UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K/A

|X|     Annual Report Pursuant to Section 13 or 15(d) of the Securities 
        Exchange Act of 1934 for the fiscal year ended December 31, 2003

|_|     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                                  (IRS employer
of incorporation or organization)                           Identification No.)

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/A or any amendment to
this Form 10-K/A. |_|

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 30, 2003, was approximately, $461,665,000. 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 February 20, 2004, Registrant had outstanding 49,007,605 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 29, 2004, which
are incorporated by reference herein.



                              STEEL DYNAMICS, INC.

                                Table of Contents





                                                                                                                 Page
                                                                                                                 ----
                                                                                                        
Part I

         Item 1.   Business...............................................................................         3
         Item 2.   Properties.............................................................................        33
         Item 3.   Legal Proceedings......................................................................        33
         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..................        34
         Item 6.   Selected Financial Data................................................................        35
         Item 7.   Management's Discussion and Analysis of Financial Condition
                      and Results of Operations...........................................................        37
         Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.............................        44
         Item 8.   Consolidated Financial Statements......................................................        45
         Item 9.   Changes in and Disagreements with Accountants on
                      Accounting and Financial Disclosures................................................        69
         Item 9A.  Controls and Procedures................................................................        69


Part III
         Item 10.  Directors and Executive Officers of the Registrant.....................................        69
         Item 11.  Executive Compensation.................................................................        69
         Item 12.  Security Ownership of Certain Beneficial Owners and Management.........................        69
         Item 13.  Certain Relationships and Related Transactions.........................................        70
         Item 14.  Principal Accountant Fees and Services.................................................        71



Part IV
         Item 15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......................        71





                                        1

                                EXPLANATORY NOTE

         The purpose of this amendment on Form 10-K/A to the Annual Report on
Form 10-K of Steel Dynamics, Inc. for the year ended December 31, 2003, is to
provide revised forms of certification on Exhibits 31.1 and 31.2, to conform to
the format prescribed by Item 601(b)(31) of Regulation S-K, as well as to revise
the form of Item 9A, subsection (b) regarding "Changes in Internal Controls" (no
changes). These changes constitute only format revisions.

         No attempt has been made in this Form 10-K/A to modify or update any
financial information or other disclosures presented in the original report on
Form 10-K, nor does this Form 10-K/A reflect events occurring after the filing
of the original Form 10-K or modify or update those disclosures, including
exhibits to the Form 10-K. Information described herein reflects the disclosures
made at the time of the original filing of the Form10-K on March 12, 2004.
Accordingly, this Form 10-K/A should be read in conjunction with our filings
made with the Securities and Exchange Commission subsequent to the filing of the
original Form 10-K, including any amendments to those filings.

                                     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:

o 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;

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

o 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;

o 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;

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

o 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;

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

                                       2


o 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;

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

o 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;

o 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;

o 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;

o 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

o 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 three
steelmaking mini-mills. We produce our steel principally from steel scrap, using
electric arc melting furnaces, continuous casting and automated rolling mills.

     During 2003, our sales were $987 million and, at year-end, we had
approximately 1,400 employees. None of our employees are represented by labor
unions.

     Flat Roll Division

     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 2003. 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 in-plant painting
facility at our Butler mini-mill, and we completed this facility and commenced
coating operations in November 2003. This $25 million facility has the capacity
to coat approximately 240,000 tons of steel.

     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 operate this new facility as a part of our Butler, Indiana
Flat Roll Division, which will also supply the Jeffersonville plant with steel
coils for coating. Production began at Jeffersonville in July 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 and 2003,
was approximately 60% of our total flat-roll shipments.

                                       3


     Structural Steel and Rail Division

     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 were able to begin to offer
a broad array of wide flange beams and H-piling structural steel products during
2003 and were able to commission most of the rest of our product line, save for
6 inch and 36 inch beams, which we hope to commission during the first quarter
of 2004. In addition, we performed casting trials for the production of standard
rail products during the first quarter of 2003, and, since that time have
successfully run product through the breakdown mill, tandem mill, cooling bed
and straightener. We anticipate having finished rail product during the second
quarter of 2004, which we will provide to the railroad companies to be tested
and monitored for product evaluation. This evaluation process may take between
six and nine months.

     Bar Products Division

     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, worked during 2003 to upgrade, redesign and retrofit
the facility for the production of a variety of merchant bar quality, or MBQ
products such as angles, flats, rounds and other merchant bars and shapes, as
well as reinforcing bar, or rebar, products and also for the production of some
special bar quality, or SBQ products. When fully complete, we expect to have
invested between $75 and $80 million of additional capital in this facility. We
started melting and casting operations in mid-December and began shipping
limited products by year-end 2003. Currently, we are producing bigger bars, both
MBQ and SBQ, and expect equipment to arrive during the first quarter of 2004
which will enable us, during the second quarter, to produce the smaller rounds,
angles, flats, channels and products of that nature. 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 our intention 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 Division
higher than our cost of purchasing and using steel scrap.

     We continued to make refinements to our systems and processes, and began
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 increasingly higher price of scrap, made the restart of
this production facility feasible. During 2003, we spent approximately $13
million of additional capital for modifications and refinements to the Iron
Dynamics operation. We restarted the rotary hearth furnace or "front end" of the
process in November 2003, and, during December 2003, produced 15,100 tonnes of
direct reduced iron, which we then compacted or briquetted to form hot
briquetted iron, or HBI. We anticipate ramping HBI production up to
approximately 30-35,000 tonnes of HBI per month by the end of the second quarter
of 2004, all of which we plan to use at our Butler flat-roll mill. We have not
yet restarted the smelting end of the Iron Dynamics process, the conversion of
HBI into liquid pig iron, but we anticipate restarting the submerged arc furnace
by the end of the first quarter or the beginning of the second quarter of 2004.

     Mesabi Nugget Project

     In March 2002, we formed a joint venture with certain entities owned by
Kobe Steel, Ltd., Cleveland-Cliffs Inc., and Ferrometrics, Inc., to assist in
the development of a proprietary process owned by Kobe, known as "ITmK3," for
the production of a fully metallized iron nugget product suitable as an
alternative iron or scrap substitute feedstock in electric arc furnace
steelmaking. We hold an approximate 18% equity interest in a pilot plant in
operation in Minnesota that is working to validate and refine the technology,
which consists of superheating direct reduced iron pellets, liquefying the
material, separating the slag and the iron, and chilling the resulting material
to produce a highly pure iron nugget.

                                       4


     New Millennium Building Systems

     During the first quarter of 2003, we increased our ownership in our
consolidated New Millennium Building Systems subsidiary from 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 the purchase of the remaining 6.8% stake held
by some of New Millennium's managers. We 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, and we also consummated the purchase of the
remaining 6.8% minority interest at 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 Flat Roll Division supplies a
majority of the hot-rolled steel utilized in New Millennium's manufacturing
operations.

     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, and a $205.0 million term
B loan, with a term of six years. 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, excluding New Millennium,
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, and in November 2003 we issued an additional $100.0 million of
the same 9 1/2% unsecured senior notes due 2009, in offerings exempt from
registration under the Securities Act of 1933. Approximately $50.0 million of
the net proceeds from this offering were used to prepay a portion of our senior
secured term B loan. 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 registered an
exchange offer on Form S-4 to enable the holders of the initial $200.0 million 
of unregistered notes, and we are also obligated to register an exchange offer 
for the $100.0 million add-on as well.

     During December 2002 and January 2003, we also 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, effective
June 11, 2003, to permit registered resales by the selling securityholders of
the notes, as well as 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 in full our $70.0
million senior secured term A loan and $40.0 million of our senior secured term
B loan in December 2002 and January 2003, as described herein. Under the terms
of the convertible note offering, holders of the notes have the right to convert
their notes into shares of our common stock at a conversion rate of 58.8076
shares per $1,000 principal amount of notes (equivalent to an initial conversion
price of approximately $17.0046 per share), subject to adjustment, if, among
other designated circumstances, during any fiscal quarter commencing after
December 31, 2002, the closing sale price of our common stock exceeds $120% of
the conversion price ($20.4055) for at least 20 trading days in the 30
consecutive trading days ending on the last trading day of any fiscal quarter.

     Competitive Strengths

     We believe that we have the following competitive strengths:

                                       5


     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 shipped
at our facilities, which we define as consolidated operating income before
start-up costs and minority interest adjustments divided by consolidated net ton
shipments, was $23, $74 and $37 in 2001, 2002 and 2003, 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 Flat Roll
Division's 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 performance-based
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 have broadened our offering of painted
and coated products with the commencement of production at our recently
completed coil coating facility and at our recently acquired galvanizing
facility, and we have entered the merchant bar, or MBQ market with an array of
angles, flats, rounds, reinforcing bar and other shapes, as well as various
special bar quality, or SBQ market, as our Bar Products Division becomes fully
operational. This diversified mix of products should enable us to access a
broader range of end-user markets, serve a broader customer base and mitigate
our exposure to cyclical downturns in commodity grade flat-rolled products or 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 an expanded geographic reach to Southern
markets.

     Business Strategy

     Expand Product Offerings

     The completion of our Structural and Rail Division and the commencement of
production at that facility, the completion of our Flat Roll Division coating
facility and the expansion of production of coated products at 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 Structural and Rail Division 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.

                                       6


     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:

     o excessive imports of steel into the United States that depress U.S. steel
       prices;

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

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

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

     o inability to secure a stable supply of steel scrap, and the escalating
       cost of steel scrap, our primary raw material, to historic highs;

     o start-up and operating risks associated with the retrofitting of our Bar
       Product Division's bar mill; and

     o 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 have two reportable
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, press releases,
ownership reports pursuant to Section 16(a) of the Securities Act of 1933, 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.

                                       7


Our Business

Our Operations

     Flat Roll Division

     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 2003 we actually produced approximately 2.4 million tons.
We commenced construction of our flat-roll 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 the 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 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 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 hot briquetted iron that our Iron Dynamics
subsidiary began to produce during 2003 or the liquid pig iron that we hope to
begin producing during 2004 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.

     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 by those customers. To
an ever increasing extent, 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
also now supply our new Jeffersonville, Indiana galvanizing facility with
cold-rolled material.

                                       8


     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.

     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.

                                       9


     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.

     New On-Site Coating Facility

     Our new $25 million on-site paint line expansion, located immediately
adjacent to our existing cold mill building, was completed during 2003 and has
an estimated 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 receives
material directly from our other processing lines and is 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 and on-line color matching, in-line tension leveling, direct
heat clean air catenary ovens and a thermal recuperative oxidizer.

     We believe that we are 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.

     New 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 an estimated
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, therefore, creates 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 helped us to facilitate a rapid start-up in July 2003. This facility
enables us to continue to serve existing cold rolled galvanized customers, whose
needs we might have otherwise been unable to meet. The Ohio River location of
this facility also creates opportunities for market expansion into other
geographic regions. Our Butler cold mill provides the new Jeffersonville
facility with cold rolled material.

     Structural and Rail Division

     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 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 were able to begin to offer a broad array of wide flange beams and
H-piling structural steel products during 2003, and, during 2003, we were also
able to commission most of the rest of our structural steel product line, except
for 6 inch and 36 inch beams which we hope to commission during the first
quarter of 2004. In addition, we performed casting trials for the production of
standard rail products during the first quarter of 2003, and, since that time
have successfully run product through the breakdown mill, tandem mill, cooling
bed and straightener. We anticipate having finished rail product during the
second quarter of 2004, which we will provide to the railroad companies to be
tested and monitored for product evaluation. This evaluation process may take
between six and nine months.

     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 type of scrap required for the production
of structural steel and rail products is generally of a cheaper and less
expensive grade than that required for the production of flat-rolled steel. 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.

                                       10


     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 to 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 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. More recently, and increasingly so during the
last half of 2003 and thus far during 2004, with no immediate prospects for
prices to abate, scrap costs have accelerated to historic highs, threatening one
of the principal elements of the mini-mills' traditional lower cost
structure--the cost of its metallic raw material. 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 the effects of high scrap prices and 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.

     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. The direct reduced iron, or DRI, is then compacted by
briquetters to form hot briquetted iron, or HBI, which is stable and can be
immediately used in our melting furnaces or stockpiled for later use. 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 Flat Roll Division's
steelmaking operations at Butler.

                                       11


     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 that
existed at that time. These factors, during that period, 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 improved production technology, coupled with our
ability to recycle waste materials as part of our raw material mix, and the then
increasingly higher price of scrap, made the restart and operation of this
production facility feasible. During 2003, we spent approximately $13 million to
further modify and refine the process, including the installation of three
briquetting machines, which enable us to stockpile iron briquettes or hot
briquetted iron (HBI), after reduction in the rotary hearth furnace, for use
directly as an alternate metallic feed stock in our Flat Roll Division's
steelmaking operations. In connection with the liquid pig iron conversion
process, the briquettes would first be liquefied and the hot liquid pig iron
would then be transferred in ladles to the flat-roll mill's meltshop and
combined with scrap steel in the mill's electric arc furnaces. During February
2003, we announced a restart of ironmaking operations at Iron Dynamics and,
during December 2003, we produced 15,100 tonnes of HBI. We anticipate ramping up
production of HBI to approximately 30-35,000 tons per month, by the end of the
second quarter of 2004, all of which we intend to use at our Flat Roll Division.
We have not yet restarted the smelting end of the Iron Dynamics process, the
conversion of HBI into liquid pig iron, but we anticipate restarting the
submerged arc furnace by the end of the first quarter or the beginning of the
second quarter of 2004.

     As of December 31, 2003, our equity investment in the Iron Dynamics project
was $185 million.

     Bar Products Division

     Pittsboro, Indiana Bar Mill

     We purchased our Pittsboro, Indiana bar mini-mill from Qualitech Steel SBQ
LLC in September 2002, and we are in the final phase of a $75 to $80 million
program to upgrade and retrofit the mill to produce a broad array of merchant
quality, or MBQ, bars and shapes and reinforcing bar products, as well as
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 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 have added 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.

     We began melting and casting operations in mid-December and began shipping
some limited products by year-end 2003. We are currently producing larger sizes
MBQ and SBQ bars and expect the arrival and installation of equipment during the
first quarter of 2004 which will enable us, during the second quarter, to begin
production of the smaller rounds, angles, flats, channels and similar products.
We expect that the Pittsboro facility will have a capacity of approximately
500,000 to 600,000 tons per year.

     New Millennium Facility

     In the first quarter of 2003, we increased our ownership percentage in our
consolidated New Millennium Building Systems subsidiary from our pre-existing
46.6% ownership interest to 100%, 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 and our purchase of the remaining 6.8% stake
owned by some of New Millennium's managers. After completion of the final
purchases, and including our original investment, we have invested approximately
$14 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 Flat Roll Division supplies a majority of the hot-rolled
steel utilized in New Millennium's manufacturing operations.

                                       12


     Products and Customers

     Flat Roll Division

     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
2002 and 2003, we produced 849,000 tons and 1.1 million tons of these lighter
gauge hot-rolled products, respectively. Our new 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
2003, 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.

