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, 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>


                                NSC Corporation
                        1998 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                                       15
Item   8.     Financial Statements and Supplementary Data                     18
Item   9.     Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosures                                       34

Part III
Item  10.     Directors and Executive Officers of the Registrant              34
Item  11.     Executive Compensation                                          35
Item  12.     Security Ownership of Certain Beneficial Owners and
              Management                                                      39
Item  13.     Certain Relationships and Related Transactions                  41

Part IV
Item  14.     Exhibits, Financial Statement Schedules and Reports on
              Form 8-K                                                        42

Signatures                                                                    45




<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,  indoor air
quality and industrial  services through two of its  wholly-owned  subsidiaries,
National  Surface   Cleaning,   Inc.  ("NSCI")  and  National  Service  Cleaning
Corporation    ("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.  OHM  Corporation  ("OHM")  acquired  NSCI  and  a
predecessor  company to NSCC in June 1988.  During 1989,  NSCC was  incorporated
in Connecticut to provide  asbestos-abatement  services to clients who 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.,   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 the
issuance to an  affiliate  of WMI of 4,010,000  shares of the  Company's  common
stock (the "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 an  affiliate  of WMI each  owned
approximately forty percent of the Common Stock.

Effective  March  6,  1998,  as  a  result  of a  transaction  between  OHM  and
International  Technology  Corporation  ("IT"),  OHM  distributed  its shares of
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
Common Stock.

The  Company  has  entered  into an  Agreement  and Plan of  Merger  dated as of
February  12, 1999 (the "Merger  Agreement"),  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
(the  "Merger"),  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 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. WMI has entered into a voting  agreement  pursuant to which it has
agreed,  subject to the terms set forth therein, to cause its affiliates to vote
their  shares of Common  Stock in favor of the  Merger  Agreement.  Since  these
shares represent  approximately  54% of the outstanding  shares of Common Stock,
the Merger  Agreement  will be approved  and  adopted  without any action by any
other  stockholder  of the  Company so long as the voting  agreement  remains in
effect.

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  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 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  its
affiliate,   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.

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.

Asbestos-Abatement and Demolition Operations

The  Company  provides   asbestos-abatement   and  other  specialty  contracting
services  through  its  network  of 19  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 35 states
and  provides  its  services  with  unionized  labor,  while NSCC is licensed to
perform  asbestos-abatement  services  in 40 states and  provides  its  services
with   non-unionized   labor.  ODMI  is  licensed  to  conduct   demolition  and
dismantling  services in 24 states,  the  District of Columbia  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 is 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  Environmental   Protection   Agency's  ("EPA")  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.

The Abatement Process

The Company's  workers  remove  asbestos in accordance  with the  regulations of
the EPA's  National  Emission  Standards for Hazardous Air Pollutants - Asbestos
("NESHAPS"), OSHA and 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 to be 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.

Markets and Customers

In 1998, the Company's  primary markets for its  asbestos-abatement,  demolition
and  dismantling  and other  specialty  contracting  services were the states of
California,  Illinois,  Massachusetts,  Minnesota, New York, Ohio, Pennsylvania,
South Carolina  and Texas  and  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 1998.

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 affiliates of
WMI in connection with certain large industrial  decontamination  and demolition
projects  performed by the WMI  affiliates.  The Company  provides such services
on a  competitive  basis.  Revenue  for  these  services  to the WMI  affiliates
amounted to approximately $22,000 in 1998.


<PAGE>


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,
                               1998              1997              1996
                                   (In thousands, except percentages)

Commercial.............. $ 46,755   47%     $  55,408   48%   $  56,299  44%
Industrial..............   28,130   28         43,835   38       53,929  42
Institutional...........   24,826   25         16,712   14       18,815  14
                         $ 99,711  100%     $ 115,955  100%   $ 129,043 100%



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.

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, 1998 the Company's  liability per  occurrence
under the general liability policy is $100,000,  under the automobile  liability
policy is $100,000 and under the workers' compensation policy is $250,000.

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 15, 1999, the Company  had  approximately  990  employees,  of which
approximately  95 are  employed  as  managers or  executives,  approximately  10
provide  technical or  engineering  services,  approximately  70 are employed in
sales,  clerical  and  data  processing  activities  and  approximately  815 are
employed  in other  capacities,  principally  hourly  labor.  During  1998,  the
number  of  hourly-rate  employees  ranged  from 900 to  1,300.  As of March 15,
1999, various unions represented  approximately  470 of the Company's  employees
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.

Government Regulation

The  federal   government   through  the  EPA,   OSHA  and  the   Department  of
Transportation  ("DOT")  regulates the  asbestos-abatement  and  demolition  and
dismantling  processes.  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.

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 adopted 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 is 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  $35,696,000,  $33,902,000  and  $38,875,000 at December 31, 1998,
1997 and  1996  respectively.  Up to  $1,875,000  of the  Company's  backlog  at
December 31, 1998 may not be earned  during 1999.  The  remaining  amount of the
Company's  backlog at  December  31, 1998 is  expected  to be  completed  in the
current calendar year.



<PAGE>

Item 2.  Properties

The  Company  currently  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               Footage
-------------------------------------------------------------------
  Lombard, IL           Offices and Warehousing          30,000
-------------------------------------------------------------------
  Houston, TX           Offices and Warehousing          24,240
-------------------------------------------------------------------
  Aston, PA             Offices and Warehousing          16,800
-------------------------------------------------------------------
  Oakland, CA           Offices and Warehousing          11,100
-------------------------------------------------------------------
  San Antonio, FL       Offices and Warehousing          10,800
-------------------------------------------------------------------
  Methuen, MA           Offices and Warehousing          10,000
-------------------------------------------------------------------
  Arden Hills, MN       Offices and Warehousing           9,654
-------------------------------------------------------------------
  Methuen, MA           Corporate Headquarters            9,500
-------------------------------------------------------------------
  Denver, CO            Offices and Warehousing           5,724
-------------------------------------------------------------------
  Orange, CA            Offices and Warehousing           5,530
-------------------------------------------------------------------
  Salisbury, NC         Offices                           5,400
-------------------------------------------------------------------
  Winfield, WV          Offices and Warehousing           5,000
-------------------------------------------------------------------
  Cincinnati, OH        Offices and Warehousing           4,000
-------------------------------------------------------------------
  Salem, NH             Offices and Warehousing           3,850
-------------------------------------------------------------------
  Wausau, WI            Offices and Warehousing           2,400
-------------------------------------------------------------------
  Baton Rouge, LA       Offices and Warehousing           1,250
-------------------------------------------------------------------
  Massena, NY           Offices                             *
-------------------------------------------------------------------
  Orange, TX            Offices                             *
-------------------------------------------------------------------
  Dallas, TX            Offices                             *
-------------------------------------------------------------------


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

The Company's  aggregate  rental  payments for leased office and warehouse space
approximated $900,000 in 1998.



<PAGE>

Item 3.  Legal Proceedings

On or about  September  4,  1998 the  Company  became  aware of  certain  issues
relating to state licensing for its employees at an asbestos  abatement  project
in South  Carolina.  The Company has brought the matter to the  attention of the
South Carolina  Department of Health and Environmental  Control.  The Company is
cooperating  with such  agency.  No civil or  criminal  charges  have been filed
against the Company in this matter.

In  addition  to the above  matter,  the  Company is  subject  to certain  legal
proceedings,   including  those  relating  to  regulatory  compliance,   in  the
ordinary  course of 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>

Executive Officers of the Registrant

The executive officers of the Company as of March 19, 1999 are listed below:

   Darryl G. Schimeck      38   Chairman, President and Chief Executive Officer
   Efstathios A. Kouninis  37   Vice President of Finance, Corporate Controller,
                                Treasurer and Secretary

Darryl G.  Schimeck has been  Chairman,  President and Chief  Executive  Officer
since May 4, 1998,  President  and Chief  Operating  Officer  since  December 5,
1996,  President  of NSCI  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.

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>


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 24,  1999  there  were  approximately  538  holders  of
record  of the  Common  Stock.  The  Company  did not pay a  dividend  in  1998.
During  December  1997,  the Company  declared and paid a cash dividend of $0.15
per  share  of  Common  Stock.   Pursuant  to  the  Company's  revolving  credit
facility,  as amended,  the Company must comply with certain financial covenants
for the  declaration  and  payment  of any  cash  dividends.  Under  the  Merger
Agreement,  the  Company is not  permitted  to declare or pay any  dividends  on
the  Common  Stock  so long as the  Merger  Agreement  remains  in  effect.  The
Common Stock does not have any preemptive rights.

NASDAQ has  advised  the  Company  that the Common  Stock does not  qualify  for
continued  listing  for  trading  on  the  NASDAQ.   The  Company  has  been  in
discussions  with  representatives  of NASDAQ in an effort to postpone action by
NASDAQ in  respect  of this  situation  pending  completion  of the  Merger.  On
March  12, 1999  the continued  listing of the Common Stock was  considered in a
written hearing by a panel of  representatives  of NASDAQ.  As of March 26, 1999
the  Company  has not been  informed of the  hearing  panel's  decision.  If the
Company's efforts are  unsuccessful,  it is likely that the marketability of the
Common Stock would be materially and adversely affected.

