UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                             ----------------------

                                   FORM 10-K
(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 number 018597
                                NSC CORPORATION
             (Exact name of registrant as specified in its Charter)


            DELAWARE                            31-1295113
   (State of incorporation)         (IRS Employer Identification Number)

         49 DANTON DRIVE, METHUEN, MA              01844
 (Address of principal executive offices)        (ZIP code)

                                 (978) 557-7300
               Registrant's telephone number, including area code

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

                         Common Stock, $0.01 par value
                             (Title of each class)

          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 ]

The  aggregate  market  value of the common stock held by  nonaffiliates  of the
registrant on March 17, 1998 was $8,320,290.

The  number  of  shares  of  common  stock  outstanding  on March  17,  1998 was
9,971,175.

                      DOCUMENTS INCORPORATED BY REFERENCE

The  information  required  by Part  III is  incorporated  by  reference  to the
definitive  Proxy Statement for the 1998 Annual Meeting of  Stockholders,  which
will be filed with the Securities and Exchange Commission no later than 120 days
after December 31, 1997.

                                  Page 1 of 54

<PAGE>


                                NSC Corporation
                        1997 Annual Report on Form 10-K

                               Table of Contents

Part I
--------------------------------------------------------------------------------
Item   1.     Business                                                         3
Item   2.     Properties                                                      10
Item   3.     Legal Proceedings                                               11
Item   4.     Submission of Matters to a Vote of Security Holders             11

Executive Officers of the Registrant                                          12

Part II
--------------------------------------------------------------------------------
Item   5.     Market for the Registrant's Common Stock and Related
               Stockholder Matters                                            13
Item   6.     Selected Financial Data                                         14
Item   7.     Management's Discussion and Analysis of Financial
               Condition and Results of Operations                            16
Item   8.     Financial Statements and Supplementary Data                     18
Item   9.     Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosures                           33

Part III
--------------------------------------------------------------------------------
Item 10.      Directors and Executive Officers of the Registrant              33
Item 11.      Executive Compensation                                          33
Item 12.      Security Ownership of Certain Beneficial Owners and
               Management                                                     33
Item 13.      Certain Relationships and Related Transactions                  33

Part IV
--------------------------------------------------------------------------------
Item 14.      Exhibits, Financial Statement Schedules and Reports
               on Form 8-K                                                    34

Signatures                                                                    37

                                  Page 2 of 54


<PAGE>


Part I


Item 1.  Business

General

NSC Corporation (the "Company") is a leading provider of asbestos-abatement  and
other specialty contracting services to a broad range of commercial,  industrial
and  institutional  clients  located  throughout the United States.  The Company
provides  asbestos-abatement,  lead  paint  abatement  and  indoor  air  quality
services  through  two  of  its  wholly-owned  subsidiaries,   National  Surface
Cleaning,   Inc.   ("NSCI")  and  National  Service  Cleaning  Corp.   ("NSCC");
asbestos-abatement  and  decontamination  and  decommissioning of government and
commercial  nuclear  facilities  through its wholly-owned  subsidiary NSC Energy
Services,  Inc. ("NSCESI");  and demolition and dismantling services through its
wholly-owned subsidiary, Olshan Demolishing Management, Inc. ("ODMI").

For  financial  information  concerning  the  Company's  two  principal  service
segments, asbestos-abatement (which includes indoor air quality, decontamination
and  decommissioning and lead  paint-abatement)  and demolition and dismantling,
see  Note 13 of the  Notes to the  Consolidated  Financial  Statements  included
elsewhere herein.

The  predecessor  of the  Company  was  founded in 1976 and  initially  provided
various cleaning services to commercial,  industrial and residential real estate
properties.  From the  early  1980s  and  until  the 1995  inclusion  of  ODMI's
activities,  substantially  all  of  the  Company's  revenue  was  derived  from
asbestos-abatement  services. The Company and a predecessor company to NSCC were
acquired  by OHM  Corporation  ("OHM")  in June  1988.  During  1989,  NSCC  was
incorporated  in Connecticut to provide  asbestos-abatement  services to clients
which  generally do not require the use of unionized  labor.  In June 1990,  the
Company completed an initial public offering of its common stock.

On May  4,  1993  pursuant  to a  Purchase  Agreement  among  the  Company,  NSC
Industrial  Services  Corp.  ("Industrial"),  OHM,  The  Brand  Companies,  Inc.
("Brand")  and  Waste  Management,   Inc.  ("WMX"),  the  Company  acquired  the
asbestos-abatement   division  of  Brand  (the   "Division")   in  exchange  for
4,010,000  shares of the  Company's  common  stock and all the  common  stock of
Industrial.

On April 20, 1995 the Company  entered into  Interim  Management  and  Operating
Agreements  with Rust  International  Inc.  (hereinafter  referred to as "Rust")
under  which  the  Company,  through  ODMI,  assumed  the  management  of Olshan
Demolishing  Company ("ODC"),  a Rust subsidiary  specializing in demolition and
dismantling, primarily in the industrial market.

As of December 31, 1997 and 1996, OHM and Rust (a successor company to Brand and
a WMX subsidiary) each owned approximately forty percent of the Company's common
stock.

Effective  March  6,  1998,  as  a  result  of a  transaction  between  OHM  and
International  Technology  Corporation ("IT"), OHM distributed its shares of the
Company's  common stock to its shareholders of record on February 24, 1998. As a
result of this transaction, WMX is the owner of approximately fifty-four percent
of the Company's common stock.

The market for  asbestos-abatement  services has seen dramatic  changes over the
past several years. In the mid-to-late  1980s, the demand in the marketplace was
extremely  high,  with  many  owners of  buildings  and  facilities  undertaking
large-scale abatement projects as a risk reduction measure. This demand, coupled
with low  barriers to entry,  provided the  conditions  for the  development  of
several large, national asbestos-abatement contractors.

Demand for  asbestos-abatement  services is dependent on the  fluctuation of the
national  economy  and the finite  amount of asbestos  remaining  to be removed.
There can be no  assurance  that such demand will remain  steady.  The  Company,
nevertheless,  is  positioned  to maintain  its share of this  market  through a
focused sales and marketing effort.  Furthermore,  through  diversification into
the demolition,  indoor air quality and  decontamination  and decommissioning of
nuclear facilities  markets,  the Company is positioning to provide a full suite
of specialty  contracting services to the  performance-sensitive  customer.  The
market will continue to demand quality performance,  and the Company will strive
to meet these demands through a unified focus on safety,  customer satisfaction,
financial performance and personnel development.

                                  Page 3 of 54

<PAGE>
Asbestos-Abatement and Demolition Operations

The Company provides asbestos-abatement and other specialty contracting services
through its network of 16 offices  located  throughout  the United  States,  and
demolition and dismantling  services through its Houston,  Texas office. NSCI is
licensed to conduct  asbestos-abatement  services in 31 states and  provides its
services   with   unionized   labor,   while   NSCC  is   licensed   to  perform
asbestos-abatement  services  in  36  states  and  provides  its  services  with
non-unionized  labor.  ODMI is licensed to conduct  demolition  and  dismantling
services  in 20 states,  the  District  of  Columbia,  Canada  and Puerto  Rico.
Generally,  ODMI provides its services with  non-unionized  labor; NSCC and ODMI
often utilize subcontractor and temporary labor.

An  asbestos-abatement  or  demolition  and  dismantling  program  is focused on
meeting the needs of the  facility  owner or  operator  to  properly  manage the
financial,  regulatory and safety-related  risks associated with a demolition or
asbestos  project.  The Company's  removal and demolition  services  require the
coordination of several processes:  marketing, bidding and contracting,  project
management,  health and safety  programs,  and the  actual  asbestos  removal or
dismantling and demolition.  The Company's management  maintains  administrative
and  operational  control  over all phases of a  project,  from  estimating  and
bidding through project completion.

The Bidding and Contract Process

While some of the Company's contracts are directly entered into with its clients
without a formal bidding process,  the Company receives a significant portion of
its  asbestos-abatement  and  demolition  and  dismantling  contracts  through a
bidding  process.  The majority of the  Company's  projects are  contracted on a
fixed-price  basis,  while the  remainder  are  contracted  either on a time and
materials or a unit-price  basis. The Company obtains work and performs services
under  contract,  often on the basis of plans,  specifications  or  requirements
prepared by the client or the  client's  agent.  Contracting  opportunities  are
identified  by  telemarketing  and the local sales  force and are  entered  into
following  competitive  bidding or direct  negotiations with the customer or its
agent. Generally, these contracts encompass supplying project management, labor,
tools,  equipment and  materials.  In most cases,  a significant  portion of the
total  costs  incurred  by  the  Company's   asbestos-abatement   operations  is
attributable  to labor  while a  significant  portion of the total  costs of its
demolition and dismantling operations is attributable to equipment rental costs.
While large abatement contracts may last more than one year, the majority of the
Company's projects are completed within five months.

Project Management

Each project is coordinated  and supervised by a project manager who selects the
requisite  equipment,  ensures contract compliance and supervises all personnel.
The Company  employs a  computerized  job cost system  which  allows it to track
project  profitability  on an ongoing  basis.  The project  manager  reviews the
progress of the project on a regular basis with management.  The project manager
continues  to  oversee  the  completion  of  the  project,  which  includes  any
subsequent  change orders.  The day-to-day  documentation  of air testing,  lead
monitoring  and final clean  analysis is an important part of the process and is
generally provided by the client's consultants.


Health and Safety

The  Company's  written  Safety  Program,  which is  issued  to all  supervisory
personnel,  contains  specific  outlines for all safety,  health and  regulatory
requirements  associated with an asbestos-abatement  project. In compliance with
the EPA's Asbestos Hazard Emergency  Response Act ("AHERA") Model  Accreditation
Plan ("MAP"),  all  asbestos-abatement  supervisors  and workers are required to
attend and satisfactorily  pass a written  examination both initially and during
annual  refresher  training.  To meet the medical  surveillance  and respiratory
protection  requirements of the  occupational  Safety and Health  Administration
("OSHA")  standards,  all personnel entering an asbestos or lead atmosphere must
first undergo an initial, and then annual, medical examination, which includes a
complete  medical  and work  history,  pulmonary  function  testing  and a chest
roentgenogram.  If an employee  will be exposed to lead, a blood sample is taken
to determine blood lead levels before exposure to that  environment.  Blood lead
levels are then  monitored  periodically  throughout  the period the employee is
working  in  this  environment.  In  addition  to  wearing  required  protective
clothing,  respirators and other personal protective equipment,  all individuals
leaving a contaminated  area are required to undergo  stringent  decontamination
procedures.  During the asbestos-abatement process, the Company engages in daily
personal air  monitoring;  during the demolition and  dismantling  process,  the
Company engages in lead, heavy metal and other  contaminant  testing.  In either
process,   the  Company  strives  to  comply  with  all  regulatory  and  safety
requirements.   Comprehensive   documentation   is  an  important  part  of  the
asbestos-abatement and demolition and dismantling process. The Company maintains
all required documentation.

                                  Page 4 of 54
<PAGE>

The Abatement Process

The Company's  workers remove asbestos in accordance with the regulations of the
Environmental  Protection  Agency's  ("EPA")  National  Emission  Standards  for
Hazardous Air Pollutants - Asbestos (NESHAPS) and OSHA with applicable state and
local  regulations.  Before any removal can begin,  the work area must be sealed
off  from  the  interior  building  environment  as  well as  from  the  outdoor
environment.  The  containment  of the work area  requires the  construction  of
barriers on the walls and floors made of plastic  sheeting  sealed at the seams.
Air  locks  are  built for entry of  personnel  and  equipment,  and a  negative
pressure air filtration system is required to prevent the escape of any asbestos
fibers from the work area. The Company constructs a worker  decontamination area
which is generally  comprised of a  contaminated  area where workers leave their
contaminated  clothing  and  equipment,  an area where the workers  shower after
leaving the sealed-off work area, and a clean area where workers prepare for the
work shift.  Workers are fitted with  respirators and disposable  suits prior to
entering the work area.

Throughout the abatement process, air samples are taken to indicate the level of
airborne fibers both inside and outside the work area to protect the workers and
the building  occupants.  An  environmental  consultant,  engineer or industrial
hygienist  tests air samples from the work area both during and upon  completion
of the project to monitor compliance with job specifications.

