AMERISTEEL CORP, S-1, 1997-10-10

AMERISTEEL CORP
S-1, 1997-10-10
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1997

REGISTRATION STATEMENT NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
AMERISTEEL CORPORATION
(Exact name of Registrant as specified in its charter)
---------------------

<TABLE>
<S> <C> <C>
FLORIDA 3312 59-0792436
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

---------------------
5100 W. LEMON STREET
TAMPA, FLORIDA 33609
(813) 286-8383
(Address, including zip code, and telephone number including area code, of
Registrant's principal executive offices)
---------------------
PHILLIP E. CASEY, CHIEF EXECUTIVE OFFICER
AMERISTEEL CORPORATION
5100 W. LEMON STREET
TAMPA, FLORIDA 33609
(813) 286-8383
(Name, address, including zip code, and telephone number including area code, of
agent for service)

Copies of communications to:

<TABLE>
<C> <C>
ALBERT C. O'NEILL, JR, ESQUIRE JOHN EVANGELAKOS, ESQUIRE
TRENAM, KEMKER, SCHARF, BARKIN SULLIVAN & CROMWELL
FRYE, O'NEILL & MULLIS 125 BROAD STREET
P.O. BOX 1102 NEW YORK, NEW YORK 10004-2400
TAMPA, FLORIDA 33601-1102 (212) 558-4000
(813) 223-7474
</TABLE>

---------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Common Stock(2)..................................... $97,750,000 $29,622
============================================================================================================
</TABLE>

(1) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
(2) The shares of Class A Common Stock are not being registered for the purpose
of sales outside the United States.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 10, 1997
[LOGO] SHARES

AMERISTEEL CORPORATION

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
----------------------

Of the shares of Class A Common Stock offered, shares are
being offered hereby in the United States and shares are being offered in
a concurrent international offering outside the United States. The initial
public offering price and the aggregate underwriting discount per share will be
identical for both Offerings. See "Underwriting".

All of the shares of Class A Common Stock offered hereby are being
sold by the Company. Prior to the Offerings, there has been no public market for
the Class A Common Stock of the Company. It is currently estimated that the
initial public offering price per share will be between $ and
$ . For factors considered in determining the initial public offering
price, see "Underwriting".

The Company has two classes of Common Stock. Shares of Class A Common Stock
and Class B Common Stock generally carry the same rights, powers, preferences,
privileges and limitations, except that Class A Common Stock has one vote per
share while Class B Common Stock has two votes per share. See "Description of
Capital Stock". After giving effect to the Offerings (assuming the Underwriters'
over-allotment options are not exercised), the issued and outstanding shares of
Class B Common Stock will have approximately % of the combined voting power
of all outstanding shares of capital stock of the Company. After the Offerings,
approximately 90% of the Class B Common Stock will be held by Kyoei Steel, Ltd.
See "Principal Stockholders".

SEE "RISK FACTORS" ON PAGE 8 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE CLASS A COMMON STOCK.

Application will be made to list the Class A Common Stock on the New York
Stock Exchange under the symbol "AST".
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT (1) COMPANY (2)
-------------- ------------ -----------
<S> <C> <C> <C>
Per Share.............................. $ $ $
Total (3).............................. $ $ $
</TABLE>

- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

(2) Before deducting estimated expenses of $ payable by the Company.

(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional shares at the initial public offering
price per share, less the underwriting discount, solely to cover
over-allotments. Additionally, the Company has granted the International
Underwriters a similar option with respect to an additional shares as
part of the concurrent international offering. If such options are exercised
in full, the total initial public offering price, underwriting discount and
proceeds to Company will be $ , $ and $ , respectively.
See "Underwriting".
----------------------
The shares offered hereby are offered severally by the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York, on
or about , 1997, against payment therefor in immediately available
funds.
GOLDMAN, SACHS & CO. MORGAN STANLEY DEAN WITTER
----------------------
The date of this Prospectus is , 1997.
<PAGE> 3

[PICTURE OF REBAR, CHANNEL, ANGLE AND FLAT STEEL PRODUCTS AND APPLICATIONS]

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

This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy the shares in any jurisdiction in which such offer or
solicitation is unlawful. There are restrictions on the offer and sale of the
shares in the United Kingdom. All applicable provisions of the Financial
Services Act 1986 and the Public Offers of Securities Regulations 1995 with
respect to anything done by any person in relation to the shares, in, from or
otherwise involving the United Kingdom must be complied with. See
"Underwriting".

In this Prospectus, references to "dollars", "U.S.$" and "$" are to United
States dollars.
---------------------

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERINGS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Financial Statements and Notes thereto appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information presented in this
Prospectus assumes that the Underwriters' over-allotment option will not be
exercised and all references in this Prospectus to the "Company" shall be deemed
to refer to AmeriSteel Corporation and all references to fiscal years are to the
Company's fiscal years ended on March 31.

THE COMPANY

The Company operates four non-union minimills located in the southeastern
U.S. that produce steel concrete reinforcing bars ("rebar"), light structural
shapes such as rounds, squares, flats, angles and channels ("merchant bars")
and, to a lesser extent, wire rod ("rods") and billets (which are semi-finished
steel products). The Company also operates 13 rebar fabricating plants
strategically located in close proximity to its mills. The Company estimates
that it currently has annual steel melting capacity of 2.0 million tons per year
and finished product rolling capacity of 1.7 million tons per year. The Company
believes that it is the second largest producer and the largest fabricator of
rebar in the U.S.

The Company's minimills use electric arc furnaces to melt recycled scrap
steel. The molten steel is then cast into long strands called billets in a
continuous casting process. Billets are then reheated and rolled into rebar,
merchant bars and rods. The Company's fabricating plants further process
approximately 40% of the Company's mill rebar production to meet specific
contractor specifications. Rebar is used primarily for strengthening concrete in
highway and building construction and other construction applications. Merchant
bars are used in a wide variety of applications including floor and roof joists,
transmission towers, and farm equipment. Rods are used in a variety of
applications, including the manufacture of welded wire fabric and nails.

In late 1992, the Company was purchased by Kyoei Steel Ltd. ("Kyoei"), a
private Japanese minimill company engaged in the manufacture of commodity grade
steel products, primarily rebar and merchant bar products. Kyoei, founded in
1947, operates four minimills in Japan and a rolling mill in Vietnam with a
total annual rebar and merchant bar rolling capacity of 2.5 million tons. Kyoei
enjoys a reputation of being a highly efficient, low cost producer in the
domestic Japanese market. The Company has benefitted from access to Kyoei's
operating, engineering and technical expertise.

THE INDUSTRY

United States market demand for rebar was approximately 6.3 million tons in
calendar 1996. The Company believes that it is the second largest producer of
rebar in the U.S. and estimates it has approximately a 13% share of the U.S.
rebar market and approximately a 20% share in the eastern two-thirds of the U.S.
The U.S. market for merchant and other light structural shape bars was estimated
to be approximately 8.6 million tons in calendar 1996. The Company estimates
that it has approximately a 6% share of this market. For the quarter ended June
30, 1997, approximately 24% of the Company's net sales were derived from
fabricated rebar, 28% from stock rebar (rebar produced by the mills and sold to
third parties), 31% from merchant bars, 6% from rods and 11% from semi-finished
billets.

The minimill industry is composed of two types of competitors: multi-mill
operators and stand-alone minimills. The Company believes that recent growth in
the industry (through acquisitions as well as capital expenditures) has been
driven by multi-mill operations because stand-alone minimills have not generally
been able to achieve the economies of scale or had access to the financial
resources to make the investments that larger operators have. The Company
believes that further industry consolidation will continue given the significant
advantages available to multi-mill operators. Accordingly, the Company is
actively investigating potential acquisition opportunities.
3
<PAGE> 5

COMPETITIVE STRENGTHS

The primary focus of the Company's business strategy is to continue to be a
low cost producer of rebar and merchant bar products in the U.S. and to further
grow its business including through acquisitions of steel producing and related
assets. The Company believes that the following competitive strengths are key
elements of this strategy:

DEMONSTRATED COST CONTROL. Since 1994, the Company has reduced its
costs of converting scrap steel to finished steel products ("conversion
costs") from $146 per ton to $125 per ton for the quarter ended June 30,
1997. The Company has achieved these cost reductions through its mill
modernization program, high mill utilization, access to competitively
priced electric power at its Tennessee and North Carolina mills, and labor
incentive programs designed to maximize productivity. In addition, since
1994, the Company has closed unprofitable operations and divested non-core
activities. The Company currently has initiatives in place that it believes
will further reduce its conversion costs.

MODERNIZED PRODUCTION EQUIPMENT IN ATTRACTIVE LOCATIONS. Since 1992,
the Company has invested approximately $110 million in mill modernization,
including major projects at its Jackson, Tennessee, Jacksonville, Florida
and Charlotte, North Carolina mills. The Company believes its recent mill
modernization program will lower conversion costs and increase capacity
utilization, enhance merchant bar quality and broaden its merchant bar
product range. The southeastern U.S. (where all the Company's mills are
located) accounts generally for more than one-fourth of U.S. rebar
consumption and, due to mild wintertime weather conditions, demonstrates
less seasonal demand fluctuations than more northern regions of the U.S.
Because of the high cost of freight relative to the value of the Company's
products, competition from non-regional producers is limited.

MOTIVATED, NON-UNION LABOR FORCE. The Company employs a non-union
workforce of approximately 1,870 employees. The Company's compensation
programs are designed to allow employees to earn significant incentive
bonuses (approximately one-fifth of their total compensation) based on
production volumes, sales volumes, cost targets or return on capital
employed. These programs have been successfully implemented by the current
management team and have resulted in lower costs, higher productivity and
increased profitability. Further incentive is provided through equity
ownership plans. Approximately 57% of current employees have purchased
stock in the Company, including Phillip E. Casey, Chairman and Chief
Executive Officer, who owns approximately 10% of the outstanding shares of
the Company's capital stock ( % after the Offerings).

STRONG MARKET POSITIONS. The Company believes that it is the second
largest producer of rebar in the U.S. and estimates it has approximately a
13% share in the U.S. rebar market and approximately a 20% share in the
eastern two-thirds of the U.S. In addition, the Company believes that it is
the largest fabricator of rebar products in the U.S., with fiscal 1997
revenues of $161.2 million, or approximately 26% of the Company's sales.
The Company believes its strong market position in both stock rebar
shipments and fabricated rebar shipments provides it with competitive
market intelligence and other advantages from vertical integration relative
to its smaller competitors. The Company estimates it has approximately a 6%
share of the U.S. market for merchant and other light structural shape
bars. The Company believes it has opportunities to increase its market
share in this market, which is generally less cyclical and more profitable
than the rebar market. A recent independent survey has ranked the Company
first in customer service and on-time delivery in the Company's principal
product markets. As evidence of a high degree of customer satisfaction, the
Company has had, on average, a relationship of at least 10 years with its
top 25 customers.

The Company's headquarters are located at 5100 W. Lemon Street, Tampa,
Florida 33609, and its telephone number is (813) 286-8383.
4
<PAGE> 6

THE OFFERINGS(1)

<TABLE>
<S> <C> <C>
Class A Common Stock offered by the
Company:
United States Offering................ shares
International Offering................ shares
Total......................... shares
Common Stock outstanding after the
Offerings:
Class A Common Stock.................. shares
Class B Common Stock.................. shares(2)
Total......................... shares
Use of Proceeds......................... To repay approximately $ million in long term
debt, to fund working capital and for general
corporate purposes. See "Use of Proceeds".
Proposed New York Stock Exchange
symbol................................ AST
</TABLE>

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

(1) The offerings of Class A Common Stock by the U.S. Underwriters and the
International Underwriters are referred to herein as the "Offerings".
(2) Excludes 328,288 shares of Class B Common Stock issuable at an average
exercise price of $12.69 on the exercise of stock options granted under the
Company's option plans and outstanding as of June 30, 1997. See
"Management -- Incentive and Benefit Plans" and "Description of Capital
Stock".
5
<PAGE> 7

SUMMARY FINANCIAL AND OPERATING DATA

The summary statement of operations and balance sheet data for the years
ended March 31, 1994, 1995, 1996 and 1997 are derived from the audited financial
statements of the Company. The same data for the year ended March 31, 1993 has
been compiled from the Company's financial statements, combining the periods for
the nine months ended December 31, 1992 which was unaudited, and the three
months ended March 31, 1993 which was audited. The data for the three month
periods ended June 30, 1996 and 1997 has been derived from the unaudited
financial statements for those periods. The unaudited financial data include, in
the opinion of management, all adjustments consisting only of normal recurring
accruals necessary to present fairly the data for such periods. Certain
reclassifications have been made to the March 31, 1994 financial data to conform
with the financial data of the other periods presented. The following financial
data for the years ended March 31, 1995, 1996 and 1997 is qualified in its
entirety by reference to the more detailed Financial Statements and Notes
thereto, included elsewhere in this Prospectus, and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, QUARTER ENDED JUNE 30,
-------------------------------------------------------------- -----------------------------
1993 1994 1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- ---------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AND AVERAGE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales........................ $ 479,971 $ 547,118 $ 639,908 $ 628,404 $ 617,289 $169,822 $168,359
Operating expenses:
Cost of sales.................. 431,288 498,692 545,725 533,965 531,190 148,912 135,037
Selling and administrative..... 25,285 27,293 29,959 29,605 29,068 6,933 7,572
Depreciation................... 15,496 15,369 14,046 14,619 16,654 3,995 4,827
Amortization of goodwill....... 3,017 4,061 4,130 4,130 4,130 1,033 1,033
Other operating expenses(1).... 9,000 10,920 -- 16,013 -- -- --
---------- ---------- ---------- ---------- ---------- -------- --------
$ 484,086 $ 556,335 $ 593,860 $ 598,332 $ 581,042 $160,873 $148,469
Income (loss) from operations.... (4,115) (9,217) 46,048 30,072 36,247 8,949 19,890
Other expense:
Interest....................... 37,534 21,027 23,330 22,000 19,473 4,855 5,188
Amortization of deferred
financing costs.............. 1,548 2,552 2,863 1,956 934 234 234
---------- ---------- ---------- ---------- ---------- -------- --------
$ 39,082 $ 23,579 $ 26,193 $ 23,956 $ 20,407 $ 5,089 $ 5,422
Income (loss) before income taxes
(benefit) & extraordinary
item........................... (43,197) (32,796) 19,855 6,116 15,840 3,860 14,468
Income taxes (benefit)........... (13,711) (10,833) 9,354 3,996 7,788 1,908 6,045
---------- ---------- ---------- ---------- ---------- -------- --------
Income (loss) before
extraordinary item............. $ (29,486) $ (21,963) $ 10,501 $ 2,120 $ 8,052 $ 1,952 $ 8,423
Extraordinary item, net of income
tax benefit(2)................. (4,185) (748) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- -------- --------
Net income (loss)................ $ (33,671) $ (22,711) $ 10,501 $ 2,120 $ 8,052 $ 1,952 $ 8,423
========== ========== ========== ========== ========== ======== ========
Earnings (loss) per share(3)..... $ (2.27) $ 1.05 $ 0.21 $ 0.80 $ 0.19 $ 0.83
========== ========== ========== ========== ======== ========
BALANCE SHEET DATA
(end of period):
Working capital.................. $ 88,805 $ 111,666 $ 121,364 $ 114,521 $ 108,727 $107,229 $114,674
Total assets..................... 495,884 523,706 561,748 554,896 535,685 547,035 541,892
Current liabilities.............. 59,530 76,006 102,080 85,588 73,792 80,934 77,632
Long-term debt (less current
portion)....................... 212,002 247,128 243,030 252,525 237,474 247,648 231,745
Stockholders' equity............. 147,711 124,999 137,750 141,747 150,564 143,927 159,170
SELECTED OPERATING DATA:
Shipped Tons
Stock rebar.................... 434 466 536 508 472 135 140
Merchant bar................... 427 468 549 544 512 121 136
Rod............................ 144 121 129 133 105 35 29
---------- ---------- ---------- ---------- ---------- -------- --------
Subtotal mill finished goods... 1,005 1,055 1,214 1,185 1,089 291 305
Fabricated rebar............... 317 330 347 315 326 84 85
Billets........................ 232 263 141 175 281 108 56
---------- ---------- ---------- ---------- ---------- -------- --------
Total shipped tons............. 1,554 1,648 1,702 1,675 1,696 483 446
========== ========== ========== ========== ========== ======== ========
Average mill finished goods
prices (per ton)............... $ 284 $ 310 $ 342 $ 337 $ 333 $ 329 $ 346
Average scrap cost (per ton)..... 94 119 130 131 130 131 129
Average metal spread (per ton)... 190 191 212 206 203 198 217
Average mill conversion costs
(per ton)...................... 140 146 135 135 138 146 125
</TABLE>

6
<PAGE> 8

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

(1) In September 1992, the Company recorded a $9.0 million charge for a
settlement related to a Florida Department of Transportation epoxy coated
rebar claim. In the fiscal year ended March 31, 1994, the Company recorded a
$10.3 million charge related to the closing of the Tampa melt shop and a
$0.6 million charge related to closing the Fort Myers, Florida and
Woodbridge, Virginia fabrication shop facilities. In the fiscal year ended
March 31, 1996, the Company recorded a $15.0 million charge related to the
closing of the Tampa rolling mill and a $1.0 million charge for the closure
of other facilities.
(2) In December 1992, the Company repaid $239.6 million of existing debt which
had a carrying value of $233.0 million resulting in a loss of $4.2 million
net of income tax benefit. In the fiscal year ended March 31, 1994, the
Company incurred a charge of $748,000, net of income tax benefits, as a
result of redeeming $20 million of the 14.5% subordinated debentures at a
premium of 6% or $1.2 million.
(3) Earnings (loss) per share for the year ended March 31, 1993 is not presented
because ownership of the Company changed in late calendar 1992. For
comparative purposes, loss per share for the entire period would have been
$(3.37) assuming 10,000,000 shares of stock outstanding throughout the
entire year.

7
<PAGE> 9

RISK FACTORS

An investment in the shares of Class A Common Stock offered hereby involves
a high degree of risk. Prospective investors should carefully consider the
following risk factors, as well as the other information in this Prospectus,
before investing in shares of the Class A Common Stock offered hereby. This
Prospectus contains certain forward-looking statements that involve risks and
uncertainties. Future events and the Company's actual results could differ
materially from the results reflected in these forward-looking statements.

HIGHLY CYCLICAL INDUSTRY

The domestic steel industry and the Company's business are highly cyclical
in nature. The Company is particularly sensitive to the presence or absence of
sustained economic growth and accompanying construction activity since rebar is
used to reinforce concrete in the construction of high rise commercial
buildings, highways, bridges and dams, and other public and private construction
projects. Demand for the Company's merchant bar products is tied less to
construction activity and more to general economic activity. Future economic
downturns or a slowdown in construction activity could adversely affect the
Company's results of operations and financial condition.

AVAILABILITY AND COST OF RAW MATERIALS

The Company's principal raw material is ferrous scrap metal derived from,
among other sources, junked automobiles, railroad cars, appliances and
demolition scrap. Scrap comprised approximately 42% of the Company's cost of
sales in fiscal 1997. The purchase price for scrap is subject to market forces
beyond the control of the Company, including demand by domestic and foreign
steel producers, freight costs, speculation by scrap brokers and other
conditions. As minimills have steadily increased their share of supplying U.S.
steel demand, demand for scrap has also increased.

The ability to pass on increases in raw material prices to the Company's
customers is, to a large extent, dependent on market conditions. There may be
periods of time in which increases in raw material prices are not recoverable by
the Company due to an inability to increase the selling prices of its products
because of weakness in the demand for, or an oversupply of, such products.
Increases in raw material prices, during such periods, may have a material
adverse effect on the Company's results of operations and financial condition.
See "Business -- Raw Materials".

The Company buys substantially all of the scrap it requires through one
broker, The David J. Joseph Company, which also operates shredders for the
Company at the Jacksonville and Jackson mills. The Company believes that it
could readily obtain adequate supplies of scrap, if warranted, from a number of
other sources at competitive prices.

HIGHLY COMPETITIVE INDUSTRY; EXCESS PRODUCTION CAPACITY

The domestic and foreign steel industries are characterized by intense
competition. The Company competes primarily with domestic minimill producers of
commodity grade steel bar products, although foreign competition can also be a
factor depending on the level of domestic prices, foreign government subsidies
and exchange rates. The Company competes primarily on the basis of price,
product quality, and reliability of service and delivery. The Company believes
that its competitive production costs, the proximity of its mills to major
markets and customers, and its long-standing reputation for quality products and
service will ensure its competitive position in the industry, although there can
be no assurance that competition will not have an adverse effect in the future.

Overall consumption of steel products in the U.S. has not grown with the
economy as a whole during the past decade. Although the operations of domestic
steel producers have been scaled back as a result of corporate reorganizations
and bankruptcies, there still exists, taking into account current levels of
imports and announced capacity additions, significant excess production capacity
in the domestic steel

8
<PAGE> 10

industry as a whole. There can be no assurance that such excess production
capacity will not have a material adverse effect on the Company's results of
operation and financial condition.

SEASONALITY; VARIABILITY OF QUARTERLY RESULTS

The Company has historically experienced and expects to continue to
experience seasonal fluctuations in its revenues and net income. Revenues can
fluctuate significantly between quarters due to factors such as the seasonal
slowdown in the construction industry, which is an important market for the
Company's finished steel products. In the past, the Company has generally
experienced its lowest sales during the third and fourth quarters of its fiscal
year.

DEPENDENCE ON SOUTHEASTERN MARKET

Sales to customers in the southeastern U.S. in recent years have accounted
for approximately one-third of the Company's total sales. Due to the relatively
high transport costs associated with the delivery of the Company's products
beyond this region, the Company does not believe that it can expand sales
significantly outside of the region without the acquisition of additional
facilities. Accordingly, the Company believes the economic condition of this
regional market will continue to have a material effect on sales and
profitability of the Company.

POTENTIAL COSTS OF ENVIRONMENTAL COMPLIANCE

The Company is subject to federal, state and local laws and regulations
governing the remediation of environmental contamination associated with past
releases of hazardous substances and to extensive federal, state, and local laws
and regulations governing discharges to the air and water as well as the
handling and disposal of solid and hazardous wastes and employee health and
safety (collectively, "Environmental Laws"). Governmental authorities have the
power to enforce compliance with these requirements, and violators may be
subject to civil or criminal penalties, injunctions or both. Third parties also
may have the right to sue for damages to enforce compliance.

The electric arc furnaces at each of the Company's four mills are
classified as generators of hazardous waste because the melting operation
produces dust containing heavy metals (principally zinc, lead, chromium and
cadmium). The Company also owns or has owned properties, and conducts or has
conducted operations at properties, which have been assessed as contaminated
with hazardous or other regulated substances, or as otherwise requiring remedial
action under Environmental Laws. Moreover, environmental legislation has been
enacted, and may in the future be enacted, to create liability for past actions
that were lawful at the time taken but that have been found to affect the
environment and to create public rights of action for environmental conditions
and activities. Under some of these Environmental Laws a company that has sent
waste to a third party waste disposal site could be held liable for the entire
cost of remediating such site regardless of fault or the lawfulness of the
original disposal activity.