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:


                                1998                       1997
Quarter Ended              High      Low              High      Low

     December 31........  $1.00     $0.97           $ 2.88     $1.75
     September 30.......   1.19      1.06             3.00      1.94
     June 30............   1.97      1.84             2.50      1.50
     March 31...........   2.19      1.75             3.22      2.38






<PAGE>


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:

 (In thousands, except per-share data)
 Years Ended December 31,              1998    1997     1996     1995     1994
------------------------------------ ------- -------- -------- -------- --------

 Revenue...........................  $99,711 $115,955 $129,043 $124,529 $132,218
 Gross profit......................   15,878   11,027   22,589   19,447   21,716
 Write-down of assets held for sale     (158)   2,843      830        -        -

 Operating income (loss)...........      650   (7,762)   3,531    1,859    5,101

 Net income (loss).................   $  446  $(4,994) $ 1,861  $   715  $ 2,566




 Basic and diluted earnings per
  share (1)........................   $ 0.04  $ (0.50) $  0.19  $  0.07  $  0.26

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

Cash dividends declared per common
 share (2).........................   $    -  $  0.15  $  0.15  $  0.15  $  0.15

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

December 31,                            1998    1997     1996     1995    1994
------------------------------------- -------- -------- ------- ------- --------
                                                  (In thousands)
Total assets.......................   $ 72,200 $ 74,489 $85,560 $ 87,161 $88,287
Goodwill, net of accumulated
 amortization......................     34,075   35,175  36,275   36,872  37,938
Assets held for sale...............        313    1,653     475        -       -
Non current liabilities, including 
 current portion of long-term 
 obligations.......................      6,811    5,253   7,610    7,421  10,588



 (1)  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,  1996,  1995 and
      1994  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,   equals  basic  earnings  per  share  and,
      accordingly, have not been separately presented.

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







<PAGE>


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

In accordance  with the Private  Securities  Litigation  Reform Act of 1995, the
Company  notes  that  statements  that  look  forward  in  time,  which  include
everything other than historical  information,  involve risks and  uncertainties
that  may  affect  the  Company's  actual  results of  operation.  Factors  that
could cause actual  results to differ  materially  include the following  (among
others):  regulatory  changes,   technological  advances,  labor  shortages  and
disputes,  technical problems,  time extensions and/or delays in projects caused
by external sources,  weather conditions,  the condition of the U.S economy, and
other  factors  listed  from  time to time in the  Company's  filings  with  the
Securities  and Exchange  Commission.  The Company  undertakes  no obligation to
publicly   revise  these   forward-looking   statements  to  reflect  events  or
circumstances that arise after the date of this report.

Results of Operations

                                 1998 vs. 1997

Revenue.  The  Company's  consolidated  revenue for the year ended  December 31,
1998  decreased  14% to  $99,711,000  from  $115,955,000  for the same period in
1997.  This  decrease was due to a  $12,020,000  decrease in  asbestos-abatement
related revenue and a $4,224,000  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 1998 results are not  indicative  of results to be expected for any upcoming
year.

Gross Profit.  Gross profit  increased to $15,878,000  in 1998 from  $11,027,000
for the same  period in 1997.  The  increase  in gross  profit in 1998 is due to
recognition,  in 1997, of losses on certain projects,  the write down adjustment
of scrap process  equipment and increased  provision for general  liability loss
related to the  unfavorable  resolution of one significant  claim.  Gross profit
as a percentage of revenue increased to 16% in 1998 from 10% in 1997.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative   ("SG&A")   expenses  for  the  year  ended  December  31,  1998
decreased  $1,109,000 or 7% to $14,624,000  from $15,733,000 for the same period
in  1997.  The  decrease  in SG&A  expenses  was the  result  of a  decrease  in
salaries,  legal  expenses  and  other  outside  services,  partially  offset by
increases in provision  for bad debt.  SG&A  expenses as a percentage of revenue
for 1998 increased to 15% from 14% in 1997 due to lower revenue activity.

Write Down of Assets  Held for Sale.  In 1998,  the  Company  sold its  Methuen,
Massachusetts   headquarters  property  for  $158,000  more  than  its  adjusted
carrying value. As discussed  below,  the Company  recorded a write down on this
asset in 1997.

Other  Operating  Income  (Expenses).  ODMI  manages  the  business  of ODC,  an
affiliate of WMI, and is required to share with the WMI  affiliate any operating
profits or losses.  For 1998, the amount due from the WMI affiliate was $338,000
compared to $887,000 due from the WMI affiliate for the same period in 1997.

Equity  Income  of   Unconsolidated   Joint   Venture.   In  1998,  the  Company
recognized  $75,000  as its share of the net  income of a joint  venture  formed
during  the  year  to  pursue   re-industrialization   and  decontamination  and
decommissioning opportunities in the Department of Energy market.

Other  Income.  Other Income was $206,000 in 1998  compared to $189,000 in 1997.
This  difference  is mainly due to increased  gains on sales of assets offset by
increased interest expense on assets under capital leases.

Net Income  (Loss).  Net income was  $446,000 in 1998  compared to a net loss of
$4,994,000  in 1997.  The change is  attributable  to  increased  gross  profit,
lower  SG&A  expenses,  a sale of real  property  at an amount  higher  than its
carrying  value and the write down  adjustment,  in 1997, of the carrying  value
of real  property and scrap  process  equipment as discussed  elsewhere  herein.
Net income (loss) as a percentage of revenue was 0.5% compared to (4%) in 1997.



<PAGE>



                                 1997 vs. 1996

Revenue.  The  Company's  consolidated  revenue for the year ended  December 31,
1997  decreased 10% to  $115,955,000  from  $129,043,000  for the same period in
1996.  This  decrease  was due to a  $6,878,000  decrease in  asbestos-abatement
related revenue and a $6,210,000  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 10% in 1997 from 18% in 1996.

Selling,  General and Administrative  Expenses. SG&A expenses for the year ended
December 31, 1997 decreased  $698,000 or 4% to $15,733,000  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  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.  A certified  independent  appraiser  was engaged to determine the market
value of the real  property.  The  write-down  of the  properties  and equipment
amounted to $2,843,000 and $830,000 in 1997 and 1996, respectively.

Other  Operating  Income  (Expenses).  For  1997,  the  amount  due from the WMI
affiliate  as a  consequence  of ODC was  $887,000,  compared to $700,000 due to
the WMI affiliate for the same period in 1996.

Other  Income.  Other Income was $189,000 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 to 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 was (4%) compared to 1.4% in 1996.

Liquidity and Capital Resources

Working  capital at December 31, 1998 was  $20,395,000  compared to  $16,826,000
at  December  31,  1997.  The  current  ratio  was  2.5/1  compared  to 1.9/1 at
December 31, 1997.  Cash used in operating  activities was  $5,402,000  compared
to cash provided by operating  activities of $7,155,000  for 1997.  The increase
in cash used in  operations  is  primarily  due to timing  issues in the billing
and collection process and accelerated vendor payments.

During  1998,  cash of  $1,553,000  was  used  for  purchases  of  property  and
equipment.  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
that 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  March  23,  1999,  will  be  sufficient  through  the  date  of the
consummation  of the proposed  Merger to finance its working  capital  needs and
planned   capital   expenditures.   In  the  event   that  the   Merger  is  not
consummated,  the  Company  will  endeavor to obtain  financing  for its capital
expenditure  needs and may,  among its  alternatives,  seek a new debt facility.
WMI will assist the Company in this  regard by  guaranteeing  some or all of the
Company's outstanding debt obligations.

As  discussed  further  in Note  11,  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,  including but not
exclusively  workers'  compensation and general  liability  claims,  at December
31, 1998 of $5,013,000 and at December 31, 1997 of $6,403,000.

Year 2000

In 1996,  the  Company  began  upgrading  its  financial  and  decision  support
systems to, in part,  comply with Year 2000  requirements.  This  process is now
complete and the Company  believes  that such  systems are Year 2000  compliant.
In  addition  to  $820,000  of  capital  costs  for new  hardware  and  software
incurred   project-to-date,   consulting  and  training  expenses  of  $264,000,
$223,000 and $135,000 were incurred with respect to system  upgrades,  including
Year  2000  compliance,  in  1998, 1997  and  1996,  respectively.  The  Company
believes that these  expenditures  will adequately  address any Year 2000 issues
associated  with the  Company's  operations.  The  Company  has been in  contact
with its bank and  several  of its more  significant  customers  and  vendors to
determine the extent to which the  Company's  interface  systems are  vulnerable
to those third  parties'  failure to remedy  their own Year 2000  issues.  There
is no  guarantee  that the  systems of other  companies  on which the  Company's
systems rely will be  converted.  Even  assuming  that such  conversions  do not
occur,  the Company does not believe  that any such third party system  failures
will have a  material  adverse  effect on the  Company  given the  nature of the
Company's business, which is not computer dependent in any material aspect.

Market Risk Factors

The Company's  exposure to interest  changes is limited to its revolving  credit
facility which bears  interest at a variable rate based on the Eurodollar  rate.
At  December  31,  1998,  the Company had no  outstanding  borrowings  under the
revolving credit facility; however, the Company's borrowing capacity was reduced
by  letters  of  credit  outstanding  as of  March  23,  1999 in the  amount  of
$4,725,000.  The Company has no plans for future  borrowings  under the facility
but may use the  facility  if cash flow  circumstances  warrant.  The  Company's
working capital loan from an affiliate is  non-interest  bearing and its capital
leases have fixed payment terms.  The Company does not enter into  derivative or
interest  rate  transactions.  Based on the above,  the  Company  believes  that
changes in interest  rates would not have a significant  effect on net income or
cash flow.

