pending investigations made future increases in imports unlikely.

      REBAR, MERCHANT BAR AND SBQ PRODUCTS

      President Bush's March 2002 Section 201 order granting tariff relief to
various categories of imported steel products included a 15% tariff on rebar and
a 30% tariff on various certain merchant and SBQ products.

      As provided by President Bush, however, when he announced the Section 201
action in March 2002, ITC will conduct a mid-term review in the third quarter of
2003 covering all of the product categories covered by the Section 201 orders,
and the ITC will then recommend to the President whether to maintain the
tariffs, reduce them more quickly or end them prior to their scheduled
expiration.

INTEGRATED MILLS VERSUS MINI-MILLS

      There are generally two kinds of primary steel producers, "integrated
mills" and "mini-mills." We are a mini-mill producer.

      Steel manufacturing by an "integrated" producer involves a series of
distinct but related processes, often separated in time and in plant geography.
The process involves ironmaking followed by steelmaking, followed by billet or
slab making, followed by reheating and further rolling into steel plate or bar,
or flat-rolling into sheet steel or coil. These processes may, in turn, be
followed by various finishing processes (including cold-rolling) or various
coating processes (including galvanizing). In integrated producer steelmaking,
coal is converted to coke in a coke oven, then combined in a blast furnace with
iron ore (or pellets) and limestone to produce pig iron, and then combined with
scrap in a "basic oxygen" or other furnace to produce raw or liquid steel. Once
produced, the liquid steel is metallurgically refined and then either poured as
ingots for later reheating and processing or transported to a continuous caster
for casting into a billet or slab, which is then further shaped or rolled into
its final form. Typically, though not always, and whether by design or as a
result of downsizing or re-configuration, many of these processes take place in
separate and remote facilities.


                                       19
<PAGE>
      In contrast, mini-mills, such as our Butler mini-mill, our Columbia City
mini-mill and our Pittsboro, Indiana mini-mill use an electric arc furnace to
directly melt scrap or scrap substitutes, thus entirely eliminating the
energy-intensive blast furnace. A mini-mill unifies the melting, casting and the
hot-rolling into a continuous process. The melting process begins with the
charging of a furnace vessel with scrap steel, carbon and lime, following which
the furnace vessel's top is swung into place, electrodes are lowered into the
furnace vessel through holes in top of the furnace, and electricity is applied
to melt the scrap. The liquid steel is then checked for chemistry and the
necessary metallurgical adjustments are made, typically while the steel is still
in the melting furnace or, if the plant has a separate staging area for that
process (as do our mini-mills), the liquid steel is transported to an area,
commonly known as a ladle metallurgy station. From there, the liquid steel is
transported to a continuous caster, which consists of a turret, a tundish (a
type of reservoir which controls the flow of liquid steel) and a water-cooled
copper-lined mold. The liquid steel passes through the continuous caster and
exits as an externally solid slab. The slab is then cut to length and proceeds
directly into a tunnel furnace, which maintains and equalizes the slab's
temperature. After leaving the tunnel furnace, the slab is descaled and then it
proceeds into the first stand of a rolling mill operation. In the rolling
process, the steel is progressively reduced in thickness. The final product is
wound into coil and may be sold either directly to end-users or to intermediate
steel processors or service centers, where it may be pickled, cold-rolled,
annealed, tempered or galvanized.

      As a group, mini-mills have historically been characterized by lower costs
of production and higher productivity than integrated mills. This is due, in
part, to lower capital costs and to lower operating costs resulting from their
streamlined melting process and smaller, more efficient plant layouts. Moreover,
mini-mills have tended to employ a management culture, such as ours, that
emphasizes flexible, incentive-oriented non-union labor practices and have
tended to be more willing to adapt to newer and more innovative management
styles that encourage decentralized decision-making. The smaller plant size of a
mini-mill also permits greater flexibility in the choice of location for the
mini-mill in order to optimize access to scrap supply, energy costs,
infrastructure and markets, as is the case with our Butler mini-mill.
Furthermore, a mini-mill's more efficient plant size and layout, which
incorporates the melt shop, metallurgical station, casting, and rolling in a
unified continuous flow under the same roof, have reduced or eliminated costly
re-handling and re-heating of partially finished product. They have also adapted
quickly to the use of new and cost-effective equipment, thereby translating
technological advances in the industry into efficient production. However, as a
result of the movement toward steel industry consolidation, coupled with the
emergence from bankruptcy of previously inefficient and high capital cost and
high operating cost steelmaking assets, under new ownership, with renegotiated
and less burdensome labor contracts, the cost differences between mini-mills and
some integrated mill consolidators have begun to narrow. Moreover, during
periods of high scrap material costs, integrated mills that produce their own
blast furnace iron and are not as dependent as mini-mills upon scrap for the
bulk of their melt mix, may actually experience lower raw material metallic
costs than mini-mills.

THE FLAT-ROLL STEEL MARKET

      The flat-roll steel market represents the largest steel product group,
accounting for an average of 64% of total U.S. steel shipments from 1997 to
2001. Flat-rolled products consist of hot-rolled, cold-rolled and coated sheet
and coil.

      The following table shows the U.S. shipments of flat-rolled steel, in net
tons, by hot-rolled, cold-rolled and coated production, as reported by the
American Iron and Steel Institute, for the five years from 1997 through 2001.

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                                       ------------------------
                                                 1997    1998    1999    2000    2001
                                                 ----    ----    ----    ----    ----
                                                       (MILLIONS OF NET TONS)
<S>                                              <C>     <C>     <C>     <C>     <C>
U.S. SHIPMENTS:
Hot-Rolled(1) ................................   29.0    25.3    27.7    29.3     27.8]
Cold-Rolled(2) ...............................   15.2    15.8    16.8    18.0     14.8]
Coated(3) ....................................   22.0    22.8    24.3    23.9     22.2]
                                                 ----    ----    ----    ----     ----
     Total ...................................   66.2    64.0    68.8    71.2     64.8
                                                 ====    ====    ====    ====     ====
Percentage of Total U.S. Steel Shipments .....     63%     62%     65%     65%      66%
</TABLE>

(1)   Includes pipe/tube, sheet, strip and plate in coils.

(2)   Includes blackplate, sheet, strip and electrical.

(3)   Includes tin coated, hot dipped, galvanized, electrogalvanized and all
      other metallic coated.


                                       20
<PAGE>
      HOT-ROLLED PRODUCTS

      All coiled flat-rolled steel is initially hot-rolled, a process that
consists of passing a cast slab through a multi-stand rolling mill to reduce its
thickness to less than 1/2 inch. Hot-rolled steel is minimally processed steel
coil that is used in the manufacture of various non-surface critical
applications, such as automobile suspension arms, frames, wheels, and other
unexposed parts in auto and truck bodies, agricultural equipment, construction
products, machinery, tubing, pipe, tools, lawn care products and guard rails.

      COLD-ROLLED PRODUCTS

      Cold-rolled steel is hot-rolled steel that has been further processed
through a pickler and then successively passed through a rolling mill without
reheating until the desired gauge, or thickness, and other physical properties
have been achieved. Cold-rolling reduces gauge and hardens the steel and, when
further processed through an annealing furnace and a temper mill, improves
uniformity, ductility and formability. Cold-rolling can also impart various
surface finishes and textures. Cold-rolled steel is used in exposed steel
applications that demand higher surface quality or finish, such as exposed
automobile and appliance panels. As a result, cold-rolled prices are typically
higher than hot-rolled prices. Typically, cold-rolled material is coated or
painted.

      COATED PRODUCTS

      Coated steel can be either hot-rolled or cold-rolled steel that has been
coated with zinc to render it corrosion-resistant and to improve its
paintability. Hot-dipped galvanized, galvannealed, electro-galvanized and
aluminized products are types of coated steels. These are also the highest
value-added sheet products because they require the greatest degree of
processing and tend to have the strictest quality requirements. Coated steel is
used in high volume applications, such as automobiles, household appliances,
roofing and siding, heating and air conditioning equipment, air ducts, switch
boxes, chimney flues, awnings, garbage cans and food containers.

THE STRUCTURAL STEEL MARKET

      The structural steel market is a relatively small part of total U.S. steel
shipments. In 1999, 2000 and 2001, structural steel shipments were 5.7 million
tons, 6.7 million tons and 6.4 million tons, respectively, and averaging 6% of
the total steel market during these three years. Consumption of structural steel
products is influenced both by new construction and manufacturing activity and
by the selection of steel over alternative structural or manufacturing
materials, which has occurred at a relatively constant rate of 50% over the five
years from 1997 through 2001.

THE RAIL MARKET

      Rail shipments in 2000 and 2001 were approximately 810,000 tons and
644,000 tons, respectively, with standard rail averaging 80% of the market over
1999, 2000 and 2001 and premium or head-hardened rail averaging 20% over 1999,
2000 and 2001. Increased rail hardness results in a longer lasting product and
is achieved by quenching hot rail with either air or water or by changing rail
chemistry through the addition of alloys. Harder rail is more costly. Rail is
produced in or imported into the U.S. and Canadian markets in standard lengths
of 39 to 80 feet, mainly due to the limitations of existing North American rail
production equipment and plant layouts, as well as the size limitations of ocean
freighters with respect to imports. As a result, in order to produce the
1,600-foot rail "strings" desired by railroads, 20 80-foot rail sections are
required to be welded together. Each weld is costly to make and adds
installation and periodic maintenance costs.

      Of the total annual shipments of rail in 2000, approximately 75% was
produced by the two remaining U.S. rail producers and 25% was imported, mainly
from Japan and from Europe. There are currently no Canadian rail producers.

THE MARKET FOR REBAR, MERCHANT BAR AND SBQ PRODUCTS

      According to data reported by the American Iron and Steel Institute, or
A.I.S.I., apparent rebar supply in the United States was approximately 8 million
tons in each of 2000 and 2001, and apparent merchant bar supply, typically
defined as ASTM A36 round, square or flat bar with a major dimension less than 3
inches, was approximately 2 million tons nationally for each of 2000 and 2001.
According to the A.I.S.I., apparent supply of light structural shapes, also
characterized by a major dimension of less than 3 inches, average approximately
4 million tons annually for each of the foregoing two years.

      Accordingly to A.I.S.I. data, apparent SBQ supply has averaged
approximately 7 million tons nationally over the 2000 and 2001 period.


                                       21
<PAGE>
ENERGY RESOURCES

      ELECTRICITY

      With respect to our Butler mini-mill, our electric service contract with
American Electric Power extends through December 31, 2007. The contract
designates only 152 hours as "interruptible service" during 2003 and these
interruptible hours further decrease annually through expiration of the
agreement. The contract also provides that the circumstances necessary to
warrant any hours of service interruptions must be of an emergency nature and
not related to price and demand. The contract also establishes an agreed fixed
rate for the rest of our electrical usage. Interruptible service subjects us to
the risk of interruption at any time in the operation of the AEP system, whether
as a result of an AEP peak demand, or even if AEP were able to obtain a higher
market price from an alternate buyer.

      With respect to our Columbia City structural steel and rail mini-mill, the
plant site is located within the service territory of Northeast Indiana
R.E.M.C., a rural electric cooperative and a member of the Wabash Valley Power
Association. We have not yet finalized any electricity supply arrangements for
this mini-mill, but, once finalized, we will be required to arrange power
transmission over lines owned by American Electric Power.

      With respect to our Pittsboro, Indiana bar mill, the plant is located
within the service territory claimed by Cinergy, formerly known as Public
Service of Indiana. We do not as yet have an electricity supply arrangement for
this mini-mill and are currently in negotiations with Cinergy with respect to
this matter.

      GAS

      We use approximately 9,000 to 11,000 decatherms of natural gas per day in
our Butler flat-roll mini-mill. A decatherm is equivalent to 1 million BTUs or
1,000 cubic feet of natural gas. We have a delivery contract on the Panhandle
Eastern Pipeline that extends through April 2008 relating to our Butler
mini-mill. We also have a delivery contract with NIPSCO/NIFL/Crossroads that
extends through October 2005 relating to our Butler mini-mill. We maintain a
liquid propane storage facility on site in Butler with sufficient reserves to
sustain operations at our flat-roll mini-mill for approximately one week in the
event of an interruption in the natural gas supply.

      With respect to our structural steel and rail mini-mill, we have entered
into an agreement with NIPSCO for gas service under its Rate Schedule 330, which
will provide firm burnertip supply and transportation service for all natural
gas requirements at this mini-mill. The agreement includes a volume-dependent
transportation fee and forgoes all balancing charges. This agreement precludes
the need for a separate pipeline transportation agreement. The agreement is for
a period of three years, beginning with the first use of gas in production. We
anticipate purchasing gas at market prices at commencement of operations.
However, we expect to minimize price volatility by entering into hedging
transactions on the futures markets.

      With respect to our Pittsboro, Indiana bar mill, we are currently
reviewing but have not yet finalized our gas purchase and transportation
arrangements.

      OTHER

      We use oxygen, nitrogen, hydrogen and argon for production purposes, which
for our Butler mini-mill, we purchase from the adjacent plant of Air Products
and Chemicals, Inc. Air Products uses its plant not only to supply us but also
to provide oxygen and other gases to other industrial customers. As a result, we
have been able to effect very favorable oxygen and other gas purchase prices on
the basis of Air Products' volume production. Praxair, Inc. has built a similar
facility within our Columbia City mini-mill. Praxair will be a captive facility
to our Columbia City mini-mill. Air Liquide built a plant adjacent to our
Pittsboro, Indiana bar mill, under an arrangement with the previous owners of
the mill, and we are in the process of negotiating a new contract with Air
Liquide to determine whether we will be supplied by that facility or will make
arrangements for an alternative source of supply.

PATENTS AND TRADEMARKS

      We have a trademark for the mark "SDI" and an accompanying design of a
steel coil and a chevron. Our Iron Dynamics subsidiary has filed five patent
applications with the U.S. Patent and Trademark Office relating to its methods
of producing low sulfur liquid pig iron. As of the date of this filing, we have
received three of those patents.

RESEARCH AND DEVELOPMENT

      At the present time, we engage in no third party research and development
activities. Our Iron Dynamics subsidiary,


                                       22
<PAGE>
however, has been engaged in research and development efforts in connection with
its attempts to develop a process for the production of direct reduced iron and
the conversion of that product into liquid pig iron. Most of this research and
development effort has been conducted in-house by Iron Dynamics' officers and
employees.

ENVIRONMENTAL MATTERS

      Our operations are subject to substantial and evolving local, state and
federal environmental, health and safety laws and regulations concerning, among
other things, emissions to the air, discharges to surface and ground water and
to sewer systems, noise control and the generation, handling, storage,
transportation, treatment and disposal of toxic and hazardous substances. In
particular, we are dependent upon both state and federal permits regulating
discharges into the air or into the water in order to be permitted to operate
our facilities. We believe that in all current respects our facilities are in
material compliance with all provisions of federal and state laws concerning the
environment and we do not believe that future compliance with such provisions
will have a material adverse effect on our results of operations, cash flows or
financial condition. We have applied to the Indiana Department of Environmental
Management for the issuance of a new air permit for our Pittsboro, Indiana bar
mill, and we anticipate that it will be issued in time for us to be able to
commence production, as planned, in the first quarter of 2004.

      Since environmental laws and regulations are becoming increasingly
stringent and the subject of increasingly vigorous enforcement, our
environmental capital expenditures and costs for environmental compliance will
likely increase in the future. In addition, due to the possibility of
unanticipated regulatory or other developments, the amount and timing of future
environmental expenditures may vary substantially from those currently
anticipated. The cost for current and future environmental compliance may also
place U.S. steel producers at a competitive disadvantage with respect to foreign
steel producers, which may not be required to undertake equivalent costs in
their operations.

      Pursuant to the Resource Conservation and Recovery Act, or RCRA, which
governs the treatment, handling and disposal of solid and hazardous wastes, the
United States Environmental Protection Agency, or U.S. EPA, and authorized state
environmental agencies conduct inspections of RCRA regulated facilities to
identify areas where there may have been releases of solid or hazardous
constituents into the environment and require the facilities to take corrective
action to remediate any such releases. RCRA also allows citizens to bring
certain suits against regulated facilities for potential damages and clean up.
Our steelmaking facilities are subject to RCRA. Our manufacturing operations
produce various by-products, some of which, for example, are electric arc
furnace or EAF dust, are categorized as industrial or hazardous waste, requiring
special handling for disposal or for the recovery of metallics. We collect such
by-products in approved baghouses and other facilities, but we are also
examining alternative reclamation technologies to recycle some of these
products. The Iron Dynamics scrap substitute process is an example of such an
alternative. While we cannot predict the future actions of the regulators or
other interested parties, the potential exists for required corrective action at
these facilities, the costs of which could be substantial.

      Under the Comprehensive Environmental Response, Compensation and Liability
Act, or CERCLA, the U.S. EPA and, in some instances, private parties have the
authority to impose joint and several liability for the remediation of
contaminated properties upon generators of waste, current and former site owners
and operators, transporters and other potentially responsible parties,
regardless of fault or the legality of the original disposal activity. Many
states, including Indiana, have statutes and regulatory authorities similar to
CERCLA and to the U.S. EPA. We have a number of waste handling agreements with
various contractors, including a hazardous waste disposal agreement with
Envirosafe Services of Ohio, Inc. to properly dispose of our electric arc
furnace dust and certain other waste products of steelmaking. However, we cannot
assure you that, even if there has been no fault by us, we may not still be
cited as a waste generator by reason of an environmental clean up at a site to
which our waste products were transported.

      In addition to RCRA and CERCLA, there are a number of other environmental,
health and safety laws and regulations that apply to our facilities and may
affect our operations.

EMPLOYEES

      Our work force consisted of 869 employees at December 31, 2002, excluding
employees then employed by New Millennium. This figure does not include
employees that will eventually be employed, once operational, at our newly
acquired Pittsboro, Indiana bar mill and our newly acquired galvanizing facility
in Jeffersonville, Indiana. None of Steel Dynamics' or New Millennium's
employees are represented by labor unions. We believe that our relationship with
our employees is good.


                                       23
<PAGE>
RISK FACTORS

      The risks described below are not the only ones facing our company.
Additional risks not presently known to us or that we currently deem immaterial
may also impair our business operations.

      Our business, financial condition or results of operations could be
materially adversely affected by any of these risks.

RISKS RELATED TO OUR INDUSTRY

      IN RECENT YEARS, IMPORTS OF STEEL INTO THE UNITED STATES HAVE ADVERSELY
      AFFECTED, AND MAY AGAIN ADVERSELY AFFECT, U.S. STEEL PRICES, WHICH WOULD
      IMPACT OUR SALES, MARGINS AND PROFITABILITY

      Excessive imports of steel into the United States have in recent years,
and may again in the future, exert downward pressure on U.S. steel prices and
significantly reduce our sales, margins and profitability. U.S. steel producers
compete with many foreign producers. Competition from foreign producers is
typically strong, but it has greatly increased as a result of an excess of
foreign steelmaking capacity and a weakening of certain foreign economies,
particularly in Eastern Europe, Asia and Latin America. The economic
difficulties in these countries have resulted in lower local demand for steel
products and have tended to encourage greater steel exports to the United States
at depressed prices.

      In addition, we believe the downward pressure on, and depressed levels of,
U.S. steel prices in recent years have been further exacerbated by imports of
steel involving dumping and subsidy abuses by foreign steel producers. Some
foreign steel producers are owned, controlled or subsidized by foreign
governments. As a result, decisions by these producers with respect to their
production, sales and pricing are often influenced to a greater degree by
political and economic policy considerations than by prevailing market
conditions, realities of the marketplace or consideration of profit or loss. For
example, between 1998 and 2001, when imports of hot-rolled and cold-rolled
products increased dramatically, domestic steel producers, including us, were
adversely affected by unfairly priced or "dumped" imported steel. Even though
various protective actions taken by the U.S. government during 2001, including
the enactment of various steel import quotas and tariffs, have resulted in an
abatement of some steel imports during 2002, these protective measures are only
temporary. When these measures expire or if they are relaxed, or if increasingly
higher U.S. steel prices enable foreign steelmakers to export their steel
products into the United States even with the presence of tariffs, the
resurgence of substantial imports of foreign steel could again create downward
pressure on U.S. steel prices. In addition, domestic steel companies, as well as
labor unions, have filed complaints with the International Trade Commission and
the U.S. Department of Commerce against certain hot-rolled, cold-rolled and
structural steel imports. In June of 2002, the ITC made final negative injury
determinations in cases relating to structural steel imports from China,
Germany, Italy, Luxembourg, Russia, South Africa, Spain and Taiwan. In addition,
in August and October of 2002, the ITC also made final negative injury
determinations in all outstanding cases relating to cold-rolled steel, thus
ending the investigations without the imposition of duties. These negative
determinations may increase the amount of cold-rolled and structural steel
imports into the United States and may create further downward pressure on U.S.
steel prices. In June of 2002, the United States granted "market economy" status
to Russia, which may enable Russia to more effectively defend itself against
dumping actions and increase the risk that Russia in the future may dump steel
into the U.S. market, which may adversely affect U.S. steel prices.

      INTENSE COMPETITION AND EXCESS GLOBAL CAPACITY IN THE STEEL INDUSTRY MAY
      CONTINUE TO EXERT DOWNWARD PRESSURE ON OUR PRICING

      We may not be able to compete effectively in the future as a result of
intense competition. Competition within the steel industry, both domestically
and worldwide, is intense and it is expected to remain so. We compete primarily
on the basis of (1) price, (2) quality and (3) the ability to meet our
customers' product needs and delivery schedules. Our primary competitors are
other mini-mills, which may have cost structures and management cultures more
similar to ours than integrated mills. We also compete with many integrated
producers of hot-rolled, cold-rolled and coated products, many of which are
larger and have substantially greater capital resources. The highly competitive
nature of the industry, in part, exerts downward pressure on prices for some of
our products. Further, over the past few years, approximately 30 domestic steel
producers have entered bankruptcy proceedings. In some cases, these previously
marginal producers have been able to emerge from bankruptcy reorganization with
lower and more competitive cost structures. In other cases, steelmaking assets
have been sold through bankruptcy proceedings to other steelmakers or to new
companies, at greatly depressed prices and free of many previously burdensome
operating costs and liabilities. The reemergence of these producers or their
successors may further increase the competitive environment in the steel
industry and contribute to price declines. In the case of certain product
applications, steel competes with other materials, including plastic, aluminum,
graphite composites, ceramics, glass, wood and concrete.

      In addition, global overcapacity in steel manufacturing and its negative
impact on U.S. steel pricing are likely to continue to persist and could have a
negative impact on our sales, margins and profitability. The U.S. steel industry
continues to be adversely


                                       24
<PAGE>
impacted by excess global steel manufacturing capacity. Over the last decade,
the construction of new mini-mills, expansion and improved production
efficiencies of some integrated mills and substantial expansion of foreign steel
capacity have all led to the excess of manufacturing capacity. Increasingly,
this overcapacity, combined with the high levels of steel imports into the
United States, has exerted downward pressure on domestic steel prices, including
the prices of our products, and has resulted in, at times, a dramatic narrowing,
or with many companies the elimination, of gross margins.

      THE POSITIVE EFFECTS OF PRESIDENT BUSH'S MARCH 5, 2002 ORDER IN
      CONTRIBUTING TO THE REDUCTION OF EXCESSIVE IMPORTS OF STEEL INTO THE
      UNITED STATES MAY BE LESSENED IF THERE ARE SUCCESSFUL APPEALS TO THE WORLD
      TRADE ORGANIZATION BY THE EXPORTING COUNTRIES OR IF DOMESTIC OR
      INTERNATIONAL POLITICAL PRESSURE RESULTS IN A RELAXATION OF, OR
      SUBSTANTIAL EXEMPTIONS FROM, THE TARIFFS CONTAINED IN THE ORDER

      If the amount, scope or duration of the Section 201 orders are lessened or
adversely changed, it could lead to a resurgence of flat-rolled steel imports,
an increase of steel slab imports and/or an increase in welded pipe and tube
imports. Any of these results would again put downward pressure on U.S.
flat-rolled prices which would negatively impact our sales, margins and
profitability. On June 22, 2001, the Bush Administration requested that the
International Trade Commission, or ITC, initiate an investigation under Section
201 of the Trade Act of 1974 to determine whether steel is being imported into
the United States in such quantities as to be a substantial cause of serious
injury to the U.S. steel industry. In October 2001, the ITC found "serious
injury" due to imports of steel products, including the products we manufacture,
and in December 2001, the ITC recommended that the President impose tariffs of
approximately 20%-40%, as well as tariff quotas in connection with certain
products such as steel slabs. On March 5, 2002, President Bush, among other
actions, imposed a three year tariff of 30% for the first year, 24% for the
second year and 18% for the third year on imports of hot-rolled, cold-rolled and
coated sheet, as well as on imports of steel slabs in excess of a specified
annual quota. North American Free Trade Agreement partners of the United States,
principally Canada and Mexico, are excluded from these tariffs, as are
"developing countries" that account for less than 3% of imported steel.
Increased imports from these excluded countries may reduce the benefit from
these tariffs to U.S. steel producers, including us.

      Imports of flat-rolled steel have declined, in part, due to the imposition
of dumping duties that have been imposed on certain imports of foreign steel,
and, in part, due to the imposition of significant tariffs as a result of this
Section 201 action. These events have, in part, allowed us to begin restoring
prices on flat-rolled products. While the President's decision to implement a
Section 201 remedy is not appealable to U.S. courts, foreign governments may
appeal, and some have appealed, to the World Trade Organization, or WTO. The
European Union, Japan and other countries are currently prosecuting such
appeals. These dispute settlement proceedings at the WTO and further appeals to
the Appellate Body of the WTO generally take 15-24 months. These appeals were
filed in April of 2002 and may be concluded by the end of 2003. Moreover, a
number of affected countries have threatened to impose various retaliatory
tariffs on U.S. steel or other products or have sought various product
exemptions from the imposition of the tariffs. Accordingly, there is a risk that
rulings adverse to the United States or substantial political pressures could
result in the President changing the remedy, granting substantial exemptions
from the remedy, or terminating the remedy entirely prior to the full three
years, although any such modification would apply only prospectively.

      OUR LEVEL OF PRODUCTION AND OUR SALES AND EARNINGS ARE SUBJECT TO
      SIGNIFICANT FLUCTUATIONS AS A RESULT OF THE CYCLICAL NATURE OF THE STEEL
      INDUSTRY AND THE INDUSTRIES WE SERVE

      The price of steel and steel products may fluctuate significantly due to
many factors beyond our control. This fluctuation directly affects the levels of
our production and our sales and earnings. The steel industry is highly
cyclical, sensitive to general economic conditions and dependent on the
condition of certain other industries. The demand for steel products is
generally affected by macroeconomic fluctuations in the United States and global
economies in which steel companies sell their products. For example, future
economic downturns, stagnant economies or currency fluctuations in the United
States or globally could decrease the demand for our products or increase the
amount of imports of steel into the United States either event of which would
decrease our sales, margins and profitability.

      In addition, a disruption or downturn in the automotive, oil and gas, gas
transmission, construction, commercial equipment, rail transportation,
appliance, agricultural and durable goods industries could negatively impact our
financial condition, production, sales, margins and earnings. We are also
particularly sensitive to trends and events, including strikes and labor unrest
that may impact these industries. These industries are significant markets for
our products and are themselves highly cyclical.


                                       25
<PAGE>
RISKS RELATED TO OUR BUSINESS

      TECHNOLOGY, OPERATING AND START-UP RISKS ASSOCIATED WITH OUR IRON DYNAMICS
      SCRAP SUBSTITUTE PROJECT MAY PREVENT US FROM REALIZING THE ANTICIPATED
      BENEFITS FROM THIS PROJECT AND COULD RESULT IN A LOSS OF OUR INVESTMENT

      If we abandon our Iron Dynamics project, or if its process does not
succeed, we will not be able to realize the expected benefits of this project
and will suffer the loss of our entire investment. As of December 31, 2002, our
investment in the Iron Dynamics project was $160 million. Since 1997, our
wholly-owned subsidiary, Iron Dynamics, has tried to develop and commercialize a
pioneering process of producing a virgin form of iron that might serve as a
lower cost substitute for a portion of the metallic raw material mix that goes
into our electric arc furnaces to be melted into new steel. This scrap
substitute project is the first of its kind. It involves processes that are
based on various technical assumptions and new applications of technologies that
have yet to be commercially proven. Since our initial start-up in August 1999,
we have encountered a number of difficulties associated with major pieces of
equipment and with operating processes and systems. Throughout the latter part
of each of 1999 and 2000, our Iron Dynamics facility was shut down. During these
shut downs, we engaged in time consuming and expensive redesign, re-engineering,
reconstruction and retrofitting of major pieces of equipment, systems and
processes. As a result, the Iron Dynamics project has taken considerably longer
and has required us to expend considerably greater resources than originally
anticipated. While we made significant progress during these shut downs in
correcting various technical and other deficiencies, we have not yet been
successful in achieving the results necessary to bring production output up and
product costs down to the point of being commercially competitive. In February
2001, we re-started operations at our Iron Dynamics facility. However, in July
2001, we suspended these operations again, with no specific date set for
resumption of operations. This shut down was a result of:

      (1)   higher than expected start-up and process refinement costs;

      (2)   then prevailing exceptionally high energy costs;

      (3)   low production quantities then being achieved at the Iron Dynamics
            facility; and

      (4)   historically low steel scrap pricing.

      These factors made the cost of producing and using Iron Dynamics scrap
substitute at our flat-roll mini-mill higher than our cost of purchasing and
using steel scrap. Furthermore, we believe that, even with additional
development and refinement to the equipment, technology systems and processes,
the Iron Dynamics facility may only be able to achieve monthly output levels
between 75%-85% of our original estimates, resulting in higher unit costs than
originally planned. We currently estimate that these additional developments and
refinements will cost approximately $14 million. On July 10, 2002, we announced
that we would begin experimental production trials in the fourth quarter of
2002. During the fourth quarter of 2002, we successfully completed certain
trials. On February 24, 2003, we announced that we have made plans to restart
our ironmaking operations during the second half of 2002. If the results of this
restart indicate that we will be able to produce liquid pig iron in sufficient
quantities and at a cost to be competitive with purchased pig iron, we could
begin commercial production in late 2003. However, Iron Dynamics may never
become commercially operational.

      In addition, while we remain optimistic that the remaining start-up
difficulties with the equipment, technology, systems and processes can be
resolved, our Iron Dynamics facility may not be able to consistently operate or
be able to produce steel scrap substitute material in the quantities that will
enable it to be cost competitive. Moreover, in connection with any restart of
operations, our Iron Dynamics facility may experience additional shutdowns or
equipment failures and such shutdowns or failures may have a material adverse
impact on our liquidity cost structure and earnings.

      WE MAY BE DELAYED IN THE CONSTRUCTION AND START-UP OF OUR PITTSBORO,
      INDIANA MINI-MILL

      On September 6, 2002, we purchased, through our wholly owned subsidiary,
Dynamic Bar Products, LLC, Qualitech Steel SBQ LLC's special bar quality
mini-mill assets located in Pittsboro, Indiana. We paid $45 million for these
assets, and we have announced plans to invest between $70 to $75 million in
plant upgrades and retrofitting to convert the facility from one capable of
producing only special bar quality steel products to a facility capable of
producing merchant bars and shapes and reinforcing bar products.

      It may cost more than the $70 to $75 million we estimate is required to
convert the Pittsboro mini-mill into a mini-mill for the production of merchant
and reinforcing bar. We are also subject to regulatory approval and to
construction and start-up delays and operational risks associated with the
start-up of a new mini-mill, either in the Pittsboro mini-mill's present
configuration or in connection with its conversion. The factors could result in
materially greater operating costs than we initially expected. We may also be
delayed either as a result of other unforeseen circumstances or events beyond
our control.


                                       26
<PAGE>
      A SUBSTANTIAL PORTION OF OUR FLAT-ROLLED PRODUCTS ARE SOLD ON THE SPOT
      MARKET, AND THEREFORE, OUR SALES, MARGINS AND EARNINGS ARE NEGATIVELY
      IMPACTED BY DECREASES IN DOMESTIC FLAT-ROLLED STEEL PRICES

      Our sales, margins and earnings are negatively impacted by decreases in
domestic flat-rolled steel prices since a significant portion of our flat-rolled
products are sold on the spot market. As a result, we are vulnerable to
downturns in the domestic flat-rolled steel market. For the three year period
ended December 31, 2002, approximately 80% of our flat-roll products were sold
on the spot market under contracts with terms of twelve months or less.

      WEAKNESS IN THE AUTOMOTIVE INDUSTRY WOULD RESULT IN A SUBSTANTIAL
      REDUCTION IN DEMAND FOR OUR PRODUCTS

      A prolonged weakness in the automotive industry would reduce the demand
for our products and decrease our sales. In addition, if automobile
manufacturers choose to incorporate more plastics, aluminum and other steel
substitutes in their automobiles, it could reduce demand for our products. Our
sales and earnings fluctuate due to the cyclical nature of the automotive
industry. The cyclical nature of the automotive industry is affected by such
things as the level of consumer spending, the strength or weakness of the U.S.
dollar and the impact of international trade and various factors, such as labor
unrest and the availability of raw materials, which affect the ability of the
automotive industry to actually build cars. While we do not presently sell a
material portion of our steel production directly to the automotive market, a
substantial portion of our sales to the intermediate steel processor and service
center market is resold to various companies in the automotive industry.

      WE MAY BE UNABLE TO PASS ON INCREASES IN THE COST OF SCRAP AND OTHER RAW
      MATERIALS TO OUR CUSTOMERS WHICH WOULD REDUCE OUR EARNINGS

      If we are unable to pass on higher scrap and other raw material costs to
our customers we will be less profitable. We may not be able to adjust our
product prices, especially in the short-term, to recover the costs of increases
in scrap and other raw material prices. Our principal raw material is scrap
metal derived primarily from junked automobiles, industrial scrap, railroad
cars, railroad track materials, agricultural machinery and demolition scrap from
obsolete structures, containers and machines. The prices for scrap are subject
to market forces largely beyond our control, including demand by U.S. and
international steel producers, freight costs and speculation. The prices for
scrap have varied significantly, are currently relatively high, may continue to
vary significantly in the future and do not necessarily fluctuate in tandem with
the price of steel. In addition, our operations require substantial amounts of
other raw materials, including various types of pig iron, alloys, refractories,
oxygen, natural gas and electricity, the price and availability of which are
also subject to market conditions.

      WE HAVE PRIMARILY RELIED UPON ONE SUPPLIER TO MEET OUR STEEL SCRAP
      REQUIREMENTS

      Since our inception, we have had a scrap supply relationship with
OmniSource Corporation, one of the largest scrap processors and brokers in the
Midwest, for our supply of steel scrap. Our current agreement with OmniSource
expires on December 31, 2004. However, we or OmniSource may terminate the
agreement at any time on or after July 1, 2003. If the contract terminates for
any reason, we would have to find another supplier for steel scrap or develop
our own scrap purchasing capability. We may be unable to secure substitute
arrangements for steel scrap on the same or better terms as those in our
contract with OmniSource. In addition, if our contract is adversely changed for
any reason, we may experience an increase in our cost of goods sold.

      For the years ended December 31, 2001 and 2002, we purchased 1.5 million
tons and 2.1 million tons, respectively, of steel scrap and scrap substitutes
from OmniSource which represented approximately 87% and 82%, respectively, of
our total scrap tons purchased during those periods.

      THERE MAY BE POTENTIAL CONFLICTS OF INTEREST WITH REGARD TO OUR
      RELATIONSHIP WITH OMNISOURCE

      With respect to any dispute between us and OmniSource involving our
existing contract, including its remaining term, any future contract, or in
connection with the terms of any commercial transaction, OmniSource may be
viewed as having a conflict of interest between what it perceives as being best
for itself as a seller of scrap and what is best for us as a buyer of scrap. We
may not be able to resolve potential conflicts and if we do resolve them, we may
receive a less favorable resolution since we are dealing with OmniSource rather
than an unaffiliated person. The chief operating officer of OmniSource is also a
member of our board of directors and is a stockholder of Steel Dynamics. This
person has obligations to us as well as to OmniSource and may have conflicts of
interest with respect to matters potentially or actually involving or affecting
us and OmniSource. OmniSource also supplies scrap to many other customers,
including other steel mills.


                                       27
<PAGE>
      WE RELY UPON A SMALL NUMBER OF MAJOR CUSTOMERS FOR A SUBSTANTIAL
      PERCENTAGE OF OUR SALES

      A loss of any large customer or group of customers could materially reduce
our sales and earnings. We have substantial business relationships with a few
large customers. For the years ended December 31, 2001 and 2002, our Butler
mini-mill's top ten customers accounted for approximately 48% and 54% of our
total net sales, respectively. During those periods, our largest customer,
Heidtman, accounted for approximately 18% and 17% of our total net sales. We
expect to continue to depend upon a small number of customers for a significant
percentage of our total net sales, and cannot assure you that any of them will
continue to purchase steel from us.

      THERE MAY BE POTENTIAL CONFLICTS OF INTEREST WITH REGARD TO OUR
      RELATIONSHIP WITH HEIDTMAN STEEL PRODUCTS, INC.

      If a dispute arises between us and Heidtman, we may be viewed as having a
conflict of interest. What is best for Heidtman as a buyer and what is best for
us as a product seller may be at odds. We may be unable to resolve potential
conflicts. If we do resolve them, we may receive a less favorable resolution
since we are dealing with Heidtman rather than an unaffiliated person. Heidtman
is an affiliate of one of our large stockholders and its president and chief
executive officer serves as one of our directors. This person has obligations to
us as well as to Heidtman and may have conflicts of interest with respect to
matters potentially or actually involving or affecting us and Heidtman.

      UNEXPECTED EQUIPMENT FAILURES MAY LEAD TO PRODUCTION CURTAILMENTS OR
      SHUTDOWNS

      Interruptions in our production capabilities will inevitably increase our
production costs, and reduce our sales and earnings for the affected period. In
addition to equipment failures, our facilities are also subject to the risk of
catastrophic loss due to unanticipated events such as fires, explosions or
violent weather conditions. Our manufacturing processes are dependent upon
critical pieces of steelmaking equipment, such as our furnaces, continuous
casters and rolling equipment, as well as electrical equipment, such as
transformers, and this equipment may, on occasion, be out of service as a result
of unanticipated failures. We have experienced and may in the future experience
material plant shutdowns or periods of reduced production as a result of such
equipment failures.

      WE DEPEND HEAVILY ON OUR SENIOR MANAGEMENT AND WE MAY BE UNABLE TO REPLACE
      KEY EXECUTIVES IF THEY LEAVE

      The loss of the services of one or more members of our senior management
team or our inability to attract, retain and maintain additional senior
management personnel could harm our business, financial condition, results of
operations and future prospects. Our senior management founded our company,
pioneered the development of thin-slab, flat-rolled technology and directed the
construction of our Butler mini-mill and Columbia City structural mini-mill. Our
operations and prospects depend in large part on the performance of our senior
management team, including Keith E. Busse, president and chief executive
officer, Mark D. Millett, vice president and general manager of our flat-roll
division, Richard P. Teets, Jr., vice president and general manager of our
structural division, Tracy L. Shellabarger, vice president and chief financial
officer and John W. Nolan, vice president, sales and marketing. Although these
senior managers have each been employees and stockholders of Steel Dynamics for
more than seven years, these individuals may not remain with us as employees. In
addition, we may not be able to find qualified replacements for any of these
individuals if their services are no longer available. We do not have key man
insurance on any of these individuals.