Over the past three years, the Company has spent in excess of $30 million
for remediation under Environmental Laws for certain on-site and off-site
locations. The Company has estimated its potential costs for further remediation
under Environmental Laws at on-site and off-site locations through 2009 to be
approximately $12.2 million and has included this amount in the Company's
recorded liabilities as of June 30, 1997. Although the Company has established
reserves for environmental remediation, there is no assurance regarding the cost
of remedial action authorities might eventually require, or that additional
environmental hazards, requiring further remedial expenditures, might not be
assessed by these authorities or private parties. Accordingly the costs of
remedial measures may exceed the amounts reserved. In addition, the Company may
be subject to legal proceedings brought by private parties or governmental
agencies with respect to environmental matters.

Although it is the Company's policy to comply with all Environmental Laws
and the Company believes that it is currently in material compliance with all
Environmental Laws, there can be no assurance that material environmental
liabilities will not be incurred by the Company in the future or that future

9
<PAGE> 11

compliance with Environmental Laws (whether those currently in effect or enacted
in the future) will not require additional expenditures by the Company or
require changes to the Company's current operations, any of which could have a
material adverse effect on the Company's results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Compliance with Environmental Laws and Regulations".

VOTING CONTROL BY PRINCIPAL STOCKHOLDER

Upon completion of the Offerings, Kyoei, through its wholly owned
subsidiary, FLS Holdings Inc. ("FLS"), will be the beneficial owner of 9,000,000
shares of the Class B Common Stock, which Class B Common Stock is entitled to
two votes per share and will represent approximately % of the combined
voting power of all classes of voting stock ( % if the Underwriters'
over-allotment options are exercised in full). As a result, Kyoei has, and will
continue to have, sufficient voting power to elect the entire Board of Directors
of the Company and, in general, to determine (without the consent of the
Company's other stockholders) the outcome of any corporate transaction or other
matters submitted to the stockholders for approval. See "Management", "Principal
Stockholders" and "Description of Capital Stock".

RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS

Although the Company's business strategy includes growing its business
through acquisitions, there can be no assurance that the Company will be able to
identify attractive or willing acquisition candidates, or that the Company will
be able to complete acquisitions if such candidates are identified. Future
acquisitions by the Company may result in potentially dilutive issuances of
equity securities, and the incurrence of additional debt and amortization
expenses related to goodwill and other intangible assets, each of which could
materially adversely affect the Company's business and results of operations. In
addition, acquisitions involve numerous risks, including difficulties in
assimilating the operations, products and personnel of the acquired company, the
diversion of management's attention from other business concerns, risks of
entering markets in which the Company has no direct prior experience and the
potential loss of key employees of both the acquired company and the Company.
The Company has no present agreements or commitments with respect to any
material acquisitions of other businesses, products or assets.

NO PRIOR MARKET FOR CLASS A COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Class A
Common Stock, and there can be no assurance that an active market will develop
or be sustained after the completion of the Offerings. Consequently, the initial
public offering price of the Class A Common Stock will be determined by
negotiations among the Company and the Underwriters. See "Underwriting" for a
description of the factors to be considered in determining the initial public
offering price.

The market price of the Class A Common Stock may be significantly affected
by, and could be subject to significant fluctuations in response to, such
factors as the Company's operating results, changes in any earnings estimates
publicly announced by the Company or by securities analysts, announcements of
significant business developments by the Company or its competitors, other
developments affecting the Company, its clients or its competitors, and various
factors affecting the Company's business, the financial markets or the economy
in general, some of which may be unrelated to the Company's performance. In
addition, the stock market has experienced a high level of price and volume
volatility, and market prices for the stock of many companies, especially
companies that have recently completed initial public offerings, have
experienced wide price fluctuations not necessarily related to the operating
performance of such companies. Because the number of shares of Class A Common
Stock being offered hereby is small relative to the average number of shares
traded of many other publicly held companies, the market price of Class A Common
Stock may be more susceptible to fluctuation.

10
<PAGE> 12

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of a substantial number of shares of the Class A Common Stock
in the public market could adversely affect the market price of the Class A
Common Stock and could impair the Company's ability to raise capital through the
sale of equity or equity-related securities. Upon completion of the Offerings,
the Company will have shares of Class A Common Stock outstanding and
10,114,603 shares of Class B Common Stock outstanding. All shares of Class B
Common Stock are convertible into shares of Class A Common Stock on a
one-for-one basis. Of such shares, 72,208 shares of Class B Common Stock,
representing approximately % of the issued and outstanding shares of Common
Stock (approximately % if the Underwriters' over-allotment options are
exercised in full), will be freely tradeable without restriction or further
registration under the Securities Act, unless purchased by "affiliates" of the
Company as that term is defined in Rule 144 under the Securities Act ("Rule
144"). The remaining 10,042,395 shares of Class B Common Stock, representing
approximately % of the issued and outstanding shares of Common Stock
(approximately % if the Underwriters' over-allotment options are exercised
in full), are beneficially owned by affiliates of the Company and are therefore
"restricted securities" as that term is defined in Rule 144 and as such are
subject to certain holding period, volume limitation and other restrictions
prescribed by Rule 144. The Company, certain of its executive officers and Kyoei
have agreed that, during the period beginning from the date of this Prospectus
and continuing to and including the date 180 days after the date of this
Prospectus, they will not offer, sell, contract to sell, pledge, hypothecate,
grant any option, right or warrant to purchase, or otherwise dispose of,
directly or indirectly, (which shall be deemed to include, without limitation,
the entering into of a cash-settled or Common Stock settled derivative
instrument) any shares of Common Stock, any securities of the Company that are
substantially similar to the Class A Common Stock or any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Common Stock, or any such substantially similar securities, (other than pursuant
to employee stock option plans existing on, or upon the conversion or exchange
of convertible or exchangeable securities outstanding as of, the date of this
Prospectus), without the prior written consent of the representatives, except
for the shares of Class A Common Stock offered in connection with the Offerings.
Upon expiration of such 180 day period, an aggregate of 10,042,395 shares will
be eligible for sale subject to the timing, volume and manner of sale
restrictions of Rule 144. See "Shares Eligible for Future Sale" and
"Underwriting".

IMMEDIATE AND SUBSTANTIAL DILUTION

Investors in the Offerings will experience immediate and substantial
dilution in net tangible book value per share of Common Stock of $ per
share. In addition, any future issuance of shares of Common Stock or the grant
of options to purchase Common Stock could cause further dilution. See
"Dilution".

11
<PAGE> 13

USE OF PROCEEDS

The net proceeds to the Company from the Offerings (based on an assumed
offering price of $ per share and after deducting assumed underwriting
discounts and estimated offering expenses) are estimated to be approximately
$ million ($ million if the Underwriters' over-allotment options are
exercised in full). The Company intends to use up to $50.0 million of the net
proceeds to repay all or a portion of the Company's Subordinated Intercompany
Note. The balance of the estimated net proceeds of the Offerings will be used
first to repay all or a portion of the outstanding balance under the Company's
Revolving Credit Agreement and then to fund working capital and for general
corporate purposes.

The $50.0 million principal amount of the Company's Subordinated
Intercompany Note outstanding as of June 30, 1997 bears interest at a weighted
average rate of LIBOR plus 138 basis points, or 7.2% per annum as of such date,
and matures in December 2002. Indebtedness under the Revolving Credit Agreement
bears interest at a per annum rate equal to one of several rate options (LIBOR,
Fed Funds or Cost of Funds), depending on the debt facility selected by the
Company, plus an applicable margin determined by tests of performance from time
to time. The indebtedness outstanding as of June 30, 1997 under the Revolving
Credit Agreement bears interest at a rate of 7.3% per annum as of such date. The
Revolving Credit Agreement expires in June 1999. The unpaid balance under the
Revolving Credit Agreement was $50.9 million as of June 30, 1997.

DIVIDEND POLICY

The Company has not recently paid regular cash dividends on its Common
Stock, but intends to establish a policy to declare and pay regular cash
dividends each fiscal quarter. The Company currently anticipates that the first
such dividend will be declared within six months following the completion of the
Offerings in the amount of $.025 per share of Common Stock. However, any
determination to pay dividends will be at the discretion of the Company's Board
of Directors and necessarily will be dependent upon the Company's results of
operations, financial condition, contractual restrictions, restrictions imposed
by applicable law and other factors deemed relevant by the Board of Directors,
and the Company may change its dividend policy or cease paying dividends at any
time. Prior to the completion of the Offerings, the Company intends to declare
and pay a special dividend of approximately $6.0 million to its then current
stockholders.

12
<PAGE> 14

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997 and as adjusted to reflect (i) the recapitalization of the Company to
create shares of Class A Common Stock and Class B Common Stock of which
100,000,000 and 22,000,000 will be authorized, respectively, (ii) the
application of the estimated net proceeds from the issuance and sale by the
Company of the shares of Class A Common Stock in the Offerings (at an
assumed offering price of $ per share) as described in "Use of
Proceeds" and (iii) the payment prior to the completion of the Offerings of a
dividend of approximately $6.0 million. The table should be read in conjunction
with the Financial Statements and Notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
----------------------------
ACTUAL AS ADJUSTED
-------------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt (including current portion of long-term
debt)..................................................... $ 5,687 $
========
Long-term debt (less current portion)
First Mortgage Notes...................................... $100,000 $
Revolving Credit Agreement................................ 50,870
Industrial Revenue Bonds.................................. 30,875
Subordinated Intercompany Note............................ 50,000
-------- --------
Total long-term debt.............................. $231,745 $

Stockholders' equity(1):
Class A Common Stock, $0.01 par value, 100,000,000 shares
authorized; no shares issued and outstanding;
shares as adjusted..................................... --
Class B Common Stock, $0.01 par value, 22,000,000 shares
authorized; 10,075,174 shares issued and outstanding... 101
Capital in excess of par.................................. 156,765
Retained earnings......................................... 4,095
Deferred compensation..................................... (1,791)
-------- --------
Total stockholders' equity........................ $159,170 $
-------- --------
Total capitalization........................................ $390,915 $
======== ========
</TABLE>

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

(1) Excludes 328,288 shares of Class B Common Stock issuable at an average
exercise price of $12.69 on the exercise of stock options granted under the
Company's option plans. See "Management -- Incentive and Benefit Plans" and
"Description of Capital Stock".

13
<PAGE> 15

DILUTION

The Company's net tangible book value as of June 30, 1997 was $72.1
million, or $7.16 per share, based on 10,075,174 shares of Common Stock
outstanding. Net tangible book value per share represents the amount of the
Company's total tangible assets less its total liabilities, divided by the total
number of shares of Common Stock outstanding. After giving effect to the sale of
the shares of Class A Common Stock in the Offerings and the
application of the estimated net proceeds therefrom, the pro forma net tangible
book value of the Company as of June 30, 1997 would have been $ million or
$ per share of Common Stock. This represents an immediate increase in
net tangible book value of $ per share to existing stockholders and an
immediate dilution of $ per share to new investors purchasing shares of
Class A Common Stock in the Offerings. The following illustrates the per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Net tangible book value per share before the Offerings.... $ 7.16
Increase per share attributable to new investors..........
-------
Pro forma net tangible book value per share after the
Offerings................................................. $
-------
Dilution of net tangible book value per share to new
investors(1).............................................. $
=======
</TABLE>

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

(1) Dilution is determined by subtracting pro forma net tangible book value per
share after the Offerings from the assumed initial public offering price per
share. The foregoing excludes 328,288 shares of Class B Common Stock
issuable at an average exercise price of $12.69 on the exercise of stock
options granted under the Company's option plans and outstanding as of June
30, 1997. See "Management -- Incentive and Benefit Plans" and "Description
of Capital Stock". To the extent such options are exercised upon vesting,
there will be further dilution to new investors purchasing shares of Class A
Common Stock in the Offerings.

14
<PAGE> 16

SELECTED FINANCIAL DATA

The selected statement of operations and balance sheet data for the years
ended March 31, 1994, 1995, 1996 and 1997 are derived from the audited financial
statements of the Company. The same data for the year ended March 31, 1993 has
been compiled from the Company's financial statements, combining the periods for
the nine months ended December 31, 1992 which was unaudited, and the three
months ended March 31, 1993 which was audited. The data for the three month
periods ended June 30, 1996 and 1997 has been derived from the unaudited
financial statements for those periods. The unaudited financial data include, in
the opinion of management, all adjustments consisting only of normal recurring
accruals necessary to present fairly the data for such periods. Certain
reclassifications have been made to the March 31, 1994 financial data to conform
with the financial data of the other periods presented. The following financial
data for the years ended March 31, 1995, 1996 and 1997 is qualified in its
entirety by reference to the more detailed Financial Statements and Notes
thereto, included elsewhere in this Prospectus, and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED MARCH 31, JUNE 30,
-------------------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AND AVERAGE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales.................................. $ 479,971 $ 547,118 $ 639,908 $ 628,404 $ 617,289 $169,822 $168,359
Operating expenses:
Cost of sales............................ 431,288 498,692 545,725 533,965 531,190 148,912 135,037
Selling and administrative............... 25,285 27,293 29,959 29,605 29,068 6,933 7,572
Depreciation............................. 15,496 15,369 14,046 14,619 16,654 3,995 4,827
Amortization of goodwill................. 3,017 4,061 4,130 4,130 4,130 1,033 1,033
Other operating expenses(1).............. 9,000 10,920 -- 16,013 -- -- --
---------- ---------- ---------- ---------- ---------- -------- --------
$ 484,086 $ 556,335 $ 593,860 $ 598,332 $ 581,042 $160,873 $148,469
Income (loss) from operations.............. (4,115) (9,217) 46,048 30,072 36,247 8,949 19,890
Other expense:
Interest................................. 37,534 21,027 23,330 22,000 19,473 4,855 5,188
Amortization of deferred financing
costs.................................. 1,548 2,552 2,863 1,956 934 234 234
---------- ---------- ---------- ---------- ---------- -------- --------
$ 39,082 $ 23,579 $ 26,193 $ 23,956 $ 20,407 $ 5,089 $ 5,422
Income (loss) before income taxes (benefit)
& extraordinary item..................... (43,197) (32,796) 19,855 6,116 15,840 3,860 14,468
Income taxes (benefit)..................... (13,711) (10,833) 9,354 3,996 7,788 1,908 6,045
---------- ---------- ---------- ---------- ---------- -------- --------
Income (loss) before extraordinary item.... $ (29,486) $ (21,963) $ 10,501 $ 2,120 $ 8,052 $ 1,952 $ 8,423
Extraordinary item, net of income tax
benefit(2)............................... (4,185) (748) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- -------- --------
Net income (loss).......................... $ (33,671) $ (22,711) $ 10,501 $ 2,120 $ 8,052 $ 1,952 $ 8,423
========== ========== ========== ========== ========== ======== ========
Earnings (loss) per share(3)............... $ (2.27) $ 1.05 $ 0.21 $ 0.80 $ 0.19 $ 0.83
========== ========== ========== ========== ======== ========
BALANCE SHEET DATA
(end of period):
Working capital............................ $ 88,805 $ 111,666 $ 121,364 $ 114,521 $ 108,727 $107,229 $114,674
Total assets............................... 495,884 523,706 561,748 554,896 535,685 547,035 541,892
Current liabilities........................ 59,530 76,006 102,080 85,588 73,792 80,934 77,632
Long-term debt (less current portion)...... 212,002 247,128 243,030 252,525 237,474 247,648 231,745
Stockholders' equity....................... 147,711 124,999 137,750 141,747 150,564 143,927 159,170
SELECTED OPERATING DATA:
Shipped Tons
Stock rebar.............................. 434 466 536 508 472 135 140
Merchant bar............................. 427 468 549 544 512 121 136
Rod...................................... 144 121 129 133 105 35 29
---------- ---------- ---------- ---------- ---------- -------- --------
Subtotal mill finished goods............. 1,005 1,055 1,214 1,185 1,089 291 305
Fabricated rebar......................... 317 330 347 315 326 84 85
Billets.................................. 232 263 141 175 281 108 56
---------- ---------- ---------- ---------- ---------- -------- --------
Total shipped tons....................... 1,554 1,648 1,702 1,675 1,696 483 446
========== ========== ========== ========== ========== ======== ========
</TABLE>

15
<PAGE> 17

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

16
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Prospectus contains certain forward-looking statements that are based
on the beliefs of the Company's management, as well as assumptions made by, and
information currently available to, the Company's management. Such statements
include, among others, (i) the highly cyclical nature and seasonality of the
steel industry, (ii) the fluctuations in the cost and availability of raw
materials, (iii) the possibility of excess production capacity, (iv) the
potential costs of environmental compliance, (v) the risks associated with
potential acquisitions, (vi) further opportunities for industry consolidation,
(vii) the impact of inflation and (viii) the fluctuations in the cost of
electricity. Because such statements involve risks and uncertainties, actual
actions and strategies and the timing and expected results thereof may differ
materially from those expressed or implied by such forward-looking statements,
and the Company's future results, performance or achievements could differ
materially from those expressed in, or implied by, any such forward-looking
statements. Factors that could cause or contribute to such material differences
include, but are not limited to, those discussed under "Risk Factors". The
following presentation of management's discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the Company's Financial Statements and the Notes thereto, and other financial
information, included elsewhere in this Prospectus.

GENERAL

The results of operations of the Company are largely dependent on the level
of construction and general economic activity in the U.S. The Company's sales
are seasonal with sales in the Company's fiscal first and second quarters
generally stronger than the rest of the year. The Company's cost of sales
includes the cost of its primary raw material, steel scrap, the cost of
converting the scrap to finished steel products, the cost of warehousing and
handling finished steel products and freight costs. The following table sets
forth information regarding the historical results of operations:

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED MARCH 31, JUNE 30,
------------------------------ -------------------
1995 1996 1997 1996 1997
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
Net sales............................... $639,908 $628,404 $617,289 $169,822 $168,359
Cost of sales........................... 545,725 533,965 531,190 148,912 135,037
Cost of sales as a percent of net
sales................................. 85.3% 85.0% 86.1% 87.7% 80.2%
Selling and administrative.............. 29,959 29,605 29,068 6,933 7,572
Depreciation............................ 14,046 14,619 16,654 3,995 4,827
Amortization of goodwill................ 4,130 4,130 4,130 1,033 1,033
Other operating expenses................ -- 16,013 -- -- --
-------- -------- -------- -------- --------
Income from operations........ $ 46,048 $ 30,072 $ 36,247 $ 8,949 $ 19,890
Interest expense........................ 23,330 22,000 19,473 4,855 5,188
Amortization of deferred financing
costs................................. 2,863 1,956 934 234 234
Income taxes............................ 9,354 3,996 7,788 1,908 6,045
-------- -------- -------- -------- --------
Net income.................... $ 10,501 $ 2,120 $ 8,052 $ 1,952 $ 8,423
======== ======== ======== ======== ========
</TABLE>

17
<PAGE> 19

THREE MONTHS ENDED JUNE 30, 1997 VERSUS THREE MONTHS ENDED JUNE 30, 1996

<TABLE>
<CAPTION>
TONS SHIPPED (THOUSANDS) AVERAGE SELLING PRICES (PER TON)
------------------------- ---------------------------------
QUARTER ENDED JUNE 30, QUARTER ENDED JUNE 30,
------------------------- ---------------------------------
1996 1997 1996 1997
----- ----- -------- --------
<S> <C> <C> <C> <C>
Mill Finished Goods:
Stock Rebar................... 135 140 $308 $331
Merchant Bar.................. 121 136 357 364
Rods.......................... 35 29 319 339
--- --- ---- ----
291 305 329 346
Fabricated Rebar................ 84 85 453 457
Billets......................... 108 56 222 231
--- ---
Total................. 483 446
=== ===
</TABLE>

NET SALES. Although net sales in the quarter ended June 30, 1997 declined
1% from the quarter ended June 30, 1996, income from operations for this period
over the comparable period in 1996 improved because higher margin finished
product sales accounted for a greater portion of the Company's net sales
relative to lower margin semi-finished billets. Improved market conditions
during the quarter ended June 30, 1997 resulted in a 4.0% increase in shipments
of finished steel products and a 5.2% increase in average mill selling prices
for finished goods for the quarter ended June 30, 1997 compared to the same
period in 1996. The completion of major capital improvement projects at the
Company's Charlotte and Jackson rolling mills also resulted in increased
production and sales of finished goods during the June 30, 1997 quarter compared
to the same period in 1996.

COST OF SALES. Higher production levels and lower scrap costs contributed
to lower costs of sales, declining from 87.7% of net sales in the quarter ended
June 30, 1996 to 80.2% of net sales in the quarter ended June 30, 1997.

SELLING AND ADMINISTRATIVE. Selling and administrative expenses for the
quarter ended June 30, 1997 increased 9.2% over the same period last year due
primarily to increased incentive pay as a result of improved performance.

DEPRECIATION. Depreciation expense of $4.8 million for the quarter ended
June 30, 1997 increased 20.8% over the same period last year due to capital
improvement spending of $23.8 million since June 30, 1996.

FISCAL 1997 VERSUS FISCAL 1996

<TABLE>
<CAPTION>
TONS SHIPPED (THOUSANDS) AVERAGE SELLING PRICES (PER TON)
------------------------- ---------------------------------
YEAR ENDED MARCH 31, YEAR ENDED MARCH 31,
------------------------- ---------------------------------
1996 1997 1996 1997
----- ----- -------- --------
<S> <C> <C> <C> <C>
Mill Finished Goods:
Stock Rebar................ 508 472 $310 $316
Merchant Bar............... 544 512 362 352
Rods....................... 133 105 336 322
----- ----- ---- ----
1,185 1,089 337 333
Fabricated Rebar............. 315 326 460 451
Billets...................... 175 281 233 227
----- -----
Total.............. 1,675 1,696
===== =====
</TABLE>

NET SALES. Net sales in fiscal 1997 declined 1.8% from fiscal 1996 as both
prices and sales volumes of finished goods declined. Mill finished product
prices declined $4 per ton, while fabricated rebar prices declined $9 per ton.
Mill finished steel production and shipment volumes were limited by the

18
<PAGE> 20

start-up of major capital improvement projects at the Charlotte and Jackson
rolling mills. As a result, shipments were more heavily weighted in favor of
lower-priced semi-finished billet products during the equipment installation and
start-up period. Fabricating revenues improved modestly as volume increases
offset the decline in price.

COST OF SALES. Cost of sales were 86.1% of net sales in fiscal 1997 versus
85.0% of net sales in fiscal 1996 due to the higher costs associated with the
decline in production tonnage at the Charlotte and Jackson mills during the
startup of capital projects for the rolling mills. Average scrap costs were down
$1 per ton for the year due to a fourth quarter decline in scrap prices.

SELLING AND ADMINISTRATION EXPENSES. Selling and administrative expenses
remained constant at 4.7% of sales in fiscal 1997 as compared to fiscal 1996.

DEPRECIATION. Depreciation increased to $16.7 million in fiscal 1997 from
$14.6 million in fiscal 1996 due to increased capital expenditures at all four
mills during the last two years.

OTHER OPERATING EXPENSES. Other operating expenses in fiscal 1996
consisted primarily of $15.0 million of expenses related to the shut-down of the
Tampa rolling mill, of which $12.0 million was attributable to the write down of
mill assets to market value and $3.0 million to employee severance benefits and
other closing costs.

INTEREST EXPENSE. Interest expense declined from $22.0 million in fiscal
1996 to $19.5 million in fiscal 1997 as cash generated from operations was used
to lower debt by $29.6 million and average annual interest rates declined from
9.3% to 8.7%. Capitalized interest for fiscal 1997 was $2.0 million compared to
$2.1 million in fiscal 1996.