A thorough cleaning of the work area is conducted after removal,  which includes
high-efficiency  particulate  air  filter  vacuuming  and  wet  mopping  of  all
surfaces.  All  barriers  erected  during  the  asbestos-abatement  project  are
dismantled  and  disposed of in the same manner as asbestos  waste.  The Company
encapsulates  the area from which asbestos was removed by applying a penetrating
encapsulant to seal off any possible remaining fibers.

The Demolition and Dismantling Process

The Company performs commercial demolition and industrial dismantling for public
and  private  customers  throughout  the  United  States.  All  work  is done in
accordance with the specifications  prepared by the owner and in accordance with
all OSHA, EPA, and state and federal  governmental  regulations.  The Company is
also subject to the  regulations of the Mine Safety and Health Act ("MSHA") when
it conducts demolition and dismantling projects at mining locations.

The Company  performs a site  specific  safety  survey of every project prior to
beginning work. An engineering survey of the equipment, structures, or buildings
to be  dismantled  or demolished  is prepared  outlining  potential  hazards and
methods used to alleviate the hazards.  During the course of the project,  daily
safety  meetings  are  conducted  to discuss  that day's  activities,  potential
problems and measures to overcome the problems.  Industrial dismantling involves
removing  structures and equipment in  manufacturing  facilities.  The Company's
workers,  utilizing  specially-designed  equipment  and  attachments,  carefully
dismantle  the  structures  and  equipment  from  the top  down.  All  materials
dismantled are either recycled or disposed of in a licensed landfill. Commercial
demolition involves demolishing high-rise office buildings, hospitals, apartment
complexes,  and other buildings.  The Company's workers,  utilizing  specialized
equipment  and  occasionally  explosives,  demolish the buildings and remove the
debris off site. All materials  generated from demolition  activities are either
recycled or disposed of in a licensed landfill.

During  dismantling and demolition  operations,  recyclable  metals and reusable
equipment are generated.  Typically,  the Company takes title to these materials
and sells them to brokers  and end users.  Sales  proceeds  from the  recyclable
metals  and  the  reusable   equipment  are  generally  part  of  the  Company's
compensation to perform the work. After equipment, structures, and buildings are
removed in accordance with the owner's  specification,  the Company  demobilizes
its equipment and personnel from the area.

                                  Page 5 of 54

<PAGE>
Markets and Customers

In 1997, the Company's  primary markets for its  asbestos-abatement,  demolition
and  dismantling  and other  specialty  contracting  services were the states of
California,  Illinois, Kentucky,  Massachusetts,  Minnesota, Missouri, New York,
Pennsylvania,  Texas and West Virginia, as well as the District of Columbia. The
Company's headquarters is located in Methuen, Massachusetts.

The Company  believes that its primary  clients,  which include large industrial
processing and  manufacturing  corporations,  insurance  companies,  real estate
development   companies  and  owners  and  tenants  of  large   commercial   and
governmental  facilities,  tend to emphasize quality and safety along with price
considerations  in  making  their  decision.  The  Company  typically  contracts
directly with owners,  operators or tenants of properties and works closely with
the environmental  consultant of the client in performing  removal services.  No
single  customer  accounted  for  more  than 10% of the  Company's  consolidated
revenue during 1997.

Following its  acquisition  by OHM in June 1988,  the Company  began  performing
asbestos-abatement  services for OHM,  principally  in  connection  with certain
large  industrial  decontamination  and  demolition  projects  performed by OHM.
Following  the  acquisition  of the  Division  in May 1993,  the  Company  began
providing  asbestos-abatement  services on a subcontract  basis for Rust and its
affiliates  in  connection  with certain large  industrial  decontamination  and
demolition  projects  performed by Rust. The Company provides such services on a
competitive  basis to both OHM and Rust.  Revenue for these  services to OHM and
Rust amounted to approximately $237,000 and $7,000, respectively, in 1997.

The  Company  divides  the  market for  asbestos-abatement  and  demolition  and
dismantling  services  into  the  following  categories:   (1)  commercial/large
residential buildings; (2) industrial facilities;  and (3) institutional,  which
includes schools, government buildings,  airports, hospitals and other buildings
not described by another category.  The following table summarizes the Company's
gross revenues by category for the periods indicated:

                                    Years Ended December 31, 1997
                       ------------------------------------------------------
                             1997              1996                1995
                       ---------------     --------------    ----------------
                                  (In thousands,except percentages)

Commercial..........   $  55,408   48%     $  56,299  44%     $  60,895   49%
Industrial..........      43,835   38         53,929  42         41,524   33
Institutional.......      16,712   14         18,815  14         22,110   18
                          ------   --         ------  --         ------   --
                       $ 115,955  100%     $ 129,043 100%     $ 124,529  100%
                       =========  ====     ========= ====     =========  ====

The Company  markets its  services  directly  to  companies  that are in need of
asbestos-abatement   and  demolition  and  dismantling   services,   to  general
contractors  who oversee  large  renovation  projects and to  asbestos-abatement
consulting  firms from which the Company  receives  asbestos  project  referrals
because of its reputation and experience.

Seasonality

The  Company's  business is subject to  variations in revenue and net income for
interim  periods  and from year to year,  and  increased  revenue may not always
result in a corresponding  increase in net income. These conditions are due to a
number of  characteristics  shared by the Company to varying  degrees  with most
other members of the industry,  including the  following:  1) its businesses are
seasonal  (typically less activity during the winter months) and are affected by
the scheduling of work at commercial  properties,  fiscal funding of projects by
government  entities,  outages at utilities  and  shutdowns at other  industrial
facilities;  2) its  performance  on a given  project is often  dependent on the
performance  of other  contractors,  who are working on the same job, over which
the Company has no control; and 3) costs ultimately incurred by the Company on a
job may be  materially  affected by such  factors as technical  problems,  labor
shortages  and disputes,  time  extensions,  weather,  delays caused by external
sources and  fluctuations  in the prices of  materials.  Revenue  and  operating
results of  asbestos-abatement  activities may also be affected by the timing of
large  contracts,  especially if all or a substantial part of the performance of
such  contracts  occurs  within one or two  quarters.  The revenue and operating
results  of  the  demolition  and  dismantling  activities  may be  affected  by
fluctuations  in the price of scrap metals.  Accordingly,  quarterly  results or
other  interim  results  should not be  considered  indicative  of results to be
expected for any other quarter or for the full fiscal year.

                                  Page 6 of 54
<PAGE>

Competition

The market for the  Company's  services  is highly  competitive.  The  Company's
ability to  compete  as a provider  of  asbestos-abatement  and  demolition  and
dismantling services depends upon pricing its services competitively, having the
ability to respond  promptly and with adequate  amounts of  resources,  having a
reputation for quality and safety,  being able to obtain appropriate bonding and
insurance, and hiring, training and retaining qualified personnel,  particularly
in the areas of  estimating  and  project  management.  While the  Company  is a
significant participant in the asbestos-abatement and demolition and dismantling
services market, it continues to experience competition from national,  regional
and local firms, some of which have substantial resources and experience.

Insurance and Bonding

The Company has established an insurance  program that has been tailored to meet
the mutual risk  management  needs of its clients and the  Company.  The primary
package includes commercial general liability, automobile liability and workers'
compensation  policies.  This plan is  written  with an A. M.  Best  Rated A+ XV
carrier.   The  Company  has  an  umbrella  policy  which  extends  coverage  to
$51,000,000 per occurrence and $52,000,000 in the general  aggregate.  Effective
November  1, 1996 the  Company's  liability  per  occurrence  under the  general
liability policy is $100,000,  under the automobile liability policy is $350,000
and under the workers' compensation policy is $500,000.

Public asbestos-abatement,  demolition and dismantling projects require that the
Company  post  surety  bonds  as  guarantees  of  performance  of the  Company's
contractual  obligations.  Under the Federal  Miller Act,  bonds are required to
protect the interests of the general  public,  as public  funding is utilized in
project  financing.  Additionally,  surety bonds also guarantee that the Company
will  pay all of its  bills,  including  suppliers  and  subcontractors  who are
working on projects  for the Company.  Similarly,  many  private  projects  also
require surety bonds to serve as protection  and provide  guarantees for private
owners.

The Company has existing  surety  relationships  with The  Insurance  Company of
the State of  Pennsylvania  (American  International  Group) and United  Pacific
Insurance Group (Reliance Insurance Group).

Employees

As of March 17, 1998 the  Company  had  approximately  940  employees,  of which
approximately  30 are  employed  as  managers or  executives,  approximately  10
provide  technical or engineering  services,  approximately  100 are employed in
sales,  clerical  and  data  processing  activities  and  approximately  800 are
employed in other capacities,  principally hourly labor. During 1997, the number
of  hourly-rate  employees  ranged  from  700 to  1100.  As of  March  17,  1998
approximately 350 of the Company's  employees were represented by various unions
under numerous  collective  bargaining  agreements.  The Company is a party to a
number of collective  bargaining  agreements with several unions which represent
employees  based upon  geographic  area or the nature of work  performed by such
employees.  Such collective  bargaining  agreements expire at various times. The
Company  considers its relations with its employees to be  satisfactory  and has
not experienced any work stoppages or slowdowns.

Patents and Service Marks

The Company currently does not own any patents or service marks.

                                  Page 7 of 54

<PAGE>

Government Regulation

The asbestos-abatement and demolition and dismantling processes are regulated by
the  federal   government   through  the  EPA,   OSHA  and  the   Department  of
Transportation ("DOT").  Additionally, the demolition and dismantling process is
regulated by MSHA when conducted at mining locations.  EPA's NESHAPS regulations
establish  standards  for the  control  of  asbestos  fiber  and  airborne  lead
emissions into the  environment  during removal and demolition  projects.  EPA's
AHERA mandates that public schools inspect for levels of asbestos  contamination
and  prepare a  specific  management  plan for  appropriate  remedial  action if
asbestos is found.  OSHA regulations  establish maximum airborne asbestos fiber,
airborne  lead and heavy  metal  exposure  levels  applicable  to  asbestos  and
demolition  employees  and set  standards  for  employee  protection  during the
demolition,   removal  or  encapsulation  of  asbestos,   as  well  as  storage,
transportation and final disposition of asbestos and demolition debris.

EPA  regulations  under the Clean Air Act's  NESHAPS  include  requirements  for
wetting of the  asbestos-containing  material,  using  exhaust  ventilation  and
filtration systems meeting certain specifications,  and following procedures for
transporting and disposing of asbestos-containing  material. Prior to commencing
most removal projects,  contractors are required to provide the EPA with written
notification  containing  certain  information,  including  the  address  of the
project,  the anticipated  starting and completion dates,  methods to be used to
comply with the emission standards,  the amount of asbestos-containing  material
involved in the project and the location of the EPA-approved disposal site.

The Toxic  Substances  Control  Act  ("TSCA"),  as  amended  by  AHERA,  and the
regulations  promulgated  pursuant  thereto,  require  inspection of schools for
asbestos  and public  notice of the  inspection  results,  which  often leads to
demands for abatement. In addition, TSCA imposes asbestos exposure standards for
state and local government employees. The EPA has also adopted regulations under
AHERA which  require  schools to use  accredited  inspectors  to inspect  school
buildings for asbestos-containing  materials.  If asbestos-containing  materials
are found and are damaged,  the school must develop an asbestos  management plan
which outlines its management practices for the materials.  Response actions may
include encapsulation,  enclosure,  repair or removal of the asbestos-containing
materials by an accredited contractor.  The AHERA regulations impose affirmative
obligations  on the  accredited  contractor  who  performs  the  work on  school
building  projects.  These  obligations  include  proper  worker,  employee  and
occupant protections.  In addition, AHERA incorporated the NESHAPS standards for
packaging,   transportation   and   disposal   of   asbestos   waste.   If   the
asbestos-containing material is not damaged, continued inspection and monitoring
by the school is required.