Except for the working  capital  loan  described  above,  the fair values of the
Company's   financial   instruments   approximate   their  respective   carrying
amounts.  The Company  estimates  the fair value of the working  capital loan to
be  $2,815,000,  compared  to  a  carrying  value  of  $4,520,000,  based  on  a
discounted cash flow analysis using the Company's incremental borrowing rate.

Inflation

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


<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, 1998, 1997 and 1996 are set forth on pages 19 through 22.



<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  $150,000,  $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.








Boston, Massachusetts
February 12, 1999,
except for Note 6,
as to which the date is
March 23, 1999



<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 directors of the Company are set forth below:

                                         Positions and Other
     Name              Age          Relationships with the Company
                                        and Business Experience

Eugene L. Barnett      70    Director.  Mr.  Barnett  is  retired  and was Vice
                             President   of  Pittway   Corp.,   a   diversified
                             conglomerate,   from   1976   to   1992.   He  was
                             formerly  Chairman and Chief Executive  Officer of
                             Brand  from  1976  through   February   1991.  Mr.
                             Barnett is a Director  of Aptar  Group,  Inc.  and
                             Pittway Corp.

Herbert A. Getz        43    Director.  Mr.  Getz  is a  private  investor  and
                             was  formerly  Senior Vice  President  and General
                             Counsel  of  WMI  from  May  1995  to  July  1998.
                             Prior  to this  position,  he was  Vice  President
                             and General  Counsel of WMI since  August 1992 and
                             Secretary  of WMI since  January  1988.  Mr.  Getz
                             also  served  as  the  Vice   President,   General
                             Counsel    and    Secretary    of     Wheelabrator
                             Technologies,  Inc.  from  November  1990  to  May
                             1993.

William P. Hulligan     55   Director.  Mr.  Hulligan  served as Vice President
                             of WMI from  February  1997  until his  retirement
                             in  November  1997 and now serves as a  consultant
                             to   WMI.   Prior   to  this   position,   he  was
                             Executive  Vice  President  of Waste  Management -
                             North  America  from  January  1996,  President of
                             Waste  Management  - Midwest  from  March 1993 and
                             President   of  Waste   Management   -  East  from
                             September 1992.

William M. R. Mapel     67   Director.  Mr.  Mapel is a  private  investor  and
                             was   formerly   a  Senior   Vice   President   of
                             Citibank,  N.A.  from  1969 to 1988,  where he was
                             employed  for more than 30 years.  Mr.  Mapel is a
                             Director   of    Brundage,    Churchill    Capital
                             Partners,    Galey   &   Lord,   Atlantic   Salmon
                             Federation,    Quebec-Labrador    Foundation   and
                             USLIFE Income Fund, Inc.

Darryl G. Schimeck     38    Director.  Mr.   Schimeck   has   been   Chairman,
                             President  and Chief  Executive  Officer since May
                             4,   1998  and  has  been   President   and  Chief
                             Operating  Officer of the Company  since  December
                             5,  1996.   Mr.   Schimeck   has  also  served  as
                             President of NSCI since July 10, 1995.

Directors' Fees

Directors  of the Company who are not  employees  of the Company or WMI or their
affiliates receive $22,000 per annum.


<PAGE>



Item 11.  Executive Compensation

The following table shows, for the fiscal years ended  December 31,  1998,  1997
and  1996, the cash  compensation paid  by the  Company and its subsidiaries, as
well as certain other compensation  paid or accrued for those years,  to each of
the most highly  compensated executive officers of  the  Company, including  the
Chief Executive Officer of the Company, in all capacities in which they served:

                           SUMMARY COMPENSATION TABLE



                                                        Long-term
                                                       Compensation
                                                        Securities    All Other
     Name and                   Annual Compensation     Underlying  Compensation
Principal Position(s)    Year  Salary ($) Bonus($)(1)   Options (#)   ($)  (4)

Victor J. Barnhart       1998   258,858          -            -         34,784
 Former Chairman of      1997   248,093          -            -          9,526
 the Board and Chief     1996         -          -      250,000 (2)          -
 Executive Officer

Darryl G. Schimeck       1998   204,144     15,000            -              -
 Chairman of the Board,  1997   180,003     15,000            -              -
 President and Chief     1996   137,954     79,519      100,000 (3)     20,340
 Executive Officer

Efstathios A. Kouninis   1998   127,669     22,500            -              -
 Vice President of       1997    99,429     37,163       57,500 (3)          -
 Finance, Corporate      1996    87,464     45,000       12,500 (3)          -
 Controller, Treasurer
 and Secretary



(1)  Messrs.  Schimeck and Kouninis received  incentive  payments for  continued
     employment, per  the  terms  of  their respective employment agreements, of
     $15,000 and  $7,500,  respectively,  for  1998  and 1997, and  $20,000  and
     $15,000,  respectively,  for 1996.  Mr.  Schimeck  received  the full  1996
     bonus and half of the 1995 bonus  amounts deferred for 1996,  including one
     year interest on this deferred amount, in 1997.

(2)  The options  granted to Mr.  Barnhart  vest after  December 5, 1999 and are
     exercisable at the fair market  value of the  underlying  securities at the
     date of the grant.

(3)  The options granted to Messrs.  Schimeck  and Kouninis vest proportionately
     over a four year period and are exercisable at the fair market value of the
     underlying securities at the date of the grant.

(4)  "All Other Compensation"  includes $20,340 for the tax  gross-up associated
     with  relocation expenses of $44,451 reimbursed to Mr. Schimeck in 1995 and
     $25,000 of  relocation expenses  paid to Mr. Barnhart in 1998  according to
     his  separation  agreement.   The   remaining   amounts   in   "All   Other
     Compensation" represent vehicle allowances.





<PAGE>


The  following  table  sets  forth   information   with  respect  to  the  named
executives  concerning  the exercise of options  during the last fiscal year and
unexercised options held as of the end of the fiscal year:
<TABLE>
<CAPTION>

                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES


                                Value Realized    Number of Securities     Value of Unexercised
                     Shares    (Market Price at  Underlying Unexercised        in the Money
                  Acquired on   Exercise Less     Options at FY-End($)     Optons at FY-End (#)
                  Exercise (#) Exercise Price) Exercisable Unexercisable Exercisable Unexercisable

<S>                      <C>             <C>          <C>       <C>       <C>          <C>      
Victor J. Barnhart         -               -            -       250,000   $      -     $       -

Darryl G. Schimeck         -               -       57,500        42,500          -             -

Efstathios A. Kouninis     -               -       33,750        36,250          -             -
</TABLE>


Stock Options Granted in Last Fiscal Year

No stock options granted by the Company to the named  executive  officers during
1998.

Employment Agreements

The Company  entered into  Employment  Security  Agreements with each of Messrs.
Schimeck and  Kouninis  dated  October 2, 1996,  as amended on November 5, 1998.
These   agreements   provide   the   Company   with  the   benefit   of  certain
non-competition  provisions,  and assure Messrs. Schimeck and Kouninis that each
of their base  salaries as of the date of execution of the  agreements  will not
be reduced  below that level  during the period  ending on  December  31,  1999.
The  agreements  also provide that  Messrs.  Schimeck and Kouninis  will receive
supplemental  incentive payments for continued  employment through 1997 and 1998
which,  for  Mr.  Schimeck,  will be the  greater  of 35% of his  actual  earned
incentive  payment  under  applicable  incentive  plans or $15,000  and, for Mr.
Kouninis,  a lump sum of $7,500.  If the executive is terminated  without cause,
he is entitled to the greater of the amount of the base salary  remaining  to be
paid before December 31, 1999, or one year of base salary.

The Company  entered into an Employment  Agreement with Mr. Barnhart dated March
12,  1997,  under  which the  Company  agreed to employ Mr.  Barnhart as CEO and
Chairman of the Board until  December 31,  1999.  On May 4, 1998,  Mr.  Barnhart
resigned from the Company.  In connection  with his  resignation,  Mr.  Barnhart
and the Company entered into a Separation  Agreement,  dated May 6, 1998.  Under
this  agreement,  the Company  receives  the benefit of certain  non-competition
covenants and  consulting  services from Mr.  Barnhart.  The agreement  provides
Mr.  Barnhart  with  his  base  salary  and  certain  insurance  benefits  until
December 31, 1999 unless  there is a change in control of the  Company,  such as
the Merger.  In that case,  Mr.  Barnhart  is  entitled to the present  value of
his  remaining  base salary.  The agreement  also  provides Mr.  Barnhart with a
$25,000  reimbursement  for relocation  expenses and the Company's  agreement to
continue  stock options  previously  granted to Mr.  Barnhart until December 31,
1999.

Compensation Committee Interlocks and Insider Participation

Messrs.  Getz,  Blackwell and Mapel were members of the  Compensation  Committee
of the Board of  Directors  during  1998,  none of whom are  officers  or former
officers of the Company.

Board Compensation Committee Report *

The primary  function  of the  Compensation  Committee  is to review and approve
salaries and other  benefits for  executive  officers of the Company and to make
recommendations  to the Board of  Directors  with  respect  to the  adoption  of
employee  benefit  programs.  The Compensation  Committee is currently  composed
of two  directors,  Messrs.  Getz and Mapel,  who are not executive  officers of
the  Company.  Mr.  Getz,  however,  was an  executive  officer  of  WMI,  which
currently,  through  ownership of Rust, is the owner of approximately 54% of the
issued  and  outstanding  Common  Stock of the  Company.  Set  forth  below is a
report of Messrs.  Getz and Mapel in their capacity as the Board's  Compensation
Committee  addressing  the  Company's  compensation  policies  for  1998 as they
affected the executive  officers who, for 1998,  were the Company's  most highly
paid executive officers.

