<PAGE>
 
                                                                           1997
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                  FORM 10-K/A
                                AMENDMENT NO. 1
(MARK ONE)
  [X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
 
                  For the fiscal year ended December 31, 1997
                                      OR
  [_]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
 
                For the Transition period from        to
 
                          COMMISSION FILE NO. 1-9117
 
                         INLAND STEEL INDUSTRIES, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
              DELAWARE                                  36-3425828
      (STATE OF INCORPORATION)               (I.R.S. EMPLOYER IDENTIFICATION
  30 WEST MONROE STREET, CHICAGO,                          NO.)
              ILLINOIS                                    60603
  (ADDRESS OF PRINCIPAL EXECUTIVE                       (ZIP CODE)
              OFFICES)
 
      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 346-0300
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
         TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH
                                                       REGISTERED
    Common Stock ($1.00 par value),           New York Stock Exchange, Inc.
including Preferred Stock Purchase Rights
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                     NONE
 
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
 
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
 
  As of February 2, 1998, the aggregate market value of the voting stock of
the registrant held by non-affiliates of the registrant was approximately
$977,000,000.(/1/)
 
  The number of shares of Common Stock ($1.00 par value) of the registrant
outstanding as of February 2, 1998 was 49,016,795.
 
(1) Excluding stock held by directors and executive officers of registrant,
    without admission of affiliate status of such individuals for any other
    purpose; also, excluding Series E ESOP Convertible Preferred Stock of the
    registrant, which Series is not publicly traded.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
  Parts I and II of this Report on Form 10-K incorporate by reference certain
information set forth in Exhibit 99, "Financial Information (to be included in
the Annual Report to Shareholders for 1997)," which is attached hereto, and is
incorporated by reference herein. Part III of this Report on Form 10-K
incorporates by reference certain information from the Company's definitive
Proxy Statement which will be furnished to stockholders in connection with the
Annual Meeting of Stockholders of the Company scheduled to be held on May 27,
1998.
 
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<PAGE>
 
                                    PART I
 
ITEM 1. BUSINESS.
 
  Inland Steel Industries, Inc. (the "Company"), a Delaware corporation, is
the sole stockholder of Inland Steel Company and the holder of stock
representing approximately 87% of the economic interest in Ryerson Tull, Inc.
("RT"). Inland Steel Company is an integrated domestic steel company that
produces and sells a wide range of steels, of which approximately 99% consists
of carbon and high-strength low-alloy steel grades. It is also a participant
in certain iron ore production and steel-finishing joint ventures. RT is the
sole stockholder of Joseph T. Ryerson & Son, Inc. ("Ryerson") and J. M. Tull
Metals Company, Inc. ("Tull"). Ryerson and Tull are leading steel service,
distribution and materials processing organizations.
 
RECENT DEVELOPMENTS
 
  On March 17, 1998, the Company announced it had signed a binding letter
agreement with Ispat International N.V. ("Ispat") whereby Ispat will acquire
Inland Steel Company for a total transaction value of approximately $1.43
billion (including approximately $1.12 billion in cash). The agreement has
been approved by the Boards of Directors of both companies. As part of the
transaction, Ispat will: i) pay $650 million for the common stock of Inland
Steel Company held by the Company; ii) pay $238.2 million for the preferred
stock of Inland Steel Company held by the Company; iii) repay the intercompany
debt of Inland Steel Company owed to the Company, which at December 31, 1997,
was $230.7 million; and iv) assume debt owed to third parties of approximately
$307.9 million. The Company intends to distribute a significant portion of the
net proceeds from the sale to its shareholders through stock repurchases,
dividends or a combination thereof. However, the Board of Directors has taken
no action and has not yet approved a plan as to the amounts or the range of
amounts of the net proceeds to be used for such purposes. The determination of
whether to engage in stock repurchases and/or to pay dividends and the amount
of net proceeds to be used for such purposes is within the discretion of the
Board of Directors and, until the Board of Directors has taken such action,
there can be no assurances that any stock repurchases and/or dividends will
occur or as to the amount of net proceeds that will be used for such purposes.
The transaction is subject to a definitive agreement, antitrust clearance,
other closing conditions, and the need to give the United Steelworkers of
America the opportunity to make an offer to purchase Inland Steel Company. It
is anticipated that the transaction will close in the third quarter of 1998.
Following the sale, the Company's primary business will be metals
distribution, presently conducted by RT. The Company is currently considering
a plan to combine with RT into one entity subsequent to the closing of the
sale.
 
BUSINESS SEGMENTS
 
  The business segments of the Company and its subsidiaries are Steel
Manufacturing (including iron ore operations) and Materials Distribution. For
the three years ended December 31, 1997, information relating to net sales,
operating profit, identifiable assets, depreciation and capital expenditures
for both business segments of the Company appears in Note 19 of Notes to
Consolidated Financial Statements included in Exhibit 99, "Financial
Information, " which is attached hereto, and is incorporated by reference
herein.
 
STEEL MANUFACTURING OPERATIONS
 
 General
 
  Inland Steel Company, a wholly owned subsidiary of the Company, is directly
engaged in the production and sale of steel and related products and the
transportation of iron ore, limestone and certain other commodities (primarily
for its own use) on the Great Lakes. Certain subsidiaries and associated
companies of Inland Steel Company are engaged in the mining and pelletizing of
iron ore and in the operation of a cold-rolling mill and steel galvanizing
lines. All raw steel made by Inland Steel Company is produced at its Indiana
Harbor Works located in East Chicago, Indiana, which also has facilities for
converting the steel produced into semi-finished and finished steel products.
<PAGE>
 
  Inland Steel Company has two divisions--the Inland Steel Flat Products
Company division and the Inland Steel Bar Company division. The Flat Products
division manages the Inland Steel Company's iron ore operations, conducts its
ironmaking operations, and produces the major portion of its raw steel. This
division also manufactures and sells steel sheet, strip and certain related
semi-finished products for the automotive, appliance, office furniture, steel
service center and electrical motor markets. The Flat Products division closed
its plate operations at year-end 1995. The Bar division manufactures and sells
special quality bars and certain related semi-finished products for forgers,
steel service centers, heavy equipment manufacturers, cold finishers and the
transportation industry.
 
