##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549




Form 10-Q


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

For
the Quarterly Period Ended March 31, 2004
Commission file number 1-31926


International
Steel Group Inc.(Exact Name of Registrant as Specified in Its Charter)

Delaware(State or Other Jurisdiction of
Incorporation or Organization)
    
    71-0871875(I.R.S. Employer
Identification Number)3250 Interstate Drive Richfield, Ohio(Address of Registrants Principal Executive Offices)
    
    44286-9000(Zip Code)


Registrants telephone number including area code: (330) 659-9100

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

Title of Each Class
Common Stock, par value, $0.01
    
    Name of Each Exchange on Which Registered
New York Stock Exchange




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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Number of common shares outstanding as of April 30, 2004: 97,828,989





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TABLE OF CONTENTS






Part I  Financial InformationItem 1.
    
    FINANCIAL STATEMENTS
    
    
    1Item 2.
    
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS
    
    
    9Item 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    12Item 4.
    
    CONTROLS AND PROCEDURES
    
    
    12Part II  Other InformationItem 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
    
    
    13SIGNATURE
    
    
    15




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##### 










PART I




ITEM 1. FINANCIAL STATEMENTS


INTERNATIONAL STEEL GROUP INC.
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except per share data)

Three months endedMarch 31, 2004,
    
    March 29, 2003Net sales
    
    $
    1,770.3
    
    
    $
    461.7Costs and expenses:Cost of sales
    
    
    1,600.0
    
    
    
    451.5Marketing, administrative, and other expenses
    
    
    55.0
    
    
    
    4.4Depreciation and amortization
    
    
    28.8
    
    
    
    7.8Total costs and expenses
    
    
    1,683.8
    
    
    
    463.7Income (loss) from operations
    
    
    86.5
    
    
    
    (2.0
    )Interest and other financing expense, net
    
    
    10.4
    
    
    
    1.9Income (loss) before income taxes
    
    
    76.1
    
    
    
    (3.9
    )Provision (benefit) for income taxes (Note 4)
    
    
    5.2
    
    
    
    (1.6
    )Net income (loss)
    
    $
    70.9
    
    
    $
    (2.3
    )Income (loss) per common share:Basic
    
    $
    0.73
    
    
    $
    (0.03
    )Diluted
    
    $
    0.68
    
    
    $
    (0.03
    )


See accompanying notes to consolidated financial statements.

1



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##### 



INTERNATIONAL STEEL GROUP INC.
Consolidated Balance Sheets
March 31, 2004 and December 31, 2003
(Dollars in millions, except share data)

March 31,
    
    December 31,2004
    
    2003(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    201.0
    
    
    $
    193.6Receivables, less allowances of $48.5 and $36.6
    
    
    679.5
    
    
    
    553.9Inventories
    
    
    788.3
    
    
    
    866.8Assets held for sale
    
    
    73.9
    
    
    
    68.6Prepaid and other current assets
    
    
    85.1
    
    
    
    24.5Total current assets
    
    
    1,827.8
    
    
    
    1,707.4Property, plant and equipment, at cost
    
    
    962.6
    
    
    
    948.3Less: accumulated depreciation and amortization
    
    
    (115.2
    )
    
    
    (86.4
    )Property, plant and equipment, net
    
    
    847.4
    
    
    
    861.9Investments in joint ventures
    
    
    26.1
    
    
    
    27.0Other assets
    
    
    52.5
    
    
    
    38.7Total assets
    
    $
    2,753.8
    
    
    $
    2,635.0Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt and capital leases
    
    $
    37.1
    
    
    $
    46.8Accounts payable
    
    
    511.3
    
    
    
    427.9Accrued compensation and benefits
    
    
    188.5
    
    
    
    212.9Other current liabilities
    
    
    149.7
    
    
    
    143.9Total current liabilities
    
    
    886.6
    
    
    
    831.5Long term liabilities:Debt
    
    
    355.5
    
    
    
    362.8Capital leases
    
    
    214.8
    
    
    
    212.7Environmental liabilities
    
    
    156.9
    
    
    
    161.2Pensions and other retiree benefits
    
    
    107.2
    
    
    
    101.0Other obligations
    
    
    16.6
    
    
    
    16.6Total liabilities
    
    
    1,737.6
    
    
    
    1,685.8Stockholders equity:Preferred Stock, $0.01 par value per share,
authorized 10,000,000 shares, none issued
    
    
    
    
    
    
    Common Stock, $0.01 par value per share, authorized 350,000,000 shares,
97,828,989 and 97,470,609 issued and outstanding
    
    
    1.0
    
    
    
    1.0Additional paid-in capital
    
    
    973.3
    
    
    
    972.2Retained earnings (deficit)
    
    
    41.9
    
    
    
    (29.0
    )Accumulated other comprehensive income
    
    
    
    
    
    
    5.0Total stockholders equity
    
    
    1,016.2
    
    
    
    949.2Total liabilities and stockholders equity
    
    $
    2,753.8
    
    
    $
    2,635.0


See accompanying notes to consolidated financial statements.

2



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##### 



INTERNATIONAL STEEL GROUP INC.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)

Three Months EndedMarch 31, 2004
    
    March 29, 2003Cash flows from operating activities:Net income (loss)
    
    $
    70.9
    
    
    
    
    
    
    $
    (2.3
    )Adjustments for items not affecting cash from operating
activities:Depreciation and amortization
    
    
    28.8
    
    
    
    
    
    
    
    7.8Other
    
    
    1.9
    
    
    
    
    
    
    
    (1.2
    )Changes in working capital and other items:Receivables
    
    
    (130.6
    )
    
    
    
    
    
    
    (38.1
    )Inventories
    
    
    78.5
    
    
    
    
    
    
    
    19.1Prepaids and other assets
    
    
    (65.6
    )
    
    
    
    
    
    
    6.0Accounts payable
    
    
    83.4
    
    
    
    
    
    
    
    3.5Income taxes
    
    
    8.3
    
    
    
    
    
    
    
    (31.7
    )Accrued compensation and benefits
    
    
    (18.7
    )
    
    
    
    
    
    
    2.1Other
    
    
    (10.1
    )
    
    
    
    
    
    
    (3.3
    )Net cash provided by (used in) operating activities
    
    
    46.8
    
    
    