AMORTIZATION OF DEFERRED FINANCING COSTS. Amortization of deferred
financing costs declined from $2.0 million in fiscal 1996 to $.9 million in
fiscal 1997 due to the refinancing of the Company's Revolving Credit Agreement
in June 1995. See "-- Liquidity and Capital Resources".

INCOME TAXES. The Company's effective federal and state income tax rate
for fiscal 1997 and 1996 was 39% excluding the effect of goodwill amortization,
which is not deductible for income tax purposes.

FISCAL 1996 VERSUS FISCAL 1995

<TABLE>
<CAPTION>
TONS SHIPPED (THOUSANDS) AVERAGE SELLING PRICES (PER TON)
-------------------------- ---------------------------------
YEAR ENDED MARCH 31, YEAR ENDED MARCH 31,
-------------------------- ---------------------------------
1995 1996 1995 1996
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Mill Finished Goods:
Stock Rebar.................... 536 508 $326 $310
Merchant Bar................... 549 544 359 362
Rods........................... 129 133 338 336
----- ----- ---- ----
1,214 1,185 342 337
Fabricated Rebar................. 347 315 421 460
Billets.......................... 141 175 228 233
----- -----
Total.................. 1,702 1,675
===== =====
</TABLE>

NET SALES. Net sales for fiscal 1996 were 1.8% lower than fiscal 1995 due
to lower volume and lower mill average selling prices. Although semi-finished
billet shipments were 24.1% higher than in fiscal 1995, finished product
shipments were down 4.1%. Average mill selling prices declined $5 per ton.
Although fabricated rebar prices increased $39 per ton, fabricated rebar
shipments were down 9.2%.

COST OF SALES. Cost of sales were 85.0% of net sales in fiscal 1996 versus
85.3% of net sales in the previous year. Mill conversion costs were the same
while scrap steel costs were $1 per ton higher than in fiscal 1995.

19
<PAGE> 21

SELLING AND ADMINISTRATION EXPENSES. Selling and administrative expenses
remained constant at 4.7% of sales in fiscal 1996 compared to fiscal 1995.

DEPRECIATION. Depreciation increased to $14.6 million in fiscal 1996 from
$14.0 million in fiscal 1995 due to increased capital expenditures that were
placed in service at all four mills.

OTHER OPERATING EXPENSES. Other operating expenses in fiscal 1996
consisted primarily of $15.0 million of expenses related to the shut-down of the
Tampa rolling mill, of which $12.0 million was attributable to the write down of
fixed assets at the mill to market value and $3.0 million to employee severance
benefits and other closing costs.

INTEREST EXPENSE. Interest expense declined from $23.3 million in fiscal
1995 to $22.0 million in fiscal 1996 primarily because of lower average interest
rates and higher capitalized interest. Average annual interest rates declined
from 9.8% in fiscal 1995 to 9.3% in fiscal 1996. Average borrowings were higher
in fiscal 1996 than in fiscal 1995. Capitalized interest for fiscal 1996 was
$2.1 million versus $654 thousand in fiscal 1995.

AMORTIZATION OF DEFERRED FINANCING COSTS. Amortization of deferred
financing costs declined in fiscal 1996 as compared to fiscal 1995 due to
refinancing of the Company's Revolving Credit Agreement. See "-- Liquidity and
Capital Resources".

INCOME TAXES. The effective federal and state income tax rate for fiscal
1996 was 39% compared to 38.8% for fiscal 1995 excluding the effect of goodwill
amortization, which is not deductible for income tax purposes.

QUARTERLY RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1996 1997 1997
------------- ------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT AVERAGE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales.................. $169,822 $158,086 $139,948 $149,433 $168,359
Operating expenses:
Cost of sales............ 148,912 136,261 119,602 126,415 135,037
Selling and
administrative......... 6,933 7,328 7,184 7,623 7,572
Depreciation............. 3,995 4,096 4,193 4,370 4,827
Amortization of
goodwill............... 1,033 1,032 1,032 1,033 1,033
-------- -------- -------- -------- --------
$160,873 $148,717 $132,011 $139,441 $148,469
Income from operations... 8,949 9,369 7,937 9,992 19,890
Other expense:
Interest................. 4,855 5,043 4,786 4,789 5,188
Amortization of deferred
financing costs........ 234 233 233 234 234
-------- -------- -------- -------- --------
$ 5,089 $ 5,276 $ 5,019 $ 5,023 $ 5,422
Income before income
taxes.................... 3,860 4,093 2,918 4,969 14,468
Income taxes............... 1,908 1,999 1,541 2,340 6,045
-------- -------- -------- -------- --------
Net income........ $ 1,952 $ 2,094 $ 1,377 $ 2,629 $ 8,423
======== ======== ======== ======== ========
</TABLE>

20
<PAGE> 22
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1996 1997 1997
------------- ------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT AVERAGE DATA)
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Shipped Tons
Stock rebar.............. 135 108 104 125 140
Merchant bar............. 121 133 123 135 136
Rod...................... 35 26 19 25 29
-------- -------- -------- -------- --------
Subtotal mill finished
goods.................. 291 267 246 285 305
Fabricated rebar......... 84 86 82 74 85
Billets.................. 108 79 47 47 56
-------- -------- -------- -------- --------
Total shipped tons....... 483 432 375 406 446
======== ======== ======== ======== ========
Average mill finished goods
prices (per ton)......... $ 329 $ 334 $ 334 $ 334 $ 346
Average scrap cost (per
ton)..................... 131 134 129 125 129
Average metal spread (per
ton)..................... 198 200 205 209 217
Average mill conversion
costs (per ton).......... 146 134 137 134 125
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's three largest financial obligations currently outstanding are
the $100 million aggregate principal amount 11 1/2% First Mortgage Notes due
December 15, 2000 (the "First Mortgage Notes"), a $140 million aggregate
principal amount Revolving Credit Agreement (the "Revolving Credit Agreement"),
and a $50 million aggregate principal amount Subordinated Intercompany Note due
December 21, 2002 and owed to FLS.

The First Mortgage Notes are secured by the real property, equipment and
certain other assets at the Company's minimills. The First Mortgage Notes are
redeemable, at the option of the Company, in whole or in part from time to time,
at the redemption prices set forth below (expressed as percentages of the
outstanding principal amount) if redeemed during the twelve-month period
commencing on December 15 of each year referenced below, plus, in each case,
accrued interest thereon to the date of the redemption:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
1996........................................................ 103.833%
1997........................................................ 101.916
1998 and thereafter......................................... 100.000
</TABLE>

The Revolving Credit Agreement is secured by the Company's inventory and
receivables and matures on June 9, 1999. The Revolving Credit Agreement provides
for a substantial portion of the Company's liquidity by making available up to
$140 million in borrowings, subject to a "borrowing base". As of June 30, 1997,
the Revolving Credit Agreement had a borrowing base of approximately $121.2
million, of which approximately $33.2 million was available to the Company,
$50.9 million was outstanding and $37.1 million was allocated to letters of
credit provided as credit backing for the Company's outstanding Industrial
Revenue Bonds. These Industrial Revenue Bonds were issued to construct
facilities in Jackson, Tennessee, Charlotte, North Carolina, Jacksonville,
Florida, and Plant City, Florida. The interest rates on these bonds range from
50% to 75% of the prime rate. The Company increased its outstanding Industrial
Revenue Bonds by $20 million in fiscal 1996 for a solid waste recycling facility
in Jackson, Tennessee. The Industrial Revenue Bonds mature in fiscal 2004 except
for the new Industrial Revenue Bonds which mature in fiscal 2018.

The First Mortgage Notes and the Revolving Credit Agreement contain certain
restrictions regarding the incurrence of additional indebtedness by the Company
and other restrictive covenants relating to the Company's business. The Company
continues to comply with all of the covenants of its loan agreements. See "Note
D of Notes to Financial Statements".

21
<PAGE> 23

Net cash provided by operating activities for the quarter ended June 30,
1997 was $5.1 million compared to $18.4 million for the same period last year
principally because finished product inventories, during the June 30, 1996
quarter, were drawn down to minimum operating levels during production
disruptions caused by mill modernization projects at the Charlotte and Jackson
mills. Net cash provided by operating activities in fiscal 1997 was $43.9
million compared to $44.1 million in fiscal 1996.

Over the years, the Company has expanded capacity by means of modernizing
and upgrading facilities. Capital expenditures were $34.4 million for the year
ended March 31, 1997, $36.9 million for the year ended March 31, 1996 and $25.8
million for the year ended March 31, 1995. The Company anticipates spending
approximately $30.0 million for capital expenditures in fiscal 1998.

The Company believes that the amounts available from operating cash flows
and funds available through its Revolving Credit Agreement will be sufficient to
meet its expected operational cash needs and planned capital expenditures for
the foreseeable future.

COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS

The Company is subject to federal, state and local laws and regulations
governing the remediation of environmental contamination associated with
releases of hazardous substances which can impose joint and several liability
for contamination regardless of fault or the lawfulness of past activities
(collectively, "Environmental Cleanup Laws") and to extensive federal, state,
and local laws and regulations governing discharges to the air and water as well
as the handling and disposal of solid and hazardous wastes and employee health
and (collectively, "Environmental Regulatory Laws"). Governmental authorities
have the power to enforce compliance with these requirements, and violators may
be subject to civil or criminal penalties, injunctions or both. Third parties
also may have the right to sue to enforce compliance and for damages.

The Company has estimated its potential costs for further remediation under
Environmental Cleanup Laws at on-site and off-site locations through 2009 to be
approximately $12.2 million and has included this amount in the Company's
recorded liabilities as of June 30, 1997. Based on past use of certain
technologies and remediation methods by third parties, evaluation of those
technologies and methods by the Company's consultants, and quotations and
third-party estimates of costs of remediation-related services provided to the
Company, or of which the Company and its consultants are aware, the Company and
its consultants believe that the Company's cost estimates are reasonable. In
light of the uncertainties inherent in determining the costs associated with the
clean-up of such contamination, including the time periods over which such costs
must be paid, the extent of contribution by parties which are jointly and
severally liable, and the nature and timing of payments to be made under cost
sharing arrangements, there can be no assurance that the ultimate costs of
remediation may not be more or less than the estimated remediation costs that
the Company has recorded.

The Company also incurs significant ongoing costs to comply with current
standards promulgated by Environmental Regulatory Laws. Although it is the
Company's policy to comply with all Environmental Regulatory Laws and the
Company believes that it is currently in material compliance with all
Environmental Regulatory Laws, Environmental Regulatory Laws may become more
significant in the future and, there can be no assurance that material
environmental liabilities will not be incurred by the Company or that compliance
with Environmental Regulatory Laws (whether those currently in effect or those
that may be enacted in the future) will not require additional expenditures by
the Company or require changes to the Company's current operations, any of which
could have a material adverse effect on the Company's results of operations and
financial condition.

IMPACT OF INFLATION

The Company's primary costs include ferrous scrap, energy and labor, which
can be affected by inflationary conditions. The Company has generally been able
to pass on cost increases through price adjustments. However, the ability to
pass on these increases depends on market conditions driven primarily by the
level of construction activity. Another factor that may limit the Company's
ability to pass on cost increases in materials is over-capacity in the steel
industry.

22
<PAGE> 24

BUSINESS

GENERAL

The Company operates four non-union minimills located in the southeastern
U.S. that produce steel concrete reinforcing bars ("rebar"), light structural
shapes such as rounds, squares, flats, angles and channels ("merchant bars")
and, to a lesser extent, wire rod ("rods") and billets (which are semi-finished
steel products). The Company also operates 13 rebar fabricating plants
strategically located in close proximity to its mills; rail spike manufacturing
facilities in Paragould, Arkansas and Lancaster, South Carolina; and a wire mesh
and collated nail manufacturing facility in New Orleans, Louisiana. Rebar is
used primarily for strengthening concrete in highway and building construction
and other construction applications. Merchant bars are used in a wide variety of
applications including floor and roof joists, transmission towers, and farm
equipment. Rods are used in a variety of applications, including the manufacture
of welded wire fabric and nails.

Approximately 60% of the Company's mill rebar production is sold directly
to distributors and independent fabricating companies in stock lengths and
sizes. The remaining 40% of the rebar produced by the mills is transferred to
the Company's 13 fabricating plants where value is added by cutting and bending
the rebar to meet strict engineering, architectural and other end-product
specifications. Merchant bars and rods generally are sold by the mills to steel
service centers, original equipment manufacturers and fabricators in stock
lengths and sizes.

The Company's four minimills are located in Jacksonville, Florida,
Charlotte, North Carolina, and Jackson and Knoxville, Tennessee. Minimills are
steel mills that use electric arc furnaces to melt steel scrap and cast the
resulting molten steel into long strands called billets in a continuous casting
process. The billets are typically transferred to a rolling mill where they are
reheated, passed through roughing mills for size reduction and then rolled into
rebar, merchant bars or rods. These products emerge from the rolling mill and
are uniformly cooled on a cooling bed. Most merchant products then pass through
automated straightening and stacking equipment. Rebar and merchant products are
neatly bundled prior to shipment to customers by rail or truck.

The predecessor of the Company was formed in 1937 as a rebar fabricator. In
1956, it merged with five steel fabricators in Florida to form Florida Steel
Corporation, which then commenced construction of its first minimill in Tampa,
Florida. In 1996, the Company changed its name to AmeriSteel Corporation.

The Company was a public company from 1956 until 1988 when it was taken
private in a management led leveraged buyout. In late 1992, the Company was
purchased by Kyoei Steel, Ltd. ("Kyoei"), a private Japanese minimill company
engaged in the manufacture of commodity grade steel products, primarily rebar
and merchant bar products. Kyoei, founded in 1947, operates four minimills in
Japan and a rolling mill in Vietnam with a total annual finished steel capacity
of 2.5 million tons. Kyoei enjoys a reputation of being a highly efficient, low
cost producer in the domestic Japanese market. The Company has benefitted from
access to Kyoei's operating, engineering and technical expertise.

INDUSTRY

United States market demand for rebar was approximately 6.3 million tons in
calendar 1996. The Company believes that it is the second largest producer of
rebar in the U.S. and estimates it has approximately a 13% share of the U.S.
rebar market and approximately a 20% share in the eastern two-thirds of the U.S.
The U.S. market for merchant and other light structural shape bars was estimated
to be approximately 8.6 million tons in calendar 1996. The Company estimates
that it has approximately a 6% share of this market in the U.S. For the quarter
ended June 30, 1997, approximately 24% of the Company's net sales were derived
from fabricated rebar, 28% from stock rebar, 31% from merchant bars, 6% from
rods and 11% from semi-finished billets.

The minimill industry is composed of two types of competitors: multi-mill
operators and stand-alone minimills. The Company believes that recent growth in
the industry (through acquisitions as well as

23
<PAGE> 25

capital expenditures) has been driven by multi-mill operations because
stand-alone minimills have not generally been able to achieve the economies of
scale or had access to the financial resources to make the investments that
larger operators have. The Company believes that further industry consolidation
will continue given the significant advantages available to multi-mill
operators. Accordingly, the Company is actively investigating potential
acquisition opportunities.

COMPETITIVE STRENGTHS

The primary focus of the Company's business strategy is to continue to be a
low cost producer of rebar and merchant bar products in the U.S. and further
grow its business including through acquisitions of steel producing and related
assets. The Company believes that the following competitive strengths are key
elements of this strategy:

DEMONSTRATED COST CONTROL. Since 1994, the Company has reduced its costs
of converting scrap steel to finished steel products ("conversion costs") from
$146 per ton to $125 per ton for the quarter ended June 30, 1997. The Company
has achieved these cost reductions through its mill modernization program, high
mill utilization, access to competitively priced electric power at its Tennessee
and North Carolina mills, and labor incentive programs designed to maximize
productivity. In addition, since 1994, the Company has closed unprofitable
operations and divested non-core activities. The Company currently has
initiatives in place that it believes will further reduce its conversion costs.

MODERNIZED PRODUCTION EQUIPMENT IN ATTRACTIVE LOCATIONS. Since 1992, the
Company has invested approximately $110 million in mill modernization, including
major projects at its Jackson, Tennessee, Jacksonville, Florida and Charlotte,
North Carolina mills. The Company believes its recent mill modernization program
will lower conversion costs and increase capacity utilization, enhance merchant
bar quality and broaden its merchant bar product range. The southeastern U.S.
(where all the Company's mills are located) accounts generally for more than
one-fourth of U.S. rebar consumption and, due to mild wintertime weather
conditions, demonstrates less seasonal demand fluctuations than more northern
regions of the U.S. Because of the high cost of freight relative to the value of
the Company's products, competition from non-regional producers is limited.

MOTIVATED, NON-UNION LABOR FORCE. The Company employs a non-union
workforce of approximately 1,870 employees. The Company's compensation programs
are designed to allow employees to earn significant incentive bonuses
(approximately one-fifth of their total compensation) based on production
volumes, sales volumes, cost targets or return on capital employed. These
programs have been successfully implemented by the current management team and
have resulted in lower costs, higher productivity and increased profitability.
Further incentive is provided through equity ownership plans. Approximately 57%
of current employees have purchased stock in the Company, including Phillip E.
Casey, Chairman and Chief Executive Officer, who owns approximately 10% of the
outstanding shares of the Company's capital stock ( % after the Offerings).

STRONG MARKET POSITIONS. The Company believes that it is the second
largest producer of rebar in the U.S. and estimates it has approximately a 13%
share in the U.S. rebar market and approximately a 20% share in the eastern
two-thirds of the U.S. In addition, the Company believes that it is the largest
fabricator of rebar products in the U.S., with fiscal 1997 revenues of $161.2
million, or approximately 26% of the Company's sales. The Company believes its
strong market position in both stock rebar shipments and fabricated rebar
shipments provides it with competitive market intelligence and other advantages
from vertical integration relative to its smaller competitors. The Company
estimates it has approximately a 6% share of the U.S. market for merchant and
other light structural shape bars. The Company believes it has opportunities to
increase its market share in this market, which is generally less cyclical and
more profitable than the rebar market. A recent independent survey has ranked
the Company first in customer service and on-time delivery in the Company's
principal product markets. As evidence of a high degree of

24
<PAGE> 26

customer satisfaction, the Company has had, on average, a relationship of at
least 10 years with its top 25 customers.

PRODUCTS

The following table shows the percentage of the Company's net sales derived
from each product category in the relevant time period:

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
------------------ QUARTER ENDED
1995 1996 1997 JUNE 30, 1997
---- ---- ---- --------------
<S> <C> <C> <C> <C>
Fabricated Rebar............................................ 23% 24% 24% 24%
Stock Rebar................................................. 27 25 24 28
Merchant Bars............................................... 31 31 28 31
Rods........................................................ 7 7 5 6
Billets and other........................................... 12 13 19 11
--- --- --- ---
100% 100% 100% 100%
=== === === ===
</TABLE>

REBAR PRODUCTS (STOCK AND FABRICATED)

The Company produces rebar products at its minimills in Knoxville,
Jacksonville and Charlotte, and to a lesser degree in Jackson. The Company's
rebar either is sold directly to distributors and independent fabricating
companies in stock lengths and sizes or is transferred to the Company's 13
fabricating plants where it is cut and bent to meet engineering, architectural
and other end-product specifications. Rebar is used primarily for strengthening
concrete in highway and building construction and other construction
applications. The Company's rebar products are used primarily in two sectors of
the construction industry: non-residential building projects, such as
institutional buildings, retail sites, commercial offices, apartments and hotels
and manufacturing facilities, and infrastructure projects such as highways,
bridges, utilities, water and waste treatment facilities and sports stadiums.
The Company's rebar products are also used in multi-family residential
construction such as apartments, condominiums and multi-family homes. Usage of
the Company's rebar products is roughly split evenly between private and public
projects.

MERCHANT BARS

The Company produces merchant bars at its minimills in Jackson and
Charlotte and to a lesser degree in Knoxville. Merchant bars consist of rounds,
squares, flats, angles and channels. Merchant bars are generally sold to
fabricators, steel service centers, and manufacturers who fabricate the steel to
meet engineering or end-product specifications. Merchant bars are used to
manufacture a wide variety of products, including gratings, transmission towers,
floor and roof joists, safety walkways, ornamental furniture, stair railings and
farm equipment.

Merchant bar products typically require more specialized processing and
handling than rebar, including straightening, stacking and specialized bundling.
Because of the greater variety of shapes and sizes, merchant bars typically are
produced in shorter production runs, necessitating more frequent changeovers in
rolling mill equipment. Merchant products generally command higher prices and
produce higher profit margins than rebar.

RODS

The Company produces steel rod at its Jacksonville minimill. Most of this
rod is sold directly to third-party customers, while the remainder, depending on
market conditions, is shipped to the Company's New Orleans, Louisiana facility,
where the rod is drawn down to wire for use in the manufacture of wire mesh,
collated nails and bulk nails.

25
<PAGE> 27

BILLETS

The Company produces semi-finished billets for conversion to rebar,
merchant bar and rods. When the market for finished product is down, or when
rolling production is limited -- as was the case in fiscal 1997 with downtime
associated with capital improvements in the Charlotte and Jackson mills -- the
Company sells the excess billet production to steel mills that have less steel
melting capacity than rolling mill capacity.

MARKETING AND CUSTOMERS

The Concrete Reinforcing Steel Institute ("CRSI") annual statistical report
for apparent rebar consumption during 1995 in the U.S. for the nine regions is
depicted on the map below.

[U.S. MAP OF REBAR CONSUMPTION]

CRSI has reported that the apparent rebar consumption for 1996 is
approximately 6.3 million tons, an increase of 14.5% over reported apparent
rebar usage in 1995 of 5.5 million tons. The latest industry data of apparent
rebar consumption by region is from CRSI's 1995 data as shown below.

<TABLE>
<CAPTION>
U.S. APPARENT REBAR USAGE AMERISTEEL SHIPMENTS % OF
REGION (THOUSANDS OF TONS) (THOUSANDS OF TONS) MARKET
------ ------------------------- -------------------- ------
<S> <C> <C> <C>
5....................................... 1,074 504 47
6....................................... 314 150 48
3....................................... 833 71 9
4....................................... 428 34 8
7....................................... 837 30 4
2....................................... 530 23 4
1....................................... 158 22 14
8....................................... 300 0 0
9....................................... 1,037 1 0
------- ----- ----
Total......................... 5,511 835 15%
======= ===== ====
</TABLE>

The Company believes that it is the second largest producer of rebar in the
U.S. The Company markets its rebar primarily in the Southeast, generally within
a 350 mile radius of its mills due to freight economics. The boundary of the
current market area for the Company's rebar products is roughly defined by a
line running through New Orleans, Louisiana, Little Rock, Arkansas, Kansas City,
Kansas, St. Louis, Missouri, Indianapolis, Indiana, Columbus, Ohio, and
Baltimore, Maryland.

The Company is one of the larger producers of merchant bar products and
generally markets its products in the eastern two-thirds of the U.S. The Company
estimates that it has approximately 6% market share of the U.S. market for
merchant and other light structural shape merchant bars. The Company believes it
has opportunities to increase its market share in the merchant bar market, which
is generally less cyclical and more profitable than the rebar market.