OSHA regulations  establish maximum airborne  asbestos,  airborne lead and heavy
metal   exposure   levels   in   the   workplace   for   employees,    including
asbestos-abatement  and demolition and  dismantling  workers.  Such  regulations
require  workplace air  monitoring to ensure  compliance  with maximum  exposure
levels and prescribe  engineering  controls and workplace  practices intended to
reduce  airborne  asbestos,  lead and heavy  metal  exposure  in the  workplace.
Included in the workplace practice provisions is the required use of appropriate
respirators,   protective   clothing   and   decontamination   units   for   the
asbestos-abatement  and  demolition  and  dismantling  worker exposed to certain
levels of asbestos or lead and heavy metals.

DOT  regulations  cover the  management  of the  transportation  of asbestos and
demolition  debris and establish certain  certification,  labeling and packaging
requirements.  In  addition,  under the  Comprehensive  Environmental  Response,
Compensation and Liability Act, also known as the Superfund Act, companies which
arrange for the  transportation  and disposal of asbestos waste materials may be
exposed to liability  relating to the  disposal of such  material at sites which
are or may be designated as national priority list sites.

Each of the states in which the Company currently  operates has adopted laws and
regulations governing the conduct of asbestos-abatement  contractors.  Such laws
and   regulations    generally    require   1)   training   and   licensing   of
asbestos-abatement   contractors  and  their  workers,   2)  notice  before  the
commencement of any  asbestos-abatement  project and 3) standards of performance
for  the  asbestos   removal  process.   In  addition,   some  states  authorize
municipalities to adopt more stringent standards.

                                  Page 8 of 54
<PAGE>

The Company  believes  that  additional  state and local  authorities  may adopt
similar laws and  regulations  and that existing laws and regulations may become
more restrictive.  The regulations  concerning  asbestos-abatement are primarily
promulgated on the state and local level.  Although subject to change,  OSHA has
adapted the final  regulations as law. Many of the  regulations  are complex and
frequently  amended and,  therefore,  the Company is unable to predict  what, if
any, impact such regulations will have on its results of operations or financial
condition.  As a  result  of the  extensive  regulation,  the  Company  and  its
subsidiaries  are,  have been and may in the  future  be,  subject to audits and
investigations by federal, state and local governmental agencies. Because of the
changing  regulatory  environment,  there can be no assurance that violations by
the  Company of  federal,  state or local  laws and  regulations  applicable  to
asbestos  removal  will not occur in the future or that changes in such laws and
regulations would not have an adverse effect on the Company's business.  Failure
to comply with regulations  could result in the imposition of civil and criminal
penalties,  any of which could have a material adverse effect upon the Company's
business.

Licensing Requirements

Most  states in which the  Company  operates  require  that the  Company  obtain
licenses  to  provide  asbestos-abatement   services,   deleading  services  and
demolition/dismantling  services. These licenses are generally subject to annual
renewal. The Company has been able to obtain the renewal of its licenses without
unusual  difficulty or delay,  and the Company believes that it is in compliance
with all  current  state  licensing  requirements  in states  where the  Company
intends to conduct business.  Furthermore, the Company is in compliance in those
states that have adopted regulations requiring state-specific training,  testing
and  licensing  of  employees  engaging  in  asbestos-abatement,   deleading  or
demolition/dismantling activities.

Backlog

The majority of the Company's  asbestos-abatement and demolition and dismantling
services  are  contracted  on a  fixed-price  basis,  while  the  remainder  are
contracted  either on a time and materials or a unit-price  basis.  The unearned
services  portion  of  the  Company's   asbestos-abatement  and  demolition  and
dismantling   services   contracts   and  unfilled   orders  was   approximately
$33,902,000,  $38,875,000  and  $47,466,000 at December 31, 1997,  1996 and 1995
respectively. Up to $2,887,000 of the Company's backlog at December 31, 1997 may
not be earned  during 1998.  The remaining  amount of the  Company's  backlog at
December 31, 1997 is expected to be completed in the current calendar year.

                                  Page 9 of 54

<PAGE>
Item 2.  Properties

The Company currently owns and leases property to support its operations.  These
facilities  provide  space for  sales and  marketing  functions  and  operations
management and support.  The Company  believes that its existing  facilities are
adequate to meet current requirements and that suitable additional or substitute
space will be available as needed to accommodate any expansion of operations and
for additional offices. The following table summarizes the Company's properties:


  -----------------------------------------------------------------------------
                                                         Square
       Location            Principal Use      Acreage   Footage     Own/Lease
  -----------------------------------------------------------------------------
  Methuen, MA         Corporate Headquarters     9       40,000        Own
                      Offices and Warehousing
  -----------------------------------------------------------------------------
  Lombard, IL         Offices and Warehousing    --      30,000       Lease
  -----------------------------------------------------------------------------
  Houston, TX         Offices and Warehousing    --      24,240       Lease
  -----------------------------------------------------------------------------
  Thorofare, NJ       Offices and Warehousing    --      17,570       Lease
  -----------------------------------------------------------------------------
  Oakland, CA         Offices and Warehousing    --      11,100       Lease
  -----------------------------------------------------------------------------
  San Antonio, FL     Offices and Warehousing    --      10,800       Lease
  -----------------------------------------------------------------------------
  Arden Hills, MN     Offices and Warehousing    --       9,654       Lease
  -----------------------------------------------------------------------------
  Cincinnati, OH      Offices and Warehousing    --       7,400       Lease
  -----------------------------------------------------------------------------
  Orange, CA          Offices and Warehousing    --       5,530       Lease
  -----------------------------------------------------------------------------
  Salisbury, NC       Offices                    --       5,400       Lease
  -----------------------------------------------------------------------------
  Winfield, WV        Offices and Warehousing    --       5,000       Lease
  -----------------------------------------------------------------------------
  Salem, NH           Offices and Warehousing    --       3,850       Lease
  -----------------------------------------------------------------------------
  Wausau, WI          Offices and Warehousing    --       2,400       Lease
  -----------------------------------------------------------------------------
  Baton Rouge, LA     Offices and Warehousing    --       1,250       Lease
  -----------------------------------------------------------------------------
  Orange, TX          Offices                    --         *         Lease
  -----------------------------------------------------------------------------
  Dallas, TX          Offices                    --         *         Lease
  -----------------------------------------------------------------------------


* These facilities consist of less than 1,000 square feet.

In 1997,  the Company  wrote down the  carrying  value of the Methuen  property,
which no longer fits in its strategic  plans and is currently held for sale. The
write down of the property amounted to $2,537,000 during 1997.

The Company's  aggregate  rental  payments for leased office and warehouse space
approximated $815,000 in 1997.

                                 Page 10 of 54

<PAGE>


Item 3.  Legal Proceedings

The Company is subject to certain legal proceedings, including those relating to
regulatory  compliance,  in the  ordinary  course  of its  business.  Management
believes that such proceedings are either adequately  covered by insurance or if
uninsured,  will not, in the aggregate,  have a material adverse effect upon the
Company.

Item 4.  Submission of Matters to a Vote of Security Holders

Not applicable.

                                 Page 11 of 54

<PAGE>



Executive Officers of the Registrant

The executive officers of the Company as of March 17, 1998 are listed below:

      Victor J. Barnhart         55     Chairman and Chief Executive Officer
      Darryl G. Schimeck         37     President and Chief Operating Officer
      Efstathios A. Kouninis     36     Vice President of Finance, Corporate
                                        Controller, Treasurer and Secretary

Victor J. Barnhart has been Chairman and Chief Executive  Officer since December
5, 1996.  Prior to joining  the  Company,  Mr.  Barnhart  was the  President  of
Integrated  Environmental  Services - WMX  Technologies  since December 1995 and
President of Rust  Industrial  Services Inc. and Rust Remedial  Services,  Inc.,
subsidiaries of WMX Technologies, since November 1990.

Darryl G. Schimeck has been President and Chief Operating Officer since December
5,  1996  and  served  as  President  of  National  Surface  Cleaning,  Inc.,  a
wholly-owned  subsidiary of the Company, since July 10, 1995 and Vice President,
Sales and  Marketing,  since February  1995.  Prior to joining the Company,  Mr.
Schimeck served as Senior Vice President of Growth Environmental  Services, Inc.
from August 1994 through January 1995. Prior to that, Mr. Schimeck was President
of Rust  Scaffold  Rental and  Erection,  Inc. from July 1993 through July 1994.
From  September  1992 to July 1993 he was Vice  President - Northern  Region for
Brand Scaffold Services, Inc.

Efstathios A. Kouninis has been Vice President of Finance, Corporate Controller,
Treasurer and Secretary since December 11, 1997, Corporate Controller, Treasurer
and Secretary since August 7, 1997,  Corporate  Controller  since February 1996,
and Director of Tax and Internal Audit since  September  1994.  Prior to joining
the  Company,   Mr.  Kouninis  served  in  accounting  positions  of  increasing
responsibility for Wheelabrator Technologies Inc.
since November 1991.

                                 Page 12 of 54


<PAGE>


Part II


Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters

The  Common  Stock is  admitted  for  trading  on the  National  Association  of
Securities   Dealers  Automatic   Quotation   System,   National  Market  System
("NASDAQ").  As of March 17, 1998 there were approximately 679 holders of record
of the Common Stock.  During  December 1997 and 1996,  the Company  declared and
paid a cash  dividend  of $0.15  per  share of  common  stock.  Pursuant  to the
Revolving  Credit  Facility,  as amended,  the Company  must comply with certain
financial covenants for the declaration and payment of any cash dividends. While
the Company's Board of Directors has not established a policy concerning payment
of regular dividends, it intends to review annually the feasibility of declaring
additional  dividends  depending  upon  the  results  of  operations,  financial
condition  and cash needs of the  Company.  The  Common  Stock does not have any
preemptive rights.

The table below sets forth, for the calendar  quarters  indicated,  the reported
high and low  closing  sales  prices of the Common  Stock as  reported by NASDAQ
based on published financial sources:


                                      1997                       1996
                                ---------------            -----------------
Quarter Ended                    High      Low              High       Low
----------------------------------------------------------------------------

     December 31.............  $2 7/8    $1 3/4           $ 2 1/2    $ 1 3/8
     September 30............   3         1 15/16           2          1 1/2
     June 30.................   2 1/2     1 1/2             2 1/2      1 1/4
     March 31................   3 7/32    2 3/8             2 1/2      1 1/8


                                 Page 13 of 54





<PAGE>
<TABLE>


Item 6. Selected Financial Data


(a) The Consolidated  Five year Summary of Results of Operations for each of the
last five years ended December 31 is set forth below:
<CAPTION>

 (In thousands, except per-share data)
 Years Ended December 31,                       1997       1996       1995       1994    1993 (1)
--------------------------------------------  --------   --------   --------   --------  --------
<S>                                           <C>        <C>        <C>        <C>       <C>
 Revenue...................................   $115,955   $129,043   $124,529   $132,218  $110,254
 Gross profit..............................     11,027     22,589     19,447     21,716    20,901
 Write-down of assets held for sale........      2,843        830          -          -         -

 Operating (loss)income....................     (7,785)     3,531      1,859      5,101     6,356

    Net (loss)income ......................   $ (4,994)  $  1,861   $    715   $  2,566  $  3,373

 Basic and diluted earnings per share (2)..   $  (0.50)  $   0.19   $  $0.07   $   0.26  $   0.40


 Weighted average number of common shares
outstanding................................      9,971      9,971      9,971      9,971     8,504

Cash dividends declared per common share (3)  $   0.15   $   0.15    $  0.15   $   0.15   $  1.20
</TABLE>
<TABLE>

  (b) The consolidated five year summary of financial position as of December 31
is set forth below:
<CAPTION>

December 31,                                    1997       1996       1995       1994     1993
--------------------------------------------  --------   --------   --------   --------  -------
                                                              (In Thousands)
<S>                                          <C>          <C>        <C>       <C>       <C>
Total assets...............................  $ 74,489     $85,560    $87,161   $88,287   $93,569
Assets held for sale.......................     1,653         475          -         -         -
Non current liabilities, including current
portion of long-term debt (4)..............     5,253       7,610      7,421    10,588    13,775
</TABLE>

                                 Page 14 of 54



<PAGE>


(1)   The  statement  of  operations  data for the year ended  December 31, 1993
      includes the results of operations  from May 4, 1993 (date of acquisition)
      of the Division.

