SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                             ______________________

                                   FORM 10-K/A
(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, 1998
                                       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 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  non-affiliates  of the
registrant on March 19, 1999 was $4,660,397.

The  number  of  shares  of  common  stock  outstanding  on March  19,  1999 was
9,971,175.


<PAGE>
Although  the Report of  Independent  Auditors of this Item 8 has been  ammended
solely to include the signature of such independent auditors,  the complete text
of Item 8 is  included  in this  Form  10-K/a  pursuant  to Rule  12b-15  of the
Securities and Exchange Act of 1934.  Accordingly,  Item 8 is hereby amended and
restated as follows:
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,  1998,  1997 and 1996 are set forth on pages 4  through  7, the Notes to the
consolidated  financial  statements  on page 8 through  16 and the Report of the
Independent Auditors on page 17.
<PAGE>

                                    NSC CORPORATION
                              CONSOLIDATED BALANCE SHEETS
                    (In thousands, except share and per-share data)

                                                               December 31,
                                                          ----------------------
                                                             1998        1997
                                                          ----------  ----------
       ASSETS
       Current assets:
         Cash and cash equivalents........................ $  3,634    $  8,781
         Accounts receivable, net.........................   22,146      20,590
         Costs and estimated earnings on contracts
          in process in excess of billings................    4,270       1,969
         Inventories......................................    1,058       1,157
         Prepaid expenses and other current assets........    2,425       1,565
         Deferred income taxes............................      758         844
                                                           ----------  ---------
                                                             34,291      34,906

       Property and equipment, net........................    3,296       2,755

       Other noncurrent assets:
         Assets held for sale ............................      313       1,653
         Investment in unconsolidated joint venture.......      225           -
         Goodwill, net of accumulated amortization of
          $9,084 and $7,984 in 1998 and 1997, respectively   34,075      35,175
                                                           ----------  ---------
                                                             34,613      36,828
                                                           ----------  ---------
         Total assets                                      $ 72,200    $ 74,489
                                                           ==========  =========

       LIABILITIES AND STOCKHOLDERS' EQUITY
       Current liabilities:
         Accounts payable................................. $  2,471    $  4,942
         Billings in excess of costs and estimated
          earnings on contracts in process................    4,369       3,274
         Accrued compensation and related costs...........    2,141       1,760
         Federal, state and local taxes...................     (776)        273
         Other accrued liabilities........................      569       1,428
         Reserve for self insurance claims and other
          contingencies...................................    5,013       6,403
         Current portion of long-term obligations.........      109           -
                                                           ----------  ---------
                                                             13,896      18,080
       Noncurrent liabilities:
         Long-term obligations............................      288           -
         Payable to affiliate.............................    4,520       4,520
         Deferred income taxes............................    1,894         733

       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 1998 and 1997...............      100         100
         Additional paid-in capital.......................   56,079      56,079
         Accumulated deficit..............................   (4,577)     (5,023)
                                                           ----------  ---------
                                                             51,602      51,156
                                                           ----------  ---------
         Total liabilities and stockholders' equity        $ 72,200    $ 74,489
                                                           ==========  =========

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



<PAGE>



                                    NSC CORPORATION
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                         (In thousands, except per-share data)



                                                   Years Ended December 31,
                                             -----------------------------------
                                                1998         1997         1996
                                             ----------    ---------  ----------

Revenue.....................................  $ 99,711     $115,955    $129,043
Cost of services............................    83,833      104,928     106,454
                                              ---------    ---------   ---------
 Gross profit...............................    15,878       11,027      22,589
Selling, general and administrative expenses   (14,624)     (15,733)    (16,431)
Write down of assets held for sale..........       158       (2,843)       (830)
Other operating income (expense)............       338          887        (700)
Goodwill amortization.......................    (1,100)      (1,100)     (1,097)
                                              ---------    ---------   ---------
 Operating income (loss)....................       650       (7,762)      3,531
                                              ---------    ---------   ---------

Equity in income of unconsolidated joint
 venture....................................        75            -           -

Other:
 Interest expense...........................       (51)         (23)       (112)
 Other income...............................       257          212         307
                                              ---------    ---------   ---------
                                                   206          189         195
                                              ---------    ---------   ---------
 Income (loss) before income taxes..........       931       (7,573)      3,726
Income tax expense (benefit)................       485       (2,579)      1,865
                                              ---------    ---------   ---------
 Net income (loss)..........................  $    446     $ (4,994)   $  1,861
                                              =========    =========   =========