The Company conducts its marketing operation through both its own inside
and outside sales personnel. The outside sales personnel for mill rebar and
merchant bar are located in close proximity to the Company's major markets and
customers. The Company's salespeople handle both rebar and merchant bar sales in
a geographic area. This structure has several advantages in that it eliminates
duplicate sales calls on customers, enables salespeople to cover smaller
geographic areas, improves customer relationships and facilitates flow of
reliable market information to the Company. Metallurgical service
representatives, located at each of the Company's mills, provide technical
support to the sales force.

The Company's inside sales force is centralized at the Company's Tampa,
Florida headquarters, where all order taking, mill production scheduling,
inventory management and shipping arrangements are coordinated. This inside
sales force has an average of 18 years of experience with the Company. The

26
<PAGE> 28

Company's inside sales force can provide customers with updated order and
shipment status, rolling schedules, inventory levels and mill test reports. The
Company also provides customers with a dial-up information service, called
AmeriSteel E-Z-Link(TM), which allows 24-hour electronic assess to information
on open orders, purchasing history, shipments, rolling schedules and current
inventories.

The Company has recently developed in-house a system ("Vendor Managed
Inventory" or "VMI") for certain (currently four) of its larger merchant bar
customers. This system provides real-time updates to the Company and customers
of order and production status. The Company assumes the responsibility for
maintaining the customers' desired inventory levels and shipment status. Because
of the nature of the programs, VMI is targeted for the Company's larger and more
well established customers. The Company believes VMI provides it with a
competitive marketing advantage with respect to these customers.

Fabricated rebar sales personnel are located at the Company's 13
fabricating facilities where engineering service representatives provide
technical and sales support.

Principal customers of the Company include steel distributors, steel
service centers, rebar fabricators, other metal fabricators and manufacturers,
railroads, building material dealers and contractors. Its fabricated rebar
products are sold to contractors performing work for residential and
nonresidential building, road, bridge, public works, utility and other
miscellaneous construction.

The Company's business is not dependent upon any single customer. The
Company's customer base is fairly stable from year to year, and during fiscal
1997 no one customer accounted for more than 2.9% of net sales and the five
largest customers accounted for approximately 9.4% of net sales. The Company's
business is seasonal, with orders in the Company's first and second fiscal
quarters tending to be strongest.

Fabricated rebar is generally produced in response to specific customer
orders. The amount of sales order backlog pertaining to fabrication contracts
was approximately 200 thousand tons at June 30, 1997. Almost all of the backlog
at June 30, 1997 is expected to be filled during fiscal 1998. Due to the
advanced order booking and the order backlog, fabricated rebar business tends to
be less cyclical than the Company's other product lines.

The Company's payment terms to customers are generally determined based on
market conditions. The Company, however, generally does not offer extended
payment terms to customers.

Despite the commodity characteristics of the stock rebar and merchant bar
markets, the Company believes that it is able to distinguish itself from its
competitors to some extent due to its product quality, its consistent delivery
record, its capacity to service large orders, and its ability to fill most
orders quickly from inventory. Moreover, although construction and
infrastructure projects are generally nonrecurring in nature, the steel
fabricators, distributors and service centers which supply many of these
projects tend to be long-time customers of the Company. The Company believes
that its reputation for quality products and service is among the highest in the
industry.

PRODUCTION AND FACILITIES

Steel can be produced at significantly lower costs by minimills than by
integrated steel operators. Integrated steel mills, which typically process iron
ore and other raw materials in blast furnaces to produce steel, generally use
costlier raw materials, consume more energy, operate older facilities that are
more labor intensive and employ a more highly paid labor force. In general,
minimills serve localized markets and produce a limited line of steel products.

The domestic minimill steel industry currently has excess production
capacity. This excess capacity has resulted in competitive product pricing and
cyclical pressures on industry profit margins. The high fixed costs of operating
a minimill encourage mill operators to maintain high levels of output even
during periods of reduced demand which exacerbates the pressures on profit
margins. In this environment, efficient production and cost controls are
important to domestic minimill steel producers.

27
<PAGE> 29

The Company's minimills operate their melting facilities continuously and
have an annual aggregate melting capacity of approximately 2.0 million tons. The
Jackson, Charlotte and Jacksonville mills operate their rolling facilities
continuously. The Knoxville mill operates its rolling facility five days per
week.

[MAP OF THE UNITED STATES SHOWING THE COMPANY'S MINIMILL LOCATIONS]

The following table sets forth certain information regarding the Company's
four minimills, including the current estimated annual production capacity and
actual production of the minimills in thousands of tons. Billets produced in the
melting process in excess of rolling needs are sold to third parties.

<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
MARCH 31, MARCH 31,
ANNUAL 1997 CAPACITY 1997 CAPACITY
START-UP MELTING MELTING UTILIZATION ROLLING ROLLING UTILIZATION
LOCATION DATE CAPACITY PRODUCTION PERCENTAGE CAPACITY PRODUCTION PERCENTAGE
- -------- -------- -------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charlotte, NC............ 1961 450 415 92% 400 220 55%
Jackson, TN.............. 1981 600 523 87 480 364 76
Jacksonville, FL......... 1976 600 465 78 500 443 89
Knoxville, TN............ 1987(1) 330 297 90 360 340 94
----- ----- -- ----- ----- --
Total........... 1,980 1,700 86% 1,740 1,367 79%
===== ===== == ===== ===== ==
</TABLE>

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

(1) Purchase Date

The Company's four minimills, together with certain other assets, serve as
collateral for the Company's First Mortgage Notes. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources".

CHARLOTTE MINIMILL

The Charlotte minimill produces rebar and merchant bars. Rebar produced in
Charlotte is marketed in the states from South Carolina to Pennsylvania.
Merchant bar produced in Charlotte is marketed along the eastern seaboard states
from Florida to Pennsylvania.

Charlotte's melting equipment includes a 75 ton electric arc furnace
utilizing the Consteel process, a continuous scrap feeding and preheating
system, and a ladle refining station. The melting facilities also include a
3-strand continuous caster and material handling equipment. Charlotte's rolling
mill includes a reheat furnace, 15 in-line mill stands, a 200 foot cooling bed,
a cut-to-length shear and an automated material bundling unit. The rolling mill
includes recently installed upgraded finishing end equipment, including a
product straightener for merchant shapes and a French manufactured Empilam
stacker. During fiscal 1997, capacity utilization of the rolling mill was
limited due to down time associated with a major capital improvement project.
The Company believes that the upgrade will improve merchant bar quality,
increase production and lower conversion costs.

JACKSON MINIMILL

The Jackson minimill produces mostly merchant bars and some larger size
rebar. This minimill is the Company's largest single producer of merchant bars.
The merchant bars are marketed primarily in the southeastern U.S., as well as
into southern Illinois, Indiana and Ohio.

The Jackson mill is the newest of the Company's minimills. Melting
equipment includes a 135 ton electric arc furnace, a 4-strand continuous billet
caster and material handling equipment. The rolling mill consists of a 120 tons
per hour reheat furnace, 16 new in-line quick-change mill stands, a cooling bed,
an in-line straightener, a cut-to-length product shear, an automatic stacker,
and associated shipping and material handling facilities. Installation of the
new quick-change mill stands, a combination of Danieli vertical and horizontal,
began in April 1996 and is scheduled to be completed in December 1997.
Installation of those stands had a disruptive effect on the rolling mill
operations as evidenced by the

28
<PAGE> 30

reduced capacity utilization of 76% in fiscal 1997. The Company believes this
investment will provide significant return on investment in the form of
decreased change time and therefore increasing production and lowering
conversion costs. The Company expects that the new mill stands will increase
rolling mill production capacity by approximately 60,000 tons per year and
decrease mill conversion costs by approximately $5 per ton if the benefits of
the project are fully realized.

JACKSONVILLE MINIMILL

The Jacksonville minimill produces rebar and rods. The rebar is marketed
primarily in Florida, the nearby Gulf Coast states and Puerto Rico, with coiled
rebar being shipped throughout the Company's marketing area. The rod products
are sold throughout the southeastern U.S.

Jacksonville's melting equipment consists of a 90 ton capacity electric arc
furnace and a 4-strand continuous caster. The rolling mill includes a 100 tons
per hour reheat furnace, a 16-stand horizontal Danieli in-line mill, a 10-stand
Danieli rod block, a cooling bed for straight bars and a controlled cooling line
for coiled products, a cut-to-length product shear, and automatic bundling and
tying equipment for straight bars and coils.

KNOXVILLE MINIMILL

The Knoxville minimill produces almost exclusively rebar. The rebar is
marketed throughout the Ohio Valley, including all areas of Ohio and Kentucky
and parts of Illinois, Indiana, Virginia, West Virginia, Tennessee, and in
portions of North and South Carolina, Georgia and Alabama.

Knoxville's melting equipment includes two 35 ton electric arc furnaces, a
3-strand continuous caster and material handling equipment. The rolling mill
consists of a reheat furnace, 16 in-line mill stands utilizing the Thermex
in-line heat treating process, a cooling bed, a cut-to-length shear line, and
associated shipping and material handling facilities.

FABRICATION

The Company believes that it operates the largest rebar fabricating group
in the U.S., consisting of a network of 13 strategically located reinforcing
steel fabricating plants throughout the southeastern U.S. with an annual
capacity of approximately 334,000 tons. The facilities are interconnected via
satellite for the immediate transfer of customer engineering and production
information utilized in its computer assisted design (CAD) detailing programs.
The fabricating plants are a downstream operation of the

29
<PAGE> 31

Company, purchasing all rebar from the Company's minimills, primarily Knoxville,
Jacksonville and Charlotte.

[MAP OF UNITED STATES SHOWING FABRICATION PLANT LOCATIONS]

Fabricated rebar is produced by cutting and bending stock rebar to meet
engineering, architectural and other end-product specifications. The fabrication
division employs about 540 employees. The following table shows the fabricating
plant locations and approximate annual tonnage on a two-shift per day, five days
per week operating basis.

<TABLE>
<CAPTION>
CAPACITY (IN)TONS
FABRICATING PLANT
- ------------------------------------------------------------
<S> <C>
Ft. Lauderdale, FL.......................................... 30,000
Jacksonville, FL............................................ 30,000
Orlando, FL................................................. 20,000
Plant City, FL (Tampa)...................................... 40,000
Duluth, GA (Atlanta)........................................ 30,000
Louisville, KY.............................................. 20,000
Charlotte, NC............................................... 30,000
Raleigh, NC................................................. 18,000
Aiken, SC................................................... 16,000
Collierville, TN (Memphis).................................. 20,000
Knoxville, TN............................................... 40,000
Nashville, TN............................................... 20,000
St. Albans, WV.............................................. 20,000
-------
Total............................................. 334,000
=======
</TABLE>

OTHER OPERATIONS

The Company's railroad spike operations, located in Lancaster, South
Carolina and Paragould, Arkansas, forge steel square bars produced at the
Charlotte mill into railroad spikes that are sold on an annual contract basis to
various railroad companies. The Company's facility in New Orleans, Louisiana
produces wire from steel rod. The wire is then either manufactured into wire
mesh for concrete pavement, converted into collated nails for use in high-speed
nail machines, or converted to bulk nails for general construction uses.

RAW MATERIALS

Steel scrap is the Company's primary raw material and comprised
approximately 42% of the Company's costs of sales in fiscal 1997. The relatively
simple metallurgical requirements of the Company's products enable the Company
to use low quality, and thus lower cost, steel scrap. Due to the geographic
extent of the Company's requirements, the Company utilizes a scrap broker, The
David J. Joseph Company ("DJJ"), in the purchase of substantially all of its
requirements. DJJ receives a fixed per ton commission fee for all tons supplied.
To reduce costs at its Jacksonville and Jackson minimills, the Company employs
DJJ under contract to operate shredding and processing operations on its mill
property for preparation and delivery of scrap from its local markets. The
operator is paid a per ton fee for these services. At Knoxville, a DJJ
representative is employed to source local prepared scrap, which the Company
buys at day-to-day market prices at the mill. The Company believes that these
processing and local buying operations at its mills consistently result in the
purchase of significant quantities of the Company's requirements at a $5-$10/ton
savings versus open market brokerage purchases. The Company anticipates that it
could readily obtain adequate supplies of scrap steel at market prices from
sources other than DJJ if warranted.

30
<PAGE> 32

Various domestic and foreign firms supply other important raw materials or
operating supplies required for the Company's business, including refractories,
ferroalloys and carbon electrodes. The Company has historically obtained
adequate quantities of such raw materials and supplies to permit efficient mill
operations.

ENERGY SUPPLY

Electricity and natural gas represent approximately 14% and 4%,
respectively, of the Company's conversion costs. Access to attractively priced
electric power and natural gas can be an important competitive cost advantage to
a minimill.

The Company purchases its electricity from the Tennessee Valley Authority
("TVA"), Knoxville Utility Board, a TVA affiliate ("KUB"), Duke Power Company
("Duke") and Florida Power & Light Company ("FP&L") and incurred the following
costs for electricity for fiscal 1997:

<TABLE>
<CAPTION>
APPROXIMATE
MILL SUPPLIER CENTS/KWH ANNUAL COST
- ---- -------- --------- -----------
(IN
MILLIONS)
<S> <C> <C> <C>
Jackson................................................... TVA 2.3 $7.2
Knoxville................................................. TVA/KUB 2.5 4.9
Charlotte................................................. Duke 2.9 6.2
Jacksonville.............................................. FP&L 4.4 11.4
</TABLE>

The Company receives electric service under competitively priced power
supply contracts with Duke and TVA. Given the importance of competitively priced
power to minimill steel production, the Company plans to continue to exhaust
every available avenue in pursuit of more cost effective rates at the
Jacksonville Mill. The Company expects that, longer term, deregulation of the
electric power industry will allow electricity to be purchased on more favorable
terms in Florida.

The Company purchases its power from its utilities under interruptible
service contracts. Under such contracts, the utilities provide service at less
than firm tariff rates in return for the right to curtail power deliveries
during peak demand periods. Such interruptions are infrequent and occur with
sufficient notice to allow the Company to curtail production in an orderly
manner.

Since deregulation of the natural gas industry, natural gas requirements
have generally been provided through purchase of well-head gas delivered via the
interstate pipeline system and local distribution companies. Open access to
competitively priced supply of natural gas enables the Company to secure
adequate supplies at competitive prices.

ENVIRONMENTAL REGULATION

See "Management's Discussion and Analysis of Results of Operations and
Financial Condition -- Compliance with Environmental Laws and Regulations", for
a discussion of the Company's cleanup liabilities with state and federal
regulators regarding the investigation and/or cleanup of certain sites.

The Company is constructing a facility at its Jackson mill that is designed
to utilize a technology developed by a third party to recycle the Company's
electric arc furnace dust ("EAF") which is currently regulated as a hazardous
waste due to the presence of heavy metals. The facility has a design capacity to
recycle up to 30 thousand tons of EAF dust per year. The Company currently
generates approximately 24 thousand tons of EAF dust per year. The facility is
designed to recycle EAF dust in two stages. In the first stage the dust is fed
into a rotary hearth furnace where the zinc in the dust is vaporized and
collected in a baghouse as crude zinc oxide. The residual of the dust exits the
rotary hearth in the form of a reduced iron unit that can be fed into the
Jackson minimill's EAF furnace as a steel scrap substitute. In the second stage
of the process, the crude zinc oxide is fed into a wet chemical process to
extract the lead and cadmium and produce a high quality, saleable zinc oxide.

The facility is currently in the early startup phase. Startup is expected
to progress slowly given that new technology is involved, and the challenge will
be to demonstrate that it can be applied at a

31
<PAGE> 33

commercially acceptable scale of production. If the technology and the facility
can be successfully developed, the Company foresees that all of the Company's
EAF dust will eventually be recycled at the facility and that the revenues from
sale of the zinc oxide and other by-products may cover the operating cost of the
facility. Additionally, the Company will save the alternative cost of disposing
of its EAF dust with third parties. There can be no assurance, however, that the
technology or the facility will be successfully developed, or that, if
successfully developed, can be operated in a cost-efficient basis.

COMPETITION

The Company experiences substantial competition in the sale of each of its
products from a large number of companies in its geographic markets.

Rebar and merchant bars are commodity steel products, making price the
primary competitive factor. Due to the high cost of freight relative to the
value of the Company's steel products, competition from non-regional producers
is limited. Rebar deliveries are generally concentrated within a 350 mile radius
of a minimill, while merchant bar deliveries are generally concentrated within a
500 mile radius of a minimill. Except in unusual circumstances, the customer's
delivery expense is limited to freight charges from the nearest competitive
minimill and any incremental freight charges must be absorbed by the supplier.
The Company has experienced some competition from foreign sources, with the
level and degree of foreign competition varying from time to time depending upon
factors including foreign government subsidies and currency exchange rates.

The Company's competitive environment varies by product.

STOCK REBAR

The boundary of the current market area for the Company's rebar products is
roughly defined by a line running through New Orleans, Louisiana, Little Rock,
Arkansas, Kansas City, Kansas, St. Louis, Missouri, Indianapolis, Indiana,
Columbus, Ohio, and Baltimore, Maryland. The Company has found shipping outside
of this market area to be only marginally profitable because of freight cost
considerations.

MERCHANT BAR

The Company's primary marketing area for merchant bars encompasses the
southeastern and midwestern U.S. The Company did not enter the merchant bar
market in a significant way until 1982 and does not have the same market
position it has in the rebar market. The Company's merchant bar sales now
represent approximately 31% of the Company's total sales.

The market for merchant bars is very competitive, with price being the
primary competitive factor. In the last two years, the Company has upgraded its
rolling mill facilities at Charlotte to increase the Company's ability to shift
production from rebar to merchant bar as market conditions allow and at Jackson
to increase production and improve merchant product mix.

RODS

The Company produces rods at its Jacksonville minimill. The Company's
primary marketing area for rods includes Florida, South Carolina, Georgia,
Alabama and Louisiana. The Company does not intend to geographically expand its
marketing beyond these states due to the relatively low margins and prohibitive
freight cost inherent to rod products. Although the market for rods can be
heavily influenced by foreign imports, rod sales by foreign competitors have not
had a material effect on the Company's rod sales in the last three years.

FABRICATED REBAR

With 13 fabricating plants located throughout the southeastern U.S., all
within good support distance from one of the Company's four minimills, the
Company is a major factor in all the markets it serves. In the sale of
fabricated rebar, the Company competes with other steel fabricators in its
marketing area, some of whom purchase their stock rebar from the Company.

32
<PAGE> 34

EMPLOYEES

As of June 30, 1997, the Company had 1,871 employees, none of whom is
covered by a collective bargaining agreement. The Company believes that its
relations with its employees are good. The following table sets forth the
approximate number of employees of the Company as of June 30, 1997:

<TABLE>
<CAPTION>
NUMBER OF
GROUP EMPLOYEES
- ----- ----------
<S> <C>
Mills
Jackson................................................... 298
Knoxville................................................. 213
Jacksonville.............................................. 269
Charlotte................................................. 273
-----
Total Mills....................................... 1,053
Mill Sales.................................................. 22
Fabricating................................................. 540
Rail/Atlas.................................................. 186
Corporate................................................... 70
-----
Total Company..................................... 1,871
=====
</TABLE>

The Company has been, and continues to be, proactive in establishing and
maintaining a climate of good employee relations with its employees. Ongoing
initiatives include organizational development skills training, team building
programs, opportunities for participation in employee involvement teams, and
adoption of an "open book" system of management. The Company believes high
employee involvement is a key factor in the success of the Company's operations.

A compensation program designed to make the Company's employees' financial
interests congruous with those of the Company's shareholders has been
implemented. For the Company's mill operating employees, the incentive is
directly connected to melting and rolling mill volumes. The sales team has their
own incentive calculated on the Company's sales volumes. The fabrication group's
operating employee incentives are tied to operating costs and other incentive
targets. Some 40 employees, comprising senior management, participate in a
Strategic Value Added incentive plan based upon return on capital employed.

LEGAL PROCEEDINGS

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Compliance with Environmental Laws and Regulations" for
a discussion of the Company's liabilities with respect to certain environmental
matters. The Company also is involved in routine litigation arising in the
normal course of business. In management's opinion, the adverse resolution of
any such routine litigation would not be likely to have a material adverse
effect on the Company's business, financial condition or results of operations.

33
<PAGE> 35

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Company's Board of Directors consists of eight members. The Company
intends within approximately six months after the completion of the Offerings to
elect two independent outside directors. Directors generally serve for one-year
terms and until their successors are duly elected and qualified.

The following table sets forth certain information regarding the Company's
existing directors and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---- --- ---------
<S> <C> <C>
Phillip E. Casey..................... 54 Chairman of the Board, Chief Executive Officer and
Director
J. Donald Haney...................... 61 Group Vice President, Fabricated Reinforcing Steel, and
Director
Shuzo Hikita......................... 54 Vice President, Engineering and Technology, and Director
Tom J. Landa......................... 46 Vice President, Chief Financial Officer, Secretary and
Director
Koichi Takashima..................... 74 Director
Akihiko Takashima.................... 60 Director
Hideichiro Takashima................. 39 Director
Ryutaro Yoshioka..................... 58 Director
Dennie Andrew........................ 57 Vice President, Steel Mill Operations
J. Neal McCullohs.................... 41 Vice President, Mill Product Sales
Robert P. Muhlhan.................... 47 Vice President, Material Procurement
James S. Rogers, II.................. 49 Vice President, Human Resources
Hiroyoshi Tsuchiya................... 59 Vice President, Strategic Planning
</TABLE>

Phillip E. Casey has been Chairman of the Board, Chief Executive Officer
and a director since June 1994. Prior to joining the Company, Mr. Casey held
various positions with Birmingham Steel Corporation, including Chief Financial
Officer, Executive Vice President and Vice Chairman of the Board from 1985 until
1994.

J. Donald Haney has been Group Vice President, Fabricated Reinforcing Steel
since 1979 and a director of the Company since 1988. Mr. Haney joined the
Company in 1958 and has held various management and sales positions with the
Company. Mr. Haney was promoted to the position of Vice President in 1974. Mr.
Haney is principally responsible for the Company's reinforcing steel fabricating
group.

Shuzo Hikita has been Vice President, Engineering and Technology and a
director of the Company since September 1996. Prior to September 1996, Mr.
Hikita held several management positions with Kyoei including Division Manager
of Kyoei's Hirakata and Osaka mills from 1994 to 1996. From 1992 to 1993, Mr.
Hikita was a Vice President with Auburn Steel.

Tom J. Landa has been Chief Financial Officer, Vice President and Secretary
of the Company since April 1995. Mr. Landa was elected a director of the Company
in March 1997. Before joining the Company, Mr. Landa spent over 19 years in
various financial management positions with Exxon Corporation and its affiliates
worldwide.

Koichi Takashima has been a director of the Company since 1992 and Chairman
of Kyoei for many years.

Akihiko Takashima has been a director of the Company since 1992 and a
Director of Kyoei for 26 years.

34
<PAGE> 36

Hideichiro Takashima has been a director of the Company since 1995. Since
June 1995 Mr. Takashima has been President and Chief Operating Officer of Kyoei.
From June 1992 until June 1995, Mr. Takashima held other senior management
positions with Kyoei.

Ryutaro Yoshioka has been a director of the Company since 1995. Mr.
Yoshioka has been Managing Director of Kyoei since July 1, 1994. Prior to such
time Mr. Yoshioka was an executive of Bank of Tokyo for over 7 years.

