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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

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FORM 10-K

|(Mark One )                                                   
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|or                                                            
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|Commission File Number: 333-79587                             
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|CALIFORNIA STEEL INDUSTRIES, INC.                             
|(Exact name of registrant as specified in its charter)        
|                                                              
|Delaware                                                      
|(State or other jurisdiction of incorporation or organization)
|                                                              
|14000 San Bernardino Avenue Fontana, California               
|(Address of principal executive offices)                      
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|(909) 350-6200                                                
|(Registrants telephone number, including area code)          
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|Securities Registered Pursuant to Section 12(b) of the Act:   
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|Title of Each Class:                                          
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|None                                                          
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|Securities registered pursuant to Section 12(g) of the Act:   
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|None                                                          
|(Title of Class)                                              
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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 o
|----- | ----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

As of March 24, 2003, there were 1,000 shares of the registrants common stock, no par value, outstanding.

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CALIFORNIA STEEL INDUSTRIES, INC.

INDEX TO ANNUAL REPORT ON FORM 10-K

For The
Fiscal Year Ended December 31, 2002

|                          |                                                                                       | Page
|------------------------- | ------------------------------------------------------------------------------------- | ----
|                          |                                                                                       |     
|PART I.                   |                                                                                      
|                          |                                                                                       |     
|Item 1.                   | Business                                                                              | 1   
|                          |                                                                                       |     
|Item 2.                   | Properties                                                                            | 8   
|                          |                                                                                       |     
|Item 3.                   | Legal Proceedings                                                                     | 8   
|                          |                                                                                       |     
|Item 4.                   | Submission of Matters to a Vote of Security Holders                                   | 8   
|                          |                                                                                       |     
|PART II.                  |                                                                                      
|                          |                                                                                       |     
|Item 5.                   | Market for Registrants Common Equity and Related Stockholder Matters                 | 9   
|                          |                                                                                       |     
|Item 6.                   | Selected Financial Data                                                               | 9   
|                          |                                                                                       |     
|Item 7.                   | Managements Discussion and Analysis of Financial Condition and Results of Operations | 10  
|                          |                                                                                       |     
|Item 7A.                  | Quantitative and Qualitative Disclosures about Market Risk                            | 15  
|                          |                                                                                       |     
|Item 8.                   | Consolidated Financial Statements and Supplementary Data                              | 17  
|                          |                                                                                       |     
|Item 9.                   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | 17  
|                          |                                                                                       |     
|PART III                  |                                                                                      
|                          |                                                                                       |     
|Item 10.                  | Directors and Executive Officers of the Registrant                                    | 18  
|                          |                                                                                       |     
|Item 11.                  | Executive Compensation                                                                | 19  
|                          |                                                                                       |     
|Item 12.                  | Security Ownership of Certain Beneficial Owners and Management                        | 23  
|                          |                                                                                       |     
|Item 13.                  | Certain Relationships and Related Transactions                                        | 23  
|                          |                                                                                       |     
|Item 14.                  | Disclosure Controls and Procedures                                                    | 24  
|                          |                                                                                       |     
|PART IV                   |                                                                                      
|                          |                                                                                       |     
|Item 15.                  | Index of Exhibits, Financial Statement Schedule, and Reports on Form 8-K              | 25  
|                          |                                                                                       |     
|Signatures                |                                                                                      
|                          |                                                                                       |     
|Section 302 Certification |                                                                                      
|                          |                                                                                       |     
|Exhibits                  |                                                                                      



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PART I

Item 1.   Business

Statements of our belief in
this section are based on our own internal studies or research, estimates of members of our senior sales management team, our knowledge of the industry or other information we have internally compiled.

Introduction

We believe we are the leading producer of flat rolled steel in the western United States
based on tonnage billed. We produce the widest range of flat rolled steel products in the region, including hot rolled, cold rolled and galvanized coil and sheet. We also produce electric resistance welded pipe. Unlike integrated steel mills and
mini-mills, we do not manufacture steel. Rather, we process steel slab manufactured by third parties. Our principal market consists of the 11 states located west of the Rocky Mountains. We have two main competitors located in the western United
States. Steel products are also supplied to the western United States via imports from foreign companies and from domestic suppliers located outside the western United States. We believe our slab-based business model, breadth of products, non-union
work environment, southern California location and long-standing customer relationships provide us with significant advantages over our competition.

Industry Overview

The steel industry is highly cyclical in nature. It is influenced by a combination of factors including periods of economic growth or recession, strength or
weakness of the U.S. dollar, worldwide production capacity, levels of steel imports and tariffs. Other factors including the failure to adapt to technological change, plant inefficiencies, high labor costs and fluctuating energy costs have affected
the industry. Steel, regardless of product type, responds to forces of supply and demand, and prices have been volatile and have fluctuated in reaction to general and industry-specific economic conditions.

There are generally two types of steel producers: integrated mills and mini-mills. Steel manufacturing by an integrated producer includes
ironmaking from raw materials, like iron ore and coal in a blast furnace, followed by steelmaking, slab making, reheating and further rolling into coil or other shapes. A mini-mill is generally a smaller volume steel producer that uses an electric
arc furnace rather than a blast furnace to create steel from ferrous scrap metal. Mini-mills typically service regional markets.

Unlike
integrated steel mills and mini-mills, we do not manufacture steel. Rather, we process steel slab manufactured by third parties. As a result, we do not have the fixed costs associated with the manufacturing of steel. Historically, raw material costs
comprise approximately 70% of our cost of goods sold. We believe we are the largest importer and the second largest purchaser of steel slab in the world. Our purchasing power provides us with the ability to negotiate favorable terms and conditions
for steel slab from low cost and high quality producers throughout the world. Prices of our flat rolled steel products have historically experienced a close correlation to the prices of steel slab. Although we remain subject to the cyclicality
inherent in the steel industry, we believe this correlation, combined with our slab-based business model, provides us with operating margins that are more consistent than those of a typical flat rolled steel producer.

Recent Industry Conditions

Pursuant to his authority under Section 201 of
the Trade Act of 1974, President Bush on March 5, 2002 announced that slab imports for all countries (other than Canada, Israel, Jordan and Mexico) will be subject to a tariff-rate quota (TRQ).  The TRQ will exempt the first 5.4
million tons of imported slab from tariffs; imports above that level will face the same tariffs that are imposed on finished flat-rolled products.  The exemption will increase to 5.9 million tons in year two, and 6.4 million tons in year
three.  President Bush imposed tariffs of 30 percent on imports of plate and hot-rolled, cold-rolled, and coated flat-rolled products from all countries other than Canada and Mexico.  The tariffs will decrease to 24 percent in year two,
and 18 percent in year three.

After operating under the Section 201 import restrictions since March 2002, we believe our ability to purchase steel slab in the international market has not been
materially affected by the Section 201 decision.  Similarly, we believe that the Section 201 limitations on competitive products have not had material consequences on our business, although many domestic steel companies credit the Section 201
ruling for their business improvements.   Beginning March 20, 2003, the second year tariffs and

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TRQs will become effective and we anticipate no material changes on our business.  However, there can be no assurances that domestic steel prices will be affected
by the tariffs on imported flat-rolled products.

Much of 2002 represented a year of improvement for most participants in the domestic
steel industry.  As certain steel companies stopped production and the Bush Administration instituted Section 201 Trade actions against the importation of many types of steel products, the supply of steel products dropped below demand resulting
in sharply higher prices.  However, by the end of 2002 most mills had resumed production while at the same time overall demand had weakened significantly.  As a result, many steel companies had begun to lower prices in an attempt to keep
order backlogs at reasonable levels.

Another recent development is the apparent increased demand for steel products in
China.  Chinas year over year growth in steel imports has encouraged many United States based steel companies to take the unusual step to export product outside the country.  As we do not currently actively pursue sales in foreign
markets, we have not competed in the Chinese market as we do not believe this level of demand is sustainable and would detract from our core business and customers, however, if the economics change and become advantageous for us, we may pursue
exports to China.

Products and Customers

Our principal product lines are
hot rolled coil and sheet, cold rolled coil and sheet, galvanized coil and sheet and electric resistance welded (ERW) pipe. The following table sets forth our billed tons by product category as a percentage of total shipments for the periods
indicated:

|                                                  |       | Year Ended December 31, |      
|------------------------------------------------- | ----- | ----------------------- | -----
|                                                  |       |                         |      
|                                                  |       | 2002                    |      
|                                                  |       |                         |      
|Hot rolled coil and sheet                         |       |                         | 47.0 
|Cold rolled coil and sheet                        |       |                         | 11.6 
|Galvanized coil and sheet                         |       |                         | 35.7 
|ERW pipe                                          |       |                         | 5.7  
|                                                  |       |                         |      
|                                                  | Total |                         |      
|                                                  |       |                         |      
|Total tons billed, excluding scrap (in thousands) |       |                         | 2,014
|                                                  |       |                         |      
|                                                  |       |                         |      

The western U.S. steel market is comprised of many consumers typically requiring small order sizes with a wide
variety of metallurgical qualities and specifications. In contrast, the majority of other U.S. steel markets primarily depend on heavy-tonnage steel consumers like the automotive and durable goods manufacturing industries. We believe that the
western United States smaller and more diverse customer base helps balance pricing power between the consumer and the supplier. Instead of competing solely on price, we believe we benefit from having customers that place greater value on our
competitive strengths, including integrated service, timeliness of delivery and ability to meet unique customer needs. We further believe that we benefit from our strategic location in Fontana, California.

We have approximately 300 active customers, with no single customer accounting for more than 7% of our 2002 net sales. Our customers include service and processing
centers, construction and building material companies, roofing and decking manufacturers, structural tubing concerns, oil and gas producers and distributors, wheel and rim manufacturers, packaging and container companies as well as various customers
in other industries.

We do not actively pursue sales in foreign markets and we make foreign sales only when they are economically
advantageous to us. In 2002, we sold approximately 10,622 tons of steel products to customers primarily in Mexico and Canada, which represented less than 1% of our total 2002 tons billed.

Hot rolled coil and sheet is our largest product category as measured by tons billed per year. Our customers use hot rolled steel for a variety of manufacturing
applications, including the production of spiral weld pipe, shipping containers, automobile wheels and rims, strapping, tubing and a variety of construction related products. In 2002, we directed approximately 47.3% of our hot rolled production to
outside sales and we further processed approximately 52.7% internally for our own higher-margin, value added product needs.

Cold rolled
coil and sheet are used in exposed steel applications where high surface quality is important. Typically, cold rolled material is coated or painted. Applications for our cold rolled products include electronic cabinetry, lighting fixtures, metal
office furniture, water heaters, container manufacturers, tubing, appliances, galvanized containers and a variety of construction

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related products. In 2002, we directed approximately 26.7% of our cold rolled production to outside sales and we further processed approximately 73.3% internally for our own
higher-margin, value added product needs.