(2)   In 1997,  the Financial  Accounting  Standards  Board issued SFAS No. 128,
      "Earnings  Per Share." SFAS 128 replaced  the  calculation  of primary and
      fully  diluted  earnings  per share with basic and  diluted  earnings  per
      share.  Basic earnings per share amounts for 1997,  1996,  1995,  1994 and
      1993  have  been   computed   by  dividing   net  (loss)   income  by  the
      weighted-average number of common shares outstanding during the respective
      periods.  Diluted  earnings per share,  after  applying the treasury stock
      method,  approximates basic earnings per share and, accordingly,  have not
      been separately presented.

(3)   In December 1997,  1996,  1995 and 1994,  the Company  declared and paid a
      cash  dividend  of $0.15 per common  share and $1.20 per  common  share in
      December 1993.

(4)   On May 4, 1993 all outstanding  amounts due to OHM were repaid with term
      loan borrowings  under a senior  revolving  credit facility with banks. On
      March 21,  1996 the  amount due to the banks  under the  senior  revolving
      credit facility was repaid in full.

                                 Page 15 of 54


<PAGE>


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations

                                 1997 vs. 1996

Revenue. The Company's consolidated revenue for the year ended December 31, 1997
decreased 10.1% to $115,955,000  from  $129,043,000 for the same period in 1996.
This  decrease was due to a $6,491,000  decrease in  asbestos-abatement  related
revenue and a $6,597,000 decrease in demolition related revenue. The decrease in
revenue  was  due  to  competitive  pricing  pressures  in the  bidding  process
resulting in the  Company's  decreased  success in securing  new work.  The 1997
results are not indicative of results to be expected for any upcoming year.

Gross Profit. Gross profit decreased to $11,027,000 in 1997 from $22,589,000 for
the same  period in 1996.  The  decrease  in the gross  profit was the result of
lower revenue,  losses on certain  projects,  the write down adjustment of scrap
process equipment and an increased  provision for general liability loss related
to the  unfavorable  resolution  of one  significant  claim.  Gross  profit as a
percentage of revenue decreased to 9.5% in 1997 from 17.5% in 1996.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  ("SG&A") expenses for the year ended December 31, 1997 decreased
$675,000 or 4.1% to $15,756,000  from  $16,431,000  for the same period in 1996.
The  decrease in SG&A costs was the result of a decrease  in salaries  and legal
expenses,  partially offset by increases in the bad debt reserves and consulting
services  associated  with the new software  implementation.  SG&A expenses as a
percentage  of revenue for 1997  increased  to 14% from 13% in 1996 due to lower
revenue.

Write Down of Assets Held for Sale.  The Company  wrote-down to market the value
of certain real property and equipment  that no longer fit its strategic  plans.
The  write-down  of the  properties  and equipment  amounted to  $2,843,000  and
$830,000 in 1997 and 1996, respectively.

Other  Operating  Expenses.  Olshan  Demolishing  Management,   Inc.  (ODMI)  is
required  to share with Rust any  operating  profits  or  operating  losses,  in
exchange for the right to operate Olshan  Demolishing  Company (ODC).  For 1997,
the amount due from Rust was  $887,000,  compared  to  $700,000  due to Rust for
the same period in 1996.

Other (Income) Expenses.  Other Income was $212,000 in 1997 compared to $195,000
in 1996. This  difference is mainly due to the  elimination of interest  expense
associated with the Company's  long-term debt, which was repaid in full on March
21, 1996, partially offset by losses on sales of certain assets.

Net (Loss) Income.  Net income decreased 368% to a net loss of ($4,994,000) from
net income of $1,861,000 in 1996. The decrease in net income is  attributable to
lower revenue,  losses on certain  projects,  the write down adjustment of scrap
process  equipment and the recognition of non-recurring  charges.  These charges
amounted to $3,204,000 after tax and were related to the designation for sale of
certain real estate,  the sale of idle equipment and an increase in the reserves
for  self-insurance  claims and  taxes.  Net (loss)  income as a  percentage  of
revenue decreased to (4.3%) from 1.4% in 1996.


                                 1996 vs. 1995

Revenue. The Company's consolidated revenue for the year ended December 31, 1996
increased 3.6% to $129,043,000  from  $124,529,000  for the same period in 1995.
This increase was due to the inclusion in 1996 of a full year of ODMI  generated
revenue of  $21,421,000  compared  with  $7,589,000  for the four  months  ended
December 31, 1995 and the $9,895,000 decline in asbestos-abatement  revenue. The
decline  in  asbestos-abatement  revenue  in 1996 was  primarily  due to  normal
fluctuations in the volume of abatement work available, as well as the Company's
increased selectivity in accepting profitable projects.

Gross Profit. Gross profit increased to $22,589,000 in 1996 from $19,447,000 for
the same  period  in  1995.  The  increase  in the  gross  profit  is  primarily
attributable to a reduction of insurance claims and their respective  settlement
reserves.  Gross  profit as a percentage  of revenue  increased to 17.5% in 1996
from 15.6% in 1995.

                                 Page 16 of 54

<PAGE>

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  ("SG&A") expenses for the year ended December 31, 1996 increased
$78,000 or less than 1% to $16,431,000  from  $16,353,000 for the same period in
1995.  SG&A  expenses  as a  percentage  of revenue  for 1996 and 1995  remained
constant  at 13%.  In 1996  ODMI  incurred  a full  year  of  SG&A  expenses  of
$1,814,000  compared with four months in 1995 of $714,000.  The increase of ODMI
expenses for 1996 was offset by a general  reduction in SG&A expenses  resulting
from the Company's continued cost containment efforts.

Write Down of Assets Held for Sale. In the fourth  quarter of 1996,  the Company
wrote-down  to market the value of certain real property that no longer fits its
strategic plans. The write-down of the property amounted to $830,000.

Other Operating Expenses. Other operating expenses in 1996 increased to $700,000
from  $169,000 in 1995 due to a full year of ODMI  activities  in 1996.  ODMI is
required  to pay Rust an  annual  fee  based on  operating  profit,  if any,  in
exchange for the right to operate ODC.

Other (Income) Expenses. In 1996 other income was $195,000, compared to $191,000
of  expense  in 1995.  This  difference  in other  (income)  expense is due to a
reduction in interest  expense  associated  with the Company's  long-term  debt,
which was repaid in full on March 21, 1996.

Net Income.  Net income  increased  160% to  $1,861,000 in 1996 from $715,000 in
1995. Net income as a percentage of revenue  increased to 1.4% in 1996 from 0.6%
in 1995.  The increase in net income is  attributable  to higher revenue and the
reduction of interest expense and insurance settlement reserves.

Liquidity and Capital Resources

Working capital at December 31, 1997 was $16,826,000  compared to $21,154,000 at
December 31, 1996.  The current  ratio was 1.93/1  compared to 2.1/1 at December
31, 1996.  Cash  provided by operating  activities  was  $7,155,000  compared to
$6,752,000  for 1996.  The increase in cash  provided by operations is primarily
due to increased accounts receivable collections, and lower operating activity.

During 1997,  cash of $929,000 was used for purchases of property and equipment,
of  which  $306,000  was  used  towards  the   implementation  of  new  software
technology.  During 1998, the Company estimates that it will spend an additional
$200,000 to complete the  implementation of this software  package.  The Company
believes that these  expenditures will adequately  address any year 2000 issues.
Pursuant to the Olshan Business Operating  Agreement,  dated April 20, 1995, the
Company has received to date a $4,520,000  interest-free  working  capital loan.
The loan is payable  according to the provisions  contained in the Agreement and
is expected to remain outstanding for the full ten year term of the Agreement.

The Company  believes that its cash flows from  operations  and funds  available
under the existing senior revolving  credit  facilities (see Note 6 of the notes
to the consolidated  financial statements included elsewhere herein), as amended
on December 22, 1997,  will be sufficient  throughout  the next twelve months to
finance its working  capital needs and planned capital  expenditures.  While the
Company's Board of Directors has not established a policy concerning  payment of
regular  dividends,  it intends to review  annually the feasibility of declaring
additional  dividends  depending  upon  the  results  of  operations,  financial
condition and cash needs of the Company.

The nature and scope of the  Company's  business  bring it into regular  contact
with the general  public and a variety of businesses  and  government  agencies.
Such  activities  inherently  subject the Company to the hazards of  litigation,
which are defended in the normal  course of  business.  While the outcome of all
claims is not clearly determinable at the present time,  management has recorded
an estimate of any losses it expects to incur in connection  with the resolution
of the claims at December  31, 1997 of  $6,403,000  and at December  31, 1996 of
$5,410,000.

Inflation

Historically, inflation has not had a significant impact upon the Company or its
cost of operations.

                                 Page 17 of 54

<PAGE>


Item 8.  Financial Statements and Supplementary Data

The consolidated  financial statements and supplementary  consolidated quarterly
financial data of the Company and its  subsidiaries for the years ended December
31, 1997, 1996 and 1995 are set forth on pages 19 through 22.

                                 Page 18 of 54

<PAGE>


                                    NSC CORPORATION
                              CONSOLIDATED BALANCE SHEETS
                    (In Thousands, Except Share and Per-Share Data)


                                                              December 31,
                                                         ----------------------
                                                           1997         1996
                                                         ---------    ---------
       ASSETS
       Current assets:
         Cash and cash equivalents ...............          $8,781       $3,975
         Accounts receivable, net.................          20,590       26,859
         Costs and estimated earnings on contracts
           in process in excess of billings.......           1,969        7,739
      Inventories.................................           1,157          878
         Prepaid expenses and other current assets           1,565        1,672
         Deferred income taxes....................             844          335
                                                         ---------    ---------
                                                            34,906       41,458

       Property and equipment,  net...............           2,755        7,352

       Other noncurrent assets:
         Assets held for sale.....................           1,653          475
         Goodwill, net of accumulated amortization of
         $7,984 and $6,884 in 1997 and 1996,respectively    35,175       36,275
                                                         ---------    ---------
                                                            36,828       36,750
                                                         ---------    ---------
         Total assets                                    $  74,489    $  85,560
                                                         =========    =========

       LIABILITIES AND STOCKHOLDERS' EQUITY
       Current liabilities:
         Accounts payable..........................          4,942        3,448
         Billings in excess of costs and estimated
           earnings on contracts in process........          3,274        5,237
         Accrued compensation and related costs....          1,760        3,898
         Federal, state and local taxes............            273        1,222
         Other accrued liabilities.................          1,428        1,089
         Reserve for self insurance claims and other
         contingencies.............................          6,403        5,410
                                                         ---------    ---------
                                                            18,080       20,304
       Noncurrent liabilities:
         Payable to affiliate......................          4,520        4,520
         Deferred income taxes.....................            733        3,090

       Stockholders' equity:
         Preferred stock $.01 par value, 10,000,000
         shares authorized, none issued and
         outstanding...............................              -            -
         Common stock $.01 par value, 20,000,000 shares
         authorized, 9,971,175 shares issued and
         outstanding in both 1997 and 1996.........             100         100
         Additional paid-in capital................          56,079      56,079
         Retained earnings (accumulated deficit)...          (5,023)      1,467
                                                          ---------   ---------
                                                             51,156      57,646
                                                          ---------   ---------
         Total liabilities and stockholders' equity       $  74,489   $  85,560
                                                          =========   =========

       The accompanying  notes are an integral part of these consolidated
       financial statements.