     Customers. The following tables show information about the types of
products we produced and the types of customers we sold to in 2002 and 2003:



                                                                                           2002             2003
                                                                                           ----             ----
                                                                                                        
         Products:
         Hot band ..............................................................             43%              48%
         Pickled and oiled......................................................             11%              10%
         Cold-rolled............................................................             13%               8%
         Hot-rolled galvanized..................................................             17%              16%
         Cold-rolled galvanized.................................................             12%              14%
         Post anneal............................................................              4%               4%
                                                                                            ---              --- 
              Total.............................................................            100%             100%
                                                                                            ===              === 

         Customers:
         Service center (including end-user intermediaries).....................             88%              84%
         Pipe and tube..........................................................              4%               5%
         Original equipment manufacturer........................................              8%              11%
                                                                                            ---              --- 
              Total.............................................................            100%             100%
                                                                                            ===              === 


     During 2003, we sold our products to approximately 190 customers. In 2003,
our largest customers were Heidtman Steel, New Process Steel and Straightline,
which in the aggregate accounted for approximately 23% of our total net sales.
Heidtman accounted, individually, for approximately 18%, 17% and 13% of our net
sales in 2001, 2002 and 2003, 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 7% of our total net sales in 2003.

                                       13


     Structural and Rail Division

     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:



         Products                                                Markets
         --------                                                -------

                                                               
        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


     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 2004, we rolled approximately 55,000
tons and shipped approximately 67,000 tons of product. We have also initiated
certain value added services for the Midwestern fabricator market, including
exact length and exact piece count capabilities.

     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. A majority of our
structural steel products are sold to service centers.

     The marketplace for steel rails in the United States and Canada is
relatively small, approximately 800,000 tons in 2002, 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.

     Bar Products Division

     Products. 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.

                                       14


     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.

     New Millennium Facility

     Products. New Millennium fabricates trusses, girders, steel joists 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

     Flat Roll Division

     Our hot-rolled products compete with many North American integrated
hot-rolled coil producers, such as U.S. Steel's plants near Detroit, Michigan,
Granite City, Illinois, Gary, Indiana, Dravosburg, Pennsylvania and Fairfield,
Alabama; Ispat Inland Inc.'s plant in East Chicago, Indiana; 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, Acme Steel's rolling facility in Chicago and the former
Bethlehem Steel plants in Burns Harbor, Indiana and Sparrow's Point, Maryland.
We also compete with companies that convert steel slabs into sheet steel, such
as Duferco Steel in Farrell, Pennsylvania. As a result of the integrated mills'
lesser dependence on steel scrap as a raw material than mini-mills, and as a
result of the consolidations that have occurred over the past year in the U.S.
steel industry, including the emergence of relaxed union work rules and lower
capital structures, many of these integrated mills are beginning to have cost
structures closer to those of the mini-mills, rendering them more competitive
than traditionally so.

     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.

     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.

     Structural and Rail Division

     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; and Bayou Steel in Laplace, Louisiana. The Nucor mini-mills and the
TXI-Chaparral mini-mills accounted for approximately 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.

                                       15


     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, formerly a subsidiary of Bethlehem Steel
Corporation, now ISG, 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.

     Bar Products Division

     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.

     Sources, Availability and Cost of Scrap and Scrap Substitute

     Our principal raw material is scrap metal derived from, among other sources
"home scrap," generated internally at steel mills themselves; industrial scrap,
generated by excess steel trimmed or produced during manufacturing; and
"obsolete" scrap such as 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 mini-mill
steelmaking process, traditionally comprising approximately 80-85% of the
metallic melt mix in electric arc furnace steelmaking, in contrast to integrated
mill steelmaking, where the proportion of scrap has traditionally been
approximately 20%. Depending upon the carbon content of scrap substitute
material that may be available from time to time, and the relative cost of such
material, the percentage of scrap used in our steelmaking operations could be
reduced to the range of 60% or less.

     As it relates to final product quality, electric arc furnace steel
producers 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 is generally more expensive and
takes the form of No. 1 dealer bundles, No. 1 factory bundles, busheling, and
clips. Such low residual scrap is generally more expensive. The balance of the
melt mix can then consist of 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 can impact scrap prices, the most critical of which, until
recently, was the level of U.S. steel production. The U.S. has generally been a
net scrap exporter. Generally, as domestic steel demand increased, so did scrap
demand and resulting scrap prices. The reverse was also normally but not always
true, with scrap prices following steel prices downward where supply exceeded
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, starting during the latter part of 2002 and
continuing through 2003 and into 2004, the price of scrap has risen sharply
upward, largely as a result of foreign scrap demand, particularly from China, a
weak U.S. dollar that makes U.S. scrap exports more attractive, and relatively
static if not limited scrap availability in the U.S. due to a weak economy and
the shrinking domestic manufacturing base. Scrap exports from the U.S. were
approximately 12 million metric tons in 2003, up 35% from 8.9 million tons in
2002. These factors have driven scrap prices to their highest levels in decades.
In September 2003, the price of No. 1 factory bundles, a key scrap commodity,
was approximately $166 per ton. The same commodity cost $280 per ton in February
and $310 in early March 2004.

                                       16


     We believe that the demand for low residual scrap will continue to 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, and especially due to foreign
scrap demand. As a result, in order to maintain an available supply of scrap at
competitive market prices, we seek to maintain multiple strong and dependable
sources through which to competitively 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 were able to ensure a stable scrap supply for our
Flat Roll and Structural and Rail Divisions through a scrap supply agreement
with OmniSource Corporation, one of the largest suppliers of scrap in the
nation. However, we have determined that in the current scrap environment we
would be better off with multiple available sources of supply, including the
development of our own scrap purchasing capability, and with the flexibility to
develop new relationships and supply agreements with third parties and certain
scrap generators. Accordingly, we and OmniSource have amicably terminated our
scrap supply agreement, effective March 31, 2004. We intend, however, to
continue purchasing scrap from OmniSource as one of our major suppliers.

         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. Historically, we have used approximately 15% by
weight of scrap substitutes in our melt mix, mainly solid and generally imported
pig iron. During 2003, we consumed approximately 364,000 tons of scrap
substitutes, of the 3.4 million tons of metallics that we melted in our electric
arc furnaces. 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 we will utilize all of Iron Dynamics' scrap substitute
product output, whether HBI or liquid pig iron, which, at full production we
estimate to be approximately 360,000 tonnes of liquid pig iron per year.

     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, worldwide steel demand, and levels of steel imports. The
steel industry has also been affected by various company-specific factors, such
as a company's ability or inability to adapt to and deal with technological
change, plant inefficiency and high labor costs. The U.S. is a net steel
importer, requiring that approximately 17% of its domestic steel consumption be
imported.

     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, the effect of a strong dollar, 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 and into early
2003, however, largely as a result of softening product demand brought about by
a still weak economy and war concerns. The shortness of the previous up cycle,
poor cost controls and high fixed costs for many steel producers, an absence of
any supply or pricing discipline by individual producers, and the strength of
the U.S. dollar that brought exports streaming into the country created the
conditions for more than 30 bankruptcies among U.S. steel producers, mainly
integrated producers, between 2001 and 2003.

     These economic dislocations, rationalization of production capacity and
supply due to steel industry consolidation, a weakened U.S. dollar, high ocean
freight rates and strong foreign, mainly Chinese and Asian, steel demand and
scrap demand, combined during 2003 to substantially reduce steel imports into
the U.S., thus constraining the supply of new steel for domestic consumption.
Moreover, by rendering exports of steel abroad more attractive, this has also
acted to constrain the U.S. supply of scrap for domestic consumption. The result
has not only been a dramatic increase in U.S. steel pricing toward the end of
2003 and into 2004, but it has also led to unprecedented increases in the cost
of steel scrap.

                                       17


     The U.S. steel industry experienced many changes during 2003 as a result of
consolidation. In 2001, the top three U.S. producers of flat-rolled sheet had a
32% market share. For 2003, the top three (U.S. Steel, ISG and Nucor) had a
market share of 55%. 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 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 acquired the bankrupt assets of National Steel.
These and similar developments caused formerly idled or inefficient production
facilities to come back into the market with substantially lower capital costs,
with lower renegotiated labor costs and work rules, 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, with the integrated mills' lesser dependence on ever more expensive
scrap as a percentage of their metallics melt ix than the mini-mills, the
traditional mini-mill cost advantage of steel scrap over integrated mill
ironmaking has also begun to invert.

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. During the
1990s, the situation was exacerbated by 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 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.

     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%. In June 2004, the Department of
Commerce will conduct a required "sunset review" regarding the countervailing
duty orders and/or suspension agreements against Russia, Japan and Brazil to
decide whether in June 2005 these orders should be extended for an additional
five years or revoked.

     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.

                                       18

     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, and other steel manufacturers, 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
these determinations were upheld on appeal in February 2004 by the Court of
International Trade, thus ending these cases. On October 17, 2002, the ITC
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, which remanded the cases to the ITC
for further determination. The ITC's response is due March 29, 2004.

     Structural Steel and Rail

     In addition to the various hot and cold flat-rolled steel cases, a number
of structural steel producers 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.

     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.
                                       19


     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.

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

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 involved (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 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 were to be cumulative with any existing tariffs or quotas
in the anti-dumping cases. They were 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 was not
appealable to U.S. courts. However, foreign governments appealed to the World
Trade Organization, or WTO, and the European Union, Japan and other countries
prosecuted such appeals. President Bush rescinded the Section 201 tariffs,
however, in December 2003, after the WTO ruled that the tariffs violated
international law and various other nations threatened to impose retaliatory
tariffs on U.S. exports and exerted other political pressure. While the Section
201 tariffs, coupled with certain major steel mill closures related to pending
bankruptcies, may have caused steel prices to increase substantially in the
first three quarter of 2002, to approximately $400 per ton, from their depressed
levels in the low $200's per ton at the end of 2001, prices nonetheless eased
back into the $260-$270 per ton range by May 2003 as a result of post-bankruptcy
capacity restarts and weak U.S. steel demand. The negative impact of the
rescission of the Section 201 tariffs has been mitigated by a number of factors
that have independently led to a strengthening of U.S. steel pricing, including
a weakened U.S. dollar, substantial increases in ocean freight and an increase
in the global demand for steel, primarily in China.

                                       20


     The rescission of the Section 201 tariffs does not affect the anti-dumping
duties imposed through the ITC processes. In announcing its December 2003
rescission action, the Bush administration affirmed its commitment to monitor
steel imports and to file anti-dumping and countervailing duty petitions if it
determines that unfairly traded steel imports adversely impact, or threaten to
adversely impact, financial results. During 2004, the ITC will also commence a
required five-year review to determine whether to continue or modify
anti-dumping findings against hot-rolled steel from Japan, Brazil and Russia. In
addition, the existing Comprehensive Steel Trade Agreement with Russia, under
which Russia voluntarily limited its exports to the U.S. of steel not otherwise
covered by anti-dumping orders, will expire in July 2004.

     The U.S. is also conducting discussions at the Organization of Economic
Cooperation and Development with the aim of reducing or eliminating the
subsidization of global inefficient steel production.

     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. 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. These have likewise
now been rescinded.

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.

     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 was 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 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, such as at the present time, 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, actually experience lower raw material metallic costs
than mini-mills, thus further compressing the historical cost differentials
between integrated and mini-mill steelmaking.

                                       21


The Flat-Roll Steel Market

     The flat-roll steel market represents the largest steel product group.
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 or AISA, for the five years from 1998 through
2002.



                                                                                Years Ended December 31,
                                                                                ------------------------
                                                                        1998     1999     2000    2001     2002
                                                                        ----     ----     ----    ----     ----
                                                                                 (millions of net tons)
                                                                                              
U.S. Shipments:
Hot-Rolled(1).................................................           25.3     27.7     29.3     27.8    28.1
Cold-Rolled(2)................................................           15.8     16.8     18.0     14.8    15.1
Coated(3).....................................................           22.8     24.3     23.9     22.2    22.8
                                                                         ----     ----     ----     ----    ----

     Total....................................................           64.0     68.8     71.2     64.8    66.0
                                                                         ====     ====     ====     ====    ====

Percentage of Total U.S. Steel Shipments......................            62%      65%      65%      66%     66%


--------------
(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.

     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.

                                       22


The Structural Steel Market

     The structural steel market is a relatively small part of total U.S. steel
shipments. In 2000, 2001 and 2002, structural steel shipments were 6.7 million
tons, 6.9 million tons and 6.7 million tons, respectively, and averaging 7% 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 1999 through 2002.

The Rail Market

     Rail shipments in 2001 and 2002 were approximately 644,000 tons and 791,000
tons, respectively, with standard rail averaging approximately 80% of the market
over 2000, 2001 and 2002 and premium or head-hardened rail averaging 20% over
2000, 2001 and 2002. 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 2002, 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 AISI, apparent rebar supply in the United
States was approximately 7 million tons in each of 2001 and 2002, 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 2001 and 2002. According to the AISI, apparent supply of
light structural shapes, also characterized by a major dimension of less than 3
inches, averaged approximately 4 million tons annually for each of the foregoing
two years.

     Accordingly to AISI data, apparent SBQ supply has averaged approximately 7
million tons nationally over the 2001 and 2002 period.

Energy Resources

     Electricity

     With respect to our Butler mini-mill, our electric service contract with
American Electric Power, or AEP, extends through December 31, 2007. The contract
designated 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 elected to enter into any long term electricity
supply agreement for this mini-mill, and have been able to effectively use spot
market pricing by tailoring our usage to lower cost operating hours. Once we
enter into a longer term agreement, however, 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 have preliminarily agreed to the terms of an energy
supply contract with Cinergy, under the terms of which we will be purchasing
electricity at market rates. The contract is pending approval by the Indiana
Utility Regulatory Commission.

                                       23


     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 with 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
purchased gas at market prices at commencement of operations and are now
minimizing 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, 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.

     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.

                                       24


     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 approximately 1,400 employees at December 31,
2003. None of Steel Dynamics' employees are represented by labor unions. We
believe that our relationship with our employees is good.

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, is periodically exacerbated by weakening of the
economies of certain foreign steelmaking countries, and is further intensified
during periods when the U.S. dollar is strong relative to foreign currencies.
Economic difficulties in these countries or a reduction in demand for steel
produced by these countries, when those events occur, results in lower local
demand for steel products in these countries and tends 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, resulted in an
abatement of some steel imports during 2002 and 2003, these protective measures
were only temporary, many foreign steel manufacturers were granted exemptions
from the application of these measures and President Bush, in December 2003,
rescinded a substantial part of these protective measures, the so-called Section
201 tariffs, as a result of a November 10, 2003 Word Trade Organization ruling
declaring that the tariffs on hot-rolled and cold-rolled finished steel imports
violated global trade rules, and as a result of economic and political pressures
from foreign governments, including threats of retaliatory tariffs on U.S.
exports. Moreover, there are products and countries that were not covered by
these protective measures, and imports of these exempt products or of products
from these countries may have an additional adverse effect upon our revenues and
income. In any event, when any of these remaining measures expire or if they are
further relaxed or repealed, 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 duties or tariffs, the resurgence of substantial imports of
foreign steel could again create downward pressure on U.S. steel prices.

                                       25


     Certain 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. Moreover, in 1999 the United States and
Russia entered into a five-year comprehensive quota agreement with annual
quantitative limitations on imports into the United States by Russian steel
producers with respect to, among other things, flat-rolled, structural, rail,
and bar steel products. This five-year agreement will terminate on July 12, 2004
and it is not expected that the agreement will be renewed. Given excess capacity
in Russia, the termination of this agreement may lead to import surges of steel
products from Russia which could have adverse effects upon U.S. steel prices.