Compensation   Policies  Towards  Executive   Officers.   The  majority  of  the
compensation  received by the  executive  officers of the Company,  as reflected
in the  compensation  table,  consisted  of a  base  salary,  and  an  incentive
payment   for  1998  as   determined   under  the  1994   Management   Incentive
Compensation Plan (the "Incentive Plan").

The base  salaries  of the  executive  officers  were  generally  set at  levels
recommended  by the  Chairman  and Chief  Executive  Officer of the  Company and
approved by the  Compensation  Committee.  Each of the  executive  officers  had
the  opportunity  to earn  incentive  payments under the Incentive Plan based on
the  achievement of certain  performance  goals  determined by the  Compensation
Committee in  conjunction  with the Company's  annual  business plan. The amount
of  incentive  payment is  targeted at a  percentage  of each  executive's  base
salary and can be  increased or  decreased  depending  on whether the  operating
cash flow and  operating  income of the Company  meet,  exceed or fall below the
targeted  operating  cash  flow and  operating  income  set by the  Compensation
Committee.  In addition, the Compensation  Committee,  from time to time, grants
stock options to executive  officers  under the Company's 1990 Stock Option Plan
to reward past performance and encourage future performance.

Mr.  Barnhart.  Mr.  Barnhart  became  Chairman and Chief  Executive  Officer on
December  5, 1996.  The  Company  entered  into an  Employment  Agreement  dated
March 12, 1997 with Mr.  Barnhart,  and the  Employment  Agreement  set his base
salary of $250,000 per year with the intention  that future  increases  would be
tied  to  both  the  future  performance  of the  Company  and  to his  personal
performance  as  assessed  by  the  Compensation   Committee.  In  addition,  in
connection  with Mr.  Barnhart's  Employment  Agreement,  he was granted options
for  250,000  shares of  the Company's common  stock,  which vest in full at the
expiration  of the  Employment  Agreement on December 31, 1999.  On May 4, 1998,
Mr.  Barnhart resigned his  position as Chairman  and Chief Executive Officer of
the Company.

Mr. Schimeck. On May 4, 1998, upon Mr. Barnhart's resignation,  Mr. Schimeck was
appointed Chairman and Chief Executive Officer of the Company. The Compensation
Committee   considered   Mr.   Schimeck's   importance  and   substantial   past
contributions to the Company and the additional responsibilities he would assume
as Chairman and Chief Executive Officer. Following discussions, the Compensation
Committee  resolved to increase  Mr.  Schimeck's  base salary to  $210,000,  his
incentive  compensation target to 50% from 40% of his base salary, and to ratify
and  confirm Mr.  Schimeck's  Employment  Agreement  (discussed  further  below)
incorporating  his new base salary in any  calculation  of a  severance  payment
following a termination without cause.

Messrs.  Schimeck  and  Kouninis.  In an effort to retain  the  services  of key
employees,   the  Company  entered  into  Employment  Security  Agreements  with
Messrs.  Schimeck and Kouninis  dated October 2, 1996, as amended on November 5,
1998,  which included  execution  bonuses of $20,000 and $15,000,  respectively,
and provided for certain supplemental incentive payments.

Section  162(m) of the Internal  Revenue Code of 1986,  as amended,  prohibits a
publicly  held  corporation,  such as the Company,  from claiming a deduction on
its federal  income tax return for  compensation  in excess of  $1,000,000  paid
for a given  fiscal  year to  certain  executives.  The  Compensation  Committee
does not believe it is likely that the  deductibility  of  compensation  paid by
the Company will be limited by the operation of Section 162(m).

                                                           HERBERT A. GETZ
                                                           WILLIAM R. MAPEL


* Note: This  report is not  incorporated  by  reference  in any prior or future
        Commission filing,  directly or by reference to the incorporation of the
        proxy  statements  of  the  Company,  unless  such  filing  specifically
        incorporates this report.


<PAGE>


Performance Graph *


Set forth below is a line graph  comparing the yearly  percentage  change in the
cumulative  total  stockholder  return on the Company's common stock against the
cumulative  total return for S&P  Composite-500  Stock Index and a peer group of
companies  selected by the Company  consisting of companies in which significant
amounts of revenues are derived from the asbestos-abatement  business (the "Peer
Group")  for the period of five years  commencing  December  31, 1993 and ending
December 31, 1998.  The Peer Group  includes  American ECO Group,  Inc.,  Foster
Wheeler  Corporation,  PDG  Environmental,   Inc.,  Philip  Environmental,  Inc.
("Philips"),  which  went  public  February  1993,  and  Sevenson  Environmental
Services, Inc. ("Sevenson").  Allwaste, Inc. ("Allwaste"), which was included in
the Peer Group for the  Performance  Graph  contained in the Proxy Statement for
the Company's 1997 Annual Meeting,  was excluded from the following  Performance
Graph as a result of its  purchase  by Philips.  Sevenson  was added to the Peer
Group to replace Allwaste.

               COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON
                      COMMON STOCK, S&P 500 AND PEER GROUP

              (Market Value of $100 Invested on December 31, 1993)

[typeset representation of line chart]

                12/31/93  12/31/94  12/31/95  12/31/96  12/31/97  12/31/98

NSC Corporation   100.00     52.20     42.68     56.10     67.07     39.84
S&P 500           100.00    111.56    152.47    186.46    244.28    281.19
Peer Group        100.00     85.45     95.83    140.76    248.96     89.64




* Note: This  report is not  incorporated  by  reference  in any prior or future
        Commission filing,  directly or by reference to the incorporation of the
        proxy  statements  of  the  Company,  unless  such  filing  specifically
        incorporates this report.


<PAGE>




Item 12.  Security Ownership of Certain Beneficial Owners and Management
Security Ownership of the Company

The  following  table  sets  forth  certain  information  as of March 19,  1999,
except as otherwise  indicated,  with respect to the beneficial ownership of the
Company's  common stock (i) by holders of 5% or greater,  (ii) each  director of
the  Company,  (iii)  each  executive  officer of the  Company,  and (iv) by all
directors  and  executive  officers  of  the  Company  as  a  group.  Except  as
otherwise  indicated,  information with respect to beneficial ownership is based
on  information  furnished to the Company by each  stockholder  included in this
table.   Except  as  otherwise  indicated  in  the  notes  to  the  table,  each
stockholder  included  in the  table  has  sole  voting  investment  power  with
respect to the shares shown to be beneficially owned.

                                           Amount and
           Name of                         Nature of
           Beneficial                      Beneficial          Percentage
           Owner (1)                      Ownership (2)         of Class

        Waste Management, Inc.              5,380,670              54.0%
        3003 Butterfield Road
        Oakbrook, IL 60521

        Franklin Resources, Inc. (1)          800,000               8.0%
        One Parker Plaza, 16th Floor
        Fort Lee, New Jersey 07024

        Kennedy Capital Management, Inc. (2)  621,645               6.2%
        10829 Olive Boulevard
        St. Louis, Missouri 63141

        FMR Corp. (3)                         550,400               5.5%
        82 Devonshire Street
        Boston, MA 02109-3614

        Dimensional Fund Advisors, Inc. (4)   518,300               5.2%
        1299 Ocean Avenue, 11th Floor
        Santa Monica, CA 90401

        Eugene L. Barnett (5)                  10,000                 *

        Herbert A. Getz                           500                 *

        William P. Hulligan                         -                 -

        William M. R. Mapel (5)                11,000                 *

        Darryl G. Schimeck (5)                 59,500                 *

        Efstathios A. Kouninis (5)             33,750                 *

        All directors and executive officers
         as a group (7 persons) (5)           114,750                 *


*   Less than 1%

(1) According to  Schedule  13G,  dated  January 29,  1999,  Franklin Resources,
    Inc. ("FRI"), a registered  investment advisor, is deemed to have beneficial
    ownership  of  800,000  shares of  the Company's common stock,  all of which
    shares are held in  open or closed-end investment companies or other managed
    accounts  which are advised by direct or indirect investment subsidiaries of
    FRI. FRI disclaims beneficial ownership of all such shares.

(2) According  to  Schedule  13G,  dated  February  5, 1999,   Kennedy   Capital
    Management,  Inc., a  registered  investment  advisor,  is  deemed  to  have
    beneficial ownership of 621,645 shares of Common Stock.

(3) According to Amendment  No. 1 to Schedule 13G, dated February 14, 1998,  FMR
    Corp.  has sole or shared  voting power as to none of such shares of  Common
    Stock and sole  investment  power as to 550,400 shares of Common Stock.

(4) According  to  Schedule  13G,  dated  February  6, 1998,   Dimensional  Fund
    Advisors, Inc. ("Dimensional") has sole voting power with respect to 351,900
    shares of  Common  Stock and sole investment power  with respect to  518,300
    shares of Common Stock.  Dimensional,  a registered  investment  advisor, is
    deemed to have  beneficial ownership of 418,300 shares of Common Stock as of
    December  31, 1997,  all of  which  shares  are held  in  portfolios  of DFA
    Investment Dimensions Group, Inc., a registered open-end investment company,
    or in series of the DFA Investment Trust Company, a Delaware business trust,
    or the DFA Group Trust and DFA Participation Group Trust investment vehicles
    for qualified  employee  benefit plans,  all of which  Dimensional serves as
    investment advisor.   Dimensional disclaims beneficial ownership of all such
    shares.