                                 Page 19 of 54
<PAGE>
<TABLE>

                                   NSC CORPORATION
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                         (In Thousands, Except Per-Share Data)

<CAPTION>


                                                          Years Ended December 31,
                                                     ----------------------------------
                                                      1997         1996          1995
                                                     --------     --------     --------
<S>                                                 <C>          <C>          <C>
Revenue......................................       $115,955     $129,043     $124,529
 Cost of services............................        104,928      106,454      105,082
                                                     --------     --------     --------
    Gross profit.............................         11,027       22,589       19,447
 Selling, general and administrative expenses         15,756       16,431       16,353
 Write down of assets held for sale..........          2,843          830            -
 Other operating (income)expense.............           (887)         700          169
 Goodwill amortization.......................          1,100        1,097        1,066
                                                     --------     --------     --------
    Operating (loss) income..................         (7,785)       3,531        1,859
                                                     --------     --------     --------

 Other:
   Interest expense..........................              -          112          587
   Other income..............................           (212)        (307)        (396)
                                                     --------     --------     --------
                                                        (212)        (195)         191
                                                     --------     --------     --------
    (Loss) income before income taxes........         (7,573)       3,726        1,668
 Income tax (benefit)expense.................         (2,579)       1,865          953
                                                     --------     --------     --------
    Net (loss) income                                $(4,994)     $ 1,861      $   715
                                                     ========     ========     ========

 Basic and diluted earnings per share........        $ (0.50)     $  0.19      $  0.07
                                                     ========     ========     ========

 Weighted-average number of common shares
 outstanding.................................          9,971        9,971        9,971
                                                     ========     ========     ========
</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                 Page 20 of 54

<PAGE>

<TABLE>


                                     NSC CORPORATION
                CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                          (In Thousands, Except Per-Share Data)
<CAPTION>

                                     Common Stock
                                  -------------------
                                  Number               Additional              Total
                                    of                 Paid-in    Retained  Stockholders'
                                  Shares     Amount    Capital    Earnings    Equity
                                  --------  ---------  ---------  ---------  ----------

<S>                    <C>        <C>       <C>          <C>         <C>     <C>
    Balance at January 1, 1995    $ 9,971   $    100   $ 56,079   $  1,883   $  58,062
                                  --------  ---------  ---------  ---------  ----------
    Net income                          -          -          -        715         715
    Cash dividend declared
    ($0.15 per share)                   -          -          -     (1,496)     (1,496)
                                  --------  ---------  ---------  ---------  ----------
    Balance at December 31, 1995  $ 9,971   $    100   $ 56,079   $  1,102   $  57,281
                                  --------  ---------  ---------  ---------  ----------
    Net income                          -          -          -      1,861       1,861
    Cash dividend declared
    ($0.15 per share)                   -          -          -     (1,496)     (1,496)
                                  --------  ---------  ---------  ---------  ----------
    Balance at December 31, 1996  $ 9,971   $    100   $ 56,079   $  1,467   $  57,646
                                  --------  ---------  ---------  ---------  ----------
    Net loss                            -          -          -     (4,994)     (4,994)
    Cash dividend declared
    ($0.15 per share)                   -          -          -     (1,496)     (1,496)
                                  --------  ---------  ---------  ---------  ----------
    Balance at December 31, 1997  $ 9,971   $    100   $ 56,079   $(5,023)   $  51,156
                                  ========  =========  =========  =========  ==========
</TABLE>

    The accompanying notes are an integral part of these consolidated  financial
    statements.

                                 Page 21 of 54
<PAGE>

<TABLE>


                                   NSC CORPORATION
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In Thousands)

<CAPTION>

                                                           Years Ended December 31,
                                                        ------------------------------
                                                          1997      1996       1995
                                                        ---------  --------  ---------
Cash flows from operating activities:
<S>                                                     <C>        <C>        <C>
   Net (loss)income.................................    $ (4,994)  $ 1,861    $   715
   Adjustments  to  reconcile  net  income  to net
   cash  provided  by  operating activities:
      Depreciation..................................       1,284     1,716      1,830
      Goodwill amortization.........................       1,100     1,097      1,066
      Deferred income taxes.........................      (2,866)     (996)    (1,034)
      Loss (gain) on disposition of property and
      equipment.....................................         145       194        (36)
      Loss on impairement of assets held for sale...       2,843       830          -
   Changes in assets and liabilities, net of effects
   of acquired business:
   Accounts receivable, net.........................       6,269       266       (984)
   Costs and estimated earnings on contracts
    in process in excess of billings................       5,770       155     (2,283)
   Other current assets.............................        (172)      235        487
   Accounts payable.................................       1,494       385       (176)
   Billings in excess of costs and estimated
    earnings on contracts in process................      (1,963)    1,305     (1,559)
   Other current liabilities........................      (1,755)     (296)     4,061
   Other............................................           -         -         38
                                                        ---------  --------  ---------
      Net cash provided by operating activities            7,155     6,752      2,125
                                                        ---------  --------  ---------
Cash flows from investing activities:
   Purchases of property and equipment..............        (929)   (2,024)      (759)
   Proceeds from sale of property and equipment.....          76       268        144
   Acquisition of other assets......................           -      (718)         -
                                                        ---------  --------  ---------
      Net cash used in investing activities                 (853)   (2,474)      (615)
                                                        ---------  --------  ---------
Cash flows from financing activities:
   Payments on long-term debt.......................           -    (5,850)    (4,738)
   Proceeds of loan from affiliate..................           -     2,949          -
   Cash dividend paid...............................      (1,496)   (1,496)    (1,496)
                                                        ---------  --------  ---------
      Net cash used in financing activities               (1,496)   (4,397)    (6,234)
                                                        ---------  --------  ---------
      Net increase (decrease) in cash and cash
      equivalents...................................       4,806      (119)    (4,724)
   Cash and cash equivalents at beginning of periods.      3,975     4,094      8,818
                                                        ---------  --------  ---------
   Cash and cash equivalents at end of periods......    $  8,781   $ 3,975    $ 4,094
                                                        =========  ========  =========
</TABLE>

   The accompanying notes are an integral part of these  consolidated  financial
   statements.

                                 Page 22 of 54


<PAGE>


NSC Corporation
Notes to Consolidated Financial Statements
December 31, 1997


Note 1 - Organization and Summary of Significant Accounting Policies

Organization   and  Basis  of  Presentation.   The   accompanying   consolidated
financial  statements  include the accounts of NSC  Corporation  (the "Company")
and its wholly-owned  subsidiaries,  National Surface Cleaning,  Inc.  ("NSCI"),
National  Service   Cleaning  Corp.   ("NSCC"),   NSC  Energy   Services,   Inc.
("NSCESI"),  NSC Specialty  Coatings,  Inc.  ("NSCSCI")  and since  September 4,
1995   Olshan   Demolishing   Management,   Inc.   ("ODMI")   -  see  Note  9  -
"Transactions  with  Affiliates".   All  intercompany   transactions  have  been
eliminated in  consolidation.  The Company is a Delaware  corporation  and was a
seventy  percent-owned  subsidiary  of OHM  Corporation  ("OHM")  through May 3,
1993.  On May 4, 1993,  pursuant  to a  Purchase  Agreement  among the  Company,
Industrial,  OHM, The Brand  Companies,  Inc.  ("Brand")  and Waste  Management,
Inc.  ("WMX"),  the Company  acquired the  asbestos-abatement  division of Brand
(the  "Division")  in exchange  for  4,010,000  shares of the  Company's  common
stock and all of the common  stock of  Industrial.  As of December  31, 1997 and
1996, OHM and Rust  International  Inc. (a successor  company to Brand and a WMX
subsidiary  hereinafter  referred to as "Rust") each owned  approximately  forty
percent of the Company's common stock.

Use of Estimates.  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying  notes.  Actual results may differ from those  estimates,  and such
differences may or may not be material.

Revenue and Cost  Recognition.  The Company derives its revenues  primarily from
providing  asbestos-abatement,  demolition and  dismantling  and other specialty
contracting  services  under  fixed-price,  time and  materials  and unit  price
contracts. In addition, certain revenue is derived from the sale of scrap metals
and processing  equipment removed from demolition sites. The Company  recognizes
revenues and related income from its fixed- and unit-price  contracts in process
using the percentage-of-completion  method of accounting. The Company determines
the  percentage-of-completion  of its contracts by comparing  costs  incurred to
date to total estimated costs.  Revenues from time and  material-type  contracts
are  recorded  based on costs  incurred.  Provisions  for  estimated  losses  on
uncompleted  contracts  are  made  in  the  period  in  which  such  losses  are
determined.  Revenues  are  recognized  for amounts  under  pending  claims when
management  believes it is probable the claim will result in additional contract
revenues and the amount can be reliably  estimated.  Contract  costs include all
direct  labor,  material,  per diem,  subcontract  and other direct and indirect
costs related to the contract performance.  Selling,  general and administrative
expenses are charged to expense as  incurred.  The asset,  "costs and  estimated
earnings on contracts  in process in excess of  billings,"  represents  revenues
recognized in excess of amounts billed. The liability, "billings on contracts in
process  in excess of costs and  estimated  earnings,"  represents  billings  in
excess of revenues recognized.

Direct  Subcontract  Costs.  The Company  incurs a substantial  amount of direct
subcontract  costs which are passed  through to its clients.  These costs result
from  the use of  subcontractors  on  projects  for  labor,  transportation  and
disposal of asbestos materials,  analytical and restoration services,  and other
removal-related   services.  The  direct  subcontract  costs  were  $30,319,000,
$25,240,000,  and  $24,426,000 for 1997,  1996 and 1995,  respectively,  and are
included in Costs of Services in the  Consolidated  Statement of Operations  for
each year.

Inventories.  Inventories  consist  primarily  of  operating  supplies  and  are
stated at the lower of cost or market.  Cost is  determined  using the first-in,
first-out (FIFO) method.

Property and Equipment.  Property and equipment are stated at cost. Depreciation
is provided  over the estimated  useful lives (3 to 30 years) of the  respective
assets using the straight-line method.

Goodwill.  Goodwill is amortized,  generally on a  straight-line  basis,  over a
40-year  life and is reviewed on an ongoing  basis by the  Company's  management
based on several  factors,  including the Company's  projection of  undiscounted
operating  cash  flows.  If an  impairment  of the  carrying  value  were  to be
indicated  by this  review,  the  Company  would  adjust the  carrying  value of
goodwill to its estimated fair value.

                                 Page 23 of 54

<PAGE>

Long-Lived  Assets.  The  adoption  by the  Company  in 1996 of  SFAS  No.  121,
"Accounting  for the impairment of Long-Lived  Assets to be Disposed Of" did not
materially affect the Company's consolidated financial statements.  In the event
that  facts and  circumstances  indicate  that any of the  Company's  long-lived
assets may be impaired,  an evaluation of recoverability would be performed.  If
after such evaluation it is determined  that an asset is impaired,  the carrying
value of the  asset would be reduced to fair value.   SFAS No. 121 requires that
assets  held for sale or disposal are carried at the lower of carrying amount or
fair value less costs to sell,  and prohibits  depreciation from  being recorded
during the periods in which the asset is being held for sale or disposal.

Income Taxes. The Company provides for income taxes based upon earnings reported
for  financial  statement  purposes.  Deferred  tax assets and  liabilities  are
determined based on temporary  differences  between the financial  reporting and
tax base of assets and liabilities.

Stock Compensation.  Effective January 1, 1996 the Company adopted SFAS No. 123,
"Accounting for Stock-Based  Compensation." SFAS No.123 requires the recognition
of, or disclosure of, compensation  expense for grants of stock options or other
equity  instruments  issued to employees  based on the fair value at the date of
grant.  As  permitted  by SFAS No.  123,  the  Company  elected  the  disclosure
requirements  instead of recognition of compensation  expense and therefore will
continue to apply existing accounting rules.

Cash  Equivalents and  Cash Flow  Information.  The Company considers all highly
liquid  investments  having a maturity of three months or less when purchased to
be cash equivalents. Cash equivalents are stated at cost which approximates fair
market value.   Cash  paid for  income  taxes  was $1,211,000,  $2,007,000,  and
$1,702,000 for 1997, 1996, and 1995, respectively. No interest was paid in 1997.
Cash  paid  for  interest  was   $112,000,  and  $587,000  for  1996  and  1995,
respectively.  The effects of the Company's cash and non-cash  transactions with
ODMI are described in Note 9, "Transactions with Affiliates."

Earnings Per Share.  In 1997, the Financial  Accounting  Standards  Board issued
SFAS No. 128, " Earnings  Per  Share."  SFAS 128  replaced  the  calculation  of
primary and fully diluted earnings per share with basic and diluted earnings per
share.  Basic  earnings  per share  amounts  for  1997,  1996 and 1995 have been
computed by dividing net (loss) income by the weighted-average  number of common
shares  outstanding during the respective  periods.  Diluted earnings per share,
after applying the treasury stock method,  approximates basic earnings per share
and, accordingly, have not been separately presented.