     Excess global capacity in the steel industry and the availability of
     competitive substitute materials has resulted in intense competition and
     may continue to exert downward pressure on our pricing

     The highly competitive nature of the industry, in part, exerts downward
pressure on prices for some of our products. 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 have traditionally been other mini-mills, which may have
cost structures and management cultures more similar to ours than integrated
mills. However, we also compete with many integrated producers of hot-rolled,
cold-rolled and coated products, many of which are larger, have substantially
greater capital resources and have cost structures that have become much more
competitive. Largely as a result of the consolidation within the U.S. steel
industry brought about by bankruptcies and the emergence of a number of
integrated steel producers with lower capital costs, new or renegotiated union
work rules and labor costs, the elimination or reduction of health care and
retirement legacy costs, and the introduction of more incentive based
compensation and a more decentralized management structure, these integrated
producers, most notably International Steel Group and U.S. Steel, have cost
structures that are more competitive. Likewise, with their lesser dependence on
scrap as a major component of their melt mix, these producers may also have a
raw material cost advantage over the currently high cost of scrap that we must
absorb. The emergence of these producers further increases the competitive
environment in the steel industry and may contribute to future price declines.

     In addition, global overcapacity in steel manufacturing has had a negative
impact on U.S. steel pricing and is likely to continue to persist and could have
a negative impact on our sales, margins and profitability. 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 an excess of manufacturing capacity. Increasingly, this
overcapacity, when combined with periodic high levels of steel imports into the
United States, exerts downward pressure on domestic steel prices, including the
prices of our products, and has resulted, at times, in a dramatic narrowing, or
with many companies the elimination, of gross margins.

     In the case of certain product applications, we and other steel
manufacturers compete with manufacturers of other materials, including plastic,
aluminum, graphite composites, glass, wood and concrete.

     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, influenced by a combination of factors, including periods of economic
growth, or recession, strength or weakness of the U.S. dollar, worldwide
production capacity, levels of steel imports and applicable tariffs, as well as
general economic conditions and 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. 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.

                                       26


      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.

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, 2003, our
investment in the Iron Dynamics project was $185 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. 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) exceptionally high energy costs;

      (3) low production quantities 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-rolled mini-mill in July 2001 higher than our cost of
purchasing and using then lower priced and available steel scrap. On July 10,
2002, we announced that we would begin experimental production trials in the
fourth quarter of 2002, we continued to make refinements to our systems and
processes, and in fact began the production trials in the fourth quarter as
planned. We successfully completed these trials and concluded that improved
production technology, coupled with our new ability to recycle waste material
inputs and the increasingly high cost of scrap made a restart of this production
facility feasible. During 2003, we spent approximately $13 million of additional
capital on these modifications and refinements to the Iron Dynamics process. The
restart commenced in December 2003, involving the front part of the Iron
Dynamics process, the production of direct reduced iron on a rotary hearth
furnace, and the compaction of the DRI into hot briquetted iron, or HBI. During
December 2003, we produced 15,100 tonnes of HBI, with an acceptable metallics
content and anticipated cost structure that compares favorably to scrap and
alternative pig iron. We have not yet restarted the back-end of the Iron
Dynamics process, the conversion of the HBI into liquid pig iron. If we
determine 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 of liquid pig iron as well during the second quarter
of 2004.

      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, whether DRI, HBI or liquid pig iron, in the
quantities and for costs that will enable it to be cost competitive with scrap
or with purchased pig iron. Moreover, 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.

      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, 2003, approximately 90% 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.

                                       27


      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, which have reached historically high
levels. In September 2003, the price of No. 1 factory bundles, a key scrap
commodity, was $166 per ton. In February 2004, the price of No. 1 factory
bundles was $280 per ton. Our principal raw material is scrap metal, and 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.

      A combination of a weak U.S. dollar, exceptionally strong Chinese and
global demand for scrap, and lower production of domestic scrap due to a weak
manufacturing economy and the continued loss of manufacturing to foreign
competition have driven scrap offshore at exceptionally high prices, have
reduced the available domestic scrap supply, and have caused the price of
domestic scrap to double within the past several months. Such scrap costs are
unsustainable, even with the sharply increased pricing for our manufactured
steel, and could erode or eliminate our gross margins. During February 2003, we
announced the imposition of scrap surcharges, keyed to a published scrap index,
on our customers with orders covering multiple months and quarters, and we
believe that these will largely be accepted. We have no assurance, however, that
this will continue to be so, or that customers will agree to pay ever higher
prices for our steel products, sufficient for us to maintain our margins,
without resistance or the selection of other suppliers or alternative materials.
If this occurs, we may lose customers, we may be unable to pass these higher
scrap costs on to our customers, and we may suffer a loss of earnings. Moreover,
some of our integrated steel producer competitors are not as dependant as we are
on scrap as a major part of their raw material melt mix, which, during periods
of high scrap costs relative to the cost of blast furnace iron used by the
integrated producers, even with the higher costs they must currently pay for
iron ore, coke, coking coal and other raw materials used in their ironmaking
processes, give them a current raw material cost advantage over mini-mills. In
addition, our operations require substantial amounts of other raw materials,
including various types of 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 purchasing agreement with OmniSource
Corporation, one of the largest scrap processors and brokers in the Midwest, to
purchase steel scrap for our mills. We have determined, however, that in the
current scrap environment we would be better off having multiple available
sources of scrap supply, including our ability to develop our own scrap
purchasing capability, with the added flexibility to develop new relationships
and supply agreements with third parties and certain generators of scrap.
Accordingly, we and OmniSource have amicably terminated our scrap supply
agreement, effective March 31, 2004. We plan to continue to purchase scrap from
OmniSource as one of our major suppliers. We may be unable, however, to realize
the anticipated benefits of our new scrap purchasing arrangements, and we may
not be able to secure substitute arrangements for steel scrap on the same or
better terms as those that were available from OmniSource. For 2003, we
purchased 2.6 million tons of steel scrap and scrap substitutes from OmniSource,
which represented approximately 89% of our total scrap purchased during this
period.

      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, the termination of our contract, or in connection with the
terms of any future 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 OmniSource may be viewed as a related party. The
chief operating officer of OmniSource is also a member of our board of directors
and is a substantial 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.

      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. In 2003, our Butler mini-mill's top ten customers accounted for
approximately 42% of our total net sales. During this period, our largest
customer, Heidtman, accounted for approximately 13% 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.

                                       28


      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.

      Start-up and operating risks associated with the construction of our
      Pittsboro, Indiana bar products mill could result in materially greater
      operating costs than those we have anticipated

      Start-up and operating risks associated with the retrofitting and
operation of our Pittsboro, Indiana bar products mill may result in materially
greater operating costs than we initially expected. We are subject to all of the
general risks associated with the construction and start-up of a new or
reconstructed mini-mill. These risks involve construction delays, cost overruns
and start-up difficulties. We could also experience operational difficulties
after start-up that could result in our inability to operate our bar bill at
full or near full capacity.

      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. Moreover, any interruption in production capability may
require us to make significant capital expenditures to remedy the problem, which
could have a negative effect on our profitability and cash flows. We may also
sustain revenue losses in excess of any recoveries we make under any applicable
business interruption insurance coverages we may have. In addition to such
revenue losses, longer-term business disruption could result in a loss of
customers, which could adversely affect our business, results of operations and
financial condition.

      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 flat-roll mini-mill, Columbia City structural and
rail mini-mill and our Pittsboro bar products 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 and Rail
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:

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

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

      o the potential disruption of our ongoing business;

      o the diversion of resources;

      o the inability of management to maintain uniform standards, controls,
        procedures and policies;

      o the difficulty of managing the growth of a larger company;

                                       29


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

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

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

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

      o 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.

      We may be delayed in the construction, and start-up or operation of our 
Pittsboro, Indiana mini-mill

      In September 2002, we purchased a special bar quality mini-mill located in
Pittsboro, Indiana for $45 million, and we are in the process of completing
between $75 and $80 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 also producing merchant bars and shapes and reinforcing
bar products. We started melting and casting operations in December 2003, began
shipping limited products by year-end 2003, are currently producing larger MBQ
and SBQ bars, and expect equipment to arrive and be installed in the first
quarter 2004 to enable us to begin to produce the smaller rounds, angles, flats,
channels and products of that nature during the second quarter. It may cost more
than the approximately $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 construction and start-up delays and
operational risks associated with the start-up of a new mini-mill, either in
Pittsboro mini-mill's present configuration or in connection with its
conversion. These factors could result in materially greater operating costs
than we initially expected. We may also be delayed as a result of unforeseen
circumstances or events beyond our control.

      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 materials and 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 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, 2003, we had indebtedness of $111 million under our
senior secured credit facility, $300 million in connection with our 9 1/2%
senior unsecured notes due 2009, and $115 million in connection with our 4%
convertible subordinated notes due 2012.

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

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

                                       30


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

      o 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;

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

      o 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 business requires substantial capital investment and maintenance 
     expenditures, which we may be unable to provide

     Our business strategy may require additional substantial capital
investment. We require capital for, among other purposes, managing acquired
assets, acquiring new equipment, maintaining the condition of our existing
equipment, completing future acquisitions and maintaining compliance with
environmental laws and regulations. To the extent that cash generated internally
and cash available under our credit facilities is not sufficient to fund capital
requirements, we may require additional debt and/or equity financing. However,
this type of financing may not be available or, if available, may not be on
satisfactory terms. Future debt financing, if available, may result in increased
interest and amortization expense, increased leverage and decreased income
available to fund further acquisitions and expansion. In addition, future debt
financing may limit our ability to withstand competitive pressures and render us
more vulnerable to economic downturns. If we fail to generate or obtain
sufficient additional capital in the future, we could be forced to reduce or
delay capital expenditures and acquisitions, sell assets or restructure or
refinance our indebtedness.

     Our senior secured credit agreement, the indenture relating to our 9 1/2%
     senior unsecured notes due 2009 and the indenture relating to our 4%
     convertible subordinated notes due 2012 contain restrictive covenants that
     may limit our flexibility

     Restrictions and covenants in our existing debt agreements, including our
senior secured credit agreement, the indenture relating to our 9 1/2% senior
unsecured notes due 2009, and the indenture relating to our 4% convertible
subordinated notes due 2012 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:

      o incur additional indebtedness;

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

      o repurchase or redeem capital stock;

      o make investments;

      o create liens and enter into sale and leaseback transactions;

      o make capital expenditures;

      o enter into transactions with affiliates or related persons;

      o issue or sell stock of certain subsidiaries;

      o sell or transfer assets; and

      o participate in certain joint ventures, acquisitions or mergers.

                                       31


     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.

     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:

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

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

      o we could be forced into bankruptcy or liquidation.

      o 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
unsecured 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:

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

      o downward revisions in securities analysts' estimates;

      o material announcements by us or our competitors;

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

      o governmental regulatory action; or

      o 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.

                                       32


     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. If all notes
are converted, an additional 6,762,874 shares of our common stock will be
issued, which has the effect of diluting earnings per share. Moreover, 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 February 20,
2004, we had 49,007,605 shares of common stock outstanding including 10,007, 565
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, 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
December 31, 2003, options to purchase 2,338,408 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 building in Fort Wayne,
Indiana 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 lease 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, 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. The Flat Roll Division's 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.

     Iron Dynamics' facility is located on approximately 26 acres, within the
footprint of our Butler, mini-mill site. The facility contains approximately
160,000 square feet under roof.

     Our Structural and Rail Division is situated on a 611-acre tract of land in
Columbia City, Indiana.

     Our Bar Products Division is situated on a 200-acre tract of land along
County Road 225 East, south of Interstate 74 in Pittsboro, Indiana. The mill
contains approximately 515,000 square feet under roof.

     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

     None.

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

     None.

                                       33


                                     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 reported high and low sales prices of our common stock for the two most
recent fiscal years are set forth in the following table:


     2003                                           High                 Low
     ----                                           ----                 ---
       First Quarter                             $  13.40             $  9.75
       Second Quarter                               14.57               11.10
       Third Quarter                                16.45               13.33
       Fourth Quarter                               24.13               15.20

     2002                                           High                 Low
     ----                                           ----                 ---
       First Quarter                             $  16.89             $ 11.40
       Second Quarter                               19.30               15.25
       Third Quarter                                18.40               10.61
       Fourth Quarter                               14.69               11.80


     As of February 20, 2004 we had 49,007,605 shares of common stock
outstanding and held beneficially by approximately 8,100 stockholders. Because
many of the shares were held by depositories, brokers and other nominees, the
number of registered holders (approximately 1,700) 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. Pursuant to this program the company
acquired 3.9 million shares of its common stock at an average price of $12 per
share in open market purchases, of which 16,000 shares were purchased during the
three years ended December 31, 2003. As of December 31, 2003, approximately
941,000 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. 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.

                                       34


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, 2003 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:

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

      o 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. For the
        year ended December 31, 2001, earnings were insufficient to cover fixed
        charges by $7.3 million.

      o For purposes of reporting our shipments and production, "Steel"
        operations include our Flat Roll Division, Structural and Rail Division
        and Bar Products Division and "Other" operations include New Millennium
        Building Systems, Paragon Steel Trading and Iron Dynamics.

      o "Prime tons" refer to hot bands produced at our Flat Roll Division,
        which meet or exceed quality standards for surface, shape and
        metallurgical properties. "Prime ton percentage" refers to the ratio of
        prime hot band tons shipped for the period to total hot band tons
        shipped for the period.

      o "Effective capacity utilization" is the Flat Roll Division's ratio of
        tons produced for the operational period to the operational period's
        capacity. We used an annual production capacity of 2.2 million tons.
        During 2002 and 2003, the Flat Roll Division produced 2.4 million tons
        to meet market demand.

                                       35





                                                                                 Years ended December 31,
                                                       -----------------------------------------------------------------------
                                                           2003           2002          2001           2000            1999
                                                        -----------    ----------     ---------      ----------     ----------
                                                                (dollars in thousands, except per share and per ton data)
                                                                                                     
Operating data:
Net sales ...........................................   $   987,248    $   864,493    $   606,984    $   692,623    $   618,821
Cost of goods sold ..................................       827,264        638,860        522,927        533,914        487,629
                                                        -----------    -----------    -----------    -----------    -----------
   Gross profit .....................................       159,984        225,633         84,057        158,709        131,192
Selling, general and administrative expenses ........        63,377         67,266         58,132         53,306         42,441
                                                        -----------    -----------    -----------    -----------    -----------
   Income from operations ...........................        96,607        158,367         25,925        105,403         88,751

Interest expense ....................................        34,493         30,201         18,480         20,199         22,178
Gain from debt extinguishment .......................        13,987              -              -              -              -
Other expense .......................................           664          3,689          2,333            719          1,294
                                                        -----------    -----------    -----------    -----------    -----------
    Income before income taxes ......................        75,437        124,477          5,112         84,485         65,279

Income tax expense ..................................        28,289         46,600          1,968         30,690         25,849
                                                        -----------    -----------    -----------    -----------    -----------
     Net Income .....................................   $    47,148    $    77,877    $     3,144    $    53,795    $    39,430
                                                        ===========    ===========    ===========    ===========    ===========

Basic earnings per share:
Net income ..........................................   $       .99    $      1.65    $       .07    $      1.15    $       .82
                                                        ===========    ===========    ===========    ===========    ===========
Weighted average common shares outstanding ..........        47,829         47,144         45,655         46,822         47,914
                                                        ===========    ===========    ===========    ===========    ===========

Diluted earnings per share:
Net income ..........................................   $       .98    $      1.64    $       .07    $      1.15    $       .82
                                                        ===========    ===========    ===========    ===========    ===========
Weighted average common shares and share equivalents
  outstanding .......................................        48,127         47,463         45,853         46,974         48,153
                                                        ===========    ===========    ===========    ===========    ===========

Other financial data:
Operating profit per net ton shipped ................   $        37    $        74    $        23    $        65    $        58
Start-up costs ......................................         7,862         13,242         19,459         19,852         18,958
Capital expenditures ................................       137,061        142,600         90,714        110,379        126,673
Ratio of earnings to fixed charges ..................          2.54x          3.32x          0.79x          2.78x          2.48x

Other data:
Shipments (net tons)
   Steel operations .................................     2,799,760      2,357,528      1,945,479      1,913,069      1,869,714
   Other operations .................................       206,718        204,153        183,648         52,200          6,692
   Intercompany .....................................      (189,230)      (171,339)      (165,525)       (45,901)        (6,692)
                                                        -----------    -----------    -----------    -----------    -----------
     Consolidated ...................................     2,817,248      2,390,342      1,963,602      1,919,368      1,869,714
                                                        ===========    ===========    ===========    ===========    ===========

Steel operations production (net tons) ..............     2,950,249      2,488,342      2,015,991      2,031,025      1,938,234
Prime ton percentage - hot band .....................          96.3           94.7           95.9           93.9           94.2
Effective capacity utilization - hot band ...........         109.4          107.9           91.6           92.3           88.1
Man-hours per hot band net ton produced .............           .30            .31            .37            .37            .41
Shares outstanding at year end, net of shares held in
  treasury (000s) ...................................        48,645         47,581         45,743         45,505         47,971
Number of employees .................................         1,397            869            676            651            650

Balance sheet data (end of period):
Cash and cash equivalents ...........................   $    65,430    $    24,218    $    78,241    $    10,184    $    16,615
Working capital .....................................       254,631        197,353        194,093        165,915        155,226
Net property, plant and equipment ...................     1,001,116        929,338        852,061        807,322        742,787
Total assets ........................................     1,448,439      1,275,696      1,180,098      1,067,074        991,556
Long-term debt (including current maturities) .......       607,574        555,450        599,924        532,520        505,963
Stockholders' equity ................................       587,233        521,660        418,575        418,784        391,370




                                       36


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 Bar Products 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 the last two years. 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. (Heidtman), purchased $132.8 million of our flat-rolled products,
or 13% of our consolidated net sales, during 2003. Sales from our Flat Roll
Division accounted for 77% of our consolidated net sales during 2003.