    
    
    
    
    (38.1
    )Cash flows from investing activities:Capital expenditures and investments
    
    
    (27.5
    )
    
    
    
    
    
    
    (23.9
    )Proceeds from sales of assets
    
    
    5.8
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (21.7
    )
    
    
    
    
    
    
    (23.9
    )Cash flows from financing activities:Borrowings under revolving credit facility
    
    
    
    
    
    
    
    
    
    
    480.7Payments under revolving credit facility
    
    
    
    
    
    
    
    
    
    
    (428.5
    )Payments on long-term debt
    
    
    (11.3
    )
    
    
    
    
    
    
    Payments on capital leases
    
    
    (7.5
    )
    
    
    
    
    
    
    Issuance of common stock, net
    
    
    1.1
    
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (17.7
    )
    
    
    
    
    
    
    52.2Increase (decrease) in cash and cash equivalents
    
    
    7.4
    
    
    
    
    
    
    
    (9.8
    )Cash and cash equivalents  beginning of period
    
    
    193.6
    
    
    
    
    
    
    
    9.8Cash and cash equivalents  end of period
    
    $
    201.0
    
    
    $
    
    
    
    
    Other information:Interest paid
    
    $
    9.1
    
    
    
    
    
    
    $
    0.9Income taxes (received) paid
    
    
    (3.1
    )
    
    
    
    
    
    
    19.9Capital lease obligation incurred
    
    
    3.9
    
    
    
    
    
    
    
    


See accompanying notes to consolidated financial statements.

3



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INTERNATIONAL STEEL GROUP INC.











(1) Basis of Presentation



| |  | These interim financial statements are unaudited and include only selected
notes. They do not contain all information required under accounting
principles generally accepted in the United States and should be read
together with the audited financial statements in ISGs Annual Report on Form
10-K for the year ended December 31, 2003 and all other reports filed with
the Securities and Exchange Commission during the year 2004. These interim
financial statements reflect all adjustments which are, in the opinion of
management, necessary to fairly present the results for the interim periods
presented. Certain prior period amounts have been reclassified to conform to
the current period presentation.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(2) Acquisitions



| |  | In May 2003, ISG acquired substantially all the assets and assumed certain
liabilities of Bethlehem Steel Corporation, which was in bankruptcy
proceedings. The acquisition of the Bethlehem net assets was accounted for as
a business combination and their results have been included in ISGs
consolidated financial results since May 1, 2003.                                                                                                                                                                                          
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following unaudited pro forma consolidated information for ISG
includes the results of operations of the Bethlehem acquisition as if it had
been consummated on January 1, 2003, including the effects of the new labor
agreement as it pertains to the former Bethlehem facilities and the
financings incurred to fund the Bethlehem acquisition. The following
unaudited pro forma summarized consolidated information is based on
historical information and does not necessarily reflect the actual results
that would have occurred.

First Quarter 2003Net sales
    
    $
    1,369.4Net income
    
    $
    28.0Income per shareBasic
    
    $
    0.37Diluted
    
    $
    0.35


(3) Inventories



| |  | Inventories are stated at the lower of cost or market. Cost was determined
using the last-in, first-out (LIFO) method of accounting for about 20% of
inventories at December 31, 2003 and the balance was determined using the
first-in, first-out (FIFO) or average cost method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Effective January 1, 2004, we changed to the LIFO cost method of accounting for
substantially all inventories and we reduced the number of pools from a pool
for each manufacturing facility to a single pool. We believe that the LIFO method of valuing
inventories is preferable because it more closely matches current costs and revenues in periods of
increasing costs. We believe that a single
method and a single pool for substantially all inventories is preferable
because, in order to further achieve the operating synergies from our
acquisitions, we now plan to reallocate the supply of semi-finished materials
to our finishing facilities among our steel producing facilities. Also, we
are considering how to best reallocate the sources of certain raw materials
among our steel producing facilities in order to improve operating
efficiencies. Having a single LIFO pool for substantially all
inventories eliminates the
potential for changes in inventory value solely because of this
movement of inventory among manufacturing facilities.

4



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INTERNATIONAL STEEL GROUP INC.













| |  | Because of significant raw material cost increases in the first quarter 2004,
we changed our interim accounting for LIFO effective January 1, 2004, from an
allocation of the projected annual LIFO provision ratably over the year to a
specific quarterly calculation based on year-to-date estimates. We believe
that the specific quarterly calculation method is preferable because it more
closely matches current costs with revenues in interim periods of rapidly
rising costs.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The total LIFO provision for the first quarter 2004 was about $103. That
provision was reduced by about $7 for liquidation of LIFO inventory
quantities in the single pool. These accounting changes mentioned above increased this
LIFO provision by about $50.                                                                                                                                                                                                                        
|
| |  | The components of inventories follow:                                                                                                                                                                                                                                                                                                                                                                                                                                                   

March 31,
    
    December 31,2004
    
    2003FIFO or average cost:Raw materials
    
    $
    314.1
    
    
    $
    291.0Finished and semi-finished goods
    
    
    613.3
    
    
    
    612.0927.4
    
    
    
    903.0LIFO reserve
    
    
    (139.1
    )
    
    
    (36.2
    )Total
    
    $
    788.3
    
    
    $
    866.8


(4) Taxes



| |  | At December 31, 2003, we had recorded a full valuation allowance for our net
deferred tax asset as discussed below. As a result, our provision for income
taxes will typically reflect what we expect to pay for the year until we
reduce the valuation allowance. Based on our first quarter pretax income and
forecasted pretax income for the year 2004, we expect to pay income taxes for
the year after recognizing temporary differences that arise during the year,
the benefit of the net operating loss (NOL) carryforward arising in 2003 and
the benefit of NOL carryforwards available for the year from the Bethlehem
acquisition. Generally accepted accounting principles also require that we
recognize in 2004 the benefit of temporary differences, principally
depreciation, that are expected to be available in 2005 and 2006 to carryback
against the current income taxes paid for 2004. The net effect of all these
items results in an estimated effective income tax rate for 2004 of about 7%.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The acquisition of the Bethlehem assets was structured as a tax-free
reorganization under Internal Revenue Code (IRC) Section 368(a)(1)(G). As a
result, the historic tax attributes of Bethlehem are carried over to the ISG
consolidated federal income tax return. These tax attributes are composed
principally of NOL carryforwards, alternative minimum tax (AMT) credit
carryforwards and temporary differences related to the tax basis of property,
plant and equipment. The net deferred tax assets acquired related to these
tax attributes were not recognized at the date of acquisition because there
were a number of required actions related to, among other matters,
Bethlehems plan of liquidation under federal bankruptcy law. During the
fourth quarter of 2003, among other events, the Bankruptcy Court confirmed
Bethlehems plan of liquidation, which subsequently became                                                                                                                    