Reclassifications.  Certain  reclassifications  have  been  made to  prior  year
financial statements to conform with the current year presentation.

Note 2 - Accounts Receivable

Accounts receivable are summarized as follows:

                                                              December 31,
                                                          -------------------
                                                            1997       1996
                                                          --------   --------
                                                             (In thousands)

      Accounts billed and due currently............       $ 18,066    $24,861
      Retained.....................................          3,235      2,555
                                                          --------   --------
                                                            21,301     27,416
      Allowance for uncollectible accounts.........           (711)      (557)
                                                          --------   --------
                                                           $20,590    $26,859
                                                          ========   ========


The  retained  receivables  at December  31, 1997 are  expected to be  collected
within one year.

                                 Page 24 of 54


<PAGE>


Note 3 - Properties and Equipment

Properties and equipment were as follows:





                                                           December 31,
                                                        -----------------
                                                         1997      1996
                                                        -------   -------
                                                          (In thousands)

      Land .....................................        $    -    $  767
      Buildings and improvements ...............           355     4,311
      Machinery and equipment ..................         6,527     9,868
      Projects in progress .....................           641       558
                                                        -------   -------
                                                         7,523    15,504
      Accumulated depreciation..................        (4,768)   (8,152)
                                                        -------   -------
      Properties and equipment, net ............        $2,755    $7,352
                                                        =======   =======


In 1997, the Company wrote-down to market the carrying value of its Methuen,  MA
property,  which no longer fits in its strategic plans and is currently held for
sale.  In 1996,  the  properties  of  Hammond,  IN and  Windsor,  CT,  which was
subsequently  sold,  were  written  down to  market.  The  write-down  of  these
properties  amounted to $2,712,000 in 1997 and $830,000 in 1996.  Also, in 1997,
the Company  wrote down  equipment  and  recognized a loss of $131,000.  Cash of
$306,000  and  $769,000  was used  towards the  implementation  of new  software
technology in 1997 and 1996  respectively.  The capitalized  portion of software
expenditures  is included in projects in progress on the Company's  consolidated
balance sheet.



Note 4 - Costs and Estimated Earnings on Contracts in Process

The consolidated balance sheets include the following amounts:

                                                            December 31,
                                                        --------------------
                                                           1997      1996
                                                        ---------   --------
                                                           (In thousands)

      Costs incurred on contracts in process........    $104,928    $106,327
      Estimated earnings............................      13,603      18,427
                                                        --------    --------
                                                         118,531     124,754
      Less billing to date..........................     119,836     122,252
                                                        --------    --------
                                                        $ (1,305)   $  2,502
                                                        ========    ========
      Costs and estimated earnings on contracts in
         process in excess of billings..............    $  1,969    $  7,739
      Billings on contracts in process in excess of
         costs and estimated earnings...............      (3,274)     (5,237)
                                                        --------    --------
                                                        $ (1,305)   $  2,502
                                                        ========    ========

Costs and  estimated  earnings  on  contracts  in process in excess of  billings
included  reserves for contract revenue  adjustments of $363,000 and $152,000 at
December 31, 1997 and 1996,  respectively.  The Company  recognizes revenue from
its fixed and unit price contracts in process using the percentage of completion
method of accounting,  which  requires the use of estimates.  Such estimates are
subject to changes  throughout  the  duration  of the  contract,  as a result of
factors such as technical problems, disputes, weather, delays caused by external
sources and fluctuations in the prices of materials and scrap metals.

                                 Page 25 of 54

<PAGE>


Note 5 - Income Taxes

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's  deferred tax  liabilities  and assets as of December 31, 1997 and
1996 are as follows:

                                                             December 31,
                                                          ------------------
                                                            1997       1996
                                                          -------    -------
                                                           (In thousands)
      Deferred tax assets:
         Accrued liabilities..........................    $ 2,847    $ 2,390
         Allowance for uncollectible accounts ........        285        223
         Assets held for sale.........................      1,281          -
         Book over tax depreciation...................        185          -
                                                          -------    -------
            Total deferred tax assets.................      4,598      2,613
      Deferred tax liabilities:
         Tax over book depreciation...................          -        572
         Goodwill.....................................      3,861      3,698
         Contract revenue recognition.................          -        458
         Prepaid expenses and other assets............        626        641
                                                          -------    -------
            Total deferred tax liabilities............      4,487      5,369
                                                          -------    -------

            Net deferred tax assets (liabilities).....     $  111    $(2,756)
                                                          =======    =======


Significant components of the provision for income tax (benefit) expenses are as
follows:

                                                Years Ended December 31,
                                                -------------------------
                                                 1997     1996     1995
                                                -------  -------  -------
                                                     (In thousands)
      Current:
         Federal............................     $ (45) $ 2,269  $ 1,404
         State..............................       332      367      583
                                                -------  -------  -------
           Total current taxes..............       287    2,636    1,987
                                                -------  -------  -------
      Deferred:
         Federal............................    (2,221)    (825)    (664)
         State..............................      (645)      54     (370)
                                                -------  -------  -------
           Total deferred tax benefit.......    (2,866)    (771)  (1,034)
                                                -------  -------  -------
      Total income tax (benefit) provision..   $(2,579) $ 1,865   $  953
                                                =======  =======  =======


The reasons for  differences  between  income taxes  attributable  to continuing
operations  and the amount  computed by applying the federal  statutory tax rate
(34% is the statutory tax rate for companies  that have less than $10 million of
taxable income) to income from continuing operations before income taxes are:


                                                     Years Ended December 31,
                                                   ----------------------------
                                                         Liability Method
                                                   ----------------------------
                                                     1997      1996      1995
                                                   --------  --------  --------
                                                       (In thousands)

 Federal statutory rate................            $(34.0)%   $ 34.0%   $ 34.0%
 Add (deduct):
  State income taxes, net of federal tax benefit..    (2.7)      7.4       8.2
            Goodwill amortization.................     2.3       4.8      10.9
            Other.................................     0.3       3.9       4.0
                                                   --------  --------  --------
                                                   $(34.1)%  $  50.1%   $ 57.1%
                                                   ========  ========  ========

                                 Page 26 of 54
<PAGE>

Note 6 - Long-Term Debt

On May 9, 1997, and  December  22,  1997, the Company  amended  its May 4,  1993
revolving  credit facility.  Under this agreement,  the Company can borrow up to
$25,000,000 on a revolving basis for a term expiring April 30, 1999. The amended
revolving credit facility contains debt service coverage,  leverage and interest
convenants  and allows for payment of dividends  subject to certain  conditions.
Amounts  outstanding under the facility bear interest of 150 to 225 basis points
above the Eurodollar  rate (the 90 day Eurodollar  rate at December 31, 1997 was
5.8125%) and are secured by  substantially  all of the Company's  assets.  As of
December 31, 1997 the Company had  outstanding  $8,000,000 in letters of credit.
There were no borrowings outstanding under this facility as of December 31, 1997
and December 31, 1996.

Note 7 - Capital Stock

The Company's Certificate of Incorporation  authorizes the Board of Directors to
issue up to 10,000,000 shares of preferred stock,  $0.01 par value,  without any
further vote or action by the stockholders. As of December 31, 1997 no preferred
stock has been issued.

Pursuant to an agreement among the Company,  Rust and OHM dated May 4, 1993 each
of Rust and OHM has the right to demand  registration,  at their own expense, of
all or a portion of the  common  stock of the  Company  held by it. In the event
either Rust or OHM demands such registration,  the other entity has the right to
participate.  This agreement is subject to certain  conditions and  limitations,
including limitations as to the frequency of exercise and Rust's and OHM's right
to participate in other registrations of the Company.


Note 8 - Stock Option Plan

The Company has a stock  option plan (the "1990  Plan")  which  provides for the
granting  of options to acquire  up to 860,000  shares of the  Company's  common
stock.  The options are issuable to directors,  officers and key employees at an
exercise price not less than the fair market value of the Company's common stock
on the date of  grant.  The  stock  options  granted  under  the  1990  Plan are
exercisable in either  cumulative  ratable annual  installments over a four year
period or altogether  three years after the date of grant,  and expire ten years
thereafter.  Shares available for grants of additional stock options,  under the
1990 Plan,  were 48,750,  151,250,  and 656,750 for the years ended December 31,
1997, 1996, and 1995 respectively.

The following tables summarize information about the Company stock options.





                                                         1990 Plan
                                                  -------------------------
                                                    Number    Option Price
                                                      of        Range Per
                                                   Options        Share
                                                  ---------  --------------

      Outstanding at January 1, 1995.........      225,320   $4.00 - $8.50
         Canceled............................     (178,070)   4.00 -  6.00
                                                  ---------
      Outstanding at December 31, 1995.......       47,250    4.00 -  8.50
         Granted.............................      690,000    2.00 -  2.06
         Canceled............................     (184,500)   2.00 -  8.50
                                                  ---------
      Outstanding at December 31, 1996.......      552,750    2.00 -  6.00
         Granted.............................      102,500    2.00 -  2.63
                                                  ---------
      Outstanding at December 31, 1997.......      655,250    2.00 -  6.00
                                                  =========

                                 Page 27 of 54
<PAGE>




                   Number of        Number of
                    Shares           Shares          Remaining
      Option      Outstanding     Exercisable at    Contractual     Option
    Grant Date    at 12/31/97        12/31/97          Life       Price Range
   --------------------------------------------------------------------------

   March 1991         3,000           3,000          3.0 years       $6.00
   May 1991          10,000          10,000          3.2 years       $6.00
   November 1991      1,250           1,250          3.5 years       $4.00
   November 1992      1,000           1,000          4.5 years       $5.75
   May 1993          10,000          10,000          5.2 years       $4.05
   February 1996    207,500          51,785          8.1 years       $2.00
   December 1996    320,000          17,500          8.8 years       $2.06
   February 1997     17,500               0          9.1 years       $2.63
   August 1997       30,000               0          9.6 years       $2.00
   November 1997     55,000               0          9.8 years       $2.38



Effective  January 1, 1996 the Company  adopted  SFAS No. 123,  "Accounting  for
Stock-Based  Compensation."  SFAS  No.  123  requires  the  recognition  of,  or
disclosure of, compensation expenses for grants of stock options or other equity
instruments  issued to  employees  based on the fair value at the date of grant.
Although  SFAS No. 123 requires the  presentation  of pro forma  information  to
reflect the fair value method of accounting  for employee  stock option  grants,
such  information  has not been presented  because the pro forma effects are not
material.  The initial impact on pro forma net income may not be  representative
of  compensation  expense in future periods when the effect of  amortization  of
multiple awards would be reflected in the pro forma calculation.  The fair value
of  these   options  was   estimated   at  the  date  of  the  grant  using  the
"Black-Scholes"   method   prescribed   by   SFAS   No.   123.   The   following
weighted-average  assumptions  were used to  determine  the fair value for 1997:
market price of the Company's  common stock of $2.00 and $2.06, a risk-free rate
of 5% and 6%, an expected dividend yield of 6% and a  weighted-average  expected
life of the option of 5 years.


Note 9 - Transactions with Affiliates

In April 1995,  the Company  entered into an Interim  Management  Agreement  and
Operating  Agreement  (the  "Agreements")  with Rust  under  which the  Company,
through ODMI,  assumed the management of Olshan  Demolishing  Company ("ODC"), a
Rust  subsidiary  specializing in demolition and  dismantling,  primarily in the
industrial  market.  The term of the Operating  Agreement  extends through April
2005,  although the  occurrence  of certain  conditions  or events could trigger
early termination.  Pursuant to the provisions of the Operating Agreement,  Rust
provided the Company with a non-interest  bearing working capital loan,  payable
upon  termination  of the  Operating  Agreement,  with  a  possible  maximum  of
$4,520,000 by  transferring  to the Company  current  assets of  $3,062,000  and
current liabilities of $1,491,000.  In 1996, Rust paid an additional  $2,949,000
to the Company,  raising the outstanding  balance of the working capital loan to
$4,520,000.  The  results  of  operations  of ODMI  are  consolidated  with  the
Company's  results  of  operations.  ODMI is  required  to share  with  Rust any
operating  profits or operating losses in exchange for the right to operate ODC.
For the year ended  December  31, 1997,  the amount due from Rust was  $887,000,
compared to $700,000 due to Rust for the same period in 1996.