Galvanized coil and sheet is produced by adding a coating of zinc to cold rolled steel, and in
some instances, to hot rolled steel, for additional corrosion resistance. We believe we offer the broadest range of thicknesses, widths and coatings of galvanized products in the western U.S. market. Applications for our galvanized coil product
include tubing, drums, tanks, culvert and a variety of construction related products.

We supply ERW pipe with diameters ranging from
4.5 to 16.0 in the western U.S. markets. The principal end-users of our ERW pipe production are oil and gas transmission companies. We also sell standard pipe to industrial accounts for load bearing and low-pressure applications.

Operations

We initially began operations in 1984 utilizing certain
purchased assets from the former Kaiser Steel Corporation.  Based on a business model that depended on the purchase of semi-finished steel slab from third party vendors, we were the first company in the United States to operate steel rolling
mills without a dedicated source of slab feedstock.  Significant business success and market acceptance of our slab based business model encouraged us to consider a modernization program designed to increase production and improve our product
mix.

Modernization Program

From 1993 through
1999 we embarked on a $250 million modernization program that allowed us to improve our product quality, double production volumes, and increase our percentage of high value added products to our product mix.  Since the completion of our
modernization program, we have continued to make selective investments designed to keep our facilities competitive or reduce operating costs.  Our capital spending in 2001 was $14.8 million.  Of this amount, approximately 22% was spent on
the installation of phase 2 of our Hydrogen Annealing Project and approximately 18% was spent on various upgrades to our hot strip mill.  Total capital spending in 2002 was $20.8 million, the majority of which was spent on motors and other
related equipment in our hot strip mill.

Production efficiencies continue to be gained through improved operating and maintenance
practices, targeted capital investments and enhanced production planning and quality control procedures. We believe the success of our modernization program contributes to our being a low cost producer of flat rolled steel products.

Hot Strip Rolling and Finishing Mills

We produce hot rolled
coil and sheet from slab in our hot strip mill. A walking beam furnace reheats slab, directs it to a multi-stand rolling mill to reduce thickness and rolls it into coil. Equipped with an automatic gauge control system and technologically advanced
computer controls, the hot strip mill currently possesses a throughput capacity of over 1.7 million tons annually and can produce hot rolled coil in gauges from 0.053 to 0.750.

The hot strip mill facility is primarily composed of the following:

| |                                                                          | a walking beam furnace with a capacity of 6,480 tons of slab per day; and                                                                          
| | ------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                           |                                                                                                                                                    
| |                                                                          | the 86 mill which consists of five roughing stands, a scale breaker, six finishing stands and two downcoilers.                                    
| |                                                                           |                                                                                                                                                    
| | In addition, the hot strip finishing lines are composed of the following:
| |                                                                          
| |                                                                          | an 80 coil slitter line that can trim product up to 0.375 in thickness and can be easily adjusted to meet a variety of customer-specified widths;
| |                                                                           |                                                                                                                                                    
| |                                                                          | one shear line using a synchronized flying shear;                                                                                                  
| |                                                                           |                                                                                                                                                    
| |                                                                          | a skin pass line that uses one 2-hi mill with 32 diameter x 86 rolls which is used for surface improvements; and                                 
| |                                                                           |                                                                                                                                                    
| |                                                                          | a build-up line that is used to increase coil sizes to customers specifications.                                                                   

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Continuous Pickle Line

We
can further process hot rolled coil on the 62-inch continuous pickle line for direct sales to our customers or for our own cold rolling and galvanizing production. The continuous pickle line is a conventional horizontal design with a coil entry
section, welder, hot water preheat tanks, acid tanks, water rinse, dryer, looper, side trimmer, coiler, oiling equipment and scale. The line, which was installed in 1994, can currently yield up to approximately 1.2 million tons per year.

Cold Rolled Mill

Cold rolled sheet is hot rolled steel
that has been further processed through the continuous pickle line and then successively passed through a rolling mill without reheating until the desired gauge and other physical properties have been achieved. Cold rolling reduces gauge and hardens
the steel and, when further processed through an annealing furnace and temper mill, improves uniformity, ductility and formability. Cold rolling can also impart various surface finishes and textures. Cold rolled steel is used in applications that
demand higher quality or finish. The thinner coil is usually annealed to increase ductility, while some coil is cut into sheet.

The
cold rolled facility, with a current annual finished capacity of approximately 1.0 million tons, includes the following:

| |  | a five-stand reduction mill;      
| | - | ----------------------------------
| |   |                                   
| |  | an electrolytic cleaning line; and
| |   |                                   
| |  | twenty hydrogen annealing bases.  

The
five-stand reduction mill reduces pickled steel strip from a gauge range of 0.075 to 0.225 to a range of 0.010 to 0.172 in thickness, with a maximum width of 60. The five-stand reduction mill was completely revamped in
1997. After cold reduction, coil is cleaned in a 200 feet to 1,000 feet per minute electrolytic cleaning line, producing smut-free steel which is then batch annealed before final production in the 60 temper mill, where the steel is tempered to
specified finish and gauge.

Hydrogen annealing is a process that heats steel coils to annealing temperatures in a pure hydrogen
atmosphere and then slowly allows the steel coils to cool. This process restores ductility to our steel products that is lost as a result of cold rolling.  Our hydrogen annealing facility has an annual capacity of 360,000 tons of cold rolled
annealed product per year.

Galvanizing Mills

Galvanized coil and sheet represent our highest value added products, requiring the greatest degree of processing and quality controls. We produce galvanized sheet by
taking cold rolled coils, and in some instances, hot rolled coils, heating it in an annealing furnace and dipping the coil, while still hot, into a pot of molten zinc. As the coil leaves the pot, coating controls insure product specifications match
customer requirements. The steels corrosion resistance makes it ideal for applications like air conditioning units, air ducts, metal ties, studs, siding, decking, roofing and culverts.

We currently operate two continuous galvanizing lines and believe that our galvanizing facilities can produce the full range of coated steel. In 2002 we increased the
productivity of our galvanizing lines to approximately 750,000 tons of galvanized steel production. The first continuous galvanizing line is horizontally configured and produces gauges from 0.012 to 0.174. The second continuous
galvanizing line is vertically configured and produces gauges from 0.010 to 0.060.

Electric Resistance Weld (ERW) Pipe Mill

We produce ERW pipe by rollforming hot rolled skelp into a pipe shape, welding the edges together with a high frequency welder, annealing the weld and
cutting the finished product to length on a continuous line. The ERW pipe may then undergo additional testing and/or finishing operations like hydrotesting and end beveling.

The pipe mill produces pipe with outside diameters ranging from 4.5 to 16 and wall thickness ranging from 0.156 to 0.375, with lengths
available up to 63 feet without mid-weld. Process coating is available through local coating applicators, one of whom lease space on our property. The ERW pipe mill has a current capacity of approximately 150,000 tons per year.

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Semi-Finished Steel Slab and Suppliers

Steel slab is a semi-finished steel raw material in rectangular form and is generally the first form taken by molten steel after it solidifies. The principal users of
steel slab are steel producers or processors that roll slab into finished products like plate or coil.

Historically, our raw material
consumption costs have comprised approximately 70% of our cost of goods sold. We are the largest importer and the second largest purchaser of slab in the world. We purchase slab from a diverse group of foreign suppliers to obtain high quality steel
at low cost through reliable sources. Our foreign vendors are located in Brazil, Mexico, Australia, Japan, Russia, South Africa, Argentina and China.

We typically make our slab purchases on a quarterly basis. As of December 31, 2002 we were committed, in the form of open purchase orders, to purchase
approximately  $92.9 million in steel slabs. All of our 2002 slab purchases were made on a quarterly basis and we expect to continue to negotiate slab prices and volume with our traditional suppliers on a quarterly basis for our slab purchases
in 2003.

Although we are not reliant on any one single vendor, in 2002, we purchased approximately 15% of our slab from Ispat Mexicana
de C. V. -Imexsa of Mexico and approximately 39% of our slab from Companhia Siderurgica de Tubarão of Brazil. Ispat Mexicana is the only steel facility in the world dedicated solely to the production of steel slab.

We own 4% of the common stock of Companhia Siderurgica de Tubarão, which represents 1.5% of the total equity interest in Companhia Siderurgica de
Tubarão. Companhia Siderurgica de Tubarão is a subsidiary of both Companhia Vale do Rio Doce and Kawasaki Steel Corporation, our stockholders parent companies. All slab purchases with our parent or affiliated companies are negotiated
on an arms length basis and in accordance with market conditions.

We negotiate with a variety of shipping companies
to deliver our slab directly to the Port of Los Angeles. We also charter vessels from Seamar Shipping Corporation, a subsidiary of Companhia Vale do Rio Doce. The vessels are loaded following a specific stowage plan that we develop. The plan ensures
high productivity rates at both the loading and unloading sites. Our agents are on site for the loading of each shipment. After unloading, the slab is transported to our facility by rail using the services of Burlington Northern Santa Fe Railroad
and Union Pacific Rail Lines. Our current contract with Burlington Northern Santa Fe Railroad is effective through December 2013. This agreement provides us with transportation services at fixed rates and ensures us a dedicated level of rail
availability through the term of the agreement. Additionally, Burlington Northern Santa Fe Railroad utilizes rail cars designed specifically to transport steel slab. We believe this will greatly improve the efficiency and safety of steel slab
transportation through our community.

Under an agreement that we have entered into with our two shareholders, we continuously purchase
slabs from Companhia Siderurgica de Tubarão as raw material for our operations according to basic terms and conditions agreed upon from time to time. In addition, our stockholders have agreed to maintain the existing contract between us and
Companhia Siderurgica de Tubarão in accordance with their respective terms and conditions.

We believe that our integrated slab
procurement system allows us to manage our slab inventory levels, ensuring optimal tonnage levels as well as the slab quality necessary to meet our customers order specifications. As of December 2002, we had what we believed to be firm backlog
orders of approximately 300,000 tons. Based on our average sales price at that time, the backlog value was approximately $132,000,000. As of December 2001, we had what we believed to be firm backlog orders of approximately 240,000 tons. Based on our
average sales price at that time, the backlog value was approximately $83,000,000.

Marketing and Customer Service

We believe that we provide the highest level of customer service and product support in the western U.S. market. Our emphasis on customer service and product quality
has enabled us to establish long-standing relationships with our customers. Our relationships with 90% of our top 30 customers extend beyond 10 years. We attribute this customer loyalty, in large part, to the successful execution of our marketing
strategies to provide a broad range of products; to provide consistent service and reliable product availability; and to provide ancillary, value added services.