5



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INTERNATIONAL STEEL GROUP INC.













| |  | effective on December 31, 2003. Accordingly, in the fourth quarter of 2003,
we determined that it was appropriate to recognize the acquired net deferred
tax assets and any related valuation allowance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | SFAS No. 109, Accounting for Income Taxes, requires that we record a
valuation allowance when it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of sufficient future
taxable income during periods in which those temporary differences become
deductible and before the expiration of the NOL carryforwards. Because of
ISGs two-year existence, limited financial performance and cumulative tax
loss from inception, it was managements judgment at December 31, 2003, that
SFAS No. 109 required recording a full valuation allowance for the net
deferred tax asset. That resulted in a $5.3 provision for deferred income
taxes for the fourth quarter and year 2003 to provide a valuation allowance
on the previously recorded net deferred tax asset. Generally accepted
accounting principles require that we recognize any tax benefits of the
Bethlehem acquisition realized in 2003 through the income statement only
after writing off any remaining intangible assets acquired from Bethlehem.
Accordingly, in the fourth quarter of 2003, we wrote off $15.2 of intangible
assets as a provision for deferred income taxes bringing the total provision
for deferred taxes in the fourth quarter and year 2003 to $20.5.

(5) Income (loss) per Share



| |  | The following table presents calculations of income (loss) per share of
common stock:
| |  | -------------------------------------------------------------------------------------

First
    
    FirstQuarter
    
    Quarter2004
    
    2003Net income (loss) applicable to common stock  Basic
    
    $
    70.9
    
    
    $
    (2.3
    )Add: Interest expense on convertible note
    
    
    0.5
    
    
    
    Net income (loss) applicable to common stock  Diluted
    
    $
    71.4
    
    
    $
    (2.3
    )Weighted average number of shares of common stock
outstanding  Basic
    
    
    97.8
    
    
    
    69.7Incremental shares issuable upon assumed conversion of
stock options
    
    
    5.5
    
    
    
    *Incremental shares issuable upon assumed conversion of
convertible note
    
    
    1.0
    
    
    
    Total shares  Diluted
    
    
    104.3
    
    
    
    69.7Income (loss) per share:Basic
    
    $
    0.73
    
    
    $
    (0.03
    )Diluted
    
    $
    0.68
    
    
    $
    (0.03
    )




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|* |  | Antidilutive.
|- |  | -------------

(6) Pension and Other Postretirement Benefit Plans



| |  | Under ISGs labor agreement with the United Steelworkers of America (USWA),
the Company has a defined benefit retiree medical and death benefit plan
covering USWA employees who are eligible to retire under the current labor
agreements. The Company does not intend to provide similar retiree medical
benefits for
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6



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INTERNATIONAL STEEL GROUP INC.



Notes to March 31, 2004 and March 29, 2003 Consolidated Financial Statements
(Unaudited)



(Dollars and shares in millions, except per share data)



| |  | employees who retire after the current labor agreement expires. ISG is not
required to pre-fund any benefits and expects any benefits to be paid in 2004
to be minimal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The net periodic postretirement benefit costs presented below do not reflect
the effects of the recently passed legislation Medicare Prescription Drug,
Improvement and Modernization Act of 2003. We have not completely assessed
the impact of this Act to determine if the currently existing plan will be
modified and what financial impact, if any, it may have on our future
expenses and obligations.                                                                                                                                                                                                                                                                                                        
|
| |  | In the Bethlehem acquisition, ISG acquired a 62.3% interest in Hibbing
Taconite Company (Hibbing), an iron ore mining joint venture that is pro rata
consolidated in ISGs consolidated financial statements. Hibbing maintains a
noncontributory defined benefit pension plan for hourly and salary employees
with benefits based on years of service and compensation. Hibbing funds the
pension plan within statutory guidelines. Hibbing also provides retiree
medical and death benefits to most full-time employees with 30 years of
service or employees who are 60 years of age with 15 years of service. The
Hibbing plan is the only defined benefit pension plan in these consolidated
financial statements.
|
| |  | ISGs consolidated components for net periodic pension and other
postemployment benefits cost for the first quarter 2004 and 2003 follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Pension
    
    Other Benefits2004
    
    2004
    
    2003Service cost
    
    $
    0.6
    
    
    $
    1.0
    
    
    $
    0.3Interest cost
    
    
    1.2
    
    
    
    2.1
    
    
    
    0.5Expected return on plan assets
    
    
    (1.2
    )
    
    
    (0.2
    )
    
    
    Amortizations:Unrecognized prior service costs
    
    
    
    
    
    
    3.4
    
    
    
    1.3Net actuarial losses
    
    
    0.4
    
    
    
    
    
    
    
    Amortization of net (asset) obligations
    
    
    (0.1
    )
    
    
    
    
    
    
    Total cost
    
    $
    0.9
    
    
    $
    6.3
    
    
    $
    2.1


(7) Contingencies



| |  | ISG is subject to various legal actions and contingencies in the normal
course of conducting business. ISG recognizes liabilities for such matters
when a loss is likely and the amount can be reasonably estimated. The effect
of the ultimate outcome of these matters on future results of operations and
liquidity cannot be predicted with any certainty. While the resolution of
these matters may have a material effect on the results of operations of a
particular quarter or year, the Company believes that the ultimate resolution
of such matters in excess of liabilities recorded will not have a material
adverse effect on its competitive position or financial position.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7



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INTERNATIONAL STEEL GROUP INC.