(5) Assumes the exercise of options, presently exercisable or exercisable within
    60  days, to purchase  up  to 10,000,  10,000,  57,500 and  33,750 shares of
    Common Stock by Messrs. Barnett, Mapel, Schimeck and Kouninis, respectively
    granted pursuant to the Company's 1990 Stock Option Plan.



<PAGE>


Item 13.  Certain Relationships and Related Transactions

Other

The Company  has,  from time to time,  provided  asbestos-abatement  and related
services to WMI and its  affiliates  on a  subcontract  basis.  Revenues  earned
from  these  affiliates  for such  services  were  $22,000  for the  year  ended
December 31,  1998.  An  affiliate  of WMI also rented  demolition  equipment to
the Company for which it was charged  $302,000  for the year ended  December 31,
1998.

In  connection  with  the  Merger,  WMI  has  entered  into a  voting  agreement
pursuant  to which it has  agreed,  subject to the terms set forth  therein,  to
cause its  affiliates  to vote  their  shares  of  Common  Stock in favor of the
Merger  Agreement.  Since  these  shares  represent  approximately  54%  of  the
outstanding  shares of Common Stock,  the Merger  Agreement will be approved and
adopted  without any action by any other  stockholder  of the Company so long as
the voting agreement remains in effect.

The Merger Agreement also contemplates that,  immediately prior to the effective
time of the Merger,  WMI will cause its  affiliates  to exchange  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 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 its
affiliate,   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.


<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, 1998,  1997 and 1996 are included
at the pages indicated below:

                                                                            Page

      Consolidated Balance Sheets                                             19
      -As of December 31, 1998 and 1997

      Consolidated Statements of Operations                                   20
      -For the Years Ended December 31, 1998, 1997 and 1996

      Consolidated Statements of Changes in Stockholders' Equity              21
      -For the Years Ended December 31, 1998, 1997 and 1996

      Consolidated Statements of Cash Flows                                   22
      -For the Years Ended December 31, 1998, 1997 and 1996

      Notes to Consolidated Financial Statements                              23

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


                                                                            Page

      Schedule II
      Valuation and Qualifying Accounts                                       46
      -For the Years Ended December 31, 1998, 1997 and 1996

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].

4(a)     Agreement  and Plan of Merger,  dated as of  February  12,  1999 by and
         among NSC Holdings,  Inc., NSC  Acquisition,  Inc., NSC Corporation and
         Waste  Management,  Inc.  [incorporated  by reference to Exhibit 2.1 to
         the Registrant's Report on Form 8-K dated February 17, 1999].

* 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>


* 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  t
         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 Form 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)    Fifth Amendment to Revolving  Credit  Agreement,  dated as of March 23,
         1999 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(k)    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(l)    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(m)  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(n)  Employment  Agreement,  dated March 12,  1997 by and between  Victor J.
         Barnhart  and NSC  Corporation  [incorporated  by  reference to Exhibit
         10(p)  to the  Registrant's  Annual  Report  on Form  10-K for the year
         ended December 31, 1996].

* 10(o)  Separation  Agreement,  dated  May 6,  1998 by and  between  Victor  J.
         Barnhart and NSC Corporation.

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


<PAGE>


* 10(p)  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 Registrant's  Annual Report on Form 10-K  for the
         year ended December 31, 1996].

* 10(q)  Amendment of Employment Security  Agreement, dated  November 5, 1998 by
         and  between Darryl G. Schimeck and NSC Corporation.

* 10(r)  Employment Security  Agreement,  dated  October 2, 1996 by  and between
         Efstathios A. Kouninis and NSC Corporation  [incorporated  by reference
         to Exhibit 10(o) to the Registrant's Annual Report on Form 10-K for the
         year ended December 31, 1997].

* 10(s)  Amendment of Employment  Security  Agreement, dated June 3, 1998 by and
         between Efstathios A. Kouninis and NSC Corporation.

* 10(t)  Amendment of Employment Security Agreement, dated November 5, 1998 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 report on Form 8-K during the three month  period
         ended December 31, 1998.


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>



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 29, 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                                            March 29, 1999
    Darryl G. Schimeck - Chairman, President and Chief
     Executive Officer (Principal Executive Officer)


/s/ EFSTATHIOS A. KOUNINIS                                        March 29, 1999
    Efstathios A. Kouninis, Vice President of Finance,
    Corporate Controller, Treasurer and Secretary
    (Principal Financial and Accounting Officer)


*   EUGENE L. BARNETT                                             March 29, 1999
    Eugene L. Barnett - Director


*   HERBERT A. GETZ                                               March 29, 1999
    Herbert A. Getz - Director


*   WILLIAM P. HULLIGAN                                           March 29, 1999
    William P. Hulligan - Director


*   WILLIAM M. R. MAPEL                                           March 29, 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                                      March 29, 1999
      Efstathios A. Kouninis - Attorney-in-Fact


<PAGE>


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


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

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

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

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

Year Ended December 31, 1998
 Deducted from assets accounts:
  Allowance for uncollectible
   accounts                    $  711     $  334       $  551        $  494
  Reserve for contract revenue
   adjustments                    363        283          614            32

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

Year Ended December 31, 1997
 Deducted from assets accounts:
  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
--------------------------------------------------------------------------------


(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>




                       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, 1998



                              ____________________


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





                             _____________________

                                    Exhibits

                             _____________________




<PAGE>


                                 EXHIBIT INDEX

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

Exhibit     Exhibit                                                      Exhibit
Number      Description                                                    Page

10(j)    Fifth Amendment to Revolving Credit Agreement, dated as             49
         of March 29, 1999 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(o)  Separation Agreement, dated May 6, 1998 by and between Victor       53
         J. Barnhart and NSC Corporation.

* 10(q)  Amendment of Employment Security Agreement, dated November 5,       55
         1998 by and between Darryl G. Schimeck and NSC Corporation.

* 10(s)  Amendment of Employment Security Agreement, dated June 3,           57
         1998 by and between Efstathios A. Kouninis and NSC Corporation.

* 10(t)  Amendment of Employment Security Agreement, dated November 5,       59
         1998 by and between Efstathios A. Kouninis and NSC Corporation.

21       Subsidiaries of the Registrant.                                     61

23       Consent of  Independent Auditors.                                   62

24       Powers of Attorney of certain directors of the Registrant.          63

27       Financial Data Schedule, Article 5                                  64



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


<PAGE>


                               FIFTH AMENDMENT TO
                           REVOLVING CREDIT AGREEMENT


      THIS  FIFTH   AMENDMENT  TO  REVOLVING   CREDIT   AGREEMENT  (this  "Fifth
Amendment")  is made and entered  into as of the __ day of March,  1999,  by and
among NSC CORPORATION,  a Delaware corporation (the "Parent"),  its Subsidiaries
listed on the signature  pages hereto (the  "Subsidiaries,"  the Parent and such
Subsidiaries   collectively   referred   to  herein  as  the   "Borrowers"   and
individually  as a  "Borrower"),  each of which  Borrowers  having its principal
place  of  business  at  49  Danton   Drive,   Methuen,   Massachusetts   01844,
BANKBOSTON,  N.A. ("BKB",  formerly known as The First National Bank of Boston),
a national  banking  association  having its principal  place of business at 100
Federal  Street,  Boston,  Massachusetts  02110,  FLEET  NATIONAL BANK ("Fleet",
formerly  known as Fleet Bank of  Massachusetts,  N.A.,  and together  with BKB,
the  "Banks"),  a  national  banking  association  with its  principal  place of
business at One Federal Street,  Boston,  Massachusetts 02111, and BKB, as Agent
for the Banks (the "Agent").

      WHEREAS,  the Borrowers,  the Banks and the Agent entered into a Revolving
Credit  Agreement  dated as of May 4, 1993 and amended as of  December 2,  1993,
May 1,  1996,  May 9,  1997 and  December  22,  1997  (the  "Credit  Agreement")
pursuant to which the Banks  extended  credit to the  Borrowers on the terms and
conditions set forth therein;

      WHEREAS,  the Banks,  the  Borrowers,  and the Agent have  agreed to amend
the Credit Agreement as hereinafter set forth;

      NOW,  THEREFORE,  for good and  valuable  consideration  the  receipt  and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereto  agree as
follows:

I.    AMENDMENT TO THE CREDIT AGREEMENT

      A.    Amendments  to  1.1 of  the  Credit  Agreement.  Section  1.1 of the
Credit  Agreement is hereby  amended by deleting the  following  definitions  in
their entirety and substituting the following in place thereof:

      "Maturity Date.  June 30, 1999."

      "Total  Commitment.  $6,000,000,  as such  amount may be reduced  pursuant
to 2.1 or 2.2 hereof."

      B.    Amendment  to  9.4  of the  Credit  Agreement.   Section  9.4 of the
Credit  Agreement  is hereby  amended by deleting  such  Section in its entirety
restating it as follows:

      "9.4. Profitable  Operations.  The  Borrowers will not permit Consolidated
      Net Income to be less than $0 for any fiscal quarter."

II.   PROVISIONS RELATING TO THIS FIFTH AMENDMENT

      A.    Definitions.   Capitalized  terms  used  herein  without  definition
have the meanings ascribed to them in the Credit Agreement.