We are the only producer of flat rolled steel products located in the western United States which can supply hot rolled, cold rolled and galvanized coil and sheet. We
also produce ERW pipe in diameters ranging from 4.5 to 16.0. We believe that we are well equipped to provide one-stop shopping for our customers and we believe that this maximizes sales opportunities and

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increases the convenience and value of the service we provide to customers. We will continue to invest in the quality of our products across all product lines, allowing us to
market ourselves as a full-service provider of flat rolled steel in the region.

Our location in southern California not only gives us a
significant freight cost advantage over our competitors, but also allows us to provide a more service-oriented approach to our customers. Our operating structure allows us to respond quickly to changes in the timing of customer requirements, adjust
schedules, source stock inventory and meet specialized shipping needs. Our ability to deliver made-to-order products in a timely manner allows our customers to maximize their inventory turns and meet production targets. By maintaining a regional
focus, we believe that we can most effectively service our customers and achieve our goal of increasing market share in higher margin value added products.

As part of our strategy to provide superior customer service, we offer our customers ancillary services such as engineering and metallurgical advice. Substantial
portions of our customers are small to medium-sized businesses. As a result, many do not have the resources to employ a sophisticated metallurgical engineering staff. Our metallurgical engineers work with our customers on a daily basis, often on
site, providing advisory services focused on reducing procurement costs and improving overall production efficiency. In addition to ancillary services, we also provide service center like operations including slitting, shearing, coating
and single-billing for third party processing. We believe that these value added services help to further differentiate us from our competitors.

Competition

The steel industry is cyclical in nature and highly competitive. We compete with domestic and foreign steel producers on the basis of customer service, product
quality and price. The domestic steel industry has been adversely affected in recent years by high levels of steel imports, worldwide production overcapacity, increased domestic and international competition, rising energy costs and other factors.
We believe that the competitive landscape within the steel industry will continue to evolve, especially as new technologies and production methods are introduced. We believe that because of our slab-based business model, breadth of products,
non-union work environment, southern California location and long-standing customer relationships, we are well positioned to meet competitive threats. However, some of our competitors are larger and may have substantially greater capital resources,
more modern technology and lower labor and raw material costs than us, as well as excess production capacity in some products and could exert downward pressure on prices for some of our products in the future.

We are also subject to general economic trends and conditions, such as the presence or absence of sustained economic growth and currency exchange rates. We are
particularly sensitive to trends in the construction, agriculture, oil and gas and gas transmission industries, because these industries are significant markets for our steel products. If there were a downturn in one or more of these industries, our
sales volume, prices and profitability and liquidity could be adversely affected.

U.S. Competition

We experienced significant change among our local, western U.S. based producers of steel sheet products in 2002. The only integrated producer in the western U.S.
ceased operating in November 2001 and filed for bankruptcy during the first quarter of 2002.  By the end of 2002 this competitor was unable to find alternative sources of capital and has entered into a liquidation process.  In addition, a
steel processor located in Northern California was purchased by another competitor and subsequently closed.  At the end of 2002, our western U.S. based competition consisted of two steel processors and, to a lesser extent, service centers.
Historically, high transportation costs have deterred midwestern steel manufacturers from accessing the western U.S. market.  However, competition from midwestern steel manufacturers increases dramatically when a lack of demand and increased
competition in their home markets encourages them to push excess production into the western United States. Many of our competitors have invested in new plants and equipment that have improved their product quality and increased their production
efficiencies. In hot rolled products, our principal domestic competition is material from a variety of sources located in the Midwestern United States.  UPI, located in Pittsburg, California, is our principal competitor in galvanized and cold
rolled products. We also compete in the galvanized market with Steelscape Inc. which operates two facilities, one located in Kalama, Washington, and the other in Rancho Cucamonga, California.

We also compete with steel service and processing centers, although such centers are customers as well as competitors. Service centers serve as wholesale distributors
for a broad line of sheet products and also provide value added services including slitting, shearing and coating.

Over the past 10
years, mini-mills have been transforming the competitive environment of the U.S. steel industry. Mini-mills are generally smaller volume steel producers that use ferrous scrap metal as their basic raw material and serve regional markets. While no
mini-mills in our market currently produce significant amounts of flat rolled products, at least one mini-mill has

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expressed an intention to construct facilities in the western U.S. to produce hot rolled coil and sheet that might compete with products we manufacture. Manufacturing
techniques have allowed mini-mills to produce types of sheet products that have traditionally been supplied by us or integrated producers. We also face increasing competition from producers of materials such as aluminum, composites, plastics and
concrete that compete with steel in many markets.

Foreign Competition

Foreign steel producers consistently compete in the western United States steel market in all of our product categories. Over the past several years we have
experienced increased competition from importers primarily within the hot rolled and cold rolled product sectors. Although imported steel has relatively long lead times to reach the western U.S. market, economic and currency dislocations in foreign
markets encourage many importers to target the United States with excess capacity at aggressive prices. Some foreign producers benefit from low labor costs, weak local currencies and government subsidies..

During 2001, competitive conditions deteriorated to unprecedented levels where prices reached unsustainable, 20-year lows and as a result, combined with a weakening
economy, more than 30 steel industry firms filed for bankruptcy.  Pursuant to his authority under Section 201 of the Trade Act of 1974, President Bush on March 5, 2002 imposed tariffs of 30 percent on imports of plate and hot-rolled,
cold-rolled, and coated flat-rolled products from all countries other than Canada and Mexico.  The tariffs decrease to 24 percent in year two, and 18 percent in year three.

In response to the imposition of tariffs, as well as several domestic steel producers temporarily halting production, the unit prices for our steel products rose for
most of 2002.  With the Presidents imposition of tariffs, steel available from foreign suppliers decreased dramatically for most of 2002.  However, by year-end, prices have sufficiently improved so that even with the added tariff
costs many foreign suppliers have returned to the domestic market.

Employee Relations

At December 31, 2002, we had 929 full-time employees. We have the largest non-union workforce located at any one steel facility in the United States. We provide our
employees with supplemental work training and education programs. Our officers also routinely discuss our business plan with them. We believe that we have a good relationship with our employees.

Forward-Looking Statements

Certain statements contained in this Form 10-K regard matters that are not
historical facts and are forward-looking statements (as such term is defined in the rules promulgated pursuant to the Securities Act of 1933, as amended). Such forward-looking statements include any statement that may predict, forecast, indicate or
imply future results, performance or achievements, and may contain the words anticipate, believe, should, could, estimate, expect, project, imply,
intend, foresee, will be, will continue, will likely result, and similar words and expressions. Such forward-looking statements reflect our current views about future events, but are not
guarantees of future performance and are subject to risk, uncertainties and assumptions. Such risks, uncertainties and assumptions include those specifically identified in this Form 10-K and the following:

| |  | our substantial indebtedness, interest expense and principal repayment obligations under our bank facility and 8.5% senior notes, which could limit our ability to (i) use
operating cash flow in our business other than for debt-servicing obligations, (ii) obtain additional financing and react to changing market and general economic conditions, and (iii) which increase our vulnerability to interest rate
increases,
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | because our board of directors is elected by our two stockholders, each of whom holds 50% of our stock, there is a possibility of deadlocks among our board of directors that
could result in costly delays in making important business decisions and put us at a competitive disadvantage,                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | competitive factors and pricing pressures,                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | our ability to control costs and maintain quality,                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | future expenditures for capital projects,                                                                                                                                                                                                                                                                                                                                                                                      

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| |  | volatility of energy costs as well as the viability of the electrical power distribution system within the state of California, and
| | - | -----------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                    
| |  | industry-wide market factors and general economic and business conditions.                                                         

Our actual results could differ materially from those projected in these forward-looking statements as a result of these risks, uncertainties and assumptions, many of
which are beyond our control.

Item 2.   Properties

We are located on
approximately 450 acres in Fontana, California. Our facilities are situated on approximately 115 acres of this space. The property includes a 22 mile railroad system serviced by Burlington Northern Santa Fe and Union Pacific rail lines.

Item 3.   Legal Proceedings

We are from time to
time in the ordinary course of business, subject to various pending or threatened legal actions. We believe that any ultimate liability arising from pending or threatened legal actions should not have a material adverse effect on our financial
position, results of operations or liquidity.

Environmental Matters

Compliance with environmental laws and regulations is a significant factor in our business. We are subject to various federal, state, and local environmental laws and
regulations concerning, among other things, air emissions, waste water discharges and solid and hazardous waste disposal. We own property and conduct or have conducted operations at properties that are contaminated with hazardous materials and will
require investigation and remediation according to federal, state or local environmental laws and regulations. Expenditures on environmental matters, including expenditures on pollution control equipment and remediation activities, totaled
approximately $2.3 million in 1998, $1.1 million in 1999, $0.9 million in 2000, $1.3 million in 2001, and $1.4 million in 2002. We plan to spend approximately $2.3 million in 2003, with the largest component representing investigation activities at
our Fontana site.

In 1996, we entered into an Expedited Remedial Action Voluntary Enforceable Agreement with the California
Environmental Protection Agency, Department of Toxic Substances Control. This agreement superseded a Voluntary and Enforceable Agreement and Imminent and/or Substantial Endangerment Order issued by the Department in 1992 and amended in 1994.
According to the agreement, we engaged an environmental consultant to conduct a remedial investigation and develop a remediation plan and remediation cost projections based upon that plan.  Utilizing the remediation plan developed by the
environmental consultant, we developed an estimate for future costs of the remediation plan.  The total aggregate cost of remediation is estimated to be approximately $1.8 million, which has been accrued in the 2002 consolidated financial
statements.  The California Department of Toxic Substances Control has not yet completed its review and approval of our plan; however, preliminary discussions between the DTSC and us have not indicated the need for any significant changes to
the remediation plan or to the Companys estimate of related costs.  The estimate of costs could change as a result of changes to the remediation plan required by the DTSC or unforeseen circumstances at the site.

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

None.

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##### Table of Contents

PART II

Item 5.   Market for Registrants Common Equity and Related Stockholder Matters

Not applicable.