Basic and diluted earnings per share........  $   0.04     $  (0.50)   $   0.19
                                              =========    =========   =========

Weighted-average number of common shares
 outstanding................................     9,971        9,971       9,971
                                              ========     =========   =========

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


<PAGE>



                                     NSC CORPORATION
                CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                          (In thousands, except per-share data)

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

  Balance at January 1, 1996     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
                                ------- ------- --------- --------- ------------
  Net income.................        -       -         -       446         446
                                ------- ------- --------- --------- ------------
  Balance at December 31, 1998   9,971   $ 100   $56,079   $(4,577)  $  51,602
                                ======= ======= ========= ========= ============

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


<PAGE>



                                   NSC CORPORATION
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In thousands)


                                                     Years Ended December 31,
                                                  ------------------------------
                                            
                                                    1998      1997       1996
                                                  ---------  --------  ---------
Cash flows from operating activities:
   Net income (loss).............................  $   446   $(4,994)   $ 1,861
   Adjustments to reconcile net income to net cash
    (used in) provided by operating activities:
      Depreciation...............................      958     1,284      1,716
      Goodwill amortization......................    1,100     1,100      1,097
      Deferred income taxes......................    1,247    (2,866)      (996)
      (Gain) loss on disposition of property and
       equipment.................................       (9)      145        194
      (Gain) loss on impairment of assets held for
       sale......................................     (158)    2,843        830
      Equity in income of unconsolidated joint
       venture...................................      (75)        -          -
   Changes in assets and liabilities, net of 
    effects of acquired business:
    Accounts receivable, net.....................   (1,556)    6,269        266
    Costs and estimated earnings on contracts
     in process in excess of billings............   (2,301)    5,770        155
    Other current assets.........................     (761)     (172)       235
    Accounts payable.............................   (2,471)    1,494        385
    Billings in excess of costs and estimated
     earnings on contracts in process............    1,095    (1,963)     1,305
    Other current liabilities....................   (2,917)   (1,755)      (296)
                                                 ---------   --------  ---------
      Net cash (used in) provided by operating
      activities                                    (5,402)    7,155      6,752
                                                 ---------   --------  ---------
Cash flows from investing activities:
   Purchases of property and equipment...........   (1,156)     (929)    (2,024)
   Proceeds from sale of property and equipment..    1,561        76        268
   Investment in joint venture...................     (150)        -       (718)
                                                 ---------   --------  ---------
      Net cash used in investing activities            255     (853)    (2,474)
                                                 ---------   --------  ---------
Cash flows from financing activities:
   Payments on long-term debt....................        -         -     (5,850)
   Proceeds of loan from affiliate...............        -         -      2,949
   Cash dividend paid............................        -    (1,496)    (1,496)
                                                 ---------   --------  ---------
      Net cash provided by (used in) financing
       activities                                        -    (1,496)    (4,397)
                                                 ---------   --------  ---------
      Net (decrease) increase in cash and cash
       equivalents...............................   (5,147)    4,806       (119)
Cash and cash equivalents at beginning of periods    8,781     3,975      4,094
                                                 ---------   --------  ---------
Cash and cash equivalents at end of periods...... $  3,634   $ 8,781    $ 3,975
                                                 =========   ========  =========

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




<PAGE>


NSC Corporation
Notes to Consolidated Financial Statements
December 31, 1998


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 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,  NSC Industrial  Services Corp., a wholly owned subsidiary of
the Company  ("Industrial"),  OHM, Waste  Management Inc.  ("WMI") and The Brand
Companies  Inc.,  an  affiliate  of  WMI  ("Brand")  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.

On April 20, 1995 the Company entered into an Interim Management  and  Operating
Agreement  with  Rust  International  Inc, an affiliate of WMI  ("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
the WMI affiliate 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,  WMI is the  owner of  approximately  fifty-four
percent of the Company's common stock.

The  Company  has  entered  into an  Agreement  and Plan of  Merger  dated as of
February 12, 1999, by and among NSC Holdings, Inc.("Holdings"), NSC Acquisition,
Inc.  ("Merger  Subsidiary"),  the  Company  and WMI  pursuant  to which  Merger
Subsidiary will be merged with and into the Company, with the Company continuing
as the surviving  corporation.  Neither  Holdings nor Merger  Subsidiary has any
prior  affiliation  with the Company or WMI.  Pursuant to the Merger  Agreement,
each share of the Company's common stock issued and outstanding at the effective
time of the Merger (other than shares held by the Company and  stockholders,  if
any, who properly  exercise their  appraisal  rights under Delaware law) will be
converted into the right to receive $1.12 per share in cash. Consummation of the
Merger is subject to certain conditions,  including approval and adoption of the
Merger  Agreement  by the  affirmative  vote of the holders of a majority of the
outstanding  shares of Common  Stock.  