      WE MAY FACE RISKS ASSOCIATED WITH THE IMPLEMENTATION OF OUR GROWTH
      STRATEGY

      Our growth strategy subjects us to various risks. As part of our growth
strategy, we may expand our existing facilities, build additional plants,
acquire other businesses and steel assets, enter into joint ventures, or form
strategic alliances that we believe will complement our existing business. These
transactions will likely involve some or all of the following risks:

      -     the difficulty of competing for acquisitions and other growth
            opportunities with companies having materially greater financial
            resources than ours;

      -     the difficulty of integrating the acquired operations and personnel
            into our existing business;

      -     the potential disruption of our ongoing business;

      -     the diversion of resources;

      -     the inability of management to maintain uniform standards, controls,
            procedures and polices;


                                       28
<PAGE>
      -     the difficulty of managing the growth of a larger company;

      -     the risk of entering markets in which we have little experience;

      -     the risk of becoming involved in labor, commercial, or regulatory
            disputes or litigation related to the new enterprise;

      -     the risk of contractual or operational liability to our venture
            participants or to third parties as a result of our participation;

      -     the inability to work efficiently with joint venture or strategic
            alliance partners; and

      -     the difficulties of terminating joint ventures or strategic
            alliances.

      These transactions might be required for us to remain competitive, but we
may not be able to complete any such transactions on favorable terms or obtain
financing, if necessary, for such transactions on favorable terms. Future
transactions may not improve our competitive position and business prospects as
anticipated, and if they do not, our sales and earnings may be significantly
reduced.

      ENVIRONMENTAL REGULATION IMPOSES SUBSTANTIAL COSTS AND LIMITATIONS ON OUR
      OPERATIONS

      We are subject to the risk of substantial environmental liability and
limitations on our operations brought about by the requirements of environmental
laws and regulations. We are subject to various federal, state and local
environmental, health and safety laws and regulations concerning such issues as
air emissions, wastewater discharges, solid and hazardous waste handling and
disposal, and the investigation and remediation of contamination. These laws and
regulations are increasingly stringent. While we believe that our facilities are
and will continue to be in material compliance with all applicable environmental
laws and regulations, the risks of substantial costs and liabilities related to
compliance with such laws and regulations are an inherent part of our business.
Although we are not currently involved in any remediation activities, it is
possible that future conditions may develop, arise or be discovered that create
substantial environmental remediation liabilities and costs. For example, our
steelmaking operations produce certain waste products, such as electric arc
furnace dust, which are classified as hazardous waste and must be properly
disposed of under applicable environmental laws. These laws can impose clean up
liability on generators of hazardous waste and other substances that are shipped
off-site for disposal, regardless of fault or the legality of the disposal
activities. Other laws may require us to investigate and remediate contamination
at our properties, including contamination that was caused in whole or in part
by third parties. While we believe that we can comply with environmental
legislation and regulatory requirements and that the costs of doing so have been
included within our budgeted cost estimates, it is possible that such compliance
will prove to be more limiting and costly than anticipated. In addition, we need
to obtain the air permit for our coil coating facility at our Butler mini-mill,
which we expect to be issued in the near future, and the air permit for our
Pittsboro mini-mill for which we have yet to make an application. There is no
guarantee that we will obtain these permits and any failure to do so could
adversely affect our business.

      In addition to potential clean up liability, in the past we have been, and
in the future we may become, subject to substantial monetary fines and penalties
for violation of applicable laws, regulations or administrative conditions. We
may also be subject from time to time to legal proceedings brought by private
parties or governmental agencies with respect to environmental matters,
including matters involving alleged property damage or personal injury.

RISKS RELATED TO OUR COMPANY

      WE HAVE SUBSTANTIAL INDEBTEDNESS AND DEBT SERVICE REQUIREMENTS WHICH
      LIMITS OUR FINANCIAL AND OPERATING FLEXIBILITY

      As of December 31, 2002, we had indebtedness of $179 million under our
senior secured credit facility, $200 million in connection with our 9 1/2%
senior notes due 2009, and $100 million in connection with our 4% convertible
subordinated notes due 2012. On January 3, 2003, the initial purchasers of our
4% convertible subordinated notes exercised their right to purchase an
additional $15 million of the notes.

      Our substantial indebtedness limits our financial and operating
flexibility. For example, it could:

      -     make it more difficult to satisfy our obligations with respect to
            our debt, including our various notes;

      -     limit our ability to obtain additional financing for working
            capital, capital expenditures, acquisitions or general corporate
            purposes;


                                       29
<PAGE>
      -     require us to dedicate a substantial portion of our cash flow from
            operations to payments on our debt, reducing our ability to use
            these funds for other purposes;

      -     limit our ability to adjust rapidly to changing market conditions;
            and

      -     increase our vulnerability to downturns in general economic
            conditions or in our business.

      Our ability to satisfy our debt obligations will depend upon our future
operating performance, which in turn will depend upon the successful
implementation of our strategy and upon financial, competitive, regulatory,
technical and other factors, many of which are beyond our control. If we are not
able to generate sufficient cash from operations to make payments under our
credit agreements or to meet our other debt service obligations, we will need to
refinance our indebtedness. Our ability to obtain such financing will depend
upon our financial condition at the time, the restrictions in the agreements
governing our indebtedness and other factors, including general market and
economic conditions. If such refinancing were not possible, we could be forced
to dispose of assets at unfavorable prices. Even if we could obtain such
financing, we cannot be sure that it would be on terms that are favorable to us.
In addition, we could default on our debt obligations.

      OUR SENIOR SECURED CREDIT AGREEMENT AND THE INDENTURE RELATING TO OUR
      9 1/2% SENIOR NOTES DUE 2009 CONTAIN RESTRICTIVE COVENANTS THAT MAY LIMIT
      OUR FLEXIBILITY

      Restrictions and covenants in our existing debt agreements, including our
senior secured credit agreement and the indenture relating to our 9 1/2% senior
notes due 2009, and any future financing agreements, may impair our ability to
finance future operations or capital needs or to engage in other business
activities. Specifically, these agreements will restrict our ability to:

      -     incur additional indebtedness;

      -     pay dividends or make distributions with respect to our capital
            stock;

      -     repurchase or redeem capital stock;

      -     make investments;

      -     create liens and enter into sale and leaseback transactions;

      -     make capital expenditures;

      -     enter into transactions with affiliates or related persons;

      -     issue or sell stock of certain subsidiaries;

      -     sell or transfer assets; and

      -     participate in certain joint ventures, acquisitions or mergers.

      A breach of any of the restrictions or covenants in our debt agreements
could cause a default under our senior secured credit agreement, other debt or
the notes. A significant portion of our indebtedness then may become immediately
due and payable. We are not certain whether we would have, or be able to obtain,
sufficient funds to make these accelerated payments, including payments on the
notes.

      WE MAY NOT HAVE SUFFICIENT CASH FLOW TO MAKE PAYMENTS ON OUR NOTES AND OUR
      OTHER DEBT

      Our ability to pay principal and interest on our various notes and on our
other debt and to fund our planned capital expenditures depends on our future
operating performance. Our future operating performance is subject to a number
of risks and uncertainties that are often beyond our control, including general
economic conditions and financial, competitive, regulatory and environmental
factors. For a discussion of some of these risks and uncertainties, please see
"Risk Factors -- Risks Related to Our Business." Consequently, we may not have
sufficient cash flow to meet our liquidity needs, including making payments on
our indebtedness.


                                       30
<PAGE>
      If our cash flow and capital resources are insufficient to allow us to
make scheduled payments on our various notes or on our other debt, we may have
to sell assets, seek additional capital or restructure or refinance our debt. If
we are required to do that, the terms of our debt may not allow for these
alternative measures, even if permitted, such measures might not satisfy our
scheduled debt service obligations.

      If we cannot make scheduled payments on our debt:

      -     our debtholders could declare all outstanding principal and interest
            to be due and payable;

      -     the lenders under our senior secured credit agreement could
            terminate their commitments and commence foreclosure proceedings
            against our assets; and

      -     we could be forced into bankruptcy or liquidation.

      -     you could lose all or part of your investment in the notes.

      DESPITE OUR SUBSTANTIAL INDEBTEDNESS, WE MAY STILL INCUR SIGNIFICANTLY
      MORE DEBT, WHICH COULD FURTHER INCREASE THE RISKS DESCRIBED ABOVE

      The terms of our senior secured credit agreement and the indentures
related to our 4% convertible subordinated notes due 2012 and our 9 1/2% senior
notes due 2009 do not prohibit us or our subsidiaries from incurring additional
indebtedness in the future. Any additional debt could be senior to the notes and
could increase the risks described above.

      OUR STOCK PRICE MAY BE VOLATILE AND COULD DECLINE SUBSTANTIALLY

      Our stock price may decline substantially as a result of the volatile
nature of the stock market and other factors beyond our control. The stock
market has, from time to time, experienced extreme price and volume
fluctuations. Many factors may cause the market price for our common stock to
decline, including:

   -  our operating results failing to meet the expectations of securities
      analysts or investors in any quarter;

   -  downward revisions in securities analysts' estimates;

   -  material announcements by us or our competitors;

   -  public sales of a substantial number of shares of our common stock;

   -  governmental regulatory action; or

   -  adverse changes in general market conditions or economic trends.

In the past, companies that have experienced volatility in the market price of
their stock have been the subject of securities class action litigation. If we
become involved in securities class action litigation in the future, it could
result in substantial costs and diversion of management attention and resources,
thus harming our business.

      CONVERSION OF OUR 4% CONVERTIBLE SUBORDINATED NOTES DUE 2012 WILL DILUTE
      THE OWNERSHIP INTERESTS OF EXISTING STOCKHOLDERS

      The conversion of some or all of our 4% convertible subordinated notes due
2012 will dilute the ownership interest of existing stockholders. Any sales in
the public market of the common stock issuable upon such conversion could
adversely affect prevailing market prices of our common stock. In addition, the
existence of the notes may encourage short selling by market participants
because the conversion of the notes could depress the price of our common stock.

      SHARES ELIGIBLE FOR PUBLIC SALE COULD ADVERSELY AFFECT OUR STOCK PRICE

      The future sale of a substantial number of our shares of common stock in
the public market, or the perception that such sales could occur, could
significantly reduce our stock price. It could also make it more difficult for
us to raise funds through equity offerings in the future. As of March 21, 2003,
we had 47,659,398 shares of common stock outstanding including 14,000,371


                                       31
<PAGE>
restricted shares held by some of our stockholders. This does not include the
6,762,874 shares of common stock that are issuable upon conversion of our 4%
convertible subordinated notes due 2012. The restricted shares may in the future
be sold without registration under the Securities Act of 1933 to the extent
permitted by Rule 144 under the Securities Act or any applicable exemption under
the Securities Act. In addition, stockholders holding 13,564,221 of these
restricted shares have the right to require us to file a registration statement
under the Securities Act to register their shares of common stock.

      In addition, we have filed registration statements under the Securities
Act to register shares of common stock reserved for issuance under our stock
option plans, thus permitting the resale of such shares by non-affiliates upon
issuance in the public market without restriction under the Securities Act. As
of March 21, 2003, options to purchase 2,610,522 shares were outstanding under
these stock option plans.

      WE DO NOT EXPECT TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE

      Since our initial public offering, we have not declared or paid cash or
other dividends on our common stock and do not expect to pay cash dividends for
the foreseeable future. We currently intend to retain all future earnings for
use in the operation of our business and to fund future growth. In addition, the
terms of our senior secured credit agreement and the indenture relating to our
senior notes restrict our ability to pay cash dividends. Even if these
restrictions are removed, any future cash dividends will depend upon our results
of operations, financial conditions, cash requirements, the availability of a
surplus and other factors.

      PROVISIONS UNDER INDIANA LAW MAY DETER ACQUISITION BIDS FOR US

      Provisions under the Indiana Business Corporation Law may have the effect
of delaying or preventing transactions involving a change of control, including
transactions in which stockholders might otherwise receive a substantial premium
for their shares over then current market prices. As a result, these provisions
may limit the ability of stockholders to approve transactions that they may deem
to be in their best interest or may delay or frustrate the removal of incumbent
directors.

ITEM 2.  PROPERTIES

      Our corporate headquarters are located in our new building in Fort Wayne
at 6714 Pointe Inverness Way, Suite 200. We currently occupy approximately
10,000 square feet of a 50,000 square foot office building we constructed during
2000. The building is in a prime commercial real estate location and we are
presently in the process of leasing the balance of office space to commercial
tenants.

      Our Flat Roll Division's plant and administrative offices that serve its
Butler mini-mill are located on approximately 840 acres, in Butler, DeKalb
County, Indiana. During 1999, we purchased approximately 108 acres of additional
unimproved farmland contiguous or in close proximity to our Butler mini-mill for
future development.

      Iron Dynamics' facility is located on approximately 26 acres, within the
footprint of our Butler, Indiana mill site, that are leased from us under a
long-term lease at nominal consideration.

      Our Structural and Rail Division is situated on a 609-acre tract of land
in Columbia City, Indiana.

      Our Pittsboro, Indiana bar mill is situated on a 138-acre tract of land
along County Road 225 East, south of Interstate 74 in Hendricks County, Indiana.
The plant contains approximately 325,000 square feet under roof.

      Our new galvanizing facility in Jeffersonville, Indiana is located within
a 210,000 square foot group of buildings situated in the Clark Maritime Center
on the Ohio River.

      New Millennium's operations are conducted in a 242,000 square foot
facility on 96 acres of land near our Butler mini-mill.

ITEM 3.  LEGAL PROCEEDINGS

      H&M Industrial Services, Inc., formerly known as National Industrial
Services, Inc., filed an action on January 24, 2001, against our subsidiary Iron
Dynamics in the Circuit Court of DeKalb County, Indiana, Cause No.
17C01-0101-CP-016. They are asking for damages of approximately $1.7 million
arising out of work allegedly performed by H&M, for which they claim they have
not been paid, in connection with the construction of Iron Dynamics' ironmaking
facility. We have denied all liability to H&M for any amount and believe that we
have adequate defenses to such claims, both factually and legally, under the
governing construction contracts and documents.


                                       32
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

      Our common stock trades on The NASDAQ Stock Market under the symbol STLD.
The table below sets forth, for the calendar quarters indicated, the reported
high and low sales prices of the common stock:

<TABLE>
<CAPTION>
     2002                                           High               Low
     ----                                          -------           --------
<S>                                              <C>                <C>
       First Quarter                             $  16.890          $ 11.400
       Second Quarter                               19.300            15.250
       Third Quarter                                18.400            10.610
       Fourth Quarter                               14.690            11.800

     2001                                           High               Low
     ----                                          -------           --------
       First Quarter                             $  13.250          $ 10.000
       Second Quarter                               14.950            10.688
       Third Quarter                                14.950             8.930
       Fourth Quarter                               12.040             9.000
</TABLE>

      As of March 21, 2003 we had 47,631,097 shares of common stock outstanding
and held beneficially by approximately 9,600 stockholders. Because many of the
shares were held by depositories, brokers and other nominees, the number of
registered holders (approximately 620) is not representative of the number of
beneficial holders.

      Effective June 1, 2000, the board of directors authorized the extension
and continuation of our 1997 share repurchase program, allowing us to repurchase
an additional 5%, or 2.3 million shares, of our outstanding common stock, at a
purchase price not to exceed $15 per share. At December 31, 2002, we had
acquired 3.8 million shares of our common stock in open market purchases of
which 3,000 shares were purchased during 2002, none were repurchased during 2001
and 2.5 million shares were purchased during 2000. The average price per share
of these purchases is $12. As of December 31, 2002, approximately 954,000 shares
remain available for us to repurchase under the June 2000 repurchase
authorization. During March 2002, pursuant to the IDI Settlement described in
Note 3 to our consolidated financial statements, we issued 1.5 million shares of
our treasury stock at an average cost of $12 per share, to the Iron Dynamics
lenders.

      We have never declared or paid cash dividends. We currently anticipate
that all of our future earnings will be retained to finance the expansion of our
business and do not anticipate paying cash dividends in the foreseeable future.
Any determination to pay cash dividends in the future will be at the discretion
of our board of directors, after taking into account various factors, including
our financial condition, results of operations, outstanding indebtedness,
current and anticipated cash needs and plans for expansion. In addition, the
terms of our senior secured credit agreement and the indenture relating or our
senior notes restrict our ability to pay cash dividends.


                                       33
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth the selected consolidated financial and operating
data of Steel Dynamics. The selected consolidated financial and operating data
as of and for each of the years in the five-year period ended December 31, 2002
were derived from our audited consolidated financial statements. You should read
the following data in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements and notes appearing elsewhere in this Form 10-K.

      You should also read the following information in conjunction with the
data in the table on the following page:

      -     Our 2002 extraordinary loss of $3.5 million (net of tax benefit of
            $2.1 million) consisted of prepayment penalties and the write-off of
            capitalized financing costs associated with our March and December
            2002 refinancings.

      -     "Operating profit per ton shipped" represents consolidated operating
            income before start-up costs divided by consolidated net ton
            shipments.

      -     "Hot band production" refers to our Flat Roll Division's total
            production of finished coiled product. "Prime tons" refer to hot
            bands produced, which meet or exceed quality standards for surface,
            shape and metallurgical properties.

      -     "Yield percentage" refers to our Flat Roll Division's tons of
            finished product divided by tons of raw materials.

      -     "Effective capacity utilization" is the Flat Roll Division's ratio
            of tons produced for the operational period to the operational
            period's capacity. For the data disclosed in the periods ended
            December 31, 1998, we used an annual capacity of 1.8 million tons,
            respectively, for this calculation. For the data disclosed in the
            four years ended December 31, 2002, we used an annual production
            capacity of 2.2 million tons. During 2002, the Flat Roll Division
            produced 2.4 million tons to meet market demand.

      -     For purposes of calculating our ratio of earnings to fixed charges,
            earnings consist of earnings from continuing operations before
            income taxes and extraordinary items, adjusted for the portion of
            fixed charges deducted from these earnings, plus amortization of
            capitalized interest. Fixed charges consist of interest on all
            indebtedness, including capitalized interest, and amortization of
            debt issuance costs, excluding amortization of debt issuance costs
            classified as extraordinary. For the year ended December 31, 2001,
            earnings were insufficient to cover fixed charges by $7.3 million.


                                       34
<PAGE>
<TABLE>
                                                                      YEARS ENDED DECEMBER 31,
                                                 ----------------------------------------------------------------
                                                    2002           2001         2000         1999         1998
                                                 ----------     ---------    ---------    ---------    ----------
                                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER TON DATA)
<CAPTION>
<S>                                              <C>            <C>          <C>          <C>          <C>
OPERATING DATA:
Net sales                                         $ 864,493      $606,984     $692,623     $618,821     $ 514,786
Cost of goods sold                                  638,860       522,927      533,914      487,629       428,978
                                                  ---------      --------     --------     --------     ---------
   Gross profit                                     225,633        84,057      158,709      131,192        85,808
Selling, general and administrative expenses         61,731        58,132       53,306       42,441        20,637
                                                  ---------      --------     --------     --------     ---------
   Income from operations                           163,902        25,925      105,403       88,751        65,171

Interest expense                                     30,201        18,480       20,199       22,178        17,538
Other (income) expense                                3,689         2,333          719        1,294        (4,993)
                                                  ---------      --------     --------     --------     ---------
   Income before income taxes
     and extraordinary items                        130,012         5,112       84,485       65,279        52,626
Income tax expense                                   48,676         1,968       30,690       25,849        20,942
                                                  ---------      --------     --------     --------     ---------
   Income before extraordinary items                 81,336         3,144       53,795       39,430        31,684
Extraordinary loss, net of tax                        3,459            --           --           --            --
                                                  ---------      --------     --------     --------     ---------
   Net Income                                     $  77,877      $  3,144     $ 53,795     $ 39,430     $  31,684
                                                  =========      ========     ========     ========     =========

BASIC EARNINGS PER SHARE:
Income before extraordinary items                 $    1.72      $    .07     $   1.15     $    .82     $     .65
Extraordinary loss                                     (.07)           --           --           --            --
                                                  ---------      --------     --------     --------     ---------
Net income                                        $    1.65      $    .07     $   1.15     $    .82     $     .65
                                                  =========      ========     ========     ========     =========
Weighted average common shares outstanding ..        47,144        45,655       46,822       47,914        48,462
                                                  =========      ========     ========     ========     =========

DILUTED EARNINGS PER SHARE:
Income before extraordinary items                 $    1.71      $    .07     $   1.15     $    .82     $     .65
Extraordinary loss                                     (.07)           --           --           --            --
                                                  ---------      --------     --------     --------     ---------
Net income                                        $    1.64      $    .07     $   1.15     $    .82     $     .65
                                                  =========      ========     ========     ========     =========
Weighted average common shares and share
  equivalents outstanding                            47,463        45,853       46,974       48,153        48,868
                                                  =========      ========     ========     ========     =========

OTHER FINANCIAL DATA:
Operating profit per net ton shipped ........   $        74    $       23   $       65   $       58   $        50
Capital expenditures ........................       142,600        90,714      110,379      126,673       194,131
Ratio of earnings to fixed charges ..........          3.74x         0.79x        2.78x        2.48x         3.10x

OTHER DATA:
Shipments (net tons) ........................     2,390,342     1,963,602    1,919,368    1,869,714     1,416,950
Hot band production (net tons) ..............     2,373,140     2,015,991    2,031,025    1,938,234     1,425,699
Prime ton percentage - hot band .............          94.7          95.9         93.9         94.2          95.3
Yield percentage - hot band .................          89.2          87.5         87.7         87.8          87.7
Effective capacity utilization - hot band ...         107.9          91.6         92.3         88.1          79.2
Man-hours per hot band net ton produced .....           .31           .37          .37          .41           .55
Shares outstanding at year end, net of shares
  held in treasury (000s) ...................        47,581        45,743       45,505       47,971        47,864
Number of employees .........................           869           676          651          650           591

BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents ...................        24,218    $   78,241   $   10,184   $   16,615   $     5,243
Working capital .............................       197,353       194,093      165,915      155,226       162,117
Net property, plant and equipment ...........       929,338       852,061      807,322      742,787       665,872
Total assets ................................     1,275,696     1,180,098    1,067,074      991,556       907,470
Long-term debt (including current maturities)       555,450       599,924      532,520      505,963       483,946
Stockholders' equity ........................       521,660       418,575      418,784      391,370       351,065
</TABLE>


                                       35
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

      The following discussion contains forward-looking statements that involve
numerous risks and uncertainties. Our actual results could differ materially
from those discussed in the forward-looking statements as a result of these
risks and uncertainties, including those set forth in this report under
"Forward-Looking Statements" and under "Risk Factors." You should read the
following discussion in conjunction with "Selected Financial Data" and our
consolidated financial statements and notes appearing elsewhere in this filing.

BUSINESS DISCUSSION

      We are a domestic steel manufacturing company that primarily owns and
operates electric arc furnace mini-mills. Our steel operations include a Flat
Roll Division, a Structural and Rail Division and a forthcoming Bar Division.

      Our Flat Roll Division is currently our core business and consists of a
flat-roll mini-mill located in Butler, Indiana, which we built and have operated
since 1996, with an annual estimated production capacity of 2.2 million tons of
flat-rolled steel, although we achieved record production of 2.4 million tons
during 2002. Our Flat Roll Division produces a broad range of high-quality
hot-rolled, cold-rolled and coated steel products, including a large variety of
value-added and high-margin specialty products, such as thinner-gauge rolled
products and galvanized products. We sell our flat-rolled products directly to
end-users, intermediate steel processors and service centers located primarily
in the Midwestern United States. Our flat-rolled products are used in numerous
industry sectors, including the automotive, construction and commercial
industries. Our largest customer, Heidtman Steel Products, Inc. purchased $146
million of our flat-rolled products, or 17% of our consolidated net sales,
during 2002. Sales from our Flat Roll Division accounted for 89% of our
consolidated net sales during 2001 and 2002.

      During May 2002, our Flat Roll Division announced plans to construct a new
coil coating facility at our Butler mini-mill at a cost of approximately $25 to
$30 million. We expect to complete construction of this facility and commence
coating operations during mid-2003. We are constructing this facility to have an
annual production capacity of 240,000 tons of coated flat-rolled products. As
another addition to our Flat Roll Division, on March 14, 2003, we purchased the
galvanizing assets of GalvPro II, LLC for $17.5 million, plus a potential of an
additional $1.5 million, based on an earn-out formula. This steel coating
facility is located in Jeffersonville, Indiana, and has an estimated annual
production capacity of between 300,000 and 350,000 tons of light-gauge,
hot-dipped, cold-rolled galvanized steel. We plan to primarily supply the
Jeffersonville facility with steel coils from our Flat Roll Division. We
anticipate investing an additional $2 to $6 million for certain equipment
modifications and upgrades to the facility, with production beginning in
mid-2003. These additions to our Flat Roll Division should enable us to further
increase our mix of higher-margin, value-added steel product sales.

      Our Structural and Rail Division consists of a structural and rail
mini-mill located in Columbia City, Indiana. We began construction in May 2001,
completed the facility in April 2002 and commenced commercial structural steel
operations during the third quarter of 2002. During 2002, we recorded
pre-production start-up costs of $13 million. Our structural and rail mini-mill
is designed to have an annual production capacity of up to 1.3 million tons of
structural steel beams, pilings and other steel components, as well as standard
and premium-grade rails. We are currently producing at approximately 45% of
capacity, although our structural steel sales accounted for only 2% of our
consolidated net sales during 2002. Through regular product introductions and
continued production ramp-up of structural steel products, the Structural and
Rail Division should be able to offer a full complement of wide-flange beam and
H-piling structural steel products by the end of the first quarter of 2003. In
addition, we expect to begin production of standard rail products during the
second quarter of 2003. Initial rail production will be used in a testing
capacity to be monitored by individual railroad companies for qualification
purposes. This qualification process may take between six and nine months for
completion. We generally sell our structural products directly to end-users and
steel service centers for use in the construction, transportation and industrial
machinery markets.

      On September 9, 2002, we purchased the special bar quality mini-mill
assets of Qualitech Steel SBQ, LLC, located in Pittsboro, Indiana, for $45
million. We plan to invest between $70 and $75 million of additional capital to
convert the facility to the production of merchant bars and shapes and
reinforcing bar products, as well as SBQ products. We anticipate our Bar
Division will have an annual production capacity of between 500,000 and 600,000
tons and that initial production will commence during the first quarter of 2004.
We plan to market the bar products directly to end-users, fabricators and steel
service centers for the construction, transportation and industrial machinery
markets.

      The U.S. steel industry has historically been and continues to be, highly
cyclical in nature, evidenced by a significant downturn in the second half of
2000 through most of 2001. During this period, our business was also adversely
impacted with our net sales declining from $693 million in 2000 to $607 million
in 2001 and our earnings declining from $54 million in 2000 to $3 million in
2001. However, during 2002, domestic flat-rolled steel prices increased
dramatically to more normalized levels from historical cyclical lows in 2001.
This increase resulted from a number of factors, including (1) a reduction in
domestic steel production capacity


                                       36
<PAGE>
as a result of past bankruptcies and shutdowns of other U.S. steel producers,
(2) a reduction in imports, driven in part by favorable rulings with respect to
tariffs and quotas on foreign steel and (3) a strengthening of the overall U.S.
economy and the need for end-users of steel products to replenish their depleted
inventories. As a result of our efficient, low-cost operations, and these
improvements in the domestic flat-roll steel markets, we achieved record
consolidated net sales of $864 million and net income of $78 million during
2002. During the first quarter of 2003, however, we have experienced downward
pricing pressure due in part to a weakened economy and decreased demand and in
part to the reappearances in the market place of substantial domestic steel
production tonnage that had left the market during 2002. This has resulted in a
softening of flat-rolled steel prices. In addition to decreased sales prices, we
are also experiencing an increase in our cost of metallic raw materials, causing
a further tightening in our first quarter 2003 margins.

      Metallic raw materials used in our electric arc furnaces represent our
single-most significant manufacturing cost, generally accounting for between 45%
and 50% of our consolidated cost of goods sold. The metallic raw material mix
utilized in our electric arc furnaces is composed of approximately 85% steel
scrap and 15% alternative iron units. From the second quarter of 2000 throughout
2001, we experienced a steady decline in metallic raw material pricing, reaching
historically low levels in the fourth quarter of 2001; however, during 2002 and
into the first quarter of 2003, we have experienced a steady pricing increase.
We believe this increase is partly due to increased demand for these metals from
foreign steel manufacturers.

      Since 1997, in an effort to reduce our exposure to these metals markets,
we have tried to develop and commercialize a pioneering process for the
production of a virgin form of iron which might serve as a lower-cost substitute
for the alternative iron units utilized in our electric arc furnaces for melting
into new steel. Our process involves the production and conversion of
direct-reduced iron into liquid pig iron at our iron making facility, Iron
Dynamics. Since we began initial operations at Iron Dynamics in 1999, the
facility has produced and sold a minimal amount of liquid pig iron to our Flat
Roll Division. During 1999 and 2000, we encountered a number of difficulties
associated with major pieces of equipment and operating processes, causing us to
shut down the facility for redesign, re-engineering and retrofitting. In July
2001, we indefinitely suspended operations due to (a) higher-than-expected
start-up and process refinement costs, (b) lower-than-expected production
quantities, (c) exceptionally high energy costs, and (d) historically low steel
scrap pricing. These factors made the cost of producing and using Iron Dynamics'
scrap substitute at our Flat Roll Division higher than our cost of purchasing
and using steel scrap, more specifically, pig iron. During the next year, we
continued to evaluate our systems and processes, and on July 10, 2002, we
announced that Iron Dynamics would begin experimental production trials in the
fourth quarter of 2002. After an evaluation of these trials, we concluded that
the improved production technology and the ability to recycle waste materials
might significantly reduce the per-unit cost of liquid pig iron production. We
believe that the restart of the facility is feasible based upon this potential
cost reduction, coupled with currently higher steel scrap prices and with the
anticipated cost benefits to be realized at our Flat Roll Division from the use
of liquid pig iron. On February 24, 2003, we announced plans to restart Iron
Dynamics and currently expect that operations will restart during the second
half of 2003. We could begin commercial production later in the year, if the
results of our restart indicate that we will be able to produce liquid pig iron
in sufficient quantities and at a cost to be competitive with purchased pig
iron. During 2003, we expect to invest $14 million of additional capital for the
necessary modifications and refinements to the facility.

      During the first quarter of 2003, we also increased our ownership interest
in our consolidated subsidiary, New Millennium Building Systems, from 46.6% to
100% for approximately $8 million. New Millennium began production in 2000 and
produces joists, girders, trusses and steel roof and floor decking, which is
sold primarily in the upper Midwest non-residential building components market.

CONSOLIDATED RESULTS OF OPERATIONS

INCOME STATEMENT CLASSIFICATIONS

      NET SALES. Our total net 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 charge
marginally higher prices for our value-added products from our cold mill. These
products include hot-rolled and cold-rolled galvanized products and cold-rolled
products.

      COST OF GOODS SOLD. Our cost of goods sold represents all direct and
indirect costs associated with the manufacture of our products. The principal
elements of these costs are steel scrap and scrap substitutes, alloys, natural
gas, argon, direct and indirect labor benefits, electricity, oxygen, electrodes,
depreciation and freight. Our metallic raw materials, steel scrap and scrap
substitutes, represent the most significant component of our cost of goods sold.

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses consist of all costs associated with our 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.


                                       37
<PAGE>
      INTEREST EXPENSE. Interest expense consists of interest associated with
our senior credit facilities and other debt agreements as described in the notes
to our financial statements contained elsewhere in this filing, 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 balances and any other non-operating income activity, including
insurance proceeds from litigation efforts. Other expense consists of any
non-operating costs, including permanent impairments of reported investments and
settlement costs from litigation efforts.

2002 VS. 2001

      NET SALES. Our net sales were $864.5 million, with total shipments of 2.4
million net tons during 2002, as compared to net sales of $607.0 million, with
total shipments of 2.0 million net tons during 2001, an increase in net sales of
$257.5 million, or 42%, and an increase in total shipments of 427,000 net tons,
or 22%. The entire steel industry experienced pricing declines from the second
half of 2000 throughout 2001, reaching the low in the fourth quarter of 2001.
However, during 2002, prices of domestic flat-rolled steel, which accounted for
93% of our consolidated net sales during the year, increased dramatically to
more normalized levels for reasons previously described. During 2002, our
average consolidated selling price per ton increased approximately $53, or 17%,
in comparison to 2001.

      COST OF GOODS SOLD. Cost of goods sold was $638.9 million during 2002, as
compared to $522.9 million during 2001, an increase of $116.0 million, or 22%,
which was due in large part to record sales and production volumes. As a
percentage of net sales, cost of goods sold represented approximately 74% and
86% during the years 2002 and 2001, respectively. We experienced a narrowing of
our gross margin throughout 2001 as our average sales price per ton decreased
more rapidly than our average metallic raw material cost per ton, which is the
most significant single component of our cost of goods sold. However, during
2002, our gross margin strengthened as our average product pricing increased by
a greater degree than our average metallic costs and as we realized greater
operating efficiencies through increased production. Metallic raw materials
represented 48% and 44% of our cost of goods sold during 2002 and 2001,
respectively. We experienced a steady decline in metallic costs from the second
quarter of 2000 through the first quarter of 2002, at which time this downward
trend ended. Our average metallic raw material cost per hot-band ton produced
was $6, or 5%, higher during 2002 than during 2001.

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $61.7 million during 2002, as compared to $58.1
million during 2001, an increase of $3.6 million, or 6%. A portion of these
expenses in both years was attributable to performance-related employee
incentive programs, facility start-up costs, and litigation costs associated
with the Nakornthai Strip Mill Public Company Ltd., or NSM, litigation efforts.
Costs associated with our performance-related employee profit-sharing plan
increased approximately $7.2 million during our record earnings year of 2002, as
compared to 2001. During the first six months of 2002, costs associated with
start-up activities at our Structural and Rail Division were $13.2 million
compared to start-up costs during 2001 of $19.5 million, of which $8.4 million
related to the Structural and Rail Division and $11.0 million related to Iron
Dynamics. Litigation costs associated with the NSM litigation efforts were
$262,000 and $8.9 million during 2002 and 2001, respectively. As a percentage of
net sales, selling, general and administrative expenses represented
approximately 7% and 10% during 2002 and 2001, respectively.

      INTEREST EXPENSE. Interest expense was $30.2 million during 2002, as
compared to $18.5 million during 2001, an increase of $11.7 million, or 63%.
During 2002, gross interest expense increased 22% to $41.6 million and
capitalized interest decreased 18% to $11.4 million, as compared to 2001. The
increase in our gross interest expense, despite the 7% decrease in our total
debt, was due to an increase in our average interest rate caused by the March
2002 refinancing, in which we accessed traditionally higher-priced public debt
markets. The decrease in our capitalized interest resulted from the reduction of
interest required to be capitalized with respect to our Structural and Rail
Division since construction was substantially complete at June 30, 2002.

      OTHER (INCOME) EXPENSE. Other expense was $3.7 million during 2002, as
compared to $2.3 million during 2001, an increase of $1.4 million. On May 6,
2002, we settled the remaining lawsuit associated with the NSM litigation. We
recorded settlement costs of $4.5 million and $2.3 million, net of any insurance
proceeds, in association with the NSM-related lawsuits during 2002 and 2001,
respectively.

      INCOME TAXES. During 2002, our income tax provision was $48.7 million,
less a $2.1 million tax benefit related to our extraordinary loss on debt
extinguishments, during 2002, as compared to $2.0 million during 2001. Our
effective tax rate was 37.4% and 38.5% for 2002 and 2001, respectively. During
2001, we recorded a $1.9 million deferred tax asset valuation allowance related
to foreign tax credits that may not be fully realized. This allowance is still
outstanding at December 31, 2002.

      EXTRAORDINARY ITEMS. During 2002, we recorded an extraordinary loss of
$3.5 million, less a related tax benefit of $2.1 million, related to the
write-off of deferred financing costs due to our March and December refinancing
activities.


                                       38
<PAGE>
2001 VS. 2000

      NET SALES. Our net sales were $607.0 million, with total shipments of 2.0
million net tons during 2001, as compared to net sales of $692.6 million, with
total shipments of 1.9 million net tons during 2000, a decrease in net sales of
$85.6 million, or 12%, and an increase in total shipments of 44,000 net tons, or
2%. The entire steel industry experienced pricing declines from the second half
of 2000 throughout 2001, reaching the low in the fourth quarter of 2001. During
2001, the average selling price per ton decreased approximately $52, or 14%, in
comparison to the same period in 2000, resulting in a 12% decline in net sales
despite a 2% increase in net shipments. Heidtman, our largest customer,
accounted for approximately 18% and 21% of our net sales during 2001 and 2000,
respectively.

      COST OF GOODS SOLD. Cost of goods sold was $522.9 million during 2001, as
compared to $533.9 million during 2000, a decrease of $11.0 million, or 2%.
Metallic raw materials represented approximately 44% and 51% of the total cost
of goods sold during 2001 and 2000, respectively. We experienced a steady
decline in our metallic raw material pricing from the second quarter of 2000
throughout 2001, reaching the low in the fourth quarter of 2001. The costs
associated with these metals averaged $18, or 14%, per ton less during 2001 than
during 2000. As a percentage of net sales, cost of goods sold represented
approximately 86% and 77% for the years 2001 and 2000, respectively. We
experienced a narrowing of our gross margin throughout 2001 as our average sales
price per ton decreased more rapidly than our average metallic raw material cost
per ton.

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $58.1 million during 2001, as compared to $53.3
million during 2000, an increase of $4.8 million, or 9%. A substantial portion
of these expenses in both years was attributable to costs associated with the
NSM litigation efforts and start-up costs associated with Iron Dynamics and the
structural and rail mill. Litigation costs associated with the NSM litigation
efforts were $8.9 million for 2001, as compared to $6.1 million for 2000, an
increase of $2.8 million, or 45%. Start-up costs were $19.5 million, of which
Iron Dynamics represents $11.0 million (including $1.7 million of interest
expense), during 2001, as compared to total start-up costs of $19.9 million, of
which Iron Dynamics represents $12.4 million, during 2000, a decrease of
$393,000 or 2%. During 2001, we also recorded bad debt expense of $6.0 million,
as compared to $349,000 during 2000, an increase of $5.7 million. Approximately
$4.7 million of this increase in bad debt expense was the result of two Flat
Roll Division customers declaring bankruptcy during 2001. As a percentage of net
sales, selling, general and administrative expenses represented approximately
10% and 8% during 2001 and 2000, respectively.

      INTEREST EXPENSE. Interest expense was $18.5 million during 2001, as
compared to $20.2 million during 2000, a decrease of $1.7 million, or 9%. Gross
interest expense decreased 10% to $34.1 million and capitalized interest
decreased 20% to $14.0 million, for 2001, as compared to 2000. Throughout 2001,
base interest rates, more specifically LIBOR and prime rates, steadily decreased
in comparison to 2000 levels, resulting in the 10% decrease in our gross
interest expense despite a 4% increase in our total net debt (total debt,
including other long-term contingent liabilities, less cash and cash
equivalents).

      OTHER (INCOME) EXPENSE. Other expense was $2.3 million during 2001, as
compared to $719,000 during 2000, an increase of $1.6 million. During 2001, we
recorded settlement costs, along with the offsetting insurance proceeds,
associated with settlements of a portion of the NSM-related lawsuits. On March
7, 2002, we settled one of two remaining NSM-related lawsuits, which was
outstanding on December 31, 2001. Accordingly, we reflected a settlement cost of
$2.3 million, which represents the settlement amount not covered by insurance
proceeds, in our financial results for 2001. During 2000, other expense included
the write-off of the remaining investment in NSM of approximately $1.4 million.