Item 6.   Selected Financial Data

The selected
consolidated financial information presented below as of and for the fiscal years ended December 31, 2002, 2001, 2000, 1999, and 1998, has been derived from our audited consolidated financial statements. Except for the fiscal years ended December
31, 1998 and 1999, these consolidated financial statements are contained elsewhere in this Form 10-K. The following selected consolidated financial information is qualified by reference to, and should be read in conjunction with the historical
consolidated financial statements, including notes accompanying them and Managements Discussion and Analysis of Financial Condition and Results of Operations found elsewhere in this Form 10-K.

|                                                          |  | Year Ended December 31, |        
|--------------------------------------------------------- |  | ----------------------- | -------
|                                                          |  |                         |        
|                                                          |  | 2002                    |        
|                                                          |  |                         |        
|                                                          |  | (dollars in thousands)  |        
|Statement of Operations Data:                             |  |                         |        
|Net sales                                                 |  | $                       | 754,355
|Cost of sales                                             |  |                         | 657,085
|Gross profit                                              |  |                         | 97,270 
|Selling, general and administrative expenses              |  |                         | 26,013 
|Income from operations                                    |  |                         | 71,257 
|Interest expense, net                                     |  |                         | (14,127
|Income (loss) before income taxes                         |  |                         | 58,139 
|Net income (loss)                                         |  |                         | 35,011 
|EBITDA, as adjusted Data(1):                              |  |                         |        
|Income (loss) before income taxes                         |  | $                       | 58,139 
|Interest expense                                          |  |                         | 14,127 
|Excluding (gain) loss of fixed assets                     |  |                         | (492   
|Depreciation and amortization                             |  |                         | 28,827 
|                                                          |  |                         |        
|EBITDA, as adjusted                                       |  | $                       | 100,601
|                                                          |  |                         |        
|EBITDA, as adjusted margin                                |  |                         | 13.3   
|Other Data:                                               |  |                         |        
|Operating margin                                          |  |                         | 9.4    
|Cash flows provided by operating activities               |  |                         | 48,295 
|Cash flows used in investing activities                   |  |                         | (20,111
|Cash flows used in financing activities                   |  |                         | (34,045
|Capital expenditures                                      |  | $                       | 20,812 
|Total tons billed, excluding scrap (in thousands)         |  |                         | 2,014  
|Number of employees at end of period                      |  |                         | 929    
|Man hours per ton produced                                |  |                         | 1.02   
|Selected Ratios:                                          |  |                         |        
|Ratio of earnings to fixed charges(2)                     |  |                         | 4.8    
|Ratio of EBITDA, as adjusted to interest expense, net (3) |  |                         | 7.1    

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##### Table of Contents

|                                                                          |  | As of December 31, |        
|------------------------------------------------------------------------- |  | ------------------ | -------
|                                                                          |  |                    |        
|                                                                          |  | 2002               |        
|                                                                          |  |                    |        
|                                                                          |  | (in thousands)     |        
|Balance Sheet Data:                                                       |  |                    |        
|Cash and cash equivalents                                                 |  | $                  | 2,891  
|Property, plant and equipment, net                                        |  |                    | 245,193
|Total assets                                                              |  |                    | 552,314
|Total long-term debt including current portion and notes payable to banks |  |                    | 163,000
|Total stockholders equity                                                |  |                    | 247,154

|   
|---
|(1)
|   
|(2)
|   
|(3)

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

Introduction

From our site in Fontana, California, we produce flat rolled steel products: hot rolled,
cold rolled, galvanized as well as ERW pipe, with a current annual finished shipment capability of approximately 2.0 million tons. We service a broad range of customers with applications that include pipe and tubing, heating, ventilating and air
conditioning, strapping, drums, steel wheels, culverts and a variety of construction related products.

We ship our products by truck
and rail to manufacturers, contractors and distributors primarily in the 11 states west of the Rocky Mountains. We generally sell our products free on board (FOB), shipping point, and title is passed when products are loaded for shipment. We
recognize revenue from product sales when products are shipped or delivered to the customer, depending on the terms of the sale. For products shipped FOB, shipping point, revenue is recognized at the time of shipment. For products shipped FOB
destination, revenue is recognized at the time of delivery. Our revenue is dependent on the volume, product mix and sales prices of our products. General economic conditions as well as the supply and demand of steel products within our market
influence sales prices. We generally set our sales prices quarterly and we maintain no long-term sales agreements.

Cost of goods sold
consists primarily of raw materials, labor, natural gas, electricity, depreciation and zinc costs. Raw material costs have historically comprised approximately 70% of our cost of goods sold. Our slab consumption unit cost in 2002 was lower compared
to 2001, however, compared to 1999, our slab consumption unit cost in 2002 was higher.

We generally purchase steel slab in boatload
quantities. Imported slab arrives on chartered vessels in the Port of Los Angeles and is transported by rail to our Fontana facility. We generally purchase steel slab on open negotiated payment terms. Steel slab consumption costs include the FOB
value of steel slab, quality extras, ocean transportation, rail freight, duties, unloading, insurance and handling costs. Historically, we negotiate slab FOB prices quarterly and other rates through contracts of varying lengths. Our purchasing power
and extensive knowledge of the worldwide slab market continues to provide us with the opportunity to negotiate with slab suppliers on terms that we believe are favorable to us. We will continue to actively manage slab procurement to minimize costs
and may opportunistically purchase slab in the future.

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##### Table of Contents

We use zinc in the production of our galvanized products. We currently purchase zinc from several suppliers. Zinc
is purchased on a monthly basis and is priced using a formula tied to the London Metals Exchange zinc index. In the past, we have managed our purchase price of zinc by entering into contracts to lock in favorable prices and may continue to do so in
the future.

We require significant volumes of electricity to operate our equipment and produce our products.  To obtain the
electricity we need to participate in the Direct Access program whereby electricity customers can contract directly with energy service providers, thereby bypassing the state of California procurement system. Our agreement, as amended, results in
lower electricity costs than would otherwise be available from Californias regulated utility providers.  The Public Utilities Commission of the State of California (PUC) issued an order on November 7, 2002, imposing exit fees of 2.7 cents
per kilowatt hour on utility customers who participating in the Direct Access program during the California electricity crisis in 2001.  The PUCs stated purpose for the exit fees (officially termed as the Cost Responsibility Surcharge or
CRS) is to recoup the substantial sums spent by the State of California to purchase electricity during the crisis.  The CRS, if continued at 2.7 cents per kwh, is projected to result in additional costs for our electricity service
of approximately $9,000,000 in 2003.  We are currently consulting with legal counsel and other impacted parties concerning a potential challenge to the exit fees, however, any such challenge is not expected to alleviate the projected impact of
exit fees in 2003.

Further, recent events have caused wholesale electricity prices to rise over the last several weeks.  Our
current direct access electricity purchase agreement covers most of our electricity requirements at pre-established prices through December 2003.  However, due to the nature of our contract and normal fluctuations in our daily electricity
usage, we occasionally are exposed to spot electricity prices when we sell excess energy into, or when we buy additional energy from, the wholesale market.  In an environment where spot prices for electricity are rising we may benefit from the
sale of excess energy and our costs may rise if additional spot purchases are required.  Conversely, in an environmental where spot prices are declining, we sell excess energy at rates that may be below our contract price and we may lower our
overall costs if additional spot purchases are required.  For fiscal 2002, electricity costs accounted for approximately 3% of our cost of goods sold.

We also require significant volumes of natural gas to produce our products.  We generally purchase natural gas on an annual contract basis from a physical
supplier active in the California market. The price we normally pay for natural gas is based on the New York Mercantile Exchange (NYMEX) natural gas commodity index, which is a commonly referenced index in the industry for natural gas purchases, and
an additional delivery cost to the California border commonly known as the basis cost.  For the last several years the index price for natural gas has experienced volatility.  In an effort to stabilize such costs, we may on occasion enter
into agreements whereby we lock in our cost for natural gas in future months.  We are currently in an agreement that fixes our cost of natural gas through May 2003.

Recent domestic events, including but not limited to, severe cold weather in certain parts of the United States, low natural gas inventory storage, and a lack of new
natural gas drilling activity, as well as international events, such as the potential conflict in Iraq and the political unrest in Venezuela, have resulted in very high natural gas costs over the last several weeks.  Our production costs have
not been affected by these recent price fluctuations because the price we pay for natural gas is fixed through May 2003.  We currently have in place additional agreements that fix the price of approximately 30% of our natural gas requirements
from June through October 2003.  We continue to monitor the near and long term price trends of natural gas and may enter into additional purchase agreements when we deem it appropriate or when opportunities present themselves.  In fiscal
year 2002, natural gas costs represented less than 5% of our cost of goods sold.

Selling, general and administrative expenses consist
primarily of sales and labor, various administrative expenses, and shipping costs. In 2002, labor costs comprised approximately 49% of our total selling, general and administrative expenses compared to 52% in 2001 and 45% in 2000.

Results of Operations

|            |                         | Tons Billed             |        
|----------- | ----------------------- | ----------------------- | -------
|            |                         |                         |        
|            |                         | Year Ended December 31, |        
|            |                         |                         |        
|            |                         | 2002                    |        
|            |                         |                         |        
|Hot Rolled  |                         |                         | 945,663
|Cold Rolled |                         |                         | 234,505
|Galvanized  |                         |                         | 719,711
|ERW pipe    |                         |                         | 113,902
|            |                         |                         |        
|            | Total (excluding scrap) |                         |        
|            |                         |                         |        
|            |                         |                         |        

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Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Net sales.   For the year ended December 31, 2002 net sales were $754,355,000.  This was a $113,965,000 improvement over the prior year. The
increase is attributable to an improved average sales unit price and a significantly higher volume of products sold. Our average sales price increased by more than $24 per ton increasing our net sales by approximately $48,600,000. We established a
new volume sold record of 2,013,781 net tons, representing a 185,410 net ton increase over the prior year and  further increasing our net sales by an additional $65,200,000.

Gross profit.Gross profit increased $69,593,000 from $27,677,000 last year to $97,270,000 this year. Gross profit as a percentage of net sales
increased from 4.3% in 2001 to 12.9% in 2002. Our improvement in gross profit was the result of a better margin between our average sales price and our average slab consumption cost, higher volumes and improved utility costs.

Selling, general and administrative (SG&A) expenses.Selling, general and administrative expenses increased $2,663,000, from
$23,350,000 last year to $26,013,000 this year. The primary reasons for the increase in SG&A expenses was an increase in profit sharing expenses resulting from improving profits as well as a $1,700,000 non-cash accrual recorded for future
environmental remediation expenditures.  SG&A expenses as a percentage of net sales decreased slightly from the prior year from 3.6% last year to 3.4% this year.

Equity in income of affiliate.We maintain a 1.5% ownership interest in Companhia Siderurgica de Tubarão, which is based on our ownership of
4.0% of its common stock. Our investment in Companhia Siderurgica de Tubarão is accounted for under the equity method of accounting. For the year ended December 31, 2002, we recognized income of $150,000 from our investment in Companhia
Siderurgica de Tubarão, which consists of our pro-rata share of Companhia Siderurgica de Tubarãos income. Companhia Siderurgica de Tubarão is a publicly traded Brazilian company engaged in the production of steel slab and coil.
Approximately 90% of Companhia Siderurgica de Tubarãos products are exported outside of Brazil and sold predominantly in U.S. dollars. This high percentage of U.S. dollar denominated cash flow tends to lessen the impact of market risks
related to fluctuations in currency exchange rates. For the year ended December 31, 2001, we recognized income of $1,274,000 from our investment in Companhia Siderurgica de Tubarão.