The Merger Agreement also contemplates that,  immediately prior to the effective
time of the Merger,  WMI will cause its affiliates to exchange 996,420 shares of
the  Company's  Common Stock (the  "Exchanged  Shares") for an interest  bearing
subordinated  promissory  note issued by the Company in the principal  amount of
$1,115,990,  representing  $1.12 per share times the number of Exchanged Shares.
All  remaining  shares  of the  Company's  common  stock  owned  by WMI  and its
affiliates  will be converted in the Merger into the right to receive  $1.12 per
share in cash. In addition,  the Merger Agreement contemplates that, immediately
prior to the  effective  time of the Merger,  WMI will cause ODC to sell certain
machinery and equipment to ODMI. In  consideration  for such assets,  all of the
Company's existing  non-interest bearing indebtedness  (currently  approximately
$4.5  million)  owed to an affiliate  of WMI will be converted  into an interest
bearing  subordinated  promissory  note issued by the  Company in the  principal
amount of $2.4 million.

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
$21,952,000,   $30,319,000,   and   $25,240,000   for   1998,   1997  and  1996,
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.

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  $223,000,  $1,211,000,  and
$2,007,000  for  1998,  1997,  and 1996,  respectively.  No  interest  was paid,
under the credit  facility,  in 1998 and 1997;  $112,000  was paid in 1996.  

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 1998,  1997 and 1996 have been
computed  by  dividing  net  income  (loss)  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.

New Accounting  Pronouncements.  The Financial  Accounting  Standards  Board has
issued  Financial  Accounting  Standards  Board  Statement  No.  130  "Reporting
Comprehensive  Income"  ("FAS  130") and  Statement  No. 131  "Disclosure  about
Segments  of an  Enterprise  and  Related  Information"  ("FAS 131") in 1997 and
Statement  No.  133   "Accounting   for  Derivative   Instruments   and  Hedging
Activities"  ("FAS  133")  in 1998.  FAS 130 and FAS 131  were  adopted  for the
Company's  1998 financial  statements.  FAS 130 and FAS 131 had no impact on the
Company's  financial  condition  or  results  of  operations.  FAS  133  must be
adopted  for  the  Company's  year  2000  financial   statements.   The  Company
anticipates  that  FAS  133  will  have  no  impact  on the  Company's  reported
financial condition or results of operations.

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

Note 2 - Accounts Receivable

Accounts receivable are summarized as follows:

                                                            December 31,
                                                          -----------------
                                                            1998     1997
                                                          -------   -------
                                                            (In thousands)

      Accounts billed and due currently................   $19,586    $18,066
      Retained.........................................     3,054      3,235
                                                           22,640     21,301
      Allowance for uncollectible accounts.............      (494)      (711)
                                                          $22,146    $20,590


The retained receivables at December 31, 1998 are expected to be collected
within one year.

Note 3 - Costs and Estimated Earnings on Contracts in Process

The consolidated balance sheets include the following amounts:

                                                             December 31,
                                                          ------------------
                                                            1998      1997
                                                          --------  --------
                                                            (In thousands)

      Costs incurred on contracts in process............. $ 83,833  $104,928
      Estimated earnings.................................   16,039    13,603
                                                            99,872   118,531
      Less billing to date...............................   99,971   119,836
                                                          $    (99) $ (1,305)
      Costs and estimated earnings on contracts in
       process in excess of billings..................... $  4,270  $  1,969
      Billings on contracts in process in excess of
       costs and estimated earnings......................   (4,369)   (3,274)
                                                          $    (99) $ (1,305)

Costs and  estimated  earnings  on  contracts  in process in excess of  billings
included  $1,264,000 at December 31, 1998  attributable  to contracts which have
not been yet  finalized or to change  orders in the process of being  negotiated
and  are net of  reserves  for  contract  revenue  adjustments  of  $32,000  and
$363,000 at December  31, 1998 and 1997,  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>



Note 4 - Properties and Equipment

Properties and equipment were as follows:


                                                            December 31,
                                                          -----------------
                                                            1998     1997
                                                          -------   -------
                                                            (In thousands)

      Land .....................................          $    -    $    -
      Buildings and improvements ...............             300       355
      Machinery and equipment ..................           8,302     6,527
      Projects in progress .....................              21       641
                                                           8,623     7,523
      Accumulated depreciation..................          (5,327)   (4,768)
      Properties and equipment, net ............          $3,296    $2,755


In 1997,  the Company  wrote-down  to market the carrying  value of its Methuen,
MA  headquarters  property,  which no longer  fits in its  strategic  plans.  In
1998, the Company sold this property  realizing  $158,000 more than its adjusted
carrying  value.  In 1996,  properties  in  Hammond,  IN  and  Windsor,  CT were
written down to market.  The write-down of properties  held for sale amounted to
$2,712,000  and  $830,000  in 1997 and  1996,  respectively.  The  Windsor,  CT
property  was sold in 1997.  Also,  in 1997,  the Company  wrote down  equipment
and  recognized  a loss of $131,000.  Expenditures of $444,000 and $306,000 were
incurred  towards the  implementation  of new  software  technology  in 1998 and
1997, respectively.

Machinery and  equipment at December 31, 1998 includes  assets with an aggregate
carrying  value  of  $506,773  (net  of  accumulated  amortization  of  $59,754)
recorded under capital  leases.  Amortization  of assets  recorded under capital
leases is included in  depreciation  expense.  Future minimum lease payments for
assets under capital leases at December 31, 1998 are as follows:

                                                   (In thousands)
                1999..........................           $139
                2000..........................            139
                2001..........................            125
                2002..........................             50
                2003..........................              6
                Total                                    $459
                Amounts representing interest              62
                Present value of minimum lease payments  $397


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, 1998
and 1997 are as follows:


                                                            December 31,
                                                          -----------------
                                                           1998      1997
                                                          -------   -------
                                                            (In thousands)
      Deferred tax assets:
         Accrued liabilities...........................   $ 2,180   $ 2,847
         Allowance for uncollectible accounts..........       198       285
         Assets held for sale..........................       320     1,281
         Book over tax depreciation....................       192       185
            Total deferred tax assets..................     2,890     4,598



<PAGE>


      Deferred tax liabilities:
         Goodwill......................................     3,667     3,861
         Contract revenue recognition..................         -         -
         Prepaid expenses and other assets.............       359       626
            Total deferred tax liabilities.............     4,026     4,487

            Net deferred tax (liabilities) assets......   $(1,136)  $   111

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

                                                   Years Ended December 31,
                                                   ------------------------
                                                    1998    1997     1996
                                                   ------- -------- -------
                                                       (In thousands)
      Current:
         Federal.................................  $ (927) $   (45) $ 2,269
         State...................................     165      332      367
           Total current taxes...................    (762)     287    2,636
      Deferred:
         Federal.................................     966   (2,221)    (825)
         State...................................     281     (645)      54
           Total deferred tax provision (benefit)   1,247   (2,866)    (771)
      Total income tax provision (benefit)....... $   485  $(2,579) $ 1,865

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
                                                   ------------------------
                                                    1998     1997    1996
                                                   ------- -------- -------
                                                        (In thousands)

         Federal statutory rate................     34.0%   (34.0)%  34.0%
         Add (deduct):
          State income taxes, net of federal tax
           benefit.............................     11.7     (2.7)    7.4
          Goodwill amortization................     19.0      2.3     4.8
          IRS audit contingency................    (14.9)       -       -
          Other................................      2.3      0.3     3.9
                                                    52.1%   (34.1)%  50.1%

Note 6 - Credit Facility

On March  23,  1999,  the  Company  amended  its May 4,  1993  revolving  credit
facility, reducing  its  available  line  from  $25,000,000  to  $6,000,000, and
extending  its  expiration   from  April  30  to  June  30,  1999.  The  amended
revolving  credit  facility  contains  debt  service   coverage,   leverage  and
interest  covenants  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,  1998 was  5.13%)  and are  secured  by  substantially  all of the
Company's  assets.  There were no borrowings  outstanding under this facility as
of December 31, 1998 and December  31, 1997.  As of March 23, 1999,  the Company
had outstanding $4,725,000 in letters of credit.

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, 1998 no
preferred stock has been issued.