| |  | ISG is subject to changing and increasingly stringent environmental laws and
regulations concerning air emissions, water discharges and waste disposal, as
well as certain remediation activities that involve the clean up of
environmental media such as soils and groundwater. If, in the future, the
Company is required to investigate and remediate any currently unknown
contamination and wastes at plant sites, ISG could be required to record
additional liabilities.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Environmental liabilities related to the acquisition of the net assets from
Bethlehem, Acme and LTV were recorded at their fair value based on their net
present value determined using an 8% discount rate.                                                                                                                                                                                                                                                                    
|
| |  | The table below represents changes in the amounts recorded for environmental
liabilities:                                                                                                                                                                                                                                                                                                                                                                                       

First Quarter
    
    Year2004
    
    2003
    
    2003Balance  beginning of period
    
    $
    208.4
    
    
    $
    56.4
    
    
    $
    56.4Liabilities recognized at acquisition *
    
    
    (6.9
    )
    
    
    
    
    
    
    159.0Accretion and changes in estimates and timing of spending
    
    
    3.9
    
    
    
    0.7
    
    
    
    1.0Spending for remediation
    
    
    (2.8
    )
    
    
    (0.8
    )
    
    
    (8.0
    )Total
    
    
    202.6
    
    
    
    56.3
    
    
    
    208.4Amount included in other current liabilities  end of period
    
    
    (45.7
    )
    
    
    (11.0
    )
    
    
    (47.2
    )Long term balance  end of period
    
    $
    156.9
    
    
    $
    45.3
    
    
    $
    161.2




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|* |  | Revisions to amounts recorded for the Bethlehem acquisition as a
result of additional information and analysis
obtained during the period.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  | The 2004 current portion includes $13.5 related to assets held for sale.
| |  | ------------------------------------------------------------------------

(8) Subsequent Events

Senior Note Issuance



| |  | On April 14, 2004, ISG issued $600 aggregate principal amount of 6.5% Senior
Notes due 2014 that were sold at 99.096% of par resulting in an effective
yield to maturity of 6.625%. Certain proceeds were used to repay
outstanding debt totaling $323.1. The remaining funds will be used to
paydown other debt, for strategic investments and for general corporate
purposes.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Weirton Acquisition



| |  | On April 22, 2004, ISGs bid to acquire the assets of Weirton Steel
Corporation was approved by the U.S. Bankruptcy Court. The acquisition was
previously approved by both companies boards of directors. The transaction
is expected to close in the second quarter of 2004. The acquisition price
is approximately $255 (of which we expect the cash portion to be approximately $160,
subject to adjustment based on working capital), including ISGs
assumption of certain liabilities.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Georgetown Acquisition



| |  | On May 4, 2004, ISG signed a definitive agreement to acquire the assets of
the Georgetown Steel Company for approximately $16 in cash and
approximately $4  in certain assumed liabilities, subject to customary
closing adjustments and approval by the bankruptcy court.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8



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##### 










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

FORWARD-LOOKING STATEMENTS

ISG and its representatives may from time to time make forward-looking
statements in reports filed with the Securities and Exchange Commission,
reports to stockholders, press releases, other written documents and oral
presentations. These forward-looking statements may be identified by the use of
predictive, future-tense or forward-looking terminology, such as believes,
anticipates, expects, estimates, intends, may, will or similar
terms. These statements speak only as of the date of such statements and ISG
will undertake no ongoing obligation, other than that imposed by law, to update
these statements. These statements appear in a number of places in this report
and include statements regarding ISGs intent, belief or current expectations
of its directors, officers or advisors with respect to, among other things:



| |  | trends affecting ISGs financial condition, results of operations or future prospects;
|- |  | --------------------------------------------------------------------------------------



| |  | business and growth strategies;
|- |  | -------------------------------



| |  | operating culture and philosophy;
|- |  | ---------------------------------



| |  | financing plans and forecasts; and
|- |  | ----------------------------------



| |  | the integration of the Bethlehem, Weirton and Georgetown assets into our business.
|- |  | ----------------------------------------------------------------------------------

Any such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and that actual
results may differ materially from those contained in the forward-looking
statements as a result of various factors, some of which are unknown. The
factors that could adversely affect ISGs actual results and performance
include, without limitation:



| |  | negative overall economic conditions or conditions in the markets served;
|- |  | -------------------------------------------------------------------------



| |  | competition within the steel industry;
|- |  | --------------------------------------



| |  | changes in U.S. or foreign trade policy affecting steel imports or exports;
|- |  | ---------------------------------------------------------------------------



| |  | changes in foreign currencies affecting the strength of the U.S. dollar;
|- |  | ------------------------------------------------------------------------



| |  | actions by domestic and foreign competitors;
|- |  | --------------------------------------------



| |  | the inability to achieve our anticipated growth objectives;
|- |  | -----------------------------------------------------------



| |  | changes in availability or cost of raw materials, energy or other supplies;
|- |  | ---------------------------------------------------------------------------



| |  | labor issues affecting ISGs workforce or the steel industry generally; and
|- |  | ---------------------------------------------------------------------------



| |  | the inability to implement our operating culture and philosophy at the acquired facilities.
|- |  | -------------------------------------------------------------------------------------------

Consolidated Results of Operations for the Three Months Ended March 31, 2004
and March 29, 2003

The discussion below relates to the results of ISG for the first quarter
2004 and first quarter 2003. The acquisition of the Bethlehem Steel
Corporation assets in May 2003 more than doubled our shipping capacity,
substantially broadened our product mix with the addition of plate, tin and
rail products, and improved our product mix by increasing the percentage of
higher value-added cold rolled and coated products. Accordingly, our financial
results for the first quarter 2004 are not comparable to our results for the
first quarter 2003.

9



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For the first quarter 2004, we reported net income of $70.9 million on
net sales of $1,770.3 million and shipments of 3,862 thousand net tons compared
to a net loss of $2.3 million on net sales of $461.7 million and shipments of
1,327 thousand net tons in the first quarter 2003. Our average net sales per
ton shipped was $458 for the first quarter 2004 compared to $348 in the first
quarter 2003. Prices were higher as a result of strong demand and the
industrys implementation of price increases including surcharges to recover
increased raw material costs. Our product mix continues to improve as value
added cold rolled and coated shipments increased to 42% of total shipments in
the first quarter 2004 from 39% in the first quarter of 2003.

The table below shows shipments by product and certain other data for the
periods shown. (Pro forma first quarter 2003 reflects the acquisition of the
Bethlehem assets as if it had occurred on January 1, 2003).