Net Interest expense.Net interest expense decreased $2,189,000 from $16,316,000 last year to $14,127,000 this year. The decrease in interest
expense is attributable to lower average loan balances. Interest expense figures are net of interest income of $508,000 and $246,000 in 2002 and 2001 respectively and capitalized interest of $319,000 in 2002 and $118,000 in 2001.

Other Income, net.Other income, net, decreased $2,539,000 from $3,398,000 last year to $859,000 this year. Other income is
comprised of miscellaneous income items such as the sale of fixed assets, rental income, proceeds from legal settlements, etc.  As many of these items occur infrequently or result in a one-time recognition of income, this category is subject to
significant fluctuation from year to year.

Income tax expense (benefit).   Income tax expense for the year was
$23,138,000 compared to income tax benefit of $3,606,000 last year.  The effective tax rate for 2002 was 39.8% compared to an effective tax rate benefit of 49.3% in 2001. Income tax expense (benefit) is net of state manufacturing investment
credit of $1,113,000 in 2002 and $1,200,000 in 2001.

Net income (loss).Net income for the year was $35,001,000
compared to the net loss incurred last year in the amount of $3,711,000.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Net sales.   For the year ended December 31, 2001 net sales were $640,390,000. This was a $80,510,000, or 11.2% decrease from the
$720,900,000 net sales generated for the year ended December 31, 2000. The year over year decrease is attributable to a decrease in sales unit price and a lower value added product mix partially offset by higher volumes. A decrease in our average
selling price reduced our net sales by approximately by $103,308,000. In 2001, we sold more hot rolled and less cold rolled and galvanized steel as a percentage of total products than in 2000. This change in our product mix contributed a decrease of
approximately $8,057,000 in net sales. Unit prices, after adjusting for product mix, decreased year over year by approximately $57 per ton.  In 2001, we sold 1,828,371 net tons compared to 1,753,094 net tons of steel in 2000, excluding steel
scrap, an increase of 75,277 net tons or 4.3%. This 4.3% increase in tonnage sold resulted in a increase of approximately $30,776,000 in net sales.

Gross profit.Gross profit decreased $76,585,000, or 73.5%, from $104,262,000 for the year ended December 31, 2000 to $27,677,000 for the year
ended December 31, 2001. Gross profit as a percentage of net sales decreased from 14.5% in 2000 to

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4.3% in 2001. Our gross profit decreased as a result of a decrease in our selling price, change in product mix, and an increase in utility costs, which was partially offset by
a decrease in our slab cost.

Selling, general and administrative (SG&A) expenses.Selling, general and
administrative expenses decreased $8,835,000, or 27.5%, from $32,185,000 for the year ended December 31, 2000 to $23,350,000 for the year ended December 31, 2001. SG&A expenses as a percentage of net sales also decreased  to 3.6% for the
year ended December 31, 2001, from 4.5% for year ended December 31, 2000. Management performance compensation and all other administrative expenses contributed to this decrease.

Equity in income of affiliate.We maintain a 1.5% ownership interest in Companhia Siderurgica de Tubarão, which is based on our ownership of
4.0% of its common stock. Our investment in Companhia Siderurgica de Tubarão is accounted for under the equity method of accounting. For the year ended December 31, 2001, we recognized income of $1,274,000 from our investment in Companhia
Siderurgica de Tubarão, which consists of our pro-rata share of Companhia Siderurgica de Tubarãos income, and $650,000 of amortized negative goodwill (which was fully amortized as of December 31, 2001). Companhia Siderurgica de
Tubarão is a publicly traded Brazilian company engaged in the production of steel slab. Approximately 90% of Companhia Siderurgica de Tubarãos products are exported outside of Brazil and sold predominantly in U.S. dollars. This high
percentage of U.S. dollar denominated cash flow tends to lessen the impact of market risks related to fluctuations in currency exchange rates. For the year ended December 31, 2000, we recognized income of $2,229,000, including amortization of
negative goodwill, from our investment in Companhia Siderurgica de Tubarão.

Net Interest expense.Net interest
expense decreased $2,440,000, or 13.0%, from $18,756,000 for the year ended December 31, 2000 to $16,316,000 for the year ended December 31, 2001. The decrease in interest expense in 2001 is attributable to both, lower average loan balances and
lower interest rates in 2001 compared to 2000. Interest expense figures are net of interest income and capitalized interest of $621,000 in 2000 and $364,000 in 2001.

Other Income, net.Other income, net increased $2,5810,000 from $588,000 last year to $3,398,000 this year. Other income is comprised of
miscellaneous income items such as the sale of fixed assets, rental income, proceeds from legal settlements, etc.  As many of these items occur infrequently or result in a one-time recognition of income, this category is subject to significant
fluctuation from year to year.

Income tax expense (benefit).   Income taxes decreased $24,899,000 from $21,293,000
expense for the year ended December 31, 2000 to a $3,606,000 benefit for the year ended December 31, 2001. The effective tax rate for 2000 was 37.9% compared to an effective tax rate benefit of 49.3% in 2001. Income tax expense benefit is net of
state manufacturing investment credit of $1,886,000 in 2000 and $1,200,000 in 2001.

Net income (loss).Net loss for
the year ended December 31, 2001 was $3,711,000. This was $38,556,000, or 110.7%, lower than the net income of $34,845,000 for the year ended December 31, 2000.

Liquidity and Capital Resources

At December 31, 2002, we had $2,891,000 in cash and cash equivalents and $101,872,000 available under our bank facility. During the
year, cash flows from operations generated $48,295,000, which consisted of $35,001,000 in net income, $28,827,000 in depreciation and amortization expense and a net cash flow decrease of $15,458,000 due to changes in assets and liabilities. 
Operating cash flow decreased as a result of a $54,560,000 increase in inventories and a $16,103,000 increase in accounts receivable.  Operating cash flow was increased as a result of a $41,394,000 change in accounts payable and a $3,791,000
change in deferred income taxes.  Cash flows from investing activities consisted primarily of $20,812,000 of capital expenditures. Cash flows from financing activities consisted of net repayments under our bank facility in the amount of
$16,000,000 and dividend payments of $18,045,000.

On March 10, 1999, we entered into a $130,000,000 five-year bank facility of which
$13,000,000 was outstanding as of December 31, 2002. The bank facility is collateralized by cash, accounts receivable, inventory and other assets. Subject to the satisfaction of customary conditions and a borrowing base, advances under the bank
facility may be made at any time prior to the bank facility termination date. The termination date is the earlier to occur of March 10, 2004 or the date that is 60 days prior to the maturity of our 8.5% senior notes. Advances may be used for working
capital, capital expenditures and other lawful corporate purposes, including the refinancing of existing debt.

On April 6, 1999, we
issued an aggregate of $150,000,000 of ten-year, 8.5% senior unsecured notes. Interest is payable on the notes on April 1 and October 1 of each year. The notes are senior in right of payment to all of our subordinated indebtedness and equal in right
of payment to all of our existing and future indebtedness that is not by its terms subordinated to the notes. We may redeem the notes at any time after April 1, 2004. The indenture governing the notes contains covenants that limit our ability to
incur additional indebtedness, pay dividends on, redeem or repurchase capital stock and make investments, create liens, sell

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assets, sell capital stock of certain of our subsidiaries, engage in transactions with affiliates and consolidate, merge or transfer all or substantially all of our assets and
the assets of certain of our subsidiaries on a consolidated basis.

We currently have approximately $3,800,000 in material commitments
for capital expenditures expected to be completed during fiscal 2003.

We anticipate that our primary liquidity requirements will
be for working capital, capital expenditures, debt service and the payment of dividends. We believe that cash generated from operations and available borrowings under our bank facility will be sufficient to enable us to meet our liquidity
requirements for fiscal 2003.

Commitments and Contingencies

The following
table represents a comprehensive list of the Companys contractual obligations and commitments as of December 31, 2002:

|                                  |  | Payments Due by Period |        
|--------------------------------- |  | ---------------------- | -------
|                                  |  |                        |        
|                                  |  | (amounts in thousands) |        
|                                  |  | Total                  |        
|                                  |  |                        |        
|Long Term Debt                    |  | $                      | 163,000
|Contractual Commitments           |  | $                      | 92,885 
|Operating Leases                  |  | $                      | 29,873 
|                                  |  |                        |        
|Total Contractual Cash Obligation |  | $                      | 285,758
|                                  |  |                        |        

Critical Accounting Policies

In December 2001, the Securities and Exchange Commission (SEC) requested that all registrants list their most critical accounting policies in
Managements Discussion and Analysis of Financial Condition and Results of Operations.  The SEC indicated that a critical accounting policy is one which is both important to the portrayal of the companys financial
condition and results of operations and requires managements most difficult, subjective or complex judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.  We believe that our
following accounting policies fit this definition:

Allowance for Doubtful Accounts.  We have attempted to reserve for
expected credit losses based on our past experience with similar accounts receivable and believe our reserves to be adequate.  It is possible, however, that the accuracy of our estimation process could be materially impacted as the composition
of this pool of accounts receivable changes over time.  We continually review and refine the estimation process to make it as reactive to these changes as possible; however, we cannot guarantee that we will be able to accurately estimate credit
losses on these account receivable.

Environmental reserve:  We have engaged an environmental consultant to conduct a
remedial investigation and develop a remediation plan and remediation cost projections based upon that plan.  Utilizing the remediation plan developed by the environmental consultant, we developed an estimate for future costs of the remediation
plan.  The total aggregate cost of remediation is estimated to be approximately $1.8 million, which has been accrued in the 2002 consolidated financial statements.  The California Department of Toxic Substances Control has not yet
completed its review and approval of our plan; however, preliminary discussions between the DTSC and us have not indicated the need for any significant changes to the remediation plan or to the Companys estimate of related costs.  The
estimate of costs could change as a result of changes to the remediation plan required by the DTSC or unforeseen circumstances at the site.

Revenue Recognition: The Company recognizes revenue when products are shipped or delivered to the customer, depending on the terms of the sale. For products
shipped FOB shipping point, revenue is recognized at the time of shipment. For products shipped FOB destination, revenue is recognized at the time of delivery. In certain cases, at the customers request, the Company will enter into bill and
hold transactions whereby title transfers to the customer, but the product does not ship until a specified later date. Revenue on such transactions is recognized when the product is ready for shipment, and only after all conditions set forth under
Staff Accounting Bulletin (SAB) No. 101 have been met.

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Item 7A.   Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks related to fluctuations in interest rates on our senior notes and on our $130 million floating rate bank facility. During fiscal year
2002, we did not use interest rate swaps or other types of derivative financial instruments.