      B.    Ratification, etc.

      Except as expressly amended or waived hereby,  the Credit  Agreement,  the
other Loan  Documents and all  documents,  instruments  and  agreements  related
thereto are hereby  ratified and  confirmed  in all respects and shall  continue
in full force and effect.  This Fifth  Amendment and the Credit  Agreement shall
hereafter  be  read  and  construed  together  as a  single  document,  and  all
references  in the Credit  Agreement or any related  agreement or  instrument to
the Credit  Agreement  shall  refer to the Credit  Agreement  as amended by this
Fifth Amendment.


<PAGE>


      C.    GOVERNING LAW.

      THIS FIFTH  AMENDMENT  SHALL BE GOVERNED BY AND  CONSTRUED  IN  ACCORDANCE
WITH THE LAWS OF THE  COMMONWEALTH OF  MASSACHUSETTS  AND SHALL TAKE EFFECT AS A
SEALED INSTRUMENT IN ACCORDANCE WITH SUCH LAWS.

      D.    Counterparts.  This  Fifth  Amendment  may be executed in any number
of counterparts and by different parties hereto on separate  counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.  Complete sets of counterparts shall be lodged with the Banks.

      E.    Effectiveness.  This  Fifth  Amendment  shall become  effective upon
the satisfaction of each of the following:

            (i)   This Fifth  Amendment  shall have been  executed and delivered
      by the respective parties hereto; and

            (ii)  The Agent shall have  received an amendment  fee of $25,000 to
      be shared pro rata  among the Banks in  accordance  with their  respective
      Commitment Percentages.

      F.    Entire  Agreement.  THE  CREDIT AGREEMENT AND THE SECURITY DOCUMENTS
AS AMENDED BY THIS FIFTH AMENDMENT  REPRESENTS THE FINAL  AGREEMENT  BETWEEN THE
PARTIES AND MAY NOT BE  CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR
SUBSEQUENT  ORAL  AGREEMENTS  OF  THE  PARTIES.  THERE  ARE  NO  UNWRITTEN  ORAL
AGREEMENTS BETWEEN THE PARTIES.



<PAGE>

      IN  WITNESS  WHEREOF,  the  undersigned  have  duly  executed  this  Fifth
Amendment under seal as of the date first set forth above.

                                    THE BORROWERS:

                                    NSC CORPORATION


                                    By: /s/  EFSTATHIOS A. KOUNINIS
                                    Title:  Vice President of Finance

                                    NATIONAL SERVICE CLEANING CORP.


                                    By: /s/  EFSTATHIOS A. KOUNINIS
                                    Title:  Vice President of Finance


                                    NATIONAL SURFACE CLEANING
                                    CORP.


                                    By: /s/  JOANNA DUNN
                                    Title:  Assistant  Secretary  &  Assistant
                                    Treasurer

                                    OLSHAN DEMOLISHING
                                    MANAGEMENT, INC.


                                    By: /s/  EFSTATHIOS A. KOUNINIS
                                    Title:  Vice President of Finance

                                    NSC ENERGY SERVICES, INC.


                                    By: /s/  EFSTATHIOS A. KOUNINIS
                                    Title:  Vice President of Finance






                                    THE BANKS:

                                    BANKBOSTON, N.A.
                                    (formerly known as The First National Bank
                                    of Boston)


                                    By: /s/  ARTHUR J. OBERHEIM
                                    Title:  Vice President

                                    FLEET NATIONAL BANK


                                    By: /s/  THOMAS F. BRENNAN
                                    Title:  Vice President





<PAGE>


                              SEPARATION AGREEMENT


      Agreement  made this 6th of May, 1998, by and between NSC  CORPORATION,  a
corporation  duly  organized  and  existing  under  the  laws  of the  State  of
Delaware,  with a  principal  place of  business  at 49 Danton  Drive,  Methuen,
Massachusetts   01844   (hereinafter   referred  to  as  "NSC")  and  VICTOR  J.
BARNHART,  an individual residing at 10 Tartan Lakes,  Westmont,  Illinois 60559
(hereinafter referred to as "Executive").

      WHEREAS,  NSC  and  Executive  entered  into  and  executed  that  certain
Employment  Agreement  dated  March 12,  1997,  effective  as of January 1, 1997
(the  "Employment  Agreement")  for a term  commencing  on  January  1, 1997 and
ending on December  31,  1999 (the "Term of  Employment")  whereby NSC  employed
Executive as Chairman and Chief Executive Officer; and

      WHEREAS,  NSC and  Executive  have  mutually  agreed  that it is in  their
respective  interest to  terminate  the  Employment  Agreement  and  Executive's
employment thereunder upon the terms and conditions set forth herein; and

      WHEREAS, NSC desires to acknowledge Executive's service and contribution
to NSC;

      NOW,  THEREFORE,  in  consideration  of the  mutual  covenants  set  forth
herein  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereto  agree as
follows:

1.    Severance  Benefits.  As  severance  benefits,  NSC shall pay to Executive
the Base Salary as provided for in Section  1.3(a) of the  Employment  Agreement
and provide to  Executive  all of the benefits  provided for in Sections  1.3(b)
and 1.3(c),  and the health,  life, and disability  insurance  benefits provided
for in Section  1.3(d),  all for the  remainder of the Term of  Employment.  Any
payment  of such  Base  Salary  and  provisions  of such  benefits  shall  be in
accordance  with and payable in the same manner as provided  for in the relevant
sections  of the  Employment  Agreement.  Upon  the  expiration  of the  Term of
Employment  on December 31, 1999,  NSC shall have no further  obligation  to pay
Executive  any Base  Salary or to provide  any  further  benefits,  except  with
respect  to  COBRA   benefits   relating   to  health   and  dental   insurance.
Notwithstanding  the  foregoing,  in the event of the occurrence of a "Change in
Control,"  as  defined  in  the  Employment  Agreement,   in  lieu  of,  and  in
satisfaction  of the  foregoing  obligations  of NSC, NSC shall pay to Executive
the total sum of the then  remaining  amounts of the Base Salary  payable  under
Section  1.3(a)  and the  benefits  payable  under  Section  1.3(c) for the then
remaining  Term of  Employment,  reduced to present  value  utilizing a discount
rate of six  (6%)  percent.  Upon  such  payment,  NSC  shall  have  no  further
obligation  to pay  Executive  any Base Salary or to provide any other  benefits
as set forth herein.

2.    Relocation   Expense.   In  full  and  complete   satisfaction   of  NSC's
obligations under the Employment  Agreement,  NSC shall, within thirty (30) days
after the date of the execution of this  Agreement,  pay to Executive the sum of
Twenty-Five Thousand  ($25,000.00)  Dollars for Executive's  relocation to South
Carolina.

3.    Stock  Options.  NSC agrees to continue,  for the remainder of the Term of
Employment,  those stock options  granted to executive  under that certain Stock
Option  Agreement  dated December 5, 1996 (the "Grant") to the extent such stock
options  are  currently  exercisable  or shall  become  exercisable  during  the
remainder  of the Term of  Employment.  Such stock  options  shall  continue  to
vest and become  exercisable  during the  remainder of the Term of Employment in
accordance  with  and  subject  to  the  terms  and  conditions  of  the  Grant.
Notwithstanding  anything to the contrary contained herein,  upon the expiration
of the Term of  Employment,  the Grant and all  rights of  Executive  thereunder
shall  immediately  expire  and shall be null and void and of no  further  force
and effect.

4.    Cooperation and  Assistance.  In  consideration  of the obligations of NSC
hereunder,  Executive agrees that he will without additional remuneration,  from
time to  time,  upon  request  of NSC,  provide  such  consulting  services  and
cooperation  to NSC and its counsel as may be  reasonably  requested by NSC from
time to time (i) with  respect to any matter  (including  any  contracts,  bids,
projects, litigation,  investigation,  or governmental proceeding) which relates
to any matter with which  Executive  was involved  during the Term of Employment
with NSC or (ii) with  respect to the general  business and  operations  of NSC.
Executive  agrees to render such  consulting  services and  cooperation  at such
times and in such manner as shall be mutually agreeable to the parties hereto.

5.    Release.  NSC and  Executive  each  hereby  covenants  and agrees that the
terms  and  conditions  of this  Separation  Agreement  shall be deemed to be in
full and complete  satisfaction  of any and all  obligations of each party under
the  Employment  Agreement,  and  therefore  each  of NSC and  Executive  hereby
releases and  discharges  the other from any and all further  obligations of any
nature under the Employment  Agreement or otherwise  relating to the Executive's
employment  with NSC.  Executive  hereby  specifically  releases and  discharges
NSC and all of its subsidiaries and affiliates,  and all of their  predecessors,
successors, assigns, directors, officers,  stockholders,  managers, supervisors,
employees,  representatives,   servants,  agents,  attorneys,  and  all  persons
acting by,  through,  under,  or in concert with NSC, both personally and as its
agents,  or  any  of  them  of  and  from  any  and  all  claims,  demands,  and
liabilities  of any nature  whatsoever  which the Executive now has or ever had,
including,  but not  limited to (a) any and all claims,  demands or  liabilities
in any manner  relating to or arising out of Executive's  employment with and/or
separation  of  employment  from,  NSC,  (b) any and all rights or  benefits  to
which  Executive  is  entitled  or claims to be  entitled to under the terms and
conditions of the  Employment  Agreement or as a result of his separation of his
employment  with NSC,  and (c) any and all claims for relief or causes of action
under any federal,  state, or local statute,  ordinance,  or regulation  dealing
in  any  respect  with   discrimination   in  employment   (including   the  Age
Discrimination  Employment Act of 1967,  as amended,  29 U.S.C.  61 et seq.) and
any  claims,  demands,  or actions  based upon  alleged or  wrongful  discharge,
retaliatory  discharge,  or breach of contract  under any state or federal  law.
The  foregoing  release by Executive  shall not be deemed to in any manner waive
or release any of NSC's obligations under this Separation Agreement.