Pursuant to an agreement  among the  Company,  an affiliate of WMI and OHM dated
May 4, 1993,  the WMI affiliate has the right to demand  registration  of all or
a portion of its shares of the Common  Stock of the Company.  This  agreement is
subject to certain conditions and limitations,  including  limitations as to the
frequency  of exercise and the WMI  affiliate'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 201,750,  48,750,  and 151,250 for the years ended December
31, 1998, 1997, and 1996 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, 1996............    47,250   $4.00 - $8.50
         Granted................................   690,000    2.00 -  2.06
         Canceled...............................  (184,500)   4.00 -  8.50
      Outstanding at December 31, 1996..........   552,750    4.00 -  6.00
         Granted................................   102,500    2.00 -  2.63
      Outstanding at December 31, 1997..........   655,250    2.00 -  6.00
         Canceled...............................  (153,000)   2.00 -  6.00
      Outstanding at December 31, 1998..........   502,250    2.00 -  6.00


                      Number of        Number of
                       Shares           Shares
                    Outstanding at   Exercisable at   Remaining
     Option          December 31,     December 31,   Contractual    Option
   Grant Date            1998            1998          Life       Price Range
   --------------------------------------------------------------------------

   March 1991           2,000            2,000        2.0 years      $6.00
   May 1991            10,000           10,000        2.2 years      $6.00
   November 1991          250              250        2.5 years      $4.00
   May 1993            10,000           10,000        4.2 years      $4.50
   February 1996       57,500           32,500        6.1 years      $2.00
   December 1996      320,000           35,000        6.8 years      $2.06
   February 1997       17,500            4,375        7.1 years      $2.63
   August 1997         30,000            7,500        7.6 years      $2.00
   November 1997       55,000           13,750        7.8 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:
market  price of the  Company's  common stock of $1.00,  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  "Agreement") with an affiliate of WMI under which the
Company,  through  ODMI,  assumed the  management  of ODC, an  affiliate  of WMI
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,  an
affiliate  of WMI  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,  the  WMI
affiliate   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 the WMI  affiliate  any  operating  profits or
operating  losses in exchange  for the right to operate  ODC. For the year ended
December  31,  1998,  the  amount  due  from  the WMI  affiliate  was  $338,000,
compared to  $887,000  for the same period in 1997.  In 1996,  $700,000  was due
to the WMI affiliate.

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 and $40,000
for  1997,  and 1996,  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 WMI and certain of its  affiliates  on a  subcontract
basis.  Revenues recognized for such services were $22,000,  $7,000, and $84,000
for the years ended  December  31, 1998,  1997,  and 1996,  respectively.  Also,
WMI 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 was $770,000 and  $1,503,000  for the years ended December 31,
1997 and 1996,  respectively.  A WMI affiliate  rented  demolition  equipment to
the Company for which it was charged  $302,000,  $418,000  and  $527,000 for the
years ended December 31, 1998, 1997, and 1996, respectively.

Note 10 - Employee Benefit Plans

Effective  October 1, 1992, the Company adopted the NSC  Corporation  Retirement
Savings Plan (the  "Plan").  The Plan allows  employees  with one year and 1,000
hours of  service,  from  their  date of hire,  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 $81,000,  $97,000 and $105,000 for 1998,  1997,
and 1996, 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  $1,113,000,  $1,983,000,  and  $1,828,000  for
1998, 1997, and 1996, 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  $100,000,  $100,000  and  $250,000 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  $5,013,000  and  $6,403,000  at December 31,
1998 and 1997,  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 2003.
Rental expense under operating  leases for properties and equipment  amounted to
$1,039,000,  $952,000, and $956,000 for 1998, 1997 and 1996,  respectively.  The
lease agreements  generally contain renewal  provisions and escalation  clauses.
Future  minimum  lease  payments  under  non-cancelable  operating  leases as of
December 31, 1998 are: 1999,  $855,000;  2000, $643,000;  2001, $294,000;  2002,
$165,000; and 2003 $39,000.

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.