  Inland Steel Company and Nippon Steel Corporation ("NSC") are participants,
through subsidiaries, in two joint ventures that operate steel-finishing
facilities near New Carlisle, Indiana. The total cost of these two facilities
was approximately $1.1 billion. I/N Tek, owned 60% by a wholly owned subsidiary
of Inland Steel Company and 40% by an indirect wholly owned subsidiary of NSC,
operates a cold-rolling mill. I/N Kote, owned equally by wholly owned
subsidiaries of Inland Steel Company and NSC (indirect in the case of NSC),
operates two galvanizing lines. Inland Steel Company is also a participant,
through a subsidiary, in another galvanizing joint venture located near
Walbridge, Ohio.
 
 Raw Steel Production and Mill Shipments
 
  The following table shows, for the three years indicated, Inland Steel
Company's production of raw steel and, based upon American Iron and Steel
Institute data, its share by percentage of total domestic raw steel production:
 
<TABLE>
<CAPTION>
                                                      RAW STEEL PRODUCTION
                                                --------------------------------
                                                INLAND STEEL    INLAND STEEL
                                                  COMPANY     COMPANY AS A % OF
                                                (000 TONS*)  U.S. STEEL INDUSTRY
                                                ------------ -------------------
      <S>                                       <C>          <C>
      1997.....................................    5,814             5.4%**
      1996.....................................    5,519             5.3
      1995.....................................    5,419             5.2
</TABLE>
--------
 *Net tons of 2,000 pounds.
**Based on preliminary data from the American Iron and Steel Institute.
 
  The annual raw steelmaking capacity of Inland Steel Company is 6.0 million
net tons. The basic oxygen process accounted for 92% of raw steel production of
the Company in both 1997 and 1996. The remainder of such production was
accounted for by electric furnace.
 
  The total tonnage of steel mill products shipped by Inland Steel Company for
each of the five years 1993 through 1997 was 5.3 million tons in 1997; 5.1
million tons in 1996; 5.1 million tons in 1995; 5.2 million tons in 1994 and
4.8 million tons in 1993. In 1997, sheet, strip and certain related semi-
finished products accounted for 82% of the total tonnage of steel mill products
shipped from the Indiana Harbor Works, and bar and certain related semi-
finished products accounted for 18%.
 
  In each of 1997 and 1996, approximately 94% of the shipments of the Flat
Products division and 98% and 92%, respectively, of the shipments of the Bar
division were to customers in 20 mid-American states. Approximately 76% of the
shipments of the Flat Products division and 92% of the Bar division in 1997
were to customers in a five-state area comprised of Illinois, Indiana, Ohio,
Michigan and Wisconsin, compared to 74% and 82% in 1996. Both divisions compete
in these geographical areas, principally on the basis of price, service and
quality, with the nation's largest producers of raw steel as well as with
foreign producers and with many smaller domestic mills.
 
  The steel market is highly competitive with major integrated producers,
including Inland Steel Company, facing competition from a variety of sources.
Many steel products compete with alternative materials such as
 
                                       2
<PAGE>
 
plastics, aluminum, ceramics, glass and concrete. Domestic steel producers have
also been adversely impacted by imports from foreign steel producers. Imports
of steel mill products accounted for 24.1% of the domestic market in 1997, up
from 23.3% in 1996 but below the 1984 peak of 26.4%. Many foreign producers are
owned, controlled, or subsidized by their governments, allowing them to ship
steel products into the domestic market despite decreased profit margins or
losses on such sales.
 
  Mini-mills provide significant competition in various product lines. Mini-
mills are relatively efficient, low-cost producers that manufacture steel
principally from scrap in electric furnaces and, at this time, generally have
lower capital, overhead, employment and environmental costs than the integrated
steel producers, including Inland Steel Company. Mini-mills have been adding
capacity and expanding their product lines in recent years to produce larger
structural products and certain flat rolled products. Thin-slab casting
technologies have allowed mini-mills to enter certain sheet markets
traditionally supplied by integrated producers. Several mini-mills using this
advanced technology are in operation in the United States and a significant
increase in modern mini-mill capacity is anticipated within the next two years.
 
  Certain facilities at the Indiana Harbor Works have been permanently closed
and others have been shut down for temporary periods. All coke batteries were
closed by year-end 1993, a year earlier than previously anticipated. An
additional provision was required with respect to those closures. (See
"Environment" below.) At year-end 1995 the plate mill was closed. Provisions
for such closure were taken prior to and in 1991.
 
  For the three years indicated, shipments by market classification of steel
mill products produced by Inland Steel Company at its Indiana Harbor Works,
including shipments to affiliates of Inland Steel Company, are set forth below.
As shown in the table, a substantial portion of shipments by the Flat Products
division was to steel service centers and transportation-related markets.
 
<TABLE>
<CAPTION>
                                                PERCENTAGE OF TOTAL TONNAGE
                                                    OF STEEL SHIPMENTS
                                               ---------------------------------
                                                 1997        1996        1995
                                               ---------   ---------   ---------
     <S>                                       <C>         <C>         <C>
     Steel Service Centers:
       Non-Affiliates.........................        25%         25%         25%
       Affiliates.............................         9          10           9
                                               ---------   ---------   ---------
                                                      34          35          34
     Automotive...............................        29          27          28
     Steel Converters/Processors..............        17          14          15
     Appliance................................         9           9           8
     Industrial, Electrical and Farm
      Machinery...............................         7           8           8
     Construction and Contractors' Products...         2           2           2
     Other....................................         2           5           5
                                               ---------   ---------   ---------
                                                     100%        100%        100%
                                               =========   =========   =========
</TABLE>
 
  Some value-added steel processing operations for which Inland Steel Company
does not have facilities are performed by outside processors, including joint
ventures, prior to shipment of certain products to Inland Steel Company's
customers. In 1997, approximately 43% of the products produced by Inland Steel
Company were processed further through value-added services such as
electrogalvanizing, painting and slitting.
 
  Approximately 74% of the finished steel shipped to customers during 1997 was
transported by truck, with the remainder transported primarily by rail. A
wholly owned truck transport subsidiary of Inland Steel Company was responsible
for shipment of approximately 10% of the total tonnage of products transported
by truck in 1997.
 
  Substantially all of the steel mill products produced by the Flat Products
division are marketed through its own selling organization, with offices
located in Chicago, Illinois; Southfield, Michigan; and Nashville, Tennessee.
Substantially all of the steel mill products produced by the Bar division are
marketed through its sales office in East Chicago, Indiana.
 
                                       3
<PAGE>
 
  See "Product Classes" below for information relating to the percentage of
consolidated net sales accounted for by certain classes of similar products of
steel manufacturing operations.
 