Pro formaFirst
    
    First
    
    FirstQuarter
    
    Quarter
    
    Quarter2004
    
    2003
    
    2003Hot Rolled
    
    
    42
    %
    
    
    41
    %
    
    
    61
    %Cold Rolled
    
    
    20
    
    
    
    21
    
    
    
    26Coated
    
    
    22
    
    
    
    21
    
    
    
    13Plate
    
    
    10
    
    
    
    9
    
    
    
    Tin Plate
    
    
    3
    
    
    
    4
    
    
    
    Rail and other
    
    
    3
    
    
    
    4
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Net sales (dollars in millions)
    
    $
    1,770.3
    
    
    $
    1,369.4
    
    
    $
    461.7Average net sales per ton shipped
    
    $
    458
    
    
    $
    418
    
    
    $
    348Shipments (tons in thousands)
    
    
    3,862
    
    
    
    3,275
    
    
    
    1,327Raw steel production (tons in thousands)
    
    
    4,056
    
    
    
    3,552
    
    
    
    1,352


Cost of sales for the first quarter 2004 was about 90% of sales compared
to 98% for the first quarter 2003 reflecting the benefits of higher shipment
levels, an improved product mix and higher average selling prices. Inventory
cost was determined using the last-in, first-out (LIFO) method of accounting for about 20% of inventories at December 31, 2003 and the balance was determined using the
first-in, first-out (FIFO) or average cost method. Effective January 1, 2004,
we changed to the LIFO cost method of accounting for
substantially all inventories, and we reduced the number of pools
from a pool for each manufacturing facility to a single pool. We believe that the LIFO method of valuing
inventories is preferable because it more closely matches current costs and revenues in periods of increasing costs.
We believe that a single method and a single pool for
substantially all inventories is preferable because, in order to further
achieve the operating synergies from our acquisitions, we now plan to reallocate
the supply of semi-finished materials to our finishing facilities among our
steel producing facilities. Also, we are considering how to best reallocate
the sources of certain raw materials among our steel producing facilities in
order to improve operating efficiencies. Having a single LIFO pool
for substantially all inventories eliminates
the potential for changes in inventory value solely because of this
movement of inventory among manufacturing facilities. Because of significant raw material cost increases in the first quarter 2004,
we changed our interim accounting for LIFO effective January 1, 2004, from an
allocation of the projected annual LIFO provision ratably over the year to a
specific quarterly calculation based on year-to-date estimates. We believe
that the specific quarterly calculation method is preferable because it more
closely matches current costs with revenues in interim periods of rapidly
rising costs. The total LIFO provision for the first
quarter 2004 was about $103 million. That provision was reduced by $7 million
for liquidation of LIFO inventory quantities in the single pool.
These accounting changes mentioned above increased this LIFO
provision by about $50 million.

The first quarter 2004 financing expense increased from the first quarter
2003 because of the increased borrowings related to the Bethlehem acquisition
in May 2003.

At December 31, 2003, we had recorded a full valuation allowance for our
net deferred tax asset as discussed in our Annual Report on Form 10-K for the
year ended December 31, 2003. As a result, our provision for income taxes will
typically reflect what we expect to pay for the year until we reduce the
valuation allowance. Based on our first quarter pretax income and forecasted
pretax income for the year 2004, we expect to pay income taxes for the year
after recognizing temporary differences that arise during the year, the benefit
of the net operating loss (NOL) carryforward arising in 2003 and the benefit of
NOL carryforwards available from the Bethlehem acquisition. Generally accepted
accounting principles also require that we recognize in 2004 the benefit of
temporary differences, principally depreciation, that are expected to be
available in 2005 and 2006 to carryback against the

10



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current income taxes paid
for 2004. The net effect of all these items results in an estimated effective
income tax rate for 2004 of about 7% compared to a normally expected rate of
about 40% for federal and state income taxes.

Liquidity and Cash Flow

We define liquidity as our cash position and remaining availability under
our revolving credit facility. At March 31, 2004, we had liquidity of $405.2
million consisting of cash of $201.0 million and available borrowing capacity
of $204.2 million under our $350.0 million revolving credit facility. As of
December 31, 2003, we had liquidity of $432.7 million.

Cash provided by operating activities for the first quarter 2004 was $46.8
million. Receivables were higher as a result of higher sales in the current
period. Inventory quantities declined during the first quarter of 2004 and the
higher unit costs were included in cost of sales as a result of adopting the
LIFO method for substantially all inventories. We also made advances to secure
certain coke in the international market, increasing our prepaid and other
current assets during the quarter. Higher prices for raw materials also
resulted in higher accounts payable at the end of the quarter. During the
quarter, we made certain required contributions to the United Steelworkers of
America (USWA) pension plan and continued to make payments under our transition
assistance program with the USWA.

We made capital expenditures and other investments of $27.5 million in the
first quarter 2004. We anticipate making capital expenditures in 2004 of about
$300 million of which about $100 million is for strategic purposes excluding
any potential acquisitions. Proceeds from asset sales were $5.8 million in the
first quarter 2004. We expect proceeds of about $50 million in the remainder
of 2004 from sales of surplus assets.

Subsequent Events

In April 2004, we issued $600 million aggregate principal amount of 6.5%
Senior Notes due 2014 that were sold at 99.096% of par resulting in an
effective yield to maturity of 6.625%. Certain proceeds were used to repay
outstanding debt totaling $323.1 million. The remaining funds will be used to
paydown other debt, for strategic investments and for general corporate
purposes.

We are currently in discussions with our lenders to replace our current
credit facilities with a new arrangement that provides more liquidity and fewer
covenants. We expect to complete these discussions by the third quarter of
this year.

On April 22, 2004, ISGs bid to acquire the assets of Weirton Steel
Corporation was approved by the U.S. Bankruptcy Court. The acquisition was
previously approved by both companies boards of directors. Following the
completion of the Weirton acquisition, which is expected to close in the second
quarter of 2004, ISG believes it will be the largest integrated steel producer
in North America. The acquisition price is approximately $255 million,
(of which we expect the cash portion to be approximately
$160 million,
subject to adjustment based on working capital) including ISGs assumption of certain liabilities. ISG has the ability to
finance the cash portion of the acquisition from existing cash and credit
arrangements.