The carrying amounts and fair values of the Company's  financial  instruments at
December 31, 1998, and 1997, respectively are as follows:


                                             1998                1997
                                       Carrying   Fair      Carrying   Fair
                                        Amount    Value      Value     Value
                                       ---------------------------------------
                                                   (In thousands)

   Cash and cash equivalents.......... $ 3,634  $ 3,634     $  8,781  $  8,781
   Accounts receivable................  22,146   22,146       20,590    20,590
   Accounts payable...................  (2,471)  (2,471)      (4,942)   (4,942)
   Long-term debt.....................  (4,520)  (2,815)      (4,520)   (2,631)


<PAGE>



Note 13- Industry Segment Data

The Company operates in two principal industries -  asbestos-abatement  services
and  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,
                                                  1998       1997       1996
                                                -------    -------    --------
                                                        (In thousands)
   Revenue
      Asbestos-Abatement....................... $87,514   $ 98,801    $105,381
      Intersegment - Demolition and Dismantling   1,210      1,943       2,241
      Demolition and Dismantling...............  10,522     15,183      21,251
      Intersegment - Asbestos-Abatement........     465         28         170
           Total revenue....................... $99,711   $115,955    $129,043

   Operating profit
      Asbestos-Abatement....................... $ 5,704   $    370    $  6,625
      Demolition and Dismantling...............    (338)    (1,638)      1,101
           Total operating profit (loss).......   5,366     (1,268)      7,726
   Corporate expenses..........................  (4,641)    (6,494)     (4,195)
   Interest expense............................     (51)       (23)       (112)
   Other.......................................     257        212         307
           Income (loss) before income taxes... $   931   $ (7,573)   $  3,726

   Depreciation
      Asbestos-Abatement....................... $   523   $  1,016    $  1,407
      Demolition and Dismantling...............     221        186          63
      Corporate................................     214         82         246
           Total depreciation.................. $   958   $  1,284    $  1,716

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

                                                          December 31,
                                                 ------------------------------
                                                   1998       1997      1996
                                                 -------    --------   -------
                                                          (In thousands)

   Identifiable assets
      Asbestos-Abatement....................... $56,733   $ 54,147    $ 66,919
      Demolition and Dismantling...............   4,895      5,676       8,681
                                                 61,628     59,823      75,600
      Corporate assets.........................  10,572     14,666       9,960
           Total assets........................ $72,200   $ 74,489    $ 85,560

   Capital expenditures
      Asbestos-Abatement....................... $ 1,280   $    456    $    394
      Demolition and Dismantling...............      22        358         699
      Corporate................................     251        115         931
           Total capital expenditures.......... $ 1,553   $    929    $  2,024


<PAGE>



Note 14 - Quarterly Financial Data (Unaudited)

The  following is an analysis of certain  items in the  consolidated  statements
of operations by quarter for 1998 and 1997:

   1998                                  First     Second     Third    Fourth
                                        Quarter    Quarter   Quarter   Quarter
                                         (In thousands, except per-share data)

   Revenue............................. $ 20,808   $ 25,252  $ 28,017  $ 25,634
   Gross profit........................    3,891      3,970     4,262     3,755
   Net income (loss)...................       23        379       272      (228)

   Basic and diluted earnings per share $      -   $   0.04  $   0.03  $  (0.02)


   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)




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.  The  write-down  of the  properties  amounted  to
$2,843,000  in  the  fourth  quarter  of  1997.  A  $158,000  adjustment  of the
Methuen  property  impairment  was recorded in the second  quarter of 1998.  See
Note 4 "Properties  and  Equipment".  The loss in the fourth  quarter of 1998 is
attributable to losses on certain asbestos-abatement projects.


<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, 1998 and 1997 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, 1998.
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 financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of NSC Corporation
and  subsidiaries  at December 31, 1998 and 1997, and the  consolidated  results
of their  operations  and their  cash  flows for each of the three  years in the
period  ended  December  31,  1998,  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 12, 1999,
except for Note 6,
as to which the date is
March 23, 1999

<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


April 28, 1999

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

*   DARRYL G. SCHIMECK                                            April 28, 1999
    Darryl G. Schimeck - Chairman, President and Chief
     Executive Officer (Principal Executive Officer)


/s/ EFSTATHIOS A. KOUNINIS                                        April 28, 1999
    Efstathios A. Kouninis, Vice President of Finance,
    Corporate Controller, Treasurer and Secretary
    (Principal Financial and Accounting Officer)


*   EUGENE L. BARNETT                                             April 28, 1999
    Eugene L. Barnett - Director


*   HERBERT A. GETZ                                               April 28, 1999
    Herbert A. Getz - Director


*   WILLIAM P. HULLIGAN                                           April 28, 1999
    William P. Hulligan - Director


*   WILLIAM M. R. MAPEL                                           April 28, 1999
    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                                      April 28, 1999
      Efstathios A. Kouninis - Attorney-in-Fact