     During 2003, our Flat Roll Division constructed a new coil coating facility
at our Butler mini-mill at a cost of approximately $25 million. We commenced
coating operations during the later part of the fourth quarter 2003 and produced
6,000 tons. This facility has an annual estimated production capacity of 240,000
tons of coated flat-rolled products. We are currently operating at approximately
57% of capacity. 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 restarted operations
at Jeffersonville mid-year and are currently operating at approximately 87% of
our average capacity expectations. We supply the Jeffersonville facility with
steel coils from our Flat Roll Division. These additions to our Flat Roll
Division should enable us to further increase our mix of higher-margin,
value-added steel product sales.

     We began construction of our Structural and Rail Division located in
Columbia City, Indiana, in May 2001, and commenced commercial structural steel
operations during the third quarter of 2002. 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 68% of
capacity and structural steel product sales accounted for 15% of our
consolidated net sales during 2003. We expect to ship standard rail products
during the first half of 2004. The initial rail shipments will be used in a
testing capacity to be monitored by individual railroad companies for evaluation
purposes. This evaluation process may take up to 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, 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 $75 and $80 million of additional capital to
convert the facility to the production of merchant bars and shapes and
reinforcing bar products, while retaining the ability to produce special bar
quality (SBQ) steel. As of December 31, 2003, we had invested $50.7 million,
including capitalized interest. The facility's anticipated annual production
capacity is between 500,000 and 600,000 tons. On December 29, 2003, the Bar
Products Division began commissioning and successfully produced certain SBQ and
merchant bar quality (MBQ) rounds. We expect to increase our SBQ and MBQ product
offerings throughout the first half of 2004 and anticipate the addition of
angles, flats and channels during the third quarter. Our Bar Products Division
plans to market the bar products directly to end-users and to service centers
for the construction, transportation and industrial machinery markets.

     Metallic raw materials used in our electric arc furnaces represent our
single-most significant manufacturing cost and historically, has generally
accounted for between 45% and 50% of our consolidated cost of goods sold.
However, due to increasing metallic raw material costs, we believe it is likely
that this percentage will be higher during 2004. 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
through current markets, we have experienced a steady pricing increase. Metallic
raw material costs are now at historical highs. We believe this increase is
partly due to a weakened U.S. dollar, less than normal production of domestic
scrap and increased demand for these metals from foreign steel manufacturers. We
believe the volatility of the metallic market necessitates the generation of a
cost effective alternative iron source.


                                       37


     Since 1997, in an effort to reduce our exposure to the volatile 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 ironmaking 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) then 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 or pig iron. During the next year, we continued
to evaluate our systems and processes. During the fourth quarter of 2002, Iron
Dynamics successfully completed certain operating trials utilizing a modified
production process. This process may significantly reduce the eventual per-unit
cost of liquid pig iron production. Throughout 2003, we invested $13.3 million
for capital expenditures required to implement this modified production process
and Iron Dynamics restarted operations mid-November, producing approximately
15,100 tonnes of hot briquetted iron during December. Since restart, the Flat
Roll Division has successfully used these iron briquettes as a part of its
metallic raw material inputs. We intend to restart the Iron Dynamics' submerged
arc furnace during the first quarter of 2004, or early in the second quarter.
This final stage of the IDI production process involves the liquefaction of the
solid iron briquettes to produce liquid pig iron.

     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.


     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 required
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 other-than-temporary impairments of reported
investments and settlement costs from litigation efforts.

     Operating Results 2003 vs. 2002

     Net income was $47.1 million or $.98 per diluted shared during 2003,
compared with $77.9 million or $1.64 per diluted share during 2002. This
decrease in our net income during 2003 was due to dramatically increased costs
of our metallic raw materials: steel scrap and scrap substitute.

     Net Sales. During 2003, our consolidated net sales increased $122.8
million, or 14%, to $987.2 million and our consolidated shipments increased
427,000 tons, or 18%, to 2.8 million tons, compared with 2002. These increases
were due primarily to 2003 being the first full year of operations for our
Structural and Rail Division. We had structural sales to external customers of
$145.5 million and shipments of 462,000 tons during 2003, a $128.0 million
increase in sales and 401,000 ton increase in shipments from 2002. Structural
products accounted for 16% of our consolidated shipments during 2003, compared
to 3% during 2002.



                                       38


     Our average consolidated selling price decreased $12 per ton to $350 per
ton during 2003. Our Flat Roll Division accounted for 77% of our consolidated
net sales during 2003, and its pricing decreased approximately $11 per ton
compared to 2002. Domestic flat-rolled steel product pricing decreased during
the first half of 2003, compared to the last half of 2002, due in part to the
weakened economy and added domestic flat-rolled production capacity. With signs
of a strengthening US economy during the second half of 2003 through the date of
this filing, we began to experience increased demand and product pricing for
most of our steel product offerings. Our divisions currently have full order
books and we anticipate strong sales during at least the first half of 2004.

     Cost of goods sold. Cost of goods sold increased $188.4 million, or 29%,
during 2003 to $827.3 million compared with 2002. As a percentage of net sales,
cost of goods sold represented approximately 84% and 74% during the years 2003
and 2002, respectively. We experienced a narrowing of our gross margin
throughout 2003 as our average sales price per ton increased more slowly than
our average metallic raw material cost per ton, which is the most significant
single component of our cost of goods sold. Metallic raw materials represented
53% and 48% of our cost of goods sold during 2003 and 2002, respectively. We
experienced a steady increase in metallic costs from the first quarter of 2002
through the end of 2003 and we anticipated further increases during the first
half of 2004. Our metallic raw material cost increased $29 per net ton charged
during 2003, while our average consolidated sales price decreased $12 per ton.
Beginning in 2004, we announced our intention to pass some of these increased
costs associated with rising metallic prices through to our customers in the
form of a scrap surcharge tied to an indexed scrap number. We believe that this
scrap surcharge, in conjunction with a general increase in our base product
pricing and stronger demand, will result in an increase in our gross margin
during the first quarter of 2004.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $63.4 million, or 6% of net sales during 2003, as
compared to $67.3 million, or 8% of net sales during 2002. A portion of these
expenses in both years was attributable to performance-related employee
incentive programs and facility start-up costs. Costs associated with our
performance-related employee profit-sharing plan decreased $3.3 million during
2003 as compared to 2002, which was a record year for pre-tax income. During
2003, costs associated with start-up activities at our Bar Products Division,
principally, were $7.9 million compared to start-up costs during 2002 of $13.2
million, which related most significantly to our Structural and Rail Division.

     Interest Expense. Interest expense was $34.5 million during 2003, as
compared to $30.2 million during 2002, an increase of $4.3 million, or 14%. This
increase in our net interest expense during 2003 was due to a decrease of $3.6
million in interest required to be capitalized in connection with our
construction projects. Our gross interest expense remained relatively flat at
$42.3 million during 2003.

     Gain From Debt Extinguishment. In January 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. There was a provision
within the agreement that if Iron Dynamics resumed operations by January 27,
2007, and generated positive cash flow (as defined in the settlement agreement),
we would be required to make contingent future payments in an aggregate amount
not to exceed $22.0 million. During December 2003, by agreement with the Iron
Dynamics' lenders, we paid $8.0 million in cash to the IDI lenders, terminating
all of our obligations to make any additional future payments under the
settlement agreement. Our 2003 financial statements reflect an ordinary non-cash
gain of $14.0 million from the extinguishment of the $22.0 million contingent
liability.


     Other (Income) Expense. Other expense was $664,000 during 2003, as compared
to $3.7 million during 2002. During 2002, we recorded settlement costs of $4.5
million, net of insurance proceeds, in association with the NSM-related
lawsuits.

     Income Taxes. During 2003, our income tax provision was $28.3 million, as
compared to $46.6 million during 2002. Our effective tax rate was 37.5% and
37.4% for 2003, and 2002, respectively. During 2003, we realized a $1.9 million
valuation allowance that was created in 2001 for foreign tax credit
carryforwards.

     Operating Results 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. 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.



                                       39


     Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $67.3 million during 2002, as compared to $58.1
million during 2001, an increase of $9.1 million, or 16%. 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 8% 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 $46.6 million, 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 was 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.
In accordance with guidance included in FASB 145, this loss is no longer
classified as an extraordinary item in our 2002 statement of income at December
31, 2003. The loss is now included at the gross amount in selling, general and
administrative expenses.

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.

     We believe the principal indicators of our liquidity are our cash position,
excess working capital and availability of cash under our capital structure. As
of December 31, 2003, our cash and equivalents totaled $65.4 million compared
with $24.2 million at December 31, 2002. The increase of $41.2 million in cash
was primarily due to financing activities undertaken in the fourth quarter of
2003. We received net proceeds of approximately $108.8 million from the issuance
of an additional $100.0 million of our 9 1/2% senior unsecured notes due March
2009. We used $58.8 million of the net proceeds to prefund certain capital
expenditures expected to occur during the first half of 2004 and we used $50.0
million to prepay a portion of our senior secured term B loan credit facility.

     Working Capital. During 2003, our operational working capital position,
representing our cash invested in trade receivables and inventories less trade
payables and accruals increased $3.2 million to $173.2 million, as compared to
December 31, 2002. Trade receivables increased $7.5 million during 2003 to
$126.0 million, of which $124.7 million, or 99%, were less than 60 days over
due. Our largest customer is an affiliated company, Heidtman Steel, which
represented 20% of our outstanding trade receivables at December 31, 2003.
During 2003, our inventories increased $31.3 million to $184.5 million,
primarily due to the $26.3 million increase in our finished goods inventories
from the ramp-up of our Structural and Rail Division. We anticipate our trade
receivables and inventories to further increase throughout 2004, as our
Structural and Rail and Bar Products Divisions continue to ramp-up their
operations. Our trade payables increased $33.1 million during 2003, due to our
new operations and due to the increased costs of metallic raw materials. At
December 31, 2003, we owed our primary metallic raw material supplier $17.8
million more when compared to December 31, 2002.


                                       40


     Capital Expenditures: During 2003, we invested $137.3 million in property,
plant and equipment related to our new divisions and improvement projects in our
existing facilities. We invested $50.7 million, including capitalized interest,
in our Bar Products Division, $22.6 million in the completion of our Structural
and Rail Division, and $24.8 million for the addition of a paint line at our
Flat Roll Division. We also purchased a satellite galvanizing facility in March
2003, for approximately $19.0 million, which includes a potential $1.5 million
earn-out payment and we increased our ownership of New Millennium from 46.6% to
100% for approximately $8.3 million. We believe these capital investments will
increase our net sales and related cash flows as each project develops as
previously discussed in our Business Discussion.

     Capital Resources. As of December 31, 2003, $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, 2003, and
expect to be in compliance during 2004. Our 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, excluding New Millennium
Building Systems, 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, excluding New Millennium Building Systems, have
guaranteed our obligations under the senior secured credit agreement. The 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 January 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 the 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
common stock during March 2002. In addition, there was a provision within the
agreement that if Iron Dynamics resumed operations by January 27, 2007, and
generated positive cash flow (as defined in the settlement agreement), we would
be required to make contingent future payments in an aggregate amount not to
exceed $22.0 million. At December 31, 2002, the contingent future payments were
reflected as an other long-term contingent liability within our financial
statements. During December 2003, by agreement with the Iron Dynamics' lenders,
we paid $8.0 million in cash to the Iron Dynamics' lenders, terminating all of
our obligations to make any additional future payments under the settlement
agreement. Our 2003 financial statements reflect a non-cash gain of $14.0
million from the extinguishment of the $22.0 million contingent liability.

     During 2003, we received benefits from state and local governments in the
form of real estate and personal property tax abatements of approximately $5.4
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 $5.6 million, $4.2 million, $2.9 million, $2.1 million, $1.3
million, $798,000, $433,000, $285,000 and $200,000, during the years 2004
through 2012, respectively.

     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.

Certain of our contractual obligations will require futures cash payments as
follows:




                                             Total       2004       2005-2006      2007-2008     2009-After
                                             -----       ----       ---------      ---------     ----------
                                                                                
  Long-term debt (Note 3)..............  $  598,740   $   15,988   $   44,752     $   98,823     $  439,177
  Commodity contracts (Note 7).........      32,503       23,177        9,326              -              -
  Construction commitments (Note 7)....      38,722       38,722            -              -              -




                                       41


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, 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 and 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
rescinded FAS 4, which required all gains and losses from extinguishment of debt
to be aggregated and classified as an extraordinary item, net of the related
income tax effect, within the statement of income. We adopted FAS 145 in January
2003 as required. Upon adoption, any gain or loss on extinguishment of debt that
was classified as an extraordinary item in prior periods that did not meet the
criteria in APB 30 for classification as an extraordinary item, was reclassified
as income or loss from continuing operations. The loss on extinguishment of debt
we recorded in 2002 of $3.5 million, net of related tax of $2.1 million, is no
longer classified as an extraordinary item in our statement of income. The loss
is now included at the gross amount in selling, general and administrative
expenses.

     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. We adopted FIN 45 as of December 31, 2002, as required and the
adoption did not have a material impact on our consolidated financial
statements.