 Raw Materials
 
  Inland Steel Company obtains iron ore pellets primarily from two iron ore
properties, located in the United States, in which subsidiaries of Inland Steel
Company have varying interests--the Empire Mine in Michigan and the Minorca
Mine in Minnesota.
 
  During the second quarter of 1997, Inland Steel Company completed the sale of
its interest in the Wabush Mines located in Labrador and Quebec, Canada. Inland
Steel Company entered into a contract with the purchaser of such interest,
effective January 1, 1997 and expiring December 31, 2006, to sell to Inland
Steel Company, at prices approximating market, any of Inland Steel Company's
iron ore pellet requirements up to one million gross tons annually not met by
Inland Steel Company's equity sources. See "Properties Relating to Steel
Manufacturing Segment--Raw Materials Properties and Interests" in Item 2 below
for further information relating to such iron ore properties.
 
  The following table shows (1) the iron ore pellets available to Inland Steel
Company, as of December 31, 1997, from properties of its subsidiaries, through
interests in raw materials ventures; (2) 1997 and 1996 iron ore pellet
production or purchases from such sources; and (3) the percentage of Inland
Steel Company's iron ore requirements represented by production or purchases
from such sources in 1997 and 1996.
 
<TABLE>
<CAPTION>
                                         IRON ORE
                                   TONNAGES IN THOUSANDS
                                  (GROSS TONS OF PELLETS)
                                ---------------------------       % OF
                                AVAILABLE AS OF PRODUCTION  REQUIREMENTS (1)
                                 DECEMBER 31,   ----------- ----------------
                                    1997(2)     1997  1996    1997      1996
                                --------------- ----- ----- --------  --------
<S>                             <C>             <C>   <C>   <C>       <C>
INLAND STEEL MINING COMPANY
 PROPERTY
  Minorca--Virginia, MN........      57,000     2,583 2,735    35%       38%
IRON ORE VENTURES
  Empire (40% owned)--Palmer,
   MI; Wabush (15.09% owned in
   1996)--Wabush, Labrador and
   Point Noire, Quebec,
   Canada(3)...................      68,000     3,389 4,034    45        55
                                    -------     ----- ----- --------  --------
    Total Iron Ore.............     125,000     5,972 6,769    80%       93%
                                    =======     ===== ===== ========  ========
</TABLE>
--------
(1) Requirements in excess of production are purchased or taken from stockpile.
(2) Net interest in proven reserves.
(3) Wabush Mines interest was sold in the second quarter of 1997 and production
    is not included in 1997 amounts shown above.
 
  All of Inland Steel Company's coal requirements are satisfied from
independent sources. In April 1996, Inland Steel Company entered into a
contract to purchase one million tons of steam coal for the period of April 1,
1996 to December 31, 1997. Inland Steel Company purchased 39% of its 1997 coal
requirements under such contract, representing 74% of its steam coal
requirements. The balance of steam coal requirements have been met through a
short-term contract. In connection with commencement of operation of the heat
recovery coke battery and associated energy facility discussed below, Inland
Steel Company's coal fired generating station will be temporarily idled in the
second quarter of 1998, thereby eliminating steam coal requirements in the
interim.
 
  Inland Steel Company's other coal requirements are for the PCI Associates
joint venture, in which a subsidiary of Inland Steel Company holds a 50%
interest. The PCI facility pulverizes coal for injection into Inland Steel
Company's blast furnaces. During 1997, the PCI facility's coal needs were
satisfied under a requirements contract subject to a force majeure provision.
This agreement continues in 1998.
 
                                       4
<PAGE>
 
  In December 1993, the last of Inland Steel Company's cokemaking facilities
was permanently shut down. Inland Steel Company has entered into three long-
term purchase contracts, one of which requires the purchase of approximately
one million tons of coke between January 1, 1998 and December 31, 1999. The
second contract requires the purchase of 350,000 tons of coke annually for the
period January 1, 1996 through December 31, 2000 on a take-or-pay basis, with a
provision allowing Inland Steel Company to sell the coke to others. Both
contract terms require purchases on an annualized basis at prices negotiated
annually based on certain market determinants. During 1997, Inland Steel
Company satisfied 80% of its total coke needs under such arrangements. The
remainder of its purchased coke requirements was obtained through short-term
contracts. Under the third contract, Inland Steel Company has committed to
purchase, for approximately 15 years, beginning approximately June 1998 when
the heat recovery coke battery (discussed below) is expected to reach full
production, 1.2 million tons of coke annually on a take-or-pay basis at prices
determined by certain cost factors, as well as energy produced by the facility
through the tolling arrangement.
 
  In the 1996 fourth quarter, Inland Steel Company reached an agreement with
Sun Coal and Coke Company and a unit of NIPSCO Industries for a heat recovery
coke battery and an associated energy recovery and flue-gas desulphurization
facility, to be located on land leased from Inland Steel Company at its Indiana
Harbor Works. Sun designed, built, financed, and will operate the cokemaking
portion of the project. A unit of NIPSCO Industries designed, built, financed,
and will operate the portion of the project which will clean the coke plant's
flue gas and convert the heat into steam and electricity. Sun, the NIPSCO unit
and other third parties will invest approximately $350 million in the project.
The facility is designed to be the primary coke source for the largest blast
furnace at the Indiana Harbor Works and is expected to commence operations in
the first quarter of 1998. Inland Steel Company also advanced $30 million
during construction of the project, which is recorded as a deferred asset on
the balance sheet and will be credited against required cash payments during
the second half of the energy tolling arrangement.
 
  Inland Steel Company sold all of its limestone and dolomite properties in
September 1990 and entered into a long-term contract with the buyer of the
properties to purchase, subject to certain exceptions and at prices which
approximate market, the full amount of the annual limestone needs of the
Indiana Harbor Works through 2002.
 
  Approximately 80% of the iron ore pellets and all of the limestone received
by Inland Steel Company at its Indiana Harbor Works in 1997 were transported by
its Great Lakes carriers. Contracts are in effect for the transportation on the
Great Lakes of the remainder of its iron ore pellet requirements. Approximately
25% of Inland Steel Company's coal requirements were transported in its hopper
cars by unit train in 1997. The remainder of Inland Steel Company's coal
requirements was transported in independent carrier-owned equipment or leased
equipment. Approximately 25% of Inland Steel Company's coke requirements in
1997 were transported in its own hopper cars, 47% in leased hopper cars, 8% in
independent carrier-owned hopper cars, and 20% in independent carrier-owned
river barges.
 
  See "Energy" below for further information relating to the use of coal in the
operations of Inland Steel Company.
 