On May 4, 2004, ISG signed a definitive agreement to acquire the assets
of the Georgetown Steel Company for approximately $16 million in cash and
approximately $4 million in certain assumed liabilities, subject to customary
closing adjustments and approval by the bankruptcy court.

Outlook for the Second Quarter

Production is expected to increase in the second quarter of 2004, however,
shipments are expected to remain relatively unchanged due to a significant
reduction in inventories that occurred in the first quarter 2004. Realized
selling prices are expected to increase by approximately $50 per ton over the
first quarter of 2004. The Company also believes there will be adequate
availability of coke supplies. Although the full impact of the current spot
coke prices are expected to increase ISGs production costs in the second
quarter of 2004, the Company expects that the positive trends on realized
selling prices due to our previously announced price increases should more than
offset the

11



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expected production cost increase. Therefore, the outlook remains
positive, with income from operations expected to rise significantly in the
second quarter of 2004.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to certain risks associated with the fluctuation in
interest rates and prices in consumable commodities, including natural gas,
heating oil, coal, coke, steel scrap and non-ferrous metals. We seek to
minimize the potential adverse impact of those market risks through the use of
appropriate management techniques that could include derivative financial
instruments. At March 31, 2004, we held cash flow hedges with respect to
natural gas with the effective portion of such instruments reflected in
accumulated other comprehensive income. We conduct the majority of our
business in the United States and all of our revenues and expenses are
transacted in U.S. dollars. As a result, our operations are not materially
affected by fluctuations in the foreign currencies. We currently have no
financial instruments in place for managing the exposure for foreign currency
exchange rates. Therefore, a hypothetical change in the exchange rate of the
U.S. dollar versus other major currencies would impact our future earnings,
fair values or cash flows, only to the extent it affects domestic imports of,
demand for and price of raw materials and steel products.

Energy costs expose us to cost volatility particularly on natural gas
requirements. In an effort to manage the risks associated with price
fluctuations on natural gas and other commodities, from time to time, we use a
variety of hedging instruments including forward contracts, futures, swaps and
options. At any point in time, we may utilize some or all of these hedging
instruments in our portfolio. We are also exposed to interest rate risk
arising from the variable rate financing on our revolving credit facility. A
hypothetical increase or decrease in interest rates of 1% on our credit
facilities would have changed interest expense by $0.2 million in the first
quarter 2004.




ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended, as of the end of the
period covered by this report (Evaluation Date). Based on this evaluation, our
principal executive officer and principal financial officer concluded as of the
Evaluation Date that our disclosure controls and procedures were effective such
that the information relating to ISG and its consolidated subsidiaries, required to
be disclosed in our Securities and Exchange Commission (SEC) reports (i) is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms, and (ii) is accumulated and communicated to ISG
management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required
disclosure.

While our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures were effective as of the
Evaluation Date, the rapid growth we have experienced in the little over two
years since we were established in February 2002 has placed a significant
strain on our internal control over financial reporting. In March 2004,
as required by procedures established by the SEC, management informed our Audit Committee of the Board of Directors and
represented to KPMG, our independent auditors, that weaknesses in
documentation, consistency, review and information systems, among other issues,
when taken in the aggregate, amount to material weaknesses in internal control
over financial reporting under definitions established by the SEC.

12



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We
implemented changes to improve our internal
controls over financial reporting during the first quarter 2004. These changes
include, among other matters, appointing a new Vice President, Controller and
Chief Accounting Officer and having our plant controllers report directly to
that officer; reviewing the adequacy of our information technology system with
an intent to either enhance or replace the system; and improving instructions
to our accounting staff and the documentation of accounting policies and
procedures in order to improve consistency of accounting matters. Management
intends to continue to review, revise and improve our internal controls over
financial reporting until the material weaknesses in internal control over
financial reporting are eliminated.

Except as noted above, there were no other changes in our internal
controls over financial reporting that occurred during the first quarter 2004
that have materially affected or are reasonably likely to materially affect our
internal controls over financial reporting.




PART II




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

3.1
    
    Third Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).3.2
    
    Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to the Registrants Registration Statement on
Form S-1 (Reg. No. 333-107524), as amended).4.1
    
    Specimen certificate for shares of
common stock (incorporated by reference to Exhibit 4.1 to the
Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).4.2
    
    Form of Registration Rights
Agreement by and among ISG and the investors party thereto
(incorporated by reference to Exhibit 4.2 to the
Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).4.3
    
    Registration Rights Agreement,
dated as of May 6, 2003, by and between ISG and the Pension
Benefit Guaranty Corporation (incorporated by reference to Exhibit
4.3 to the Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).4.4
    
    Convertible Subordinated Promissory
Note, dated as of May 6, 2003, by ISG, as Maker and the Pension
Benefit Guaranty Corporation, as Payee (incorporated by reference to
Exhibit 4.4 to the Registrants Registration Statement on
Form S-1 (Reg. No.333-107524), as amended).4.5
    
    Exchange and Registration Rights Agreement, dated as of
April 14, 2004, by and among International Steel Group Inc.,
certain subsidiaries of International Steel Group Inc.,
Goldman, Sachs & Co., UBS Securities LLC, Citigroup Global
Markets Inc., and J.P. Morgan Securities Inc.4.6
    
    Indenture, dated as of April 14, 2004, by and among
International Steel Group Inc., certain subsidiaries of
International Steel Group Inc., and The Bank of New York, as
trustee, including the Form of International Steel Group
Inc.s 6.50% Senior Notes due 2014.10.1
    