     In January 2003, the FASB issued Interpretation No. 46 (revised December
2003) (FIN 46R), "Consolidation of Variable Interest Entities, an interpretation
of ARB No. 51." FIN 46R provides a new framework for identifying variable
interest entities (VIEs) and determining when a company should include the
assets, liabilities, non-controlling interests and results of activities of a
VIE in its consolidated financial statements and provides guidance related to a
company's initial and subsequent measurement of newly consolidated VIEs. In
general, a VIE is a corporation, partnership, limited-liability corporation,
trust or any other legal structure used to conduct activities or hold assets
that either has: an insufficient amount of equity to carry out is principal
activities without additional subordinated financial support; a group of equity
owners that are unable to make significant decisions about its activities; or, a
group of equity owners that do not have the obligation to absorb losses or the
right to receive returns generated by its operations.

     FIN 46R requires a VIE to be consolidated if a party with an ownership,
contractual or other financial interest in the VIE is obligated to absorb a
majority of the risk of loss from the VIE's activities, is entitled to receive a
majority of the VIE's residual returns, or both. FIN 46R must be applied to all
entities subject to this Interpretation as of March 31, 2004. However, prior to
the required application of this Interpretation, FIN 46R must be applied to
those entities that are considered to be special-purpose entities as of December
31, 2003. There was no impact to our financial statements from the application
of this Interpretation at December 31, 2003. At this time we do not believe the
adoption of FIN 46R will have a material impact on our consolidated financial
statements.

     In April 2003, the FASB issued FAS No. 149 (FAS 149), "Accounting for
Derivative Instruments and Hedging Activities." The Statement amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under FAS
133. The amendments set forth in FAS 149 improve financial reporting by
requiring that contracts with comparable characteristics be accounted for
similarly. FAS 149 is effective for contracts entered into or modified after
June 30, 2003, except for certain outlined exceptions. We adopted this with no
initial impact to our financial statements.

     In May 2003, the FASB issued FAS No. 150 (FAS 150), "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." FAS
150 changes the accounting for certain financial instruments that, under
previous guidance, could be classified as equity or "mezzanine" equity, by now
requiring these instruments be classified as liabilities (or assets in some
circumstances) in the balance sheet. Further, FAS 150 requires disclosure
regarding the terms of those instruments and settlement alternatives. The
guidance is generally effective for all financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. We adopted FAS 150 with no
initial impact to our financial statements.


                                       42


     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.

     Revenue Recognition and Allowance for Doubtful Accounts. We recognize
revenues from sales and the allowance for estimated costs associated with
returns from these sales when the title of the product transfers upon shipment.
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. Our steel joist and steel decking operation, New
Millennium Building Systems, recognizes revenues from construction contracts on
a percentage of completion method based on steel consumed to date as a
percentage of the estimated total steel required for each contract. New
Millennium accounted for 5% of our 2003 net sales.

     We are exposed to credit risk in the event of nonpayment by our customers,
which are principally within the intermediate steel processor, service center,
automotive and construction industries. We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability of our customers to
make required payments based on known credit risks, historical loss experience
and current economic conditions affecting our customers. We mitigate our
exposure to credit risk by performing ongoing credit evaluations and taking
further action when necessary, such as requiring letters of credit or other
security interests to support the receivable from our customer. 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 2003, events and circumstances indicated that $125 million of assets
related to Iron Dynamics might be impaired. However, our estimate of
undiscounted cash flows was approximately $54 million in excess of such carrying
amounts and, therefore, no charge has been recorded at December 31, 2003. 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 the
ramp-up 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, 2003, we had available net operating loss carryforwards of approximately $30
million and capital loss carryforwards of approximately $5 million, which expire
beginning 2021 and 2005, respectively. During 2003, we were unable to utilize a
$3 million foreign tax credit carryforward, which we had created a valuation
allowance of $2 million for in 2001. Therefore, the valuation allowance was
realized in 2003.



                                       43


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, 2003 (in millions):




                                                                            Interest rate risk
                                                       -------------------------------------------------------------
                                                              Fixed rate                         Variable rate
                                                       --------------------------         --------------------------
                                                                          Average                            Average
                                                       Principal           rate           Principal           rate
                                                       ---------          -------         ---------          -------
                                                                                                 
Expected maturity date:
    2004.........................................      $     9.8            6.3%          $     6.1            4.4%
    2005.........................................            8.9            5.7                21.4            4.9
    2006.........................................            2.2            7.8                12.4            4.1
    2007.........................................            2.3            7.8                94.0            4.1
    2008.........................................            2.4            7.9                   -              -
    Thereafter...................................          239.2            6.7               200.0            7.0
                                                       ---------                          ---------               
Total............................................      $   264.8            6.7           $   333.9            5.9
                                                       =========                          =========

Fair value.......................................      $   264.8                          $   333.9
                                                       =========                          =========


     Commodity Risk

     In the normal course of business we are exposed to the market risk and
price fluctuations related to the sale of steel products and to the purchase of
commodities used in our production process, such as metallic raw materials,
electricity, natural gas and alloys. Our risk strategy associated with product
sales has generally been to obtain competitive prices for our products and to
allow operating results to reflect market price movements dictated by supply and
demand. During 2003, approximately 10% of our net sales were under fixed-price
contracts with greater than twelve month commitments.

     Our risk strategy associated with the purchase of commodities utilized
within our production process has generally been to make certain commitments
with suppliers relating to future expected requirements for such commodities.
Certain of these commitments contain provisions which require us to "take or
pay" for specified quantities without regard to actual usage for periods of up
to 3 years. During the years ending December 31, 2004, 2005 and 2006, we have
commitments for natural gas and its transportation with "take or pay" or other
similar commitment provisions for approximately $23.2 million, $8.8 million and
$492,000, respectively. We fully utilized all such "take or pay" requirements
during the past three years and purchased $16.9 million, $14.0 million and $12.7
million, during the years ended December 31, 2003, 2002 and 2001, respectively,
under these contracts. We believe that our production requirements will be such
that consumption of the products or services purchased under these commitments
will occur in the normal production process.

     We also purchase electricity consumed at our Flat Roll Division pursuant to
a contract which extends through December 2007. The contract designates 152
hours as "interruptible service" during 2004, 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.



                                       44


ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----

Independent Auditors' Report.............................................   46

Consolidated Balance Sheets as of December 31, 2003 and 2002.............   47

Consolidated Statements of Income for each of the
   three years in the period ended December 31, 2003.....................   48

Consolidated Statements of Stockholders' Equity
   for each of the three years in the period ended December 31, 2003.....   49

Consolidated Statements of Cash Flows for each of the
   three years in the period ended December 31, 2003.....................   50

Notes to Consolidated Financial Statements...............................   51




                                       45


                          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, 2003 and 2002, and the related consolidated statements
of income, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 2003. 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, 2003 and 2002, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles generally accepted
in the United States.



                                                   /S/ Ernst & Young LLP
Fort Wayne, Indiana
January 23, 2004



                                       46


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




                                                                                                        December 31,
                                                                                               ----------------------------
                                                                                                   2003             2002
                                                                                               -----------      -----------
                                                                                                                  
                                      ASSETS

Current assets:
     Cash and short-term investments................................................           $    65,430      $    24,218
     Accounts receivable, net of allowance for doubtful accounts of $3,678
         and $2,701 as of December 31, 2003 and 2002, respectively..................               100,933           83,779
     Accounts receivable-related parties............................................                25,090           34,700
     Inventories....................................................................               184,496          153,204
     Deferred income taxes..........................................................                23,217            6,680
     Other current assets...........................................................                 8,769            8,322
                                                                                               -----------      -----------
              Total current assets..................................................               407,935          310,903

Property, plant and equipment, net..................................................             1,001,116          929,338

Restricted cash.....................................................................                 2,636            2,616

Other assets........................................................................                36,752           32,839
                                                                                               -----------      -----------
              Total assets..........................................................           $ 1,448,439      $ 1,275,696
                                                                                               ===========      ===========

                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable...............................................................           $    42,698      $    27,390
     Accounts payable-related parties...............................................                36,628           18,827
     Accrued interest...............................................................                11,312           10,665
     Other accrued expenses.........................................................                46,678           44,755
     Current maturities of long-term debt...........................................                15,988           11,913
                                                                                               -----------      -----------
              Total current liabilities.............................................               153,304          113,550

Long-term debt, including unamortized bond premium of $8,834 as of December 
31, 2003............................................................................               591,586          543,537

Deferred income taxes...............................................................               115,703           70,330

Minority interest...................................................................                   613            4,632

Other long-term contingent liabilities..............................................                     -           21,987

Commitments and contingencies

Stockholders' equity:
     Common stock voting, $.01 par value; 100,000,000 shares authorized;
         51,011,839 and 49,966,590 shares issued; 48,645,246 and 47,580,676
         shares outstanding as of December 31, 2003 and 2002, respectively..........                   509              499
     Treasury stock, at cost; 2,366,593 and 2,385,914 shares as of December 31, 2003
         and 2002, respectively.....................................................               (28,670)         (28,889)
     Additional paid-in capital.....................................................               362,328          347,050
     Retained earnings..............................................................               257,254          210,106
     Other accumulated comprehensive loss...........................................                (4,188)          (7,106)
                                                                                               -----------      -----------
              Total stockholders' equity............................................               587,233          521,660
                                                                                               -----------      -----------
              Total liabilities and stockholders' equity............................           $ 1,448,439      $ 1,275,696
                                                                                               ===========      ===========




                 See notes to consolidated financial statements.



                                       47


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




                                                                                        Years ended December 31,
                                                                             ---------------------------------------------
                                                                                 2003             2002              2001
                                                                             ----------        ---------        ----------
                                                                                                              
Net sales:
   Unrelated parties...................................................      $  854,403        $ 718,937        $  495,079
   Related parties.....................................................         132,845          145,556           111,905
                                                                             ----------        ---------        ----------
         Total net sales...............................................         987,248          864,493           606,984
Cost of goods sold.....................................................         827,264          638,860           522,927
                                                                             ----------        ---------        ----------
         Gross profit..................................................         159,984          225,633            84,057
Selling, general and administrative expenses...........................          63,377           67,266            58,132
                                                                             ----------        ---------        ----------
         Operating income..............................................          96,607          158,367            25,925
Interest expense.......................................................          34,493           30,201            18,480
Gain from debt extinguishment..........................................          13,987                -                 -
Other expense .........................................................             664            3,689             2,333
                                                                             ----------        ---------        ----------
         Income before income taxes....................................          75,437          124,477             5,112
Income taxes  .........................................................          28,289           46,600             1,968
                                                                             ----------        ---------        ----------
         Net income....................................................      $   47,148        $  77,877        $    3,144
                                                                             ==========        =========        ==========

Basic earnings per share:
     Net income........................................................      $      .99        $    1.65        $      .07
                                                                             ==========        =========        ==========
     Weighted average common shares outstanding........................          47,829           47,144            45,655
                                                                             ==========        =========        ==========

Diluted earnings per share:
     Net income........................................................      $      .98        $    1.64        $      .07
                                                                             ==========        =========        ==========
     Weighted average common shares and share equivalents outstanding..          48,127           47,463            45,853
                                                                             ==========        =========        ==========




                 See notes to consolidated financial statements.


                                       48


                              STEEL DYNAMICS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (in thousands)




                                                                                                   Other
                                                                        Additional              accumulated
                                                               Common     paid-in    Retained   comprehensive Treasury
                                                     Shares     stock     capital    earnings       loss        stock       Total
                                                  ---------   ---------  ---------  ---------  -------------  ---------   ---------
                                                                                                     
Balances at January 1, 2001 ....................     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 benefit of $1,545 ..............          -           -          -          -     (2,468)             -      (2,468)
    Unrealized loss on derivative instruments,
     net of tax benefit 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 benefit of $575 ................          -           -          -          -     (1,165)             -      (1,165)
    Unrealized loss on available-for-sale
     securities, net of tax benefit 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

Issuance of common stock (net of expenses)
   and proceeds from exercise of stock
   options, including related tax effect .......      1,044          10     15,066          -          -              -      15,076
Issuance of treasury stock .....................         33           -        212          -          -            395         607
Purchase of treasury stock .....................        (13)          -          -          -          -           (176)       (176)

Comprehensive income:
  Net income ...................................          -           -          -     47,148          -              -      47,148
  Comprehensive loss:
    Unrealized gain on derivative instruments,
     net of tax effect of $1,290 ...............          -           -          -          -      2,274              -       2,274
    Unrealized gain on available-for-sale
     securities, net of tax effect of $383 .....          -           -          -          -        644              -         644
                                                                                                                          ---------
         Total comprehensive income ............                                                                             50,066
                                                  ---------   ---------  ---------  ---------  ---------      ---------   ---------
Balances at December 31, 2003 ..................     48,645   $     509  $ 362,328  $ 257,254  $  (4,188)     $ (28,670)  $ 587,233
                                                  =========   =========  =========  =========  =========      =========   =========



                 See notes to consolidated financial statements.


                                       49



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





                                                                                        Years ended December 31,
                                                                                    -----------------------------------
                                                                                       2003         2002        2001
                                                                                    ---------    ---------    ---------
                                                                                                            
Operating activities:
     Net income .................................................................   $  47,148    $  77,877    $   3,144

     Adjustments to reconcile net income to net cash provided by operating
     activities:
         Depreciation and amortization ..........................................      69,110       59,443       46,794
         Deferred income taxes ..................................................      28,836       25,485       (1,008)
         Gain from debt extinguishment ..........................................     (13,987)           -            -
         Loss on disposal of property, plant and equipment ......................         240          113           42
         Minority interest ......................................................      (1,068)        (137)         680
         Changes in certain assets and liabilities:
              Accounts receivable ...............................................      (7,544)     (36,600)      21,107
              Inventories .......................................................     (31,292)     (34,836)     (11,623)
              Other assets ......................................................      (2,636)      (4,110)       1,169
              Accounts payable ..................................................      33,109        4,887       13,341
              Accrued expenses ..................................................       5,690       22,900       (6,273)
                                                                                    ---------    ---------    ---------
                  Net cash provided by operating activities .....................     127,606      115,022       67,373
                                                                                    ---------    ---------    ---------
Investing activities:
     Purchases of property, plant and equipment .................................    (137,269)    (142,600)     (90,714)
     Proceeds from sale of property, plant and equipment ........................         208            1            4
     Proceeds from government grants ............................................           8        8,813            -
     Other investing activities .................................................      (8,291)           -            -
                                                                                    ---------    ---------    ---------
Net cash used in investing activities ...........................................    (145,344)    (133,786)     (90,710)
                                                                                    ---------    ---------    ---------
Financing activities:
     Issuance of long-term debt .................................................     191,820      598,991      201,362
     Repayments of long-term debt ...............................................    (144,009)    (621,465)    (111,971)
     Treasury stock issuance (purchase), net ....................................         219          (43)           -
     Issuance of common stock (net of expenses) and proceeds
       from exercise of stock options, including related tax effect .............      15,288        5,001        2,003
     Debt issuance costs ........................................................      (4,368)     (17,743)           -
                                                                                    ---------    ---------    ---------
                  Net cash provided by (used in) financing activities ...........      58,950      (35,259)      91,394
                                                                                    ---------    ---------    ---------
Increase (decrease) in cash and equivalents .....................................      41,212      (54,023)      68,057
Cash and equivalents at beginning of year .......................................      24,218       78,241       10,184
                                                                                    ---------    ---------    ---------
Cash and equivalents at end of year .............................................   $  65,430    $  24,218    $  78,241
                                                                                    =========    =========    =========



                 See notes to consolidated financial statements.