 Product Classes
 
  The following table sets forth the percentage of consolidated net sales of
Inland Steel Company, for the three years indicated, contributed by each class
of similar products of Inland Steel Company and accounted for 10% or more of
consolidated net sales in such time period. The data includes sales to
affiliates of Inland Steel Company.
 
<TABLE>
<CAPTION>
                                                                 1997  1996  1995
                                                                 ----  ----  ----
    <S>                                                          <C>   <C>   <C>
      Sheet and Strip...........................................  81%   81%   82%
      Bar.......................................................  19    19    18
                                                                 ---   ---   ---
                                                                 100%  100%  100%
                                                                 ===   ===   ===
</TABLE>
 
 
                                       5
<PAGE>
 
  Sales to General Motors Corporation approximated less than 10% of
consolidated net sales in each of 1997 and 1996 and 10% in 1995. No other
customer accounted for more than 10% of the consolidated net sales of the
Company during any of these years.
 
 Capital Expenditures and Investments in Joint Ventures
 
  In recent years, Inland Steel Company and its subsidiaries have made
substantial capital expenditures, principally at the Indiana Harbor Works, to
improve quality and reduce costs, and for pollution control. Additions by
Inland Steel Company and its subsidiaries to property, plant and equipment,
together with retirements and adjustments, for the five years ended December
31, 1997, are set forth below. Net capital additions during such period
aggregated $417.9 million.
 
<TABLE>
<CAPTION>
                                                DOLLARS IN MILLIONS
                                   ---------------------------------------------
                                             RETIREMENTS             NET CAPITAL
                                   ADDITIONS  OR SALES   ADJUSTMENTS  ADDITIONS
                                   --------- ----------- ----------- -----------
      <S>                          <C>       <C>         <C>         <C>
      1997........................  $ 98.4     $ 40.8       $ 6.1      $ 63.7
      1996........................   155.8        8.5         5.6       152.9
      1995........................   113.9       36.7         1.5        78.7
      1994........................   223.7       47.8         2.0       177.9
      1993........................    86.1      140.2        (1.2)      (55.3)
</TABLE>
 
  In recent years, Inland Steel Company's largest capital improvement projects
at the Indiana Harbor Works have emphasized reducing costs and improving
quality in the steel-processing sequence of Inland Steel Company. Inland Steel
Company and its subsidiaries made capital expenditures of $98 million in 1997.
Such expenditures principally related to the purchase of new machinery and
equipment to maintain or improve operations at the Indiana Harbor Works.
 
  In July 1987, a wholly owned subsidiary of Inland Steel Company formed a
partnership, I/N Tek, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate a cold-rolling facility with an annual
capacity of 1,500,000 tons, of which approximately 40% is cold-rolled substrate
for I/N Kote (described below). The I/N Tek facility is located near New
Carlisle, Indiana. Inland Steel Company, which owns, through its subsidiary, a
60% interest in the I/N Tek partnership is, with certain limited exceptions,
the sole supplier of hot band to be processed by the I/N Tek facility and
generally has exclusive rights to the production capacity of the facility.
 
  In September 1989, a wholly owned subsidiary of Inland Steel Company formed a
second partnership, I/N Kote, with an indirect wholly owned subsidiary of NSC
to construct, own, finance and operate two sheet steel galvanizing lines
adjacent to the I/N Tek facility. The subsidiary of Inland Steel Company owns a
50% interest in I/N Kote. The I/N Kote facility consists of a hot-dip
galvanizing line and an electrogalvanizing line with a combined annual capacity
of 900,000 tons. Inland Steel Company has guaranteed 50% of I/N Kote's
permanent financing. I/N Kote has contracted to acquire its cold-rolled steel
substrate from Inland Steel Company, which supplies the substrate from the I/N
Tek facility and Inland Steel Company's Indiana Harbor Works.
 
  Further information regarding the I/N Tek and I/N Kote joint venture projects
will be set forth under the caption "Certain Relationships and Related
Transactions--Joint Ventures" in the Company's definitive Proxy Statement which
will be furnished to stockholders of the Company in connection with its Annual
Meeting scheduled to be held on May 27, 1998, and is incorporated by reference
into Item 13 of this Report.
 
  The amount budgeted for 1998 capital expenditures by Inland Steel Company and
its subsidiaries is approximately $110 million. It is anticipated that capital
expenditures will be funded from cash generated by operations and advances from
and capital contributions by the Company. (See "Environment" below for a
discussion of capital expenditures for pollution control purposes.)
 
                                       6
<PAGE>
 
 Employees
 
  The monthly average number of active employees of Inland Steel Company and
its subsidiaries receiving pay during 1997 was approximately 8,900. At year-
end, approximately 6,900 employees were represented by the United Steelworkers
of America, of whom approximately 470 were on furlough or indefinite layoff.
Total employment costs decreased from $649 million in 1996 to $642 million in
1997, as lower employee benefit costs were in part offset by higher profit
sharing provisions.
 
  Beginning in 1991, Inland Steel Company embarked upon a major turnaround
strategy, with the assistance of an outside consulting firm, to significantly
reduce costs, increase revenues and improve asset utilization at Inland Steel
Company. With the closure of the plate operations at year-end 1995, Inland
Steel Company completed the workforce reduction program which was part of the
turnaround strategy, reducing employment by 25%.
 
  The current labor agreement between Inland Steel Company and the United
Steelworkers of America, effective August 1, 1993, covers wages and benefits
through July 31, 1999. Among other things, the agreement provided a wage
increase of $.50 per hour in 1995 and a $500 bonus in each of 1993 and 1994
(totalling in each case approximately $4 million). All active employees
received an additional week of vacation in 1994 and in 1996. The agreement
provided for a reopener on wages and certain benefits in 1996 with an
arbitration provision to resolve unsettled issues, thereby precluding a work
stoppage over the six-year term of the contract. On September 17, 1996 an
arbitrator issued a decision selecting Inland Steel Company's final offer of
terms covering the second half of the six year agreement. The terms provided a
wage increase of $.50 per hour retroactive to August 1, 1996 with increases of
$.25 an hour in 1997 and 1998. A $1,000 lump sum would be paid to active
employees in each of the three remaining years of the contract (totalling
approximately $20 million). One additional holiday was provided and retirement
benefits were increased for active employees. The agreement also provided for
election of a union designee acceptable to the Company's Board of Directors
(Dr. Robert B. McKersie is such union designee), restrictions on the ability of
Inland Steel Company to reduce the union workforce (generally limited to
attrition and major facilities shutdowns) while allowing greater flexibility to
institute work rule changes, quarterly rather than annual payment of profit
sharing amounts, significant improvements in pension benefits for active
employees, and the securing of retiree health care obligations through certain
trust and second mortgage arrangements. "First dollar" health care coverage is
eliminated under the agreement through the institution of co-payments and
increased deductibles on medical benefits.
 