    Third Amendment to Credit and Guaranty Agreement, dated as
of March 21, 2004, by and among International Steel Group
Inc., as a Guarantor, ISG Acquisition Inc., ISG Cleveland
Inc., ISG Hennepin Inc., ISG Indiana Harbor Inc., ISG Warren
Inc., ISG Riverdale Inc., ISG Plate LLC (f/k/a ISG Plate
Inc.), ISG Piedmont LLC (f/k/a ISG Piedmont Inc.), ISG Burns
Harbor LLC (f/k/a ISG Burns Harbor Inc.), ISG Sparrows Point
LLC (f/k/a ISG Sparrows Point Inc.), ISG Steelton LLC (f/k/a
ISG Steelton Inc.), and ISG Lackawanna LLC (f/k/a ISG
Lackawanna Inc.), as Borrowers, certain subsidiaries of the
Registrant, as Guarantors, the Lenders party thereto from
time to time, UBS Securities LLC, as Joint Lead Arranger and
Joint Book runner, UBS AG, Stamford Branch, as
Administrative Agent, Goldman Sachs Credit Partners L.P., as
Joint Lead Arranger, Joint Book runner and Syndication
Agent, The CIT Group/Business Credit, Inc., as Collateral
Agent, Fleet Capital Corporation, as Co-Documentation Agent,
and LaSalle Bank National Association, as Co-Documentation
Agent.10.2
    
    Fourth Amendment to Credit and Guaranty Agreement, dated as
of April 27, 2004, by and among International Steel Group
Inc., as a Guarantor, ISG Acquisition Inc., ISG Cleveland
Inc., ISG Hennepin Inc., ISG Indiana Harbor Inc., ISG Warren
Inc., ISG Riverdale Inc., ISG Plate LLC (f/k/a ISG Plate
Inc.), ISG Piedmont LLC (f/k/a ISG Piedmont Inc.), ISG Burns
Harbor LLC (f/k/a ISG Burns Harbor Inc.), ISG Sparrows Point
LLC (f/k/a ISG Sparrows Point Inc.), ISG Steelton LLC (f/k/a
ISG Steelton Inc.), and ISG Lackawanna LLC (f/k/a ISG
Lackawanna Inc.), as Borrowers, certain subsidiaries of the
Registrant, as Guarantors, the Lenders party thereto from
time to time, UBS Securities LLC, as Joint Lead Arranger and
Joint Book runner, UBS AG, Stamford Branch, as
Administrative Agent, Goldman Sachs Credit Partners L.P., as
Joint Lead Arranger, Joint Book runner and Syndication
Agent, The CIT Group/Business Credit, Inc., as Collateral
Agent, Fleet Capital Corporation, as Co-Documentation Agent,
and LaSalle Bank National Association, as Co-Documentation
Agent.


13



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10.3
    
    Amended and Restated Asset Purchase Agreement, dated as of
February 25, 2004, by and among Weirton Steel Corporation,
FW Holdings Inc., Weirton Venture Holdings Corporation, ISG
Weirton Inc., and International Steel Group Inc.10.4
    
    Amendment No. 1 to Amended and Restated Asset Purchase
Agreement, dated as of March 8, 2004, by and among Weirton
Steel Corporation, FW Holdings Inc., Weirton Venture
Holdings Corporation, ISG Weirton Inc., and International
Steel Group Inc.10.5
    
    Amendment No. 2 to Amended and Restated Asset Purchase
Agreement, dated as of April 21, 2004, by and among Weirton
Steel Corporation, FW Holdings Inc., Weirton Venture
Holdings Corporation, ISG Weirton Inc., and International
Steel Group Inc.10.6
    
    Amendment No. 3 to Amended and
Restated Asset Purchase Agreement, dated as of May 5, 2004, by and among Weirton Steel Corporation, FW Holdings Inc., Weirton Venture Holdings Corporation, ISG Weirton Inc., and International Steel Group Inc.10.7
    
    Employment Agreement, by and between Rodney B. Mott and
International Steel Group, dated as of February 25, 2004.10.8
    
    Employment Agreement, by and between Jerome V. Nelson and
International Steel Group, dated as of February 26, 2004.10.9
    
    Employment Agreement, by and between V. John Goodwin and
International Steel Group, dated as of March 31, 2004.10.10
    
    Employment Agreement, by and between Leonard M. Anthony and
International Steel Group, dated as of March 31, 2004.18.1
    
    Letter from the independent auditors, KPMG,
regarding the preferability of the change in
accounting principle from the First-in,
First out (FIFO) method of accounting for
inventories to the Last-in, First out (LIFO)
method.31.1
    
    Certification by the Chief Executive Officer
pursuant to Rules 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934.31.2
    
    Certification by the Chief Financial Officer
pursuant to Rules 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934.32.1
    
    Certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.


(b) Reports on Form 8-K



|1. |  | On February 23, 2004 the Company filed a Current Report on Form
8-K under Item 5 disclosing the execution of a Purchase Agreement for
International Steel Group Inc. to acquire substantially all of the
assets of Weirton Steel Corporation.                                                        
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | On February 26, 2004 the Company furnished a Current Report on
Form 8-K under Item 12 disclosing certain financial results of
International Steel Group Inc. for the quarter and year ended
December 31, 2003.                                                                                       
|  
|3. |  | On April 2, 2004 the Company filed a Current Report on Form 8-K
under Item 5 disclosing International Steel Group Inc.s intention to
offer $600 million of its Senior Notes due 2014 in a transaction
exempt from the registration requirements of the Securities Act of
1933.                      
|  
|4. |  | On April 2, 2004 the Company furnished a Current Report on Form
8-K under Item 9 disclosing certain information regarding the
Company, including portions of the disclosure document used in
connection with the transaction exempt from the registration
requirements of the Securities Act of 1933.

14



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|5. |  | On April 13, 2004 the Company filed a Current Report on Form
8-K under Item 5 disclosing the pricing of $600 million of its Senior
Notes due 2014 in a transaction exempt from the registration
requirements of the Securities Act of 1933.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|6. |  | On April 29, 2004 the Company furnished a Current Report of
Form 8-K under Item 12 disclosing certain financial results of
International Steel Group Inc. for the quarter ended March 31, 2004.                                            
|  
|7. |  | On May 6, 2004 the Company filed a Current Report on Form 8-K
under Item 5 disclosing the execution of a Purchase Agreement for
International Steel Group Inc. to acquire substantially all of the
assets of Georgetown Steel Company.     