6.    Survival.  Notwithstanding  the  termination of the  Employment  Agreement
and  the  termination  of  Executive's  employment,  NSC  and  Executive  hereby
acknowledge,  confirm,  and agree that  Sections  2, 3, and 4 of the  Employment
Agreement  shall  remain  in  full  force  and  effect  and  shall  survive  the
termination of the Employment Agreement.

7.    Miscellaneous.

a.          This  Agreement  shall cease and terminate upon  Executive's  death,
and, in such event,  NSC shall have no further  obligation  to make any payments
to or provide any benefits hereunder to Executive.

b.          For  purposes  of  the  Separation  Agreement,   Section  6  of  the
Employment  Agreement,  including  all of the  subsections  thereof,  are hereby
incorporated as if fully set forth herein.

8.    Acknowledgment.  Executive  hereby  acknowledges  and  agrees  that he has
been given  twenty-one (21) days after receipt of this  Separation  Agreement to
consider  its terms  before  signing it and has  elected to waive the  remaining
days of that  period,  if any,  and  Executive  is  hereby  provided  seven  (7)
calendar  days from the date of signing this  Separation  Agreement to terminate
and  revoke  this  Separation   Agreement,   and  upon  such  revocation,   this
Separation   Agreement  shall  be  unenforceable,   null,  and  void.  Executive
further  acknowledges and agrees that the Separation  Agreement shall not become
effective  or  enforceable  until  the   aforementioned   revocation  period  is
expired,  and no severance  benefits will be paid by NSC until the expiration of
said  revocation  period.  Executive  acknowledges  and recites  that (a) he has
entered into this Separation  Agreement  knowingly and  voluntarily;  (b) he has
read and understands the Separation  Agreement in its entirety;  (c) he has been
advised  orally and is hereby  advised in  writing to consult  with an  attorney
with  respect to this  Separation  Agreement  before  signing it; (d) he has not
been forced to sign this  Separation  Agreement by any employee or agent of NSC;
and  (e)  he  has  fully  reviewed  the  terms  of  this  Separation  Agreement,
acknowledges  that he understands  the terms of this Separation  Agreement,  and
states  that  he  is  entering  into  this   Separation   Agreement   knowingly,
voluntarily,  and in full  settlement of all claims that he may have as a result
of his employment with or separation of employment from NSC.

WITNESS:                            NSC CORPORATION


                                    By:    /s/  DARRYL G. SCHIMECK
                                    Name:  Darryl G. Schimeck
                                    Title: Chief Executive Officer and
President

WITNESS:                            EXECUTIVE


                                    /s/  VICTOR J. BARNHART
                                    Victor J. Barnhart
f:\common\corp\agreemnt\employmt\barn-sep.doc



<PAGE>




                                November 5, 1998


Mr. Darryl G. Schimeck
c/o NSC Corporation
160 Eisenhower Lane, North
Lombard, IL  60148


      Re:   Amendment of Employment Security Agreement


Dear Darryl:

      In  light of the  recent  developments  at NSC  Corporation  ("NSC"),  NSC
wishes to amend your  Employment  Security  Agreement dated October 2, 1996 (the
"Employment Security  Agreement").  In consideration of the continuation of your
employment  with NSC and your continued  cooperation  and assistance to NSC, the
Employment Security Agreement shall be and hereby is amended as follows:

      1.    Extension  of Term.  Upon the  expiration  of the  original  Term of
the  Employment  Security  Agreement,   the  Term  of  the  Employment  Security
Agreement shall be  automatically  extended for an additional  period of one (1)
year, ending on December 31, 1999.

      2.    Change in  Control.  In the event  that a  "Terminating  Event",  as
defined  hereinafter,  shall  occur  within  one (1)  year  after a  "Change  in
Control", as defined  hereinafter,  then NSC shall pay all severance benefits to
you in accordance  with Section 7(a) of the  Employment  Security  Agreement and
provide to you all other  benefits to which you are entitled in accordance  with
the terms and  conditions of the  Employment  Security  Agreement upon the event
of the termination of your employment without Cause.

            For  purposes  hereof,  a Change in Control  shall be deemed to have
occurred  in the  following  events:  (a) as a direct  result  of any  tender or
exchange,  offer,  merger,  reorganization,  consolidation,  or  other  business
combination,  sale of assets or  contested  election or any  combination  of the
foregoing   transactions   (i)  the  persons  who  are  the   directors  of  NSC
immediately  before such  transaction  shall cease to  constitute  a majority of
the Board of  Directors  of NSC (or of any  successor  entity),  (ii) NSC is not
the surviving  corporation in the transaction,  or (iii) Waste Management,  Inc.
and its  affiliates do not hold  immediately  after such  transaction a majority
in the aggregate of the outstanding  common shares of the surviving  entity;  or
(b) the sale or other  disposition of all or substantially  all of the assets of
NSC (in one transaction or in a series of transactions).

            Further,  for purposes  hereof,  a Terminating  Event shall mean (i)
termination  by NSC (or by any  successor  entity) of your  employment  with NSC
(or any such  successor  entity) for any reason  other than (a) death or (b) for
Cause,  as  defined  in  the  Employment  Security   Agreement;   or  (ii)  your
resignation  from  your  employment  with  NSC (or any  such  successor  entity)
within ninety (90) days after the  occurrence  of any of the  following  events:
(a) a  reasonable  determination  by you in good  faith  that  there  has been a
significant  and  substantial  reduction in the scope of your  responsibilities,
authorities,   powers,   functions,   or  duties   from  the   responsibilities,
authorities,  powers,  functions,  or duties exercised by you immediately  prior
to a  Change  in  Control;  (b) a ten  (10%)  percent  reduction  in your  total
monetary compensation,  including base salary, bonuses,  incentive compensation,
material benefit plans,  and non-cash  personal  benefits and perquisites  which
are  susceptible  of  accurate  and  objective  measurement,  as all of the same
shall  be in  effect  on the  date  of  this  Amendment  or as the  same  may be
increased  from  time  to  time;  (c)  NSC,  or its  successor,  requiring  your
relocation  from the  office  where  you are  principally  employed  immediately
prior to the date of the Change in  Control  to a location  more than fifty (50)
miles away from the  location  where you are  principally  employed  immediately
prior  to the  date of the  Change  in  Control;  or (d) the  failure  of NSC to
obtain a  satisfactory  agreement  from any  successor  to  assume  and agree to
perform the obligations of NSC under the Employment Security Agreement.

      3.    General   Provisions.   In  the  event  that  you  are  required  to
commence or bring any legal  action or  proceeding  to enforce your rights under
the Employment  Security  Agreement,  as amended, or to collect any benefits due
to  you  thereunder,  you  shall  be  entitled  to  recover  from  NSC,  or  its
successor,   any  and  all  costs  and  expenses  incurred  by  you,   including
reasonable  attorney's  fees, in connection  therewith.  This Amendment shall be
subject  to and  governed  by the  laws  of the  Commonwealth  of  Massachusetts
without  regard to its choice of law  principles.  Except as  expressly  amended
herein,  the  Employment  Security  Agreement  shall  remain  in full  force and
effect, unaltered and unaffected hereby.

                                    NSC CORPORATION



                                    By:    /s/  EFSTATHIOS A. KOUNINIS
                                    Name:  Efstathios A. Kouninis
                                    Title: Vice President of Finance

                                   ACCEPTANCE

Agreed to and accepted this  5th  day of November, 1998.


/s/  DARRYL G. SCHIMECK
Darryl G. Schimeck

G:\CORP\AGREEMNT\EMPLOYMT\schim-am.doc


<PAGE>


                                   AMENDMENT


      Agreement made this 3rd day of June , 1998 by and between NSC Corporation,
a duly  organized  Delaware  corporation  (hereinafter  "NSC") and Efstathios A.
Kouninis ("Employee").

      WHEREAS,  NSC and  Employee  entered  into a certain  Employment  Security
Agreement dated October 8, 1996, a copy of which is attached hereto as Exhibit A
(the "Employment Security Agreement"); and

      WHEREAS,  NSC and Employee now desire to amend the terms and conditions of
the Employment Security Agreement as hereinafter set forth;

      NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereby  agree as
follows:

      1.     Section  6(b)  of  the  Employment   Security   Agreement  entitled
"Severance" shall be and hereby is amended to read as follows:

      If you are  terminated  by NSC without  Cause after the  expiration of the
Term of this  Agreement,  you shall be entitled to receive  severance  pay for a
period of one (1) year at the rate of your  annual  base  salary then in effect,
payable in the same manner as your regular  salary,  together with one (1) years
continued  coverage under NSC's medical and dental plans at the rate  applicable
to active employees.