The Company  has,  from time to time,  provided  asbestos-abatement  and related
services to OHM and its affiliates on a subcontract basis.  Revenues  recognized
from these affiliates for such services were $237,000, $40,000, and $212,000 for
1997,  1996,  and 1995,  respectively.  Also,  in 1996 OHM provided  removal and
cleaning  services of waste material to the Company on a subcontract  basis. The
cost for such services was $121,000.

In addition, the Company has, from time to time, provided asbestos-abatement and
related  services to Rust and certain of its affiliates on a subcontract  basis.
Revenues recognized for such services were $7,000, $84,000, and $302,000 for the
years ended December 31, 1997,  1996,  and 1995,  respectively.  Also,  Rust and
certain of its affiliates provided scaffolding,  disposal,  demolition and other
related  services  to the  Company  on a  subcontract  basis.  The cost for such
services  provided  by Rust and its  affiliates  was  $770,000,  $1,503,000  and
$1,719,000 for the years ended December 31, 1997,  1996 and 1995,  respectively.
Rust  rented  demolition  equipment  to the  Company  for  which it was  charged
$418,000, $527,000 and $209,000 for the years ended December 31, 1997, 1996, and
1995, respectively.

                                 Page 28 of 54
<PAGE>
Note 10 - Employee Benefit Plans

Effective  October 1, 1992, the Company adopted the NSC  Corporation  Retirement
Savings  Plan  (the  "Plan").   The  plan  allows  eligible  employees  to  make
contributions,  up to a certain limit, to a trust on a tax-deferred  basis under
section 401(k) of the Internal Revenue Code. The Company may, at its discretion,
make  profit-sharing  contributions  to the Plan out of its profits for the plan
years. The Company made matching contributions of $97,000,  $105,000 and $89,000
for 1997, 1996, and 1995, respectively.

The Company's subsidiary, NSCI, has certain union employees which are covered by
union-sponsored,  collectively  - bargained,  multi-employer  retirement  plans.
Contributions to the plans were $1,983,000, $1,828,000, and $1,575,000 for 1997,
1996, and 1995, respectively.

Note 11 - Litigation, Commitments and Contingencies

The nature and scope of the  Company's  business  bring it into regular  contact
with the general  public and a variety of businesses  and  government  agencies.
Such  activities  inherently  subject the Company to the hazards of  litigation,
which are defended in the normal course of business.

The Company effectively  self-insures its auto, commercial general liability and
workers'compensation risks up to $350,000, $100,000 and $500,000 per occurrence,
respectively.  For claims that may exceed the self-insured  amounts, the Company
has obtained  commercial/excess  umbrella and excess workers'  compensation stop
loss  coverage  on  a  fully-insured   basis.  Factors  affecting  the  ultimate
resolution  of these  claims  against the  Company,  particularly  those  claims
related to  personal  injuries,  are to some  degree  outside the control of the
Company and include, among other items, determination of the extent of an injury
or  disability,  the amount of ongoing  medical  expenses  that are necessary to
treat the injury or disability, and the uncertainty associated with damages that
may be awarded in the event of a jury trial.

In connection with the claims described in the preceding paragraphs, the Company
has an  accrual  balance  of  $6,403,000  and  $5,410,000  for  1997  and  1996,
respectively,  which  represents  its  estimate  of  loss  associated  with  the
resolution of these claims. However, the ultimate outcome of these claims cannot
presently be determined.

The Company  occupies  office and  warehouse  space and  utilizes  equipment  in
various  locations  under operating  leases, the last of which  expires in 2000.
Rental expense under operating  leases for properties and equipment  amounted to
$952,000,  $956,000,  and $908,000 for 1997,  1996 and 1995,  respectively.  The
lease agreements  generally contain renewal  provisions and escalation  clauses.
Future  minimum  lease  payments  under  non-cancelable  operating  leases as of
December 31, 1997 are: 1998, $451,000; 1999, $101,000; and 2000, $44,000.

The Company had  $8,000,000  letters of credit  outstanding at both December 31,
1997 and 1996.  These  letters of credit were issued in support of the Company's
insurance programs.

Note 12 - Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amount reported in the balance sheet for
cash and cash equivalents approximates their fair value.

Accounts  receivable and accounts payable:  The carrying amounts reported in the
balance sheet for accounts  receivable and accounts  payable  approximate  their
fair value.

Long-term  debt:  The fair value of the  Company's  long-term  debt is estimated
using discounted cash flow analyses,  based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.

                                 Page 29 of 54
<PAGE>

The carrying amounts and fair values of the Company's  financial  instruments at
December 31, 1997 are as follows:

                                            Carrying       Fair
                                             Amount       Value
                                          ------------------------
                                               (In thousands)

   Cash and cash equivalents.............   $8,781        $8,781
   Accounts receivable...................   20,590        20,590
   Accounts payable......................   (4,942)       (4,942)
   Long-term debt........................   (4,520)       (2,631)

Note 13- Industry Segment Data

The Company operates in two principal industries -  asbestos-abatement  services
and  beginning in September  1995,  demolition  and  dismantling  services.  The
Company's  asbestos-abatement  divisions  provide  asbestos  and  lead  removal,
insulation,  restoration  and indoor air  quality  primarily  to private  sector
clients at commercial and industrial properties,  while the Company's demolition
and  dismantling   division  provides  industrial   dismantling  and  commercial
demolition  for public and  private  sector  customers.  Intersegment  sales are
generally priced on a basis comparable to sales to unaffiliated companies.


                                              For the Years Ended December 31,
                                                1997        1996        1995
                                              --------    --------    --------
                                                     (In thousands)
   Revenue
      Asbestos-Abatement.................     $100,744    $107,622    $116,940
      Demolition and Dismantling.........       15,211      21,421       7,589
                                              --------    --------    --------
           Total revenue.................     $115,955    $129,043    $124,529
                                              ========    ========    ========

   Operating profit
      Asbestos-Abatement.................      $   370     $ 6,625    $  6,932
      Demolition and Dismantling.........       (1,638)      1,101         827
                                              --------    --------    --------
           Total operating profit........       (1,268)      7,726       7,759
   Corporate expenses....................       (6,517)     (4,195)     (5,731)
   Interest expense......................            -        (112)       (587)
   Other.................................          212         307         227
                                              --------    --------    --------
           (Loss) income before income taxes   $(7,573)   $  3,726    $  1,668
                                              ========    ========    ========

   Depreciation
      Asbestos-Abatement.................      $ 1,016     $ 1,407    $  1,571
      Demolition and Dismantling.........          186          63           2
      Corporate..........................           82         246         257
                                              --------    --------    --------
           Total depreciation............      $ 1,284     $ 1,716    $  1,830
                                              ========    ========    ========

   Amortization
      Asbestos-Abatement.................      $    34     $    31    $      -
      Demolition and Dismantling.........            -           -           -
      Corporate..........................        1,066       1,066       1,066
                                              --------    --------    --------
           Total amortization............      $ 1,100     $ 1,097    $  1,066
                                              ========    ========    ========

                                 Page 30 of 54
<PAGE>



                                                      December 31,
                                             ---------------------------
                                              1997       1996      1995
                                             -------   -------   -------
                                                     (In thousands)

   Identifiable assets
      Asbestos-Abatement.................    $54,147   $66,919   $74,958
      Demolition and Dismantling.........      5,676     8,681     7,370
                                             -------   -------   -------
                                              59,823    75,600    82,328
      Corporate assets...................     14,666     9,960     4,833
                                             -------   -------   -------
           Total assets..................    $74,489   $85,560   $87,161
                                             =======   =======   =======

   Capital expenditures
      Asbestos-Abatement.................    $   456   $   394   $  485
      Demolition and Dismantling.........        358       699       79
      Corporate..........................        115       931      195
                                             -------   -------   -------
           Total capital expenditures....    $   929   $ 2,024   $  759
                                             =======   =======   =======




Note 14 - Quarterly Financial Data (Unaudited)

The following is an analysis of certain items in the consolidated  statements of
operations by quarter for 1997 and 1996:

   1997                              First     Second      Third     Fourth
                                    Quarter    Quarter    Quarter    Quarter
                                    -------    -------    -------    -------
                                     (In thousands, except per-share data)

   Revenue.....................     $29,815    $31,082    $30,643    $24,415
   Gross profit................       4,991      3,843        487      1,706
   Net income (loss)...........         459          1     (2,119)    (3,335)

   Basic and diluted earnings
   per share...................     $  0.05    $     -    $(0.21)   $ (0.34)
                                    =======    =======    =======    =======



   1996                              First     Second      Third     Fourth
                                    Quarter    Quarter    Quarter    Quarter
                                    -------    -------    -------    -------
                                      (In thousands, except per-share data)

   Revenue...................       $35,823   $32,147     $30,014    $31,059
   Gross profit..............         5,960     5,331       5,321      5,977
   Net income................           560       557         454        290

   Basic and diluted earnings
   per share.................       $  0.06    $  0.06    $  0.04    $  0.03
                                    =======    =======    =======    =======




The  Company's  results of  operations  for the fourth  quarter of 1997  reflect
additional  provisions  for workers'  compensation  losses and the write-down to
market of the carrying value of its Methuen,  MA property,  as well as the write
down of certain equipment. These assets no longer fit in the Company's strategic
plans and are  currently  held for sale.  In the  fourth  quarter  of 1996,  the
Company  wrote-down  the  carrying  values of its Hammond,  IN and  Windsor,  CT
properties.  The Windsor property was  subsequently  sold. The write-down of the
properties  amounted to $2,843,000 in the fourth quarter of 1997 and $830,000 in
the fourth quarter of 1996. See Note 3 "Properties and Equipment."

                                 Page 31 of 54
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS


Board of Directors and Stockholders
NSC Corporation

We have audited the accompanying  consolidated balance sheets of NSC Corporation
and  subsidiaries as of December 31, 1997 and 1996 and the related  consolidated
statements of operations,  changes in stockholders' equity,  and cash  flows for
each of the three years in the period ended  December 31, 1997.  Our audits also
included the financial  statement  schedule  listed in the Index at Item 14 (a).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of NSC
Corporation and subsidiaries at December 31, 1997 and 1996, and the consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1997,  in  conformity  with  generally  accepted
accounting  principles.  Also, in our opinion,  the related financial  statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.



/s/ Ernst & Young LLP


Boston, Massachusetts
February 6, 1998

                                 Page 32 of 54


<PAGE>


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting
and Financial Disclosures

Not applicable.


Part III

Item 10.  Directors and Executive Officers of the Registrant

The  information  required by this item,  in addition to that set forth above in
Part I under the caption "Executive Officers of the Registrant," is set forth in
the section entitled  "Information  Concerning Directors and Nominees" contained
in the Company's  definitive Proxy Statement to be filed with the Securities and
Exchange  Commission  (the "Proxy  Statement") in connection  with the Company's
1998 Annual Meeting of Stockholders, and such information is incorporated herein
by reference.

Item 11.  Executive Compensation

Remuneration  of the directors and officers and  information  related thereto is
included in the section entitled "Executive  Compensation and Other Information"
contained in the Proxy Statement, and said information is incorporated herein by
reference   except  for   information   contained   under  the  captions  "Board
Compensation Committee Report" and "Performance Graph."


Item 12.  Security Ownership of Certain Beneficial Owners and Management

Security  ownership of management and certain  beneficial owners and information
related  thereto is included  in the section  entitled  "Voting  Securities  and
Principal  Holders  Thereof"   contained  in  the  Proxy  Statement,   and  said
information is incorporated herein by reference.


Item 13.  Certain Relationships and Related Transactions

Transactions with management and related parties and information related thereto
is  included  in  the  section  entitled  "Certain   Relationships  and  Related
Transactions"  contained  in  the  Proxy  Statement,  and  said  information  is
incorporated herein by reference.