 Environment
 
  Inland Steel Company is subject to environmental laws and regulations
concerning emissions into the air, discharges into ground water and waterways,
and the generation, handling, labeling, storage, transportation, treatment and
disposal of waste material. These include various federal statutes regulating
the discharge or release of pollutants to the environment, including the Clean
Air Act, Clean Water Act, Resource Conservation and Recovery Act, Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA," also
known as "Superfund"), Safe Drinking Water Act, and Toxic Substances Control
Act, as well as state and local requirements. Violations of these laws and
regulations can give rise to a variety of civil, administrative, and, in some
cases, criminal actions and could also result in substantial liabilities or
require substantial capital expenditures. In addition, under CERCLA the United
States Environmental Protection Agency (the "EPA") has authority to impose
liability for site remediation on waste generators, past and present site
owners and operators, and transporters, regardless of fault or the legality of
the original disposal activity. Liability under CERCLA is strict, joint and
several.
 
  By year-end 1993, the last of Inland Steel Company's cokemaking facilities
was permanently shut down. Inland Steel Company has entered into three long-
term contracts to satisfy the majority of its coke needs. In November 1996,
Inland Steel Company reached an agreement with Sun Coal and Coke Company and a
unit of NIPSCO for a heat recovery coke battery. (See "Raw Materials" above.)
In addition, Inland Steel Company participates in a joint venture that has
constructed and is operating a pulverized coal injection facility for blast
furnace application, reducing Inland Steel Company's coke needs by
approximately 25%.
 
                                       7
<PAGE>
 
  Capital spending for pollution control projects totaled $7 million in 1997
and $19 million in 1996. Another $46 million was spent in 1997 to operate and
maintain such equipment, versus $44 million a year earlier. During the five
years ended December 31, 1997, Inland Steel Company spent $279 million to
construct, operate and maintain environmental control equipment at its various
locations.
 
  Environmental projects previously authorized and presently under
consideration, including those designed to comply with the 1990 Clean Air Act
Amendments, but excluding any amounts that would be required under the consent
decree settling the 1990 EPA lawsuit, will require capital expenditures of
approximately $4 million in 1998. It is anticipated that Inland Steel Company
will make annual capital expenditures of $2 million to $5 million in each of
the four years thereafter. In addition, Inland Steel Company will have ongoing
annual expenditures of $40 million to $50 million for the operation of air and
water pollution control facilities to comply with current federal, state and
local laws and regulations. Due to the inability to predict the costs of
corrective action that may be required under the Resource Conservation and
Recovery Act and the consent decree in the 1990 EPA lawsuit, Inland Steel
Company cannot predict the amount of additional environmental expenditures that
will be required. Such additional environmental expenditures, excluding amounts
that may be required in connection with the consent decree in the 1990 EPA
lawsuit, however, are not expected to be material to the financial position or
results of operations of Inland Steel Company.
 
  See Item 3 below for information concerning certain proceedings pertaining to
environmental matters in which Inland Steel Company is involved.
 
 Energy
 
  Coal, together with coke, all of which are purchased from independent
sources, accounted for approximately 76% of the energy consumed by Inland Steel
Company at the Indiana Harbor Works in 1997.
 
  Natural gas and fuel oil supplied approximately 22% of the energy
requirements of the Indiana Harbor Works in 1997 and are used extensively by
Inland Steel Company at other facilities that it owns or in which it has an
interest. Utilization of the pulverized coal injection facility (see
"Environment" above) has reduced natural gas and fuel oil consumption at the
Indiana Harbor Works.
 
  Inland Steel Company both purchases and generates electricity to satisfy
electrical energy requirements at the Indiana Harbor Works. In 1997, Inland
Steel Company produced approximately 59% of its electrical energy requirements
at the Indiana Harbor Works. The purchase of electricity at the Indiana Harbor
Works is subject to curtailment under rules of the local utility when necessary
to maintain appropriate service for various classes of its customers.
 
  A subsidiary of NIPSCO has leased land at the Indiana Harbor Works and built
a 75 megawatt steam turbine on such land. Pursuant to a 15-year toll-charge
contract between Inland Steel Company and the NIPSCO subsidiary, the turbine
facility generates electricity for use by Inland Steel Company utilizing steam
produced by burning waste blast furnace gas. The facility became operational in
the first half of 1996. During 1997, this facility produced approximately 60%
of the purchased electricity requirements of the Indiana Harbor Works.
 
MATERIALS DISTRIBUTION OPERATIONS
 
  The Company's materials distribution operations in the United States are
conducted by its majority-owned materials distribution subsidiary, RT, through
its operating subsidiaries--Ryerson and Tull. RT has a single business segment,
which is comprised of Ryerson and Tull, leading steel service, distribution and
materials processing organizations. RT also owns 50% of Ryerson de Mexico, a
joint venture general line metals service center and processor with facilities
in Mexico.
 
  On February 13, 1997, RT, through Ryerson, purchased all of the outstanding
stock of Thypin Steel Co., Inc. ("Thypin") for $120 million in cash plus the
assumption of $23 million of debt. Thypin was a privately held distributor of
carbon and stainless steel products with seven locations in the eastern United
States. On March 3, 1997, RT, through Tull, acquired substantially all the
assets of Cardinal Metals, Inc. ("Cardinal"), a privately
 
                                       8
<PAGE>
 
held distributor and processor of carbon steel products with a single facility
located in Pounding Mill, VA. On August 22, 1997, RT, through Ryerson,
purchased all of the outstanding stock of Omni Metals, Inc. ("Omni"), a
privately held processor and distributor of flat-rolled carbon steel products
with a facility in Knoxville, TN. Thypin and Omni have subsequently been merged
into Ryerson.
 
  Ryerson, Tull and Ryerson Coil Processing Company ("Ryerson Coil"), a
specialized processing unit of Ryerson, are organized into five business units
along regional and product lines. RT believes that it is the largest metals
service center in the United States based on sales revenue, with 1997 sales of
$2.8 billion and a current U.S. market share of approximately 10%, based on
RT's analysis of data prepared by the Steel Service Center Institute ("SSCI").
RT distributes and processes metals and other materials throughout the
continental United States, and is among the largest purchasers of steel in the
United States.
 