      INCOME TAXES. Our income tax provision was $2.0 million, with an effective
tax rate of 38.5%, during 2001, as compared to $30.7 million, with an effective
tax rate of 36.3%, during 2000. During 2001, we recorded a $1.9 million deferred
tax asset valuation allowance related to foreign tax credits that may not be
fully realized. This allowance was offset by a $1.4 million reduction in the
effective tax rate applied to our cumulative net deferred tax liability.

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 in compliance 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.

CASH FLOWS

      During 2002, cash provided by operating activities was $115.0 million, as
compared to $67.4 million during 2001, an increase of $47.6 million, or 71%,
primarily driven by our increases in earnings during 2002. Cash used in
investing activities for
<PAGE>
capital investments was $133.8 million and $90.7 million for 2002 and 2001,
respectively. Approximately 59% of our capital investment costs during 2002 were
incurred in the construction of our Structural and Rail Division and
approximately 34% were used to purchase our Bar Division assets in Pittsboro,
Indiana. Cash used in financing activities was $35.3 million during 2002 and
cash provided by financing activities was $91.4 million during 2001. Our
decrease in funds due to financing activities during 2002 resulted from our
change in capital structure during March and December and from a decrease in
Iron Dynamics' debt due to an agreement with the Iron Dynamics' senior bank
lenders to extinguish $37.0 million of senior secured debt, during March 2002.
We also spent $17.7 million on costs related to our March and December
refinancing activities, in which we accessed the public debt markets for the
first time. These refinancings allowed us to lengthen scheduled debt
amortizations and achieve greater financial flexibility through further capital
diversification.

      During 2002, we received benefits from state and local governments in the
form of real estate and personal property tax abatements of approximately $4.5
million. Based on our current abatements and utilizing our existing long-lived
asset structure, we estimate the remaining annual effect on future operations to
be approximately $3.3 million, $2.8 million, $2.2 million, $1.3 million,
$998,000, $536,000, $269,000, $63,000 and $25,000, during the years 2003 through
2011, respectively.

LIQUIDITY

      We believe the principal indicators of our liquidity are our cash
position, remaining availability under our bank credit facilities and excess
working capital. During 2002, our cash position decreased $54.0 million to $24.2
million and our working capital position increased $3.3 million to $197.4
million, as compared to December 31, 2001. As of December 31, 2002, $75.0
million under our senior secured revolving credit facility remained undrawn and
available. Our ability to draw down the revolver is dependent upon our continued
compliance with the financial covenants and other covenants contained in our
senior secured credit agreement. We were in compliance with these covenants at
December 31, 2002, and expect to be in compliance during 2003.

      In March 2002, we issued $200.0 million of 9.5% senior unsecured notes and
we entered into a new $350.0 million senior secured credit agreement in order to
refinance our existing senior secured and unsecured credit facilities and to
obtain additional working capital. The $350.0 million credit facility was made
available to us as $75.0 million in the form of a five-year revolving credit
facility, $70.0 million in the form of a five-year term A loan and $205.0
million in the form of a six-year term B loan. The new senior secured credit
agreement is secured by liens and mortgages on substantially all of our personal
and real property assets, by liens and mortgages on substantially all of the
personal and real property assets of our wholly-owned subsidiaries and by
pledges of all shares of capital stock and inter-company debt held by us and
each wholly-owned subsidiary. In addition, our wholly-owned subsidiaries have
guaranteed our obligations under the new senior secured credit agreement. The
new senior secured credit agreement contains financial covenants and other
covenants that limit or restrict our ability to make capital expenditures; incur
indebtedness; permit liens on our property; enter into transactions with
affiliates; make restricted payments or investments; enter into mergers,
acquisitions or consolidations; conduct asset sales; pay dividends or
distributions and enter into other specified transactions and activities. We are
also required to prepay any amounts that we borrowed with the proceeds we
receive from a number of specified events or transactions.

      In December 2002 and January 2003, we issued $115.0 million of 4.0%
convertible subordinated notes in order to refinance $70.0 million of our senior
secured term A loan and $40 million of our senior secured term B loan. Holders
of our 4.0% notes may convert the notes into a maximum of 6.8 million shares of
our common stock under certain circumstances based on, among other things, the
market price of our common stock, the assigned credit rating of our 4.0% notes,
and certain other circumstances as defined within the prospectus. During 2002,
we recorded an extraordinary loss of $3.5 million, less a related tax benefit of
$2.1 million, related to the write-off of deferred financing costs due to the
March and December refinancing activities.

      On January 28, 2002, we entered into an agreement with the Iron Dynamics'
lenders to extinguish the debt under the IDI senior secured credit agreement at
the end of March 2002. We complied with each of the settlement requirements,
thus constituting full and final settlement of all of Iron Dynamics' obligations
and Steel Dynamics' guarantees under the Iron Dynamics' credit agreement. In
meeting the requirements of the settlement agreement, we paid $15.0 million in
cash and issued an aggregate of $22.0 million, or 1.5 million shares, of our
treasury stock during March 2002. In addition, if Iron Dynamics resumes
operations by January 27, 2007, and generates positive cash flow (as defined in
the settlement agreement), we are required to make contingent future payments in
an aggregate not to exceed $22.0 million. The contingent future payments are
non-interest-bearing and have been classified as non-current, since no payments
are expected to be required during 2003.

      Our ability to meet our debt service obligations and reduce our total debt
will depend upon our future performance, which in turn, will depend upon general
economic, financial and business conditions, along with competition, legislation
and regulation, factors that are largely beyond our control. In addition, we
cannot assure you that our operating results, cash flow and capital resources
will be sufficient for repayment of our indebtedness in the future. We believe
that based upon current levels of operations and anticipated growth, cash flow
from operations, together with other available sources of funds including
additional borrowings under our senior secured credit agreement, will be
adequate for the next two years for making required payments of principal and
interest on our indebtedness and for funding anticipated capital expenditures
and working capital requirements.


                                       40
<PAGE>
      Effective June 1, 2000, the board of directors authorized the extension
and continuation of our 1997 share repurchase program, allowing us to repurchase
an additional 5%, or 2.3 million shares, of our outstanding common stock at a
purchase price not to exceed $15 per share. At December 31, 2002, we had
acquired 3.8 million shares of our common stock in open market purchases, of
which 3,000 shares were purchased during 2002, none were purchased during 2001,
and 2.5 million shares were purchased during 2000. The average price per share
of these purchases is $12. As of December 31, 2002, approximately 954,000 shares
remain available for repurchase under the June 2000 repurchase authorization.

OTHER MATTERS

INFLATION

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

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 Bar Division in
Pittsboro, Indiana, that compliance with current environmental laws and
regulations is not likely to have a materially 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.

RECENT ACCOUNTING PRONOUNCEMENTS

      In April 2002, the Financial Accounting Standards Board (FASB) issued
Statement No. 145 (FAS 145), "Rescission of FASB Statements No. 4, 44, 64,
Amendment of FASB Statement No. 13, and Technical Corrections." This statement,
among other things, rescinds FAS 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. We intend to adopt FAS
145 as of January 1, 2003, as required. Upon adoption, any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior
periods presented that does not meet the criteria in APB 30 for classification
as an extraordinary item, will be reclassified as income or loss from continuing
operations. We have determined that the adoption of FAS 145 will not have a
material impact on our consolidated financial statements. The loss on
extinguishment of debt recorded in 2002 of $3.5 million, net of related tax of
$2.1 million, will no longer be classified as an extraordinary item in our 2003
financial statements; rather, it will be included in our income from operations.

      In July 2002, the FASB issued Statement No. 146 (FAS 146), "Accounting for
Costs Associated with Exit or Disposal Activities." The statement requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. Costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, plant
closing, or other exit or disposal activity. FAS 146 is effective for exit or
disposal activities initiated after December 31, 2002. FAS 146 may affect the
timing of our recognition of future exit or disposal costs, if any.

      In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 requires companies, at
the time certain guarantees are issued, to recognize an initial liability for
the fair value of the obligations assumed under the guarantee. FIN 45 also
provides guidance concerning existing disclosure requirements related to
guarantees and warranties. The initial recognition requirements of FIN 45 are
effective for guarantees issued or modified after December 31, 2002, and
adoption of the disclosure requirements is effective for us as of December 31,
2002. We believe the adoption of FIN 45 will not have a material impact on our
consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      Management's discussion and analysis of our financial condition and
results of operations is based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. We review the accounting policies we use in
reporting our financial results on a regular basis. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and related
disclosure of contingent assets and liabilities. We evaluate the appropriateness
of these estimations and judgments on an ongoing basis. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Results may differ from these estimates due
to actual outcomes being different from those on which we based our assumptions.
We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.


                                       41
<PAGE>
      REVENUE RECOGNITION AND ALLOWANCE FOR DOUBTFUL ACCOUNTS. We generally
recognize revenues from sales and the allowance for estimated costs associated
with returns from these sales when the product is shipped. Provision is made for
estimated product returns and customer claims based on estimates and actual
historical experience. If the historical data used in our estimates does not
reflect future returns and claims trends, additional provision may be necessary.
We maintain an allowance for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. If the financial
condition of our customers were to deteriorate, resulting in the impairment of
their ability to make payments, additional allowance may be required.

      IMPAIRMENTS OF LONG-LIVED ASSETS. In accordance with the methodology
described in FASB Statement No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," we review long-lived assets for impairment whenever
events or changes in circumstances indicate the carrying amount of such assets
may not be recoverable. Impairment losses are recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amounts. The impairment loss is measured by comparing the fair value of
the asset to its carrying amount. During 2002, events and circumstances
indicated that approximately $117.0 million of assets related to Iron Dynamics
might be impaired. However, our estimate of undiscounted cash flows was
approximately $85.6 million in excess of such carrying amounts and, therefore,
no charge has been recorded at December 31, 2002. We made various assumptions in
estimating the undiscounted cash flows, including, among other things, a
weighted average of the most likely achieved production levels, significant cost
components, required capital expenditures and a date for resumption of
commercial production. Nonetheless, it is reasonably possible that our estimate
of undiscounted cash flows may change in the near term due to, among other
things, technological changes, economic conditions, and changes in the business
model or changes in operating performance, resulting in the need to write-down
those assets to fair value.

      DEFERRED TAX ASSETS AND LIABILITIES. We are required to estimate our
income taxes as a part of the process of preparing our consolidated financial
statements. This requires us to estimate our actual current tax exposure
together with assessing temporary differences resulting from differing
treatments of items for tax and accounting purposes. These differences result in
deferred tax assets and liabilities, which are included within our consolidated
balance sheet. We must then assess the likelihood that our deferred tax assets
will be recovered from future taxable income and, to the extent we believe that
recovery is not likely, we must establish a valuation allowance. As of December
31, 2002, we had available foreign tax credit carryforwards of approximately
$3.0 million for federal income tax purposes, which expire in 2003. Due to the
limited time frame remaining to utilize the foreign tax credits and the
decreased likelihood that the net operating losses will be fully absorbed prior
to the expiration of the credits, a valuation allowance of $1.9 million was
created in 2001. Even if these credits are not utilized as such, they can be
treated as tax-deductible expenses. Therefore, $1.1 million of foreign tax
credit remains as a deferred tax asset as of December 31, 2002.

      CONTINGENT LIABILITIES. The accrual of a contingency involves considerable
judgment on the part of management. We use outside experts, such as lawyers, as
necessary to aid in the estimation of the probability that a loss will occur and
the amount (or range) of that potential loss. During 1999, we were sued by
institutional purchasers in a 1998 note offering by certain investment banks on
behalf of NSM, the owner and operator of a steel mini-mill in Thailand for whom
we agreed to render certain post-offering technical and operational advisory
services. During the second and third quarters of 2001, we settled seven of the
nine pending lawsuits, and in the first half of 2002, we settled the two
remaining lawsuits, in each case without any admission of liability and, to the
extent of any monetary payments, except for approximately $2.3 million recorded
in 2001 and $4.5 million recorded in the first quarter of 2002.


                                       42
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      MARKET RISK

      In the normal course of business we are exposed to interest rate changes.
Our objectives in managing exposure to interest rate changes are to limit the
impact of these rate changes on earnings and cash flows and to lower overall
borrowing costs. To achieve these objectives, we primarily use interest rate
swaps to manage net exposure to interest rate changes related to our portfolio
of borrowings. We generally maintain fixed rate debt as a percentage of our net
debt between a minimum and maximum percentage. A portion of our debt has an
interest component that resets on a periodic basis to reflect current market
conditions.

      The following table represents the principal cash repayments and related
weighted-average interest rates by maturity date for our long-term debt as of
December 31, 2002 (in millions):

<TABLE>
<CAPTION>
                                                INTEREST RATE RISK
                                ------------------------------------------------
                                       FIXED RATE               VARIABLE RATE
                                -----------------------    ---------------------
                                                AVERAGE                  AVERAGE
Expected maturity date:         PRINCIPAL        RATE      PRINCIPAL      RATE
                                ---------       -------    ---------     -------
<S>                             <C>             <C>        <C>           <C>
    2003 .....................   $    4.3        6.4%      $    7.6       4.3%
    2004 .....................        6.4        6.7            7.5       4.7
    2005 .....................        7.2        7.2           17.1       5.1
    2006 .....................        2.2        7.8           12.5       5.1
    2007 .....................        2.3        7.8          114.6       5.4
    Thereafter................      326.7        7.7           47.1       5.5
                                 --------                  --------
Total ........................   $  349.1        7.6       $  206.4       5.3
                                 ========                  ========
Fair value ...................   $  349.1                  $  206.4
                                 ========                  ========
</TABLE>


                                       43
<PAGE>
ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                                    PAGE

<S>                                                                                 <C>
Independent Auditors' Report......................................................   45

Consolidated Balance Sheets as of December 31, 2002 and 2001......................   46

Consolidated Statements of Income for each of the
   three years in the period ended December 31, 2002..............................   47

Consolidated Statements of Stockholders' Equity
   for each of the three years in the period ended December 31, 2002..............   48

Consolidated Statements of Cash Flows for each of the
   three years in the period ended December 31, 2002..............................   49

Notes to Consolidated Financial Statements........................................   50
</TABLE>


                                       44
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Steel Dynamics, Inc.

We have audited the accompanying consolidated balance sheets of Steel Dynamics,
Inc. as of December 31, 2002 and 2001, and the related consolidated statements
of income, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

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

As discussed in Note 1 to the financial statements in 2001 the company changed
its method of accounting for derivative financial instruments.


/s/ Ernst & Young LLP
Fort Wayne, Indiana
January 24, 2003, except for Note 14,
as to which the date is March 14, 2003


                                       45
<PAGE>
<TABLE>
                              STEEL DYNAMICS, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>

                                                                                               DECEMBER 31,
                                                                                           2002            2001
                                                                                        ---------       ---------
                                      ASSETS
<S>                                                                                    <C>            <C>
CURRENT ASSETS:
     Cash and cash equivalents .....................................................   $    24,218    $    78,241
     Accounts receivable, net of allowance for doubtful accounts of
         $2,701 and $2,374 as of December 31, 2002 and 2001, respectively ..........        83,779         65,589
     Accounts receivable-related parties ...........................................        34,700         16,290
     Inventories ...................................................................       153,204        118,368
     Deferred income taxes .........................................................         6,680         24,600
     Other current assets ..........................................................         8,322          9,116
                                                                                       -----------    -----------
              Total current assets .................................................       310,903        312,204

PROPERTY, PLANT, AND EQUIPMENT, NET ................................................       929,338        852,061

RESTRICTED CASH ....................................................................         2,616          3,030

OTHER ASSETS .......................................................................        32,839         12,803
                                                                                       -----------    -----------

              TOTAL ASSETS .........................................................   $ 1,275,696    $ 1,180,098
                                                                                       ===========    ===========


                         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable ..............................................................   $    27,390    $    30,228
     Accounts payable-related parties ..............................................        18,827         11,101
     Accrued interest ..............................................................        10,665          4,052
     Other accrued expenses ........................................................        44,755         26,697
     Current maturities of long-term debt ..........................................        11,913         46,033
                                                                                       -----------    -----------
              Total current liabilities ............................................       113,550        118,111

LONG-TERM DEBT, less current maturities ............................................       543,537        553,891

DEFERRED INCOME TAXES ..............................................................        70,330         62,765

MINORITY INTEREST ..................................................................         4,632          4,769

OTHER LONG-TERM CONTINGENT LIABILITIES .............................................        21,987         21,987

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
     Common stock voting, $.01 par value; 100,000,000 shares authorized;
         49,966,590 and 49,586,473 shares issued; 47,580,676 and 45,743,473
         shares outstanding as of December 31, 2002 and 2001, respectively .........           499            495
     Treasury stock, at cost; 2,385,914 and 3,843,000 shares as of December 31, 2002
         and 2001, respectively ....................................................       (28,889)       (46,526)
     Additional paid-in capital ....................................................       347,050        337,733
     Retained earnings .............................................................       210,106        132,229
     Other accumulated comprehensive loss ..........................................        (7,106)        (5,356)
                                                                                       -----------    -----------
         Total stockholders' equity ................................................       521,660        418,575
                                                                                       -----------    -----------

              TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...........................   $ 1,275,696    $ 1,180,098
                                                                                       ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       46
<PAGE>
<TABLE>
                              STEEL DYNAMICS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                            2002         2001        2000
                                                                          ---------    --------    --------
<S>                                                                       <C>          <C>         <C>
NET SALES:
   Unrelated parties ..................................................   $ 718,937    $ 495,079   $ 549,851
   Related parties ....................................................     145,556      111,905     142,772
                                                                          ---------    ---------   ---------
         Total net sales ..............................................     864,493      606,984     692,623

Cost of goods sold ....................................................     638,860      522,927     533,914
                                                                          ---------    ---------   ---------
         Gross profit .................................................     225,633       84,057     158,709
Selling, general and administrative expenses ..........................      61,731       58,132      53,306
                                                                          ---------    ---------   ---------
         Operating income .............................................     163,902       25,925     105,403

Interest expense ......................................................      30,201       18,480      20,199
Other expense .........................................................       3,689        2,333         719
                                                                          ---------    ---------   ---------
         Income before income taxes and extraordinary items ...........     130,012        5,112      84,485
Income tax expense ....................................................      48,676        1,968      30,690
                                                                          ---------    ---------   ---------
         Income before extraordinary items ............................      81,336        3,144      53,795
Extraordinary loss on debt extinguishments, net tax benefit of $2,076 .       3,459           --          --
                                                                          ---------    ---------   ---------

NET INCOME ............................................................   $  77,877    $   3,144   $  53,795
                                                                          =========    =========   =========

BASIC EARNINGS PER SHARE:
   Income before extraordinary items ..................................   $    1.72    $    0.07   $    1.15
   Extraordinary loss on debt extinguishments .........................        (.07)          --          --
                                                                          ---------    ---------   ---------
   Net income .........................................................   $    1.65    $     .07   $    1.15
                                                                          =========    =========   =========

Weighted average common shares outstanding ............................      47,144       45,655      46,822
                                                                          =========    =========   =========

DILUTED EARNINGS PER SHARE:
   Income before extraordinary items ..................................   $    1.71    $    0.07   $    1.15
   Extraordinary loss on debt extinguishments .........................        (.07)          --          --
                                                                          ---------    ---------   ---------
   Net income .........................................................   $    1.64    $     .07   $    1.15
                                                                          =========    =========   =========

Weighted average common shares and share equivalents outstanding ......      47,463       45,853      46,974
                                                                          =========    =========   =========
</TABLE>

                 See notes to consolidated financial statements.


                                       47
<PAGE>
<TABLE>
                              STEEL DYNAMICS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<CAPTION>
                                                                                             OTHER
                                                                   ADDITIONAL             ACCUMULATED
                                                           COMMON   PAID-IN   RETAINED   COMPREHENSIVE    TREASURY
                                                 SHARES    STOCK    CAPITAL   EARNINGS        LOSS          STOCK        TOTAL
                                                 -------   -----   --------   --------   -------------    --------    ---------
<S>                 <C>                           <C>       <C>    <C>        <C>        <C>              <C>         <C>
BALANCES AT JANUARY 1, 2000 ..................    47,971    $493   $335,237   $ 75,290   $          --    $(19,650)   $ 391,370

Issuance of common stock (net of expenses)
   and proceeds from exercise of stock
   options, including related tax effect .....        83      --        495         --              --          --
                                                                                                                            495
Purchase of treasury stock ...................    (2,549)     --         --         --              --     (26,876)     (26,876)
Net income and comprehensive income ..........        --      --         --     53,795              --          --       53,795
                                                 -------    ----   --------   --------   -------------    --------    ---------
BALANCES AT DECEMBER 31, 2000 ................    45,505     493    335,732    129,085              --     (46,526)     418,784

Issuance of common stock (net of expenses)
   and proceeds from exercise of stock
   options, including related tax effect .....       238       2      2,001         --              --          --        2,003

Comprehensive income (loss):
  Net income .................................        --      --         --      3,144              --          --        3,144
  Comprehensive loss:
    Cumulative effect of an accounting change,
     net of tax effect of $1,545 .............        --      --         --         --         (2,468)          --       (2,468)
    Unrealized loss on derivative instruments,
     net of tax effect of $1,811 .............        --      --         --         --         (2,888)          --       (2,888)
                                                                                                                      ---------
         Total comprehensive loss ............                                                                           (2,212)
                                                 -------    ----   --------   --------   -------------    --------    ---------

BALANCES AT DECEMBER 31, 2001 ................    45,743     495    337,733    132,229         (5,356)     (46,526)     418,575

Issuance of common stock (net of expenses)
   and proceeds from exercise of stock
   options, including related tax effect .....       381       4      4,997         --              --          --        5,001
Issuance of treasury stock ...................     1,460      --      4,320         --              --      17,680       22,000
Purchase of treasury stock ...................        (3)     --         --         --              --         (43)         (43)

Comprehensive income (loss):
  Net income .................................        --      --         --     77,877              --          --       77,877
  Comprehensive loss:
    Unrealized loss on derivative instruments,
     net of tax effect of $575 ...............        --      --         --         --         (1,165)          --       (1,165)
    Unrealized loss on available-for-sale
     securities, net of tax effect of $347 ...        --      --         --         --           (585)          --         (585)
                                                                                                                      ---------
         Total comprehensive income ..........                                                                           76,127
                                                 -------    ----   --------   --------   ------------     --------    ---------

BALANCES AT DECEMBER 31, 2002 ................    47,581    $499   $347,050   $210,106   $     (7,106)    $(28,889)   $ 521,660
                                                 =======    ====   ========   ========   ============     ========    =========
</TABLE>

                 See notes to consolidated financial statements.


                                       48
<PAGE>
<TABLE>
                              STEEL DYNAMICS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                           2002         2001         2000
                                                                        ---------    ---------    ---------
<S>                                                                     <C>          <C>          <C>
OPERATING ACTIVITIES:
     Net income .....................................................   $  77,877    $   3,144    $  53,795
     Adjustments to reconcile net income to net cash
     provided by operating activities:
         Extraordinary loss on debt extinguishments .................       5,535           --           --
         Depreciation and amortization ..............................      59,443       46,794       45,443
         Loss on disposal of property, plant and equipment ..........         113           42          155
         Deferred income taxes ......................................      25,485       (1,008)      20,386
         Minority interest ..........................................        (137)         680        2,294
         Changes in certain assets and liabilities:
              Accounts receivable ...................................     (36,600)      21,107      (16,337)
              Inventories ...........................................     (34,836)     (11,623)          (3)
              Other assets ..........................................      (9,645)       1,169           59
              Accounts payable ......................................       4,887       13,341       (9,648)
              Accrued expenses ......................................      22,900       (6,273)       6,648
                                                                        ---------    ---------    ---------
                  Net cash provided by operating activities .........     115,022       67,373      102,792
                                                                        ---------    ---------    ---------

INVESTING ACTIVITIES:
     Purchases of property, plant and equipment .....................    (142,600)     (90,714)    (110,379)
     Proceeds from sale of property, plant and equipment ............           1            4          980
     Proceeds from government grants ................................       8,813           --           --
                                                                        ---------    ---------    ---------
Net cash used in investing activities ...............................    (133,786)     (90,710)    (109,399)
                                                                        ---------    ---------    ---------

FINANCING ACTIVITIES:
     Issuance of long-term debt .....................................     598,991      201,362       68,917
     Repayments of long-term debt ...................................    (621,465)    (111,971)     (42,360)
     Purchase of treasury stock .....................................         (43)          --      (26,876)
     Issuance of common stock (net of expenses) and proceeds
       from exercise of stock options, including related tax effect .       5,001        2,003          495
     Debt issuance costs ............................................     (17,743)          --           --
                                                                        ---------    ---------    ---------
                  Net cash provided by (used in) financing activities     (35,259)      91,394          176
                                                                        ---------    ---------    ---------

Increase (decrease) in cash and cash equivalents ....................     (54,023)      68,057       (6,431)
Cash and cash equivalents at beginning of year ......................      78,241       10,184       16,615
                                                                        ---------    ---------    ---------
Cash and cash equivalents at end of year ............................   $  24,218    $  78,241    $  10,184
                                                                        =========    =========    =========
</TABLE>

                 See notes to consolidated financial statements.


                                       49
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Steel Dynamics, Inc. (SDI), together with its subsidiaries (the
company), is a domestic manufacturer of steel products with operations in the
following businesses.

Steel Operations. Steel operations include the Flat Roll Division, the
Structural and Rail Division and the forthcoming Bar Division. The Flat Roll
Division is currently the company's core business and operates a technologically
advanced flat-roll steel mini-mill located in Butler, Indiana, with an annual
production capacity of 2.2 million tons of flat-rolled carbon steel products,
including hot-rolled, cold-rolled and coated steel products. During 2002, the
facility produced 2.4 million tons, or approximately 200,000 tons in excess of
its previously estimated annual capacity to meet market demand. The company
sells these products directly to end-users, intermediate steel processors and
service centers located primarily in the Midwestern United States. These
products are used in numerous industry sectors, including automotive,
construction and commercial industries.

The company began construction of its Structural and Rail Division, located in
Columbia City, Indiana, in May 2001, and commenced commercial structural steel
operations during the third quarter of 2002. The mini-mill is designed to have
an annual production capacity of up to 1.3 million tons of structural steel
beams, pilings, and other steel components, as well as standard and
premium-grade rails. Through regular product introductions and continued
production ramp-up of structural steel products, the company anticipates being
able to offer a full complement of wide-flange beam and H-piling structural
steel products during the first quarter of 2003. In addition, the company
expects to begin production of standard rail products during the second quarter
of 2003. The initial rail production will be used in a testing capacity to be
monitored by individual railroad companies for qualification purposes. This
qualification process may take between six and nine months for completion. The
company generally sells its structural products directly to end-users and steel
service centers to be used primarily in the construction, transportation and
industrial machinery markets.

On September 9, 2002, the company purchased the special bar quality mini-mill
assets of Qualitech Steel SBQ, LLC, located in Pittsboro, Indiana for $45
million. The company plans to invest between $70 and $75 million of additional
capital to convert the facility to the production of merchant bars and shapes
and reinforcing bar products, with an anticipated annual production capacity of
between 500,000 and 600,000 tons. The company estimates initial production will
commence during the first quarter of 2004 and plans to market the bar products
directly to end-users and to service centers for the construction,
transportation and industrial machinery markets.

Steel Scrap Substitute and Other Operations. The company's wholly owned
subsidiary, Iron Dynamics, Inc. (IDI), located in Butler, Indiana, involves the
pioneering of a process to produce direct reduced iron, which is then converted
into liquid pig iron. Liquid pig iron is a high quality steel scrap substitute
used in the company's flat-roll steel mini-mill. During 1999, IDI commenced
initial start-up and produced and sold a minimal amount of liquid pig iron to
the company's Flat Roll Division; however, it was determined that IDI would
require certain design and equipment modifications to attain its fully intended
operating functionality. These modifications occurred during the second half of
2000 with completion and restart occurring in the first quarter of 2001. While
IDI believed that many of the design and equipment deficiencies were corrected
with these modifications, the company halted operations at IDI during July 2001
with no specific date set for resumption of actual production, as a result of
higher-than-expected start-up and process refinement costs, lower-than-expected
production quantities, exceptionally high energy costs and historically low
steel scrap pricing. From the time operations were halted in 2001 up until the
fourth quarter of 2002, the costs incurred at IDI were composed of those
expenses required to maintain the facility and further evaluate the project and
its related benefits. On July 10, 2002, IDI announced that it would begin
experimental production trials in the fourth quarter of 2002. These trials
utilized a modified production process. IDI successfully completed certain
operating trials which may significantly reduce the eventual per-unit cost of
liquid pig iron production. On February 24, 2003, the company announced its
intent to restart IDI in the second half of 2003. The company's board of
directors approved an additional capital investment of approximately $14 million
for additional modifications and refinements required to implement this modified
production process at the IDI facility. These modifications are expected to be
completed during 2003. The company also has two consolidated subsidiary
operations: one that receives revenue from the fabrication of trusses, girders,
steel joists and steel decking for the non-residential construction industry and
one that receives revenue from the further processing, or slitting, and sale of
certain secondary and excess steel products.

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


                                       50
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates. The financial statements are prepared in conformity with
accounting principles generally accepted in the United States 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 could differ from these estimates.

Revenue Recognition. The company generally recognizes revenues from sales and
the allowance for estimated costs associated with returns from these sales when
the title of the product transfers. Provision is made for estimated product
returns and customer claims based on estimates and actual historical experience.

Freight Costs. The company reflects freight costs associated with shipping its
products to customers as a component of cost of goods sold.

Cash and Cash Equivalents. Cash and cash equivalents include all highly liquid
investments with a maturity of three months or less at the date of acquisition.
Restricted cash is held by trustees in debt service funds for the repayment of
principal and interest related to the company's municipal bonds.

Marketable Securities. In accordance with Financial Accounting Standards Board
(FASB) Statement No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," the company has classified its marketable securities as `available
for sale" and, accordingly, carries such securities at aggregate fair value.
Unrealized gains or losses are included in other accumulated comprehensive loss
as a component of stockholders' equity.

Inventories. Inventories are stated at lower of cost (principally standard cost
which approximates actual cost on a first-in, first-out basis) or market.
Inventory consisted of the following at December 31 (in thousands):

<TABLE>
<CAPTION>
                                              2002        2001
                                            --------    --------
<S>                                         <C>         <C>
          Raw materials ...........         $ 53,532    $ 44,807
          Supplies ................           52,815      42,258
          Work in progress ........           14,835       8,512
          Finished goods ..........           32,022      22,791
                                            --------    --------
                                            $153,204    $118,368
                                            ========    ========
</TABLE>

Property, Plant and Equipment. Property, plant and equipment are stated at cost,
which includes capitalized interest on construction-in-progress and is reduced
by proceeds received from certain state and local government grants and other
capital cost reimbursements. The company assigns each fixed asset a useful life
ranging from five to 12 years for plant, machinery and equipment and 20 to 30
years for buildings and improvements. Repairs and maintenance are expensed as
incurred. Depreciation for non-production assets is provided utilizing the
straight-line depreciation methodology. Depreciation for production assets is
provided utilizing the units-of-production depreciation methodology, based on
units produced, subject to a minimum and maximum level. Depreciation expense was
$56.4 million, $45.9 million and $44.7 million for the years ended December 31,
2002, 2001 and 2000, respectively.

In August 2001, the Financial Accounting Standards Board (FASB) issued Statement
No. 144 (FAS 144), "Accounting for the Impairment or Disposal of Long-Lived
Assets," which supersedes FASB Statement No. 121 (FAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
and the accounting and reporting provisions of Accounting Principles Board (APB)
Opinion No. 30 (APB 30), "Reporting the Results of Operations-Reporting the
Effects of Disposal of a Segment of a Business and Extraordinary Unusual and
Infrequently Occurring Events and Transactions". FAS 144 retains the fundamental
provisions of FAS 121 for recognition and measurement of the impairment of
long-lived assets to be held and used, and measurement of long-lived assets to
be disposed of by sale. FAS 144 broadens the presentation requirements of
discontinued operations of APB 30 to include a component of an entity (rather
than a segment of business). In accordance with the methodology described in FAS
144, the company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate the carrying amount of such assets may not be
recoverable. Impairment losses are recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated during the life of those assets are less than
the assets' carrying amounts. The impairment loss is measured by comparing the
fair value of the asset to its carrying amount.

At December 31, 2002, events and circumstances indicated that approximately
$117.0 million of assets related to Iron Dynamics might be impaired. However,
the company's estimate of undiscounted cash flows was approximately $85.6
million in excess of such carrying amounts and therefore, in compliance with FAS
144, no charge was recorded. The company made various assumptions in estimating
the undiscounted cash flows, including, among other things, a weighted average
of the most likely achieved production levels, significant cost components,
required capital expenditures and the date for resumption of commercial
production.


                                       51
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nonetheless, it is reasonably possible that the estimate of undiscounted cash
flows may change in the near term, resulting in the need to write-down those
assets to fair value.

Other Accumulated Comprehensive Loss. The following table presents the company's
components of other accumulated comprehensive loss at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                                         2002           2001
                                                                        -------        -------
<S>                                                                     <C>            <C>
            Cumulative effect of an accounting change ............      $(2,468)       $(2,468)
            Unrealized loss on derivative instruments ............       (4,053)        (2,888)
            Unrealized loss on available for sale securities .....         (585)            --
                                                                        -------        -------
                                                                        $(7,106)       $(5,356)
                                                                        =======        =======
</TABLE>

Concentration of Credit Risk. Financial instruments that potentially subject the
company to significant concentrations of credit risk principally consist of
temporary cash investments and accounts receivable. The company places its
temporary cash investments with high credit quality financial institutions and
limits the amount of credit exposure from any one institution. Generally, the
company does not require collateral or other security to support customer
receivables.

Earnings Per Share. The company computes and presents earnings per common share
in accordance with FASB Statement No. 128, "Earnings Per Share". Basic earnings
per share is based on the weighted average shares of common stock outstanding
during the period. Diluted earnings per share assumes, in addition to the above,
the weighted average dilutive effect of common share equivalents outstanding
during the period. Common share equivalents represent dilutive stock options and
dilutive convertible subordinated debt and are excluded from the computation in
periods in which they have an anti-dilutive effect. The difference between the
company's basic and diluted earnings per share is solely attributable to stock
options. The following table represents the common share equivalents that were
excluded from the company's dilutive earnings per share calculation because they
were anti-dilutive at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                            2002    2001    2000
                                                            -----   -----   -----
<S>                                                         <C>     <C>     <C>
      Stock options .....................................   1,273   1,371   1,631
      Convertible subordinated debt .....................   5,881      --      --
                                                            -----   -----   -----
          Total anti-dilutive share equivalents .........   7,154   1,371   1,631
                                                            =====   =====   =====
</TABLE>

Derivative Financial Instruments. Effective January 1, 2001, the company adopted
FASB Statement No. 133 (FAS 133), "Accounting for Derivative Instrument and
Hedging Activities," as amended. FAS 133 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.
Derivatives that are not designated as hedges must be adjusted to fair value
through income. Changes in the fair value of derivatives that are designated as
hedges, depending on the nature of the hedge, are recognized as either an offset
against the change in fair value of the hedged balance sheet item through
earnings or as other comprehensive income, until the hedged item is recognized
in earnings. The ineffective portion of a derivative's change in fair value is
immediately recognized in earnings. On an annual basis, there has been no hedge
ineffectiveness recorded since adoption of FAS 133.

In the normal course of business, the company has limited involvement with
derivative financial instruments in an effort to manage the company's exposure
to fluctuations in interest and foreign exchange rates. The company employs
interest rate swap agreements, which are accounted for as cash flow hedges, and
periodically employs foreign currency exchange contracts as necessary. Upon
adoption of FAS 133, the company designated and assigned its financial
instruments as hedges of specific assets, liabilities or anticipated
transactions. When hedged assets or liabilities are sold or extinguished, or the
anticipated transaction being hedged is no longer expected to occur, the company
recognizes the gain or loss on the designated hedged financial instrument. The
company classified its derivative financial instruments as held or issued for
purposes other than trading. The company's results of operations and financial
position reflect the impact of adopting FAS 133 commencing January 1, 2001, as a
one-time after-tax cumulative effect of an accounting change of approximately
$2.5 million as a reduction in other comprehensive income.

Stock-Based Compensation. In December 2002, the FASB issued Statement No. 148
(FAS 148), "Accounting for Stock-Based Compensation-Transition and Disclosure,"
which amends FASB Statement No. 123 (FAS 123), "Accounting for Stock-Based
Compensation." FAS 148 is effective for fiscal years ending after December 15,
2002, and gives further guidance regarding methods of transition for a voluntary
change to the fair-value-based method of accounting for stock-based employee
compensation and regarding disclosure requirements as previously defined in FAS
123. At December 31, 2002, the company had three incentive stock option plans,
which are described more fully in Note 6, and accounted for these plans under
the recognition and measurement principles of APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. Under APB 25, no


                                       52
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

stock-based employee compensation cost related to the incentive stock option
plans is reflected in net income, as all options granted under those plans had
an exercise price equal to the market value of the underlying common stock on
the date of grant.

The following table illustrates the effect on net income and earnings per share
if the company had applied the fair value recognition provisions of FAS 123 to
its stock-based employee compensation for the years ended December 31 (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                                                  2002          2001         2000
                                                                               ----------    ----------   ----------
<S>                                                                            <C>           <C>          <C>
      Net income, as reported ..............................................   $   77,877    $    3,144   $   53,795
           Total stock-based employee compensation expense
               using the fair value based method, net of related tax effects       (2,380)       (2,330)      (2,101)
                                                                               ----------    ----------   ----------
      Pro forma net income .................................................   $   75,497    $      814   $   51,694
                                                                               ==========    ==========   ==========
      Basic earnings per share:
        As reported ........................................................   $     1.65    $      .07   $     1.15
        Pro forma ..........................................................         1.60           .02         1.10

      Diluted earnings per share:
         As reported .......................................................   $     1.64    $      .07   $     1.15
         Pro forma .........................................................         1.59           .02         1.10
</TABLE>

For purposes of pro forma disclosure, the estimated fair value of the options is
amortized to expense over the vesting period. The estimated weighted-average
fair value of the individual options granted during 2002, 2001 and 2000 was
$7.07, $5.17 and $4.19, respectively, on the date of grant. The fair values at
the date of grant were estimated using the Black-Scholes option-pricing model
with the following assumptions: no-dividend-yield, risk-free interest rates from
3.2% to 7.1%, expected volatility from 30% to 62% and expected lives from five
months to eight years.

Recent Accounting Pronouncements. In April 2002, the FASB issued Statement No.
145 (FAS 145), "Rescission of FASB Statements No. 4, 44, 64, Amendment of FASB
Statement No. 13, and Technical Corrections." This statement, among other
things, rescinds FAS 4, which required all gains and losses from extinguishment
of debt to be aggregated and, if material, classified as an extraordinary item,
net of the related income tax effect. The company intends to adopt FAS 145 as of
January 1, 2003, as required. Upon adoption, any gain or loss on extinguishment
of debt that was classified as an extraordinary item in prior periods presented
that does not meet the criteria in APB 30 for classification as an extraordinary
item, will be reclassified as income or loss from continuing operations. The
company has determined that the adoption of FAS 145 will not have a material
impact on its consolidated financial statements. The loss on extinguishment of
debt recorded in 2002 of $3.5 million, net of related tax of $2.1 million, will
no longer be classified as an extraordinary item in the company's 2003 financial
statements; rather, it will be included in the company's income from operations.