For fixed rate debt like the senior notes,
changes in interest rates generally affect the fair value of the debt instrument. For variable rate debt like our bank facility, changes in interest rates generally do not affect the fair value of the debt, but do affect earnings and cash flow. We
do not have an obligation to repay our senior notes prior to maturity in 2009 and, as a result, interest rate risk and changes in fair value should not have a significant impact on us. We believe that the interest rate on the 8.5% senior notes
approximates the current rates available for similar types of financing and as a result the carrying amount of the 8.5% senior notes approximates fair value. The fair value of our senior notes at December 31, 2002 was approximately $151,125,000. The
carrying value of the floating rate bank facility approximates fair value as the interest rate is variable and resets frequently. The bank facility bears interest at the Eurodollar rate, which was 2.44% at December 31, 2002.  We estimate that
the average amount of debt outstanding under the facility for fiscal year 2003 will be $40.0 million. Therefore, a one-percentage point increase in interest rates would result in an increase in interest expense of $400,000 for the year.

We do not believe that the future market rate risk related to the senior notes and the floating rate bank facility will have a material impact on
our financial position, results of operations or liquidity.

We require significant volumes of electricity to operate our equipment and
produce our products.  To obtain the electricity we need to participate in the Direct Access program whereby electricity customers can contract directly with energy service providers, thereby bypassing the state of California procurement
system. Our agreement, as amended, results in lower electricity costs than would otherwise be available from Californias regulated utility providers.  The Public Utilities Commission of the State of California (PUC) issued an order on
November 7, 2002, imposing exit fees of 2.7 cents per kilowatt hour on utility customers who participating in the Direct Access program during the California electricity crisis in 2001.  The PUCs stated purpose for the exit fees
(officially termed as the Cost Responsibility Surcharge or CRS) is to recoup the substantial sums spent by the State of California to purchase electricity during the crisis.  The CRS, if continued at 2.7 cents per kwh, is projected
to result in additional costs for our electricity service of approximately $9,000,000 in 2003.  We are currently consulting with legal counsel and other impacted parties concerning a potential challenge to the exit fees, however, any such
challenge is not expected to alleviate the projected impact of exit fees in 2003.

Further, recent events have caused wholesale natural
gas and electricity prices to rise over the last several weeks.  Our current direct access electricity purchase agreement covers most of our electricity requirements at pre-established prices through December 2003. However, due to the nature of
our contract and normal fluctuations in our daily electricity usage, we occasionally are exposed to spot electricity prices when we sell excess energy into, or when we buy additional energy from, the wholesale market.  In an environment where
spot prices for electricity are rising we may benefit from the sale of excess energy and our costs may rise if additional spot purchases are required.  Conversely, in an environmental where spot prices are declining, we sell excess energy at
rates that may be below our contract price and we may lower our overall costs if additional spot purchases are required.  For fiscal 2002, electricity costs accounted for approximately 3% of our cost of goods sold.

We also require significant volumes of natural gas to produce our products.  We generally purchase natural gas on an annual contract basis from a physical
supplier active in the California market. The price we normally pay for natural gas is based on the New York Mercantile Exchange (NYMEX) natural gas commodity index, which is a commonly referenced index in the industry for natural gas purchases, and
an additional delivery cost to the California border commonly known as the basis cost.  For the last several years the index price for natural gas has experienced volatility.  In an effort to stabilize such costs, we may on occasion enter
into agreements whereby we lock in our cost for natural gas in future months.  We are currently in an agreement that fixes our cost of natural gas through May 2003.

Recent domestic events, including but not limited to, severe cold weather in certain parts of the United States, low natural gas inventory storage, and a lack of new
natural gas drilling activity, as well as international events, such as the potential conflict in Iraq and the political unrest in Venezuela, have resulted in very high natural gas costs over the last several weeks.  Our production costs have
not been affected by these recent price fluctuations because the price we pay for natural gas is fixed through May 2003.  We currently have in place additional agreements that fix the price of approximately 30% of our natural gas requirements
from June through October 2003.  We continue to monitor the near and long term price trends of natural gas and may enter into additional purchase agreements when we deem it appropriate or when opportunities present themselves.  In fiscal
year 2002, natural gas costs represented less than 5% of our cost of goods sold.

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Recently Issued Accounting Standards

In June 2001, the
Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, (SFAS No. 141) and SFAS No. 142, Goodwill and Other Intangible
Assets (SFAS No. 142).  SFAS No. 141 requires that the purchase method of accounting be used for all business combinations.  SFAS No. 141 specifies criteria that intangible assets acquired in a business combination must meet to be
recognized and reported separately from goodwill.  SFAS No. 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the
provisions of SFAS No. 142.  SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance
with SFAS No. 121 and subsequently, SFAS No. 144 after its adoption.

The Company adopted the provisions of SFAS No. 141 as of July 1,
2001, the impact of which was not material to us.  SFAS No. 142 was effective January 1, 2002.  Goodwill and intangible assets determined to have an indefinite useful life acquired in a purchase business combination completed after June
30, 2001, but before SFAS No. 142 is adopted in full, are not amortized.  Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 continued to be amortized and tested for impairment prior to the full
adoption of SFAS No. 142.  The adoption of SFAS No. 142 did not have a material impact on our consolidated financial position or consolidated results of operations.

In September, 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (SFAS No. 143).  SFAS No. 143 requires the Company to
record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development
and/or normal use of the assets.  The Company also records a corresponding asset which is depreciated over the life of the asset.  Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at
the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation.  The Company is required to adopt SFAS No. 143 on January 1, 2003.  The adoption of SFAS No. 143 is not
expected to have a material impact on our consolidated financial position or consolidated results of operations.

In October, 2001, the
FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144).  SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets.  This
Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by
which the carrying amount of the asset exceeds the fair value of the asset.  SFAS No. 144 requires companies to separately report discontinued operations and extends that reporting to a component of an entity that either has been disposed of
(by sale, abandonment, or in a distribution to owners) or is classified as held for sale.  Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.  The Company adopted SFAS No. 144 on
January 1, 2002, and the impact of this adoption did not have a material impact on our consolidated financial position or consolidated results of operations.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities.  SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  Examples of costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued operations, plant closing or other exit or disposal activities.  SFAS No. 146 is effective prospectively for exit or disposal activities initiated after December
31, 2002, with earlier adoption encouraged.  As the provisions of SFAS No. 146 are required to be applied prospectively after the adoption date, the Company cannot determine the potential effects that adoption of SFAS No. 146 will have on the
financial statements.

In November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (the Interpretation), which addresses the disclosure to be made by a guarantor in its interim and annual financial statements about its
obligations under guarantees.  At December 31, 2002, the Company has no such guarantees.

On December 31, 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based Compensation -- Transition and Disclosure, which amends SFAS No. 123, Accounting for Stock-Based Compensation.  SFAS No. 148 amends the disclosure requirements in SFAS No. 123 for
stock-based compensation for annual periods ending after December 15, 2002, and for interim periods beginning after December 15, 2002, including those companies that continue to recognize stock-based compensation under APB Opinion No. 25,
Accounting for Stock Issued to Employees.  In addition, SFAS No. 148 provides three alternative

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transition methods for companies that choose to adopt the fair value measurement provisions of SFAS No. 123.  .  The Company believes that there will not be a
material impact to the Company upon adoption of SFAS No. 148.

Item 8.   Consolidated Financial Statements and Supplementary Data

The Consolidated Financial Statements required in response to this Item are included under Item 14(a) of Part IV of this Report.

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

On December 12, 2002, the Board of Directors of California Steel Industries, Inc. (the Company) decided to terminate the engagement of KPMG, LLP
(KPMG) as its independent auditor upon completion of the  December 31, 2002 audit and issuance of their report thereon.  The decision to terminate KPMGs engagement was based on the Boards determination that it is in
the best interests of the Company to rotate its independent auditors every five years to ensure independence.

The Companys auditor
for the 2002, 2001 and 2000 fiscal years was KPMG. KPMGs reports on the Companys consolidated financial statements for the years ended December 31, 2002, 2001 and 2000, did not contain an adverse opinion or disclaimer of opinion, nor
were they otherwise modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2002, 2001
and 2000, there were no disagreements between the Company and KPMG on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to KPMGs satisfaction, as applicable,
would have caused it to make reference to the subject matter of the disagreement in connection with its report on the Companys consolidated financial statements for such years.

The Company has provided KPMG with a copy of the foregoing disclosures. Attached as Exhibit 16.1 is a copy of KPMGs letter, dated December 19, 2002, stating
that it agrees with such statements.

On December 12, 2002, the Board of Directors of the Company approved the engagement of
PricewaterhouseCoopers, LLP (PwC) effective as of January 1, 2003.

During the three most recent fiscal years ended December
31, 2002, 2001 and 2000, the Company has not consulted with PwC regarding either (i) the application of accounting principles to a specific completed or contemplated transaction; or the type of audit opinion that might be rendered on the
Companys consolidated financial statements, and neither written nor oral advice was provided to the Company that PwC concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing, or
financial reporting issues; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K or a reportable event as defined
in Item 304(a)(1)(v).

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PART III

Item 10.   Directors and Executive Officers of the Registrant

The following table sets forth our Directors and executive officers as of December 31, 2002. All Directors hold their positions until their terms expire and until
their respective successors are elected and qualified. Executive officers are elected by and serve at the discretion of the Board of Directors until their terms expire and their successors are duly chosen and qualified.

|Name                   |  | Age |  | Position                                              
|---------------------- |  | --- |  | ------------------------------------------------------
|                       |  |     |  |                                                       
|Tatsuhiko Hamamoto     |  | 62  |  | Chairman of the Board of Directors                    
|Francisco Póvoa        |  | 53  |  | Director                                              
|Toshihiro Kabasawa     |  | 48  |  | Director                                              
|Dalton Nosé            |  | 54  |  | Director                                              
|C. Lourenco Goncalves* |  | 44  |  | President and Chief Executive Officer                 
|Vicente Wright*        |  | 50  |  | Executive Vice President, Finance                     
|Toshiyuki Tamai        |  | 52  |  | Executive Vice President, Operations                  
|James Wilson           |  | 53  |  | Vice President, Sales                                 
|Brett Guge             |  | 48  |  | Vice President, Administration and Corporate Secretary

*Mr. Goncalves resigned effective February 21, 2003 and Vicente Wright was named as interim President and CEO by the Board of Directors until a permanent replacement
is appointed.

Tatsuhiko Hamamotohas served as Chairman of the Board of Directors since July 1998. From 1995 to 1998, Mr.
Hamamoto was Corporate Auditor on the Board of Kawasaki Steel Corporation. From 1993 to 1995, Mr. Hamamoto was Executive Vice President of KLI, a leasing company. From 1990 to 1992, Mr. Hamamoto served as Vice President, Technology and Finance at
Armco Steel. From 1987 to 1989, Mr. Hamamoto was General Manager of the Overseas Steel Business Department at Kawasaki Steel Corporation and our Executive Vice President. He graduated from Kobe University with a Bachelor of Arts Degree in Economics.