 Joseph T. Ryerson & Son, Inc.
 
  Ryerson, with business unit headquarters in Philadelphia, PA (Ryerson East),
Chicago, IL (Ryerson Central), and Tukwila, WA (Ryerson West), is a leading
materials distribution organization. With full-line service centers in 35 major
cities, Ryerson is engaged in the nationwide sale of its products through its
own sales organization. Ryerson maintains heavy-duty shears, slitters,
precision cut-to-length lines, high-speed saws, flame-cutting machines and
other processing equipment for use in furnishing custom cutting and
miscellaneous shapes in accordance with customer orders. The Ryerson Coil unit,
headquartered in Chicago, IL, performs processing through five facilities for
customers who traditionally buy large quantities of sheet steel products.
Ryerson also markets plant equipment products through a wholesale industrial
catalog.
 
 J. M. Tull Metals Company, Inc.
 
  Tull is one of the largest distributors of metals in the southeastern United
States. Tull and its wholly-owned subsidiary, AFCO Metals, Inc. ("AFCO"),
operate 20 service centers and two processing facilities located throughout the
southeastern and south-central United States. Tull produces a variety of metals
products with value-added processing, including welded steel tubing and roll-
formed shapes. Tull's products are sold principally through its own sales
staff.
 
 Ryerson de Mexico
 
  RT also owns, indirectly, a 50% interest in Ryerson de Mexico, a joint
venture with Altos Hornos de Mexico, S.A. de C.V., an integrated steel mill
operating in Mexico. Ryerson de Mexico, which was formed in 1994, is a general
line metals service center and processor with 12 facilities in Mexico. The
impact of Ryerson de Mexico on RT's results of operations has not been
material.
 
 Industry Overview
 
  Primary steel producers typically sell steel in the form of standard-sized
coils, sheets, plate, structurals, bars and tubes and generally sell in large
volumes with long lead times for production and delivery. Other primary metals
producers, such as producers of stainless steel and aluminum, also typically
sell their products in large volumes with long lead times for production and
delivery. However, many customers seek to purchase metals with customized
specifications, including value-added processing, in smaller volumes, on
shorter lead times and with more reliable delivery than primary metals
producers are able to provide. Metals service centers act as intermediaries
between primary metals producers and customers by purchasing metals in a
variety of shapes and sizes from primary metals producers in large volumes,
allowing metals service centers to take advantage of producer economies of
scale resulting in lower costs of materials purchased, and engaging in a
variety of distribution and value-added processing operations to meet the
demands of specific customers. Because metals service centers purchase metals
from a number of primary producers, they can maintain a consistent supply of
various types of metal used by their customers. Most importantly, however,
metals service centers generally have lower fixed costs than primary metals
producers. By purchasing products from metals service centers, customers may be
able to lower their inventory levels, decrease the time between the placement
of an order and receipt of materials and reduce internal expenses, thereby
lowering their total cost of raw materials. RT believes that the
 
                                       9
<PAGE>
 
increased prevalence of just-in-time inventory needs of manufacturers and
intermediate processors has made and will continue to make the value-added
inventory, processing and delivery functions performed by metals service
centers more important in the metals market.
 
  The industry is cyclical (with periods of strong demand and higher prices
followed by periods of weaker demand and lower prices), principally due to the
cyclical nature of the industries in which the largest consumers of metals
operate. Any significant slowdown in one or more of those industries could have
a material adverse effect on the demand for metals, resulting in lower prices
for metals and reduced profitability for metals service centers, including RT.
Metals prices and metals service center profitability improve as metal-
consuming industries experience recoveries following economic downturns.
 
  The industry is comprised of many companies, the majority of which have
operations limited as to product line and size of inventory, with customers
located in a specific geographic area. Based on SSCI data, RT believes that the
industry is comprised of between 750 and 1,000 service centers, operating out
of approximately 2,000 locations and servicing approximately 300,000 customers.
The industry is highly fragmented, consisting of a large number of small
companies and a few relatively large companies. Based on RT's analysis of SSCI
data, the industry handled approximately 29 million tons or approximately 24.4%
of the metals distributed in the United States in 1997.
 
  The industry is divided into three major groups: general line service
centers, specialized service centers and processing centers, each of which
targets different market segments. General line service centers handle a broad
line of metals products and tend to concentrate on distribution rather than
processing. General line service centers range in size from one location to a
nationwide network of locations. For general line service centers, individual
order size in terms of dollars and tons tends to be small relative to
processing centers, while the total number of orders is typically very high.
Specialized service centers focus their activities on a narrower range of
product and service offerings than general line companies. Such service centers
provide a narrower range of services to their customers and emphasize product
expertise and lower operating costs, while maintaining a moderate level of
investment in processing equipment. Processing centers typically process large
quantities of steel purchased from primary producers for resale to large
industrial customers, such as the automotive industry. Because orders are
typically large, operation of a processing center requires a significant
investment in processing equipment.
 
 Products and Services
 
  RT carries a full line of carbon steel, stainless steel and aluminum, and a
limited line of alloy steel, nickel, red metals and plastics. These materials
are inventoried in a number of shapes, including coils, sheets, rounds,
hexagons, square and flat bars, plate, structurals and tubing.
 
  The following table sets forth RT's shipments (by percentage of RT's sales
revenue) for 1995, 1996 and 1997 for each of RT's major product lines.
 
<TABLE>
<CAPTION>
                                                               PERCENTAGE OF
      PRODUCT LINE                                             SALES REVENUE
      ------------                                             ----------------
                                                               1995  1996  1997
                                                               ----  ----  ----
      <S>                                                      <C>   <C>   <C>
      Stainless and aluminum..................................  27%   26%   27%
      Carbon flat rolled......................................  24    27    27
      Bars, tubing and structurals............................  22    22    20
      Fabrication and carbon plate............................  20    20    20
      Other...................................................   7     5     6
                                                               ---   ---   ---
        Total................................................. 100%  100%  100%
                                                               ===   ===   ===
</TABLE>
 
  More than one-half of the materials sold by RT is processed. RT uses
techniques such as sawing, slitting, blanking, pickling, cutting to length,
levelling, flame cutting, laser cutting, edge trimming, edge rolling,
fabricating and grinding to process materials to specified thickness, length,
width, shape and surface quality
 
                                       10
<PAGE>
 
pursuant to specific customer orders. Among the most common processing
techniques used by RT are pickling, a chemical process using an acidic solution
to remove surface oxide, commonly called "scale," from steel which develops
after the steel is hot rolled; slitting, which is cutting coiled metals to
specified widths along the length of the coil; levelling, which is flattening
metals and cutting them to exact lengths; and edge rolling, a process which
imparts round or smooth edges. Although RT often uses third-party fabricators
to outsource certain limited processes that RT is not able to perform
internally, outsourcing these processes does not affect a significant part of
RT's operations or constitute a significant part of RT's operating costs and
expenses.
 