                                       50



                              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 Bar Products Division. The Flat Roll
Division is currently the company's core business, accounting for 76.8% of the
company's net sales during 2003. The Flat Roll Division 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 and 2003, 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. The company expects to ship standard rail products during
the first half of 2004. The initial rail shipments will be used in a testing
capacity to be monitored by individual railroad companies for evaluation
purposes. This evaluation process may take up to 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 is investing between $75 and $80 million of additional
capital to convert the facility to the production of merchant bars and shapes
and reinforcing bar products, while retaining the ability to produce special bar
quality (SBQ) steel. As of December 31, 2003, the company had invested $50.7
million, including capitalized interest. The facility's anticipated annual
production capacity is between 500,000 and 600,000 tons. On December 29, 2003,
the company's Bar Products Division began commissioning and successfully
produced certain SBQ and merchant bar quality (MBQ) rounds. The company expects
to increase its SBQ and MBQ product offerings throughout the first half of 2004
and anticipates the addition of angles, flats and channels during the third
quarter. The Bar Products Division 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, to compact that material
to form hot-briquetted iron (HBI), and to then convert the HBI into liquid pig
iron. HBI and liquid pig iron are high quality steel scrap substitutes that can
be used in the Flat Roll Division's electric arc furnaces. 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
then historically low steel scrap pricing. From the time operations were halted
in 2001 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. During the fourth quarter of
2002, IDI successfully completed certain operating trials utilizing a modified
production process. This process may significantly reduce the eventual per-unit
cost of liquid pig iron production. Throughout 2003, the company invested $13.3
million for capital expenditures required to implement this modified production
process and Iron Dynamics restarted operations mid-November, producing
approximately 15,100 tonnes of HBI during December. Since restart, the Flat Roll
Division has successfully used these iron briquettes as a part of its metallic
raw material inputs. IDI plans to restart the submerged arc furnace and the
smelting part of the IDI process, during the first quarter of 2004, or early in
the second quarter. This final stage of the IDI production process involves the
liquefaction of the solid iron briquettes to produce liquid pig iron.

The company also has two consolidated subsidiary operations: New Millennium
Building Systems (NMBS), which receives revenue from the fabrication of trusses,
girders, steel joists and steel decking for the non-residential construction
industry and a 50%-owned facility that receives revenue from the further
processing, or slitting, and sale of certain secondary and excess prime steel
products. During March 2003, the company increased its ownership interest in
NMBS from 46.6% to 100% for a cost of approximately $8.3 million.


                                       51


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the
accounts of SDI, together with its subsidiaries, 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.

Use of Estimates. Generally accepted accounting principles require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at year-end and
the reported amounts of revenues and expenses during the year. Significant items
subject to such estimates and assumptions include the carrying value of
property, plant and equipment; valuation allowances for trade receivables,
inventories and deferred income tax assets; potential environmental liabilities,
litigation claims and settlements. Actual results could differ from the
estimates and assumptions used.

Revenue Recognition. The company 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. The
company's steel joist and steel decking operation, NMBS, recognizes revenues
from construction contracts on a percentage of completion method based on steel
tons used on completed units to date as a percentage of estimated total steel
tons required by each contract. NMBS accounted for 5.1% of the company's
consolidated net sales during 2003.

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

Cash and 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. The aggregate fair market value of the
company's available for sale securities was $1.7 million and $505,000 at
December 31, 2003 and 2002, respectively.

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):
                                               2003              2002
                                            ----------        ----------
         Raw materials.................     $   46,347        $   53,532
         Supplies......................         60,420            52,815
         Work in progress..............         15,996            14,835
         Finished goods................         61,733            32,022
                                            ----------        ----------
                                            $  184,496        $  153,204
                                            ==========        ==========

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
$64.9 million, $56.4 million and $45.9 million for the years ended December 31,
2003, 2002 and 2001, respectively.

In accordance with the methodology described in FASB Statement No. 144 (FAS
144), "Accounting for the Impairment or Disposal of Long-Lived Assets," 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, 2003, events and circumstances indicated that $125.3 million of
assets related to Iron Dynamics might be impaired. However, the company's
estimate of undiscounted cash flows was approximately $54 million in excess of
such



                                       52



                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 a weighted average of the most likely achieved production
levels, significant cost components, required capital expenditures and the
ramp-up of commercial production. 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):




                                                                                   2003           2002
                                                                                --------       --------- 
                                                                                                
           Cumulative effect of an accounting change.................           $ (2,468)      $  (2,468)
           Unrealized loss on derivative instruments.................             (1,779)         (4,053)
           Unrealized gain (loss) on available for sale securities...                 59            (585)
                                                                                --------       --------- 
                                                                                $ (4,188)      $  (7,106)
                                                                                ========       ========= 


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. The company is
exposed to credit risk in the event of nonpayment by customers principally
within the intermediate steel processor, service center, automotive and
construction industries. Changes in these industries may significantly affect
management's estimates and the company's financial performance. The company
mitigates its exposure to credit risk, which it generally extends initially on
an unsecured basis, by performing ongoing credit evaluations and taking further
action if necessary, such as requiring letters of credit or other security
interests to support the customer receivable. Management's estimation of the
allowance for doubtful accounts is based upon known credit risks, historical
loss experience and current economic conditions affecting the company's
customers.

Heidtman Steel Products (Heidtman) accounted for 13.5%, 16.8% and 18.4% of the
company's net sales for the years ended December 31, 2003, 2002 and 2001,
respectively.

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
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. For the years ended December 31,
2003, 2002, and 2001, respectively, options to purchase 564,000 shares, 1.3
million shares and 1.4 million shares were excluded from the diluted earnings
per share calculation because the options were anti-dilutive. Approximately 6.8
million shares and 5.9 million shares related to the company's convertible
subordinated debt were also excluded from the calculation of diluted earnings
per share for the years ended December 31, 2003 and 2002, respectively, because
the conversion requirements had not been met. The conversion requirements are
more specifically discussed in Note 3 to the company's financial statements and
are likely to be met during the first quarter of 2004.

Derivative Financial Instruments. The company records derivative financial
instruments in accordance with FASB Statement No. 133 (FAS 133), "Accounting for
Derivative Instrument and Hedging Activities," as amended. FAS 133 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 as other income or expense. For the year
ended December 31, 2003, the company recorded a $275,000 loss related to hedging
ineffectiveness. On an annual basis, there was no hedge ineffectiveness recorded
through the statements of income during the two years ended December 31, 2002.

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, and periodically employs foreign currency
exchange contracts as necessary. At the time of acquiring financial instruments,
the company designates and assigns these 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


                                       53


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 amended FASB Statement No. 123 (FAS 123), "Accounting for Stock-Based
Compensation." FAS 148 was 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. For the three years ended December 31, 2003, 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 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.

The following table illustrates the effect on net income and earnings per share
as 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):



                                                                                   2003           2002          2001
                                                                                 --------      ----------    ---------
                                                                                                    
         Net income, as reported......................................           $ 47,148      $   77,877    $   3,144
              Total stock-based employee compensation expense
                  using the fair value based method, net of related 
                  tax effects                                                      (2,340)         (2,380)      (2,330)
                                                                                 --------      ----------    ---------
         Pro forma net income.........................................           $ 44,808      $   75,497    $     814
                                                                                 ========      ==========    =========
         Basic earnings per share:
            As reported...............................................           $    .99      $     1.65    $     .07
            Pro forma.................................................                .94            1.60          .02

         Diluted earnings per share:
            As reported...............................................           $    .98      $     1.64    $     .07
            Pro forma.................................................                .93            1.59          .02



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 2003, 2002 and 2001 was
$5.12, $7.07 and $5.17, 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
2.5% to 3.2%, expected volatility from 33% to 39% and expected lives from five
months to seven 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 adopted 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 did
not meet the criteria in APB 30 for classification as an extraordinary item, was
reclassified as income or loss from continuing operations. The loss on
extinguishment of debt recorded in 2002 of $3.5 million, net of related tax of
$2.1 million, is no longer classified as an extraordinary item.

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 adoption of FIN 45 did not have a material impact on the company's
consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46 (revised December 2003)
(FIN 46R), "Consolidation of Variable Interest Entities, an interpretation of
ARB No. 51." FIN 46R provides a new framework for identifying variable interest
entities (VIEs) and


                                       54


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determining when a company should include the assets, liabilities,
non-controlling interests and results of activities of a VIE in its consolidated
financial statements and provides guidance related to a company's initial and
subsequent measurement of newly consolidated VIEs. In general, a VIE is a
corporation, partnership, limited-liability corporation, trust or any other
legal structure used to conduct activities or hold assets that either has: an
insufficient amount of equity to carry out is principal activities without
additional subordinated financial support; a group of equity owners that are
unable to make significant decisions about its activities; or, a group of equity
owners that do not have the obligation to absorb losses or the right to receive
returns generated by its operations.

FIN 46R requires a VIE to be consolidated if a party with an ownership,
contractual or other financial interest in the VIE is obligated to absorb a
majority of the risk of loss from the VIE's activities, is entitled to receive a
majority of the VIE's residual returns, or both. FIN 46R must be applied to all
entities subject to this Interpretation as of March 31, 2004. However, prior to
the required application of this Interpretation, FIN 46R must be applied to
those entities that are considered to be special-purpose entities as of December
31, 2003. There was no financial statement impact from the application of this
Interpretation at December 31, 2003. At this time the company does not believe
the adoption of FIN 46R will have a material impact on its consolidated
financial statements.

In April 2003, the FASB issued FAS No. 149 (FAS 149), "Accounting for Derivative
Instruments and Hedging Activities." The Statement amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under FAS 133. The
amendments set forth in FAS 149 improve financial reporting by requiring that
contracts with comparable characteristics be accounted for similarly. FAS 149 is
effective for contracts entered into or modified after June 30, 2003, except for
certain outlined exceptions. This Statement was adopted with no initial impact.

In May 2003, the FASB issued FAS No. 150 (FAS 150), "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." FAS
150 changes the accounting for certain financial instruments that, under
previous guidance, could be classified as equity or "mezzanine" equity, by now
requiring these instruments be classified as liabilities (or assets in some
circumstances) in the balance sheet. Further, FAS 150 requires disclosure
regarding the terms of those instruments and settlement alternatives. The
guidance is generally effective for all financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. This Statement was adopted
with no initial impact.

Note 2.  Property, Plant and Equipment
The company's property, plant and equipment at December 31 consisted of the
following (in thousands):




                                                                    2003             2002
                                                               ------------      ------------
                                                                                    
         Land and improvements...............................  $     45,407      $     44,531
         Buildings and improvements..........................       127,782           127,898
         Plant, machinery and equipment......................     1,006,012           972,071
         Construction in progress............................       141,671            40,152
                                                               ------------      ------------
                                                                  1,320,872         1,184,652
         Less accumulated depreciation.......................       319,756           255,314
                                                               ------------      ------------
               Property, plant, and equipment, net...........  $  1,001,116      $    929,338
                                                               ============      ============



Note 3.  Debt and Other Long-term Contingent Liability
The company's borrowings consisted of the following at December 31 (in
thousands):




                                                                                             2003              2002
                                                                                         ----------       ----------
                                                                                                    
     SDI senior secured notes payable...............................................     $  111,287       $  179,000
     SDI senior 9 1/2% unsecured notes, due March 2009, including unamortized
         bond premium of $8,834 at December 31, 2003................................        308,834          200,000
     SDI 4.0% convertible subordinated notes, due December 2012.....................        115,000          100,000
     NMBS senior secured notes payable..............................................         13,719           11,654
     State and local government municipal bond issues...............................         24,996           26,641
     Electric utility, transmission facility and other loans........................         33,738           38,155
                                                                                         ----------       ----------
         Total debt.................................................................        607,574          555,450
              Less current maturities...............................................         15,988           11,913
                                                                                         ----------       ----------
          Long-term debt............................................................     $  591,586       $  543,537
                                                                                         ==========       ==========





                                       55


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SDI Senior Secured Notes Payable. SDI has a $350.0 million senior secured credit
facility dated March 23, 2002. During 2003 and 2002, respectively, $64.0 million
and $96.0 million of this senior secured facility was refinanced with net
proceeds from the issuance of $115.0 million of 4.0% convertible subordinated
notes and with a portion of the net proceeds from a $100.0 million additional
issuance of the company's 9 1/2% senior unsecured notes. With these proceeds the
company prepaid the entire term A loan facility of $70.0 million and $90.0
million of the term B loan facility. As of December 31, 2003, the SDI senior
secured facility was composed of the following:

o    $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, and
o    $111.3 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

The weighted-average interest rate was 4.2% and 5.5% as of December 31, 2003 and
2002, respectively, under the company'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.

The SDI 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 (excluding NMBS) and by pledges of all shares of
capital stock and inter-company debt held by the company and its wholly-owned
subsidiaries. The facility contains financial covenants and other covenants that
limit or restrict the company with respect to its ability to pay dividends, make
capital expenditures, incur indebtedness, and make restricted payments or
investments, among other things.

SDI Senior 9 1/2% Unsecured Notes. The company issued $200.0 million 9 1/2%
senior unsecured notes during March 2002 as a part of refinancing its senior
secured credit facilities. On November 14, 2003, the company issued an
additional $100.0 million of these notes at a price of 109% and accrued interest
from the last semi-annual interest payment date of September 15, 2003 which
resulted in net proceeds of $108.8 million. The issuance premium of $9.0 million
will be amortized over the remaining life of the notes resulting in an
approximate effective interest rate of 7.5% for the additional $100.0 million
issuance. Approximately $58.8 million of the net proceeds was used to prefund
certain capital expenditures and $50.0 million was used to prepay a portion of
the company's term B loan facility. The notes have a maturity of seven years
(non-callable for four years) and are due March 2009. 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. The company entered into an interest rate swap agreement on
January 9, 2004 with a notional amount of $200.0 million pursuant to which the
company has agreed to receive fixed rate payments of 9.5% on the fifteenth day
of each March and September and will pay LIBOR plus 5.7%. This interest swap
agreement matures March 15, 2009.

SDI 4.0% Convertible Subordinated Notes. During December 2002 the company issued
$100.0 million of 4.0% convertible subordinated notes due December 15, 2012, and
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 $70.0 million of the $110.0 million in net proceeds to prepay the entire
outstanding balance of its senior secured term A loan and the remaining $40.0
million to prepay a portion of its senior secured term B loan. The notes are
non-callable for five years and bear interest at 4.0%, payable semiannually on
each June 15th and December 15th. 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. At December 31, 2003,
none of these circumstances had occurred. 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 100.000%.


                                       56


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IDI Settlement. In January 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, there was a provision within the agreement that if Iron
Dynamics resumed operations by January 27, 2007, and generated positive cash
flow (as defined in the settlement agreement), the company would be required to
make contingent future payments in an aggregate amount not to exceed $22.0
million. At December 31, 2002, the contingent future payments were reflected as
an other long-term contingent liability within the company's financial
statements. During December 2003, with the agreement of the IDI lenders, the
company paid $8.0 million in cash to the IDI lenders, terminating all of the
company's obligations to make any additional future payments under the
settlement agreement. The company's 2003 financial statements reflect a gain of
$14.0 million from the extinguishment of the $22.0 million contingent liability.

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

o    $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.
o    $9.0 million in the form of a five-year revolving facility (subject to a
     borrowing base), which matures July 31, 2005. At December 31, 2003, $8.2
     million of this revolving facility was outstanding.