Francisco Póvoahas served as a Director since March 1998. He has worked at Companhia Vale do Rio Doce since February 1972
and has held positions as Superintendent of Technology, Mining Superintendent and General Manager of the South System, Industrial Engineering General Manager. From 1991 to 1993, Mr. Póvoa served as the Executive Director of Rio Doce
International in Brussels. Since 1997, he has served as both the Chairman of the board of directors and the President of Companhia Vale do Rio Doces Employees Investment Club, a shareholder of Companhia Vale do Rio Doce. He served as President
of SIBRA-Eletrosiderurgica Brasileira S.A. and Companhia Paulista de Ferro-Ligas, a Brazilian manganese producer, from 1997 to 1998. He has served as a member of the board of directors of Companhia Vale do Rio Doce since 1997, Société
Européenne DAlliages Pour La Sidérurgie (SEAS), a French ferro-alloy producer since 1998, Nova Era Silicon, a Brazilian ferro-silicon company, since 1998, and Companhia Vale do Rio Doces pension fund since 1993. Mr. Póvoa
graduated from Universidade Federal de Minas Gerais with a Mining Engineering Degree.

Toshihiro Kabasawahas served as a
Director since July 2000. He has been employed by Kawasaki Steel Corporation since 1977 where he has held positions as Human Development Manager, Organization & Systems Manager, Steel Business Planning Manager, and Manager of Overseas Business
in Corporate Planning Department. He graduated from Tokyo University with a Bachelors Degree in Law.

Dalton Noséhas
served as a Director since January 1, 2002.  He has been employed by Companhia Vale do Ric Doce since February 2001 where he serves as the Development Director.   From 1975 through 2001, Mr. Nosé held management positions,
including that of President and CEO, at a number of Brazilian steel and manufacturing companies, including twenty years of working with the KORF Group and associated companies in Germany and Brazil.  Mr. Nosé has specialized in operations
and engineering, with a strong emphasis on implementing new technologies.  Mr. Nosé graduated from Instituto Maua de Technologia with a B.S. in Metallurgical Engineering.

C. Lourenco Goncalves served as President and Chief Executive Officer from March 1998 to February, 2003. From 1981 to 1998, he was employed by Companhia
Siderurgica Nacional, the largest steel company in Brazil, where he held positions as a Managing Director, General Superintendent of Volta Redonda Works, Hot Rolling General Manager, Cold Rolling and Coated Products General Manager, Hot Strip Mill
Superintendent, Continuous Casting Superintendent and Quality Control Manager. Mr. Goncalves graduated from the Federal University of Minas Gerais State with a Masters Degree in Metallurgy.

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Vicente Wright was named interim President and Chief Executive Officer in February, 2003 and continues to
serve as Executive Vice President, Finance, a position he has held since February, 1998.  Mr. Wright was the Steel Division General Manager, from 1992 to 1998, and Iron Ore Sales General Manager from 1991 to 1992 of Companhia Vale do Rio Doce.
From 1987 to 1988, he served as Iron Ore Sales General Manager for Rio Doce Asia Ltd., a subsidiary of Companhia Vale do Rio Doce. In 1986 and 1987, he was the assistant to the President of California Steel Industries in charge of slab procurement
and all of its related logistics. From 1978 to 1986, Mr. Wright served as Purchasing Executive and Slab Marketing Manager at Companhia Siderurgica de Tubarão. Mr. Wright was a member of the Board of Directors of Companhia Siderurgica Nacional,
the largest steel company in Brazil, from 1993 to 1997, Acominas, a Brazilian steel mill, from 1994 to 1998, Siderar, an Argentine steel mill, from 1994 to 1997, Chairman of Nova Era Silicon, a Brazilian ferro-silicon company mill, from 1994 to 1997
and SEAS from 1994 to 1998. He graduated from Marquette University, Milwaukee, Wisconsin with a Bachelors Degree in Business Administration.

Toshiyuki Tamaihas served as Executive Vice President, Operations since July, 2001. He has been with CSI since 1995, previously holding positions as Manager,
Hot Strip Rolling and Finishing Operations and General Manager, Hot Rolling and Tubular Products.  He joined Kawasaki Steel Corporation in 1973, where he served  as Manager at the No. 2 Hot Strip Mill at Chiba Works.  Prior to joining
CSI, he worked as Senior Staff Engineer at AK Steel, Middletown, Ohio.  Mr. Tamai graduated from Kyoto University with a Bachelors Degree in Mechanical Engineering.

James Wilsonhas served as Vice President, Sales since November 2000. He has been employed by California Steel Industries since 1984 holding the positions of
Manager, Galvanized Products and Manager, Cold Rolled Products. Prior to joining California Steel Industries, he worked in various segments of the metals industry, including J.T. Ryerson & Sons, a service center, and in manufacturing. He
graduated from the University of California, Berkeley, with a Bachelor of Science degree in Industrial Engineering.

Brett Gugehas served as Vice President, Administration and Corporate Secretary since May 1997. From 1994 to 1997, he served as the Manager of Administration of Gallatin Steel. From 1983 to 1994, he was employed by Alcoa where he held positions as the
Superintendent of Industrial Relations and Employment, Supervisor of Employee Relations and Superintendent of Industrial Relations and Training. Mr. Guge graduated from the University of Tennessee with a Bachelors Degree in Communications, and
from Xavier University with a Masters Degree in Business Administration.

Board Committees

Our Board of Directors has a Compensation Committee and an Operations and Finance Committee. The Compensation Committee is comprised of four members: Director
Tatsuhiko Hamamoto, Director Francisco Póvoa, Mr. Yasutaka Kumeda of Kawasaki Steel Corporation and Mr. Marcus Roger M.M. da Costa of Companhia Vale do Rio Doce. The Compensation Committee met twice during 2002. The Compensation Committee
reviews compensation packages for our officers and prepares the executive compensation proposal to the Board.

The Operations and
Finance Committee is comprised of four members including Directors Toshihiro Kabasawa, Leonardo Moretzohn of Companhia Vale do Rio Doce, Mr. Isamu Okamura of Kawasaki Steel Corporation and one vacancy which has not yet been filled.  This
committee met twice during 2002. The Operations and Finance Committee mainly reviews our investment plans, business plan, annual operating plan and budget. The Operations and Finance Committee is also responsible for reviewing our operating results
and performance.

Director Compensation

For their service as our Directors
for fiscal year 2002, all Directors, except the Chairman, received $3,000 per month and committee members received $1,000 per month, each payable on a monthly basis. Mr. Hamamoto, Chairman of the Board of Directors, is paid a salary of $336,910 as
our employee. In addition to his salary, he received $36,109 in bonus and $8,500 in matching contributions to his account in our 401(k) Plan.

Item 11.   Executive Compensation

The following
summary compensation table sets forth information regarding compensation earned in the fiscal years ended December 31, 2002, 2001, and 2000 by our Chief Executive Officer and each of our other four most highly compensated executive officers whose
salary and bonus exceeded $100,000.

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Summary Compensation Table

|                            |                                          | Annual Compensation |      | Long-Term Compensation |   | All Other Compensation |        
|--------------------------- | ---------------------------------------- | ------------------- | ---- | ---------------------- | - | ---------------------- | -------
|                            |                                          |                     |      |                        |   |                        |        
|Name and Principal Position |                                          | Year                |      | Salary                 |   | Incentive Compensation |        
|                            |                                          |                     |      |                        |   |                        |        
|C. Lourenco Goncalves       |                                          |                     | 2002 |                        | $ | 336,910                |        
|                            | President and Chief Executive Officer    |                     |      | 2001                   |   | $                      | 336,661
|                            |                                          |                     | 2000 |                        | $ | 324,000                |        
|Vicente Wright              |                                          |                     | 2002 |                        | $ | 217,360                |        
|                            | Executive Vice President, Finance        |                     |      | 2001                   |   | $                      | 217,199
|                            |                                          |                     | 2000 |                        | $ | 209,000                |        
|Mr. Toshiyuki Tamai         |                                          |                     | 2002 |                        | $ | 217,360                |        
|                            | Executive Vice President, Operations (8) |                     |      | 2001                   |   | $                      | 167,826
|Brett Guge                  |                                          |                     | 2002 |                        | $ | 200,000                |        
|                            | Vice President, Administration           |                     |      | 2001                   |   | $                      | 199,369
|                            | & Corporate Secretary                    |                     |      | 2000                   |   | $                      | 167,000
|Jim Wilson                  |                                          |                     | 2002 |                        | $ | 200,000                |        
|                            | Vice President, Sales                    |                     |      | 2001                   |   | $                      | 200,000
|                            |                                          |                     | 2000 |                        | $ | 141,000                |        

|   
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|(1)
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|(2)
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|(3)
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|(10) | Represents $4,610 in car allowance and $25,814 in medical expenses and home leave reimbursements. Home leave  reimbursement is paid to our executives who are foreign
nationals in connection with trips by them and their family members to their country of origin.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                      
|(11) | Represents car allowance and other fringe benefits.                                                                                                                                                                                                                  

Supplemental Executive Retirement Plans and
Separation Agreement

On September 19, 2000, we entered into a Supplemental Executive Retirement Plan with Brett J. Guge, Vice
President, Administration and Corporate Secretary, intended to induce Mr. Guge to remain in our employ. Upon his retirement, we are obligated to pay Mr. Guge a monthly benefit for 180 months calculated as follows: one-twelfth of the product of 2.5%
multiplied by the number of years he is employed with us limited to 18 years, multiplied by his average annual compensation. This benefit vests at the rate of 4% per year, continuing yearly except for the year Mr. Guge turns 65, when the vesting
will be 24%. The payment of the vested portion of this benefit will start at the first day of the month following the month in which Mr. Guge reaches age 65. At December 31, 2002, he was vested 12% under this agreement.

Shareholders Agreement

We are owned 50% by Kawasaki Steel Holdings (USA), Inc., a Delaware
corporation and a subsidiary of Kawasaki Steel Corporation, a Japanese corporation, and 50% by Rio Doce Limited, a New York corporation and a subsidiary of Companhia Vale do Rio Doce (CVRD), a Brazilian corporation. Our two stockholders
entered into a Shareholders Agreement dated June 27, 1995, replacing a Shareholders Agreement dated June 1, 1987. According to the Shareholders Agreement, the stockholders agreed to subscribe for additional shares of our stock in
proportion to their respective ownership if any new stock is issued, and increases in our capital stock from time to time shall be allocated between our common stock and preferred stock as agreed upon by the stockholders. Each of the stockholders
has the right and obligation to subscribe and pay fully for the new shares in proportion to its respective ownership of our common stock. In addition, either stockholder may let its Affiliated Corporations, as defined the Shareholders
Agreement, subscribe, in whole or in part, to the new shares to be issued to it under the terms described below.