Dennie Andrew has been Vice President, Steel Mill Operations, since October
1997. From September 1996 until September 1997, Mr. Andrew was Vice President,
Jacksonville Steel Mill Division. From 1986 until 1996, Mr. Andrew was President
of North American operations for Simac International.

J. Neal McCullohs has been Vice President, Mill Product Sales, since August
1995. Mr. McCullohs joined the Company in 1978 and has held various sales
management positions with the Company, including division manager of the St.
Albans Reinforcing Division and Atlanta Reinforcing Division.

Robert P. Muhlhan has been Vice President, Material Procurement, since
February 1995. From 1993 until 1995, Mr. Muhlhan was Regional Vice President of
National Material Trading. Prior to 1993, Mr. Muhlhan spent 24 years with LTV
Steel Company, most recently as Manager -- Production Materials.

James S. Rogers, II, has been Vice President, Human Resources, since June
1997. From 1992 until 1996, Mr. Rogers was Vice President, Human Resources, at
Birmingham Steel Corporation. From 1975 until 1992, Mr. Rogers was employed by
the Company in various positions, including Manager of Corporate Personnel
Practices and Director of Human Resources.

Hiroyoshi Tsuchiya has been Vice President, Strategic Planning, since May
1994. Prior to his employment with the Company, Mr. Tsuchiya held various
management positions with Mitsubishi Corporation in Japan and Canada from 1975
to 1994.

Koichi Takashima and Akihiko Takashima are brothers. Hideichiro Takashima
is the son of Koichi Takashima. None of the other directors or executive
officers are related to one another.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has a standing Executive Compensation Committee and
Audit Committee.

The principal responsibility of the Executive Compensation Committee is to
provide recommendations to the Board of Directors regarding compensation for
executive officers of the Company.

The Audit Committee's principal responsibilities are to review the annual
audit of the Company's financial statements and to meet with the independent
auditors of the Company from time to time in order to review the Company's
general policies and procedures with respect to audits and accounting and
financial controls.

DIRECTORS COMPENSATION

No director receives separate compensation for services rendered as a
director. Expenses incurred by directors who are employees of the Company to
attend meetings of the Board of Directors or committees thereof are reimbursed
by the Company. The Company does not reimburse expenses incurred by non-employee
directors to attend Board of Directors or committee meetings. These policies are
expected to change following the election of two outside, independent directors
within six months following completion of the Offerings.

35
<PAGE> 37

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth all compensation awarded to, earned by, or
paid for services rendered to the Company in all capacities during the Company's
three most recently completed fiscal years for each of the named executive
officers of the Company as defined under applicable Securities and Exchange
Commission Rules (the "Named Executive Officers"):

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------- -------------------------
SECURITIES
RESTRICTED UNDERLYING
STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S)(1) (#)(1) COMPENSATION(2)
- --------------------------- ---- -------- ---------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Phillip E. Casey........... 1997 $255,000 $ 65,637 $ 0 0 $ 3,278
Chairman of the Board 1996 255,000 80,453 0 0 4,617
and Chief Executive 1995 249,167 2,692,170 4,500,000 250,000 0
Officer(3)
J. Donald Haney............ 1997 210,954 53,893 0 3,500 3,032
Group Vice President, 1996 196,974 64,445 0 1,368 2,620
Fabricated Reinforcing
Steel 1995 216,594 140,995 0 0 4,137
Tom J. Landa............... 1997 170,217 43,886 0 0 3,647
Vice President and 1996 160,389 153,019 150,000 12,960 0
Chief Financial
Officer(4)
James C. Hogue(5).......... 1997 166,662 42,570 0 3,000 2,921
Vice President, Human 1996 155,712 50,944 0 1,080 2,735
Resources 1995 180,936 105,872 0 0 3,422
James F. Oliver............ 1997 121,978 83,009 0 3,000 2,332
Vice President, 1996 104,734 62,942 0 738 2,096
Knoxville Steel Mill
Division 1995 119,856 55,317 0 0 1,936
Thomas G. Creed(5)......... 1997 156,408 39,935 0 0 593,569
President and 1996 256,308 82,671 0 2,500 2,481
Chief Operating Officer 1995 282,204 221,779 0 0 4,748
</TABLE>

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

(1) All references are to Class B Common Stock. The shares of restricted stock
shown are subject to a substantial risk of forfeiture which for Mr. Casey
lapses at the rate of 20% per year beginning as of June 1, 1995 and for Mr.
Landa lapses at a rate of 33 1/3% per year beginning as of April 1, 1997. At
the end of fiscal 1997, the aggregate restricted stock holdings and value of
such holdings were for Mr. Casey 450,000 shares and $6,075,000,
respectively, and for Mr. Landa 12,000 shares and $162,000, respectively.
Dividends, if declared and paid on the Common Stock generally, are payable
on such restricted shares at the same rate as paid to all stockholders. In
fiscal 1998, Messrs. Haney, Landa and Oliver were granted 2,500 shares of
restricted stock each subject to a substantial risk of forfeiture which
lapses at the rate of 33 1/3% per year beginning as of October 1, 1999.
(2) These amounts consist of Company matching contributions made pursuant to the
Company's Savings Plan, except for Mr. Creed, which amount includes a
one-time payment of $591,600 from the Supplemental Benefits Plan in
connection with his retirement in November 1996.
(3) For fiscal 1995, Mr. Casey's salary covers ten months of employment
beginning June 1, 1994, and his bonus includes a one-time signing bonus of
$500,000 and a $1,946,000 tax bonus. See "-- Executive Employment Agreement"
for more information.
(4) Includes a $100,000 signing bonus pursuant to Mr. Landa's employment offer
in March 1995.
(5) Messrs. Creed and Hogue retired from the Company in November 1996 and May
1997, respectively.

36
<PAGE> 38

OPTION GRANTS TABLE

The following table shows information concerning options to purchase shares
of Class B Common Stock granted during fiscal 1997 for the Named Executive
Officers:

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------ -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Phillip E. Casey.................. -- -- -- -- -- --
J. Donald Haney................... 3,500 4.41% 12.50 5/14/06 27,514 69,726
Tom J. Landa...................... -- -- -- -- -- --
James C. Hogue(1)................. 3,000 3.78% 12.50 5/14/06 23,584 59,765
James F. Oliver................... 3,000 3.78% 12.50 5/14/06 23,584 59,765
Thomas G. Creed(1)................ 2,500 3.15% 12.50 5/14/06 19,653 49,804
</TABLE>

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

(1) Messrs. Creed and Hogue forfeited their options upon retirement in November
1996 and May 1997, respectively.

OPTION EXERCISES AND YEAR-END VALUE TABLE

No stock options were exercised by any of the Company's executive officers
during fiscal 1997. The following table shows information concerning values as
of the end of fiscal 1997 of options to purchase shares of Class B Common Stock
held by each Named Executive Officer:

<TABLE>
<CAPTION>
VALUE OF OPTIONS
NUMBER OF OPTIONS EXERCISABLE/UNEXERCISABLE
NAME EXERCISABLE/UNEXERCISABLE $(1)
- ---- ------------------------- -------------------------
<S> <C> <C>
Phillip E. Casey.............................. 0/0 0/0
Tom J. Landa.................................. 0/12,960 0/12,960
J. Donald Haney............................... 0/4,868 0/4,868
James C. Hogue(2)............................. 0/4,080 0/4,080
James F. Oliver............................... 0/3,738 0/3,738
Thomas G. Creed(2)............................ 0/0 0/0
</TABLE>

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

(1) This represents the amount by which the latest appraisal exceeds the
exercise price of the options held by the Named Executive Officer.

(2) Messrs. Creed and Hogue forfeited their options upon retirement in November
1996 and May 1997, respectively.

PENSION BENEFITS

The table below sets forth the estimated annual benefits, payable as a
single life annuity beginning at retirement at age 65, at various remuneration
levels and for representative years of service at normal retirement date, under
the Company's tax qualified noncontributory defined benefit pension plan (the
"Retirement Plan").

ESTIMATED ANNUAL RETIREMENT BENEFIT

<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
FINAL AVERAGE COMPENSATION 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- -------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000.................................. $27,070 $33,837 $40,604 $47,372 $ 52,372
150,000.................................. 42,070 52,587 63,104 73,622 81,122
200,000.................................. 57,070 71,337 85,604 99,872 109,872
</TABLE>

37
<PAGE> 39

Under the Retirement Plan, the compensation taken into account generally
includes all salary, bonuses and other taxable compensation, subject to a
$150,000 per year limitation. The final average compensation for the Named
Executive Officers for purposes of the Retirement Plan for fiscal 1997 is
$150,000. The years of credited service for the named Executive Officers for the
Retirement Plan are three years for Phillip E. Casey, 39 years for J. Donald
Haney, two years for Tom J. Landa, seven years for James F. Oliver, and 23 years
for Thomas G. Creed. The benefits under the Retirement Plan are not subject to
any deduction for Social Security or other offset amounts.

SUPPLEMENTAL BENEFITS PLAN

The Company maintains a nonqualified, unfunded Supplemental Benefits Plan
(the "SERP"), which provides certain officers defined pension benefits in
addition to those provided under the Company's other plans. The SERP provides an
annual retirement benefit equal to the greater of (i) 50% of final average
compensation without regard to the $150,000 limit, and (ii) 2.4% of final
average compensation multiplied by years of service (up to 25), plus 1% of final
average compensation multiplied by years of service in excess of 25 (up to 10),
less (in either case) amounts to which the participant is entitled under other
retirement plans of the Company and prior employers and under Social Security.
Upon retirement at November 1, 1996, Thomas G. Creed received a one-time payment
of $591,600 as his SERP benefit. As of March 31, 1997, the Company had accrued
approximately $138,500 in supplemental retirement benefits for the then two
remaining active employees (James C. Hogue and J. Donald Haney) covered by the
SERP. No other Named Executive Officer is, or is anticipated to be, covered by
the SERP.

In connection with the acquisition of FLS by Kyoei the officers covered by
the SERP waived certain rights under the SERP, provided that if such officers
are terminated without cause, resign for good reason, die, retire or become
disabled, then such officers will be entitled to receive the amounts they would
have received had such officers not waived such rights.

EXECUTIVE EMPLOYMENT AGREEMENT

Effective June 1, 1994, the Company entered into an employment agreement
with Phillip E. Casey to serve as the Company's Chairman of the Board of
Directors and Chief Executive Officer. The agreement provides for a one time
signing bonus of $500,000, annual base salary of $300,000, a grant of 750,000
shares of Class B Common Stock (then valued at $4.5 million) to vest ratably
over five years, a tax bonus in the amount of $1,946,000 with respect to such
shares, and other benefits commensurate with his position. Mr. Casey has placed
15% of his annual salary at risk as part of the Company's annual incentive
program. Pursuant to the agreement, the Company also granted to Mr. Casey an
option to purchase an additional 250,000 shares of Class B Common Stock for $1.5
million, which Mr. Casey exercised. The agreement provides for certain
termination benefits and places restrictions on the disposition of the Company's
Class B Common Stock. Effective upon the completion of the Offerings, the
restrictions on the disposition of such shares will lapse.

INCENTIVE AND BENEFIT PLANS

EQUITY OWNERSHIP PLAN

The Board of Directors administers the Equity Ownership Plan and makes the
determination as to the grant of awards, options and/or rights under the plan.
An aggregate of 243,002 shares of Class A Common Stock are reserved for issuance
under the plan. An aggregate of 143,750 shares of Class B Common Stock are
reserved for issuance in connection with stock options previously granted under
the plan and currently unexercised. Under the plan, restricted stock, incentive
stock options, nonqualified stock options and stock appreciation rights or any
combination thereof may be granted to Company employees. In general, the
exercise price of the options granted under the plan will be determined at the
discretion of the Board of Directors, which price generally may not be less than
the market price of the Common Stock on the date the option is granted. Options
normally vest 33 1/3% each year beginning approximately two years after the date
of grant and expire after 10 years. The Board of Directors may

38
<PAGE> 40

condition awards of restricted stock and stock appreciation rights upon
satisfaction of performance criteria or other conditions.

SHARES IN SUCCESS

In 1995, the Company adopted a stock purchase/stock option plan that
provided employees with a one-time right in July 1995 to purchase Class B Common
Stock at a price equal to 85% of then appraised fair market value. For each
share of Class B Common Stock purchased under the plan, each employee received
options to purchase six additional shares at the then appraised fair market
value. Options vest 33 1/3% each year beginning approximately two years after
the date of grant and expire in 2005. No additional options may be granted under
the plan, and no additional shares may be purchased under the plan except upon
the exercise of outstanding options. As of September 30, 1997, an aggregate of
30,987 shares of Class B Common Stock purchased by employees under the plan
remain outstanding, and an aggregate of 186,012 shares of Class B Common Stock
are reserved for issuance under the plan in connection with stock options that
were granted under the plan and are currently unexercised.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Company's Executive Compensation Committee are Koichi
Takashima, Hideichiro Takashima and Ryutaro Yoshioka. Akihiko Takashima, a
current director of the Company, and Takeshi Fujimura, a former director, were
members of the committee during fiscal 1997. Mr. Fujimura remains a special
advisor to the Chairman of the Board of the Company. No other member of the
Executive Compensation Committee has at any time been an officer or employee of
the Company.

Mr. Fujimura was an advisor to the President of Kyoei until his retirement
in June 1997; the current members of the Executive Compensation Committee and
Akihiko Takashima continue to be executive officers and/or directors of Kyoei.

CERTAIN TRANSACTIONS

The Company has entered into technical assistance arrangements with Kyoei,
which owns FLS. See "Risk Factors -- Voting Control by Principal Stockholder"
and "Principal Stockholders". Under these arrangements the Company reimburses
Kyoei for the personnel costs of its consulting engineers and certain travel and
other expenses. Payments made by the Company under these arrangements have been
approximately $367,000, $161,000 and $32,000 in fiscal 1995, 1996 and 1997,
respectively.

39
<PAGE> 41

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Class B Common Stock as of the date of the
Prospectus and as adjusted to reflect the sale of the shares of Class A Common
Stock offered hereby, assuming no exercise of the Underwriters' over-allotment
option, by (i) each person known by the Company to own beneficially more than
5.0% of the outstanding Class B Common Stock, (ii) each director of the Company
who owns shares of Class B Common Stock, (iii) each of the Named Executive
Officers and (iv) all executive officers and directors as a group.

BENEFICIAL OWNERSHIP(1)

<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
COMMON STOCK VOTING POWER
------------------------ -------------
BEFORE THE AFTER THE AFTER THE
NUMBER OFFERINGS OFFERINGS OFFERINGS
--------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Kyoei Steel, Ltd........................... 9,000,000(2) 89.0
Phillip E. Casey........................... 877,484 10.0(3)
J. Donald Haney............................ 6,676 * * *
Tom J. Landa............................... 14,660 * * *
James F. Oliver............................ 4,172 * * *
Koichi Takashima........................... 0 -- -- --
Akihiko Takashima.......................... 0 -- -- --
Shuzo Hikita............................... 0 -- -- --
Hideichiro Takashima....................... 0 -- -- --
Ryutaro Yoshioka........................... 0 -- -- --
Thomas G. Creed(4)......................... 0 -- -- --
James C. Hogue(4).......................... 0 -- -- --
All Directors and Executive Officers as a
Group (13 persons)....................... 912,987 10.3(3)
</TABLE>

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

* Less than one percent.
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities Exchange Commission rules, includes shares as to which a person
has or shares voting power and/or investment power. Except as otherwise
indicated, all shares are held of record with sole voting and investment
power. For purposes of the table, a person or group of persons is deemed to
have "beneficial ownership" of any shares as of a given date which such
person has the right to acquire within 60 days after such date.
(2) All shares shown are owned directly by FLS, a wholly owned subsidiary of
Kyoei. Kyoei's address is 18F Aqua Dojima, West Building, 1-4-16 Dojimahama,
Kita-Ku, Osaka 530, Japan.
(3) Based on a beneficial ownership before the Offerings by Mr. Casey of
1,006,892 shares. The additional 129,408 shares of Class B Common Stock have
been gifted by Mr. Casey pursuant to Transfer and Proxy Agreements between
Mr. Casey and certain donees. The gifted shares are subject to certain
restrictions set forth in the agreements. Under the agreements, Mr. Casey is
appointed as attorney-in-fact with full power to vote the shares in
accordance with the decision of the holders of a majority of the shares held
by the donee stockholders and Mr. Casey. As a result, Mr. Casey had the
right to vote all 129,408 shares. The restrictions (including those relating
to voting) expire upon the effectiveness of the registration statement of
which this Prospectus is a part. Mr. Casey's address is 5100 W. Lemon
Street, Suite 312, Tampa, Florida 33609.
(4) Messrs. Creed and Hogue retired from the Company in November 1996 and May
1997, respectively.

40
<PAGE> 42

DESCRIPTION OF CAPITAL STOCK

References in this Prospectus to the Company's Articles of Incorporation or
Bylaws are references to such documents as they will be amended and restated in
connection with the Offerings. The following description is a summary and is
subject to and qualified in its entirety by reference to the provisions of the
Company's Articles of Incorporation, the form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.

COMMON STOCK

The Company has authority under its Articles of Incorporation to issue up
to 100,000,000 shares of Class A Common Stock, par value $.01, and up to
22,000,000 shares of Class B Common Stock, par value $.01 (together referred to
as "Common Stock"). Shares of Class A Common Stock and shares of Class B Common
Stock generally carry the same rights, powers, preferences, privileges and
limitations, except that Class A Common Stock has one vote per share while Class
B Common Stock has two votes per share. As of the date of this Prospectus, there
are no shares of Class A Common Stock outstanding and there are 10,114,603
shares of Class B Common Stock outstanding held of record by approximately 1,065
stockholders. Of such shares, 9,000,000 shares are held of record by FLS, which
shares will represent approximately % of the combined voting power of all
Common Stock upon completion of the Offerings. See "Principal Stockholders".

Holders of Common Stock do not have any preemptive rights or rights to
subscribe for additional securities of the Company.

VOTING RIGHTS

The holders of Class A Common Stock are entitled to one vote per share.
Holders of Class B Common Stock are entitled to two votes per share. Holders of
all classes of Common Stock entitled to vote will vote together as a single
class on all matters presented to the stockholders for their vote or approval.
Because of the disproportionate voting rights of the Class B Common Stock,
holders of Class B Common Stock may be able to control the outcome of matters
submitted to a vote of the Company's stockholders, including the election of
directors, when the number of outstanding shares of Class B Common Stock is less
than a majority of the number of shares of all classes of Common Stock then
outstanding. See "Risk Factors -- Voting Control by Principal Stockholder".

DIVIDENDS

Holders of Class A Common Stock and Class B Common Stock are entitled to
receive dividends at the same rate if, as and when such dividends are declared
by the Company out of assets legally available therefor. The Company may not
make any dividend or distribution to any holder of any class of Common Stock
unless simultaneously with such dividend or distribution the Company makes the
same dividend or distribution with respect to each outstanding share of Common
Stock regardless of class. In the case of a dividend or other distribution
payable in shares of a class of Common Stock, including distributions pursuant
to stock splits or divisions of Common Stock, only shares of Class A Common
Stock may be distributed with respect to Class A Common Stock and only shares of
Class B Common Stock may be distributed with respect to Class B Common Stock.
Whenever a dividend or distribution, including distributions pursuant to stock
splits or divisions of the Common Stock, is payable in shares of a class of
Common Stock, the number of shares of each class of Common Stock payable per
share of such class of Common Stock shall be equal in number. In the case of
dividends or other distributions consisting of other voting securities of the
Company or of voting securities of any corporation which is a wholly-owned
subsidiary of the Company, the Company shall declare and pay such dividends in
two separate classes of such voting securities, identical in all respects except
that (i) the voting rights of each such security issued to the holders of Class
A Common Stock shall be one-half of the voting rights of each such security
issued to holders of Class B Common Stock, (ii) such security issued to holders
of Class B Common Stock shall convert into the security issued to the holders of
Class A Common Stock upon the

41
<PAGE> 43

same terms and conditions applicable to the conversion of Class B Common Stock
into Class A Common Stock and shall have the same restrictions on transfer and
ownership applicable to the transfer and ownership of the Class B Common Stock,
and (iii) with respect only to dividends or other distributions of voting
securities of any corporation which is a wholly owned subsidiary of the Company,
the respective voting rights of each such security issued to holders of Class A
Common Stock and Class B Common Stock with respect to election of directors
shall otherwise be as comparable as is practicable to those of the Class A
Common Stock and Class B Common Stock, respectively. In the case of dividends or
other distributions consisting of securities convertible into, or exchangeable
for, voting securities of the Company or of voting securities of any corporation
which is a wholly owned subsidiary of the Company, the Company shall provide
that such convertible or exchangeable securities and the underlying securities
be identical in all respects (including, without limitation, the conversion or
exchange rate) except that the underlying securities may have the same
differences as they would have if the Company issued voting securities of the
Company or of a wholly owned subsidiary rather than issuing securities
convertible into, or exchangeable for, such securities.

CONVERSION

Class A Common Stock has no conversion rights. Shares of Class B Common
Stock are convertible into Class A Common Stock, in whole or in part, at any
time and from time to time at the option of the holder, on the basis of one
share of Class A Common Stock for each share of Class B Common Stock converted.
Each share of Class B Common Stock will also automatically convert into one
share of Class A Common Stock if, on the record date for any meeting of the
stockholders of the Company, the number of shares of Class B Common Stock then
outstanding is less than % of the aggregate number of shares of Common
Stock outstanding as of such record date. The Company covenants that (i) it will
at all times reserve and keep available, out of its authorized but unissued
shares of Class A Common Stock, such number of shares of Class A Common Stock
issuable upon the conversion of all outstanding shares of Class B Common Stock,
(ii) it will cause any share of Class A Common Stock issuable upon conversion of
a share of Class B Common Stock that requires registration with or approval of
any governmental authority under federal or state law before such shares may be
issued upon conversion to be so registered or approved and (iii) it will use its
best efforts to list the shares of Class A Common Stock required to be delivered
upon conversion prior to such delivery upon such national securities exchange
upon which the outstanding Class A Common Stock is listed at the time of such
delivery.

RESTRICTIONS ON ADDITIONAL ISSUANCES AND TRANSFER

The Company may not issue or sell any shares of Class B Common Stock or any
securities (including, without limitation, any rights, options, warrants or
other securities) convertible into, or exchangeable or exercisable for, shares
of Class B Common Stock to any person who is not a holder of Class B Common
Stock as of the date of completion of the Offerings, other than pursuant to
stock options already outstanding. Additionally, shares of Class B Common Stock
may not be transferred, whether by sale, assignment, gift, bequest, appointment
or otherwise, to a person other than another holder of Class B Common Stock or
to Kyoei. Notwithstanding the foregoing (i) any holder of Class B Common Stock
may pledge his, her or its shares of Class B Common Stock to a financial
institution pursuant to a bona fide pledge of such shares as collateral security
for indebtedness due to the pledgee provided that such shares remain subject to
the transfer restrictions and that, in the event of foreclosure or other similar
action by the pledgee, such pledged shares of Class B Common Stock may only be
transferred to as provided above or converted into shares of Class A Common
Stock, as the pledgee may elect, and (ii) the foregoing transfer restrictions
shall not apply in the case of a merger, consolidation or business combination
of the Company with or into another corporation in which all of the outstanding
shares of Common Stock of the Company regardless of class are purchased by the
acquiror.