  The plate burning and fabrication processes are particularly important to RT.
These processes require sophisticated and expensive processing equipment. As a
result, rather than making investments in such equipment, manufacturers have
increasingly outsourced these processes to metals service centers. RT has flame
or laser cutting capacity in 45 of its 63 facilities.
 
  RT also provides services and technical advice to its customers as an
integral part of providing products to its customers. RT does not charge
customers separately for such services or advice, but rather includes the costs
of such services and advice in the price of products sold to such customers.
 
  RT's services include: just-in-time delivery, production of kits containing
multiple products for ease of assembly by the customer, the provision of
company-owned materials to the customer and the placement of company employees
at the customer's site for inventory management, production and technical
assistance. RT also provides special stocking programs where products that
would not otherwise be stocked by RT are held in inventory to meet certain
customers' needs. The foregoing services are designed to reduce customers'
costs by minimizing their investment in inventory and improving their
production efficiency.
 
 Customer Base
 
  RT's customer base is diverse, numbering over 50,000. No customer accounted
for more than 2% of RT's sales in 1997 and the top ten customers accounted for
approximately 7% of RT's sales in 1997. RT's customer base includes most metal-
consuming industries, most of which are cyclical. RT's shipments (by percentage
of RT's sales revenue) for 1995, 1996 and 1997 for each class of RT's customers
were as set forth in the table below.
 
<TABLE>
<CAPTION>
                                                            PERCENTAGE
      CLASS OF CUSTOMER                                  OF SALES REVENUE
      -----------------                                  ---------------------
                                                         1995    1996    1997
                                                         -----   -----   -----
      <S>                                                <C>     <C>     <C>
      Machinery manufacturers...........................    38%     38%     37%
      Fabricated metals producers.......................    25      26      26
      Transportation equipment producers................    10      10       9
      Electrical machinery producers....................     9       8       8
      Wholesale distributors............................     3       3       4
      Construction-related purchasers...................     3       4       5
      Metals mills and foundries........................     3       3       3
      Other.............................................     9       8       8
                                                         -----   -----   -----
        Total...........................................   100%    100%    100%
                                                         =====   =====   =====
</TABLE>
 
  RT's flat-rolled processing business unit, Ryerson Coil, generally serves a
customer base that differs from RT's general line service center business. A
large portion of Ryerson Coil's customers have long-term supply contracts.
These contracts are typically at fixed prices and are generally from three
months to one year in duration, although Ryerson Coil has a small number of
arrangements with large customers that extend beyond one year. Ryerson Coil
attempts to limit its financial exposure on these fixed-price sales
arrangements by entering into fixed-price supply arrangements with one or more
suppliers for comparable periods of time. Ryerson Coil's customers often seek
large quantities of carbon sheet product that have undergone one or more of the
following processes: pickling, cutting to length, slitting, tension levelling,
texturing or blanking. Many of Ryerson Coil's approximately 600 customers are
in the transportation, appliance, office furniture or cabinetry businesses.
 
                                       11
<PAGE>
 
 Suppliers
 
  In 1997, RT purchased in excess of 3.0 million tons of materials from many
suppliers, including approximately 500,000 tons (or approximately 10.5% of the
purchase dollars) from Inland Steel Company. RT expects to continue purchasing
significant amounts of steel from Inland Steel Company in the future, although
there can be no assurance that such purchases will continue. Excluding Inland
Steel Company, RT's top 25 suppliers accounted for approximately 38% of 1997
purchases in dollars.
 
  RT purchases the majority of its inventories in the open market at prevailing
market prices. However, occasionally RT enters into long-term, fixed-price
supply contracts to offset its long-term, fixed-price sales contracts in order
to minimize its financial exposure.
 
  Because RT uses many suppliers and because there is a substantial overlap of
product offerings from these suppliers, RT believes it will be able to meet its
materials requirements for the foreseeable future. RT works with and monitors
its suppliers in order to obtain improvements in price, quality, service,
delivery and performance. RT believes it has good relationships with most of
its suppliers.
 
 Sales and Marketing
 
  Each of RT's business units maintains its own sales and marketing force. In
addition to its office sales staff, RT markets and sells its products through
the use of its field sales force that has extensive product and customer
knowledge and through a comprehensive catalog of RT's products. RT's office and
field sales staffs, which together consist of approximately 800 employees,
include technical and metallurgical personnel. In addition, RT's technically-
oriented marketing departments develop advertising materials and maintain
product expertise for each of the various types of materials sold and
industries serviced by RT.
 
 Capital Expenditures
 
  In recent years RT has made capital expenditures to maintain, improve and
expand processing capabilities. Additions by RT to property, plant and
equipment, together with retirements, for the five years ended December 31,
1997, excluding the initial purchase price of acquisitions, are set forth
below. Net capital additions during such period aggregated $85.2 million.
 
<TABLE>
<CAPTION>
                                                      DOLLARS IN MILLIONS
                                               ---------------------------------
                                                         RETIREMENTS NET CAPITAL
                                               ADDITIONS   OR SALES   ADDITIONS
                                               --------- ----------- -----------
      <S>                                      <C>       <C>         <C>
      1997....................................   $40.3      $12.0       $28.3
      1996....................................    24.1        6.0        18.1
      1995....................................    19.3        4.7        14.6
      1994....................................    20.4       12.4         8.0
      1993....................................    19.3        3.1        16.2
</TABLE>
 
  RT anticipates that capital expenditures and investments in joint ventures,
excluding acquisitions, will be in the range of $40 million to $50 million for
1998, which will be funded from cash generated by operations plus possible
borrowing under RT's credit facility.
 