In July 2002, the FASB issued Statement No. 146 (FAS 146), "Accounting for Costs
Associated with Exit or Disposal Activities." The statement requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, plant
closing, or other exit or disposal activity. FAS 146 is effective for exit or
disposal activities initiated after December 31, 2002. FAS 146 may affect the
timing of the company's recognition of future exit or disposal costs, if any.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." FIN 45 requires a company, at the time it
issues certain guarantees, to recognize an initial liability for the fair value
of the obligations assumed under the guarantee. FIN 45 also provides guidance
concerning existing disclosure requirements related to guarantees and
warranties. The initial recognition requirements of FIN 45 are effective for
guarantees issued or modified after December 31, 2002, and adoption of the
disclosure requirements are effective for the company as of December 31, 2002.
The company believes the adoption of FIN 45 will not have a material impact on
its consolidated financial statements.


                                       53
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  PROPERTY, PLANT AND EQUIPMENT
The company's property, plant and equipment at December 31 consisted of the
following (in thousands):

<TABLE>
<CAPTION>
                                                                                            2002             2001
                                                                                       ------------      ------------
<S>                                                                                    <C>               <C>
         Land and improvements......................................................   $     44,531      $     31,882
         Buildings and improvements.................................................        127,898            87,442
         Plant, machinery and equipment.............................................        972,071           684,700
         Construction in progress...................................................         40,152           247,318
                                                                                       ------------      ------------
                                                                                          1,184,652         1,051,342
         Less accumulated depreciation..............................................        255,314           199,281
                                                                                       ------------      ------------
               Property, plant, and equipment, net..................................   $    929,338      $    852,061
                                                                                       ============      ============
</TABLE>

NOTE 3.  DEBT AND OTHER LONG-TERM CONTINGENT LIABILITY
SDI Refinancing. On March 26, 2002, the company refinanced its existing $450.0
million senior secured credit facility and its $45 million senior unsecured
credit facility with the following:

-     $75.0 million in the form of a five-year revolving credit facility,
      maturing March 26, 2007, which is subject to a borrowing base and bears
      interest at floating rates;

-     $70.0 million in the form of a five-year term A loan, payable in quarterly
      installments beginning June 26, 2003, with the final installment due March
      26, 2007, and bearing interest at floating rates;

-     $205.0 million in the form of a six-year term B loan, payable in quarterly
      installments beginning June 26, 2003, with the final installment due March
      26, 2008, and bearing interest at floating rates; and

-     $200.0 million in the form of 9.5% seven-year senior unsecured notes due
      March 15, 2009 (non-callable for four years), with interest payable
      semi-annually.

The new $350.0 million senior secured credit facility is secured by liens and
mortgages on substantially all of the personal and real property assets of the
company and its wholly-owned subsidiaries and by pledges of all shares of
capital stock and inter-company debt held by the company and its wholly-owned
subsidiaries. The new senior secured credit facility contains financial
covenants and other covenants that limit or restrict the company with respect to
its ability to make capital expenditures, incur indebtedness, and make
restricted payments or investments, among other things.

The $200.0 million 9.5% senior unsecured notes have a maturity of seven years.
The company may redeem the notes at any time on or after March 15, 2006, at a
redemption price of 104.750%; on or after March 15, 2007, at a redemption price
of 102.275%; and on or thereafter March 15, 2008, at a redemption price of
100.000%. In addition, at any time prior to March 15, 2005, the company may
redeem up to 35% of the principal amount of the notes with the net cash proceeds
of its common stock at a redemption price of 109.500% plus accrued interest up
to the redemption date, provided that certain other restrictions as described in
the indenture are met. The notes bear interest at 9.5%, payable semiannually on
each March 15th and September 15th, commencing September 15, 2002.

On December 17, 2002, the company refinanced $96.0 million of its $350.0 million
senior secured credit facility with $100.0 million of 4.0% convertible
subordinated notes due December 15, 2012. The net proceeds of the offering were
$96.0 million after payment of the underwriting fees and expenses of the
offering, which will be amortized over the term of the notes. The notes are
non-callable for five years and bear interest at 4.0%, payable semiannually on
each June 15th and December 15th, commencing June 15, 2003. In addition, the
company will pay contingent interest during any six-month period commencing
December 15, 2007, if the trading price of the notes for each of the five
trading days immediately preceding such period equals or exceeds 120% of the
principal amount of the notes. Holders may convert the notes into shares of the
company's common stock at a conversion rate of 58.8076 shares per $1,000
principal amount of notes, subject to adjustment, before close of business on
December 15, 2012, only under the following circumstances: (1) at any time after
the closing sale price of the company's common stock exceeds 120% of the
conversion price, or $20.41 per share, for at least 20 trading days in the 30
consecutive trading days ending on the last trading day of any fiscal quarter
commencing after December 31, 2002; (2) upon the occurrence of specified credit
rating events with respect to the notes; (3) if the notes have been called for
redemption by the company; or (4) upon the occurrence of certain other corporate
events. The company may redeem the notes at any time on or after December 18,
2007, at a redemption price of 101.143%; on or after December 15, 2008, at a
redemption price of 100.571%; and on or thereafter December 15, 2009, at a
redemption price of


                                       54
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

100.000%. During January 2003, the original purchasers of the company's 4.0%
convertible subordinated notes exercised their right to purchase an additional
$15.0 million aggregate principal, thereby increasing the issue to $115.0
million. The company used the additional $14.0 million in net proceeds to
further prepay its $350.0 million senior secured credit facility. During 2002
the company recorded an extraordinary loss of $3.5 million, net of related tax
benefit of $2.1 million, related to accelerated amortization of deferred
financing costs due to the above refinancings.

IDI Settlement. On January 28, 2002, the company entered into an agreement with
the Iron Dynamics' lenders to extinguish the debt under the IDI senior secured
credit agreement at the end of March 2002. The company complied with each of the
settlement requirements, thus constituting full and final settlement of all of
Iron Dynamics' obligations and the Steel Dynamics' guarantees under the Iron
Dynamics credit agreement. In meeting the requirements of the settlement
agreement, the company paid $15.0 million in cash and issued an aggregate of
$22.0 million, or 1.5 million shares, of the company's common stock during March
2002. In addition, if Iron Dynamics resumes operations by January 27, 2007, and
generates positive cash flow (as defined in the settlement agreement), the
company is required to make contingent future payments in an aggregate not to
exceed $22.0 million. The contingent future payments are non-interest bearing
and have been classified as non-current, as no payments are expected to be
required during 2003.

The company's borrowings consisted of the following at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                                                            2002             2001
                                                                                         ----------       ----------

<S>                                                                                      <C>              <C>
         SDI senior secured notes payable, refinanced March 2002....................     $  179,000       $  490,000
         SDI senior 9.5% unsecured notes, due March 2009............................        200,000                -
         SDI 4.0% convertible subordinated notes, due December 2012.................        100,000                -
         IDI senior secured notes payable, settled March 2002.......................              -           37,000
         NMBS senior secured notes payable..........................................         11,654           19,570
         State and local government municipal bond issues...........................         26,641           26,500
         Electric utility, transmission facility and other loans....................         38,155           26,854
                                                                                         ----------       ----------
               Total debt...........................................................        555,450          599,924
         Less current maturities....................................................         11,913           46,033
                                                                                         ----------       ----------
                Long-term debt......................................................     $  543,537       $  553,891
                                                                                         ==========       ==========
</TABLE>

The weighted-average interest rate was 5.5% and 5.9% as of December 31, 2002 and
2001, respectively, under the company's senior secured credit facilities. The
weighted-average interest rate was 4.3% as of December 31, 2001, under IDI's
senior secured credit facilities. The company has an interest rate swap
agreement with a notional amount of $100.0 million pursuant to which the company
has agreed to make fixed rate payments at 6.9% on the tenth day of each January,
April, July and October and will receive LIBOR payments. This interest rate swap
agreement matures January 10, 2005, and is accounted for as a cash flow hedge.

New Millennium Building Systems (NMBS) Senior Secured Financing. NMBS has a
$15.5 million bank credit facility with The Provident Bank that is composed of:

-     $6.5 million in the form of a three-year term loan facility (subject to a
      borrowing base), payable in quarterly installments of $162,500 beginning
      September 30, 2002, with a final balloon installment due July 2, 2005.

-     $9.0 million in the form of a five-year revolving facility (subject to a
      borrowing base), which matures July 31, 2005.

Borrowings under the NMBS credit agreement bear interest at floating rates. The
weighted-average interest rate was 5.3% and 5.2% as of December 31, 2002 and
2001, respectively. The NMBS bank credit agreement is secured by liens on
substantially all of NMBS's assets. The company unconditionally guaranteed $3.1
million of the $11.7 million of debt outstanding under the NMBS credit agreement
as of December 31, 2002. Pursuant to the company's purchase of an additional
equity interest in NMBS on February 21, 2003, as described in Note 14, the
company increased its unconditional guarantee to $6.2 million. NMBS has an
interest rate swap agreement with an initial notional amount of $5.0 million,
reduced quarterly by $162,500 to $3.2 million at maturity on July 5, 2005.
Pursuant to the swap agreement, NMBS has agreed to make fixed rate payments of
7.5% on the fifth of each month and will receive LIBOR payments. At December 31,
2002, the notional amount of the NMBS swap was $4.8 million, and is accounted
for as a cash flow hedge.

State and Local Government Municipal Bond Issues. In May 1995, the company
entered into a bond purchase agreement with the Indiana Development Finance
Authority, under which was issued $21.4 million of bonds to finance, among other
things, the construction and equipment for certain sewage works, improvements,
waste and water system improvements and other related


                                       55
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

facilities located at the Butler, Indiana, mini-mill. As of December 31, 2002
and 2001, respectively, approximately $2.6 million and $3.0 million of the bond
proceeds were held by the bond trustee in a debt-service reserve fund and were
recorded as restricted cash. In August 2002, the stand-by letter of credit
relating to the municipal bonds was drawn in the amount of $15.3 million by the
Indiana Development Finance Authority. In turn, the lenders that provided the
stand-by letter of credit entered into a five-year term loan agreement with the
company for the drawn amount. This term facility bears interest at floating
rates and had a weighted-average interest rate of 4.1% as of December 31, 2002.

In November 1998, the company received $10.0 million from Whitley County,
Indiana, representing proceeds from solid waste and sewage disposal revenue
bonds to be used to finance certain solid waste and sewage disposal facilities
located at the Whitley County, Indiana, structural and rail mill. The bonds bear
interest at 7.3%, with interest payable semi-annually and principal payments
commencing November 2003 through final maturity in November 2018.

Electric Utility Development Loans. In June 1994, the company entered into a
loan agreement for approximately $13.0 million to finance the company's portion
of the cost to construct an electric substation. The loan bears interest at
8.0%, with equal monthly principal and interest payments required in amounts
sufficient to amortize the substation facility loan over a period of 15 years.
The outstanding principal balance on the substation facility loan was $9.4
million and $10.2 million, as of December 31, 2002 and 2001, respectively.

In addition, the company entered into a loan agreement for approximately $7.8
million to finance the company's portion of the cost to construct an electric
transmission line and certain related facilities. The loan bears interest at
8.0%, with equal monthly principal and interest payments required in amounts
sufficient to amortize the transmission facility loan over a period of 20 years.
The outstanding principal balance on the transmission facility loan was $6.3
million and $6.6 million as of December 31, 2002 and 2001, respectively.

During 1998, IDI entered into an agreement with an electric utility to provide a
$6.5 million eight-year loan. This loan is secured by on-site power distribution
and related equipment. The related interest rate is tied to 90-day commercial
paper rates with an option to establish a fixed interest rate based on an
average of the interest rates applicable to one, three and five year U.S.
Treasuries. The weighted-average interest rate was 3.4% and 5.1% as of December
31, 2002 and 2001, respectively. The outstanding principal balance on the
on-site power distribution facility was $3.8 million and $4.7 million as of
December 31, 2002 and 2001, respectively.

In December 2001, the company entered into an agreement with Northeastern Rural
Electric Membership Corporation (REMC) and Wabash Valley Power Association, Inc.
to finance approximately $9.8 million related to the company's portion of the
cost to construct a transmission line and certain related facilities at the
structural and rail division. This funding was provided in April 2002. The loan
bears interest at 8.1%, with monthly principal and interest payments required in
amounts sufficient to amortize the transmission facility loan over a period of
20 years, with the unpaid principal due at the end of 10 years. The company also
has an undrawn $1.5 million outstanding stand-by letter of credit associated
with the REMC agreement. The outstanding principal balance on the transmission
facility loan was $9.6 million as of December 31, 2002.

The above credit agreements contain customary representations and warranties and
affirmative and negative covenants, including, among others, covenants relating
to financial and compliance reporting, capital expenditures, restricted dividend
payments, maintenance of certain financial ratios, incurrence of liens, sale or
disposition of assets and incurrence of other debt.

Maturities of outstanding debt as of December 31, 2002, are as follows (in
thousands):

<TABLE>
<CAPTION>
<S>                      <C>                                                 <C>
                         2003........................................        $   11,913
                         2004........................................            13,958
                         2005........................................            24,317
                         2006........................................            14,693
                         2007........................................           116,946
                         Thereafter..................................           373,623
                                                                             ----------
                                                                             $  555,450
</TABLE>

The company capitalizes interest on construction-in-progress assets. For the
years ended December 31, 2002, 2001, and 2000, total interest costs incurred
were $41.6 million, $34.1 million and $37.8 million, respectively, of which
$11.4 million, $14.0 million and $17.5 million, respectively, were capitalized.
Cash paid for interest was $35.0 million, $35.7 million and $37.3 million for
the years ended December 31, 2002, 2001, and 2000, respectively.


                                       56
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4.  INCOME TAXES
The company files a consolidated federal income tax return. Cash paid for taxes
was $22.7 million, $4.7 million and $17.9 million for the years ended December
31, 2002, 2001 and 2000, respectively. The current and deferred federal and
state income tax expense for the years ended December 31 are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                    2002     2001       2000
                                                  -------   ------    -------
<S>                                               <C>       <C>       <C>
      Current income tax expense .............    $20,287   $  768    $10,086
      Deferred income tax expense ............     26,313    1,200     20,604
                                                  -------   ------    -------
           Total income tax expense ..........    $46,600   $1,968    $30,690
                                                  =======   ======    =======
</TABLE>

A reconciliation of the statutory tax rates to the actual effective tax rates
for the years ended December 31, are as follows:

<TABLE>
<CAPTION>
                                                                       2002    2001     2000
                                                                       ----    ----     ----
<S>                                                                    <C>     <C>      <C>
      Statutory federal tax rate ...................................   35.0%   35.0%    35.0%
           State income taxes, net of federal benefit ..............    2.3    (1.5)     3.5
           Other permanent differences .............................    0.1     1.4      0.1
           Benefit of rate decrease on cumulative deferred taxes ...     --    (33.8)   (2.3)
           Valuation allowance .....................................     --    37.4       --
                                                                       ----    ----     ----
      Effective tax rate ...........................................   37.4%   38.5%    36.3%
                                                                       ====    ====     ====
</TABLE>

The benefit of rate decrease on cumulative deferred taxes reflected in the
reconciliation above for 2001 and 2000 is the result of decreases in the
effective state income tax rate in years when the deferred tax assets and
liabilities are expected to reverse.

Significant components of the company's deferred tax assets and liabilities at
December 31 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                               2002         2001
                                                                                            ---------    ---------
<S>                                                                                         <C>          <C>
        DEFERRED TAX ASSETS:
             Net operating loss, capital loss, and credit carryforwards ................    $   7,024    $  27,814
             Alternative minimum tax carryforwards .....................................       50,058       35,266
             Capitalized start-up costs ................................................       20,101       17,955
             Tax assets expensed for books .............................................       13,598       11,077
             Interest rate swap liability ..............................................        3,863        3,257
             Accrued expenses ..........................................................        1,840        1,458
             Unrealized losses .........................................................          347           --
                                                                                            ---------    ---------
        Total deferred tax assets ......................................................       96,831       96,827
             Less valuation allowance ..................................................       (1,913)      (1,913)
                                                                                            ---------    ---------
        Net deferred tax assets ........................................................       94,918       94,914
                                                                                            ---------    ---------

        DEFERRED TAX LIABILITIES:
             Depreciable assets ........................................................     (149,790)    (124,884)
             Amortization of fees ......................................................       (4,160)      (3,398)
             Capitalized interest ......................................................       (3,926)      (4,589)
             Other .....................................................................         (692)        (208)
                                                                                            ---------    ---------
        Total deferred tax liabilities .................................................     (158,568)    (133,079)
                                                                                            ---------    ---------
             Net deferred tax liability ................................................    $ (63,650)   $ (38,165)
                                                                                            =========    =========
</TABLE>

The deferred tax assets and liabilities reflect the net tax effects of temporary
differences that are derived from the cumulative taxable or deductible amounts
recorded in the consolidated financial statements in years different from that
of the income tax returns. As of December 31, 2002, the company had fully
utilized its remaining net operating loss carryforwards for federal purposes. As
of December 31, 2002, the company had available capital loss carryforwards of
approximately $5.2 million for federal and state income tax purposes, which
expire beginning in 2005. As of December 31, 2002, the company had available
foreign tax credit carryforwards of approximately $3.0 million for federal
income tax purposes, which expire in 2003. Due to the limited time frame
remaining to utilize the foreign tax credits and the decreased likelihood that
the net operating losses will be fully absorbed prior to the expiration of the
credits, a valuation allowance of $1.9 million was recorded in 2001. Even if
these credits are not utilized as such, they can be treated as tax-deductible
expenses. Therefore, $1.1 million of foreign tax credit remains as a deferred
tax asset as of December 31, 2002.


                                       57
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5.  COMMON STOCK
Effective June 1, 2000, the board of directors authorized the extension and
continuation of the company's 1997 share repurchase program, allowing the
company to repurchase an additional 5%, or 2,344,000 shares, of its outstanding
common stock, at a purchase price not to exceed $15 per share. At December 31,
2002, the company had acquired 3,846,000 shares of its common stock in open
market purchases, of which 3,000 shares were purchased during 2002, none were
purchased during 2001, and 2,549,000 shares were purchased during 2000. The
average price per share of these purchases is $12. As of December 31, 2002,
approximately 954,000 shares remain available for repurchase under the June 2000
repurchase program. During March 2002, pursuant to the IDI Settlement described
in Note 3, the company issued 1,460,000 shares of its treasury stock, at an
average cost of $12 per share, to the IDI lenders.

NOTE 6.  INCENTIVE STOCK OPTION AND OTHER PLANS
1994 and 1996 Incentive Stock Option Plans. The company has reserved 6,022,154
shares of common stock for issuance upon exercise of options or grants under the
1994 Incentive Stock Option Plan (1994 Plan) and the 1996 Incentive Stock Option
Plan (1996 Plan). The 1994 Plan was adopted for certain key employees who are
responsible for management of the company. Options granted under the 1994 Plan
vest two-thirds six months after the date of grant and one-third five years
after the date of grant, with a maximum term of 10 years. All of the company's
employees are eligible for the 1996 Plan, with the options vesting 100% six
months after the date of grant, with a maximum term of five years. Both plans
grant options to purchase the company's common stock at an exercise price of at
least 100% of fair market value on the date of grant.

Non-Employee Director Stock Option Plan (Director Plan). The company has
reserved 100,000 shares of common stock for issuance upon exercise of options or
grants under the Director Plan. The Director Plan was adopted in May 2000, for
members of the company's board of directors who are not employees or officers of
the company. Options granted under the Director Plan vest 100% six months after
the date of grant, with a maximum term of five years. The plan grants options to
purchase the company's common stock at an exercise price of at least 100% of
fair market value on the date of grant.

The company's combined stock option activity for the 1994 Plan, the 1996 Plan
and the Director Plan is as follows:

<TABLE>
<CAPTION>
                                                                                  WEIGHTED AVERAGE
                                                                  OPTIONS          EXERCISE PRICE
                                                                 ---------        ----------------

<S>                                                              <C>                  <C>
Balance outstanding at January 1, 2000.......................    1,739,882            $ 14.34
    Granted..................................................      753,072               9.96
    Exercised................................................      (82,748)              4.10
    Forfeited................................................      (93,616)             19.27

Balance outstanding at December 31, 2000.....................    2,316,590              13.17
    Granted..................................................      636,322              11.90
    Exercised................................................     (158,838)              9.29
    Forfeited................................................     (117,812)             15.42

Balance outstanding at December 31, 2001.....................    2,676,262              13.00
    Granted..................................................      575,738              14.80
    Exercised................................................     (376,964)             10.37
    Forfeited................................................     (243,325)             19.11

Balance outstanding at December 31, 2002.....................    2,631,711              13.21
</TABLE>

The following table summarizes certain information concerning the company's
outstanding options as of December 31, 2002:

<TABLE>
<CAPTION>
                                             WEIGHTED AVERAGE
                                                 REMAINING
       RANGE OF          OUTSTANDING        CONTRACTUAL LIFE       WEIGHTED AVERAGE      EXERCISABLE       WEIGHTED AVERAGE
    EXERCISE PRICE          OPTIONS               (YEARS)           EXERCISE PRICE         OPTIONS          EXERCISE PRICE
   -----------------     ------------       ------------------    ------------------    -------------     -----------------
<S>                      <C>                <C>                   <C>                   <C>               <C>
        $3 to $10           645,499                 2.5                $  7.53              645,499           $   7.53
       $10 to $15         1,258,904                 3.5                  12.55              915,246              12.46
       $15 to $20           481,803                 3.4                  17.86              474,320              17.88
       $20 to $30           245,505                 3.0                  22.32              235,216              22.33
</TABLE>


                                       58
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Officer and Manager Cash and Stock Bonus Plan. Officers and managers of the
company are eligible to receive cash bonuses based on predetermined formulas
designated in the Officer and Manager Cash and Stock Bonus Plan. In the event
the cash portion of the bonus exceeds the predetermined maximum cash payout, the
excess bonus is distributed as common stock of the company. Any common stock
issued pursuant to this plan vests one-third in January of each of the three
years following the year of award. A total of 450,000 shares have been reserved
under this plan. As of December 31, 2002, approximately 27,000 shares of the
original 82,000 shares related to the 2000 stock bonus award, and 144,000 shares
related to the 2002 stock bonus award remained committed for issuance.

NOTE 7.  COMMITMENTS AND CONTINGENCIES

The company has an off-take agreement with Heidtman Steel Products (Heidtman)
that extends through March 2007 (see Note 8). Under the terms of the agreement,
Heidtman is obligated to purchase, and the company is obligated to sell to
Heidtman, at least 76,000 tons of hot-band products per quarter, or 336,000 tons
annually, and at least 15,000 tons of cold-rolled products per quarter, or
60,000 tons annually. For hot-rolled steel, the company's pricing to Heidtman is
determined by either a market pricing formula based on an "all-in" cost-plus
basis or a spot market pricing formula determined on the basis of a discounted
market index. For cold-rolled products, the pricing is determined on a marginal
revenue basis over hot-rolled sheet.

The company has executed a raw material supply contract with OmniSource
Corporation (OmniSource) for the purchase of steel scrap resources (see Note 8).
Under the terms of the contract, OmniSource has agreed to act as the company's
exclusive scrap purchaser and to use its best efforts to locate and secure up to
a minimum of 80% of the company's steel scrap requirements, at the lowest
then-available market prices for material of like grade, quantity and delivery
dates. The cost to the company of OmniSource-owned scrap is the prices at which
OmniSource, in bona fide market transactions, can actually sell material of like
grade, quality and quantity. With respect to general market brokered scrap, the
cost to the company is the price at which OmniSource can actually purchase that
scrap in the market, without mark-up or any other additional cost. For its
brokering services, OmniSource receives a commission per gross ton of scrap
received by the company. All final decisions regarding scrap purchases belong to
the company, and the company maintains the sole right to determine its periodic
scrap needs, including the extent to which it may employ scrap substitutes in
lieu of, or in addition to, steel scrap. The company retains the right to
acquire up to, but not in excess of, 20% of its steel scrap purchased in any
calendar quarter, not to exceed 125,000 tons in such calendar quarter, from
other sources. The agreement, which became effective July 1, 2002, extends
through December 31, 2004; however, either party may terminate the agreement at
anytime on or after July 1, 2003, provided that such party gives the other party
at least three full calendar months prior notice.

The company has entered into certain commitments with suppliers which are of a
customary nature within the steel industry. Commitments have been entered into
relating to future expected requirements for such commodities as natural gas,
electricity and certain transportation services. Certain commitments contain
provisions which require that the company "take or pay" for specified quantities
without regard to actual usage for periods of up to 3 years. During the years
ending December 31, 2003, 2004 and 2005, the company has commitments for natural
gas and its transportation with "take or pay" or other similar commitment
provisions for approximately $17.9 million, $17.5 million and $9.3 million,
respectively. The company fully utilized all such "take or pay" requirements
during the past three years and purchased $14.0 million, $12.7 million and $9.0
million, during the years ended December 31, 2002, 2001 and 2000, respectively,
under these contracts. The company believes that production requirements will be
such that consumption of the products or services purchased under these
commitments will occur in the normal production process. The company purchases
its electricity consumed at its Flat Roll Division pursuant to a contract which
extends through December 2007. The contract designates 152 hours as
"interruptible service" during 2003, and these interruptible hours further
decrease annually through expiration of the agreement. The contract also
establishes an agreed fixed rate energy charge per Mill/kWh consumed for each
year through the expiration of the agreement. At December 31, 2002, the company
has outstanding construction-related commitments of $12.8 million related to the
rail mill construction and $15.7 million related to the addition of a coil
coating facility at the company's Flat Roll Division.

The company is subject to litigation from time to time, which is incidental to
its business. The company, based upon current knowledge including discussions
with legal counsel, believes that the results of any threatened or pending
litigation will not have a material effect on the company's financial position,
results of operations, or cash flows.

NOTE 8.  TRANSACTIONS WITH AFFILIATED COMPANIES

The company sells various flat-rolled products to Heidtman and purchases steel
scrap resources from OmniSource, both of which are affiliated companies. The
president and chief executive officer of Heidtman is a member of the company's
board of directors, and Heidtman is a stockholder of the company. During 2002,
the chairman of the board of directors of OmniSource resigned from the company's
board of directors and was replaced by the president of OmniSource. Both of
these individuals were stockholders of the company.


                                       59
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

Transactions with these affiliated companies for the years ended December 31 are
as follows (in millions):

<TABLE>
<CAPTION>
                                     2002                               2001                              2000
                           ---------------------------         ---------------------------        ---------------------------
                                          PERCENTAGE                          PERCENTAGE                         PERCENTAGE
                             AMOUNT     OF TOTAL SALES           AMOUNT     OF TOTAL SALES          AMOUNT     OF TOTAL SALES
                           ----------   --------------         ----------   --------------        ----------   --------------
<S>                        <C>          <C>                    <C>          <C>                   <C>          <C>
Sales:
   Heidtman ............   $  145.6           17%              $  112.3          18%              $  142.8          21%
Accounts receivable:
   Heidtman ............       34.7                                16.3                               20.1
Purchases:
   OmniSource ..........      232.7                               177.5                              179.7
Accounts payable:
   OmniSource ..........       18.8                                11.0                                9.1
</TABLE>

NOTE 9.  FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments including cash and cash
equivalents, accounts receivable and accounts payable approximate fair value,
because of the relatively short maturity of these instruments. The carrying
value of long-term debt, including the current portion, approximates fair value
due to the interest being determined by variable rates, repricing periodically.
The fair value of the various interest rate swap agreements was estimated to be
a liability of $10.4 million and $8.8 million at December 31, 2002 and 2001,
respectively. The fair values are estimated by the use of quoted market prices,
estimates obtained from brokers, and other appropriate valuation techniques
based on references available.

NOTE 10.  RETIREMENT PLANS
The company sponsors a 401(k) retirement savings and profit sharing plan for
eligible employees, which is a "qualified plan" for federal income tax purposes.
The company's total expense for the plan was $6.9 million, $424,000 and $4.6
million for the years ended December 31, 2002, 2001 and 2000, respectively.

NOTE 11.  SEGMENT INFORMATION
The company has two reportable segments: steel operations and steel scrap
substitute operations. The steel operations segment includes the company's Flat
Roll Division, Structural and Rail Division, and Bar Division. The Flat Roll
Division sells a broad range of hot-rolled, cold-rolled and coated steel
products, including a large variety of specialty products such as thinner gauge
hot-rolled products and galvanized products. The Flat Roll Division sells
directly to end-users and service centers, including Heidtman, located primarily
in the Midwestern United States and these products are used in numerous industry
sectors, including the automotive, construction and commercial industries. The
company began significant construction of its Structural and Rail Division in
May 2001, with structural steel production commencing in the third quarter of
2002. Construction of the rail facility is continuing, with initial test
production anticipated to commence in the second quarter of 2003. This facility
produces and sells structural steel beams, pilings, and other steel components
directly to end-users and service centers for the construction, transportation
and industrial machinery markets. This facility is also designed to produce and
sell a variety of standard and premium-grade rails for the railroad industry. On
September 9, 2002, the company purchased the special bar quality mini-mill
assets of Qualitech Steel SBQ, LLC. The company plans to invest between $70 and
$75 million of additional capital to convert the facility to the production of
merchant bars and shapes and reinforcing bar products, with an anticipated
annual production capacity of between 500,000 and 600,000 tons. The company
anticipates initial production will begin during the first quarter of 2004 and
anticipates marketing the bar products directly to end-users and to service
centers for the construction, transportation and industrial machinery markets.

Steel scrap substitute operations include the revenues and expenses associated
with the company's wholly owned subsidiary, Iron Dynamics. From the time
operations were halted in 2001 through the fourth quarter of 2002, the costs
incurred at IDI were composed of those expenses required to maintain the
facility and further evaluate the project and its related benefits. On July 10,
2002, IDI announced that it would begin experimental production trials in the
fourth quarter of 2002. These trials utilized a modified production process. IDI
successfully completed certain operating trials which may significantly reduce
the eventual per-unit cost of liquid pig iron production. Additional
modifications and refinements required to implement this modified production
process at the IDI facility are estimated to cost approximately $14.0 million,
and are expected to be completed during 2003. The company recently announced its
intent to restart IDI during the second half of 2003.

Revenues included in the category "All Other" are from two subsidiary operations
that are below the quantitative thresholds required for reportable segments.
These revenues are from the fabrication of trusses, girders, steel joists and
steel decking for the non-residential construction industry; from the further
processing, or slitting, and sale of certain steel products; and from the resale


                                       60
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of certain secondary and excess steel products. In addition, "All Other" also
includes certain unallocated corporate accounts, such as the company's senior
secured credit facilities, senior unsecured notes, convertible subordinated
notes and certain other investments.

The company's operations are primarily organized and managed by operating
segment. Operating segment performance and resource allocations are primarily
based on operating results before income taxes. The accounting policies of the
reportable segments are consistent with those described in Note 1 to the
financial statements. Intersegment sales and any related profits are eliminated
in consolidation. The external net sales of the company's steel operations
include sales to non-U.S. companies of $10.1 million, $8.0 million and $10.3
million, for the years ended December 31, 2002, 2001 and 2000, respectively. The
company's segment results are as follows (in thousands):

<TABLE>
<CAPTION>
                                        2002           2001           2000
                                    ------------   ------------   ------------
<S>                                 <C>            <C>            <C>
STEEL OPERATIONS
Net sales
     External                       $   785,007    $   541,693    $   679,137
     Other segments                      48,578         33,462          5,548
Operating income                        188,081         49,537        138,180
Depreciation and amortization            51,024         43,852         43,923
Assets                                1,057,509        890,504        867,075
Liabilities                             117,537         95,251         85,759
Capital expenditures                    143,045         83,399         64,611
                                    -----------    -----------    -----------
STEEL SCRAP SUBSTITUTE OPERATIONS
Net sales
     External                       $        --    $        --    $        --
     Other segments                         450          4,660          5,752
Operating loss                          (10,471)       (14,203)       (12,477)
Depreciation and amortization             5,083          1,274            785
Assets                                  149,651        155,415        148,897
Liabilities                              27,832         64,670         71,195
Capital expenditures                     (2,999)         4,619         21,622
                                    -----------    -----------    -----------
ALL OTHER
Net sales
     External                       $    79,486    $    65,291    $    13,486
     Other segments                         769            909             --
Operating loss                          (13,433)        (8,808)       (22,391)
Depreciation and amortization             3,336          1,668            735
Assets                                  169,157        211,704        121,665
Liabilities                             704,433        674,871        558,380
Capital expenditures                      2,554          2,696         24,146
                                    -----------    -----------    -----------
ELIMINATIONS
Net sales
     Other segments                 $   (49,797)   $   (39,031)   $   (11,300)
Operating income (loss)                    (275)          (601)         2,091
Depreciation and amortization                --             --             --
Assets                                 (100,621)       (77,525)       (70,563)
Liabilities                             (95,766)       (73,269)       (67,044)
Capital expenditures                         --             --             --
                                    -----------    -----------    -----------
CONSOLIDATED
Net sales                           $   864,493    $   606,984    $   692,623
Operating income                        163,902         25,925        105,403
Depreciation and amortization            59,443         46,794         45,443
Assets                                1,275,696      1,180,098      1,067,074
Liabilities                             754,036        761,523        648,290
Capital expenditures                    142,600         90,714        110,379
                                    -----------    -----------    -----------
</TABLE>


                                       61
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12.  CONDENSED CONSOLIDATING INFORMATION
Certain 100%-owned subsidiaries of SDI, one of which was incorporated in 2000
and the others in 2002, have fully and unconditionally guaranteed all of the
indebtedness relating to the issuance of $200.0 million of senior notes issued
in March 2002 and due 2009. Set forth below are condensed consolidating
financial statements of the company, including the guarantors. The following
condensed consolidating financial statements present the financial position,
results of operations and cash flows of (i) SDI (in each case, reflecting
investments in its consolidated subsidiaries under the equity method of
accounting), (ii) the guarantor subsidiaries of SDI, (iii) the non-guarantor
subsidiaries of SDI, and (iv) the eliminations necessary to arrive at the
information for the company on a consolidated basis. The condensed consolidating
financial statements should be read in conjunction with the accompanying
consolidated financial statements of the company.