                                 Page 33 of 54


<PAGE>
Part IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1)The  following  consolidated  financial  statements of the Company and its
      subsidiaries  for the years ended  December  31,  1997,  1996 and 1995 are
      included at the pages indicated below:

                                                                            Page

      Consolidated Balance Sheets                                             19
      -As of December 31, 1997 and 1996

      Consolidated Statements of Operations                                   20
      -For the Years Ended December 31, 1997, 1996 and 1995

      Consolidated Statements of Changes in Stockholders' Equity              21
      -For the Years Ended December 31, 1997, 1996 and 1995

      Consolidated Statements of Cash Flows                                   22
      -For the Years Ended December 31, 1997, 1996 and 1995

      Notes to Consolidated Financial Statements                              23

      Report of  Independent Auditors                                         32

(a)(2)The following consolidated financial statement schedule is included herein
      at the page indicated below:
                                                                            Page

      Schedule II Valuation and Qualifying Accounts                           39
      -For the Years Ended December 31, 1997, 1996 and 1995

All other  schedules for which  provision is made in the  applicable  accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are not applicable, and therefore have been omitted.

(a)(3)   The following Exhibits are included in this Annual Report on Form 10-K:

Exhibit             Exhibit
Number              Description

3(i)(a)  Amended and Restated  Certificate  of  Incorporation  of the Registrant
         dated April 24, 1990  incorporated  by reference to Exhibit 3(a) to the
         Registrant's Form S-1, Registration Statement No.
         33-34702].

3(ii)(a)
         By-Laws of the  Registrant  [incorporated  by reference to Exhibit 3(b)
         to the Registrant's Form S-1, registration Statement No. 33-34702].

4        Specimen Common Stock Certificate [incorporated by reference to Exhibit
         4 to the  Registrant's  Annual  Report on Form 10-K for the year  ended
         December 31, 1990].

* 10(a)  NSC  Corporation  1990  Stock  Option  Plan,  As  Amended  and Restated
         [incorporated by reference to Exhibit 10(a) to the Registrant's  Annual
         Report on Form 10-K for the year ended December 31, 1991].

-----------------------------------------
*        Indicates a management  contract or  compensatory  plan or  arrangement
         required to be filed pursuant to Item 14(c) of Form 10-K.

                                 Page 34 of 54
<PAGE>

* 10(b)  NSC  Corporation   Retirement   Savings  Plan   and   NSC   Corporation
         Retirement  Savings Plan Trust Agreement  [incorporated by reference to
         Exhibit 10.1 to the Registrant's  Quarterly Report on Form 10-Q for the
         quarter ended September 30, 1992].

* 10(c)  Indemnification  Agreement,  dated as of May 1, 1990 by and between the
         Registrant  and  William  M. R. Mapel  [incorporated  by  reference  to
         Exhibit 10(i) of  the Registrant's Form S-1, Registration Statement No.
         33-34702].

10(d)    Purchase  Agreement,   dated  as  of  December  23,  1992  and  related
         amendments made thereto, by and among OHM Corporation, NSC Corporation,
         NSC Industrial  Services Corp.,  The Brand  Companies,  Inc.,  Chemical
         Waste  Management,  Inc. and Waste  Management,  Inc.  [incorporated by
         reference to Exhibit 10(ff) to the  Registrant's  Annual Report on Form
         10-K for the year ended December 31, 1992].

* 10(e)  NSC   Corporation   1993   Restricted  Stock  Plan    [incorporated  by
         reference to Exhibit 10(gg) to the  Registrant's  Annual Report on Form
         10-K for the year ended December 31, 1992].

10(f)    Revolving  Credit  Agreement,  dated as of May 4, 1993 by and among NSC
         Corporation, its Subsidiaries named therein, The First National Bank of
         Boston and Fleet Bank of  Massachusetts  [incorporated  by reference to
         Exhibit 10(m) to the Registrant's Annual Report on Form 10-K for
         the year ended December 31, 1993].

10(g)    Second Amendment to Revolving Credit Agreement, dated as of May 1, 1996
         by and among NSC Corporation, its Subsidiaries named therein, The First
         National  Bank of Boston and Fleet  National  Bank,  formerly  known as
         Fleet Bank of Massachusetts [incorporated by reference to Exhibit 10 to
         the  Registrant's  Quarterly  Report on From 10-Q for the quarter ended
         March 31, 1996].

10(h)    Third Amendment to Revolving Credit Agreement,  dated as of May 9, 1997
         by and among NSC  Corporation,  its  Subsidiaries  named  therein,  and
         BankBoston,  formerly  known as The First  National  Bank of Boston and
         Fleet National Bank.

10(i)    Fourth  Amendment to Revolving Credit  Agreement,  dated as of December
         22, 1997 by and among NSC Corporation,  its Subsidiaries named therein,
         and BankBoston, formerly known as The First National Bank of Boston and
         Fleet National Bank.

10(j)    Registration  Rights Agreement,  dated as of May 4, 1993 by and between
         NSC  Corporation,  OHM  Corporation and The Brand  Companies,  Inc., as
         succeeded  by Rust  International  Inc.  [incorporated  by reference to
         Exhibit  10(p) to the  Registrant's  Annual Report on Form 10-K for the
         year ended December 31, 1993].

10(k)    Olshan  Interim  Management and Operating  Agreements  dated January 1,
         1995 and April 20, 1995  [incorporated by reference to Exhibit 10(a) to
         the Registrant's  Annual Report on Form 10-Q for the quarter ended June
         30, 1995].

* 10(l)  NSC   Corporation's  1994   Management  Incentive   Compensation   Plan
         [incorporated by reference to Exhibit 10(q) to the Registrant's  Annual
         Report on Form 10-K for the year ended December 31, 1994].

* 10(m)  Employment  Agreement,  dated  March  12,  1997  by  and between Victor
         J. Barnhart and NSC Corporation  [incorporated  by reference to Exhibit
         10(p) to the Registant's  Annual Report on Form 10-K for the year ended
         December 31, 1996].

* 10(n)  Employment  Security  Agreement,  dated  October 2, 1996 by and between
         Darryl G. Schimeck and  NSC Corporation  [incorporated by  reference to
         Exhibit  10(p) to  the Registant's  Annual Report on  Form 10-K for the
         year ended December 31, 1996].
-----------------------------------------
*        Indicates a management  contract or  compensatory  plan or  arrangement
         required to be filed pursuant to Item 14(c) of Form 10-K.

                                 Page 35 of 54
<PAGE>

* 10(o)  Employment  Security  Agreement,  dated  October 2, 1996 by and between
         Efstathios A. Kouninis and NSC Corporation.

21       Subsidiaries of the Registrant.

23       Consent of Independent Auditors.

24       Powers of Attorney of certain directors of the Registrant.

27       Financial Data Schedule, Article 5


(b)   The  Company  filed no current  report on Form 8-K during the three  month
      period ended December 31, 1997.


Note: None of the Exhibits  listed in the foregoing index are included with this
      Annual  Report on Form  10-K.  A copy of these  Exhibits  may be  obtained
      without  charge by writing to Efstathios A.  Kouninis,  Vice  President of
      Finance,  Corporate Controller,  Treasurer and Secretary, NSC Corporation,
      49 Danton Drive, Methuen, Massachusetts 01844.

-----------------------------------------
*        Indicates a management  contract or  compensatory  plan or  arrangement
         required to be filed pursuant to Item 14(c) of Form 10-K.

                                 Page 36 of 54
<PAGE>

Signatures

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

                  NSC CORPORATION
                  By  /s/   EFSTATHIOS A. KOUNINIS
                  Efstathios A. Kouninis, Vice President of Finance,
                  Corporate Controller, Treasurer and Secretary


March 25, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

                                                                         Date

*  VICTOR J. BARNHART                                             March 25, 1998
    Victor J. Barnhart - Chairman and Chief Executive Officer
    (Principal Executive Officer)



*   DARRYL G. SCHIMECK                                            March 25, 1998
    Darryl G. Schimeck - President and Chief Operating Officer



/s/ EFSTATHIOS A. KOUNINIS                                        March 25, 1998
    Efstathios A. Kouninis, Vice President of Finance,
    Corporate Controller, Treasurer and Secretary
    (Principal Financial and Accounting Officer)



*   EUGENE L. BARNETT                                             March 25, 1998
    Eugene L. Barnett - Director



*   PAMELA K.M. BEALL                                             March 25, 1998
    Pamela K.M. Beall - Director

                                 Page 37 of 54
<PAGE>


*   ROBERT J. BLACKWELL                                           March 25, 1998
    Robert J. Blackwell - Director



*   HERBERT A. GETZ                                               March 25, 1998
    Herbert A. Getz - Director



*   WILLIAM P. HULLIGAN                                           March 25, 1998
    William P. Hulligan - Director



*   WILLIAM M. R. MAPEL                                           March 25, 1998
    William M. R. Mapel - Director




*     The  undersigned,  by signing his name  hereto does sign and execute  this
      report  pursuant  to  Powers  of  Attorney   executed  on  behalf  of  the
      above-named  officers and directors and  contemporaneously  herewith filed
      with the Securities and Exchange Commission.




/s/   EFSTATHIOS A. KOUNINIS                                      March 25, 1998
      Efstathios A. Kouninis - Attorney-in-Fact

                                 Page 38 of 54
<PAGE>
<TABLE>


NSC CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(In thousands)


---------------------------------------------------------------------------------------------
Column A                                  Column B       Column C     Column D     Column E

---------------------------------------------------------------------------------------------
<CAPTION>

                                          Balance at     Charged to                Balance at
                                          Beginning      Costs and     Deductions    End of
           Description                    of Period      Expenses(2)   Describe(1)   Period

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

Year Ended December 31, 1997
Deducted from assets accounts:
<S>                                            <C>         <C>          <C>         <C>
   Allowance for uncollectible accounts        $ 557       $ 253        $   99      $  711
   Reserve for contract revenue adjustments      152         311           100         363
---------------------------------------------------------------------------------------------
Year Ended December 31, 1996
Deducted from assets accounts:
   Allowance for uncollectible accounts        $ 549       $  67        $   59      $  557
   Reserve for contract revenue adjustments      442         111           401         152
---------------------------------------------------------------------------------------------
Year Ended December 31, 1995
Deducted from assets accounts:
   Allowance for uncollectible accounts        $ 782       $   -        $  233      $  549
   Reserve for contract revenue adjustments      530         401           489         442
---------------------------------------------------------------------------------------------

</TABLE>

(1)      Uncollectible accounts written off and adjustments to unbilled revenues
         on contracts in process.

(2)      Reduction of revenues on  contracts  in process and amounts  charged to
         bad debt expense.

                                 Page 39 of 54


<PAGE>





                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549


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



                                   FORM 10-K

                    ANNUAL REPORT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                           FOR THE FISCAL YEAR ENDED
                               December 31, 1997



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


                                NSC CORPORATION
             (Exact name of registrant as specified in its charter)





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

                                    Exhibits

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


                                 Page 40 of 54

<PAGE>



                                 EXHIBIT INDEX

The following Exhibits are included in this Annual Report on Form 10-K:

Exhibit     Exhibit                                                      Exhibit
Number      Description                                                    Page


10(h) Third Amendment to Revolving Credit Agreement,  dated as of May 9,      42
      1997 by and between  NSC  Corporation,   its   subsidiaries  named
      therein, BankBoston, formerly known as The First National  Bank of
      Boston, and Fleet National Bank.

10(i) Fourth  Amendment  to  Revolving  Credit   Agreement,  dated as of      45
      December 22, 1997 by and between NSC Corporation, its subsidiaries
      named therein,  BankBoston,  formerly  known as The First National
      Bank of Boston, and Fleet National Bank.

*10(o)  Employment Security Agreement, dated October 2, 1996, by and          48
        between Efstathios Kouninis and NSC Corporation.

 21       Subsidiaries of the Registrant.                                     51

 23       Consent of  Independent Auditors.                                   52

 24       Powers of Attorney of certain directors of the Registrant.          53

 27       Financial Data Schedule, Article 5                                  54

 (b)      The Company filed no Current Report on Form 8-K during  the
          three-month period ended  December 31, 1997.

--------------------------------------------
*         Indicates  a  management  contract or  compensatory  plan or
          arrangement required to be filed pursuant to Item 14(c) of Form 10-K.

                                 Page 41 of 54
<PAGE>