RECLASSIFICATION AND MERGER

In the event of a reclassification or other similar transaction as a result
of which the shares of Class A Common Stock are converted into another security,
then a holder of Class B Common Stock will be entitled to receive upon
conversion the amount of such other security that the holder would have received

42
<PAGE> 44

if the conversion occurred immediately prior to the record date of such
reclassification or other similar transaction. No adjustments in respect of
dividends will be made upon the conversion of any share of Class B Common Stock
except that, if a share is converted subsequent to the record date for the
payment of a dividend or other distribution on shares of Class B Common Stock
but prior to such payment, then the registered holder of such share at the close
of business on such record date will be entitled to receive the dividend or
other distribution payable on such date regardless of the conversion thereof or
the Company's default in payment of the dividend due on such date. In the event
the Company enters into any consolidation, merger, combination or other
transaction in which shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then, and in such
event, the shares of each class of Common Stock will be exchanged for or changed
into either (i) the same amount of stock, securities, cash and/or any other
property, as the case may be, into which or for which each share of any other
class of Common Stock is exchanged or changed; provided, however, that if shares
of Common Stock are exchanged for or changed into shares of capital stock, such
shares so exchanged for or changed into may differ to the extent and only to the
extent that the Class A Common Stock and Class B Common Stock differ as provided
in the Company's Articles of Incorporation or (ii) if holders of each class of
Common Stock are to receive different distributions of stock, securities, cash
and/or any other property, an amount of stock, securities, cash and/or property
per share having a value, as determined by an independent investment banking
firm of national reputation selected by the Board of Directors, equal to the
value per share into which or for which each share of any other class of Common
Stock is exchanged or changed.

OTHER PROVISIONS

In the event of liquidation of the Company, after payment of the debts and
other liabilities of the Company, the remaining assets of the Company will be
distributable ratably among the holders of the Class A Common Stock and Class B
Common Stock treated as a single class. Except as described below, the holders
of the Class A Common Stock and Class B Common Stock are not entitled to
preemptive rights. None of the Class A Common Stock or Class B Common Stock may
be subdivided or combined in any manner unless the other class is subdivided or
combined in the same proportion.

FLORIDA BUSINESS CORPORATION ACT

The Company will be subject to several anti-takeover provisions under
Florida law that apply to a public corporation organized under Florida law
unless the corporation has elected to opt out of such provisions in its Articles
of Incorporation or (depending on the provision in question) its Bylaws. The
Company has not elected to opt out of these provisions. The Florida Business
Corporation Act (the "Florida Act") contains a provision that prohibits the
voting of shares in a publicly-held Florida corporation which are acquired in a
"control share acquisition" unless the holders of a majority of the
corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition. A
"control share acquisition" means an acquisition that immediately thereafter
entitles the acquiring party to vote in the election of directors within any of
the following ranges of voting power: (i) one-fifth or more but less than one
third of such voting power, (ii) one third or more but less than a majority of
such voting power and (iii) more than a majority of such voting power.

The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested stockholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested stockholder,
(ii) the interested stockholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years, or (iii) the interested
stockholder is the beneficial owner of at least 90% of the corporation's
outstanding voting shares, exclusive of those shares acquired by the interested
stockholder directly from the corporation in a transaction approved by a
majority of the disinterested directors, or (iv) the affirmative vote of
two-thirds of the voting shares other than the shares beneficially owned by the

43
<PAGE> 45

interested stockholders. An interested stockholder is defined as a person who
together with affiliates and associates beneficially owns more than 10% of the
corporation's outstanding voting shares.

INDEMNIFICATION AND LIMITATION OF LIABILITY FOR DIRECTORS AND OFFICERS

The Company's Bylaws provide that the Company shall indemnify directors and
officers to the fullest extent permitted by the laws of the State of Florida.
The Company intends to enter into indemnification agreements with all of its
executive officers and directors creating certain indemnification obligations on
the Company's part in favor of the directors and executive officers. These
indemnification agreements clarify and expand the circumstances under which a
director or executive officer will be indemnified.

The indemnification rights conferred by the Bylaws and indemnification
agreements are not exclusive of any other right, under the Florida Act or
otherwise, to which a person seeking indemnification may otherwise be entitled.
The Company also intends to provide liability insurance for the directors and
officers for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers.

The effect of such indemnification arrangements may be to exempt or limit
the liability of such executive officers and directors to the Company or its
stockholders for monetary damages for breach of fiduciary duty to the Company,
except to the extent such exemption or limitation is not permitted under the
Florida Act as the same exists or may hereafter be amended.

TRANSFER AGENT

The transfer agent and registrar of the Common Stock is .

LISTING

Application will be made for listing of the Class A Common Stock on the New
York Stock Exchange ("NYSE") under the trading symbol "AST".

SHARES ELIGIBLE FOR FUTURE SALE

A substantial number of shares of Class B Common Stock already outstanding,
or issuable on exercise of outstanding options, upon conversion into shares of
Class A Common Stock, will be eligible for future sale in the public market at
prescribed times pursuant to exemptions from registration under the Securities
Act of 1933, as amended (the "Securities Act").

44
<PAGE> 46

entering into of a cash-settled or Common Stock settled derivative instrument)
any shares of Common Stock, any securities of the Company that are substantially
similar to the Class A Common Stock or any securities that are convertible into
or exchangeable for, or that represent the right to receive, Common Stock, or
any such substantially similar securities, (other than pursuant to employee
stock option plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of this
Prospectus), without the prior written consent of the representatives, except
for the shares of Class A Common Stock offered in connection with the Offerings.
Upon expiration of such 180 day period, an aggregate of 10,042,395 shares will
be eligible for sale subject to the timing, volume and manner of sale
restrictions of Rule 144. See "Underwriting".

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned his or her shares of Common Stock for at least one year
(including the prior holding period of any prior owner other than an affiliate
of the Company) is entitled to sell within any three-month period that number of
shares which does not exceed the greater of 1% of the outstanding shares of
Common Stock and the average weekly trading volume during the four calendar
weeks preceding each such sale. Sales under Rule 144 also are subject to certain
manner of sale provisions, notice requirements and the availability of current
public information about the Company. A person (or persons whose shares are
aggregated) who is not or has not been deemed an affiliate of the Company for at
least three months and who has beneficially owned shares for at least two years
(including the holding period of any prior owner other than an affiliate) would
be entitled to sell such shares under Rule 144 without regard to the limitations
discussed above.

Sales of such shares in the public market, or the perception that such
sales may occur, could adversely affect the market price of the Common Stock or
impair the Company's ability to raise additional capital in the future through
the sale of equity securities.

VALIDITY OF CLASS A COMMON STOCK

The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company by Trenam, Kemker, Scharf, Barkin, Frye, O'Neill &
Mullis, Professional Association, Tampa, Florida. The validity of the shares of
Class A Common Stock offered hereby will be passed upon for the Underwriters by
Sullivan & Cromwell, New York, New York, which will be relying upon the opinion
of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill, & Mullis, Professional
Association, as to matters of Florida Law.

EXPERTS

The Financial Statements and Notes thereto included in this Prospectus, to
the extent and for the periods indicated in their report, have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their report with respect thereto, and is included herein, in reliance upon the
authority of said firm, as experts in accounting and auditing in giving said
report.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each such instance reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith will file reports, proxy statements
and other information with the Commission. The Registration Statement, as well
as all periodic reports and other information

45
<PAGE> 47

filed by the Company pursuant to the Exchange Act, may be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street NW, Washington, D.C. 20549, and at the regional offices of the Commission
located at 7 World Trade Center, 7th Floor, New York, New York 10048 and
Citicorp Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials may be obtained from the World Wide Web site that the
Commission maintains at http://www.sec.gov and from the Public Reference Section
of the Commission, 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed
rates.

46
<PAGE> 48

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Statements of Financial Position as of March 31, and June
30, 1997 (unaudited)...................................... F-2
Statements of Income (unaudited) for the Periods Ended June
30, 1996 and 1997......................................... F-3
Statements of Cash Flows (unaudited) for the Periods Ended
June 30, 1996 and 1997.................................... F-4
Notes to Unaudited Financial Statements..................... F-5
Report of Independent Certified Public Accountants.......... F-8
Statements of Financial Position as of March 31, 1996 and
1997...................................................... F-9
Statements of Income for the Periods Ended March 31, 1995,
1996 and 1997............................................. F-10
Statements of Shareholders' Equity for the Periods Ended
March 31, 1995, 1996 and 1997............................. F-11
Statements of Cash Flows for the Periods Ended March 31,
1995, 1996 and 1997....................................... F-12
Notes to Financial Statements for the Periods Ended March
31, 1995, 1996 and 1997................................... F-13
</TABLE>

F-1
<PAGE> 49

AMERISTEEL CORPORATION

STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1997 1997
--------- -----------
(UNAUDITED)
($ IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................... $ 1,645 $ 3,306
Accounts receivable......................................... 68,563 77,973
Inventories................................................. 106,173 104,905
Deferred tax assets......................................... 5,000 5,000
Other current assets........................................ 1,138 1,122
-------- --------
TOTAL CURRENT ASSETS.............................. 182,519 192,306
ASSETS HELD FOR SALE........................................ 14,838 14,967
PROPERTY, PLANT AND EQUIPMENT............................... 308,159 310,507
Less accumulated depreciation............................... 58,138 62,924
-------- --------
250,021 247,583
GOODWILL.................................................... 85,773 84,740
DEFERRED FINANCING COSTS.................................... 2,523 2,289
OTHER ASSETS................................................ 11 7
-------- --------
TOTAL ASSETS................................................ $535,685 $541,892
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable...................................... $ 44,666 $ 40,482
Salaries, wages and employee benefits....................... 14,598 14,470
Environmental remediation................................... 5,079 5,633
Other current liabilities................................... 4,355 9,615
Interest payable............................................ 4,659 1,745
Current maturities of long-term borrowings.................. 435 5,687
-------- --------
TOTAL CURRENT LIABILITIES......................... 73,792 77,632
LONG-TERM BORROWINGS, LESS CURRENT PORTION.................. 237,474 231,745
OTHER LIABILITIES........................................... 21,555 21,045
DEFERRED TAX LIABILITIES.................................... 52,300 52,300
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 30,000,000 shares authorized
at March 31, and June 30, 1997, 10,079,028 and
10,075,174 shares outstanding at March 31, and June 30,
1997, respectively..................................... 101 101
Capital in excess of par.................................. 156,816 156,765
Retained earnings (accumulated deficit)................... (4,328) 4,095
Deferred compensation..................................... (2,025) (1,791)
-------- --------
TOTAL SHAREHOLDERS' EQUITY........................ 150,564 159,170
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $535,685 $541,892
======== ========
</TABLE>

See notes to financial statements

F-2
<PAGE> 50

AMERISTEEL CORPORATION

STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
JUNE 30, JUNE 30,
1996 1997
----------- -----------
($ IN THOUSANDS EXCEPT PER
COMMON SHARE)
<S> <C> <C>
NET SALES................................................... $169,822 $168,359
Operating Expenses:
Cost of sales............................................. 148,912 135,037
Selling and administrative................................ 6,933 7,572
Depreciation.............................................. 3,995 4,827
Amortization of goodwill.................................. 1,033 1,033
-------- --------
160,873 148,469
-------- --------
INCOME FROM OPERATIONS...................................... 8,949 19,890
Other Expenses:
Interest.................................................. 4,855 5,188
Amortization of deferred financing costs.................. 234 234
-------- --------
5,089 5,422
-------- --------
INCOME BEFORE INCOME TAXES.................................. 3,860 14,468
Income taxes................................................ 1,908 6,045
-------- --------
NET INCOME.................................................. $ 1,952 $ 8,423
======== ========
Weighted average common shares outstanding (in thousands)... 10,094 10,098
EARNINGS PER COMMON SHARE................................... $ 0.19 $ 0.83
======== ========
</TABLE>

See notes to financial statements

F-3
<PAGE> 51

AMERISTEEL CORPORATION

STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
JUNE 30, JUNE 30,
1996 1997
----------- -----------
($ IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 1,952 $ 8,423
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 5,262 6,094
Deferred income taxes..................................... 500 --
Other (loss on asset disposals and deferred
compensation).......................................... 295 739
Changes in operating assets and liabilities:
Accounts receivable....................................... (4,156) (9,410)
Inventories............................................... 14,942 1,268
Other assets.............................................. 268 (109)
Accounts payable, income taxes and other liabilities...... (666) (1,922)
-------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 18,397 5,083
INVESTING ACTIVITIES
Additions to property, plant and equipment................ (13,514) (2,895)
Proceeds from sales of property, plant and equipment...... 127 1
Use of restricted IRB funds............................... 4,017 --
-------- -------
NET CASH USED IN INVESTING ACTIVITIES....................... (9,370) (2,894)
FINANCING ACTIVITIES
Payments to short-term and long-term borrowings, net...... (9,375) (477)
Redemption of common stock................................ (44) (51)
-------- -------
NET CASH USED IN FINANCING ACTIVITIES....................... (9,419) (528)
-------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (392) 1,661
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 6,193 1,645
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 5,801 $ 3,306
======== =======
</TABLE>

See notes to financial statements

F-4
<PAGE> 52

AMERISTEEL CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE A -- BASIS OF PRESENTATION

The financial statements include the accounts of AmeriSteel, a Florida
corporation, (the Company). As of April 1, 1996, the Company changed its name
from Florida Steel Corporation (which it had used since 1956) to AmeriSteel
Corporation. The predecessor of the Company was formed in 1937. All significant
intercompany accounts and transactions have been eliminated.

The accompanying unaudited condensed financial statements do not include
all the information or footnotes necessary for a complete presentation of
financial condition, results of operations and cash flows in conformity with
generally accepted accounting principles. However all adjustments which, in the
opinion of management are necessary for a fair presentation, have been included.
Such adjustments consisted of only normally recurring items.

It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included
elsewhere in this Prospectus. The results of the three months ended June 30,
1997 are not necessarily indicative of the results to be expected for the fiscal
year ending March 31, 1998.

NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements: In June 1997, the Financial Accounting
Standards Board issued Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information" which establishes standards for reporting
information about operating segments of a business. The statement, which is
based on the management approach to segment reporting, includes requirements to
report selected segment information and entity-wide disclosures about products
and services, major customers, and the countries in which the Company holds
assets and reports revenues. This statement becomes effective for the Company
for reporting beginning in fiscal 1999. Management has not yet evaluated the
effects of this change on the Company's financial statements.

Reclassifications: Certain amounts in the prior period financial
statements have been reclassified to conform to the current fiscal financial
statement presentation.

NOTE C -- INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1997 1997
--------- -----------
(UNAUDITED)
($ IN THOUSANDS)
<S> <C> <C>
Finished goods.............................................. $ 59,299 $ 61,230
Work in-process............................................. 14,175 12,753
Raw materials and operating supplies........................ 32,699 30,922
-------- --------
$106,173 $104,905
======== ========
</TABLE>

F-5
<PAGE> 53

AMERISTEEL CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS -- CONTINUED

NOTE D -- BORROWINGS

Long-term borrowings consist of the following:

<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, 1997
1997 (UNAUDITED)
--------- -----------
($ IN THOUSANDS)
<S> <C> <C>
Revolving Credit Agreement.................................. $ 51,340 $ 50,870
First Mortgage Notes........................................ 100,000 100,000
Subordinated Intercompany Note.............................. 50,000 50,000
Industrial Revenue Bonds.................................... 30,875 30,875
Trade Loan Agreement........................................ 5,259 5,259
Note to Parent.............................................. 435 428
-------- --------
237,909 237,432
Less Current Maturities..................................... 435 5,687
-------- --------
$237,474 $231,745
======== ========
</TABLE>

NOTE E -- ENVIRONMENTAL MATTERS

Environmental legislation and regulation at both the federal and state
level is subject to change, which may change the cost of compliance. Various
possible methods of remediation are presently being studied for approval;
however, it is expected that the investigation and remediation process will take
a number of years. Although the ultimate costs associated with the remediation
are not presently known, the Company has estimated the cost to be approximately
$12.2 million with these costs recorded in accrued liabilities as of June 30,
1997. The Company paid approximately $5.2 million in remediation costs in fiscal
1997. Of the amount accrued at March 31, 1997, the Company expects to pay
approximately $5.1 million in fiscal 1998. The timing of future payments are
uncertain due to the various remediation alternatives being considered. The
Company's estimate of the remediation costs is based on its review of each site
and the nature of such problems. The Company then determines for each site the
expected remediation methods, and the estimated cost for each step of
remediation. In all such determinations, the Company employs outside
consultants, and providers of such remedial services where necessary, to assist
in making such determinations. The Company expensed approximately $2 million in
each of the past two fiscal years, and $6 million in fiscal 1995 for
environmental remediation costs.

Based on past use of certain technologies and remediation methods by third
parties, evaluation of those technologies and methods by the Company's
consultants and quotations and third-party estimates of costs of
remediation-related services provided to the Company or of which the Company and
its consultants are aware, the Company and its consultants believe that the
Company's cost estimates are reasonable. In light of the uncertainties inherent
in determining the costs associated with the clean-up of such contamination,
including the time periods over which such costs must be paid, the extent of
contribution by parties which are jointly and severally liable, and the nature
and timing of payments to be made under cost sharing arrangements, there can be
no assurance the ultimate costs of remediation may not be greater or less than
the estimated remediation costs.

NOTE F -- SUBSEQUENT EVENTS

The Board of Directors contemplates an initial public offering of its
common stock (the Offering). In connection with the Offering, the Board of
Directors has approved a change in its Articles of Incorporation and Bylaws as
of to authorize 100,000,000 shares of $.01 par value Class A
common stock and 22,000,000 shares of $.01 par value Class B common stock.
Holders of Class A common stock and Class B common stock are entitled to one
vote per share and two votes per share, respectively.

F-6
<PAGE> 54

AMERISTEEL CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS -- CONTINUED

During September 1997, the Board of Directors granted 9,200 common stock
options with an exercise price of $13.50 per share and 40,000 restricted shares
of common stock with a price of $13.50 per share. These options and shares will
relate to Class B common stock upon the Offering.

In September 1997, the Company incurred additional indebtedness of
$5,000,000 through an industrial revenue bond for the construction of steel mill
equipment. The loan bears interest at 50% to 75% of the prime rate and matures
in September 2014.

F-7
<PAGE> 55

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To AmeriSteel Corporation:

We have audited the accompanying statements of financial position of
AmeriSteel Corporation (a Florida corporation) as of March 31, 1996 and 1997,
and the related statements of income, shareholders' equity and cash flows for
each of the three years in the period ended March 31, 1997. 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 generally accepted auditing
standards. 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 financial position of AmeriSteel Corporation as of
March 31, 1996 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended March 31, 1997, in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Tampa, Florida,
April 25, 1997

F-8
<PAGE> 56

AMERISTEEL CORPORATION

STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................... $ 6,193 $ 1,645
Accounts receivable, less allowance of $1,000 at March 31,
1996 and 1997 for doubtful accounts....................... 72,910 68,563
Inventories................................................. 112,753 106,173
Deferred tax assets......................................... 7,200 5,000
Other current assets........................................ 1,053 1,138
-------- --------
TOTAL CURRENT ASSETS.............................. 200,109 182,519
ASSETS HELD FOR SALE........................................ 14,411 14,838
PROPERTY, PLANT AND EQUIPMENT
Land and improvements....................................... 13,393 14,942
Building and improvements................................... 31,906 35,116
Machinery and equipment..................................... 199,350 250,299
Construction in progress.................................... 45,039 7,802
-------- --------
289,688 308,159
Less accumulated depreciation............................... 42,679 58,138
-------- --------
247,009 250,021
GOODWILL.................................................... 89,903 85,773
DEFERRED FINANCING COSTS.................................... 3,457 2,523
OTHER ASSETS................................................ 7 11
-------- --------
TOTAL ASSETS...................................... $554,896 $535,685
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable...................................... $ 40,234 $ 44,666
Salaries, wages and employee benefits....................... 14,336 14,598
Environmental remediation................................... 6,079 5,079
Other current liabilities................................... 5,057 4,355
Interest payable............................................ 4,940 4,659
Current maturities of long-term borrowings (including note
payable to parent of $444 and $435 at March 31, 1996 and
1997, respectively)....................................... 14,942 435
-------- --------
TOTAL CURRENT LIABILITIES......................... 85,588 73,792
LONG-TERM BORROWINGS, LESS CURRENT PORTION.................. 252,525 237,474
OTHER LIABILITIES........................................... 20,336 21,555
DEFERRED TAX LIABILITIES.................................... 54,700 52,300
SHAREHOLDERS' EQUITY........................................
Common stock, $.01 par value; 30,000,000 authorized,
10,095,741 and 10,079,028 shares outstanding, at March 31,
1996 and 1997, respectively............................... 101 101
Capital in excess of par.................................... 157,026 156,816
Accumulated deficit......................................... (12,380) (4,328)
Deferred compensation....................................... (3,000) (2,025)
-------- --------
TOTAL SHAREHOLDERS' EQUITY........................ 141,747 150,564
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $554,896 $535,685
======== ========
</TABLE>

See notes to financial statements

F-9
<PAGE> 57

AMERISTEEL CORPORATION

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
1995 1996 1997
--------- --------- ---------
($ IN THOUSANDS EXCEPT
EARNINGS PER COMMON SHARE)
<S> <C> <C> <C>
NET SALES................................................... $639,908 $628,404 $617,289
Operating expenses:
Cost of sales............................................. 545,725 533,965 531,190
Selling and administrative................................ 29,959 29,605 29,068
Depreciation.............................................. 14,046 14,619 16,654
Amortization of goodwill.................................. 4,130 4,130 4,130
Other operating expenses.................................. -- 16,013 --
-------- -------- --------
593,860 598,332 581,042
-------- -------- --------
INCOME FROM OPERATIONS...................................... 46,048 30,072 36,247
Other expenses:
Interest.................................................. 23,330 22,000 19,473
Amortization of deferred financing costs.................. 2,863 1,956 934
-------- -------- --------
26,193 23,956 20,407
-------- -------- --------
INCOME BEFORE INCOME TAXES.................................. 19,855 6,116 15,840
Income taxes................................................ 9,354 3,996 7,788
-------- -------- --------
NET INCOME.................................................. $ 10,501 $ 2,120 $ 8,052
======== ======== ========
Weighted average common shares outstanding (in thousands)... 10,000 10,062 10,087
======== ======== ========
EARNINGS PER COMMON SHARE................................... $ 1.05 $ 0.21 $ 0.80
======== ======== ========
</TABLE>