 Employees
 
  As of December 31, 1997, RT employed approximately 5,400 persons, of which
approximately 2,550 were salaried employees and approximately 2,850 were hourly
employees. Approximately 40% of the hourly employees were members of various
unions, including the United Steelworkers and the Teamsters, and an additional
approximately 29% of the hourly employees have voted for union certification in
proceedings currently pending before the National Labor Relations Board. RT's
relationship with the various unions generally has been good, but occasional
work stoppages have occurred. Over the last five years, work stoppages have
occurred at two facilities (approximately 4% of the total number of
facilities), have involved an average of 43
 
                                       12
<PAGE>
 
employees and have lasted an average of six days. During 1998, labor contracts
covering approximately 160 employees at five facilities will expire. During
1999, contracts covering approximately 740 employees at 17 facilities will
expire. The current agreement with the United Steelworkers will expire on July
31, 1999, and agreements with the Teamsters expire on various dates during the
period March 31, 1998 through November 15, 2003. While management does not
expect any unresolvable issues to arise in connection with the renewal of any
of these contracts, no assurances can be given that any of these contracts will
be extended prior to their expiration.
 
  Prior to April 30, 1996, certain of RT's employees were eligible to
participate in the Inland Steel Industries, Inc. Pension Plan, a
noncontributory defined benefit pension plan. Effective April 30, 1996, that
portion of the Inland Steel Industries, Inc. Pension Plan covering RT's current
and former employees was separated and became the Ryerson Tull Pension Plan.
 
  Effective January 1, 1998, RT froze the benefits accrued under the Ryerson
Tull Pension Plan, a defined benefit pension plan for certain salaried
employees and instituted a defined contribution plan. Salaried employees vested
in their benefits accrued under the defined benefit plan at December 31, 1997
will be entitled to those benefits upon retirement. Certain transition rules
have been established for those salaried employees meeting the specified age
and service requirements.
 
 Competition
 
  RT is engaged in a highly fragmented and competitive industry. In general,
competition is based on quality, service, price and geographic proximity. Based
on SSCI data, RT believes that the industry is comprised of between 750 and
1,000 service centers, operating out of approximately 2,000 locations. RT
competes with many other general line service centers, specialized service
centers and processing centers on a regional and local basis, some of which may
have greater financial resources and flexibility than RT. RT also competes to a
lesser extent with primary steel producers. Primary steel producers typically
sell to very large customers that require regular shipments of large volumes of
steel. Although these large customers sometimes use metals service centers to
supply a portion of their metals needs, metals service center customers
typically are consumers of smaller volumes of metals than customers of primary
steel producers. To the extent that some of RT's competitors purchase a higher
percentage of metals than RT from foreign steelmakers, such competitors may
benefit from favorable exchange rates or other economic or regulatory factors
that may result in a competitive advantage. This competitive advantage may be
offset somewhat by higher transportation costs associated with importing metals
into the United States. Excess capacity of metals relative to demand in the
industry since mid-1995 led to a weakening in prices. As a result, RT has been
reducing its prices since mid-1995 to remain competitive.
 
 Environmental, Health and Safety Matters
 
  RT's operations are subject to many federal, state and local regulations
relating to the protection of the environment and to workplace health and
safety. In particular, RT's operations are subject to extensive federal, state
and local laws and regulations governing waste disposal, air and water
emissions, the handling of hazardous substances, environmental protection,
remediation, workplace exposure and other matters. RT's management believes
that RT is presently in substantial compliance with all such laws and does not
currently anticipate that RT will be required to expend any substantial amounts
in the foreseeable future in order to meet current environmental, workplace
health or safety requirements. However, additional costs and liabilities may be
incurred to comply with current and future requirements, which costs and
liabilities could have a material adverse effect on RT's results of operations
or financial condition.
 
  There are no known pending remedial actions or claims relating to
environmental matters that are expected to have a material effect on RT's
financial position or results of operations. Some of the properties owned or
leased by RT, however, are located in industrial areas or have a history of
heavy industrial use. These properties may potentially incur environmental
liabilities in the future that could have a material adverse effect on RT's
financial condition or results of operations.
 
                                       13
<PAGE>
 
  Capital and operating expenses for pollution control projects were
significantly below $1 million per year for the past five years and are
expected to remain at similar levels.
 
 Patents and Trademarks
 
  RT owns several U.S. patents and U.S. and foreign trademarks, service marks
and copyrights. Certain of the trademarks are registered with the U.S. Patent
and Trademark Office and, in certain circumstances, with the trademark offices
of various foreign countries. The patents expire over various periods of time
beginning in 2011. RT believes that the expiration of its patents will not
materially adversely affect its business. RT considers certain other
information owned by it to be trade secrets. RT protects its trade secrets by,
among other things, entering into confidentiality agreements with its employees
regarding such matters and implementing measures to restrict access to
sensitive data and computer software source code on a need-to-know basis. RT
believes that these safeguards adequately protect its proprietary rights and
vigorously defends these rights. While RT considers all of its intellectual
property rights as a whole to be important, RT does not consider any single
right to be essential to its operations as a whole.
 
OTHER FOREIGN OPERATIONS
 
  In 1994, the Company formed Inland International, Inc. to conduct the
Company's international operations, and it organized Inland International
Trading, Inc. to sell products and services of the Company and its affiliates
and purchase materials for them abroad. In 1995, Inland International Trading,
Inc. organized I.M.F. Steel International Limited, a Hong Kong company (in
which it and a subsidiary of MacSteel Holdings (Pte.), Ltd. (South Africa) each
holds a 50% interest), to engage in the world-wide purchase and sale of steel
and related products. In 1994, Inland Industries de Mexico, S.A. de C.V. (a
subsidiary of RT) and Altos Hornos de Mexico, S.A. de C.V., formed Ryerson de
Mexico, S.A. de C.V. to provide materials management services in Mexico. In
China, the Company has a joint venture with Baoshan Iron & Steel Corporation,
Shanghai Ryerson Limited, which was organized to conduct steel service center
operations. Such joint venture has begun construction of a steel service center
in Shanghai and is expected to commence operations in the first half of 1998.
In 1997, the Company and The Tata Iron and Steel Co. Ltd. (India) organized
Tata Ryerson Limited to conduct steel service center operations in India. Tata
Ryerson Limited currently conducts operations organized in Jamshedpur at an
acquired facility and is developing another facility at Pune. Substantially all
of the Company's operations are located in the United States. At year-end 1997,
neither investments in foreign operations nor foreign sales were material.
 
                                       14
<PAGE>
 
                                   SIGNATURES
 
  PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE COMPANY HAS DULY CAUSED THIS AMENDED REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
 
                                          Inland Steel Industries, Inc.
 
Date: April 20, 1998                                 /s/ Jay M. Gratz
                                          By: _________________________________
                                                       Jay M. Gratz
                                                    Vice President and
                                                  Chief Financial Officer
 
 
                                       15