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

INTERNATIONAL STEEL GROUP INC.Date: May 13, 2004
    
    
    /s/ LONNIE A. ARNETTLonnie A. ArnettVice President, Controller andChief Accounting Officer


15



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##### 



Exhibit Index

ExhibitNumber
    
    Description of Document3.1
    
    Third Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).3.2
    
    Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to the Registrants Registration Statement on
Form S-1 (Reg. No. 333-107524), as amended).4.1
    
    Specimen certificate for shares of
common stock (incorporated by reference to Exhibit 4.1 to the
Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).4.2
    
    Form of Registration Rights
Agreement by and among ISG and the investors party thereto
(incorporated by reference to Exhibit 4.2 to the
Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).4.3
    
    Registration Rights Agreement,
dated as of May 6, 2003, by and between ISG and the Pension
Benefit Guaranty Corporation (incorporated by reference to Exhibit
4.3 to the Registrants Registration Statement on Form S-1 (Reg.
No.333-107524), as amended).4.4
    
    Convertible Subordinated Promissory
Note, dated as of May 6, 2003, by ISG, as Maker and the Pension
Benefit Guaranty Corporation, as Payee (incorporated by reference to
Exhibit 4.4 to the Registrants Registration Statement on
Form S-1 (Reg. No.333-107524), as amended).4.5
    
    Exchange and Registration Rights Agreement, dated as of
April 14, 2004, by and among International Steel Group
Inc., certain subsidiaries of International Steel Group
Inc., Goldman, Sachs & Co., UBS Securities LLC, Citigroup
Global Markets Inc., and J.P. Morgan Securities Inc.4.6
    
    Indenture, dated as of April 14, 2004, by and among
International Steel Group Inc., certain subsidiaries of
International Steel Group Inc., and The Bank of New York,
as trustee, including the Form of International Steel
Group Inc.s 6.50% Senior Notes due 2014.10.1
    
    Third Amendment to Credit and Guaranty Agreement, dated
as of March 21, 2004, by and among International Steel
Group Inc., as a Guarantor, ISG Acquisition Inc., ISG
Cleveland Inc., ISG Hennepin Inc., ISG Indiana Harbor
Inc., ISG Warren Inc., ISG Riverdale Inc., ISG Plate LLC
(f/k/a ISG Plate Inc.), ISG Piedmont LLC (f/k/a ISG
Piedmont Inc.), ISG Burns Harbor LLC (f/k/a ISG Burns
Harbor Inc.), ISG Sparrows Point LLC (f/k/a ISG Sparrows
Point Inc.), ISG Steelton LLC (f/k/a ISG Steelton Inc.),
and ISG Lackawanna LLC (f/k/a ISG Lackawanna Inc.), as
Borrowers, certain subsidiaries of the Registrant, as
Guarantors, the Lenders party thereto from time to time,
UBS Securities LLC, as Joint Lead Arranger and Joint Book
runner, UBS AG, Stamford Branch, as Administrative Agent,
Goldman Sachs Credit Partners L.P., as Joint Lead
Arranger, Joint Book runner and Syndication Agent, The
CIT Group/Business Credit, Inc., as Collateral Agent,
Fleet Capital Corporation, as Co-Documentation Agent, and
LaSalle Bank National Association, as Co-Documentation
Agent.10.2
    
    Fourth Amendment to Credit and Guaranty Agreement, dated
as of April 27, 2004, by and among International Steel
Group Inc., as a Guarantor, ISG Acquisition Inc., ISG
Cleveland Inc., ISG Hennepin Inc., ISG Indiana Harbor
Inc., ISG Warren Inc., ISG Riverdale Inc., ISG Plate LLC
(f/k/a ISG Plate Inc.), ISG Piedmont LLC (f/k/a ISG
Piedmont Inc.), ISG Burns Harbor LLC (f/k/a ISG Burns
Harbor Inc.), ISG Sparrows Point LLC (f/k/a ISG Sparrows
Point Inc.), ISG Steelton LLC (f/k/a ISG Steelton Inc.),
and ISG Lackawanna LLC (f/k/a ISG Lackawanna Inc.), as
Borrowers, certain subsidiaries of the Registrant, as
Guarantors, the Lenders party thereto from time to time,
UBS Securities LLC, as Joint Lead Arranger and Joint Book
runner, UBS AG, Stamford Branch, as Administrative Agent,
Goldman Sachs Credit Partners L.P., as Joint Lead
Arranger, Joint Book runner and Syndication Agent, The
CIT Group/Business Credit, Inc., as Collateral Agent,
Fleet Capital Corporation, as Co-Documentation Agent, and
LaSalle Bank National Association, as Co-Documentation
Agent.10.3
    
    Amended and Restated Asset Purchase Agreement, dated as
of February 25, 2004, by and among Weirton Steel
Corporation, FW Holdings Inc., Weirton Venture Holdings
Corporation, ISG Weirton Inc., and International Steel
Group Inc.10.4
    
    Amendment No. 1 to Amended and Restated Asset Purchase
Agreement, dated as of March 8, 2004, by and among
Weirton Steel Corporation, FW Holdings Inc., Weirton
Venture Holdings Corporation, ISG Weirton Inc., and
International Steel Group Inc.10.5
    
    Amendment No. 2 to Amended and Restated Asset Purchase
Agreement, dated as of April 21, 2004, by and among
Weirton Steel Corporation, FW Holdings Inc., Weirton
Venture Holdings Corporation, ISG Weirton Inc., and
International Steel Group Inc.10.6
    
    Amendment No. 3 to Amended and
Restated Asset Purchase Agreement, dated as of May 5, 2004, by and among Weirton Steel Corporation, FW Holdings Inc., Weirton Venture Holdings Corporation, ISG Weirton Inc., and International Steel Group Inc.10.7
    
    Employment Agreement, by and between Rodney B. Mott and
International Steel Group, dated as of February 25, 2004.


16



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ExhibitNumber
    
    Description of Document10.8
    
    Employment Agreement, by and between Jerome V. Nelson and
International Steel Group, dated as of February 26, 2004.10.9
    
    Employment Agreement, by and between V. John Goodwin and
International Steel Group, dated as of March 31, 2004.10.10
    
    Employment Agreement, by and between Leonard M. Anthony
and International Steel Group, dated as of March 31,
2004.18.1
    
    Letter from the independent auditors,
KPMG, regarding the preferability of
the change in accounting principle from
the First-in, First out (FIFO) method
of accounting for inventories to the
Last-in, First out (LIFO) method.31.1
    
    Certification by the Chief Executive
Officer pursuant to Rules
13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934.31.2
    
    Certification by the Chief Financial
Officer pursuant to Rules
13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934.32.1
    
    Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002.


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