<TABLE>
Condensed Consolidating Balance Sheet (in thousands):

<CAPTION>
                                                                               COMBINED       CONSOLIDATING         TOTAL
                                             PARENT         GUARANTORS      NON-GUARANTORS     ADJUSTMENTS      CONSOLIDATED
                                          -----------       -----------     --------------    -------------     ------------
                                                                       (AS OF DECEMBER 31, 2002)
<S>                                       <C>               <C>              <C>               <C>              <C>
Cash....................................  $    22,530       $       282      $     1,406       $        --      $    24,218
Accounts receivable.....................      117,001                --            9,403            (7,925)         118,479
Inventories.............................      137,072                --           16,868              (736)         153,204
Other current assets....................       15,209                50               99              (356)          15,002
                                          -----------       -----------      -----------       -----------      -----------
   Total current assets.................      291,812               332           27,776            (9,017)         310,903

Property, plant and equipment, net......      742,202            46,139          141,107              (110)         929,338
Other assets............................      189,807            28,454              330          (183,136)          35,455
                                          -----------       -----------      -----------       -----------      -----------
   Total assets.........................  $ 1,223,821       $    74,925      $   169,213       $  (192,263)     $ 1,275,696
                                          ===========       ===========      ===========       ===========      ===========


Accounts payable........................  $    44,608       $        --      $     9,533       $    (7,924)     $    46,217
Accrued expenses........................       52,537                --            3,030              (147)          55,420
Current maturities of long-term debt....        7,292                --            4,639               (18)          11,913
                                          -----------       -----------      -----------       -----------      -----------
   Total current liabilities............      104,437                --           17,202            (8,089)         113,550

Other liabilities.......................       72,959            22,926           (2,188)           (1,380)          92,317
Long-term debt..........................      524,733                --           22,496            (3,692)         543,537
Minority interest.......................          622                --               --             4,010            4,632

Common stock............................          499            45,361          172,196          (217,557)             499
Treasury stock..........................      (28,889)                -               --                --          (28,889)
Additional paid-in capital..............      347,050                16               --               (16)         347,050
Retained earnings.......................      209,299             6,622          (40,276)           34,461          210,106
Other accumulated comprehensive loss....       (6,889)                -             (217)               --           (7,106)
                                          -----------       -----------      -----------       -----------      -----------
   Total stockholders' equity...........      521,070            51,999          131,703          (183,112)         521,660
                                          -----------       -----------      -----------       -----------      -----------
   Total liabilities and stockholders'
      equity............................  $ 1,223,821       $    74,925      $   169,213       $  (192,263)     $ 1,275,696
                                          ===========       ===========      ===========       ===========      ===========
</TABLE>


                                       62
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
Condensed Consolidating Balance Sheet (in thousands):

<CAPTION>
                                                                               COMBINED       CONSOLIDATING        TOTAL
                                             PARENT         GUARANTORS      NON-GUARANTORS     ADJUSTMENTS      CONSOLIDATED
                                          -----------       -----------     --------------    -------------     ------------
                                                                       (AS OF DECEMBER 31, 2001)
<S>                                       <C>               <C>              <C>               <C>              <C>
Cash..................................    $    77,407       $        83      $       751       $        --      $    78,241
Accounts receivable...................         78,461                --           10,375            (6,957)          81,879
Inventories...........................        100,709                --           17,680               (21)         118,368
Other current assets..................         32,973               (16)           1,095              (336)          33,716
                                          -----------       -----------      -----------       -----------      -----------
   Total current assets...............        289,550                67           29,901            (7,314)         312,204

Property, plant and equipment, net....        703,896                --          148,270              (105)         852,061
Other assets..........................         90,044             7,822            1,405           (83,438)          15,833
                                          -----------       -----------      -----------       -----------      -----------
   Total assets.......................    $ 1,083,490       $     7,889      $   179,576       $   (90,857)     $ 1,180,098
                                          ===========       ===========      ===========       ===========      ===========

Accounts payable......................    $    40,081       $         1      $     8,204       $    (6,957)     $    41,329
Accrued expenses......................         28,165                --            2,585                (1)          30,749
Current maturities of long-term debt..          2,337                --           43,696                --           46,033
                                          -----------       -----------      -----------       -----------      -----------
   Total current liabilities..........         70,583                 1           54,485            (6,958)         118,111

Other liabilities.....................         61,308                --            2,728            20,716           84,752
Long-term debt........................        532,350                --           21,876              (335)         553,891
Minority interest.....................            639                --               --             4,130            4,769

Common stock..........................            495                 1          133,351          (133,352)             495
Treasury stock........................        (46,526)               --               --                --          (46,526)
Additional paid-in capital............        337,733                16               --               (16)         337,733
Retained earnings.....................        132,264             7,871          (32,864)           24,958          132,229
Other accumulated comprehensive
   loss...............................         (5,356)               --               --                --           (5,356)
                                          -----------       -----------      -----------       -----------      -----------
   Total stockholders' equity.........        418,610             7,888          100,487          (108,410)         418,575
                                          -----------       -----------      -----------       -----------      -----------
   Total liabilities and stockholders'
     equity...........................    $ 1,083,490       $     7,889      $   179,576       $   (90,857)     $ 1,180,098
                                          ===========       ===========      ===========       ===========      ===========
</TABLE>


                                       63
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
Condensed Consolidating Statements of Income (in thousands):

<CAPTION>
                                                                               COMBINED       CONSOLIDATING        TOTAL
                                             PARENT         GUARANTORS      NON-GUARANTORS     ADJUSTMENTS      CONSOLIDATED
                                          -----------       -----------     --------------    -------------     -----------
                                                                    (Year ended December 31, 2002)
<S>                                       <C>               <C>              <C>               <C>              <C>
Net sales.............................    $   833,585       $        --      $    80,705       $   (49,797)     $   864,493
Cost of goods sold....................        607,131                --           80,806           (49,077)         638,860
                                          -----------       -----------      -----------       -----------      -----------
   Gross profit.......................        226,454                --             (101)             (720)         225,633
Selling, general and administration...         52,824               324            9,028              (445)          61,731
                                          -----------       -----------      -----------       -----------      -----------
Operating income (loss)...............        173,630              (324)          (9,129)             (275)         163,902
Interest expense......................         28,313                --            2,058              (170)          30,201
Other (income) expense................         54,303           (50,879)             (24)              289            3,689
                                          -----------       -----------      -----------       -----------      -----------
Income (loss) before income taxes and
   equity in net loss of subsidiaries.         91,014            50,555          (11,163)             (394)         130,012
Income tax expense (benefit)..........         35,203            17,687           (4,214)               --           48,676
                                          -----------       -----------      -----------       -----------      -----------
Income (loss) before extraordinary items
   and equity in net loss of subsidiaries      55,811            32,868           (6,949)             (394)          81,336
Extraordinary loss on debt
   extinguishments....................         (2,996)               --             (463)               --           (3,459)
                                          -----------       -----------      -----------       -----------      -----------
                                               52,815            32,868           (7,412)             (394)          77,877
Equity in net income of subsidiaries..         25,456                --               --           (25,456)              --
                                          -----------       -----------      -----------       -----------      -----------
Net income (loss).....................    $    78,271       $    32,868      $    (7,412)      $   (25,850)     $    77,877
                                          ===========       ===========      ===========       ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                               COMBINED       CONSOLIDATING        TOTAL
                                             PARENT         GUARANTORS      NON-GUARANTORS     ADJUSTMENTS      CONSOLIDATED
                                          -----------       -----------     --------------    -------------     -----------
                                                                    (Year ended December 31, 2001)
<S>                                       <C>               <C>              <C>               <C>              <C>
Net sales.............................    $   575,156       $        --      $    70,859       $   (39,031)     $   606,984
Cost of goods sold....................        498,707                --           63,216           (38,996)         522,927
                                          -----------       -----------      -----------       -----------      -----------
   Gross profit.......................         76,449                --            7,643               (35)          84,057
Selling, general and administration...         38,872                15           19,245                --           58,132
                                          -----------       -----------      -----------       -----------      -----------
Operating income (loss)...............         37,577               (15)         (11,602)              (35)          25,925
Interest expense......................         14,405                --            4,075                --           18,480
Other (income) expense................         37,698           (35,353)             (12)               --            2,333
                                          -----------       -----------      -----------       -----------      -----------
Income (loss) before income taxes and
   equity in net loss of subsidiaries.        (14,526)           35,338          (15,665)              (35)           5,112
Income tax expense....................         (4,405)           12,404           (6,031)               --            1,968
                                          -----------       -----------      -----------       -----------      -----------
                                              (10,121)           22,934           (9,634)              (35)           3,144
Equity in net income of subsidiaries..         13,300                --               --           (13,300)              --
                                          -----------       -----------      -----------       -----------      -----------
Net income (loss).....................    $     3,179       $    22,934      $    (9,634)      $   (13,335)     $     3,144
                                          ===========       ===========      ===========       ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                               COMBINED       CONSOLIDATING        TOTAL
                                             PARENT         GUARANTORS      NON-GUARANTORS     ADJUSTMENTS      CONSOLIDATED
                                          -----------       -----------     --------------    -------------     ------------
                                                                    (Year ended December 31, 2000)
<S>                                       <C>               <C>              <C>               <C>              <C>
Net sales.............................    $   684,684       $        --      $    14,052       $    (6,113)     $   692,623
Cost of goods sold....................        527,008                --           12,781            (5,875)         533,914
                                          -----------       -----------      -----------       -----------      -----------
   Gross profit.......................        157,676                --            1,271              (238)         158,709
Selling, general and administration...         36,514                18           16,774                --           53,306
                                          -----------       -----------      -----------       -----------      -----------
Operating income (loss)...............        121,162               (18)         (15,503)             (238)         105,403
Interest expense......................         19,283                --              916                --           20,199
Other (income) expense................         39,208           (38,489)              --                --              719
                                          -----------       -----------      -----------       -----------      -----------
Income (loss) before income taxes and
   equity in net loss of subsidiaries.         62,671            38,471          (16,419)             (238)          84,485
Income tax expense....................         23,416            13,465           (6,191)               --           30,690
                                          -----------       -----------      -----------       -----------      -----------
                                               39,255            25,006          (10,228)             (238)          53,795
Equity in net income of subsidiaries..         14,778                --               --           (14,778)              --
                                          -----------       -----------      -----------       -----------      -----------
Net income (loss).....................    $    54,033       $    25,006      $   (10,228)      $   (15,016)     $    53,795
                                          ===========       ===========      ===========       ===========      ===========
</TABLE>


                                       64
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
Condensed Consolidating Statements of Cash Flows (in thousands):

<CAPTION>
                                                                                                COMBINED            TOTAL
                                                              PARENT          GUARANTORS      NON-GUARANTORS    CONSOLIDATED
                                                            -----------      -----------      --------------    ------------
                                                                              (Year ended December 31, 2002)
<S>                                                         <C>              <C>               <C>              <C>
Net cash provided by operations......................       $    80,838      $    33,976       $       208      $   115,022
Net cash used in investing activities - primarily
   purchases of property, plant and equipment........           (88,203)         (46,140)              557         (133,786)
Financing activities:
   Issuance of long-term debt........................           582,411               --            16,580          598,991
   Repayments of long-term debt......................          (566,450)              --           (55,015)        (621,465)
   Other.............................................           (63,473)          12,363            38,325          (12,785)
                                                            -----------      -----------       -----------      -----------
Net cash provided by (used in) financing activities..           (47,512)          12,363              (110)         (35,259)
                                                            -----------      -----------       -----------      -----------
Increase (decrease) in cash and cash equivalents.....           (54,877)             199               655          (54,023)
Cash and cash equivalents at beginning of year.......            77,407               83               751           78,241
                                                            -----------      -----------       -----------      -----------
Cash and cash equivalents at end of year.............       $    22,530      $       282       $     1,406      $    24,218
                                                            ===========      ===========       ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                COMBINED            TOTAL
                                                              PARENT          GUARANTORS      NON-GUARANTORS     CONSOLIDATED
                                                            -----------      -----------      --------------    -------------
                                                                              (Year ended December 31, 2001)
<S>                                                         <C>              <C>               <C>              <C>
Net cash provided by (used in) operations............       $    53,101      $    35,086       $   (20,814)     $    67,373
Net cash used in investing activities - primarily
   purchases of property, plant and equipment........           (84,632)              --            (6,078)         (90,710)
Financing activities:
   Issuance of long-term debt........................           192,834               --             8,528          201,362
   Repayments of long-term debt......................          (105,299)              --            (6,672)        (111,971)
   Other.............................................            12,479          (35,043)           24,567            2,003
                                                            -----------      -----------       -----------      -----------
Net cash provided by financing activities............           100,014          (35,043)           26,423           91,394
                                                            -----------      -----------       -----------      -----------
Increase (decrease) in cash and cash equivalents.....            68,483               43              (469)          68,057
Cash and cash equivalents at beginning of year.......             8,924               40             1,220           10,184
                                                            -----------      -----------       -----------      -----------
Cash and cash equivalents at end of year.............       $    77,407      $        83       $       751      $    78,241
                                                            ===========      ===========       ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                COMBINED            TOTAL
                                                              PARENT          GUARANTORS      NON-GUARANTORS     CONSOLIDATED
                                                            -----------      -----------      --------------    -------------
                                                                              (Year ended December 31, 2000)
<S>                                                         <C>              <C>               <C>              <C>
Net cash provided by (used in) operations............       $   122,198      $        23       $   (19,429)     $   102,792
Net cash used in investing activities - primarily
   purchases of property, plant and equipment........           (68,926)              --           (40,473)        (109,399)
Financing activities:
   Issuance of long-term debt........................            48,997               --            19,920           68,917
   Repayments of long-term debt......................           (38,958)              --            (3,402)         (42,360)
   Purchase of treasury stock........................           (26,876)              --                --          (26,876)
   Other.............................................           (42,402)              17            42,880              495
                                                            -----------      -----------       -----------      -----------
Net cash provided by (used in) financing activities..           (59,239)              17            59,398              176
                                                            -----------      -----------       -----------      -----------
Increase (decrease) in cash and cash equivalents.....            (5,967)              40              (504)          (6,431)
Cash and cash equivalents at beginning of year.......            14,891               --             1,724           16,615
                                                            -----------      -----------       -----------      -----------
Cash and cash equivalents at end of year.............       $     8,924      $        40       $     1,220      $    10,184
                                                            ===========      ===========       ===========      ===========
</TABLE>


                                       65
<PAGE>
                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED, IN THOUSANDS, EXCEPT PER
          SHARE DATA)

<TABLE>
<CAPTION>
                                                            1ST QUARTER      2ND QUARTER      3RD QUARTER      4TH QUARTER
<S>                                                        <C>             <C>               <C>              <C>
2002:
Net sales............................................      $   166,903     $   213,739       $   240,697      $   243,154
Gross profit.........................................           27,374          53,043            72,755           72,461
Operating income.....................................           14,286          33,264            57,076           59,276
Income before extraordinary items....................            3,668          17,728            29,131           30,810
Extraordinary loss on debt extinguishments...........            2,028              --                --            1,431
Net income...........................................            1,640          17,728            29,131           29,378
Earnings per share before extraordinary items:
     Basic...........................................              .08             .37               .61              .65
     Diluted.........................................              .08             .37               .61              .64
Earnings per share:
     Basic...........................................              .04             .37               .61              .62
     Diluted.........................................              .04             .37               .61              .61

2001:
Net sales............................................      $   154,086     $   157,639       $   156,807      $   138,452
Gross profit.........................................           25,563          25,499            21,919           11,076
Operating income.....................................           11,761           7,323             9,098           (2,257)
Net income...........................................            4,383           1,953             2,122           (5,314)
Earnings per share:
     Basic...........................................              .10             .04               .05             (.12)
     Diluted.........................................              .10             .04               .05             (.12)
</TABLE>

Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not equal
the total for the year.

NOTE 14.  SUBSEQUENT EVENTS
On March 14, 2003, the company purchased the galvanizing assets of GalvPro II,
LLC, for $17.5 million, plus the potential of an additional $1.5 million based
on an earn-out formula. This steel coating facility is located in
Jeffersonville, Indiana, and has an estimated annual production capacity of
between 300,000 and 350,000 tons of light-gauge, hot-dipped, cold-rolled
galvanized steel. The company anticipates investing between $2.0 and $6.0
million of additional capital for certain equipment modifications and
improvements. The facility will be operated as a cost-center of the company's
Flat Roll Division. The company anticipates production will begin mid-2003 and
believes this addition will increase its percentage of value-added product
sales.

On February 27, 2003, the company announced that it was increasing its ownership
in its consolidated subsidiary NMBS from 46.6% ownership to 100% through (a)
acquisition of the 46.6% ownership interest in NMBS previously held by New
Process Steel Corporation (New Process), a privately held Houston, Texas, steel
processor, which the company has already consummated at a cost of $3.5 million,
plus the purchase of New Process' portion of NMBS's subordinated notes payable,
including accrued interest, to New Process for $3.9 million, and (b) an
agreement to acquire the remaining 6.8% stake held by other minority investors,
during the first quarter of 2003. NMBS began production in 2000 and produces
joists, girders, trusses and steel roof and floor decking, which is sold
primarily in the upper Midwest non-residential building components market.


                                       66
<PAGE>
ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required to be furnished pursuant to this item will be set forth
under the caption "Election of Directors" in the 2003 Proxy Statement, which we
will file no later than 120 days after the end of our fiscal year with the
Securities and Exchange Commission. We incorporate that information herein by
reference.

ITEM 11: EXECUTIVE COMPENSATION

The information required to be furnished pursuant to this item will be set forth
under the caption "Executive Compensation" in the 2003 Proxy Statement, which we
will file no later than 120 days after the end of our fiscal year with the
Securities and Exchange Commission. We incorporate that information herein by
reference.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required to be furnished pursuant to this item will be set forth
under the caption "Information on Directors and Executive Officers" in the 2003
Proxy Statement, which will be filed no later than 120 days after the end of our
fiscal year with the Securities and Exchange Commission. We incorporate that
information herein by reference.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

We have four compensation plans approved by stockholders under which our equity
securities are authorized for issuance to employees or directors in exchange for
goods or services: The 1994 Incentive Stock Option Plan; The Amended and
Restated 1996 Incentive Stock Option Plan; The Revised Officer and Manager Cash
and Stock Bonus Plan; and The Non-Employee Director Stock Option Plan.

The following table summarizes information about our equity compensation plans
at December 31, 2002:

<TABLE>
<CAPTION>
                                                                                                                   (c)
                                                 (a)                                                 Number of securities remaining
                                     Number of Securities to be                   (b)                 available for future issuance
                                       issued upon exercise of         Weighted-average exercise        under equity compensation
                                    outstanding options, warrants    price of outstanding options,     plans (excluding securities
          Plan Category                      and rights                   warrants and rights            reflected in column (a)
------------------------------------------------------------------------------------------------------------------------------------

<S>                                 <C>                              <C>                             <C>
Equity compensation plans
approved by security holders                  2,802,384                         $12.54                          3,219,770

Equity compensation plans not
approved by security holders                   -------                          -------                          -------
</TABLE>

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Heidtman Contract. For the years ended December 31, 2002 and 2001, we sold
approximately 451,000 tons and 405,000 tons of our steel products to Heidtman
for $145.6 million and $112.3 million, representing approximately 17% and 18% of
our total net sales for each year, respectively. We have a long-term "off-take"
agreement with Heidtman that extends through March 2007. Under the off-take
agreement, Heidtman is obligated to buy and we are obligated to sell to
Heidtman, at least 76,000 tons of our hot band products per quarter, or 336,000
tons annually, and at least 15,000 tons of our cold-rolled products per quarter,
or 60,000 tons annually. Our pricing to Heidtman is determined by either a
market or a spot market pricing formula. For market priced sales of hot-rolled
steel, pricing is determined on an "all-in" cost-plus basis, together with all
published extras. For spot market sales of hot-rolled steel, pricing is
determined on the basis of a discounted market index. Pricing for cold-rolled
products is determined on a


                                       67
<PAGE>
marginal revenue basis over hot-rolled sheet. John Bates is the President and
Chief Executive Officer of Heidtman, is a member of our board of directors and
is the beneficial owner of 6.3% of our common stock outstanding as of December
31, 2002.

OmniSource Contract. We have had an ongoing relationship with OmniSource,
pursuant to which OmniSource has agreed to act as our exclusive scrap purchaser
and to use its best efforts to locate and secure for us up to a minimum of 80%
of our steel scrap requirements at the lowest then-available market prices for
material of like grade, quantity and delivery dates. The cost to us of
OmniSource-owned scrap is the price at which OmniSource, in bona fide market
transactions, can actually sell material of like grade, quality and quantity.
With respect to general market brokered scrap, the cost to us is the price at
which OmniSource can actually purchase that scrap in the market, without mark-up
or any other additional cost. For its services, OmniSource receives a commission
per gross ton of scrap received by us at our mini-mills. All final decisions
regarding scrap purchases belong to us, and we maintain the sole right to
determine our periodic scrap needs, including the extent to which we may employ
scrap substitutes in lieu of, or in addition to, scrap. In addition, we have the
right to purchase up to, but not in excess of, 20% of our gross tonnage of
purchased scrap in any calendar quarter from certain other steel scrap providers
not to exceed 125,000 tons in such calendar quarter. No commission is payable to
OmniSource for scrap substitute purchased or manufactured by us or for scrap
purchased from other vendors provided that we do not exceed the agreed upon
thresholds. In addition, OmniSource maintains a scrap handling facility, with
its own equipment and staff, on our plant site. OmniSource does not pay rent for
this facility. The current agreement which became effective July 1, 2002,
extends through December 31, 2004; however, either party may terminate the
agreement at anytime on or after July 1, 2003, provided that such party gives
the other party at least three full calendar months prior notice.

For the years ended December 31, 2002 and 2001, we purchased 2.1 million tons of
scrap, or 82% of our total scrap purchases, and 1.5 million tons of scrap, or
87% of our total scrap purchases, respectively from OmniSource. For these
purchasing services, we paid OmniSource fees of $3.5 million and $4.2 million
for the years ended December 31, 2002 and 2001, respectively. Daniel Rifkin, who
is a member of our board of directors, is the President of OmniSource and is
also a stockholder of our company.

New Millennium Joint Venture. In September 1999, we and New Process Steel
Holding Co., Inc., a major processor and distributor of coated flat-rolled
products, organized New Millennium, an Indiana limited liability company. At
December 31, 2002 our ownership interest in New Millennium was 46.6%, but our
vote is determinative on all material matters requiring an affirmative vote,
except for a limited number of matters specifically requiring a unanimous vote.
Our financial investment in New Millennium was $5.0 million as of December 31,
2002. In addition, in connection with the refinancing of New Millennium's credit
facility pursuant to a credit agreement dated July 2, 2002, we have made a $3.5
million subordinated loan to New Millennium as of December 31, 2002, and we have
entered into a capital call agreement that requires us to make additional
capital contributions up to an aggregate of $1.5 million under certain
circumstances. In February 2003, however, we purchased New Process Steel's 46.6%
ownership interest in New Millennium, and we announced that we have an agreement
to acquire the remaining 6.8% minority interest, which we expect to consummate
shortly. As a result of these transactions, we will own 100% of New Millennium
it will no longer be operated as a joint venture with a third party.

We believe that all of the transactions described above are on terms no less
favorable to us than could be obtained from unaffiliated third parties.

ITEM 14: CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. An evaluation was
performed under the supervision and with the participation of registrant's
management, including the chief executive officer and chief financial officer,
of the effectiveness of the design and operation of registrant's disclosure
controls and procedures, within 90 days prior to the filing date of this report
on Form 10-K. Based upon their evaluation, registrant's principal executive
officer and principal financial officer have concluded that registrant's
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934) are effective to ensure that
information required to be disclosed by registrant in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

(b) Changes in internal controls. There have been no significant changes in
registrant's internal controls or in other factors that could significantly
affect internal controls subsequent to their evaluation. There were no
significant deficiencies or material weaknesses, and, therefore, there were no
corrective actions taken.


                                       68
<PAGE>
ITEM 15: PRINCIPAL ACCOUNTANT FEES AND SERVICES

Independent Auditor Fee Information

Fees for professional services provided by our independent auditors in each of
the last two years, in each of the following categories are:

<TABLE>
<CAPTION>
                                                     2002          2001
                                                   --------      --------
<S>                                                <C>           <C>
            Audit Fees                             $412,000      $184,000
            Audit-Related Fees                       48,000        46,000
            Tax Fees                                351,000        38,000
            All Other Fees                               --            --
                                                   --------      --------
                                                   $811,000      $268,000
                                                   ========      ========
</TABLE>

Fees for audit services include fees associated with the annual audit, the
reviews of the Company's quarterly reports on Form 10-Q, comfort letter
procedures, preparing consents, and assistance with review of documents filed
with the Commission. Audit-related fees principally include accounting
consultations and audits of benefit plans.

There were no other services performed during 2002 and 2001.

                                     PART IV

ITEM 16.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)   The following documents are filed as a part of this report:

      1.    Financial Statements:

                  See the Audited Consolidated Financial Statements of Steel
                  Dynamics Inc. attached hereto and described in the Index on
                  page 42 of this Report.

      2.    Financial Statement Schedules:

                  None


                                       69
<PAGE>
(b)   Reports on Form 8-K. We filed the following reports on Form 8-K during the
      fourth quarter of 2002.

<TABLE>
<CAPTION>
         DATE OF FILING                      DESCRIPTION                            REPORTED

<S>                                          <C>                                    <C>
         November 14, 2002                   Item 9:  Regulation FD Disclosure      Section 906 Certification re report on Form
                                                                                    10-Q for quarter ending September 30, 2002

         December 18, 2002                   Item 9:  Regulation FD Disclosure      Announcing sale of $100 million of
                                                                                    registrant's 4% convertible subordinated notes
                                                                                    due 2012
</TABLE>

(c)   Exhibits:

Exhibit No.

   2.1      Agreement (Settlement Agreement), dated as of January 28, 2002, by
            and among Iron Dynamics, Inc., Steel Dynamics, Inc., various
            signatory lender banks, and Mellon Bank, N.A. as Agent for the Iron
            Dynamics lenders, incorporated by reference from Exhibit 2.1 to our
            Report on Form 8-K, filed February 26, 2002.

   3.1a     Amended and Restated Articles of Incorporation of Steel Dynamics,
            Inc., incorporated by reference from Exhibit 3.1a in Registrant's
            Registration Statement on Form S-1, SEC File No. 333-12521,
            effective November 21, 1996.

   3.1b     Articles of Incorporation of Iron Dynamics, Inc., incorporated by
            reference from Registrant's 1996 Annual Report on Form 10-K, filed
            March 31, 1997.

   3.2a     Amended Bylaws of Steel Dynamics, Inc., incorporated herein by
            reference from Exhibit 3.2a to our Registration Statement on Form
            S-3, SEC File No. 333-82210, effective February 28, 2002.

   3.2b     Bylaws of Iron Dynamics, Inc., incorporated by reference from
            Registrant's 1996 Annual Report on Form 10-K, filed March 31, 1997.

   4.1      Registration Agreement between Steel Dynamics, Inc. and certain
            stockholders of Steel Dynamics, Inc., incorporated by reference from
            Exhibit 10.31 to the Company's Registration Statement on Form S-1,
            SEC File No. 333-12521, filed September 23, 1996.

   4.1a     Amendment No. 1 to Registration Agreement (incorporated by reference
            from Exhibit 10.32 to the Company's Registration Statement on Form
            S-1, SEC File No. 333-12521, filed September 23, 1996).

   4.1b     Amendment No. 2 to Registration Agreement (incorporated by reference
            from Exhibit 10.33 to the Company's Registration Statement on Form
            S-1, SEC File No. 333-12521, filed September 23, 1996).

   4.1c     Amendment No. 3 to Registration Agreement (incorporated by reference
            from Exhibit 10.34 to the Company's Registration Statement on Form
            S-1, SEC File No. 333-12521, filed September 23, 1996).


                                       70
<PAGE>
   4.2      Registration Rights Agreement, dated as of January 28, 2002, among
            Steel Dynamics, Inc., various financial institutions which are to
            receive Steel Dynamics common stock under the Settlement Agreement
            referred to in Exhibit 2.1, and Mellon Bank, N.A., as Agent,
            incorporated by reference from Exhibit 4.1 to our Report on Form
            8-K, filed February 26, 2002.

   4.3      Registration Rights Agreement between Steel Dynamics, Inc. as Issuer
            and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. as
            Initial Purchasers, dated as of December 23, 2002, re $100,000,000
            of our 4% Convertible Subordinated Notes due 2012, incorporated by
            reference from Exhibit 4.1c to our Registration Statement on Form
            S-3, File No. 333-103672, filed March 7, 2003.

   4.4      Indenture relating to Registrant's issuance of $200 million senior
            unsecured notes, dated as of March 26, 2002, between Steel Dynamics,
            Inc. as Issuer and SDI Investment Company as Initial Subsidiary
            Guarantor, and Fifth Third Bank, Indiana as Trustee, incorporated by
            reference from Exhibit 10.3a to our 2001 Annual Report on Form 10-K,
            filed March 28, 2002.

   4.4a*    First Supplemental Indenture, dated as of September 6, 2002,
            relating to the Indenture described in Exhibit 4.4.

   4.4b*    Second Supplemental Indenture, dated as of September 30, 2002,
            relating to the Indenture described in Exhibit 4.4

   4.4c*    Third Supplemental Indenture, dated as of December 31, 2002,
            relating to the Indenture described in Exhibit 4.4.

   4.5      Indenture relating to our 4% Convertible Subordinated Notes due
            2012, dated as of December 23, 2002, between Steel Dynamics, Inc.
            and Fifth Third Bank, Indiana as Trustee, incorporated by reference
            from Exhibit 4.2a to our Registration Statement on Form S-3, File
            No. 333-103672, filed March 7, 2003.

   10.1     Credit Agreement relating to our $350 million senior secured credit
            facility, dated as of March 26, 2002 among Steel Dynamics, Inc. as
            Borrower, certain designated "Initial Lender Parties," JPMorgan
            Chase as Collateral Agent and Administrative Agent, Morgan Stanley
            Senior Funding, Inc. as Arranger and Syndication Agent, and others,
            incorporated by reference from Exhibit 10.1a to our 2001 Annual
            Report on Form 10-K, filed March 28, 2002.

   10.1a    First Amendment to Credit Agreement referenced at Exhibit 10.1,
            dated as of August 6, 2002, incorporated herein from Exhibit 10.1b
            to our Registration Statement on Form S-4, SEC File No. 333-99855,
            effective October 17, 2002.

   10.1b*   Second Amendment to Credit Agreement dated as of December 16, 2002,
            relating to the Credit Agreement described at Exhibit 10.1.

   10.1c*   Third Amendment to Credit Agreement dated as of January 23, 2003,
            relating to the Credit Agreement described at Exhibit 10.1.

   10.1d*   Fourth Amendment to Credit Agreement dated as February 20, 2003,
            relating to the Credit Agreement described at Exhibit 10.1.

   10.2     Subsidiary Guaranty dated as of March 26, 2002 from SDI Investment
            Company, Iron Dynamics, Inc. and certain future Additional
            Guarantors, in favor of the Secured Parties under the March 26, 2002
            Credit Agreement, incorporated by reference from Exhibit 10.2a to
            our 2001 Annual Report on Form 10-K, filed March 28, 2002.

   10.2a*   Subsidiary Guaranty Supplement, dated as of April 7, 2002, from
            Ferrous Resources, LLC, in favor of the Secured Parties under the
            March 26, 2002 Credit Agreement.

   10.2b*   Subsidiary Guaranty Supplement, dated as of September 6, 2002, from
            Dynamic Bar Products, LLC, in favor of the Secured Parties under the
            March 26, 2002 Credit Agreement.

   10.2c*   Subsidiary Guaranty Supplement, dated as of January 23, 2003, from
            Steel Dynamics Sales North America, Inc., in favor of the Secured
            Parties under the March 26, 2002 Credit Agreement.

   10.3*    Purchase Agreement dated December 17, 2002 between Steel Dynamics,
            Inc. and Morgan Stanley & Co. Incorporated, et al as Initial
            Purchasers re Steel Dynamics, Inc.'s 4% Convertible Subordinated
            Notes due 2012.


                                       71
<PAGE>
   10.12    Loan Agreement between Indiana Development Finance Authority and
            Steel Dynamics, Inc. re Taxable Economic Development Revenue bonds,
            Trust Indenture between Indiana Development Finance Authority and
            NBD Bank, N.A., as Trustee re Loan Agreement between Indiana
            Development Finance Authority and Steel Dynamics, Inc., incorporated
            by reference from Exhibit 10.12 to Registrant's Registration
            Statement on Form S-1, File No. 333-12521, effective November 21,
            1996.

   10.18    1994 Incentive Stock Option Plan, incorporated by reference from
            Exhibit 10.18 to Registrant's Registration Statement on Form S-1,
            File No. 333-12521, effective November 21, 1996.

   10.19+   Amended and Restated 1996 Incentive Stock Option Plan, incorporated
            by reference from Exhibit 10.19 to our 2001 Annual Report on Form
            10-K, filed March 28, 2002.

   10.23+   Revised Officer and Manager Cash and Stock Bonus Plan, incorporated
            by reference from Exhibit 10.23 to our June 30, 2000 Form 10-Q,
            filed August 11, 2000.

   10.40    Non-Employee Director Stock Option Plan, incorporated by reference
            from Exhibit 10.40 to our June 30, 2000 Form 10-Q, filed August 11,
            2000.

   10.41    Agreement (Settlement Agreement), dated as of January 28, 2002, by
            and among Iron Dynamics, Inc., Steel Dynamics, Inc., various
            signatory lender banks, and Mellon Bank, N.A. as Agent for the Iron
            Dynamics lenders, incorporated by reference from Exhibit 2.1 to our
            Report on Form 8-K/A, filed February 26, 2002.

   12.1*    Computation of Ratio of Earnings to Fixed Charges

   14.1*    Code of Ethics for Principal Executive Officers and Senior Financial
            Officers

   21.1*    List of our Subsidiaries

   23.1*    Consent of Ernst & Young LLP.

   24.1     Powers of attorney (see signature page on page 73 of this report).

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

*        Filed concurrently herewith
+        Indicates a management contract or compensatory plan or arrangement.

(d)   Availability of Exhibits. Copies of this Annual Report on Form 10-K
      (including Exhibit 24.1), Exhibits 11.1, 12.1, 21.1 and 23.1 are available
      to our stockholders without charge. Copies of other exhibits can be
      obtained by stockholders upon payment of 12 cents per page for such
      exhibits. Written requests should be sent to Investor Relations, Steel
      Dynamics, Inc., 6714 Pointe Inverness Way, Suite 200 Fort Wayne, Indiana
      46804.


                                       72
<PAGE>
SIGNATURES


      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.

March 28, 2003

                              STEEL DYNAMICS, INC.

                                           By:   /S/  KEITH E. BUSSE
                                                --------------------
                                                      KEITH E. BUSSE
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

      Each person whose signature appears below constitutes and appoints Keith
E. Busse and Tracy L. Shellabarger, either of whom may act without the joinder
of the other, as his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him, and in his name, place and
stead, in any and all capacities to sign any and all amendments, and supplements
to this 2002 Annual Report on Form 10-K, filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, and to file the same, with
all exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and performs each and every act and thing
requisite and necessary to be done, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their substitute or substitutes may lawfully do
or cause to be done by virtue thereof.

      PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
2002 ANNUAL REPORT ON FORM 10-K HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
ON BEHALF OF STEEL DYNAMICS, INC. AND IN THE CAPACITIES AND ON THE DATES
INDICATED.

<TABLE>
<CAPTION>
           SIGNATURES                                               TITLE                                       DATE

  /s/ KEITH E. BUSSE
-------------------------------------
<S>                                         <C>                                                                 <C>
           KEITH E. BUSSE                     President & Chief Executive Officer and Director               3/28/03
                                                        (Principal Executive Officer)

  /s/ TRACY L. SHELLABARGER
-------------------------------------
        TRACY L. SHELLABARGER               Vice President & Chief Financial Officer and Director            3/28/03
                                                (Principal Financial and Accounting Officer)

  /s/ MARK D. MILLETT
-------------------------------------
           MARK D. MILLETT                                     Vice President                                3/28/03

  /s/ RICHARD P. TEETS, JR.
-------------------------------------
        RICHARD P. TEETS, JR.                                  Vice President                                3/28/03

  /s/ DANIEL M. RIFKIN
-------------------------------------
           DANIEL M. RIFKIN                                       Director                                   3/28/03

  /s/ JOHN C. BATES
-------------------------------------
            JOHN C. BATES                                         Director                                   3/28/03

 /s/ DR. JURGEN KOLB
-------------------------------------
           DR. JURGEN KOLB                                        Director                                   3/28/03

  /s/ NAOKI HIDAKA
-------------------------------------
            NAOKI HIDAKA                                          Director                                   3/28/03

  /s/ JOSEPH D. RUFFOLO
-------------------------------------
           JOSEPH D. RUFFOLO                                      Director                                   3/28/03

  /s/ JAMES E. KELLEY
-------------------------------------
            JAMES E. KELLEY                                       Director                                   3/28/03

  /s/ RICHARD J. FREELAND
-------------------------------------
          RICHARD J. FREELAND                                     Director                                   3/28/03

 /s/ PAUL B. EDGERLEY
-------------------------------------
           PAUL B. EDGERLEY                                       Director                                   3/28/03
</TABLE>


                                       74
<PAGE>
                      CHIEF EXECUTIVE OFFICER CERTIFICATION

      I, Keith E. Busse, Chairman, President and Chief Executive Officer,
certify that:

      1. I have reviewed this annual report on Form 10-K of Steel Dynamics,
Inc.;

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

      3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

      4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14 for the registrant and have:

      (a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

      (b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

      (c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:

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

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

      6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  March 28, 2003


                                        /s/ KEITH E. BUSSE
                               -------------------------------------------------
                               Keith E. Busse
                               Chairman, President and Chief Executive Officer


                                       75
<PAGE>
                      CHIEF FINANCIAL OFFICER CERTIFICATION

      I, Tracy L. Shellabarger, Vice President and Chief Financial Officer,
certify that:

      1. I have reviewed this annual report on Form 10-K of Steel Dynamics,
Inc.;

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

      3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

      4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14 for the registrant and have:

      (a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

      (b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

      (c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:

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

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

      6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  March 28, 2003

                                        /s/ TRACY L. SHELLABARGER
                               --------------------------------------------
                               Tracy L. Shellabarger
                               Vice President and Chief Financial Officer


                                       76

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4.A
<SEQUENCE>3
<FILENAME>y84794exv4w4wa.txt
<DESCRIPTION>FIRST SUPPLEMENTAL INDENTURE
<TEXT>
<PAGE>
                                                                    EXHIBIT 4.4A


                          FIRST SUPPLEMENTAL INDENTURE

      THIS FIRST SUPPLEMENTAL INDENTURE is dated as of September 6, 2002, among
STEEL DYNAMICS, INC., an Indiana corporation (the "Company"), SDI INVESTMENT
COMPANY, a Delaware corporation, (the "Initial Subsidiary Guarantor"), DYNAMIC
BAR PRODUCTS, LLC, an Indiana limited liability company (the "Additional
Subsidiary Guarantor") and FIFTH THIRD BANK, INDIANA, a state banking
association, as trustee (the "Trustee").

                                    RECITALS:

      The Company, the Initial Subsidiary Guarantor and the Trustee have duly
authorized, executed and delivered an Indenture dated as of March 26, 2002 (the
"Original Indenture") in connection with the issuance initially of up to
$200,000,000 aggregate principal amount of the Company's 9-1/2% Senior Notes due
2009 (the "Notes") as provided in the Original Indenture.

      The Company has formed the Additional Subsidiary Guarantor as a Restricted
Subsidiary (as that term is defined in the Original Indenture) for the purpose
of acquiring certain steel making assets located in Hendricks County, Indiana.

      This First Supplemental Indenture is being executed and delivered by the
Company, the Initial Subsidiary Guarantor and the Additional Subsidiary
Guarantor pursuant to the provisions of Section 4.20 and Section 9.01(2) of the
Original Indenture.

      This First Supplemental Indenture (together with the Original Indenture,
collectively the "Indenture") is subject to, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be a part of and to govern indentures qualified under the Trust Indenture Act of
1939, as amended.

            AND THIS FIRST SUPPLEMENTAL INDENTURE FURTHER WITNESSETH:

      For and in consideration of the premises, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders, as follows:

                                  ARTICLE ONE

                               Guaranty of Notes

      Section 1.01. Note Guarantee; Limitation of Liability. (a) Subject to the
provisions of Article Ten of the Original Indenture, the Additional Subsidiary
Guarantor hereby, jointly and severally with the Initial Subsidiary Guarantor,
fully and unconditionally guarantees to each Holder of Notes and to the Trustee
on behalf of the Holders: (i) the due and punctual payment of the principal of,
premium, if any, on and interest on each Note, when and as the same shall
<PAGE>
become due and payable, whether at maturity, by acceleration or otherwise, the
due and punctual payment of interest on the overdue principal of and interest,
if any, on the Notes, to the extent lawful, and the due and punctual performance
of all other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms of such Note, the Original Indenture and this First
Supplemental Indenture and (ii) in the case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, at Stated Maturity, by acceleration or otherwise, subject,
however, in the case of clauses (i) and (ii) above, to the limitations set forth
in the second paragraph of Section 10.01 of the Original Indenture.

      (b)   The undersigned, and by their acceptance of this First Supplemental
Indenture, hereby confirm that it is the intention of all such Persons that this
First Supplemental Indenture, the Original Indenture and the obligations of the
undersigned hereunder and thereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this First Supplemental Indenture, the
Original Indenture and the obligations of the undersigned hereunder and
thereunder. To effectuate the foregoing intention, the undersigned hereby
irrevocably agree that the obligations of the undersigned under this First
Supplemental Indenture and the Original Indenture at any time shall be limited
to the maximum amount as will result in the obligations of the undersigned under
this First Supplemental Indenture and the Original Indenture not constituting a
fraudulent transfer or conveyance.

      Section 1.02. Obligations under the Original Indenture. The Additional
Subsidiary Guarantor hereby agrees, as of the date first above written, to be
bound as a Subsidiary Guarantor by all of the terms and conditions of the
Original Indenture to the same extent as each of the other Subsidiary Guarantors
thereunder. The Additional Subsidiary Guarantor further agrees, as of the date
first above written, that each reference in the Original Indenture to a
"SUBSIDIARY GUARANTOR" shall also mean and be a reference to the Additional
Subsidiary Guarantor, and each reference in any of the Notes to a "SUBSIDIARY
GUARANTOR" shall also mean and be a reference to the Additional Subsidiary
Guarantor.

      Section 1.03. Covenants and Agreements. The Additional Subsidiary
Guarantor makes each covenant and agreement set forth in Article Ten of the
Original Indenture to the same extent as each other Subsidiary Guarantor.

                                  ARTICLE TWO

                                 Miscellaneous

      Section 2.01. Remainder of Original Indenture Unaffected. Except as
specifically provided in Article One above, the terms of the Original Indenture
shall remain unchanged and in full force and effect, and shall govern the
interpretation and application of this First Supplemental Indenture.


                                       2
<PAGE>
      Section 2.02. Duplicate Originals; Delivery by Telecopier. The parties may
sign any number of copies of this First Supplemental Indenture. Each signed copy
shall be an original, but all of them together represent the same agreement.
Delivery of an executed counterpart of a signature page to this First
Supplemental Indenture by telecopier shall be effective as delivery of an
original executed counterpart of this First Supplemental Indenture.

      Section 2.03. Separability. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.



                              [End of Article Two]


                                       3
<PAGE>
                                   SIGNATURES


      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.

"Company"                                     STEEL DYNAMICS, INC.

                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  Vice President
                                                   -----------------------------


"Initial Subsidiary Guarantor"                SDI INVESTMENT COMPANY

                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  President
                                                   -----------------------------



"Additional Subsidiary Guarantor"             DYNAMIC BAR PRODUCTS, LLC

                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  Vice President
                                                   -----------------------------



"Trustee"                                     FIFTH THIRD BANK, INDIANA

                                              By:  /s/ George L. Bawcum
                                                   -----------------------------
                                              Its  Trust Officer
                                                   -----------------------------


                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4.B
<SEQUENCE>4
<FILENAME>y84794exv4w4wb.txt
<DESCRIPTION>SECOND SUPPLEMENTAL INDENTURE
<TEXT>
<PAGE>
                                                                    EXHIBIT 4.4B


                          SECOND SUPPLEMENTAL INDENTURE

      THIS SECOND SUPPLEMENTAL INDENTURE is dated as of September 30, 2002,
among STEEL DYNAMICS, INC., an Indiana corporation (the "Company"), SDI
INVESTMENT COMPANY, a Delaware corporation, (the "Initial Subsidiary
Guarantor"), DYNAMIC BAR PRODUCTS, LLC, an Indiana limited liability company
(the "Additional Subsidiary Guarantor"), STLD HOLDINGS, INC. an Indiana
corporation, FERROUS RESOURCES, LLC, an Indiana limited liability company (STLD
Holdings, Inc. and Ferrous Resources, LLC may individually be referred to as the
"New Subsidiary Guarantor" and collectively as the "New Subsidiary Guarantors"),
and FIFTH THIRD BANK, INDIANA, a state banking association, as trustee (the
"Trustee").