Borrowings under the NMBS credit agreement bear interest at floating rates. The
weighted-average interest rate was 6.0% and 5.3% as of December 31, 2003 and
2002, respectively. The NMBS bank credit agreement is secured by liens on
substantially all of NMBS's assets. The company unconditionally guaranteed $6.2
million of the $13.7 million of debt outstanding under the NMBS credit agreement
as of December 31, 2003. 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, 2003, the notional amount of the NMBS
swap was $4.2 million, and was 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 facilities located at the
Butler, Indiana, mini-mill. 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 4.0% as of December 31, 2003,
at which time the principal balance outstanding was $14.0 million. As of
December 31, 2003, $2.6 million of the bond proceeds were held by the bond
trustee in a debt-service reserve fund and were recorded as restricted cash.

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. The
outstanding principal balance was $9.7 million and $10.0 million, as of December
31, 2003 and 2002, respectively.

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 $8.5
million and $9.4 million, as of December 31, 2003 and 2002, 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 $6.0
million and $6.3 million as of December 31, 2003 and 2002, respectively.


                                       57


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $9.4 million and $9.6 million as of December 31, 2003 and
2002, respectively.

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, 2003, are as follows (in
thousands):

             2004........................................        $   15,988
             2005........................................            30,135
             2006........................................            14,617
             2007........................................            96,374
             2008........................................             2,449
             Thereafter..................................           439,177
                                                                 ----------
                                                                    598,740
                     Unamortized bond premium                         8,834
                                                                 ----------
                                                                 $  607,574
                                                                 ==========

The company capitalizes interest on construction-in-progress assets. For the
years ended December 31, 2003, 2002 and 2001, total interest costs incurred were
$42.3 million, $41.6 million and $34.1 million, respectively, of which $7.8
million, $11.4 million and $14.0 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, 2003, 2002, and 2001, respectively.


                                       58


                              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 $7.5 million, $22.7 million and $4.7 million for the years ended December
31, 2003, 2002 and 2001, respectively. The current and deferred federal and
state income tax expense for the years ended December 31 is as follows (in
thousands):



                                                          2003         2002          2001
                                                       ---------     ---------    ---------
                                                                               
         Current income tax expense................    $   3,408     $  20,287    $     768
         Deferred income tax expense...............       24,881        26,313        1,200
                                                       ---------     ---------    ---------
              Total income tax expense.............    $  28,289     $  46,600    $   1,968
                                                       =========     =========    =========


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




                                                                                 2003      2002     2001
                                                                                 ----      ----     ---- 
                                                                                             
         Statutory federal tax rate....................................          35.0%     35.0%    35.0%
              State income taxes, net of federal benefit...............           1.9       2.3     (1.5)
              Other permanent differences..............................           (.2)      0.1      1.4
              Cost (benefit) of rate changes on cumulative deferred taxes          .8         -    (33.8)
              Valuation allowance......................................             -         -     37.4
                                                                                 ----      ----     ---- 
         Effective tax rate............................................          37.5%     37.4%    38.5%
                                                                                 ====      ====     ==== 



The cost (benefit) of rate changes on cumulative deferred taxes reflected in the
reconciliation above for 2003 and 2001 is the result of changes 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):




                                                                                       2003            2002
                                                                                   ----------      ----------
                                                                                                    
         Deferred tax assets:
              Net operating loss, capital loss, and credit carryforwards........   $   16,214      $    7,024
              Alternative minimum tax carryforwards.............................       50,973          50,058
              Capitalized start-up costs........................................       21,381          20,101
              Tax assets expensed for books.....................................       13,937          13,598
              Interest rate swap liability......................................        2,567           3,863
              Accrued expenses..................................................        4,138           1,840
              Unrealized losses.................................................            -             347
                                                                                   ----------      ----------
         Total deferred tax assets..............................................      109,210          96,831
              Less valuation allowance..........................................            -          (1,913)
                                                                                   ----------      ----------
         Net deferred tax assets................................................      109,210          94,918
                                                                                   ----------      ----------

         Deferred tax liabilities:
              Depreciable assets ...............................................     (189,662)       (149,790)
              Amortization of fees..............................................       (4,293)         (4,160)
              Capitalized interest..............................................       (7,537)         (3,926)
              Other.............................................................         (204)           (692)
                                                                                   ----------      ----------
         Total deferred tax liabilities.........................................     (201,696)       (158,568)
                                                                                   ----------      ----------
              Net deferred tax liability .......................................   $  (92,486)     $  (63,650)
                                                                                   ==========      ========== 


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, 2003, the company had available
net operating loss carryforwards of approximately $29.7 million for federal
purposes, which expire beginning in 2021. As of December 31, 2003, 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, 2003, the company had foreign tax credit carryforwards
expiring of approximately $3.0 million for federal tax purposes, which the
company was unable to utilize. Therefore, the valuation allowance created in
2001 of $1.9 million was realized in 2003. The foreign tax credit of $3.0
million is eligible to be carried back to 1998 as a tax deductible item and is
reflected as part of the federal net operating loss carryforward as of December
31, 2003.



                                       59



                              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. Pursuant to this
program, the company acquired 3,859,000 shares of its common stock at an average
price of $12 per share in open market purchases, of which 16,000 shares were
purchased during the three years ended December 31, 2003. As of December 31,
2003, approximately 941,000 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:




                                                                       Weighted average
                                                       Options          exercise price
                                                      ---------        ----------------
                                                                 
Balance outstanding at January 1, 2001.............   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

    Granted........................................     828,084              15.69
    Exercised......................................    (999,279)             11.99
    Forfeited......................................    (122,108)             19.49

Balance outstanding at December 31, 2003...........   2,338,408              14.27



The following table summarizes certain information concerning the company's
outstanding options as of December 31, 2003:




                                             Weighted average
                                               remaining
       Range of          Outstanding        contractual life       Weighted average     Exercisable       Weighted average
    exercise price          options              (years)            exercise pice         options          exercise price
    --------------       -----------        ------------------     ----------------     ------------       ----------------
                                                                                            
        $3 to $10           395,866                 1.5                $  7.22              395,866           $   7.22
       $10 to $15         1,051,291                 3.3                  12.55            1,051,291              12.55
       $15 to $20           745,339                 1.4                  18.66              383,531              17.91
       $20 to $30           145,912                 3.8                  23.40              145,912              23.40





                                       60


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2003 Executive Incentive Compensation Plan (Executive Officer Plan). With
stockholder approval, on January 1, 2003, the Executive Officer Plan replaced
the Amended and Restated Officer and Manager Cash and Stock Bonus Plan (Old
Plan) which was effective since 1996 and amended in 2000. Stock bonus awards of
approximately 96,000 shares were issued under the Old Plan, but were not vested
as of December 31, 2003. These shares will continue to be governed by the terms
of the Old Plan until final vesting during 2005. Certain officers of the company
are eligible to receive cash bonuses based on predetermined formulas designated
in the Executive Officer 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 750,000 shares have been reserved under this plan. As of
December 31, 2003, approximately 3,200 shares related to the 2003 stock bonus
award remained committed for issuance.

Note 7.  Commitments and Contingencies
The company has an off-take agreement with 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 had a raw material supply contract with OmniSource Corporation
(OmniSource) for the purchase of steel scrap resources (see Note 8). The company
and OmniSource amicably terminated this scrap supply agreement, effective March
31, 2004. The company plans, however, to continue purchasing scrap from
OmniSource as one of its major suppliers.

     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, 2004, 2005 and 2006, the company has commitments
for natural gas and its transportation with "take or pay" or other similar
commitment provisions for approximately $23.2 million, $8.8 million and
$492,000, respectively. The company fully utilized all such "take or pay"
requirements during the past three years and purchased $16.9 million, $14.0
million and $12.7 million, during the years ended December 31, 2003, 2002 and
2001, 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 2004, 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, 2003, the company
has outstanding construction-related commitments of $38.7 million related to the
mill construction at the Bar Products 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. The president and chief executive officer of
Heidtman is a member of the company's board of directors and a stockholder of
the company. The president and chief operating officer of OmniSource is also a
member of the board of directors and a stockholder of the company. Transactions
with these companies for the years ended December 31 are as follows (in
millions):

                                                 2003       2002       2001
                                               -------    -------    --------
Heidtman:
     Sales..................................   $ 132.8    $ 145.6    $ 112.3
       Percentage of total sales............        13%        17%        18%
       Accounts receivable..................      25.1       34.7       16.3

OmniSource:
     Purchases..............................   $ 354.7    $ 232.7    $ 177.5
     Accounts payable.......................      36.6       18.8       11.0



                                       61



                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9.  Financial Instruments
The carrying amounts of financial instruments including cash and 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
$7.1 million and $10.4 million at December 31, 2003 and 2002, 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 $4.7 million, $6.9 million and
$424,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Note 11.  Segment Information
The company has two reportable segments: steel operations and steel scrap
substitute operations.

Steel 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, which accounted for 14.7%,
18.5% and 20.7% of the segment's external net sales for the years ended December
31, 2003, 2002 and 2001, respectively. These customers are 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 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. Initial trials to produce rail
commenced in late October 2003. This facility produces and sells structural
steel beams, pilings, and other steel components directly to end-users and steel
service centers to be used primarily in the construction, transportation and
industrial machinery markets. This facility is also designed to produce and sell
a variety of standard and premium-grade rail for the railroad industry. The
company anticipates supplying standard rail to potential customers to begin the
evaluation process during the first half of 2004.

On September 9, 2002, the company purchased the special bar quality mini-mill
assets of Qualitech Steel SBQ, LLC. The company plans to convert the facility to
the production of merchant bars and shapes and reinforcing bar products, while
retaining the ability to produce SBQ steel. The facility's anticipated annual
production capacity is between 500,000 and 600,000 tons. On December 29, 2003,
the company's Bar Products Division began commissioning and successfully
produced certain SBQ and MBQ rounds. The company expects to increase its SBQ and
MBQ product offerings throughout the first half of 2004 and anticipates the
addition of angles, flats and channels during the third quarter. The Bar
Products Division 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 Operations. 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. During the fourth quarter of 2002, IDI successfully completed
certain operating trials utilizing a modified production process. This process
may significantly reduce the eventual per-unit cost of liquid pig iron
production. Throughout 2003, the company invested $13.3 million for capital
expenditures required to implement this modified production process and Iron
Dynamics restarted operations mid-November, producing approximately 15,100
tonnes of hot briquetted iron during December. Since restart, the Flat Roll
Division has successfully used these iron briquettes as a part of its metallic
raw material inputs. IDI plans to restart the submerged arc furnace during the
first quarter of 2004, or early in the second quarter. This final stage of the
IDI production process involves the liquefaction of the solid iron briquettes to
produce liquid pig iron.

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
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.



                                       62



                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $66.6 million, $10.1 million and $8.0
million, for the years ended December 31, 2003, 2002 and 2001, respectively. The
company's segment results are as follows (in thousands):




                                                 2003           2002           2001
                                            ------------    ------------   ------------
                                                                  
Steel Operations
Net sales
     External                               $    903,837    $    785,007   $    541,693
     Other segments                               52,720          48,578         33,462
Operating income                                 120,704         188,081         49,537
Depreciation and amortization                     61,329          51,024         43,852
Assets                                         1,161,368       1,057,509        890,504
Liabilities                                      157,576         117,537         95,251
Capital expenditures                             122,527         143,045         83,399
------------------------------------------------------------------------------------------

Steel Scrap Substitute Operations
Net sales
     External                               $          -    $          -   $          -
     Other segments                                2,955             450          4,660
Operating loss                                   (10,902)        (10,471)       (14,203)
Depreciation and amortization                      4,944           5,083          1,274
Assets                                           157,428         149,651        155,415
Liabilities                                        6,873          27,832         64,670
Capital expenditures                              13,326          (2,999)         4,619
------------------------------------------------------------------------------------------

All Other
Net sales
     External                               $     83,411    $     79,486   $     65,291
     Other segments                                  824             769            909
Operating loss                                   (13,628)        (18,968)        (8,808)
Depreciation and amortization                      2,837           3,336          1,668
Assets                                           234,800         169,157        211,704
Liabilities                                      802,158         704,433        674,871
Capital expenditures                               1,208           2,554          2,696
------------------------------------------------------------------------------------------

Eliminations
Net sales
     Other segments                         $    (56,499)   $    (49,797)  $    (39,031)
Operating income (loss)                              433            (275)          (601)
Assets                                          (105,157)       (100,621)       (77,525)
Liabilities                                     (105,401)        (95,766)       (73,269)
Capital expenditures                                   -               -              -
------------------------------------------------------------------------------------------

Consolidated
Net sales                                   $    987,248    $    864,493   $    606,984
Operating income                                  96,607         158,367         25,925
Depreciation and amortization                     69,110          59,443         46,794
Assets                                         1,448,439       1,275,696      1,180,098
Liabilities                                      861,206         754,036        761,523
Capital expenditures                             137,061         142,600         90,714
------------------------------------------------------------------------------------------





                                       63



                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12.  Condensed Consolidating Information
Certain 100%-owned subsidiaries of SDI have fully and unconditionally guaranteed
all of the indebtedness relating to the issuance of $300.0 million of senior
notes due 2009. Following 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.

Condensed Consolidating Balance Sheet (in thousands):




                                                                                    Combined      Consolidating       Total
                                                      Parent       Guarantors    non-guarantors    adjustments     consolidated
                                                   -----------     ----------    --------------    -----------     ------------
                                                                             (As of December 31, 2003)
                                                                                                           
Cash ..........................................    $    64,008     $       496    $       926     $         -     $    65,430
Accounts receivable ...........................        123,315         119,785         13,037        (130,114)        126,023
Inventories ...................................        164,024           2,579         18,397            (504)        184,496
Other current assets ..........................         32,938              68            168          (1,188)         31,986
                                                   -----------     -----------    -----------     -----------     -----------
   Total current assets .......................        384,285         122,928         32,528        (131,806)        407,935

Property, plant and equipment, net ............        755,707          96,757        148,769            (117)      1,001,116
Other assets ..................................        260,538          36,855            262        (258,267)         39,388
                                                   -----------     -----------    -----------     -----------     -----------
   Total assets ...............................    $ 1,400,530     $   256,540    $   181,559     $  (390,190)    $ 1,448,439
                                                   ===========     ===========    ===========     ===========     ===========


Accounts payable ..............................    $    64,069     $    15,618    $    11,025     $   (11,386)    $    79,326
Accrued expenses ..............................         52,365           1,699          5,046          (1,120)         57,990
Current maturities of long-term debt ..........         11,765               -          4,243             (20)         15,988
                                                   -----------     -----------    -----------     -----------     -----------
   Total current liabilities ..................        128,199          17,317         20,314         (12,526)        153,304

Other liabilities .............................        108,680          73,310        (13,587)        (52,700)        115,703
Long-term debt ................................        575,608               -         24,826          (8,848)        591,586
Minority interest .............................             28               -              -             585             613

Common stock ..................................            509          46,482        189,735        (236,217)            509
Treasury stock ................................        (28,670)              -              -               -         (28,670)
Additional paid-in capital ....................        362,328         116,868              -        (116,868)        362,328
Retained earnings .............................        257,919           2,563        (39,612)         36,384         257,254
Other accumulated comprehensive loss ..........         (4,071)              -           (117)              -          (4,188)
                                                   -----------     -----------    -----------     -----------     -----------
   Total stockholders' equity .................        588,015         165,913        150,006        (316,701)        587,233
                                                   -----------     -----------    -----------     -----------     -----------
   Total liabilities and stockholders'
     equity ...................................    $ 1,400,530     $   256,540    $   181,559     $  (390,190)    $ 1,448,439
                                                   ===========     ===========    ===========     ===========     ===========




                                       64



                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidating Balance Sheet (in thousands):