See notes to financial statements

F-10
<PAGE> 58

AMERISTEEL CORPORATION

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK CAPITAL
------------------- IN EXCESS ACCUMULATED DEFERRED
SHARES AMOUNT OF PAR DEFICIT COMPENSATION TOTAL
---------- ------ --------- ----------- ------------ --------
($ IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT MARCH 31, 1994....... 200 $ -- $150,000 $(25,001) $ -- $124,999
Repurchase of common stock....... (20) -- -- -- -- --
Common stock issuance............ 15 -- 4,500 -- (4,500) --
Exercise of stock options........ 5 -- 1,500 -- -- 1,500
Net income....................... -- -- -- 10,501 -- 10,501
Reduction in deferred
compensation................... -- -- -- -- 750 750
49,999 for 1 stock dividend...... 9,999,800 100 (100) -- -- --
---------- ---- -------- -------- ------- --------
BALANCES AT MARCH 31, 1995....... 10,000,000 100 155,900 (14,500) (3,750) 137,750
Common stock issuance............ 95,741 1 1,126 -- (150) 977
Net income....................... -- -- -- 2,120 -- 2,120
Reduction in deferred
compensation................... -- -- -- -- 900 900
---------- ---- -------- -------- ------- --------
BALANCES AT MARCH 31, 1996....... 10,095,741 101 157,026 (12,380) (3,000) 141,747
Common stock issuance............ 100 -- 1 -- -- 1
Repurchase of common stock....... (16,813) -- (211) -- -- (211)
Net income....................... -- -- -- 8,052 -- 8,052
Reduction in deferred
compensation................... -- -- -- -- 975 975
---------- ---- -------- -------- ------- --------
BALANCES AT MARCH 31, 1997....... 10,079,028 $101 $156,816 $ (4,328) $(2,025) $150,564
========== ==== ======== ======== ======= ========
</TABLE>

See notes to financial statements

F-11
<PAGE> 59

AMERISTEEL CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
1995 1996 1997
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 10,501 $ 2,120 $ 8,052
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.............................................. 14,046 14,619 16,654
Amortization.............................................. 6,993 6,086 5,064
Deferred income taxes..................................... 1,849 (1,200) (200)
Loss on disposition of property, plant and equipment...... 600 14,312 317
Deferred compensation..................................... 750 900 975
Changes in operating assets and liabilities:
Accounts receivable....................................... (11,142) 7,450 4,347
Recoverable income taxes.................................. 300 -- --
Inventories............................................... (12,470) 14,927 6,580
Other current assets...................................... 420 (303) (85)
Other assets.............................................. 15 21 (4)
Trade accounts payable.................................... 3,315 (9,130) 4,432
Salaries, wages and employee benefits..................... (868) (2,184) 262
Other current liabilities................................. 290 769 (828)
Environmental remediation................................. (7,995) (5,421) (1,400)
Interest payable.......................................... 526 (318) (281)
Income taxes payable...................................... 1,561 514 126
Other liabilities......................................... 2,666 929 (81)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......... 11,357 44,091 43,930
INVESTING ACTIVITIES
Additions to property, plant and equipment.................. (25,781) (36,894) (34,382)
Proceeds from sale of property, plant and equipment......... 1,857 788 876
Proceeds from sale (net of purchases) of assets held for
sale...................................................... -- 794 1,096
Restricted IRB Funds........................................ -- (13,700) 13,700
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES.............. $(23,924) $(49,012) $(18,710)
FINANCING ACTIVITIES
Proceeds from (payments to) short and long-term borrowings,
net....................................................... $ 12,147 $ 21,227 $(29,558)
Additions to deferred financing costs....................... -- (909) --
Repurchase of subordinated debentures....................... -- (13,035) --
Proceeds from exercise of stock options..................... 1,500 -- --
Proceeds from sale of common stock.......................... -- 977 --
Redemption of common stock.................................. -- -- (210)
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES......... 13,647 8,260 (29,768)
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ 1,080 3,339 (4,548)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 1,774 2,854 6,193
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 2,854 $ 6,193 $ 1,645
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest (net of amount capitalized).......... $ 22,150 $ 22,318 $ 19,754
======== ======== ========
Cash paid for income taxes.................................. $ 5,645 $ 4,682 $ 7,862
======== ======== ========
</TABLE>

See notes to financial statements

F-12
<PAGE> 60

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995, 1996 AND 1997

NOTE A -- BASIS OF PRESENTATION

The financial statements include the accounts of AmeriSteel, a Florida
corporation, (the "Company"). As of April 1, 1996, the Company changed its name
from Florida Steel Corporation (which it had used since 1956) to AmeriSteel
Corporation. The predecessor of the Company was formed in 1937. All significant
intercompany accounts and transactions have been eliminated.

NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Credit Risk: The Company extends credit, primarily on a basis of 30-day
terms, to various customers in the steel distribution, fabrication and
construction industries, primarily located in the southeastern United States.
The Company performs periodic credit evaluations of its customers and generally
does not require collateral. Credit (recoveries)losses for the fiscal years
1995, 1996, and 1997 have been $(559,000), $184,000 and $106,000, respectively.

Business Segment: The Company is engaged in steel production and the
manufacture, fabrication and marketing of steel products, primarily for use in
construction and industrial markets. In the years ended March 31, 1996 and 1997,
export sales were less than 1% of total sales.

Cash Equivalents: The Company considers all highly liquid investments,
with a maturity of three months or less when purchased, to be cash equivalents.

Inventories: Inventories are stated at the lower of cost (first-in,
first-out method) or market.

Assets Held for Sale: The majority of the account consists of real estate
and machinery and equipment held for sale and is carried at the lower of cost or
estimated fair value. For the year ended March 31, 1996, the Company transferred
$5.0 million from property, plant and equipment to assets held for sale.

Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Major renewals and betterments are capitalized and depreciated over their
estimated useful lives. Maintenance and repairs are charged against operations
as incurred. Upon retirement or other disposition of property, plant and
equipment, the cost and related allowances for depreciation are removed from the
accounts and any resulting gain or loss is reflected in income.

Interest costs for property, plant and equipment construction expenditures
of approximately $2.1 million and $2.0 million were capitalized for the years
ended March 31, 1996 and 1997, respectively. For financial reporting purposes,
the Company provides for depreciation of property, plant and equipment using the
straight-line method over the estimated useful lives of 20 to 30 years for
buildings and improvements and 4 to 15 years for all other property, plant and
equipment.

Goodwill: Goodwill consists of the excess of purchase price over the fair
value of acquired assets and liabilities. Goodwill is stated at cost less
accumulated amortization of $13.3 million and $17.5 million at March 31, 1996
and 1997, respectively. Goodwill is being amortized over a 25-year period.

Deferred Financing Costs: The deferred financing costs as of March 31,
1996 and 1997, are net of accumulated amortization of $8.0 million and $9.0
million, respectively. These amounts will be amortized over the term of the
respective debt instruments, which range from 3 to 8 years.

Earnings per Common Share: Earnings per common share are computed using
the weighted average number of outstanding common shares. On May 22, 1995, the
Company's Board of Directors authorized a 49,999 for 1 stock dividend.

F-13
<PAGE> 61

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments: The carrying amount of long-term
borrowings approximates fair value due to market rates of interest and related
maturities.

Delivery Expenses: The Company's policy is to include all delivery
expenses in cost of sales.

Self Insurance: As part of its risk management strategies, the Company is
self-insured, up to certain amounts, for risks such as workers' compensation,
employee health benefits, and long-term disability. Risk retention is determined
based on savings from insurance premium reductions, and, in the opinion of
management, does not result in unusual loss exposure relative to other companies
in the industry.

Recent Accounting Pronouncements: In October 1996, the American Institute
of Certified Public Accountants issued Statement of Position No. 96-1,
"Environmental Remediation Liabilities" (SOP 96-1). SOP 96-1 provides
authoritative guidance on the specific accounting issues for the recognition,
measurement, display, and disclosure of environmental remediation liabilities.
Specifically, SOP 96-1 requires (1) the recognition of an environmental
remediation liability when the criteria of Statement of Financial Accounting
Standards No. 5, "Accounting for Contingencies" are met, (2) the measurement of
the liability to include incremental direct costs of the remediation effort and
costs of compensation and benefits for those employees who are expected to
devote a significant amount of time directly to the remediation effort, (3) the
measurement of the liability to include the entity's allocable share of the
liability for a specific site and the entity's share of amounts related to the
site that will not be paid by other potentially responsible parties, (4) the
measurement of the liability be based on enacted laws, regulations and
technology, and (5) appropriate display of the liabilities in the financial
statements and disclosures in the footnotes to the financial statements. SOP
96-1 is effective for fiscal years beginning after December 15, 1996. Management
has determined that the adoption of SOP 96-1 will not have a material effect on
the accompanying financial statements.

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" which establishes standards for computing and
presenting earnings per share. The statement replaces the presentation of
primary earnings per share with a presentation of basic earnings per share. It
also requires dual presentation of basic and diluted earnings per share on the
income statement and provides for certain disclosures. The Company will adopt
Statement No. 128 in the third quarter of fiscal 1998 and does not believe the
effect of adoption will be material.

Reclassifications: Certain amounts in the fiscal 1995 and 1996 financial
statements have been reclassified to conform to the fiscal 1997 financial
statement presentation.

F-14
<PAGE> 62

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE C -- INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Finished goods.............................................. $ 73,196 $ 59,299
Work in-process............................................. 16,291 14,175
Raw materials and operating supplies........................ 23,266 32,699
-------- --------
$112,753 $106,173
======== ========
</TABLE>

NOTE D -- BORROWINGS

Long-term borrowings consist of the following:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Revolving Credit Agreement.................................. $ 71,650 $ 51,340
First Mortgage Notes........................................ 100,000 100,000
Subordinated Intercompany Note.............................. 50,000 50,000
Industrial Revenue Bonds.................................... 30,875 30,875
Note to Parent.............................................. 444 435
Trade Loan Agreements....................................... 4,498 5,259
Bank of Tokyo Loan.......................................... 10,000 --
-------- --------
267,467 237,909
Less current maturities..................................... 14,942 435
-------- --------
$252,525 $237,474
======== ========
</TABLE>

On June 9, 1995, the Company entered into a revolving bank agreement (the
"Revolving Credit Agreement"), which provides up to $140 million borrowings
subject to a "borrowing base" amount. The borrowing base amount will not exceed
the sum of 85% of eligible accounts receivable plus 65% of eligible inventory.
Letters of credit are subject to an aggregate sublimit of $50 million. The
Revolving Credit Agreement expires on June 9, 1999.

The Revolving Credit Agreement contains certain covenants including, among
other restrictions, financial ratios and limitations on indebtedness, liens,
investments and disposition of assets and dividends. It is collateralized by
first priority security interests in substantially all accounts receivable and
inventory of the Company. The Company was in compliance with these covenants
throughout fiscal 1997.

Loans under the Revolving Credit Agreement bear interest at a per annum
rate equal to one of several rate options (LIBOR, Fed Funds, or Cost of Funds)
based on the facility chosen at the time of borrowing plus an applicable margin
determined by tests of performance from time to time. The effective interest
rate at March 31, 1997 was 7.4%.

The First Mortgage Notes are collateralized senior obligations of the
Company limited in aggregate principal amount to $100 million and mature on
December 15, 2000. Interest on the First Mortgage Notes accrues at the rate of
11.5% per annum and is payable semiannually on each June 15 and December 15. The
Company has assigned and pledged a security interest in substantially all the
real and personal property of the four mills.

F-15
<PAGE> 63

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The First Mortgage Notes will be redeemable, at the option of the Company,
in whole or in part from time to time, on or after December 15, 1996 at
redemption prices (expressed as percentages of the outstanding principal amount)
if redeemed during the twelve-month period commencing on December 15 of the year
set forth below, plus, in each case, accrued interest thereon to the date of
redemption (none were redeemed in fiscal 1997):

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
1996........................................................ 103.833%
1997........................................................ 101.916%
1998 and thereafter......................................... 100.000%
</TABLE>

The First Mortgage Notes rank pari passu with respect to the payment in
full of the principal and interest on all existing and future senior
indebtedness of the Company and rank senior to all subordinated indebtedness of
the Company.

The First Mortgage Notes contain covenants that include, without
limitation, maintenance of sufficient consolidated net worth and limitations on
additional indebtedness, transactions with affiliates, dispositions of assets,
liens, dividends and distributions. The Company was in compliance with these
covenants throughout fiscal 1997.

The Company has issued to a related party a $50 million note (the
"Subordinated Intercompany Note") which matures December 21, 2002. The
Subordinated Intercompany Note bears interest at variable rates. The weighted
average interest rate at March 31, 1997 was 7.01%.

The Company also has outstanding borrowings obtained through industrial
revenue bonds ("IRBs") issued to construct facilities in Jackson, Tennessee;
Charlotte, North Carolina; Jacksonville, Florida; and Plant City, Florida. The
interest rates on these bonds range from 50% to 75% of the prime rate. The
Company increased its outstanding IRBs by $20 million in fiscal 1996 for a solid
waste recycling facility in Jackson, Tennessee. The IRBs mature in fiscal 2004
except for the new IRBs which mature in fiscal 2018. The IRBs are backed by
irrevocable letters of credit issued pursuant to the Revolving Credit Agreement.
As of March 31, 1997, the Company had approximately $37 million of outstanding
letters of credit, primarily for IRBs, insurance-related matters and surety
bonds.

The Note to Parent is an unsecured non-interest bearing note which is due
on demand. Accordingly, amounts due are classified as current in the
accompanying statements of financial position.

The Company has borrowed $5.3 million as of March 31, 1997, under the Trade
Loan Agreements. The loan bears interest at 7.3% and matures on June 30, 1998.
Proceeds were used for the purchase of steel mill equipment.

The maturities of long-term borrowings for the fiscal years subsequent to
March 31, 1997 are as follows:

<TABLE>
<CAPTION>
FISCAL AMOUNT
- ------ ----------------
($ IN THOUSANDS)
<S> <C>
1998....................................................... $ 435
1999....................................................... 58,079
2000....................................................... --
2001....................................................... 100,000
2002....................................................... --
Thereafter................................................. 79,395
--------
$237,909
========
</TABLE>

F-16
<PAGE> 64

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE E -- INCOME TAXES

The provision for income taxes is comprised of the following amounts:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
1995 1996 1997
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal........................................ $3,572 $ 4,592 $7,391
State.......................................... -- 604 597
------ ------- ------
3,572 5,196 7,988
------ ------- ------
Deferred provision (benefit):
Federal........................................ 4,785 (1,301) (594)
State.......................................... 997 101 394
------ ------- ------
5,782 (1,200) (200)
------ ------- ------
$9,354 $ 3,996 $7,788
====== ======= ======
</TABLE>

A reconciliation of the difference between the effective income tax rate
for each year and the statutory federal income tax rate follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
1995 1996 1997
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
Tax provision at statutory rates................... $6,949 $2,141 $5,544
State income taxes, net of federal income tax
effect........................................... 997 244 722
Goodwill amortization.............................. 1,611 1,611 1,446
Other items, net................................... (203) -- 76
------ ------ ------
$9,354 $3,996 $7,788
====== ====== ======
</TABLE>

F-17
<PAGE> 65

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The components of the deferred tax assets and liabilities consisted of the
following at March 31:

<TABLE>
<CAPTION>
1996 1997
-------- --------
($ IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX ASSET
Allowance for doubtful accounts........................... $ 390 $ 390
Worker's compensation accrual............................. 1,648 1,413
Employee benefits and related accruals.................... 2,229 2,351
Environmental remediation accrual......................... 4,611 3,414
Federal loss carryforward................................. 2,055 1,654
State loss carryforward................................... 596 40
Alternative minimum tax credit carryforward............... 468 --
Pension accrual........................................... 1,739 2,334
Post retirement benefits accrual.......................... 3,228 3,306
Other..................................................... 1,136 856
-------- --------
18,100 15,758
-------- --------
DEFERRED TAX LIABILITY
Inventories............................................... (2,988) (1,992)
Property, plant and equipment............................. (58,260) (57,903)
Assets held for sale...................................... (3,240) (2,432)
Deferred compensation..................................... (1,112) (731)
-------- --------
(65,600) (63,058)
-------- --------
NET DEFERRED TAX LIABILITY.................................. $(47,500) $(47,300)
======== ========
</TABLE>

The Company has a Federal net operating loss carryforward of approximately
$4.7 million and a state net operating loss of approximately $1.0 million, both
expiring in 2009. As a result of a change in tax fiscal year, recognition of
Federal net operating loss carryforwards are limited to approximately $1.6
million each year.

NOTE F -- BENEFIT PLANS

The Company maintains a defined benefit pension plan covering substantially
all employees. The benefits are based on years of service and compensation
during the period of employment. Annual contributions are made in conformity
with minimum funding requirements and maximum deductible limitations.

F-18
<PAGE> 66

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The plan's funded status and the amounts recognized in the accompanying
statements of financial position are as follows:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation including vested benefits
of $65,617 and $66,249, at March 31, 1996 and 1997,
respectively........................................... $ 69,221 $ 71,157
======== ========
Projected benefit obligation for service rendered to date... $(84,950) $(84,646)
Plan assets at fair value................................... 82,808 85,828
-------- --------
Projected benefit obligation (in excess of) less than plan
assets.................................................... (2,142) 1,182
Unrecognized net gain....................................... (1,310) (6,549)
Unrecognized prior service cost............................. (426) (390)
-------- --------
Net accrued pension cost included in accrued salaries, wages
and employee benefits..................................... $ (3,878) $ (5,757)
======== ========
</TABLE>

The weighted average discount rates used in determining the actuarial
present value of the accumulated benefit obligation were 7.5% and 7.75%, for the
years ended March 31, 1996 and 1997, respectively. The rate of increase in
future compensation levels was 4.5% for both years. The expected rate of return
on plan assets was 9.5% for the years ended March 31, 1996 and 1997.

Pension cost included in the accompanying statements of income is comprised
of the following:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
1995 1996 1997
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
Service cost................................... $ 2,574 $ 2,695 $ 2,802
Interest cost.................................. 5,357 5,756 6,223
Actual income from plan assets................. (6,783) (14,561) (7,395)
Net amortization and deferral.................. 982 8,025 249
------- -------- -------
Net pension cost............................... $ 2,130 $ 1,915 $ 1,879
======= ======== =======
</TABLE>

The Company also has a voluntary savings plan available to substantially
all of its employees. Under this plan, the Company contributes amounts based
upon a percentage of the savings paid into the plan by employees. The Company
matches 50% of the employees' contributions up to 4% of employees' salaries.
Costs under this plan were $1.2 million, $1.1 million, and $1.1 million for the
years ended March 31, 1995, 1996 and 1997, respectively.

The Company has an unfunded Supplemental Benefits Plan, which is a
nonqualified plan that provides certain officers defined pension benefits in
excess of limits imposed by federal tax laws. The charges to income under the
Supplemental Benefits Plan for the years ended March 31, 1995, 1996 and 1997
were $159 thousand, $0 and $282 thousand, respectively.

Post Retirement Benefits

The Company currently provides specified health care benefits to retired
employees. Employees who retire after a certain age with specified years of
service become eligible for benefits under this unfunded plan. The Company has
the right to modify or terminate these benefits. The following table summarizes

F-19
<PAGE> 67

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the accumulated post retirement benefit obligations included in the Company's
statements of financial position:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Retirees.................................................... $4,176 $4,496
Fully eligible active participants.......................... 238 232
Other active plan participants.............................. 3,178 3,015
------ ------
Total............................................. 7,592 7,743
Plan assets at fair value................................... -- --
Unrecognized net gain....................................... 1,303 1,319
------ ------
Accrued post retirement benefit obligation.................. $8,895 $9,062
====== ======
</TABLE>

The following table summarizes the net post retirement benefit costs:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1997
--------- ---------
($ IN THOUSANDS)
<S> <C> <C>
Service cost................................................ $ 203 $ 216
Interest cost............................................... 543 558
Gain........................................................ (60) (23)
------ ------
Net post retirement benefit cost............................ $ 686 $ 751
====== ======
</TABLE>

The weighted average discount rate used in determining the accrued post
retirement benefit obligation was 7.50% for fiscal 1996 and 7.75% for fiscal
1997. The gross medical trend rate was assumed to be 10.31% in 1996 and dropping
.346% per year to 6.0% in 2008 and beyond for pre-65 retirees that retired
before January 1, 1994 and 9.0% decreasing by .5% per year to 5.5% in 2003 and
beyond for post-65 retirees that retired before January 1, 1994. For retirees on
or after January 1, 1994, the trend rate is the same until the Company's
expected costs are double the 1992 costs. At that point, future increases in the
medical trend will be paid by the retirees. The health care cost trend rate
assumption has a significant effect on the amount of the obligation reported.

The incremental effect of a 1% increase in the medical trend rate would
result in an increase of approximately $230,448 and $16,699 to the accrued post
retirement benefit obligation and net post retirement benefit cost,
respectively, as of and for the year ended March 31, 1997.

NOTE G -- COMMON STOCK

In fiscal 1996, the Board of Directors approved a one time Stock
Purchase/Option Plan (the "Purchase Plan") available to essentially all
employees. Employees who purchased stock were awarded stock options equal to six
times the number of shares purchased. A total of 37,689 shares were sold under
the Purchase Plan at a purchase price of $10.63 per share, with 32,448 shares
outstanding as of March 31, 1997. The options were granted at fair value at the
date of the grants, determined based on an independent appraisal as of the end
of the previous fiscal year-end. The options have a four-year vesting period. A
total of 226,134 options were granted under the Purchase Plan. No options remain
available for future grant. The issued options and shares become one-third
vested two years from the grant date, another one-third vested three years from
the grant date and the remaining balance vested four years from the grant date.
Options may be exercised for 10 years from the grant date.

F-20
<PAGE> 68

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

During fiscal 1996, the Board of Directors also approved the AmeriSteel
Corporation Equity Ownership Plan (the "Equity Ownership Plan") which provides
for grants of common stock, options to purchase common stock and stock
appreciation rights up to 438,852 shares. The Company has granted 91,350
incentive stock options and 12,100 shares of common stock under the Equity
Ownership Plan through March 31, 1997. As of March 31, 1997, there remain
348,452 shares available for future grants. The issued options and shares become
one-third vested two years from the grant date, another one-third vested three
years from the grant date and the remaining balance vested four years from the
grant date. All grants were at the fair market value of the common stock on the
grant date, determined based on an independent appraisal as of the end of the
previous fiscal year-end. Options may be exercised for 10 years from the grant
date.

The Company accounts for its stock-based compensation plans under
Accounting Principles Board Opinion No. 25 (APB 25), under which no compensation
expense has been recognized for the instruments issued under the Purchase Plan
or the options issued under the Equity Ownership Plan. In October 1995, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123),
which was effective for fiscal years beginning after December 15, 1995. SFAS No.
123 allows companies to continue following the accounting guidance of APB 25,
but requires pro forma disclosure of net income and earnings per share for the
effects on compensation expense had the accounting guidance of SFAS No. 123 been
adopted. The pro forma disclosures are required only for stock-based awards
granted subsequent to April 1, 1995.

The Company adopted SFAS No. 123 for disclosure purposes in fiscal 1997.
For SFAS No. 123 purposes, the fair value of each option grant under the
Purchase Plan and the Equity Ownership Plan has been estimated as of the date of
the grant using a minimum value calculation with the following weighted average
assumptions: risk-free interest rate of 6.5% and 6.3% for the Equity Ownership
Plan and Purchase Plan, respectively; expected life of 7 years for both the
Equity Ownership Plan and Purchase Plan; and dividend rate of 0% for both the
Equity Ownership Plan and Purchase Plan. Using these assumptions, the fair value
of the stock options granted in fiscal 1996 and 1997 is $1,009,501 and $347,159,
respectively, which would be amortized as compensation expense over the vesting
period of the options.