                                    RECITALS:

      The Company, the Initial Subsidiary Guarantor and the Trustee have duly
authorized, executed and delivered an Indenture dated as of March 26, 2002 (the
"Original Indenture") in connection with the issuance initially of up to
$200,000,000 aggregate principal amount of the Company's 9-1/2% Senior Notes due
2009 (the "Notes") as provided in the Original Indenture.

      The Company, the Initial Subsidiary Guarantor, the Additional Subsidiary
Guarantor, and the Trustee entered into a First Supplemental Indenture dated as
of September 6, 2002.

      This Second Supplemental Indenture is being executed and delivered by the
Company, the Initial Subsidiary Guarantor, the Additional Subsidiary Guarantor,
and the New Subsidiary Guarantors pursuant to the provisions of Section 4.20 and
Section 9.01(2) of the Original Indenture.

      This Second Supplemental Indenture (together with the Original Indenture
and the First Supplemental Indenture, collectively the "Indenture") is subject
to, and shall be governed by, the provisions of the Trust Indenture Act of 1939,
as amended, that are required to be a part of and to govern indentures qualified
under the Trust Indenture Act of 1939, as amended.

           AND THIS SECOND SUPPLEMENTAL INDENTURE FURTHER WITNESSETH:

      For and in consideration of the premises, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders, as follows:

                                  ARTICLE ONE

                               Guaranty of Notes

      Section 1.01. Note Guarantee; Limitation of Liability. (a) Subject to the
provisions of Article Ten of the Original Indenture, the New Subsidiary
Guarantors hereby, jointly and
<PAGE>
severally with the Initial Subsidiary Guarantor and the Additional Subsidiary
Guarantor, fully and unconditionally guarantee to each Holder of Notes and to
the Trustee on behalf of the Holders: (i) the due and punctual payment of the
principal of, premium, if any, on and interest on each Note, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest, if any, on the Notes, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms of such Note, the Original
Indenture, the First Supplemental Indenture, and this Second Supplemental
Indenture and (ii) in the case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, at Stated Maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in the
second paragraph of Section 10.01 of the Original Indenture.

      (b)   The undersigned, and by their acceptance of this Second Supplemental
Indenture, hereby confirm that it is the intention of all such Persons that this
Second Supplemental Indenture, the Original Indenture, and the First
Supplemental Indenture and the obligations of the undersigned hereunder and
thereunder not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar foreign, federal or state law to the extent
applicable to this Second Supplemental Indenture, the Original Indenture, the
First Supplemental Indenture, and the obligations of the undersigned hereunder
and thereunder. To effectuate the foregoing intention, the undersigned hereby
irrevocably agree that the obligations of the undersigned under this Second
Supplemental Indenture, the Original Indenture, and the First Supplemental
Indenture at any time shall be limited to the maximum amount as will result in
the obligations of the undersigned under this Second Supplemental Indenture, the
Original Indenture, and the First Supplemental Indenture not constituting a
fraudulent transfer or conveyance.

      Section 1.02. Obligations under the Original Indenture. The New Subsidiary
Guarantors hereby agree, as of the date first above written, to be bound as a
Subsidiary Guarantor by all of the terms and conditions of the Original
Indenture to the same extent as each of the other Subsidiary Guarantors
thereunder. The New Subsidiary Guarantors further agree, as of the date first
above written, that each reference in the Original Indenture to a "SUBSIDIARY
GUARANTOR" shall also mean and be a reference to the New Subsidiary Guarantors,
and each reference in any of the Notes to a "SUBSIDIARY GUARANTOR" shall also
mean and be a reference to the New Subsidiary Guarantors.

      Section 1.03. Covenants and Agreements. The New Subsidiary Guarantors make
each covenant and agreement set forth in Article Ten of the Original Indenture
to the same extent as each other Subsidiary Guarantor.

                                  ARTICLE TWO

                                 Miscellaneous


                                       2
<PAGE>
      Section 2.01. Remainder of Original Indenture Unaffected. Except as
specifically provided in Article One above, the terms of the Original Indenture
shall remain unchanged and in full force and effect, and shall govern the
interpretation and application of this Second Supplemental Indenture.

      Section 2.02. Duplicate Originals; Delivery by Telecopier. The parties may
sign any number of copies of this Second Supplemental Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement. Delivery of an executed counterpart of a signature page to this
Second Supplemental Indenture by telecopier shall be effective as delivery of an
original executed counterpart of this Second Supplemental Indenture.

      Section 2.03. Separability. In case any provision in this Second
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.



                              [End of Article Two]


                                       3
<PAGE>
                                   SIGNATURES

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.

"Company"                                     STEEL DYNAMICS, INC.

                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  Vice President
                                                   -----------------------------



"Initial Subsidiary Guarantor"                SDI INVESTMENT COMPANY

                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  President
                                                   -----------------------------



"Additional Subsidiary Guarantor"             DYNAMIC BAR PRODUCTS, LLC

                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  Vice President
                                                   -----------------------------



"Trustee"                                     FIFTH THIRD BANK, INDIANA

                                              By:  /s/ George L. Bawcum
                                                   -----------------------------
                                              Its  Trust Officer
                                                   -----------------------------



"New Subsidiary Guarantor"                    STLD HOLDINGS, INC.


                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  Vice President
                                                   -----------------------------



"New Subsidiary Guarantor"                    FERROUS RESOURCES, LLC

                                              By:  /s/ Tracy L. Shellabarger
                                                   -----------------------------
                                              Its  Vice President
                                                   -----------------------------


                                       4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4.C
<SEQUENCE>5
<FILENAME>y84794exv4w4wc.txt
<DESCRIPTION>THIRD SUPPLEMENTAL INDENTURE
<TEXT>
<PAGE>
                                                                    EXHIBIT 4.4C


                          THIRD SUPPLEMENTAL INDENTURE

      THIS THIRD SUPPLEMENTAL INDENTURE is dated as of December 31, 2002, among
STEEL DYNAMICS, INC., an Indiana corporation (the "Company"), SDI INVESTMENT
COMPANY, a Delaware corporation, (the "Initial Subsidiary Guarantor"), DYNAMIC
BAR PRODUCTS, LLC, an Indiana limited liability company (the "Second Subsidiary
Guarantor"), STLD HOLDINGS, INC. an Indiana corporation, FERROUS RESOURCES, LLC,
an Indiana limited liability company (STLD Holdings, Inc. and Ferrous Resources,
LLC may individually be referred to as the "Additional Subsidiary Guarantor" and
collectively as the "Additional Subsidiary Guarantors"), STEEL DYNAMICS SALES
NORTH AMERICA, INC., an Indiana corporation (the "New Subsidiary Guarantor"),
and FIFTH THIRD BANK, INDIANA, a state banking association, as trustee (the
"Trustee").

                                    RECITALS:

      The Company, the Initial Subsidiary Guarantor and the Trustee have duly
authorized, executed and delivered an Indenture dated as of March 26, 2002 (the
"Original Indenture") in connection with the issuance initially of up to
$200,000,000 aggregate principal amount of the Company's 9-1/2% Senior Notes due
2009 (the "Notes") as provided in the Original Indenture.

      The Company, the Initial Subsidiary Guarantor, the Second Subsidiary
Guarantor, and the Trustee entered into a First Supplemental Indenture dated as
of September 6, 2002.

      The Company, the Initial Subsidiary Guarantor, the Second Subsidiary
Guarantor, the Additional Subsidiary Guarantors and the Trustee entered into a
Second Supplemental Indenture dated as of September 30, 2002.

      This Third Supplemental Indenture is being executed and delivered by the
Company, the Initial Subsidiary Guarantor, the Second Subsidiary Guarantor, the
Additional Subsidiary Guarantors and the New Subsidiary Guarantor pursuant to
the provisions of Section 4.20 and Section 9.01(2) of the Original Indenture.

      This Third Supplemental Indenture (together with the Original Indenture,
the First Supplemental Indenture and the Second Supplemental Indenture,
collectively the "Indenture") is subject to, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be a part of and to govern indentures qualified under the Trust Indenture Act of
1939, as amended.

            AND THIS THIRD SUPPLEMENTAL INDENTURE FURTHER WITNESSETH:

      For and in consideration of the premises, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders, as follows:
<PAGE>
                                  ARTICLE ONE

                               Guaranty of Notes

      Section 1.01. Note Guarantee; Limitation of Liability. (a) Subject to the
provisions of Article Ten of the Original Indenture, the New Subsidiary
Guarantor hereby, jointly and severally with the Initial Subsidiary Guarantor,
the Second Subsidiary Guarantor and the Additional Subsidiary Guarantors, fully
and unconditionally guarantee to each Holder of Notes and to the Trustee on
behalf of the Holders: (i) the due and punctual payment of the principal of,
premium, if any, on and interest on each Note, when and as the same shall become
due and payable, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal of and interest, if any,
on the Notes, to the extent lawful, and the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms of such Note, the Original Indenture, the First
Supplemental Indenture, the Second Supplemental Indenture and this Third
Supplemental Indenture and (ii) in the case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, at Stated Maturity, by acceleration or otherwise, subject,
however, in the case of clauses (i) and (ii) above, to the limitations set forth
in the second paragraph of Section 10.01 of the Original Indenture.

      (b)   The undersigned, and by their acceptance of this Third Supplemental
Indenture, hereby confirm that it is the intention of all such Persons that this
Third Supplemental Indenture, the Original Indenture, the First Supplemental
Indenture and the Second Supplemental Indenture and the obligations of the
undersigned hereunder and thereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Third Supplemental Indenture, the
Original Indenture, the First Supplemental Indenture, the Second Supplemental
Indenture and the obligations of the undersigned hereunder and thereunder. To
effectuate the foregoing intention, the undersigned hereby irrevocably agree
that the obligations of the undersigned under this Third Supplemental Indenture,
the Original Indenture, the First Supplemental Indenture and the Second
Supplemental Indenture at any time shall be limited to the maximum amount as
will result in the obligations of the undersigned under this Third Supplemental
Indenture, the Original Indenture, the First Supplemental Indenture and the
Second Supplemental Indenture not constituting a fraudulent transfer or
conveyance.

      Section 1.02. Obligations under the Original Indenture. The New Subsidiary
Guarantor hereby agrees, as of the date first above written, to be bound as a
Subsidiary Guarantor by all of the terms and conditions of the Original
Indenture to the same extent as each of the other Subsidiary Guarantors
thereunder. The New Subsidiary Guarantor further agrees, as of the date first
above written, that each reference in the Original Indenture to a "SUBSIDIARY
GUARANTOR" shall also mean and be a reference to the New Subsidiary Guarantor,
and each reference in any of the Notes to a "SUBSIDIARY GUARANTOR" shall also
mean and be a reference to the New Subsidiary Guarantor.


                                       2
<PAGE>
      Section 1.03. Covenants and Agreements. The New Subsidiary Guarantor makes
each covenant and agreement set forth in Article Ten of the Original Indenture
to the same extent as each other Subsidiary Guarantor.

                                  ARTICLE TWO

                                 Miscellaneous

      Section 2.01. Remainder of Original Indenture Unaffected. Except as
specifically provided in Article One above, the terms of the Original Indenture
shall remain unchanged and in full force and effect, and shall govern the
interpretation and application of this Third Supplemental Indenture.

      Section 2.02. Duplicate Originals; Delivery by Telecopier. The parties may
sign any number of copies of this Third Supplemental Indenture. Each signed copy
shall be an original, but all of them together represent the same agreement.
Delivery of an executed counterpart of a signature page to this Third
Supplemental Indenture by telecopier shall be effective as delivery of an
original executed counterpart of this Third Supplemental Indenture.

      Section 2.03. Separability. In case any provision in this Third
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.



                              [End of Article Two]


                                       3
<PAGE>
                                   SIGNATURES

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.

"Company"                               STEEL DYNAMICS, INC.

                                        By:  ___________________________________
                                        Its  ___________________________________


"Initial Subsidiary Guarantor"          SDI INVESTMENT COMPANY

                                        By:  ___________________________________
                                        Its  ___________________________________



"Second Subsidiary Guarantor"           DYNAMIC BAR PRODUCTS, LLC

                                        By:  ___________________________________
                                        Its  ___________________________________



"Additional Subsidiary Guarantor"       STLD HOLDINGS, INC.

                                        By:  ___________________________________
                                        Its  ___________________________________



"Additional Subsidiary Guarantor"       FERROUS RESOURCES, LLC

                                        By:  ___________________________________
                                        Its  ___________________________________



"Trustee"                               FIFTH THIRD BANK, INDIANA

                                        By:  ___________________________________
                                        Its  ___________________________________


                                       4
<PAGE>
"New Subsidiary Guarantor"              STEEL DYNAMICS SALES NORTH AMERICA, INC.

                                        By:  ___________________________________
                                        Its  ___________________________________


                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1.B
<SEQUENCE>6
<FILENAME>y84794exv10w1wb.txt
<DESCRIPTION>SECOND AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.1B


                      SECOND AMENDMENT TO CREDIT AGREEMENT

            THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of December 16,
2002 (this "Amendment"), is among STEEL DYNAMICS, INC. (the "Borrower"), the
Lenders (as defined below) signatories hereto, JPMORGAN CHASE BANK, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent, and
MORGAN STANLEY SENIOR FUNDING, INC., as Arranger and Syndication Agent.

                              W I T N E S S E T H:

            WHEREAS, the Borrower, certain financial institutions and other
Persons (such capitalized term and other capitalized terms used in these
recitals to have the meanings set forth or defined by reference in Part I below)
from time to time parties thereto (collectively, the "Lenders"), JPMorgan Chase
Bank, as Collateral Agent, the Administrative Agent, General Electric Capital
Corporation, as Documentation Agent, and Morgan Stanley Senior Funding, Inc., as
Arranger and Syndication Agent, are parties to the Credit Agreement, dated as of
March 26, 2002, as amended by the First Amendment to Credit Agreement, dated as
of August 6, 2002, and as waived by Letter Waiver, dated as of October 6, 2002
(such Credit Agreement, as so amended and waived, the "Existing Credit
Agreement");

            WHEREAS, the Borrower has requested that the Lenders amend the
Existing Credit Agreement as set forth below; and

            WHEREAS, the Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit Agreement in
certain respects as set forth below (the Existing Credit Agreement, as so
amended or otherwise modified by this Amendment, being referred to as the
"Credit Agreement");

            NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the parties hereto hereby agree as follows:

                                     PART I
                                  DEFINITIONS

            SUBPART 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

            "Administrative Agent" is defined in the preamble.

            "Amendment" is defined in the preamble.

            "Borrower" is defined in the preamble.

            "Credit Agreement" is defined in the third recital.
<PAGE>
            "Existing Credit Agreement" is defined in the first recital.

            "Second Amendment Effective Date" is defined in Subpart 3.1.

            "Lenders" is defined in the first recital.

            SUBPART 1.2. Other Definitions. Terms for which meanings are
provided in the Existing Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this Amendment with such meanings.

                                    PART II
                                   AMENDMENTS

            Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part; except as so amended or otherwise modified by this Amendment,
the Existing Credit Agreement and the Loan Documents shall continue in full
force and effect in accordance with their terms.

            SUBPART 2.1. Amendment to Article I. Article I of the Existing
Credit Agreement is hereby amended in accordance with Subpart 2.1.1.

                  SUBPART 2.1.1. Section 1.01 of the Existing Credit Agreement
      is hereby amended by inserting the following new definitions therein in
      the appropriate alphabetical order:

                  "Second Amendment" means the Second Amendment, dated as of
            December 16, 2002, to this Agreement among the Borrower, the
            Administrative Agent, Morgan Stanley Senior Funding, Inc. and the
            Lenders parties thereto.

                  "Second Amendment Effective Date" is defined in Subpart 3.1 of
            the Second Amendment.

            SUBPART 2.2. Amendment to Article V. Article V of the Existing
Credit Agreement is hereby amended in accordance with Subpart 2.2.1.

                  SUBPART 2.2.1. Section 5.02(b)(i) of the Existing Credit
      Agreement is hereby amended by adding at the end thereof new clauses (E)
      and (F) to read as follows:

                  "(E)  up to an additional $100,000,000 principal amount of
            Senior Notes at any time outstanding; and

                  (F)   up to $150,000,000 principal amount of unsecured
            convertible notes (convertible into common stock of the Borrower)
            with a maturity and redemption for all of such principal amount at
            least six months after the final maturity date of the Term B
            Advances (with the Borrower hereby agreeing not to prepay, redeem,
            repurchase or otherwise acquire any of such notes prior to the day
            which is six months after the final maturity date of the Term B
            Advances) with covenants and defaults no more restrictive on the
            Borrower than those


                                       2
<PAGE>
            contained in the Senior Notes, and if issued as subordinated debt,
            with subordination provisions reasonably satisfactory to the
            Arranger and the Administrative Agent."

                                    PART III
                          CONDITIONS TO EFFECTIVENESS

            SUBPART 3.1. Effectiveness. This Amendment and the amendments
contained herein shall become effective on the date (the "Second Amendment
Effective Date") when each of the conditions set forth in this Part shall have
been fulfilled to the satisfaction of the Administrative Agent.

                        SUBPART 3.1.1. Execution of Counterparts. The
      Administrative Agent and the Arranger shall have received counterparts of
      this Amendment, duly executed and delivered on behalf of the Borrower, the
      Administrative Agent and the Required Lenders.

                        SUBPART 3.1.2. Expenses. The Borrower shall have paid
      all expenses (including the fees and expenses of Shearman & Sterling)
      incurred in connection with the preparation, negotiation and execution of
      this Amendment and matters relating to the Credit Agreement from and after
      the closing thereof to the extent invoiced.

                        SUBPART 3.1.3. Legal Details, etc. All documents
      executed or submitted pursuant hereto shall be satisfactory in form and
      substance to the Administrative Agent and the Arranger and Shearman &
      Sterling as counsel. The Administrative Agent, the Arranger and counsel
      shall have received all information and such counterpart originals or such
      certified or other copies or such materials as the Administrative Agent,
      the Arranger or counsel may reasonably request, and all legal matters
      incident to the transactions contemplated by this Amendment shall be
      satisfactory to the Administrative Agent, the Arranger and counsel.

                                    PART IV
                  MISCELLANEOUS; REPRESENTATIONS AND COVENANTS

            SUBPART 4.1. Continuing Effectiveness, etc. As amended hereby, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed in all respects. After the Second Amendment Effective Date, all
references in the Credit Agreement and each other Loan Document to the
"Agreement" or "Credit Agreement", as applicable, shall refer to the Existing
Credit Agreement, after giving effect to this Amendment, and this Amendment
shall be a Loan Document for all purposes. The Borrower hereby confirms its
obligations under Section 8.04 of the Credit Agreement to pay all fees and
expenses of the Administrative Agent and the Arranger (including reasonable fees
and out-of-pocket expenses of Shearman & Sterling) in connection with this
Amendment and other ongoing administration of the Credit Agreement as provided
in Section 8.04 of the Credit Agreement since the last invoice it received.

            SUBPART 4.2. Mandatory Prepayments. The Borrower hereby confirms its
obligations under Section 2.06(b)(iii) of the Credit Agreement to prepay an
aggregate principal amount of Advances equal to 75% of the amount of Net Cash
Proceeds from the incurrence or


                                       3
<PAGE>
issuance by the Borrower of any Debt described in Sections 5.02(b)(i)(E) and (F)
of the Credit Agreement.

            SUBPART 4.3. Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original but all such
counterparts shall together constitute one and the same Amendment.

            SUBPART 4.4. Governing Law. THIS AMENDMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

            SUBPART 4.5. Successors and Assigns. This Amendment shall be binding
upon the Borrower, the Lenders and the Agents and their respective successors
and assigns, and shall inure to their successors and assigns.

            SUBPART 4.6. Representations and Warranties. In order to induce the
Lenders to execute and deliver this Amendment, the Borrower represents and
warrants to the Agents, the Lenders and the Issuing Bank that, after giving
effect to the terms of this Amendment, the following statements are true and
correct: (a) the representations and warranties set forth in Article IV of the
Existing Credit Agreement and in the other Loan Documents are true and correct
on the Second Amendment Effective Date as if made on the Second Amendment
Effective Date and after giving effect to the Second Amendment (unless stated to
relate solely to an earlier date, in which case such representations and
warranties were true and correct in all material respects as of such earlier
date) and (b) no Default has occurred and is continuing.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]


                                       4
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their respective authorized officers as of the day
and year first above written.

                                      STEEL DYNAMICS, INC.


                                      By:  /s/ THERESA WAGLER
                                          -------------------------------------
                                          Title: ASSISTANT SECRETARY
LENDERS:


                                      JPMORGAN CHASE BANK,
                                        as Administrative Agent and Collateral
                                            Agent and as a Lender

                                      By: /s/ JAMES H. RAMAGE
                                          -------------------------------------
                                          Title: MANAGING DIRECTOR

                                      MORGAN STANLEY SENIOR FUNDING, INC.,
                                        as Arranger and Syndication Agent and as
                                            a Lender


                                      By: /s/ LUCY K. GALBRAITH
                                          ----------------------------------
                                          Title: VICE PRESIDENT


                                      GENERAL ELECTRIC CAPITAL CORPORATION,
                                        as Documentation Agent and as a Lender


                                      By:  /s/ ILLEGIBLE
                                          ----------------------------------
                                          Title: DULY AUTHORIZED SIGNATORY

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1.C
<SEQUENCE>7
<FILENAME>y84794exv10w1wc.txt
<DESCRIPTION>THIRD AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.1C


                       THIRD AMENDMENT TO CREDIT AGREEMENT

            THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of January 23,
2003 (this "Amendment"), is among STEEL DYNAMICS, INC. (the "Borrower"), the
Lenders (as defined below) signatories hereto, JPMORGAN CHASE BANK, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent, and
MORGAN STANLEY SENIOR FUNDING, INC., as Arranger and Syndication Agent.

                              W I T N E S S E T H:

            WHEREAS, the Borrower, certain financial institutions and other
Persons (such capitalized term and other capitalized terms used in these
recitals to have the meanings set forth or defined by reference in Part I below)
from time to time parties thereto (collectively, the "Lenders"), JPMorgan Chase
Bank, as Collateral Agent, the Administrative Agent, General Electric Capital
Corporation, as Documentation Agent, and Morgan Stanley Senior Funding, Inc., as
Arranger and Syndication Agent, are parties to the Credit Agreement, dated as of
March 26, 2002, as amended by the First Amendment to Credit Agreement, dated as
of August 6, 2002, as waived by the Letter Waiver, dated as of October 6, 2002,
and as amended by the Second Amendment to Credit Agreement, dated as December
16, 2002 (such Credit Agreement, as so amended and waived, the "Existing Credit
Agreement");

            WHEREAS, the Borrower has requested that the Lenders amend the
Existing Credit Agreement as set forth below; and

            WHEREAS, the Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit Agreement in
certain respects (the Existing Credit Agreement, as so amended or otherwise
modified by this Amendment, being referred to as the "Credit Agreement");

            NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the parties hereto hereby agree as follows:

                                     PART I
                                   DEFINITIONS

            SUBPART 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

            "Administrative Agent" is defined in the preamble.

            "Amendment" is defined in the preamble.

            "Borrower" is defined in the preamble.
<PAGE>
            "Credit Agreement" is defined in the third recital.

            "Existing Credit Agreement" is defined in the first recital.

            "Third Amendment Effective Date" is defined in Subpart 3.1.

            "Lenders" is defined in the first recital.

            SUBPART 1.2. Other Definitions. Terms for which meanings are
provided in the Existing Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this Amendment with such meanings.

                                    PART II
                                   AMENDMENTS

            Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part; except as so amended or otherwise modified by this Amendment,
the Existing Credit Agreement and the Loan Documents shall continue in full
force and effect in accordance with their terms.

            SUBPART 2.1. Amendment to Article I. Article I of the Existing
Credit Agreement is hereby amended in accordance with Subpart 2.1.1.

                  SUBPART 2.1.1. Section 1.01 of the Existing Credit Agreement
      is hereby amended by inserting the following new definitions therein in
      the appropriate alphabetical order:

                  "New Sales Subsidiary" means Steel Dynamics Sales North
            America, Inc., an Indiana corporation that is a newly-formed
            wholly-owned Subsidiary.

                  "Third Amendment" means the Third Amendment, dated as of
            January 23, 2003, to this Agreement among the Borrower, the
            Administrative Agent, General Electric Capital Corporation, as
            Documentation Agent, Morgan Stanley Senior Funding, Inc., as
            Arranger and Syndication Agent, and the Lenders parties thereto.

                  "Third Amendment Effective Date" is defined in Subpart 3.1 of
            the Third Amendment.

            SUBPART 2.2. Amendment to Article V. Article V of the Existing
Credit Agreement is hereby amended in accordance with Subparts 2.2.1 through
2.2.5.

                  SUBPART 2.2.1. Debt. Clause (b) of Section 5.02 of the
      Existing Credit Agreement is hereby amended by inserting immediately after
      the words "and its Subsidiaries" in the first line of sub-clause (iii)
      thereof the parenthetical "(other than the New Sales Subsidiary, except
      with respect to its Obligations under the Loan Documents)".


                                       2
<PAGE>
                  SUBPART 2.2.2. Nature of Business. Clause (c) of Section 5.02
      of the Existing Credit Agreement is hereby amended by adding the following
      at the end thereof immediately before the period appearing therein:

      "or permit the New Sales Subsidiary to engage in any business activity
      other than purchasing on an arm's length basis for fair value inventory
      from the Borrower, receiving the transfer of accounts receivable from the
      Borrower (and the servicing of the same) and the sale by the New Sales
      Subsidiary of inventory in the ordinary course of business for cost plus a
      commercial margin to third party customers".

                  SUBPART 2.2.3. Asset Sales. Clause (e) of Section 5.02 of the
      Existing Credit Agreement is hereby amended by inserting immediately
      before the proviso at the end thereof the following new sub-clause (vi):

            "(vi) the transfer of accounts receivable and sale for fair value on
      an arm's length basis of inventory by the Borrower to the New Sales
      Subsidiary, subject, in all cases, to the Liens thereon granted by the
      Borrower under the Security Agreement."

                  SUBPART 2.2.4. Investments. Clause (f) of Section 5.02 of the
      Existing Credit Agreement is hereby amended by (a) deleting the
      punctuation mark "." appearing at the end of sub-clause (xi) thereof and
      inserting the punctuation mark ";" in replacement therefor and (b)
      inserting at the end thereof the following new sub-clause (xii):

            "(xii) Investments by the Borrower in the New Sales Subsidiary
      comprising (A) the transfer of accounts receivable referred to in Section
      5.02(e)(vi), all subject to the Liens thereon granted by the Borrower
      under the Security Agreement, (B) up to approximately $5,000 in cash
      equity and (C) up to approximately $125,000 in additional assets."

                  SUBPART 2.2.5. Subsidiaries. Clause (q) of Section 5.02 of the
      Existing Credit Agreement is amended by deleting the reference to "Section
      5.02(f)(i), (vii) or (ix)" appearing in clause (i) thereof and inserting a
      reference to "Section 5.02(f)(i), (vii), (ix) or (xii)" in replacement
      therefor.

                                    PART III
                           CONDITIONS TO EFFECTIVENESS

            SUBPART 3.1. Effectiveness. This Amendment and the amendments
contained herein shall become effective on the date (the "Third Amendment
Effective Date") when each of the conditions set forth in this Part shall have
been fulfilled to the satisfaction of the Administrative Agent.

                  SUBPART 3.1.1. Execution of Counterparts. The Administrative
      Agent and the Arranger shall have received counterparts of this Amendment,
      duly executed and delivered on behalf of the Borrower, the Administrative
      Agent and the Required Lenders.

                  SUBPART 3.1.2. Guaranty and Security. (a) The New Sales
      Subsidiary shall have duly entered into a supplement to the Subsidiary
      Guaranty and a supplement to


                                       3
<PAGE>
      the Security Agreement, in each case under documentation reasonably
      satisfactory in form and substance to the Administrative Agent, the
      Arranger and their counsel, pursuant to which the New Sales Subsidiary, in
      consideration of (among other things) the transfer of the Borrower's
      accounts receivables to it, shall have duly guaranteed the Obligations and
      shall have granted a valid security interest in all of its assets to the
      Administrative Agent for the benefit of the Lenders and authorized
      perfection of the same, and the documentation for the transfer of such
      accounts receivable and for the purchase by the New Sales Subsidiary of
      inventory from the Borrower shall be reasonably satisfactory in form and
      substance to the Administrative Agent, the Arranger and their counsel.

            (b)   The Borrower shall have entered into a supplement to the
      Security Agreement, under documentation reasonably satisfactory in form
      and substance to the Administrative Agent, the Arranger and their counsel,
      to duly pledge all shares of stock and other Equity Interests in the New
      Sales Subsidiary, and shall have delivered to the Collateral Agent
      certificates representing all shares of stock and other Equity Interests
      in the New Sales Subsidiary accompanied by undated stock powers executed
      in blank.

                  SUBPART 3.1.3. Legal Opinion. The Administrative Agent and the
      Arranger shall have received, in form and substance reasonably
      satisfactory to the Administrative Agent, the Arranger and their counsel
      and in sufficient copies for each Lender, a favorable legal opinion of
      Barrett & McNagny, counsel for the Borrower and the New Sales Subsidiary,
      to the effect that this Amendment and the supplements to the Subsidiary
      Guaranty and the Security Agreement referred to in Section 3.1.2 above
      have been duly authorized, executed and delivered by the Borrower and the
      New Sales Subsidiary, as the case may be, will not violate organizational
      documents, material agreements or laws, and are legal, valid and binding,
      and that such security agreement supplements create valid and perfected
      liens on and security interests in the Collateral covered thereby,
      securing the payment of the Secured Obligations.

                  SUBPART 3.1.4. Expenses. The Borrower shall have paid all
      expenses (including the fees and expenses of Shearman & Sterling) incurred
      in connection with the preparation, negotiation and execution of this
      Amendment and other matters relating to the Credit Agreement from and
      after the last invoice to the extent invoiced.

                  SUBPART 3.1.5. Legal Details, etc. All documents executed or
      submitted pursuant hereto shall be satisfactory in form and substance to
      the Administrative Agent and the Arranger and Shearman & Sterling as
      counsel. The Administrative Agent, the Arranger and counsel shall have
      received all information and such counterpart originals or such certified
      or other copies or such materials as the Administrative Agent, the
      Arranger or counsel may reasonably request, and all legal matters incident
      to the transactions contemplated by this Amendment shall be satisfactory
      to the Administrative Agent, the Arranger and counsel.

                                    PART IV
                  MISCELLANEOUS; REPRESENTATIONS AND COVENANTS


                                       4
<PAGE>
            SUBPART 4.1. Continuing Effectiveness, etc. As amended hereby, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed in all respects. After the Third Amendment Effective Date, all
references in the Credit Agreement and each other Loan Document to the
"Agreement" or "Credit Agreement", as applicable, shall refer to the Existing
Credit Agreement, after giving effect to this Amendment, and this Amendment and
the supplements referred to in Subpart 3.1.3 shall be Loan Documents for all
purposes. The Borrower hereby confirms its obligations under Section 8.04 of the
Credit Agreement to pay all fees and expenses of the Administrative Agent and
the Arranger (including reasonable fees and out-of-pocket expenses of Shearman &
Sterling) in connection with this Amendment and other ongoing administration of
the Credit Agreement as provided in Section 8.04 of the Credit Agreement since
the last invoice it received.

            SUBPART 4.2. Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original but all such
counterparts shall together constitute one and the same Amendment.

            SUBPART 4.3. Governing Law. THIS AMENDMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

            SUBPART 4.4. Successors and Assigns. This Amendment shall be binding
upon the Borrower, the Lenders and the Agents and their respective successors
and assigns, and shall inure to their successors and assigns.

            SUBPART 4.5. Representations and Warranties. In order to induce the
Lenders to execute and deliver this Amendment, the Borrower represents and
warrants to the Agents, the Lenders and the Issuing Bank that, after giving
effect to the terms of this Amendment, the following statements are true and
correct: (a) the representations and warranties set forth in Article IV of the
Existing Credit Agreement and in the other Loan Documents are true and correct
on the Third Amendment Effective Date as if made on the First Amendment
Effective Date and after giving effect to the Third Amendment (unless stated to
relate solely to an earlier date, in which case such representations and
warranties were true and correct in all material respects as of such earlier
date) and (b) no Default has occurred and is continuing.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]


                                       5
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their respective authorized officers as of the day
and year first above written.

                                          STEEL DYNAMICS, INC.


                                          By:  /s/ THERESA WAGLER
                                             ----------------------------------
                                              Title:  ASSISTANT SECRETARY



                                          JPMORGAN CHASE BANK,
                                            as Administrative Agent and
                                                Collateral Agent and as a Lender

                                          By:  /s/ LUCY K. GALBRAITH
                                             ----------------------------------
                                              Title:  VICE PRESIDENT



                                         MORGAN STANLEY SENIOR FUNDING, INC.,
                                            as Arranger and Syndication Agent
                                                and as a Lender


                                          By:  /s/ JAMES H. RAMAGE
                                              ----------------------------------
                                              Title:  MANAGING DIRECTOR



                                       GENERAL ELECTRIC CAPITAL CORPORATION,
                                            as Documentation Agent and as a
                                            Lender


                                          By:  /s/ ILLEGIBLE
                                              ----------------------------------
                                              Title:  DULY AUTHORIZED SIGNATORY




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1.D
<SEQUENCE>8
<FILENAME>y84794exv10w1wd.txt
<DESCRIPTION>FOURTH AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.1D


                      FOURTH AMENDMENT TO CREDIT AGREEMENT

            THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of February 20,
2003 (this "Amendment"), is among STEEL DYNAMICS, INC. (the "Borrower"), the
Lenders (as defined below) signatories hereto, JPMORGAN CHASE BANK, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent, and
MORGAN STANLEY SENIOR FUNDING, INC., as Arranger and Syndication Agent.

                              W I T N E S S E T H:

            WHEREAS, the Borrower, certain financial institutions and other
Persons (such capitalized term and other capitalized terms used in these
recitals to have the meanings set forth or defined by reference in Part I below)
from time to time parties thereto (collectively, the "Lenders"), JPMorgan Chase
Bank, as Collateral Agent, the Administrative Agent, General Electric Capital
Corporation, as Documentation Agent, and Morgan Stanley Senior Funding, Inc., as
Arranger and Syndication Agent, are parties to the Credit Agreement, dated as of
March 26, 2002, as amended by the First Amendment to Credit Agreement, dated as
of August 6, 2002, as waived by the Letter Waiver, dated as of October 6, 2002,
as amended by the Second Amendment to Credit Agreement, dated as of December 16,
2002, and as amended by the Third Amendment to Credit Agreement, dated as of
January 23, 2003 (such Credit Agreement, as so amended and waived, the "Existing
Credit Agreement");

            WHEREAS, the Borrower has requested that the Lenders amend the
Existing Credit Agreement as set forth below; and

            WHEREAS, the Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit Agreement in
certain respects (the Existing Credit Agreement, as so amended or otherwise
modified by this Amendment, being referred to as the "Credit Agreement");

            NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the parties hereto hereby agree as follows:

                                    PART I
                                  DEFINITIONS

            SUBPART 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

            "Administrative Agent" is defined in the preamble.

            "Amendment" is defined in the preamble.
<PAGE>
            "Borrower" is defined in the preamble.

            "Credit Agreement" is defined in the third recital.

            "Existing Credit Agreement" is defined in the first recital.

            "Fourth Amendment Effective Date" is defined in Subpart 3.1.

            "Lenders" is defined in the first recital.

            SUBPART 1.2. Other Definitions. Terms for which meanings are
provided in the Existing Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this Amendment with such meanings.

                                    PART II
                                   AMENDMENTS

            Effective on (and subject to the occurrence of) the Fourth Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part; except as so amended or otherwise modified by this Amendment,
the Existing Credit Agreement and the Loan Documents shall continue in full
force and effect in accordance with their terms.

            SUBPART 2.1. Amendment to Article I. Article I of the Existing
Credit Agreement is hereby amended in accordance with Subparts 2.1.1 and 2.1.2.

                  SUBPART 2.1.1. Section 1.01 of the Existing Credit Agreement
      is hereby amended by deleting the phrase "(other than the Capital
      Expenditures referred to in clauses (i) and (ii) of the proviso to Section
      5.02(p))" appearing in clause (iv) of the definition of "Fixed Charge
      Coverage Ratio" and inserting in replacement therefor the phrase "(other
      than the Capital Expenditures referred to in clauses (i) and (ii) of the
      first proviso to Section 5.02(p) and the Capital Expenditures referred to
      in the second proviso to Section 5.02(p))."

                  SUBPART 2.1.2. Section 1.01 of the Existing Credit Agreement
      is hereby further amended by inserting the following new definitions
      therein in the appropriate alphabetical order:

                  "Fourth Amendment" means the Fourth Amendment, dated as of
            February 20, 2003, to this Agreement among the Borrower, the
            Administrative Agent, Morgan Stanley Senior Funding, Inc. and the
            Lenders parties thereto.

                  "Fourth Amendment Effective Date" is defined in Subpart 3.1 of
            the First Amendment.

                  "GalvPro Acquisition" means the acquisition by the Borrower of
            all of the assets of a cold rolled galvanizing facility in
            Jeffersonville, Indiana (the "GalvPro Facility") from GalvPro II
            LLC, all as described in the GalvPro Asset Purchase Agreement.


                                       2
<PAGE>
                  "GalvPro Asset Purchase Agreement" means the asset purchase
            agreement dated as of January 28, 2003 between the Borrower, as
            Buyer, GalvPro II LLC, as Seller, and ING Capital LLC.

                  "GalvPro Facility" has the meaning set forth therefor in the
            definition of "GalvPro Acquisition" above.

                  "GalvPro Sublease" means that certain sublease by and between
            GalvPro II LLC and the City of Jeffersonville acting by and through
            the Jefferson Redevelopment Commission, as lessor, dated December
            10, 1999 and recorded December 13, 1999 as Instrument No. 26530,
            Miscellaneous Drawer 31, in the Clark County, Indiana Recorders'
            Office, which sublease will be assigned by GalvPro II LLC to the
            Borrower as set forth in the GalvPro Asset Purchase Agreement.

                  "Jeffersonville TIF Bonds" means the Jeffersonville
            Redevelopment Authority Tax Increment Lease Revenue Bonds of 1999 in
            the outstanding principal amount of $1,075,000 which will be
            acquired by the Borrower from GalvPro II LLC as set forth in the
            GalvPro Asset Purchase Agreement.

            SUBPART 2.2. Amendment to Article V. Article V of the Existing
Credit Agreement is hereby amended in accordance with Subparts 2.2.1 through
2.2.3.

                  SUBPART 2.2.1. Clause (f) of Section 5.02 of the Existing
      Credit Agreement is hereby amended by (a) deleting the punctuation mark
      "." appearing at the end of sub-clause (xii) thereof and inserting the
      punctuation mark ";" in replacement therefor and (b) inserting at the end
      thereof the following new sub-clauses (xiii) and (xiv):

            "(xiii) the GalvPro Acquisition; and

            (xiv) the Jeffersonville TIF Bonds."

                  SUBPART 2.2.2. Clause (h) of Section 5.02 of the Existing
      Credit Agreement is hereby amended by (a) deleting the punctuation mark
      "." appearing at the end thereof and inserting the punctuation mark "," in
      replacement therefor and (b) inserting at the end thereof the following
      phrase:

                  "and other than (and exclusive of obligations payable under)
            the GalvPro Sublease ".