                                                                                  Combined      Consolidating          Total
                                                       Parent       Guarantors  non-guarantors   adjustments       consolidated
                                                   -----------      ----------  --------------   -----------       ------------
                                                                              (As of December 31, 2002)
                                                                                                   
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
                                                   ===========     ===========    ===========     ===========     ===========





                                       65


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidating Statements of Income (in thousands):




                                                                                     Combined      Consolidating      Total
                                                         Parent      Guarantors   non-guarantors    adjustments    consolidated
                                                      -----------    ----------   --------------    -----------    ------------
                                                                              (Year ended December 31, 2003)
                                                                                                   
Net sales .........................................   $   956,552    $   956,556    $    87,190    $(1,013,050)   $   987,248
Cost of goods sold ................................       793,936        949,923         88,148     (1,004,743)       827,264
                                                      -----------    -----------    -----------    -----------    -----------
   Gross profit ...................................       162,616          6,633           (958)        (8,307)       159,984
Selling, general and administration ...............        49,329         11,022          8,963         (5,937)        63,377
                                                      -----------    -----------    -----------    -----------    -----------
Operating income (loss) ...........................       113,287         (4,389)        (9,921)        (2,370)        96,607
Interest expense ..................................        34,841         (1,360)         1,688           (676)        34,493
Other (income) expense ............................        58,977        (59,087)       (14,009)           796        (13,323)
                                                      -----------    -----------    -----------    -----------    -----------
Income before income taxes and
   equity in net income of subsidiaries ...........        19,469         56,058          2,400         (2,490)        75,437
Income tax expense (benefit) ......................         8,794         19,613            900         (1,018)        28,289
                                                      -----------    -----------    -----------    -----------    -----------
                                                           10,675         36,445          1,500         (1,472)        47,148
Equity in net income of subsidiaries ..............        37,945              -              -        (37,945)             -
                                                      -----------    -----------    -----------    -----------    -----------
Net income (loss) .................................   $    48,620    $    36,445    $     1,500    $   (39,417)   $    47,148
                                                      ===========    ===========    ===========    ===========    ===========


                                                                                     Combined      Consolidating      Total
                                                         Parent      Guarantors   non-guarantors    adjustments    consolidated
                                                      -----------    ----------   --------------    -----------    ------------
                                                                              (Year ended December 31, 2002)
                                                                                                   
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 ...............        57,617            324          9,770           (445)        67,266
                                                      -----------    -----------    -----------    -----------    -----------
Operating income (loss) ...........................       168,837           (324)        (9,871)          (275)       158,367
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 income of subsidiaries ...........        86,221         50,555        (11,905)          (394)       124,477
Income tax expense (benefit) ......................        33,406         17,687         (4,493)             -         46,600
                                                      -----------    -----------    -----------    -----------    -----------
                                                           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
                                                      ===========    ===========    ===========    ===========    ===========


                                                                                     Combined      Consolidating      Total
                                                         Parent      Guarantors   non-guarantors    adjustments    consolidated
                                                      -----------    ----------   --------------    -----------    ------------
                                                                              (Year ended December 31, 2001)
                                                                                                   
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 income of subsidiaries ...........       (14,526)        35,338        (15,665)           (35)         5,112
Income tax expense (benefit) ......................        (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
                                                      ===========    ===========    ===========    ===========    ===========




                                       66


                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidating Statements of Cash Flows (in thousands):




                                                                                                  Combined           Total
                                                                      Parent      Guarantors   non-guarantors    consolidated
                                                                    ---------     ----------   --------------    ------------
                                                                              (Year ended December 31, 2003)
                                                                                                      

Net cash provided by (used in) operations ....................      $ 188,681       $ (68,265)      $   7,280       $ 127,696
Net cash used in investing activities - primarily
   purchases of property, plant and equipment ................        (79,927)        (50,674)        (14,743)       (145,344)
Financing activities:
   Issuance of long-term debt ................................        153,540               -          38,280         191,820
   Repayments of long-term debt ..............................        (85,765)              -         (58,334)       (144,099)
   Issuance of treasury stock ................................            219               -               -             219
   Other .....................................................       (135,270)        119,153          27,037          10,920
                                                                    ---------       ---------       ---------       ---------
Net cash provided by (used in) financing activities ..........        (67,276)        119,153           6,983          58,860
                                                                    ---------       ---------       ---------       ---------
Increase (decrease) in cash and cash equivalents .............         41,478             214            (480)         41,212
Cash and cash equivalents at beginning of year ...............         22,530             282           1,406          24,218
                                                                    ---------       ---------       ---------       ---------
Cash and cash equivalents at end of year .....................      $  64,008       $     496       $     926       $  65,430
                                                                    =========       =========       =========       =========



                                                                                                  Combined           Total
                                                                      Parent      Guarantors   non-guarantors    consolidated
                                                                    ---------     ----------   --------------    ------------
                                                                              (Year ended December 31, 2002)
                                                                                                      
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
                                                                    =========       =========       =========       =========



                                                                                                  Combined           Total
                                                                      Parent      Guarantors   non-guarantors    consolidated
                                                                    ---------     ----------   --------------    ------------
                                                                              (Year ended December 31, 2003)
                                                                                                      
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 (used in) 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
                                                                    =========       =========       =========       =========




                                       67



                              STEEL DYNAMICS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13. Quarterly Financial Information (unaudited, in thousands, except per
share data)




                                                            1st Quarter      2nd Quarter      3rd Quarter      4th Quarter
                                                            -----------      -----------      -----------      -----------
                                                                                                   
2003:
Net sales ..........................................         $235,504         $218,632         $253,952         $279,160
Gross profit .......................................           49,535           31,908           38,855           39,686
Operating income ...................................           34,560           17,226           22,845           21,976
Gain from extinguishment of debt ...................                -                -                -           13,987
Net income .........................................           15,778            5,430            9,191           16,749
Earnings per share:
     Basic .........................................              .33              .11              .19              .35
     Diluted .......................................              .33              .11              .19              .34

2002:
Net sales ..........................................         $166,903         $213,739         $240,697         $243,154
Gross profit .......................................           27,374           53,043           72,755           72,461
Operating income ...................................           11,042           33,264           57,076           56,985
Net income .........................................            1,640           17,728           29,131           29,378
Earnings per share:
     Basic .........................................              .04              .37              .61              .62
     Diluted .......................................              .04              .37              .61              .61




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.



                                       68



ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

ITEM 9A: 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, as of December 31, 2003. 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-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were
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 CONTROL OVER FINANCIAL REPORTING. During our
most recent fiscal quarter, there was no change in our internal control over
financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

                                    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 2004 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 2004 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
2004 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 2003 Executive
Officer Compensation Plan, which replaced The Revised Officer and Manager Cash
and Stock Bonus Plan on January 1, 2003; and The Non-Employee Director Stock
Option Plan. The following table summarizes information about our equity
compensation plans at December 31, 2003:




                                               (a)                              (b)                               (c)
                                                                                                     Number of securities remaining
                                     Number of Securities to be                                      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)
---------------------------------- ------------------------------ -------------------------------- --------------------------------
                                                                                            
Equity compensation plans
approved by security holders                2,437,510                         $14.62                          2,630,156
Equity compensation plans not
approved by security holders                 _______                          _______                          _______





                                       69



ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Heidtman Contract. For the years ended December 31, 2003 and 2002, we sold
approximately 419,000 tons and 451,000 tons of our steel products to Heidtman
for $132.8 million and $145.6 million, representing approximately 13% and 17% 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 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% of our common stock
outstanding as of December 31, 2003.

     OmniSource Contract. Since our inception, we were able to ensure a stable
scrap supply for our Flat Roll and Structural and Rail Divisions through a scrap
supply agreement with OmniSource Corporation. However, we have determined that
in the current scrap environment we would be better off with multiple available
sources of supply, including the development of our own scrap purchasing
capability, and with the flexibility to develop new relationships and supply
agreements with third parties and certain scrap generators. Accordingly, we and
OmniSource have amicably terminated our scrap supply agreement, effective March
31, 2004. We intend, however, to continue purchasing scrap from OmniSource as
one of our major suppliers.

     For the years ended December 31, 2003 and 2002, we purchased 2.6 million
tons of scrap, or 89% of our total scrap purchases, and 2.1 million tons of
scrap, or 82% of our total scrap purchases, respectively from OmniSource. For
these purchasing services, we paid OmniSource fees of $2.8 million and $3.5
million for the years ended December 31, 2003 and 2002, respectively. Daniel
Rifkin, who is a member of our board of directors, is the President and Chief
Operating Officer of OmniSource and is also a stockholder of our company.

     Omni Dynamic Aviation, LLC. During 2003, we increased our interest in Omni
Dynamic Aviation, which owns and operates a King Air aircraft, to 97.5% by
purchasing an interest previously held by OmniSource for approximately $360,000.

     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.



                                       70


ITEM 14: 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:

                                                    2003         2002
                                                 ---------    ----------
                      Audit Fees                 $ 280,000    $  412,000
                      Audit-Related Fees            52,000        48,000
                      Tax Fees                     159,000       351,000
                      All Other Fees                 6,000             -
                                                 ---------    ----------
                                                 $ 497,000    $  811,000
                                                 =========    ==========

         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 separate audit of a subsidiary. Tax fees principally include
tax consultations, compliance and planning services.

         There were no other services performed during 2003 and 2002.

                                     PART IV

ITEM 15.  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. included as part of Item 8 and described in the
                  Index on page 45 of this Report.

      2. Financial Statement Schedules:

                None

(b) Reports on Form 8-K. We filed the following reports on Form 8-K during the
fourth quarter of 2003.




         Date of Filing      Description                            Reported
                                                              
         October 23, 2003    Item 9 "Regulation FD Disclosure",     Earnings press release for the quarter ended
                             which was intended to be filed under   September 30, 2003
                             Item 12 "Results of Operations and
                             Financial Condition"


(c) Exhibits:




  Exhibit No.
  -----------
            
      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.





                                       71




            
      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.

      4.2      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, 
               incorporated herein by reference from our Exhibit 4.4a to our 2002 Annual Report on Form 10-K, filed March 28,
               2003.

      4.4b     Second Supplemental Indenture, dated as of September 30, 2002, relating to the Indenture described in Exhibit 4.4, 
               incorporated herein by reference from our Exhibit 4.4b to our 2002 Annual Report on Form 10-K, filed March 28,
               2003.

      4.4c     Third Supplemental Indenture, dated as of December 31, 2002, relating to the Indenture described in Exhibit 4.4, 
               incorporated herein by reference from our Exhibit 4.4c to our 2002 Annual Report on Form 10-K, filed March 28,
               2003.

      4.4d*    Fourth Supplemental Indenture, dated as of November 26, 2003, 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.

               Material Contracts

     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, incorporated herein by reference from our Exhibit 10.1b to our 2002 Annual Report on Form 10-K,
               filed March 28, 2003.

     10.1c     Third Amendment to Credit Agreement dated as of January 23, 2003, relating to the Credit Agreement described at 
               Exhibit 10.1, incorporated herein by reference from our Exhibit 10.1c a to our 2002 Annual Report on Form 10-K,
               filed March 28, 2003.



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     10.1d     Fourth Amendment to Credit Agreement dated as February 20, 2003, relating to the Credit Agreement described at 
               Exhibit 10.1, incorporated herein by reference from our Exhibit 10.1d to our 2002 Annual Report on Form 10-K,
               filed March 28, 2003.

     10.1e*    Fifth Amendment to Credit Agreement dated as August 7, 2003, relating to the Credit Agreement described at Exhibit 
               10.1.

     10.1f*    Sixth Amendment to Credit Agreement dated as November 13, 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.

     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.

     10.24+*   2003 Executive Incentive Compensation Plan, approved by stockholders on May 29, 2003.

     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.

     10.41a*   Agreement (Settlement Agreement and Mutual Release), dated as of December 23, 2003, by and among Iron Dynamics, Inc.,
               Steel Dynamics, Inc., and various signatory lender banks.

               Other

     12.1*     Computation of Ratio of Earnings to Fixed Charges

     14.1      Code of Ethics for Principal Executive Officers and Senior Financial Officers, incorporated by reference herein from
               Exhibit 14.1 to our 2002 Annual Report on Form 10-K, filed March 28, 2003.

     21.1*     List of our Subsidiaries

     23.1*     Consent of Ernst & Young LLP.






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     24.1      Powers of attorney (see signature page on page 75 of this Report).

               Executive Officer Certifications

     31.1*     Certification of Chief Executive Officer required by Item 307 of Regulation S-K as promulgated by the Securities and
               Exchange Commission and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     31.2*     Certification of Chief Financial Officer required by Item 307 of Regulation S-K as promulgated by the Securities and
               Exchange Commission and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     32.1*     Certification of Chief Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002

     32.2*     Certification of Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002



--------------
*     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 12.1, 14.1, 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.



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                                   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 9, 2005
                                            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 Gary E. Heasley, 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 2003 Annual Report, as amended, on Form 10-K/A, 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 perform each and
every act and thing requisite and necessary to be done, as fully as he might or
could do in person, hereby ratifying and confirming all 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 2003 Annual Report, as amended, on Form 10-K/A has been signed below by the
following persons on behalf of Steel Dynamics, Inc. and in the capacities and on
the dates indicated.




        Signatures                                                   Title                                       Date
        ----------                                                   -----                                       ----
                                                                                                          
  /S/ KEITH E. BUSSE                          President & Chief Executive Officer and Director                  3/9/05
----------------------------------                      (Principal Executive Officer)                                   
           Keith E. Busse                     
                                              


  /S/ GARY E. HEASLEY                         Chief Financial Officer                                           3/9/05 
----------------------------------              (Principal Financial and Accounting Officer)                             
        Gary E. Heasley                   
                                                


  /S/ MARK D. MILLETT                        Vice President and Director                                        3/9/05 
----------------------------------                                                                                       
           Mark D. Millett                                                                                               
                                                                                                                         
                                                                                                                         
                                                                                                                         
  /S/ RICHARD P. TEETS, JR.                  Vice President and Director                                        3/9/05
----------------------------------                       
        Richard P. Teets, Jr.                            





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                                                                  Director                                      
----------------------------------                                                                                       
           Daniel M. Rifkin                                                                                              
                                                                                                                         
                                                                                                                         
  /S/ JOHN C. BATES                                               Director                                      3/9/05 
----------------------------------                                                                                       
            John C. Bates                                                                                                
                                                                                                                         
                                                                                                                         
                                                                                                                         
  /S/ DR. JURGEN KOLB                                             Director                                      3/9/05
----------------------------------                                                                                       
           Dr. Jurgen Kolb                                                                                               
                                                                                                                         
                                                                                                                         
                                                                                                                         
  /S/ NAOKI HIDAKA                                                Director                                      3/9/05
----------------------------------                                                                                       
            Naoki Hidaka                                                                                                 
                                                                                                                         
                                                                                                                         
  /S/ JOSEPH D. RUFFOLO                                           Director                                      3/9/05
----------------------------------                                                                                       
           Joseph D. Ruffolo                                                                                             
                                                                                                                         
                                                                                                                         
  /S/ JAMES E. KELLEY                                             Director                                      3/9/05
----------------------------------                                                                                       
            James E. Kelley                                                                                              
                                                                                                                         
                                                                                                                         
  /S/ RICHARD J. FREELAND                                         Director                                      3/9/05
----------------------------------                                                                                       
          Richard J. Freeland                                                                                            
                                                                                                                         
                                                                                                                         
  /S/ PAUL B. EDGERLEY                                            Director                                      3/9/05
----------------------------------                                                                                       
           Paul B. Edgerley                                       






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