The fair value of the stock issued under the Purchase Plan has been
estimated at the date of the grant using a minimum value calculation with the
following weighted average assumptions: risk-free interest rate of 5.3%,
expected life of 7 years and dividend rate of zero percent. Using these
assumptions, the fair value of the issued stock in fiscal 1996 and fiscal 1997
is $75,755 and $0, respectively. The fiscal 1996 fair value would be
compensation expense for fiscal 1996. Had compensation cost been determined
consistent with SFAS No. 123, utilizing the assumptions detailed above, the
Company's net income and earnings per share ("EPS") would have been changed to
the following pro forma amounts:

<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
Net Income:
As Reported............................................... $2,120 $8,052
Pro Forma................................................. 2,003 7,858
EPS:
As Reported............................................... $ .21 $ .80
Pro Forma................................................. .20 .78
</TABLE>

F-21
<PAGE> 69

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Because the SFAS No. 123 method of accounting has not been applied to
stock-based compensation granted prior to April 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.

The following table summarizes stock option activity for the years ended
March 31, 1996 and 1997:

<TABLE>
<CAPTION>
EQUITY OWNERSHIP PLAN PURCHASE PLAN
--------------------------------------------- ---------------------------------------------
1996 1997 1996 1997
--------------------- --------------------- --------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning of
year............... -- $ -- 12,000 $ 12.50 -- $ -- 221,094 $12.50
Granted............ 12,000 12.50 79,350 12.50 226,134 12.50 -- --
Exercised.......... -- -- -- -- -- -- -- --
Forfeited.......... -- -- (13,050) (12.50) (5,040) 12.50 (26,316) 12.50
Outstanding, end of
year............... 12,000 12.50 78,300 12.50 221,094 12.50 194,778 12.50
====== ======= ======= =======
Options vested at
year-end........... -- -- -- -- -- -- -- --
Weighted-average fair
value of options
granted during the
year............... -- $ 4.46 -- $ 4.38 -- $ 4.45 -- $ --
</TABLE>

No stock option activity occurred during fiscal 1995. The weighted-average
remaining contractual life of the options under the Purchase Plan and the Equity
Ownership Plan as of March 31, 1997 is 8.50 years and 9.15 years, respectively.

The weighted-average fair value of the shares sold under the Purchase Plan
during fiscal 1996 was $12.50.

Subsequent to year end, the Board of Directors granted options for an
additional 63,550 shares with an exercise price of $13.50 per share.

NOTE H -- INCENTIVE COMPENSATION PLAN

During 1989, the Board of Directors approved a short-term incentive plan to
reward key employees who are significant to the Company's long-term success. The
awards are based on the Company's actual operating results, as compared to
targeted results. The plan provides for annual distributions to participants
based on that relationship. The plan is amended annually by the Board of
Directors to reflect changes in expected operating results, and to adjust target
results accordingly. The fiscal 1996 and 1997 plans were based on actual return
on capital employed as compared to target return on capital employed. The prior
fiscal years plans were based on actual operating results as compared to target
operating results. The award was $1.9 million for fiscal 1995, $1.2 million for
fiscal 1996, and $1.4 million for fiscal 1997, which amounts were included in
salaries, wages and employee benefits.

NOTE I -- ENVIRONMENTAL MATTERS

F-22
<PAGE> 70

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

costs in fiscal 1997. Of the amount accrued at March 31, 1997, the Company
expects to pay approximately $5.1 million in fiscal 1998. The timing of future
payments are uncertain due to the various remediation alternatives being
considered. The Company's estimate of the remediation costs is based on its
review of each site and the nature of such problems. The Company then determines
for each site the expected remediation methods, and the estimated cost for each
step of remediation. In all such determinations, the Company employs outside
consultants, and providers of such remedial services where necessary, to assist
in making such determinations.

The Company expensed approximately $6 million in fiscal 1995 and $2 million
in each of the past two fiscal years for environmental remediation costs.

Based on past use of certain technologies and remediation methods by third
parties, evaluation of those technologies and methods by the Company's
consultants and quotations and third-party estimates of costs of
remediation-related services provided to the Company or of which the Company and
its consultants are aware, the Company and its consultants believe that the
Company's cost estimates are reasonable. In light of the uncertainties inherent
in determining the costs associated with the clean-up of such contamination,
including the time periods over which such costs must be paid, the extent of
contribution by parties which are joint and severally liable, and the nature and
timing of payments to be made under cost sharing arrangements; there can be no
assurance the ultimate costs of remediation may not be greater or less than the
estimated remediation costs.

NOTE J -- COMMITMENTS

Operating Leases

The Company leases certain equipment and real property under noncancelable
operating leases. Aggregate future minimum payments under these leases are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING MARCH 31, AMOUNT
- --------------------- ----------------
($ IN THOUSANDS)
<S> <C>
1998..................................................... $1,644
1999..................................................... 1,210
2000..................................................... 1,134
2001..................................................... 863
2002..................................................... 735
Thereafter............................................... 1,345
--------
$6,931
========
</TABLE>

Total rent expense was approximately $5.0 million, $4.2 million, and $4.1
million, for the years ended March 31, 1995, 1996 and 1997, respectively.

On April 1, 1995, the Company entered into two noncancelable operating
lease agreements with an initial lease term of five years to lease land and land
improvements to a third party. Aggregate future minimum gross rentals under
these leases is $100,000 per year. Cost of the land and land improvements was
$1.6 million.

Service Commitments

The Company entered into two noncancelable agreements to purchase
transportation services. The rates charged are based on a fixed dollar amount
and number of miles. These rates are subject to change each year based on
inflation. The term for each agreement is 5 years, beginning April 1, 1995,
renewable for successive one-year periods.

F-23
<PAGE> 71

AMERISTEEL CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Employment Agreement

On June 1, 1994, the Company entered into a five-year employment agreement
(the "Employment Agreement") with a senior member of management. The Employment
Agreement provides for, among other benefits, a one-time bonus of $2,446,000,
base annual salary of $300,000 (subsequently revised to $255,000 plus incentives
based on performance), and equity interest of 7.5% of the outstanding common
stock of the Company to vest ratably over the next five years. Deferred
compensation of $4,500,000 was recorded related to the common stock granted, and
is being amortized on a straight-line basis over the term of the Employment
Agreement. The Employment Agreement also provides for certain additional
benefits in the event of termination.

Interest Rate Swap

The Company maintained an interest rate swap (the "Swap") agreement as a
hedge against fluctuations in interest rates on certain debt. The Swap had a
notional amount of $20 million and expired on February 24, 1997. Under the terms
of the Swap, the Company agreed to pay fixed interest at 9% and receive variable
interest at the LIBOR Rate plus 3.0%, computed on the notional amount. The
Company amortized the premium paid to acquire the Swap over its term as an
adjustment to interest expense.

Litigation

The Company is defending various claims and legal actions which are common
to its operations. While it is not feasible to predict or determine the ultimate
outcome of these matters, none of them, in the opinion of management, will have
a material effect on the Company's financial position or results of operations.

NOTE K -- OTHER OPERATING EXPENSES

In June 1995, the Company announced the closing of the Tampa rolling mill
resulting in a $15.0 million charge of which $12.0 million was used to reduce
fixed assets to realizable value while the balance was primarily benefit costs
for affected employees. The Company also wrote off $752 thousand in fiscal 1996,
for the remaining cost of the Woodbridge, Virginia lease which was closed in
fiscal 1995.

NOTE L -- EVENTS (UNAUDITED) SUBSEQUENT TO DATE OF AUDITORS' REPORT

F-24
<PAGE> 72

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the U.S. Underwriters named below, and
each of such U.S. Underwriters, for whom Goldman, Sachs & Co. and Morgan Stanley
& Co. Incorporated are acting as representatives, has severally agreed to
purchase from the Company, the respective number of shares of Class A Common
Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CLASS A
UNDERWRITER COMMON STOCK
----------- ------------
<S> <C>
Goldman, Sachs & Co.........................................
Morgan Stanley & Co. Incorporated...........................

---------
Total.....................................................
=========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The U.S. Underwriters propose to offer the shares of Class A Common Stock
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain securities dealers at
such a price less a concession of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Class A Common Stock
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the representatives.

The Company has entered into an underwriting agreement (the "International
Underwriting Agreement") with the underwriters of the international offering
(the "International Underwriters") providing for the concurrent offer and sale
of shares of Class A Common Stock in an international offering outside the
United States. The offering price and aggregate underwriting discounts and
commissions per share for the two offerings are identical. The closing of the
offering made hereby is a condition to the closing of the international
offering, and vice versa. The representatives of the International Underwriters
are Goldman Sachs International and Morgan Stanley & Co. International Limited.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the Offerings, each of the U.S.
Underwriters named herein has agreed that, as a part of the distribution of the
shares offered hereby and subject to certain exceptions, it will offer, sell or
deliver the shares of Class A Common Stock, directly or indirectly, only in the
United States of America (including the States and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction
(the "United States") and to U.S. persons, which term shall mean, for purposes
of this paragraph: (a) any individual who is a resident of the United States or
(b) any corporation, partnership or other entity organized in or under the laws
of the United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States. Each of the
International Underwriters has agreed pursuant to the Agreement Between that, as
a part of the distribution of the shares offered as a part of the international
offering, and subject to certain exceptions, it will (i) not, directly or
indirectly, offer, sell or deliver shares of Class A Common Stock (a) in the
United States or to any U.S. persons or (b) to any person who it believes
intends to reoffer, resell or deliver the shares in the United States or to any
U.S. persons, and (ii) cause any dealer to whom it may sell such shares at any
concession to agree to observe a similar restriction.

U-1
<PAGE> 73

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Class A Common Stock as may be mutually agreed. The price of any shares so sold
shall be the initial public offering price, less an amount not greater than the
selling concession.

In connection with the Offerings, the Underwriters may purchase and sell
the Class A Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the Offerings. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Class A Common Stock; and
syndicate short positions involve the sale by the Underwriters of a greater
number of shares of Class A Common Stock than they are required to purchase from
the Company in the Offerings. The Underwriters also may impose a penalty bid,
whereby selling concessions allowed to syndicate members or other broker-dealers
in respect of the securities sold in the Offerings for their account may be
reclaimed by the syndicate if such shares of Class A Common Stock are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Class A Common Stock, which may be higher than the price that might otherwise
prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected on the New York
Stock Exchange, in the over-the-counter market or otherwise.

The Company has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
additional shares of Class A Common Stock solely to cover
over-allotments, if any. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the shares of Class A Common Stock offered. The
Company has granted the International Underwriters a similar option to purchase
up to an aggregate of additional shares of Class A Common Stock.

The Company, certain executive officers of the Company and Kyoei have
agreed that, during the period beginning from the date of this Prospectus and
continuing to and including the date 180 days after the date of this Prospectus,
they will not offer, sell, contract to sell, pledge, hypothecate, grant any
option, right or warrant to purchase, or otherwise dispose of, directly or
indirectly, (which shall be deemed to include, without limitation, the entering
into of a cash-settled or Common Stock settled derivative instrument) any shares
of Common Stock, any securities of the Company which are substantially similar
to the shares of Class A Common Stock or any securities that are convertible
into or exchangeable for, or that represent the right to receive, Common Stock,
or any such substantially similar securities, (other than pursuant to employee
stock option plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of this
Prospectus), without the prior written consent of the representatives, except
for the shares of Class A Common Stock offered in connection with the Offerings.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares of
Class A Common Stock offered by them.

Prior to the Offerings, there has been no public market for the shares of
Class A Common Stock. The initial public offering price will be negotiated among
the Company and the representatives of the U.S. Underwriters and International
Underwriters. Among the factors considered in determining the initial public
offering price of the Class A Common Stock, in addition to prevailing market
conditions, were the Company's historical performance, estimates of the business
potential and earnings prospects of the Company, an assessment of the Company's
management and the consideration of the above factors in relation to market
valuation of companies in related businesses.

U-2
<PAGE> 74

The Company intends to apply to have the Class A Common Stock listed on the
New York Stock Exchange under the symbol "AST". In order to meet one of the
requirements for listing the Class A Common Stock on the New York Stock
Exchange, the Underwriters have undertaken to sell lots of 100 or more shares to
a minimum of 2,000 beneficial holders.

This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Class A Common Stock, including shares initially sold in
the international offering, to persons located in the United States.

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.

U-3
<PAGE> 75

==========================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH SOLICITATION IS UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................... 3
Risk Factors............................. 8
Use of Proceeds.......................... 12
Dividend Policy.......................... 12
Capitalization........................... 13
Dilution................................. 14
Selected Financial Data.................. 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 17
Business................................. 23
Management............................... 34
Principal Stockholders................... 40
Description of Capital Stock............. 41
Shares Eligible for Future Sale.......... 44
Validity of Class A Common Stock......... 45
Experts.................................. 45
Additional Information................... 45
Index to Financial Statements............ F-1
Underwriting............................. U-1
</TABLE>

----------------------
THROUGH AND INCLUDING , 1997 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
==========================================================
==========================================================

AMERISTEEL CORPORATION

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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

[LOGO]

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

GOLDMAN, SACHS & CO.

MORGAN STANLEY DEAN WITTER
REPRESENTATIVES OF THE UNDERWRITERS

==========================================================
<PAGE> 76

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $29,622
NASD filing fee............................................. *
NYSE listing fees........................................... *
Printing and engraving expenses............................. *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Blue Sky fees and expenses.................................. *
Transfer Agent's fees and expenses.......................... *
Miscellaneous............................................... *
-------
Total............................................. $ *
=======
</TABLE>

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

* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Florida Business Corporation Act, as amended (the "Florida Act"),
provides that, in general, a business corporation may indemnify any person who
is or was a party to any proceeding (other than an action by, or in the right
of, the corporation) by reason of the fact that he or she is or was a director
or officer of the corporation, against liability incurred in connection with
such proceeding, including any appeal thereof, provided certain standards are
met, including that such officer or director acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, and provided further that, with respect to any criminal action
or proceeding, the officer or director had no reasonable cause to believe his or
her conduct was unlawful. In the case of proceedings by or in the right of the
corporation, the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he or she is or was a director or officer of the corporation
against expenses and amounts paid in settlement actually and reasonably incurred
in connection with the defense or settlement of such proceeding, including any
appeal thereof, provided that such person acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made in respect of any
claim as to which such person is adjudged liable unless a court of competent
jurisdiction determines upon application that such person is fairly and
reasonably entitled to indemnity. To the extent that any officers or directors
are successful on the merits or otherwise in the defense of any of the
proceedings described above, the Florida Act provides that the corporation is
required to indemnify such officers or directors against expenses actually and
reasonably incurred in connection therewith. However, the Florida Act further
provides that, in general, indemnification or advancement of expenses shall not
be made to or on behalf of any officer or director if a judgment or other final
adjudication establishes that his or her actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe it
was unlawful; (ii) a transaction from which the director or officer derived an
improper personal benefit; (iii) in the case of a director, a circumstance under
which the director has voted for or assented to a distribution made in violation
of the Florida Act or the corporation's articles of incorporation; or (iv)
willful misconduct or a conscious disregard for the best interests of the
corporation in a proceeding by or in the right of the corporation to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
Under the terms of the Company's Articles of Incorporation and Bylaws, the
Company may indemnify any director, officer or employee or any former director,
officer or employee to the fullest extent permitted by law.

II-1
<PAGE> 77

The Company intends to enter into indemnity agreements with each of its
directors and certain officers which provide that the Company will indemnify
such persons against any costs and expenses, judgments, settlements and fines
incurred in connection with any claim involving such person by reason of his or
her position as director or officer, provided that such person meets certain
standards of conduct.

The underwriters also will agree to indemnify the directors and officers of
the Company against certain liabilities pursuant to the Underwriting Agreement
(see Exhibit 1).

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The Company sold 250,000 sales of Class B Common Stock to Mr. Casey for an
aggregate of $1.5 million in 1994, and 750,000 shares were granted as
compensation, pursuant to his employment agreement as described in the
Prospectus included in this Registration Statement. The Company sold 48,836
shares of Class B Common Stock to members of the Company's management for an
aggregate of $610,450 in 1996 in connection with the Company's bonus
compensation system. The Company believes that all such transactions were exempt
from registration pursuant to Section 4(2) and/or Rule 701 under the Securities
Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation, as amended to date (incorporated
by reference to Exhibit 3(I) to the Company's Annual Report
on Form 10-K for the year ended March 31, 1996)
3.2 -- Form of Certificate of Incorporation to be in effect
immediately prior to completion of the Offerings to which
this Registration Statement relates*
3.3 -- Form of Bylaws to be in effect immediately prior to
completion of the Offerings to which this Registration
Statement relates*
4 -- Form of Class A Common Stock Certificate*
5 -- Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill &
Mullis, as to the legality of the Class A Common Stock being
Registered*
10.1 -- AmeriSteel Equity Ownership Plan (incorporated by reference
to Exhibit 10 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996)
10.2 -- AmeriSteel Strategic Value Added Executive Short-Term
Incentive Plan (incorporated by reference to Exhibit 10 to
the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1996)
10.3 -- $140,000,000 Credit Agreement dated as of June 9, 1995 among
the Company, certain financial institutions, The Bank of
Tokyo, Ltd. and NationsBank of Florida, N.A., and The Bank
of Tokyo, Ltd. as agent, as amended*
10.4 -- Indenture dated as of December 15, 1992 by and between the
Company and The Connecticut National Bank for $100,000,000
11 1/2% First Mortgage Notes due 2000*
11 -- Statement re computation of per share earnings (incorporated
by reference to Exhibit 11 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997)
23.1 -- Consent of Counsel to the Company (included in Exhibit 5)*
23.2 -- Consent of Arthur Andersen LLP
24 -- Powers of Attorney by persons whose names are signed to this
Registration Statement pursuant to such Powers of Attorney
</TABLE>

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

* To be filed by amendment

II-2
<PAGE> 78

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14), or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes to provide to the underwriter,
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt deliver to each purchaser.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 79

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida,
on the 10th day of October, 1997.

AMERISTEEL CORPORATION

By: /s/ PHILLIP E. CASEY
------------------------------------
Phillip E. Casey
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>

/s/ PHILLIP E. CASEY Chief Executive Officer and October 10, 1997
- ----------------------------------------------------- Director (Principal
Phillip E. Casey Executive Officer)

/s/ TOM J. LANDA Chief Financial Officer, Vice October 10, 1997
- ----------------------------------------------------- President and Director
Tom J. Landa (Principal Financial
Officer and Principal
Accounting Officer)

* Group Vice President, October 10, 1997
- ----------------------------------------------------- Fabricated Reinforcing
J. Donald Haney Steel, and Director

/s/ SHUZO HIKITA Vice President of Engineering October 10, 1997
- ----------------------------------------------------- and Technology, and
Shuzo Hikita Director

* Director October 10, 1997
- -----------------------------------------------------
Koichi Takashima

* Director October 10, 1997
- -----------------------------------------------------
Akihiko Takishima

* Director October 10, 1997
- -----------------------------------------------------
Hideichiro Takashima

* Director October 10, 1997
- -----------------------------------------------------
Ryutaro Yoshioka
</TABLE>

*By: /s/ TOM J. LANDA
-------------------------------
Tom J. Landa
Attorney-in-fact

II-4

<PAGE> 1
EXHIBIT 23.2

CONSENT TO USE OF REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

As independent certified public accountants, we hereby consent to the use of our
report (and to all references to our firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Tampa, Florida
October 10, 1997

<PAGE> 1
EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned, in his capacity as
Chief Executive Officer and a director of AmeriSteel Corporation (the
"Company"), a Florida corporation, does hereby constitute and appoint Tom J.
Landa and J. Donald Haney, each of them, a true and lawful attorney in his name,
place and stead, in any and all capacities, to sign his name to the Registration
Statement on Form S-1 relating to the proposed issuance, sale and delivery by
the Company of shares of its Common Stock and any and all amendments to said
Registration Statement (including post-effective amendments and registration
statements filed pursuant to Rule 462 and otherwise),and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission granting unto said attorneys-in-fact and
agents the full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the foregoing, as full to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his substitute, may lawfully do or cause to be done by virtue hereof.

October 10, 1997 /s/ Phillip E. Casey
-- -----------------------------------------
Phillip E. Casey, Chief Executive Officer
and Director

<PAGE> 2

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned, in his capacity as
a director of AmeriSteel Corporation (the "Company"), a Florida corporation,
does hereby constitute and appoint Phillip E. Casey, Tom J. Landa and J. Donald
Haney, each of them, a true and lawful attorney in his name, place and stead, in
any and all capacities, to sign his name to the Registration Statement on Form
S-1 relating to the proposed issuance, sale and delivery by the Company of
shares of its Common Stock and any and all amendments to said Registration
Statement (including post-effective amendments and registration statements filed
pursuant to Rule 462 and otherwise),and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission granting unto said attorneys-in-fact and agents the full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the foregoing, as full to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or his
substitute, may lawfully do or cause to be done by virtue hereof.

October 10, 1997 /s/ Hideichiro Takashima
-- ------------------------------
Hideichiro Takashima, Director

<PAGE> 3

POWER OF ATTORNEY

October 10, 1997 /s/ Koichi Takashima
-- -----------------------------
Koichi Takashima, Director

<PAGE> 4

POWER OF ATTORNEY

October 10, 1997 /s/ Akihiko Takashima
-- ----------------------------------
Akihiko Takashima, Director

<PAGE> 5

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned, in his capacity as
Group Vice President, Fabricated Reinforcing Steel and a director of AmeriSteel
Corporation (the "Company"), a Florida corporation, does hereby constitute and
appoint Phillip E. Casey and Tom J. Landa, each of them, a true and lawful
attorney in his name, place and stead, in any and all capacities, to sign his
name to the Registration Statement on Form S-1 relating to the proposed
issuance, sale and delivery by the Company of shares of its Common Stock and any
and all amendments to said Registration Statement (including post-effective
amendments and registration statements filed pursuant to Rule 462 and
otherwise),and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission granting
unto said attorneys-in-fact and agents the full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the foregoing, as full to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his substitute, may lawfully do
or cause to be done by virtue hereof.

October 10, 1997 /s/ J. Donald Haney
-- -----------------------------------------
J. Donald Haney, Group Vice President,
Fabricated Reinforcing Steel and Director

<PAGE> 6

POWER OF ATTORNEY

October 10, 1997 /s/ Ryutaro Yoshioka
-- -------------------------------
Ryutaro Yoshioka, Director

<PAGE> 7

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned, in his capacity as
Chief Financial Officer, Vice President and a director of AmeriSteel Corporation
(the "Company"), a Florida corporation, does hereby constitute and appoint
Phillip E. Casey and J. Donald Haney, each of them, a true and lawful attorney
in his name, place and stead, in any and all capacities, to sign his name to the
Registration Statement on Form S-1 relating to the proposed issuance, sale and
delivery by the Company of shares of its Common Stock and any and all amendments
to said Registration Statement (including post-effective amendments and
registration statements filed pursuant to Rule 462 and otherwise),and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission granting unto said attorneys-in-fact
and agents the full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the foregoing, as full to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his substitute, may lawfully do or cause to be done by virtue hereof.

October 10, 1997 /s/ Tom J. Landa
-- -------------------------------------------
Tom J. Landa, Chief Financial Officer, Vice
President and Director

<PAGE> 8

POWER OF ATTORNEY

October 10, 1997 /s/ Shuzo Hikita
-- ------------------------------
Shuzo Hikita, Director