                  SUBPART 2.2.3. Clause (p) of Section 5.02 of the Existing
      Credit Agreement is hereby amended by inserting at the end thereof the
      following new proviso:

                  "and provided further, however, that for the Fiscal Year
            ending on December 31, 2003, additional Capital Expenditures of no
            more than $25,000,000 in the aggregate may be made with respect to
            the acquisition of, and improvements to, the GalvPro Facility."


                                       3
<PAGE>
                                    PART III
                          CONDITIONS TO EFFECTIVENESS

            SUBPART 3.1. Effectiveness. This Amendment and the amendments
contained herein shall become effective on the date (the "Fourth Amendment
Effective Date") when each of the conditions set forth in this Part shall have
been fulfilled to the satisfaction of the Administrative Agent, provided that
such conditions are in any event fulfilled no later than February 28, 2003.

                  SUBPART 3.1.1. Execution of Counterparts. The Administrative
      Agent and the Arranger shall have received counterparts of this Amendment,
      duly executed and delivered on behalf of the Borrower, the Administrative
      Agent and the Required Lenders.

                  SUBPART 3.1.2. Amendment Fee. The Administrative Agent shall
      have received, for the account of each Lender which shall have executed
      this Amendment before 5:00 p.m. (New York time) on February 20, 2003, an
      amendment fee in an aggregate amount equal to .05% of the aggregate amount
      of each such Lender's Advances and Commitments.

                  SUBPART 3.1.3. Expenses. The Borrower shall have paid all
      expenses (including the fees and expenses of Shearman & Sterling) incurred
      in connection with the preparation, negotiation and execution of this
      Amendment and other matters relating to the Credit Agreement from and
      after the last invoice to the extent invoiced.

                  SUBPART 3.1.4. Legal Details, etc. All documents executed or
      submitted pursuant hereto shall be satisfactory in form and substance to
      the Administrative Agent and the Arranger and Shearman & Sterling as
      counsel. The Administrative Agent, the Arranger and counsel shall have
      received all information and such counterpart originals or such certified
      or other copies or such materials as the Administrative Agent, the
      Arranger or counsel may reasonably request, and all legal matters incident
      to the transactions contemplated by this Amendment shall be satisfactory
      to the Administrative Agent, the Arranger and counsel.

                                    PART IV
                  MISCELLANEOUS; REPRESENTATIONS AND COVENANTS

            SUBPART 4.1. Continuing Effectiveness, etc. As amended hereby, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed in all respects. After the Fourth Amendment Effective Date, all
references in the Credit Agreement and each other Loan Document to the
"Agreement" or "Credit Agreement", as applicable, shall refer to the Existing
Credit Agreement, after giving effect to this Amendment, and this Amendment
shall be a Loan Document for all purposes. The Borrower hereby confirms its
obligations under Section 8.04 of the Credit Agreement to pay all fees and
expenses of the Administrative Agent and the Arranger (including reasonable fees
and out-of-pocket expenses of Shearman & Sterling) in connection with this
Amendment and other ongoing administration of the Credit Agreement as provided
in Section 8.04 of the Credit Agreement since the last invoice it received.


                                       4
<PAGE>
                  SUBPART 4.2. Give Security. (a) The Borrower hereby confirms
      its obligations under Section 5.01(j) of the Credit Agreement to give
      security in connection and with respect to the GalvPro Acquisition as such
      obligations are described in Section 5.01(j) of the Credit Agreement.

      (b)   The Borrower hereby agrees to provide to the Collateral Agent within
45 days after the consummation of the GalvPro Acquisition (or 60 days, in the
case of clause (vii) below), the following:

            (i)    a leasehold mortgage upon the real estate and improvements to
      be acquired by the Borrower in Clark County, Indiana in connection with
      the GalvPro Acquisition in form and substance reasonably satisfactory to
      the Collateral Agent;

            (ii)   evidence that the leasehold mortgage referred to in
      subparagraph (i) above has been duly recorded in the appropriate recording
      offices and that all filing and recording taxes and fees have been paid;

            (iii)  a mortgage loan title insurance policy insuring the leasehold
      mortgage referred to in subparagraph (i) above in an amount acceptable to
      the Collateral Agent issued by a title insurance company of recognized
      standing reasonably satisfactory to the Collateral Agent ("Title Insurance
      Company") and in form and substance reasonably satisfactory to the
      Collateral Agent, along with such reinsurance and direct access agreements
      as the Collateral Agent may deem necessary or desirable;

            (iv)   a survey in form and substance reasonably satisfactory to the
      Collateral Agent, certified to the Collateral Agent and the Title
      Insurance Company pursuant to a certification reasonably satisfactory to
      the Collateral Agent;

            (v)    a favorable opinion of Barrett & McNagny, LLP, local counsel
      to the Lender Parties, in form and substance reasonably satisfactory to
      the Collateral Agent;

            (vi)   evidence of the insurance required by the terms of the
      mortgage referred to in subparagraph (i) above;

            (vii)  to the extent reasonably required by the Collateral Agent,
      estoppel and consent agreements executed by any lessors or sublessors
      under the GalvPro Sublease and the primary lease governing the GalvPro
      Sublease, all in form and substance satisfactory to Collateral Agent; and

            (viii) such other assignments, security agreements and other
      documents as may be reasonably required by the Collateral Agent to obtain
      and perfect liens and security interests for the benefit of the Lender
      Parties in the assets acquired by the Borrower pursuant to the GalvPro
      Acquisition.

      (c)   The Borrower hereby agrees to provide to the Collateral Agent within
45 days after the acquisition of a fee interest in the GalvPro Facility, the
following:


                                       5
<PAGE>
            (i)   a mortgage upon the real estate and improvements acquired by
      the Borrower in connection with the GalvPro Facility in form and substance
      reasonably satisfactory to the Collateral Agent;

            (ii)  evidence that the mortgage referred to in subparagraph (i)
      above has been duly recorded in the appropriate recording offices and that
      all filing and recording taxes and fees have been paid;

            (iii) a mortgage loan title insurance policy insuring the mortgage
      referred to in subparagraph (i) above in an amount acceptable to the
      Collateral Agent issued by the Title Insurance Company and in form and
      substance reasonably satisfactory to the Collateral Agent, along with such
      reinsurance and direct access agreements as the Collateral Agent may deem
      necessary or desirable;

            (iv)  a survey in form and substance reasonably satisfactory to the
      Collateral Agent, certified to the Collateral Agent and the Title
      Insurance Company pursuant to a certification reasonably satisfactory to
      the Collateral Agent;

            (v)   a favorable opinion of Barrett & McNagny, LLP, local counsel
      to the Lender Parties, in form and substance reasonably satisfactory to
      the Collateral Agent;

            (vi)  evidence of the insurance required by the terms of the
      mortgage referred to in subparagraph (i) above; and

            (vii) such other assignments, security agreements and other
      documents as may be reasonably required by the Collateral Agent to obtain
      and perfect liens and security interests for the benefit of the Lender
      Parties in the assets acquired by the Borrower in connection with the
      GalvPro Facility.

            SUBPART 4.3. Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original but all such
counterparts shall together constitute one and the same Amendment.

            SUBPART 4.4. Governing Law. THIS AMENDMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

            SUBPART 4.5. Successors and Assigns. This Amendment shall be binding
upon the Borrower, the Lenders and the Agents and their respective successors
and assigns, and shall inure to their successors and assigns.

            SUBPART 4.6. Representations and Warranties; Event of Default. In
order to induce the Lenders to execute and deliver this Amendment, (a) the
Borrower represents and warrants to the Agents, the Lenders and the Issuing Bank
that, after giving effect to the terms of this Amendment, the following
statements are true and correct: (i) the representations and warranties set
forth in Article IV of the Existing Credit Agreement and in the other Loan
Documents are true and correct on the Fourth Amendment Effective Date as if made
on the


                                       6
<PAGE>
Fourth Amendment Effective Date and after giving effect to the Fourth Amendment
(unless stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct in all material respects as
of such earlier date); (ii) no Default has occurred and is continuing; and (iii)
the GalvPro Asset Purchase Agreement contains unqualified representations and
warranties from the seller thereunder providing that the consummation of such
acquisition will not violate or otherwise breach agreements to which such seller
is a party and (b) the Borrower agrees that any breach in any material respect
of any representation, warranty, or covenant contained in this Amendment shall
constitute an Event of Default.

            SUBPART 4.7. Modifications to this Amendment. This Amendment can be
amended, waived or otherwise modified by instrument in writing signed by the
Borrower and the Required Lenders.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]


                                       7
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their respective authorized officers as of the day
and year first above written.

                                          STEEL DYNAMICS, INC.


                                          By: /s/ THERESA E. WAGLER
                                              ---------------------------
                                              Title: ASSISTANT SECRETARY



                                          JPMORGAN CHASE BANK,
                                            as Administrative Agent and
                                                Collateral Agent and as a Lender

                                          By: /S/  JAMES H. RAMAGE
                                              ---------------------------------
                                              Title: MANAGING DIRECTOR



                                         MORGAN STANLEY SENIOR FUNDING, INC.,
                                            as Arranger and Syndication Agent
                                                and as a Lender


                                          By: /S/ JAAP L. TONCKENS
                                             ----------------------------------
                                              Title: VICE PRESIDENT



                                         GENERAL ELECTRIC CAPITAL CORPORATION,
                                            as Documentation Agent and as a
                                                Lender


                                          By: /S/ ILLEGIBLE
                                             ----------------------------------
                                              Title: DULY AUTHORIZED SIGNATORY






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.A
<SEQUENCE>9
<FILENAME>y84794exv10w2wa.txt
<DESCRIPTION>SUBSIDIARY GUARANTY SUPPLEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.2a

                         SUBSIDIARY GUARANTY SUPPLEMENT

                                                                   April 7, 2002

JPMorgan Chase Bank, as Administrative Agent
270 Park Avenue
New York, New York  10017
Attention:  James Ramage

               Credit Agreement dated as of March 26, 2002 among
Steel Dynamics, Inc, an Indiana corporation (the "BORROWER"), the Lender Parties
   party to the Credit Agreement, JP MORGAN CHASE BANK, as Collateral Agent,
        JPMorgan Chase Bank, as Administrative Agent, and Morgan Stanley
            Senior Funding, Inc., as Arranger and Syndication Agent

Ladies and Gentlemen:

            Reference is made to the above-captioned Credit Agreement and to the
Subsidiary Guaranty referred to therein (such Subsidiary Guaranty, as in effect
on the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, together with this Guaranty Supplement, being the
"SUBSIDIARY GUARANTY"). The capitalized terms defined in the Subsidiary Guaranty
or in the Credit Agreement and not otherwise defined herein are used herein as
therein defined.

            Section 1. Guaranty; Limitation of Liability. (a) The undersigned
hereby absolutely, unconditionally and irrevocably guarantee the punctual
payment when due, whether at scheduled maturity or on any date of a required
prepayment or by acceleration, demand or otherwise, of all Obligations of each
other Loan Party now or hereafter existing under or in respect of the Loan
Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premium, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agree to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Guaranty
Supplement, the Subsidiary Guaranty or any other Loan Document. Without limiting
the generality of the foregoing, the undersigned's liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
any other Loan Party to any Secured Party under or in respect of the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
such other Loan Party.

            (b) The undersigned, and by its acceptance of this Guaranty
Supplement, the Administrative Agent and each other Secured Party, hereby
confirm that it is the intention of all such Persons that this Guaranty
Supplement, the Subsidiary Guaranty and the Obligations of the
<PAGE>
undersigned hereunder and thereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Guaranty Supplement, the Subsidiary
Guaranty and the Obligations of the undersigned hereunder and thereunder. To
effectuate the foregoing intention, the Administrative Agent, the other Secured
Parties and the undersigned hereby irrevocably agree that the Obligations of the
undersigned under this Guaranty Supplement and the Subsidiary Guaranty at any
time shall be limited to the maximum amount as will result in the Obligations of
the undersigned under this Guaranty Supplement and the Subsidiary Guaranty not
constituting a fraudulent transfer or conveyance.

            (c) The undersigned hereby unconditionally and irrevocably agree
that in the event any payment shall be required to be made to any Secured Party
under this Guaranty Supplement, the Subsidiary Guaranty or any other guaranty,
the undersigned will contribute, to the maximum extent permitted by applicable
law, such amounts to each other Guarantor and each other guarantor so as to
maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents.

            Section 2. Obligations Under the Guaranty. The undersigned hereby
agree, as of the date first above written, to be bound as a Guarantor by all of
the terms and conditions of the Subsidiary Guaranty to the same extent as each
of the other Guarantors thereunder. The undersigned further agree, as of the
date first above written, that each reference in the Subsidiary Guaranty to an
"ADDITIONAL GUARANTOR" or a "GUARANTOR" shall also mean and be a reference to
the undersigned, and each reference in any other Loan Document to a "SUBSIDIARY
GUARANTOR" or a "LOAN PARTY" shall also mean and be a reference to the
undersigned.

            Section 3. Representations and Warranties. The undersigned hereby
make each representation and warranty set forth in Section 6 of the Subsidiary
Guaranty to the same extent as each other Guarantor.

            Section 4. Delivery by Telecopier. Delivery of an executed
counterpart of a signature page to this Guaranty Supplement by telecopier shall
be effective as delivery of an original executed counterpart of this Guaranty
Supplement.

            Section 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) THIS GUARANTY SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

            (b) The undersigned hereby irrevocably and unconditionally submit,
each for itself and its property, to the nonexclusive jurisdiction of any New
York State court or any federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Guaranty Supplement, the
Subsidiary Guaranty or any of the other Loan Documents to which it is or is to
be a party, or for recognition or enforcement of any judgment, and the
undersigned hereby irrevocably and unconditionally agree that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the extent permitted by law, in such federal court.
The undersigned agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the


                                       2
<PAGE>
judgment or in any other manner provided by law. Nothing in this Guaranty
Supplement or the Subsidiary Guaranty or any other Loan Document shall affect
any right that any party may otherwise have to bring any action or proceeding
relating to this Guaranty Supplement, the Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party in the courts of any
other jurisdiction.

            (c) Each of the undersigned irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty Supplement, the
Subsidiary Guaranty or any of the other Loan Documents to which it is or is to
be a party in any New York State or federal court. The undersigned hereby
irrevocably waive, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding in any
such court.

            (d) THE UNDERSIGNED HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
ADVANCES OR THE ACTIONS OF ANY SECURED PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

                                               Very truly yours,

                                               FERROUS RESOURCES, LLC



                                               By:  /S/ MARK D. MILLETT
                                                   -----------------------------
                                                   Mark D. Millett, President


                                               STLD HOLDINGS, INC.


                                               By:  /S/ MARK D. MILLETT
                                                   -----------------------------
                                                   Mark D. Millett, President


                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.B
<SEQUENCE>10
<FILENAME>y84794exv10w2wb.txt
<DESCRIPTION>SUBSIDIARY GUARANTY SUPPLEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.2b


                         SUBSIDIARY GUARANTY SUPPLEMENT

                                                               September 6, 2002

JPMorgan Chase Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017

Attention:  Deirdre Wall

               Credit Agreement dated as of March 26, 2002 among
Steel Dynamics, Inc, an Indiana corporation (the "BORROWER"), the Lender Parties
    party to the Credit Agreement, JPMorgan Chase Bank, as Collateral Agent,
        JPMorgan Chase Bank, as Administrative Agent, and Morgan Stanley
            Senior Funding, Inc., as Arranger and Syndication Agent

Ladies and Gentlemen:

            Reference is made to the above-captioned Credit Agreement and to the
Subsidiary Guaranty referred to therein (such Subsidiary Guaranty, as in effect
on the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, together with this Guaranty Supplement, being the
"SUBSIDIARY GUARANTY"). The capitalized terms defined in the Subsidiary Guaranty
or in the Credit Agreement and not otherwise defined herein are used herein as
therein defined.

            Section 1. Guaranty; Limitation of Liability. (a) The undersigned
hereby absolutely, unconditionally and irrevocably guarantees the punctual
payment when due, whether at scheduled maturity or on any date of a required
prepayment or by acceleration, demand or otherwise, of all Obligations of each
other Loan Party now or hereafter existing under or in respect of the Loan
Documents (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premium, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any other Secured Party in enforcing any rights under this Guaranty
Supplement, the Subsidiary Guaranty or any other Loan Document. Without limiting
the generality of the foregoing, the undersigned's liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
any other Loan Party to any Secured Party under or in respect of the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
such other Loan Party.

            (b)   The undersigned, and by its acceptance of this Guaranty
Supplement, the Administrative Agent and each other Secured Party, hereby
confirms that it is the intention of all such Persons that this Guaranty
Supplement, the Subsidiary Guaranty and the Obligations of the undersigned
hereunder and thereunder not constitute a fraudulent transfer or conveyance for
<PAGE>
                                       2


purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar foreign, federal or state law to the
extent applicable to this Guaranty Supplement, the Subsidiary Guaranty and the
Obligations of the undersigned hereunder and thereunder. To effectuate the
foregoing intention, the Administrative Agent, the other Secured Parties and the
undersigned hereby irrevocably agree that the Obligations of the undersigned
under this Guaranty Supplement and the Subsidiary Guaranty at any time shall be
limited to the maximum amount as will result in the Obligations of the
undersigned under this Guaranty Supplement and the Subsidiary Guaranty not
constituting a fraudulent transfer or conveyance.

            (c)   The undersigned hereby unconditionally and irrevocably agrees
that in the event any payment shall be required to be made to any Secured Party
under this Guaranty Supplement, the Subsidiary Guaranty or any other guaranty,
the undersigned will contribute, to the maximum extent permitted by applicable
law, such amounts to each other Guarantor and each other guarantor so as to
maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents.

            Section 2. Obligations Under the Guaranty. The undersigned hereby
agrees, as of the date first above written, to be bound as a Guarantor by all of
the terms and conditions of the Subsidiary Guaranty to the same extent as each
of the other Guarantors thereunder. The undersigned further agrees, as of the
date first above written, that each reference in the Subsidiary Guaranty to an
"ADDITIONAL GUARANTOR" or a "GUARANTOR" shall also mean and be a reference to
the undersigned, and each reference in any other Loan Document to a "SUBSIDIARY
GUARANTOR" or a "LOAN PARTY" shall also mean and be a reference to the
undersigned.

            Section 3. Representations and Warranties. The undersigned hereby
makes each representation and warranty set forth in Section 6 of the Subsidiary
Guaranty to the same extent as each other Guarantor.

            Section 4. Delivery by Telecopier. Delivery of an executed
counterpart of a signature page to this Guaranty Supplement by telecopier shall
be effective as delivery of an original executed counterpart of this Guaranty
Supplement.

            Section 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(A) THIS GUARANTY SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

            (b)   The undersigned hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or any federal court of the United States of America
sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Guaranty Supplement, the
Subsidiary Guaranty or any of the other Loan Documents to which it is or is to
be a party, or for recognition or enforcement of any judgment, and the
undersigned hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the extent permitted by law, in such federal court.
The undersigned hereby agrees that service of process in any such action or
proceeding brought in any such New York state court or in such federal court may
be made upon CT Corporation System at its offices at 111 Eighth Avenue, 13th
Floor, New York, New York
<PAGE>
                                       3


10011 (the "PROCESS AGENT") and the undersigned hereby irrevocably appoints the
Process Agent its authorized agent to accept such service of process, and agrees
that the failure of the Process Agent to give any notice of any such service
shall not impair or affect the validity of such service or of any judgment
rendered in any action or proceeding based thereon. The undersigned hereby
further irrevocably consents to the service of process in any action or
proceeding in such courts by the mailing thereof by any parties hereto by
registered or certified mail, postage prepaid, to the undersigned at its address
specified pursuant to Section 9 of the Subsidiary Guaranty. The undersigned
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Guaranty Supplement or the
Subsidiary Guaranty or any other Loan Document shall affect any right that any
party may otherwise have to bring any action or proceeding relating to this
Guaranty Supplement, the Subsidiary Guaranty or any of the other Loan Documents
to which it is or is to be a party in the courts of any other jurisdiction.

            (c)   The undersigned irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guaranty Supplement, the Subsidiary Guaranty
or any of the other Loan Documents to which it is or is to be a party in any New
York State or federal court. The undersigned hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court.

            (d)   THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
ADVANCES OR THE ACTIONS OF ANY SECURED PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

                                       Very truly yours,


                                       DYNAMIC BAR PRODUCTS, LLC


                                       By: Steel Dynamics, Inc., its sole member


                                       By /s/  Theresa E. Wagler
                                          Title: Assistant Treasurer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.C
<SEQUENCE>11
<FILENAME>y84794exv10w2wc.txt
<DESCRIPTION>SUBSIDIARY GUARANTY SUPPLEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.2c

                         SUBSIDIARY GUARANTY SUPPLEMENT

                                                                January 23, 2003

JPMorgan Chase Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017

Attention: Deirdre Wall

Re:  Credit Agreement dated as of March 26 2002, as amended by the First
     Amendment to Credit Agreement, dated as of August 6, 2002, as waived by
     Letter Waiver, dated as of October 6, 2002, and as further amended by the
     Second Amendment to Credit Agreement, dated as of December 16, 2002 and the
     Third Amendment to Credit Agreement, dated of even date herewith, among
     Steel Dynamics, Inc, an Indiana corporation (the "BORROWER"), the Lender
     Parties party to the Credit Agreement, JPMorgan Chase Bank, as Collateral
     Agent, JPMorgan Chase Bank, as Administrative Agent, and Morgan Stanley
     Senior Funding, Inc., As Arranger and Syndication Agent

Ladies and Gentlemen:

     Reference is made to the above-captioned Credit Agreement and to the
Subsidiary Guaranty referred to therein (such Subsidiary Guaranty, as in effect
on the date hereof and as it may hereafter be amended, supplemented or
otherwise modified from time to time, together with this Guaranty Supplement,
being the "SUBSIDIARY GUARANTY"). The capitalized terms defined in the
Subsidiary Guaranty or in the Credit Agreement and not otherwise defined herein
are used herein as therein defined.

     Section 1. Guaranty; Limitation of Liability. (a) The undersigned hereby
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations of each other Loan Party
now or hereafter existing under or in respect of the Loan Documents (including,
without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premium,
fees, indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations being the "GUARANTEED OBLIGATIONS"), and agrees to pay any and all
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Administrative Agent or any other Secured Party in enforcing any rights
under this Guaranty Supplement, the Subsidiary Guaranty or any other Loan
Document. Without limiting the generality of the foregoing, the undersigned's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any other Loan Party to any Secured Party under
or in respect of the Loan Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Loan Party.
<PAGE>
                                       2

     (b)  The undersigned, and by its acceptance of this Guaranty Supplement,
the Administrative Agent and each other Secured Party, hereby confirms that it
is the intention of all such Persons that this Guaranty Supplement, the
Subsidiary Guaranty and the Obligations of the undersigned hereunder and
thereunder not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar foreign, federal or state law to the extent
applicable to this Guaranty Supplement, the Subsidiary Guaranty and the
Obligations of the undersigned hereunder and thereunder. To effectuate the
foregoing intention, the Administrative Agent, the other Secured Parties and
the undersigned hereby irrevocably agree that the Obligations of the
undersigned under this Guaranty Supplement and the Subsidiary Guaranty at any
time shall be limited to the maximum amount as will result in the Obligations
of the undersigned under this Guaranty Supplement and the Subsidiary Guaranty
not constituting a fraudulent transfer or conveyance.

     (c)  The undersigned hereby unconditionally and irrevocably agrees that in
the event any payment shall be required to be made to any Secured Party under
this Guaranty Supplement, the Subsidiary Guaranty or any other guaranty, the
undersigned will contribute, to the maximum extent permitted by applicable law,
such amounts to each other Guarantor and each other guarantor so as to maximize
the aggregate amount paid to the Secured Parties under or in respect of the Loan
Documents.

     Section 2. Obligations Under the Guaranty. The undersigned hereby agrees,
as of the date first above written, to be bound as a Guarantor by all of the
terms and conditions of the Subsidiary Guaranty to the same extent as each of
the other Guarantors thereunder. The undersigned further agrees, as of the date
first above written, that each reference in the Subsidiary Guaranty to an
"ADDITIONAL GUARANTOR" or a "GUARANTOR" shall also mean and be a reference to
the undersigned, and each reference in any other Loan Document to a "SUBSIDIARY
GUARANTOR" or a "LOAN PARTY" shall also mean and be a reference to the
undersigned.

     Section 3. Representations and Warranties. The undersigned hereby makes
each representation and warranty set forth in Section 6 of the Subsidiary
Guaranty to the same extent as each other Guarantor.

     Section 4. Delivery by Telecopier. Delivery of an executed counterpart of a
signature page to this Guaranty Supplement by telecopier shall be effective as
delivery of an original executed counterpart of this Guaranty Supplement.

     Section 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
THIS GUARANTY SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

     (b)  The undersigned hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or any federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Guaranty Supplement, the Subsidiary Guaranty
or any of the other Loan Documents to which it is or is to be a party, or for
recognition or enforcement of any judgment, and the undersigned hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in
<PAGE>
                                       3


any such New York State court or, to the extent permitted by law, in such
federal court. The undersigned hereby agrees that service of process in any
such action or proceeding brought in any such New York state court or in such
federal court may be made upon CT Corporation System at its offices at 111
Eighth Avenue, 13th Floor, New York, New York 10011 (the "PROCESS AGENT") and
the undersigned hereby irrevocably appoints the Process Agent its authorized
agent to accept such service of process, and agrees that the failure of the
Process Agent to give any notice of any such service shall not impair or affect
the validity of such service or of any judgment rendered in any action or
proceeding based thereon. The undersigned hereby further irrevocably consents
to the service of process in any action or proceeding in such courts by the
mailing thereof by any parties hereto by registered or certified mail, postage
prepaid, to the undersigned at its address specified pursuant to Section 9 of
the Subsidiary Guaranty. The undersigned agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty Supplement or the Subsidiary Guaranty or any other
Loan Document shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Guaranty Supplement, the Subsidiary
Guaranty or any of the other Loan Documents to which it is or is to be a party
in the courts of any other jurisdiction.

     (c)  The undersigned irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guaranty Supplement, the Subsidiary Guaranty
or any of the other Loan Documents to which it is or is to be a party in any
New York State or federal court. The undersigned hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such suit, action or proceeding in any such court.

     (d)  THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES
OR THE ACTIONS OF ANY SECURED PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.


                                       Very truly yours,



                                       STEEL DYNAMICS SALES NORTH AMERICA,
                                       INC.


                                       By:  /S/ RICHARD P. TEETS, JR.
                                           -------------------------------------
                                           Richard P. Teets, Jr., Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>12
<FILENAME>y84794exv10w3.txt
<DESCRIPTION>PURCHASE AGREEMENT
<TEXT>
<PAGE>

                                                                  EXECUTION COPY

                                                                    EXHIBIT 10.3

                                  $100,000,000

                              STEEL DYNAMICS, INC.

                   4% Convertible Subordinated Notes Due 2012

                               PURCHASE AGREEMENT

December 17, 2002

<PAGE>

                                                               December 17, 2002

Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
c/o Morgan Stanley & Co. Incorporated
      1585 Broadway
      New York, New York 10036

Dear Sirs and Mesdames:

      Steel Dynamics, Inc., an Indiana corporation (the "COMPANY"), proposes to
issue and sell to the several purchasers named in Schedule I hereto (the
"INITIAL PURCHASERS") $100,000,000 principal amount of its 4% Convertible
Subordinated Notes Due 2012 (the "FIRM SECURITIES") to be issued pursuant to the
provisions of an Indenture dated as of December 23, 2002 (the "INDENTURE")
between the Company and Fifth Third Bank, as Trustee (the "TRUSTEE"). The
Company also proposes to issue and sell to the Initial Purchasers not more than
an additional $25,000,000 principal amount of its 4% Convertible Subordinated
Notes Due 2012 (the "ADDITIONAL SECURITIES") if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf of the
Initial Purchasers, the right to purchase such 4% Convertible Subordinated Notes
Due 2012 granted to the Initial Purchasers in Section 2 hereof. The Firm
Securities and the Additional Securities are hereinafter collectively referred
to as the "SECURITIES". The Securities will be convertible into shares of the
Company's common stock, par value $.01 (the "UNDERLYING SECURITIES").

      The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act.

      The Initial Purchasers and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement dated as of the
Closing Date (as defined in Section 4) between the Company and the Initial
Purchasers (the "REGISTRATION RIGHTS AGREEMENT").

      In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum (the "PRELIMINARY MEMORANDUM") and will prepare
a final offering memorandum (the "FINAL MEMORANDUM" and, with the Preliminary
Memorandum, each a "MEMORANDUM") including or incorporating by reference a
description of the terms of the Securities and the Underlying Securities, the
terms of the offering and a description of the Company. As used herein, the term
"MEMORANDUM" shall include in each case the documents incorporated by reference
therein. The terms "SUPPLEMENT", "AMENDMENT" and "AMEND" as used herein with
respect to a Memorandum shall include all documents deemed to be incorporated by
reference in the Preliminary Memorandum or Final Memorandum that are filed
subsequent to the date of such Memorandum with the Securities and Exchange
Commission (the

<PAGE>

"COMMISSION") pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").

      Prior to the execution of this Agreement, the Company entered into that
certain Second Amendment to the Credit Agreement dated as of December 16, 2002
(the "Second Amendment") which amends the $350.0 million Credit Agreement dated
as of March 26, 2002, as amended, among the Company, the Lenders defined
therein, JPMorgan Chase Bank, as administrative agent for the Lenders
thereunder, General Electric Capital Corporation, as documentation agent and
Morgan Stanley Senior Funding, Inc., as arranger and syndication agent, (the
"Credit Agreement") in order to allow the Company to incur the indebtedness
evidenced by the Securities.

      1. Representations and Warranties. The Company represents and warrants to,
and agrees with, you that:

            (a) (i) Each document, if any, filed or to be filed pursuant to the
      Exchange Act and incorporated by reference in either Memorandum complied
      or will comply when so filed in all material respects with the Exchange
      Act and the applicable rules and regulations of the Commission thereunder
      and (ii) the Preliminary Memorandum does not contain and the Final
      Memorandum, in the form used by the Initial Purchasers to confirm sales
      and on the Closing Date, will not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements therein, in the light of the circumstances under which they
      were made, not misleading, except that the representations and warranties
      set forth in this paragraph do not apply to statements or omissions in
      either Memorandum based upon information relating to any Initial Purchaser
      furnished to the Company in writing by such Initial Purchaser through you
      expressly for use therein.

            (b) The Company has been duly incorporated, is validly existing as a
      corporation in good standing under the laws of the jurisdiction of its
      incorporation, has the corporate power and authority to own its property
      and to conduct its business as described in each Memorandum and is duly
      qualified to transact business and is in good standing in each
      jurisdiction in which the conduct of its business or its ownership or
      leasing of property requires such qualification, except to the extent that
      the failure to be so qualified or be in good standing would not have a
      material adverse effect on the Company and its subsidiaries, taken as a
      whole.

            (c) Each subsidiary of the Company has been duly incorporated or
      organized, is validly existing as a corporation or limited liability
      company in good standing under the laws of the jurisdiction of its
      incorporation or organization, has the corporate power and authority to
      own its property and to conduct its business as described in each
      Memorandum and is duly qualified to transact business and is in good
      standing in each jurisdiction in which the conduct of its business or its
      ownership or leasing of property requires such qualification, except to
      the extent that the failure to be so qualified or be in good standing
      would not have a material adverse effect on the Company and its
      subsidiaries, taken as a whole; each subsidiary of the Company and the
      percentage of capital stock or equity units and voting stock or voting
      units of each such subsidiary


                                       2
<PAGE>

      owned by the Company is set forth on Schedule II hereto and all of the
      issued shares of capital stock or equity units of each subsidiary of the
      Company have been duly and validly authorized and issued, are fully paid
      and non-assessable and are owned directly by the Company, free and clear
      of all liens, encumbrances, equities or claims.

            (d) This Agreement has been duly authorized, executed and delivered
      by the Company.

            (e) The authorized capital stock of the Company conforms as to legal
      matters to the description thereof contained in the Final Memorandum.

            (f) The shares of common stock outstanding on the date hereof have
      been duly authorized and are validly issued, fully paid and
      non-assessable.

            (g) The Securities have been duly authorized and, when executed and
      authenticated in accordance with the provisions of the Indenture and
      delivered to and paid for by the Initial Purchasers in accordance with the
      terms of this Agreement, will be valid and binding obligations of the
      Company, enforceable in accordance with their terms, subject to applicable
      bankruptcy, insolvency or similar laws affecting creditors' rights
      generally and general principles of equity, and will be entitled to the
      benefits of the Indenture and the Registration Rights Agreement.

            (h) The Underlying Securities issuable upon conversion of the
      Securities have been duly authorized and reserved and, when issued upon
      conversion of the Securities in accordance with the terms of the
      Securities, will be validly issued, fully paid and non-assessable, and the
      issuance of the Underlying Securities will not be subject to any
      preemptive or similar rights.

            (i) The Indenture has been duly authorized and, when executed and
      delivered by the Company, will be a valid and binding agreement of the
      Company, enforceable in accordance with its terms, subject to applicable
      bankruptcy, insolvency or similar laws affecting creditors' rights
      generally and general principles of equity.

            (j) The Registration Rights Agreement has been duly authorized and,
      when executed and delivered by the Company, will be a valid and binding
      agreement of the Company, enforceable in accordance with its terms,
      subject to applicable bankruptcy, insolvency or similar laws affecting
      creditors' rights generally and general principles of equity and except as
      rights to indemnification and contribution under the Registration Rights
      Agreement may be limited under applicable law.

            (k) The execution and delivery by the Company of, and the
      performance by the Company of its obligations under, this Agreement, the
      Indenture, the Registration Rights Agreement and the Securities will not
      contravene any provision of applicable law or the articles of
      incorporation or by-laws of the Company or any agreement or other
      instrument binding upon the Company or any of its subsidiaries that is
      material to the Company and its subsidiaries, taken as a whole (including,
      but not limited to, the Credit Agreement as amended by the Second
      Amendment) or any judgment, order or decree of any governmental body,
      agency or court having jurisdiction over the Company or any


                                       3
<PAGE>

      subsidiary, and no consent, approval, authorization or order of, or
      qualification with, any governmental body or agency is required for the
      performance by the Company of its obligations under this Agreement, the
      Indenture, the Registration Rights Agreement and the Securities, except
      such as may be required by the securities or Blue Sky laws of the various
      states in connection with the offer and sale of the Securities and by
      Federal and state securities laws with respect to the Company's
      obligations under the Registration Rights Agreement.

            (l) There has not occurred any material adverse change, or any
      development involving a prospective material adverse change, in the
      condition, financial or otherwise, or in the earnings, business or
      operations of the Company and its subsidiaries, taken as a whole, from
      that set forth in the Final Memorandum (exclusive of any amendments or
      supplements thereto subsequent to the date of this Agreement).

            (m) There are no legal or governmental proceedings pending or
      threatened to which the Company or any of its subsidiaries is a party or
      to which any of the properties of the Company or any of its subsidiaries
      is subject other than proceedings accurately described in all material
      respects in each Memorandum and proceedings that would not have a material
      adverse effect on the Company and its subsidiaries, taken as a whole, or
      on the power or ability of the Company to perform its obligations under
      this Agreement, the Indenture, the Registration Rights Agreement and the
      Securities or to consummate the transactions contemplated by the Final
      Memorandum.

            (n) With the exception of the air permit for the Company's coil
      coating facility at its Butler mini-mill which is expected to be issued
      shortly and the air permit for the Company's Pittsboro mini-mill for which
      the Company has yet to make an application, each of the Company and its
      subsidiaries has all necessary consents, authorizations, approvals,
      orders, certificates and permits of and from, and has made all
      declarations and filings with, all federal, state, local and other
      governmental authorities, all self-regulatory organizations and all courts
      and other tribunals, to own, lease, license and use its properties and
      assets and to conduct its business in the manner described in the Final
      Memorandum, except to the extent that the failure to obtain such consents,
      authorizations, approvals, orders, certificates and permits or make such
      declarations and filings would not have a material adverse effect on the
      Company and its subsidiaries, taken as a whole. Neither the Company nor
      any of its subsidiaries has received any notice of proceedings relating to
      the revocation or modification of any such consent, authorization,
      approval, order, certificate or permit which, singly or in the aggregate,
      if the subject of an unfavorable decision, ruling or finding, would result
      in a material adverse change in the condition, financial or otherwise, or
      in the earnings, business or operations of the Company and its
      subsidiaries, taken as a whole, except as described in or contemplated by
      the Final Memorandum.

            (o) The Company and its subsidiaries (i) are in compliance with any
      and all applicable foreign, federal, state and local laws and regulations
      relating to the protection of human health and safety, the environment or
      hazardous or toxic substances or wastes, pollutants or contaminants
      ("ENVIRONMENTAL LAWS"), (ii) have, with the exception of the air permit
      for the Company's coil coating facility at its Butler mini-mill which is


                                       4
<PAGE>

      expected to be issued shortly and the air permit for the Company's
      Pittsboro mini-mill for which the Company has not yet made an application,
      received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and
      (iii) are in compliance with all terms and conditions of any such permit,
      license or approval, except where such noncompliance with Environmental
      Laws, failure to receive required permits, licenses or other approvals or
      failure to comply with the terms and conditions of such permits, licenses
      or approvals would not, singly or in the aggregate, have a material
      adverse effect on the Company and its subsidiaries, taken as a whole.

            (p) In the ordinary course of business, the Company conducts a
      periodic review of the effect of Environmental Laws on the business,
      operations and properties of the Company and its subsidiaries, in the
      course of which it identifies and evaluates associated costs and
      liabilities (including, without limitation, any capital or operating
      expenditures required for clean-up, closure of properties or compliance
      with Environmental Laws or any permit, license or approval, any related
      constraints on operating activities and any potential liabilities to third
      parties). On the basis of such review, the Company has reasonably
      concluded that such associated costs and liabilities would not, singly or
      in the aggregate, have a material adverse effect on the Company and its
      subsidiaries, taken as a whole.

            (q) The Company, after giving effect to the offering and sale of the
      Securities and the application of the proceeds thereof as described in the
      Final Memorandum, will not be an "investment company" as such term is
      defined in the Investment Company Act of 1940, as amended.

            (r) Neither the Company nor any affiliate (as defined in Rule 501(b)
      of Regulation D under the Securities Act, an "Affiliate") of the Company
      has directly, or through any agent, (i) sold, offered for sale, solicited
      offers to buy or otherwise negotiated in respect of, any security (as
      defined in the Securities Act) which is or will be integrated with the
      sale of the Securities in a manner that would require the registration
      under the Securities Act of the Securities or (ii) engaged in any form of
      general solicitation or general advertising in connection with the
      offering of the Securities (as those terms are used in Regulation D under
      the Securities Act) or in any manner involving a public offering within
      the meaning of Section 4(2) of the Securities Act.

            (s) It is not necessary in connection with the offer, sale and
      delivery of the Securities to the Initial Purchasers in the manner
      contemplated by this Agreement to register the Securities under the
      Securities Act or to qualify the Indenture under the Trust Indenture Act
      of 1939, as amended.

            (t) The Securities satisfy the requirements set forth in Rule
      144A(d)(3) under the Securities Act.

            (u) The Securities conform in all material respects to the
      description thereof contained in the Final Memorandum under the heading
      "Description of Notes".


                                       5
<PAGE>

            (v) Subsequent to the respective dates as of which information is
      given in the Final Memorandum, (1) the Company and its subsidiaries have
      not incurred any material liability or obligation, direct or contingent,
      nor entered into any material transaction not in the ordinary course of
      business; (2) the Company has not purchased any of its outstanding capital
      stock, nor declared, paid or otherwise made any dividend or distribution
      of any kind on its capital stock; and (3) there has not been any material
      change in the capital stock, short-term debt or long-term debt of the
      Company and its consolidated subsidiaries, except in each case as
      described in or contemplated by the Final Memorandum.