      2.     The  following  provision  shall  be and  hereby  is  added  to the
Employment Security Agreement:

In the event of a sale of NSC during the Term to an entity  unrelated  to NSC or
its major  shareholder,  Rust  International,  Inc., if you remain employed with
NSC through the closing of a sale,  NSC will pay you a  transaction  bonus equal
to two (2) times your monthly base salary for your  assistance  and  cooperation
in  facilitating  the closing of the sale. NSC will pay said  transaction  bonus
to you as soon as  reasonably  practicable  following  the date of the  closing.
Payment of such bonus will be subject to normal withholding.

      3.     Except  as  expressly  amended  herein,  the  Employment   Security
Agreement is hereby  ratified and  confirmed  and shall remain in full force and
effect and shall not be otherwise affected or altered hereby.



<PAGE>


      4.     This  Amendment  shall be  subject to and  governed  by the laws of
the  Commonwealth  of  Massachusetts   without  regard  to  its  choice  of  law
principles.

      IN WITNESS WHEREOF,  the  parties hereto have executed this document as of
the date first above written, intending this document to take effect as a sealed
instrument.

WITNESS:                            NSC CORPORATION


                                    By: /s/  DARRYL G. SCHIMECK
                                        Darryl G. Schimeck, Chairman,
                                        Chief Executive Officer and President

WITNESS:


                                    /s/  EFSTATHIOS A. KOUNINIS
                                    Efstathios A. Kouninis

g:\common\corp\agreemnt\employmt\koun-amd.doc



<PAGE>



                                November 5, 1998


Mr. Efstathios A. Kouninis
c/o NSC Corporation
49 Danton Drive
Methuen, MA  01844


      Re:   Amendment of Employment Security Agreement


Dear Stathis:

      In  light of the  recent  developments  at NSC  Corporation  ("NSC"),  NSC
wishes to amend your  Employment  Security  Agreement  dated October 8, 1996, as
previously  amended by that certain  Amendment dated June 3, 1998  (collectively
the "Employment  Security  Agreement").  In consideration of the continuation of
your employment  with NSC and your continued  cooperation and assistance to NSC,
the Employment Security Agreement shall be and hereby is amended as follows:

      4.    Extension of Term.  The Term of the  Employment  Security  Agreement
as  referred  to in  Section 1 thereof  shall be and hereby is  extended  for an
additional  period  commencing on the expiration of the original Term and ending
on December 31, 1999;  provided however that the amount of severance  payable to
you in accordance with Section 6(a) of the Employment  Security  Agreement shall
in no event exceed one (1) year of base salary.

      5.    Change in  Control.  In the event  that a  "Terminating  Event",  as
defined  hereinafter,  shall  occur  within  one (1)  year  after a  "Change  in
Control", as defined  hereinafter,  then NSC shall pay all severance benefits to
you in accordance  with Section 6(a) of the  Employment  Security  Agreement and
provide to you all other  benefits to which you are entitled in accordance  with
the terms and  conditions of the  Employment  Security  Agreement upon the event
of the termination of your employment without Cause.

            For  purposes  hereof,  a Change in Control  shall be deemed to have
occurred  in the  following  events:  (a) as a direct  result  of any  tender or
exchange,  offer,  merger,  reorganization,  consolidation,  or  other  business
combination,  sale of assets or  contested  election or any  combination  of the
foregoing   transactions   (i)  the  persons  who  are  the   directors  of  NSC
immediately  before such  transaction  shall cease to  constitute  a majority of
the Board of  Directors  of NSC (or of any  successor  entity),  (ii) NSC is not
the surviving  corporation in the transaction,  or (iii) Waste Management,  Inc.
and its  affiliates do not hold  immediately  after such  transaction a majority
in the aggregate of the outstanding  common shares of the surviving  entity;  or
(b) the sale or other  disposition of all or substantially  all of the assets of
NSC (in one transaction or in a series of transactions).

            Further,  for purposes  hereof,  a Terminating  Event shall mean (i)
termination  by NSC (or by any  successor  entity) of your  employment  with NSC
(or any such  successor  entity) for any reason  other than (a) death or (b) for
Cause,  as  defined  in  the  Employment  Security   Agreement;   or  (ii)  your
resignation  from  your  employment  with  NSC (or any  such  successor  entity)
within ninety (90) days after the  occurrence  of any of the  following  events:
(a) a  reasonable  determination  by you in good  faith  that  there  has been a
significant  and  substantial  reduction in the scope of your  responsibilities,
authorities,   powers,   functions,   or  duties   from  the   responsibilities,
authorities,  powers,  functions,  or duties exercised by you immediately  prior
to a  Change  in  Control;  (b) a ten  (10%)  percent  reduction  in your  total
monetary compensation,  including base salary, bonuses,  incentive compensation,
material benefit plans,  and non-cash  personal  benefits and perquisites  which
are  susceptible  of  accurate  and  objective  measurement,  as all of the same
shall  be in  effect  on the  date  of  this  Amendment  or as the  same  may be
increased  from  time  to  time;  (c)  NSC,  or its  successor,  requiring  your
relocation  from the  office  where  you are  principally  employed  immediately
prior to the date of the Change in  Control  to a location  more than fifty (50)
miles away from the  location  where you are  principally  employed  immediately
prior  to the  date of the  Change  in  Control;  or (d) the  failure  of NSC to
obtain a  satisfactory  agreement  from any  successor  to  assume  and agree to
perform the obligations of NSC under the Employment Security Agreement.

      6.    General   Provisions.   In  the  event  that  you  are  required  to
commence or bring any legal  action or  proceeding  to enforce your rights under
the Employment  Security  Agreement,  as amended, or to collect any benefits due
to  you  thereunder,  you  shall  be  entitled  to  recover  from  NSC,  or  its
successor,   any  and  all  costs  and  expenses  incurred  by  you,   including
reasonable  attorney's  fees, in connection  therewith.  This Amendment shall be
subject  to and  governed  by the  laws  of the  Commonwealth  of  Massachusetts
without  regard to its choice of law  principles.  Except as  expressly  amended
herein,  the  Employment  Security  Agreement  shall  remain  in full  force and
effect, unaltered and unaffected hereby.

                                    NSC CORPORATION



                                    By:    /s/  DARRYL G. SCHIMECK
                                    Name:  Darryl G. Schimeck
                                    Title: Chairman, CEO and President

                                   ACCEPTANCE

Agreed to and accepted this 5th day of November, 1998.


/s/  EFSTATHIOS A. KOUNINIS
Efstathios A. Kouninis

G:\CORP\AGREEMNT\EMPLOYMT\kouni-am2.doc


<PAGE>




                                   EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT




                                                        State of Other
       Name of Subsidiary                        Jurisdiction of Incorporation
----------------------------------              --------------------------------

National Surface Cleaning, Inc.                           New Hampshire

National Service Cleaning Corp.                           Connecticut

Olshan Demolishing Management, Inc.                       Delaware

NSC Energy Services, Inc.                                 Delaware




<PAGE>



                                   EXHIBIT 23

                         CONSENT OF INDEPENDENT AUDITORS

We consent to the  incorporation  by  reference  in the  Registration  Statement
(Form  S-8  No.  33-35986)  pertaining  to the  1990  Stock  Option  Plan of NSC
Corporation  and in the related  Prospectus  of our report  dated  February  12,
1999,  except for Note 6 as to which the date is March 23,  1999,  with  respect
to the  consolidated  financial  statements  and  schedule  of  NSC  Corporation
included in its Annual Report (Form 10-K) for the year ended December 31, 1998.



                                                           /s/ ERNST & YOUNG LLP


Boston, Massachusetts
March 26, 1999

<PAGE>



                                   EXHIBIT 24

                   DIRECTORS AND OFFICERS OF NSC CORPORATION
                           ANNUAL REPORT ON FORM 10-K
                               POWER OF ATTORNEY


The  undersigned   directors  and  officers  of  NSC  Corporation,   a  Delaware
corporation  (the  Company"),  do hereby make,  constitute and appoint Darryl G.
Schimeck,  Efstathios A. Kouninis and Charles W. Hardin,  and each of them, with
full power of  substitution  and  resubstitution,  as  attorneys  or attorney of
the  undersigned,  to execute and file,  under the  Securities  Exchange  Act of
1934,  as  amended,  the  Company's  Annual  Report on Form  10-K,  for the year
ended  December  31, 1998 and all  amendments  or exhibits  thereto,  and any or
all  applications  or other  documents  to be  filed  with  the  Securities  and
Exchange  Commission  pertaining  to such  Annual  Report,  with full  power and
authority   to  do  and  perform   any  and  all  acts  and  things   whatsoever
necessary,  appropriate  or  desirable  to be  done in the  premises,  or in the
name,   place   and  stead  of  the  said   directors   and   officers,   hereby
ratifying  and  approving  the  acts of said  attorneys  and any of them and any
substitute.


This power of attorney may be executed in counterpart.

IN WITNESS  WHEREOF,  the  undersigned  have  subscribed  these  presents  as of
the 29th day of March 1998.

/s/ DARRYL G. SCHIMECK                       /s/  EUGENE L. BARNETT
Darryl G. Schimeck, Chairman, CEO and        Eugene L. Barnett, Director
President(Principal Executive Officer)

/s/  EFSTATHIOS A. KOUNINIS                  /s/  HERBERT A. GETZ
Efstathios A. Kouninis, Vice President       Herbert A. Getz, Director
of Finance, Corporate Controller, Treasurer
and Secretary
(Principal Financial and Accounting Officer) /s/  WILLIAM P. HULLIGAN
                                             William P. Hulligan, Director

                                             /s/  WILLIAM M. R. MAPEL
                                             William M. R. Mapel, Director