            (w) The Company and its subsidiaries have good and marketable title
      in fee simple to all real property and good and marketable title to all
      personal property owned by them which is material to the business of the
      Company and its subsidiaries, in each case free and clear of all liens,
      encumbrances and defects except such as are described in the Final
      Memorandum or such as do not materially affect the value of such property
      and do not interfere with the use made and proposed to be made of such
      property by the Company and its subsidiaries: and any real property and
      buildings held under lease by the Company and its subsidiaries are held by
      them under valid, subsisting and enforceable leases with such exceptions
      as are not material and do not interfere with the use made and proposed to
      be made of such property and buildings by the Company and its
      subsidiaries, in each case except as described in or contemplated by the
      Final Memorandum.

            (x) The Company and its subsidiaries own or possess, or can acquire
      on reasonable terms, all material patents, patent rights, licenses,
      inventions, copyrights, know-how (including trade secrets and other
      unattended and/or unpatentable proprietary or confidential information,
      systems or procedures), trademarks, service marks and trade names
      currently employed by them in connection with the business now operated by
      them, and neither the Company nor any of its subsidiaries has received any
      notice of infringement of or conflict with asserted rights of others with
      respect to any of the foregoing which, singly or in the aggregate, if the
      subject of an unfavorable decision, ruling or finding, would result in any
      material adverse change in the condition, financial or otherwise, or in
      the earnings, business or operations of the Company and its subsidiaries,
      taken as a whole.

            (y) No material labor dispute with the employees of the Company or
      any of its subsidiaries exists, except as described in or contemplated by
      the Final Memorandum, or, to the knowledge of the Company, is imminent;
      and the Company is not aware of any existing, threatened or imminent labor
      disturbance by the employees of any of its principal suppliers,
      manufacturers or contractors that could result in any material adverse
      change in the condition, financial or otherwise, or in the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

            (z) The Company and each of its subsidiaries are insured by insurers
      of recognized financial responsibility against such losses and risks and
      in such amounts as are prudent and customary in the businesses in which
      they are engaged; neither the Company nor any such subsidiary has been
      refused any insurance coverage sought or applied for; and neither the
      Company nor any such subsidiary has any reason to believe


                                       6
<PAGE>

      that it will not be able to renew its existing insurance coverage as and
      when such coverage expires or to obtain similar coverage from similar
      insurers as may be necessary to continue its business at a cost that would
      not materially and adversely affect the condition, financial or otherwise,
      or the earnings, business or operations of the Company and its
      subsidiaries, taken as a whole, except as described in or contemplated by
      the Final Memorandum.

            (aa) The Company and each of its subsidiaries maintain a system of
      internal accounting controls sufficient to provide reasonable assurance
      that (1) transactions are executed in accordance with management's general
      or specific authorizations; (2) transactions are recorded as necessary to
      permit preparation of financial statements in conformity with generally
      accepted accounting principles and to maintain asset accountability; (3)
      access to assets is permitted only in accordance with management's general
      or specific authorization; and (4) the recorded accountability for assets
      is compared with the existing assets at reasonable intervals and
      appropriate action is taken with respect to any differences.

      2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Initial Purchasers, and each Initial Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Firm Securities set forth in
Schedule I hereto opposite its name at a purchase price of 97% of the principal
amount thereof plus accrued interest, if any, to the Closing Date (the "PURCHASE
PRICE").

      On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchasers the Additional Securities, and the Initial Purchasers
shall have the right to purchase, severally and not jointly, up to $25,000,000
principal amount of Additional Securities at the Purchase Price plus accrued
interest, if any, to the date of payment and delivery. You may exercise this
right on behalf of the Initial Purchasers, in whole or from time to time in
part, by giving written notice of each election to exercise this option. The
Initial Purchasers may exercise this option and purchase the Additional
Securities during the 13-day period commencing with, and including, the initial
issuance of the Firm Securities. Any exercise notice shall specify the principal
amount of Additional Securities to be purchased by the Initial Purchasers and
the date on which such Additional Securities are to be purchased. Each purchase
date must be at least one business day after the written notice is given and may
not be earlier than the Closing Date for the Firm Securities nor later than ten
business days after the date of such notice and provided that in no event shall
such purchase date be later than the date 12 days following the initial issuance
of the Firm Securities (the "Option Cut-off Date") and provided further that the
Initial Purchasers shall sell or otherwise dispose of such Additional Securities
on or before such date. Additional Securities may be purchased as provided in
Section 4 solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Securities. On each day, if any, that Additional
Securities are to be purchased (an "OPTION CLOSING DATE"), each Initial
Purchaser agrees, severally and not jointly, to purchase the principal amount of
Additional Securities (subject to such adjustments to eliminate fractional
Securities as you may determine) that bears the same proportion to the total
principal amount of Additional Securities to be purchased on such Option Closing
Date as the principal amount of Firm Securities set forth in


                                       7
<PAGE>

Schedule I opposite the name of such Initial Purchaser bears to the total
principal amount of Firm Securities.

      The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period ending 90 days after the date of the Final Memorandum,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the common stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of common stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) the issuance and sale of the Securities offered
by the Final Memorandum, (b) the issuance of shares of Common Stock upon
conversion of the Securities, (c) the issuance by the Company of shares of
Common Stock upon the exercise of an option or a warrant or the conversion of a
security outstanding on the date of the Final Memorandum of which the Initial
Purchasers have been advised in writing, (d) the issuance by the Company of
additional options under its existing stock option plans, provided that such
options are not exercisable during such 90-day period and (e) transactions by
any person other than the Company relating to shares of Common Stock or other
securities acquired in open market transactions after completion of the
Offering.

      The Company hereby agrees that, without the prior written consent of
Morgan & Stanley & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period beginning on the date hereof and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Securities (other than the sale of the Securities
under this Agreement.)

      3. Terms of Offering. You have advised the Company that you will make an
offering of the Securities purchased by the Initial Purchasers hereunder on the
terms to be set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into as in your judgment is advisable.

      4. Payment and Delivery. Payment for the Firm Securities shall be made to
the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Securities for the respective accounts of the
several Initial Purchasers at 10:00 a.m., New York City time, on December 23,
2002, or at such other time on the same or such other date, not later than
December 30, 2002, as shall be designated in writing by you. The time and date
of such payment are hereinafter referred to as the "CLOSING DATE."

      Payment for any Additional Securities shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Securities for the respective accounts of the several Initial
Purchasers at 10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 2 or at such other time on the same or
on such other date, in any event not later than the Option Cut-off Date, as
shall be designated in writing by you.


                                       8
<PAGE>

      Certificates for the Securities shall be in definitive form or global
form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date or the applicable Option Closing Date, as the case
may be. The certificates evidencing the Securities shall be delivered to you on
the Closing Date or an Option Closing Date, as the case may be, for the
respective accounts of the several Initial Purchasers, with any transfer taxes
payable in connection with the transfer of the Securities to the Initial
Purchasers duly paid, against payment of the Purchase Price therefor plus
accrued interest, if any, to the date of payment and delivery.

      5. Conditions to the Initial Purchasers' Obligations. The obligations of
the Initial Purchasers to purchase and pay for the Firm Securities on the
Closing Date are subject to the following conditions:

            (a) Subsequent to the execution and delivery of this Agreement and
      prior to the Closing Date:

                  (i) there shall not have occurred any downgrading, nor shall
            any notice have been given of any intended or potential downgrading
            or of any review for a possible change that does not indicate the
            direction of the possible change, in the rating accorded the Company
            or any of the Company's securities or in the rating outlook for the
            Company by any "nationally recognized statistical rating
            organization," as such term is defined for purposes of Rule
            436(g)(2) under the Securities Act; and

                  (ii) there shall not have occurred any change, or any
            development involving a prospective change, in the condition,
            financial or otherwise, or in the earnings, business or operations
            of the Company and its subsidiaries, taken as a whole, from that set
            forth in the Final Memorandum (exclusive of any amendments or
            supplements thereto subsequent to the date of this Agreement) that,
            in your judgment, is material and adverse and that makes it, in your
            judgment, impracticable to market the Securities on the terms and in
            the manner contemplated in the Final Memorandum.

            (b) The Initial Purchasers shall have received on the Closing Date a
      certificate, dated the Closing Date and signed by an executive officer of
      the Company, to the effect set forth in Section 5(a)(i) and to the effect
      that the representations and warranties of the Company contained in this
      Agreement are true and correct as of the Closing Date and the Company has
      complied with all of the agreements and satisfied all of the conditions on
      its part to be performed or satisfied hereunder on or before the Closing
      Date.

            The officer signing and delivering such certificate may rely upon
      the best of his or her knowledge as to proceedings threatened.

            (c) The Initial Purchasers shall have received on the Closing Date
      an opinion of Barrett & McNagny LLP, counsel for the Company, dated the
      Closing Date, to the


                                       9
<PAGE>

      effect set forth in Exhibit A. Such opinion shall be rendered to the
      Initial Purchasers at the request of the Company and shall so state
      therein.

            (d) The Initial Purchasers shall have received on the Closing Date
      an opinion of Sidley Austin Brown & Wood LLP as New York counsel for the
      Company, dated the Closing Date, to the effect set forth in Exhibit B.
      Such opinion shall be rendered to the Initial Purchasers at the request of
      the Company and shall so state therein. The Initial Purchasers shall have
      received on the Closing Date an opinion of Sidley Austin Brown & Wood LLP
      as special tax counsel for the Company, dated the Closing Date, in form
      and substance satisfactory to counsel for the Initial Purchasers to the
      effect that the Securities will be treated as contingent payment
      indebtedness for United States federal income tax purposes and the
      statements in the Offering Memorandum under the caption "Certain United
      States Federal Income Tax Considerations" insofar as such statements
      constitute a summary of the United States federal tax laws referred to
      therein, are accurate and fairly summarize the United States federal tax
      laws referred to therein. Such opinion shall be rendered to the Initial
      Purchasers at the request of the Company and shall so state therein.

            (e) The Initial Purchasers shall have received on the Closing Date
      an opinion of Shearman & Sterling, counsel for the Initial Purchasers,
      dated the Closing Date, in form and substance satisfactory to you.

            (f) The Initial Purchasers shall have received on each of the date
      hereof and the Closing Date a letter, dated the date hereof or the Closing
      Date, as the case may be, in form and substance satisfactory to the
      Initial Purchasers, from Ernst & Young LLP, independent public
      accountants, containing statements and information of the type ordinarily
      included in accountants' "comfort letters" to underwriters with respect to
      the financial statements and certain financial information contained in or
      incorporated by reference into the Final Memorandum; provided that the
      letter delivered on the Closing Date shall use a "cut-off date" not
      earlier than the date hereof.

            (g) The "lock-up" agreements, each substantially in the form of
      Exhibit C hereto, between you and the officers and directors of the
      Company and certain shareholders of the Company relating to sales and
      certain other dispositions of shares of common stock or certain other
      securities, delivered to you on or before the date hereof, shall be in
      full force and effect on the Closing Date.

            (h) The Second Amendment to the Credit Agreement has been duly
      authorized, executed and delivered by the parties thereto and is in full
      force and effect.

            (i) The Securities shall have been designated PORTAL securities in
      accordance with the rules and regulations adopted by the National
      Association of Securities Dealers, Inc. relating to trading in the PORTAL
      Market.

            (j) The Initial Purchasers shall have received such other documents
      and certificates as are reasonably requested by you or your counsel.


                                       10
<PAGE>

      The several obligations of the Initial Purchasers to purchase Additional
Securities hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization, execution and
authentication of the Additional Securities to be sold on such Option Closing
Date and other matters related to the execution and authentication of such
Additional Securities.

      6. Covenants of the Company. In further consideration of the agreements of
the Initial Purchasers contained in this Agreement, the Company covenants with
each Initial Purchaser as follows:

            (a) To furnish to you in New York City, without charge, prior to
      10:00 a.m. New York City time on the business day next succeeding the date
      of this Agreement and during the period mentioned in Section 6(c), as many
      copies of the Final Memorandum, any documents incorporated by reference
      therein and any supplements and amendments thereto as you may reasonably
      request.

            (b) Before amending or supplementing either Memorandum, to furnish
      to you a copy of each such proposed amendment or supplement and not to use
      any such proposed amendment or supplement to which you reasonably object.

            (c) If, during such period after the date hereof and prior to the
      date on which all of the Securities shall have been sold by the Initial
      Purchasers, any event shall occur or condition exist as a result of which
      it is necessary to amend or supplement the Final Memorandum in order to
      make the statements therein, in the light of the circumstances when the
      Final Memorandum is delivered to a purchaser, not misleading, or if, in
      the opinion of counsel for the Initial Purchasers, it is necessary to
      amend or supplement the Final Memorandum to comply with applicable law,
      forthwith to prepare and furnish, at its own expense, to the Initial
      Purchasers, either amendments or supplements to the Final Memorandum so
      that the statements in the Final Memorandum as so amended or supplemented
      will not, in the light of the circumstances when the Final Memorandum is
      delivered to a purchaser, be misleading or so that the Final Memorandum,
      as amended or supplemented, will comply with applicable law.

            (d) To endeavor to qualify the Securities for offer and sale under
      the securities or Blue Sky laws of such jurisdictions as you shall
      reasonably request.

            (e) Whether or not the transactions contemplated in this Agreement
      are consummated or this Agreement is terminated, to pay or cause to be
      paid all expenses incident to the performance of its obligations under
      this Agreement, including: (i) the fees, disbursements and expenses of the
      Company's counsel and the Company's accountants in connection with the
      issuance and sale of the Securities and all other fees or expenses in
      connection with the preparation of each Memorandum and all amendments and
      supplements thereto, including all printing costs associated therewith,
      and the delivering of copies thereof to the Initial Purchasers, in the
      quantities herein above specified, (ii) all costs and expenses related to
      the transfer and delivery of the Securities to the Initial Purchasers,
      including any transfer or other taxes payable thereon, (iii) the


                                       11
<PAGE>

      cost of printing or producing any Blue Sky or legal investment memorandum
      in connection with the offer and sale of the Securities under state
      securities laws and all expenses in connection with the qualification of
      the Securities for offer and sale under state securities laws as provided
      in Section 6(d) hereof, including filing fees and the reasonable fees and
      disbursements of counsel for the Initial Purchasers in connection with
      such qualification and in connection with the Blue Sky or legal investment
      memorandum, (iv) any fees charged by rating agencies for the rating of the
      Securities, (v) all document production charges and expenses of counsel to
      the Initial Purchasers (but not including their fees for professional
      services) in connection with the preparation of this Agreement, (vi) the
      fees and expenses, if any, incurred in connection with the admission of
      the Securities for trading in PORTAL or any appropriate market system,
      (vii) the costs and charges of the Trustee and any transfer agent,
      registrar or depositary, (viii) the cost of the preparation, issuance and
      delivery of the Securities, (ix) the costs and expenses of the Company
      relating to investor presentations on any "road show" undertaken in
      connection with the marketing of the offering of the Securities,
      including, without limitation, expenses associated with the production of
      road show slides and graphics, fees and expenses of any consultants
      engaged in connection with the road show presentations with the prior
      approval of the Company, travel and lodging expenses of the
      representatives and officers of the Company and any such consultants and
      the cost of any aircraft chartered in connection with the road show, and
      (x) all other costs and expenses incident to the performance of the
      obligations of the Company hereunder for which provision is not otherwise
      made in this Section. It is understood, however, that except as provided
      in this Section, Section 8, and the last paragraph of Section 10, the
      Initial Purchasers will pay all of their costs and expenses, including
      fees and disbursements of their counsel, transfer taxes payable on resale
      of any of the Securities by them and any advertising expenses connected
      with any offers they may make.

            (f) Neither the Company nor its Affiliates will sell, offer for sale
      or solicit offers to buy or otherwise negotiate in respect of any security
      (as defined in the Securities Act) which could be integrated with the sale
      of the Securities in a manner which would require the registration under
      the Securities Act of the Securities.

            (g) Not to solicit any offer to buy or offer or sell the Securities
      or the Underlying Securities by means of any form of general solicitation
      or general advertising (as those terms are used in Regulation D under the
      Securities Act) or in any manner involving a public offering within the
      meaning of Section 4(2) of the Securities Act.

            (h) While any of the Securities or the Underlying Securities remain
      "restricted securities" within the meaning of the Securities Act, to make
      available, upon request, to any seller of the Securities the information
      specified in Rule 144A(d)(4) under the Securities Act, unless the Company
      is then subject to Section 13 or 15(d) of the Exchange Act.

            (i) To use its best efforts to permit the Securities to be
      designated PORTAL securities in accordance with the rules and regulations
      adopted by the National Association of Securities Dealers, Inc. relating
      to trading in the PORTAL Market.


                                       12
<PAGE>

            (j) During the period of two years after the Closing Date or any
      Option Closing Date, if later, the Company will not, and will not permit
      any of its affiliates (as defined in Rule 144 under the Securities Act) to
      resell any of the Securities or the Underlying Securities which constitute
      "restricted securities" under Rule 144 that have been reacquired by any of
      them.

      7. Offering of Securities; Restrictions on Transfer. Each Initial
Purchaser, severally and not jointly, represents and warrants that such Initial
Purchaser is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Initial Purchaser, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Securities by any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for such Securities only from,
and will offer such Securities only to, persons that it reasonably believes to
be QIBs that in purchasing such Securities are deemed to have represented and
agreed as provided in the Final Memorandum under the caption "Transfer
Restrictions".

      8. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Initial Purchaser, each person, if any, who controls any
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act and each affiliate of any Initial Purchaser
within the meaning of Rule 405 under the Securities Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through you expressly for use therein.

      (b) Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors and officers and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Initial Purchaser, but only with
reference to information relating to such Initial Purchaser furnished to the
Company in writing by such Initial Purchaser through you expressly for use in
either Memorandum or any amendments or supplements thereto.

      (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the


                                       13
<PAGE>

indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

      (d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Initial Purchasers, on the other hand, from the offering of
the Securities or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Company, on the one hand, and of the Initial Purchasers,
on the other hand, in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Initial Purchasers, on the other hand, in connection with the
offering of the Securities shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Securities (before
deducting expenses) received by the Company and the total discounts and
commissions received by the Initial


                                       14
<PAGE>

Purchasers in respect thereof, bear to the aggregate offering price of the
Securities. The relative fault of the Company, on the one hand, and of the
Initial Purchasers, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the respective principal amount of Securities they have purchased
hereunder, and not joint.

      (e) The Company and the Initial Purchasers agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 8(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities resold by it in the initial
placement of such Securities were offered to investors exceeds the amount of any
damages that such Initial Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.

      (f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Initial Purchaser, any person controlling any Initial
Purchaser or any affiliate of any Initial Purchaser or by or on behalf of the
Company, its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Securities.

      9. Termination. The Initial Purchasers may terminate this Agreement by
notice given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment,


                                       15
<PAGE>

is material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Securities on the
terms and in the manner contemplated in the Final Memorandum.

      10. Effectiveness; Defaulting Initial Purchasers. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.

      If, on the Closing Date, or an Option Closing Date, as the case may be,
any one or more of the Initial Purchasers shall fail or refuse to purchase
Securities that it or they have agreed to purchase hereunder on such date, and
the aggregate principal amount of Securities which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of Securities to be
purchased on such date, the other Initial Purchasers shall be obligated
severally in the proportions that the principal amount of Firm Securities set
forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Firm Securities set forth opposite the names of all such
non-defaulting Initial Purchasers, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Initial Purchaser or
Initial Purchasers agreed but failed or refused to purchase on such date;
provided that in no event shall the principal amount of Securities that any
Initial Purchaser has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such
principal amount of Securities without the written consent of such Initial
Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Firm Securities which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of Firm
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Initial Purchaser
or of the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Final Memorandum or in any
other documents or arrangements may be effected. If, on an Option Closing Date,
any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Additional Securities and the aggregate principal amount of Additional
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Additional Securities to be purchased on such
Option Closing Date, the non-defaulting Initial Purchasers shall have the option
to (a) terminate their obligation hereunder to purchase the Additional
Securities to be sold on such Option Closing Date or (b) purchase not less than
the principal amount of Additional Securities that such non-defaulting Initial
Purchasers would have been obligated to purchase in the absence of such default.
Any action taken under this paragraph shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.

      If this Agreement shall be terminated by the Initial Purchasers, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Initial Purchasers or such Initial
Purchasers as have so terminated this Agreement with respect to themselves,


                                       16
<PAGE>

severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Initial Purchasers in connection
with this Agreement or the offering contemplated hereunder.

      11. Notices. All notices and other communications under this Agreement
shall be in writing and mailed, delivered or sent by facsimile transmission to:
if sent to the Initial Purchasers, Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York 10036, attention: High Yield New Issues Group,
facsimile number (212) 761-0587 and if sent to the Company, to Steel Dynamics,
Inc., 6714 Pointe Inverness Way, Suite 200, Fort Wayne, Indiana 46804,
attention: Tracy Shellabarger, facsimile number (219) 969-3555.

      12. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

      13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

      14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement


                                       17
<PAGE>

                                          Very truly yours,

                                          STEEL DYNAMICS, INC.

                                          By: /s/ Tracy L. Shellabarger
                                             --------------------------
                                          Name: Tracy L. Shellabarger
                                          Title: Vice President, Chief Financial
                                                 Officer and Secretary

<PAGE>

Accepted as of the date hereof

MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.

By: Morgan Stanley & Co. Incorporated

By:  /s/ David P. Sun
     ------------------
     Name: David P. Sun
     Title: Executive Director

<PAGE>

<TABLE>
<CAPTION>
                                   SCHEDULE I

                               Initial Purchasers

                                                                    PRINCIPAL AMOUNT OF FIRM
                      INITIAL PURCHASERS                           SECURITIES TO BE PURCHASED
                      ------------------                           --------------------------
<S>                                                                <C>
Morgan Stanley & Co. Incorporated.........................                $ 75,000,000
Goldman, Sachs & Co. .....................................                $ 25,000,000

Total:  ..................................................                $100,000,000
</TABLE>

<PAGE>

                                   SCHEDULE II

                                  Subsidiaries

<TABLE>
<CAPTION>
                                                            PERCENT OF CAPITAL               PERCENT OF VOTING
                                                        STOCK/EQUITY UNITS OWNED BY     STOCK/VOTING UNITS OWNED BY
NAME                                                       STEEL DYNAMICS, INC.             STEEL DYNAMICS, INC.
----                                                    ---------------------------     ---------------------------
<S>                                                     <C>                             <C>
Iron Dynamics, Inc.                                                100%                             100%
New Millennium Building Systems, LLC                              46.5%                              50%
Omni Dynamic Aviation, LLC                                          50%                              50%
Paragon Steel Enterprises, LLC                                      50%                              50%
SDI Investment Company                                             100%                             100%
STLD Holdings, Inc.                                                100%                             100%
Ferrous Resources, LLC                                             100%                             100%
Dynamic Bar Products, LLC                                          100%                             100%
</TABLE>


<PAGE>

                                    EXHIBIT A



                       OPINION OF COUNSEL FOR THE COMPANY

      Attach draft opinion of the counsel for the Company to be delivered
pursuant to Section 5(c) of the Purchase Agreement to the effect that:

      A. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

      B. Each subsidiary of the Company has been duly incorporated or organized,
is validly existing as a corporation or as a limited liability company in good
standing under the laws of the jurisdiction of its incorporation or
organization, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital stock, and
all membership units or interests, of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable, and
are owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims.

      C. The Purchase Agreement has been duly authorized, executed and delivered
by the Company.

      D. The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Final Offering Memorandum.

      E. All shares of common stock of the Company and its subsidiaries
outstanding on the [Closing Date] [Option Closing Date] have been duly
authorized and are validly issued, fully paid and non-assessable.

      F. The Securities have been duly authorized, executed and delivered by the
Company.

      G. The Underlying Securities reserved for issuance upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Securities,
will be validly issued, fully paid and non-assessable and the issuance of the
Underlying Securities will not be subject to any preemptive or similar rights.

<PAGE>

      H. The Indenture has been duly authorized, executed and delivered by the
Company.

      I. The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company.

      J. The Second Amendment to the Credit Agreement has been duly authorized,
executed and delivered by the Company and is in full force and effect.

      K. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Purchase Agreement, the Indenture, the
Registration Rights Agreement and the Securities will not contravene any
provision of applicable law or the articles of incorporation or by-laws of the
Company or, to the best of such counsel's knowledge, any agreement or other
instrument binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, (including, but not
limited to, the Credit Agreement as amended by the Second Amendment) or, to the
best of such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under the Purchase Agreement, the
Indenture, the Registration Rights Agreement and the Securities, except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and by Federal and state
securities laws with respect to the Company's obligations under the Registration
Rights Agreement.

      K. After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than proceedings fairly summarized in
all material respects in the Final Memorandum and proceedings which such counsel
believes are not likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company to
perform its obligations under the Purchase Agreement, the Indenture, the
Registration Rights Agreement and the Securities or to consummate the
transactions contemplated by the Final Memorandum.

      L. After due inquiry, to the best of our knowledge, the Company and its
subsidiaries (i) are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have, with the exception
of the air permit for the Company's coil coating facility at its Butler
mini-mill which is expected to be issued shortly and the air permit for the
Company's Pittsboro mini-mill for which the Company has not yet made an
application, received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and

<PAGE>

conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole.

      M. The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Final Memorandum, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.

      N. The statements related to legal matters, documents or proceedings
included in the Final Memorandum under the captions "Risk Factors--We may be
required to transfer the acquired assets back to Qualitech, or we may be delayed
in the construction and start-up of this mini-mill," "Risk
Factors--Environmental regulation imposes substantial costs and limitations on
our operations," "Description of Notes," "Description of Capital Stock,"
"Description of Certain Indebtedness," "Certain ERISA Considerations," "Private
Placement," and "Transfer Restrictions," and in "Item 1 -
Business--Environmental Matters," "Item 3 - Legal Proceedings," "Item 1 -
Business--Risk Factors--Risks Related to Our Business--We face litigation risks
in connection with our terminated Thailand advisory transaction," "Item 1 -
Business--Risk Factors--Risks Related to Our Business--Environmental regulation
imposes substantial costs and limitations on our operations" and "Item 13 -
Certain Relationships and Related Transactions" of the Company's most recent
annual report on Form 10-K and in "Item 1 - Legal Proceedings," of each
quarterly report on Form 10-Q included or incorporated by reference in the Final
Memorandum, in each case fairly summarize in all material respects such matters,
documents or proceedings.

      O. Such counsel (i) is of the opinion that each document incorporated by
reference in the Final Memorandum (except for financial statements and schedules
and other financial and statistical data included therein as to which such
counsel need not express any opinion), complied as to form when filed with the
Commission in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder and (ii) has no reason to believe that
(except for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief) the Final
Memorandum when issued contained, or as of the date such opinion is delivered
contains, any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

      P. Based upon the representations, warranties and agreements of the
Company in the Purchase Agreement and of the Initial Purchasers in the Purchase
Agreement, it is not necessary in connection with the offer, sale and delivery
of the Securities to the Initial Purchasers under the Purchase Agreement or in
connection with the initial resale of such Securities by the Initial Purchasers
in accordance with the Purchase Agreement to register the Securities under the
Securities Act of 1933, as amended, or to qualify the Indenture under the Trust
Indenture Act of 1939, it being understood that no opinion is expressed as to
any subsequent resale of any Security or Underlying Security.

      Q. With the exception of the air permit for the Company's coil coating
facility at its Butler mini-mill which is expected to be issued shortly and the
air permit for the Company's Pittsboro mini-mill for which the Company has not
yet made an application, each of

<PAGE>

the Company and its subsidiaries has all necessary certificates, orders,
permits, licenses, authorizations, consents and approvals of and from, and has
made all declarations and filings with, all federal, state and local
governmental authorities, all self-regulatory organizations and all courts and
tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Final Memorandum, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to revocation or modification of any such certificates,
orders, permits, licenses, authorizations, consents or approvals, nor is the
Company or any of its subsidiaries in violation of, or in default under, any
federal, state or local law, regulation, rule, decree, order or judgment
applicable to the Company or any of its subsidiaries the effect of which, singly
or in the aggregate, would have a material adverse effect on the prospects,
condition, financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, except as described in the
Final Memorandum.

      With respect to paragraph O above, counsel may state that his or her
opinion and belief are based upon his or her participation in the preparation of
the Final Memorandum (and any amendments or supplements thereto), and review and
discussion of the contents thereof and review of the documents incorporated by
reference therein, but are without independent check or verification except with
respect to paragraphs N.

<PAGE>

                                    EXHIBIT B

                   OPINION OF NEW YORK COUNSEL FOR THE COMPANY

      Attach draft opinion of the New York counsel for the Company to be
delivered pursuant to Section 5(d) of the Purchase Agreement to the effect that:

      A. Assuming the Securities have been duly authorized, executed and
delivered by the parties thereto, the Securities, when authenticated in
accordance with the provisions of the Indenture and delivered and paid for by
the Initial Purchasers in accordance with the terms of the Purchase Agreement,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors' rights generally and subject to general principles of equity
(regardless of whether considered in a proceeding in equity or at law), and will
be entitled to the benefits of the Indenture.

      B. Assuming the Indenture has been duly authorized, executed and delivered
by the parties thereto, the Indenture is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and subject to general principles of
equity (regardless of whether considered in a proceeding in equity or at law).

      C. Assuming the Registration Rights Agreement has been duly authorized,
executed and delivered by the parties thereto, the Registration Rights Agreement
is a valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights generally
and subject to general principles of equity (regardless of whether considered in
a proceeding in equity or at law) and except as rights to indemnification and
contribution under the Registration Rights Agreement may be limited or
unenforceable under applicable law.

<PAGE>

                                    EXHIBIT C

                            [FORM OF LOCK-UP LETTER]

                                                               December __, 2002



Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
c/o  Morgan Stanley & Co. Incorporated
     1585 Broadway
     New York, NY 10036

Dear Sirs and Mesdames:

      The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into a Purchase Agreement (the "PURCHASE
AGREEMENT") with Steel Dynamics, Inc., an Indiana corporation (the "COMPANY"),
providing for the offering (the "OFFERING") by the several Initial Purchasers,
including Morgan Stanley (the "INITIAL PURCHASERS"), of $100,000,000 principal
amount of Convertible Subordinated Notes Due 2012 of the Company (the
"SECURITIES"). The Securities will be convertible into shares of the Company's
common stock, par value $.01 of the Company (the "COMMON STOCK").

      To induce the Initial Purchasers that may participate in the Offering to
continue their efforts in connection with the Offering, the undersigned hereby
agrees that, without the prior written consent of Morgan Stanley on behalf of
the Initial Purchasers, it will not, during the period commencing on the date
hereof and ending 90 days after the date of the final offering memorandum
relating to the Offering (the "FINAL MEMORANDUM"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) the issuance
and sale of the Securities offered by the Final Memorandum, (b) the issuance of
shares of Common Stock upon conversion of the Securities, (c) the issuance by
the Company of shares of Common Stock upon the exercise of an option or a
warrant or the conversion of a security outstanding on the date of the Final
Memorandum of which the Initial Purchasers have been advised in writing, (d) the
issuance by the Company of additional options under its existing stock option
plans, provided that such options are not exercisable during such 90-day period
and (e) transactions by any person other than the Company relating to shares of
Common Stock or other securities acquired in open market transactions after
completion of the Offering. In addition, the undersigned agrees that, without
the prior written consent of Morgan

<PAGE>

Stanley on behalf of the Initial Purchasers, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the Final
Memorandum, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's share of Common
Stock except in compliance with the foregoing restrictions.

      The undersigned understands that the Company and the Initial Purchasers
are relying upon this Lock-Up Agreement in proceeding toward consummation of the
Offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.

      Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
a Purchase Agreement, the terms of which are subject to negotiation between the
Company and the Initial Purchasers.

                                            Very truly yours,


                                            ------------------------------------
                                            (Name)

                                            ------------------------------------
                                            (Address)


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>13
<FILENAME>y84794exv12w1.txt
<DESCRIPTION>COMPUTATION OF RATIO OF EARNINGS
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                    EXHIBIT 12.1

<TABLE>
STEEL DYNAMICS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<CAPTION>

                                                                    1998         1999         2000         2001         2002
                                                                ----------   ----------   ----------    ----------   ----------
<S>                                                             <C>          <C>          <C>           <C>          <C>
Interest expense, including amortization
   of debt issuance costs................                       $   16,938   $   22,919   $   21,038    $   21,015   $   32,978
Capitalized interest ....................                            5,878       13,196       17,477        13,993       11,413
                                                                ----------   ----------   ----------    ----------   ----------

        Fixed charges (a)................                           22,816       36,115       38,515        35,008       44,391

Income before taxes and extraordinary items                         52,626       65,279       84,485         5,113      130,012
Amortization of capitalized interest.....                            1,138        1,365        1,501         1,597        2,932
Less capitalized interest................                           (5,878)     (13,196)     (17,477)      (13,993)     (11,413)
                                                                ----------   ----------   ----------    ----------   ----------
        Adjusted earnings (b)............                       $   70,702   $   89,563   $  107,024    $   27,725   $  165,922
                                                                ==========   ==========   ==========    ==========   ==========

Ratio (b) / (a)..........................                            3.10x        2.48x        2.78x         0.79x        3.74x
                                                                ==========   ==========   ==========    ==========   ==========
</TABLE>

For purposes of calculating our ratio of earnings to fixed charges, earnings
consist of earnings from continuing operations before income taxes and
extraordinary items, adjusted for the portion of fixed charges deducted from the
earnings, plus amortization of capitalized interest. Fixed charges consist of
interest on all indebtedness, including capitalized interest, and amortization
of debt issuances costs, excluding amortization of debt issuance costs
classified as extraordinary. In 2001, our earnings were insufficient to cover
our fixed charges by $7.3 million.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.1
<SEQUENCE>14
<FILENAME>y84794exv14w1.txt
<DESCRIPTION>CODE OF ETHICS
<TEXT>
<PAGE>
                                                                   Exhibit 14.1


                     Code of Ethics for Principal Officers
                      For Principal Executive Officers and
                          Senior Financial Officers of
                              Steel Dynamics, Inc.


         It is the policy of Steel Dynamics, Inc. ("SDI") that the Chief
Executive Officer, each other principal executive officer, the Chief Financial
Officer, Chief Accounting Officer, Corporate Controller and Controller of each
of SDI's operating divisions adhere to and advocate the following principles
governing their professional and ethical conduct in the fulfillment of their
responsibilities:

         1.       Act at all times in accordance with SDI's Code of Business
Conduct and Ethics, of which this Code of Ethics for Principal Executive
Officers and Senior Financial Officers is a part, as well as SDI's Policy on
Insider Trading, and all other current and future policies governing the
conduct of SDI's principal executive or senior financial officers.

         2.       Provide full, fair, accurate, objective, timely and
understandable disclosures in internal reports as well as in registration
statements, periodic reports and other documents filed with or furnished to the
Securities and Exchange Commission, any other government agency or
self-regulatory organization, or otherwise used in any form of public
communication.

         3.       Act at all times with honesty, integrity and independence.

         4.       Always act in good faith, with due care and diligence.

         5.       Avoid actual or apparent conflicts of interest in both
personal and professional relationships, always distinguishing between
personal, private interests and those interests of SDI, including the use of
company property or the receipt of personal benefits. Company information,
company assets and company opportunities should not be exploited for personal
gain.

         6.       Comply with all federal, state, local and foreign laws, rules
and regulations applicable to business conduct, including (but not limited to)
laws relating to securities, competition, health, safety and the environment.

         7.       Respect the confidentiality of information acquired in the
course of performing one's duties and responsibilities, except where disclosure
is authorized or otherwise legally required. Do not use confidential
information acquired in the course of business for personal advantage.

         8.       Communicate this Code of Ethics at least annually throughout
all financial departments, and proactively promote ethical behavior and the
importance of adhering to the spirit as well as the letter of the law among
subordinates and peers.

         9.       Subject at all times to the provisions of SDI's confidential
and anonymous complaint process, which goes directly to the Audit Committee,
promptly report any violations

________________________________________________________________________________
Code of Ethics for Principal Officers




<PAGE>
or suspected violations of this Code of Ethics, or any unethical behavior
encompassed by this Code, to the Chief Executive Officer, with a copy to the
Audit Committee of the Board of Directors, for internal investigation and any
appropriate remedial action

         10.        Violations, failure to report apparent violations, covering
up violations or apparent violations, retaliating against or disciplining a
person for reporting a violation or apparent violation, or obstructing an
investigation of an alleged or apparent violation will constitute grounds for
disciplinary action, including possible termination of employment. If there are
any questions involving application of this Code of Ethics, guidance should be
sought from SDI's legal counsel.

         SDI will waive application of this Code of Ethics, if ever, only in
limited situations where circumstances warrant, and then only in conjunction
with appropriate monitoring and controls. Changes in and waivers of this Code of
Ethics may be made only by the Board or by the Audit Committee, based on full
disclosure of all relevant facts, and will be disclosed as required under
applicable law and regulations.

         It is also the Policy of SDI that the Chief Executive Officer, each
Vice President, the Chief Financial Officer, Chief Accounting Officer, Corporate
Controller and Controller of each of SDI's operating divisions acknowledge
receipt of and certify their willingness to adhere to the foregoing annually and
file a copy of such certification with the Audit Committee of the Board.

         The Audit Committee shall have the power to monitor, make
determinations, and recommend action to the Board with respect to the
administration of this Policy or the violation thereof.




























________________________________________________________________________________
Code of Ethics for Principal Officers                                          2





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>15
<FILENAME>y84794exv21w1.txt
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                    EXHIBIT 21.1
<TABLE>
<CAPTION>

                                                                       Percent of Capital                     Percent of Voting
                                                                       Stock/Equity Units                    Stock/Voting Units
                                                                            Owned by                              Owned by
Name                                                                  Steel Dynamics, Inc.                  Steel Dynamics, Inc.
---------------------------------------------------------          --------------------------            --------------------------

<S>                                                                <C>                                   <C>
Dynamic Bar Products, LLC (Indiana)                                             100%                                 100%
Ferrous Resources, LLC (Delaware)                                               100%                                 100%
Iron Dynamics, Inc. (Indiana)                                                   100%                                 100%
New Millennium Building Systems, LLC (Indiana)                                   46.6%*                               50%*
Omni Dynamic Aviation, LLC (Indiana)                                             50%                                  50%
Paragon Steel Enterprises, LLC (Indiana)                                         50%                                  50%
SDI Investment Company (Indiana)                                                100%                                 100%
STLD Holdings, Inc. (Indiana)                                                   100%                                 100%
Steel Dynamics Sales North America, Inc. (Indiana)                              100%                                 100%
</TABLE>

* Figures shown are at December 31, 2002. Registrant acquired an additional
46.6% of the equity units and 100% of the voting units of New Millennium in
February 2003, and will acquire the balance of 6.8% of the equity units in March
2003.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>16
<FILENAME>y84794exv23w1.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG LLP
<TEXT>
<PAGE>
                                                                    EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in the Registration Statements of
Steel Dynamics, Inc. (Forms S-8 Nos. 333-19541, 333-27549 and 333-55888; and
Form S-3 No. 333-82210 and Form S-3 No. 333-103672) of our report dated January
24, 2003, except for Note 14, as to which the date is March 14, 2003, with
respect to the consolidated financial statements of Steel Dynamics, Inc.
included in the Annual Report (Form 10-K) for the year ended December 31, 2002.

                                                     /s/ Ernst & Young LLP
Fort Wayne, Indiana
March 27, 2003

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