The Shareholders
Agreement provides that the Board of Directors shall be constituted of five directors, one of whom shall be chairman, as elected by and among the directors. Each stockholder shall have the right to appoint two Directors and the fifth Director shall
be elected by unanimous affirmative vote of the shareholders. In addition, the stockholders shall jointly appoint a president, who shall appoint other officers designated by the Board of Directors. The Shareholders Agreement also provides for
a Consultative Council consisting of two members, one appointed by each of the stockholders. It is unclear whether the Consultative Council provisions are valid under Delaware corporation law. The Consultative Council decides on all relevant matters
submitted to it by both or either of the stockholders and specifically resolves any deadlock among the Directors. Because no stockholder holds a majority of our stock and the Directors and members of the Consultative Council are elected by the
stockholders in proportion to each of the stockholders holdings, there is a possibility that a deadlock may occur on any issue voted on by the stockholders, Board of Directors and Consultative Council. If a deadlock were to occur and the
Consultative Council could not resolve the issue, the last recourse is arbitration according to the Shareholders Agreement. Furthermore, according to the Shareholders Agreement, we have agreed to purchase slab from Companhia Siderurgica
de Tubarão and use Seamar Shipping Corporation for ocean transportation of slab at negotiated prices.

The Shareholders
Agreement provides that, subject to any limitation on the payment of dividends contained in any agreement we are a party to, the stockholders shall cause us to distribute from our profits as many dividends as possible that may be distributed under
the applicable laws and regulations, provided that the profits shall first be applied to the payment of dividends on the preferred stock. We have historically paid dividends of 50% of our net income per year.

If either one of the stockholders wishes to transfer or assign their shares of our stock to a third party, other than to one of its affiliated corporations, the
stockholder must first offer to sell those shares to the other stockholder upon the same terms and conditions that the third party has offered to purchase the shares. Any stockholder who sells, transfers, assigns, or creates a pledge or other
encumbrance on its shares in favor a third party, other than its affiliated corporations, is obligated to obtain an undertaking letter from the third party according to which the third party undertakes unconditionally and irrevocably the obligations
of the transferring stockholder under the Shareholders Agreement in proportion to the number of shares transferred. Either stockholder may sell, transfer or assign to its affiliated corporations all or any part of its shares or preemptive
rights to subscribe for new shares of our stock by giving written notice to the other stockholder, provided that the affiliated corporation has agreed to become a party to the Shareholders Agreement. In this case, both the transferor and the
affiliated corporation shall jointly assume all of the obligations of the transferor under the Shareholders Agreement.

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401(k) Plan

We maintain the California Steel
Industries, Inc. 401(k) Savings Plan, a tax qualified cash or deferred tax arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended. The 401(k) Plan provides the participants with benefits upon retirement, death, disability
or termination of employment with us. Employees are eligible to participate in the salary reduction portion of the plan on the first day of the calendar month following their date of hire.

Participants may authorize us to contribute to the 401(k) Plan on their behalf a percentage of their compensation, not to exceed legally permissible limits, including
an overall dollar limit of $11,000 for 2002. The 401(k) Plan provides for our discretionary matching and profit sharing contributions. We currently match 100% of the first 4% of the participants deferral under the 401(k) Plan each year and 50%
of the next 2% of the participants deferral under the 401(k) Plan each year. Each plan year we may also elect to make an additional contribution to the 401(k) Plan. This discretionary employer contribution, if we make it, is allocated to each
participants account based on the participants compensation for the year relative to the compensation of all participants for that year. In order to share in the allocation of the discretionary employer contribution, if any, a
participant must complete 1,000 hours of service in the plan year.

Profit-Sharing Plan

We maintain a profit sharing plan under which bonuses are awarded based on a pool amount, equal to 8% of our income before taxes excluding gain or loss on disposition
of fixed assets and the results of Companhia Siderurgica de Tubarão. The basis for determining the profit sharing pool is subject to review and approval of our Board of Directors. The employees share in the pool amount is based on his or
her length of service with us during the profit sharing period. Employees who voluntarily terminate their employment for reasons others than retirement before the end of the profit sharing period and employees whose employment is involuntarily
terminated are not eligible to receive any profit sharing award.

Compensation Committee Interlocks and Inside Participation

Mr. Tatsuhiko Hamamoto, Mr. Francisco Póvoa, Mr. Yatsutaka Kumeda, and Mr. Marcus Roger M.M. da Costa served as members of our Compensation Committee in 2002.
Except for Mr. Hamamoto, none of the members of the Compensation Committee was, during 2002, an officer, employee or formerly an officer or employee of ours or our subsidiary.

Mr. Kumeda served as Staff Manager, Corporate Planning Department of Kawasaki Steel Corporation during 2002. Kawasaki Steel Corporations subsidiary, Kawasaki
Steel Holdings (USA), Inc. is one of our stockholders.  During 2002, no amounts were paid to Kawasaki Steel Corporation for participation on the committee.  In 2002, Mr. Póvoa served as a board member of CVRD, as well as the President
of the CVRD Employees Investment Club, a shareholder of Companhia Vale do Rio Doce.  In 2002, Mr. Marcus Roger M.M. de Costa served as General Manager of Human Resources and Corporate Administration of Companhia Vale do Rio Doce.

Board Compensation Committee Report on Executive Compensation

Executive compensation
at California Steel Industries, including plan design and scope, covers five corporate executive officer positions and the Chairman of the Board. Executive compensation is the responsibility of the Board of Directors. Periodically the Board, through
its Compensation Committee, authorizes benchmarking surveys of executive compensation for similarly sized manufacturing companies, including private companies and those publicly traded. The surveys are conducted by recognized consulting firms,
analyzing executive compensation within the steel industry and other manufacturing sectors. California Steel Industries executive compensation program currently includes as its major elements a base annual salary, and a management incentive
program based on (i) annual performance of California Steel Industries, and (ii) individual performance measured against annual objectives.

| | Submitted by the Compensation Committee of the Board of Directors:
| | ------------------------------------------------------------------
| |                                                                   
| | Tatsuhiko Hamamoto                                                
| | Francisco Póvoa                                                   
| | Yatsutaka Kumeda                                                  
| | Marcus Roger M.M. de Costa                                        

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Item 12.   Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of December 31, 2002, information regarding the shares of our common stock and Class C preferred stock beneficially owned by each
stockholder that beneficially owns in excess of 5% of the outstanding shares of our common stock and Class C preferred stock. No director or named executive officer beneficially owns any shares of our common stock or Class C preferred stock.

|                                                                                                               |  | Common |        | Class C Preferred | 
|-------------------------------------------------------------------------------------------------------------- |  | ------ | ------ | ----------------- | 
|                                                                                                               |  |        |        |                   | 
|Name of Beneficial Owner                                                                                       |  |        | Number |                   | 
|                                                                                                               |  |        |        |                   | 
|Rio Doce Limited 546 5th Avenue, 12th Floor New York, New York 10036                                           |  |        | 500    |                   | 
|Kawasaki Steel Holdings (USA), Inc. c/o Corporation Trust Center 1209 Orange Street Wilmington, Delaware
19801 |  |        | 500    |                   | 

Rio Doce Limited is a subsidiary of
Companhia Vale do Rio Doce, a Brazilian corporation, and Kawasaki Steel Holdings (USA), Inc. is a subsidiary of Kawasaki Steel Corporation, a Japanese corporation.

Item 13.   Certain Relationships and Related Transactions

Our stockholders, Kawasaki Steel Holdings (USA), Inc., a subsidiary of Kawasaki Steel Corporation, and Rio Doce Limited, a subsidiary of Companhia Vale do Rio Doce,
are parties to a Shareholders Agreement. According to the Shareholders Agreement, the stockholders control the election of the Board of Directors. The stockholders also indirectly control the appointment of officers through their right
to jointly elect the president, who is entitled to appoint our other officers.

The Shareholders Agreement also provides for a
Consultative Council, comprised of two members. Each stockholder is entitled to elect one member. The Consultative Council decides on all matters submitted to it by either or both of the stockholders and resolves deadlocks among the Board of
Directors. We have transactions in the normal course of business with affiliated companies. For example, we purchase slab from Companhia Siderurgica de Tubarão, a subsidiary of both Companhia Vale do Rio Doce and Kawasaki Steel Corporation.
During 2002, we purchased $128,976,000) of slab from Companhia Siderurgica de Tubarão and $5,664,000 of slab from Kawasaki Steel Corporation. We also hold a 4% interest in the common stock of Companhia Siderurgica de Tubarão.

We conducted arms-length negotiations with Companhia Siderurgica de Tubarão and Kawasaki Steel Corporation in 2002. The Shareholders
Agreement provides that we shall continuously purchase slabs from Companhia Siderurgica de Tubarão under terms and conditions as agreed upon by Companhia Siderurgica de Tubarão and us. The executive officer negotiating the market price for
the steel slab was our Executive Vice PresidentFinance.

We charter vessels from Seamar Shipping Corporation (Seamar), a subsidiary
of Companhia Vale do Rio Doce, for the ocean transfer of slab to the Port of Los Angeles. During 2002, we incurred $574,000 in charter fees from Seamar for its services. The Shareholders Agreement provides that we shall charter vessels from
Seamar. We entered into a 15-year contract with Seamar for shipping services that expired on May 29, 2000, which was then extended to December 31, 2001.  We do not currently have a contract with Seamar or any other carrier.  The executive
officer responsible for negotiating the price for shipping services was our Executive Vice PresidentFinance.

We had a five year
contract with Rio Doce Pasha Terminal (RDP), a joint venture of Companhia Vale do Rio Doce, to unload our ocean cargo from ships at the Port of Los Angeles that expired on December 31, 2000. During 2001, we incurred $17,254,000 for
RDPs services. In 2001, CVRD sold its interest in RDP and CSI signed a new agreement with Pasha Stevedoring Terminal (PST), which is not a related party.  CSIs new agreement with PST is for 10 years commencing with
January, 2001.

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##### Table of Contents

Item 14.   Disclosure Controls and Procedures

For
the period ending December 31, 2002 (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Executive Vice
President of Finance (the principal finance and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended (the
Exchange Act).  Based upon this evaluation, our President and Chief Executive Officer and our Executive Vice President of Finance concluded that, as of December 31, 2002, our disclosure controls and procedures were adequate to
ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in the SECs rules and forms.

Additionally, our President and Chief Executive Officer and Executive Vice President of Finance determined, as of December 31, 2002, that there were
no significant changes in our internal controls or in other factors that could significantly affect our internal controls.

24



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##### Table of Contents

PART IV

Item 15.   Exhibits, Financial Statement Schedule, and Reports on Form 8-K

(a)(1) and (2) Financial Statements:

The
following consolidated financial statements and schedule of the Registrant are included in response to Item 8 of this Report:

|   |                                                                                                       | Page                                         
|-- | ----------------------------------------------------------------------------------------------------- | ---------------------------------------------
|   |                                                                                                       |                                              
|1. | Consolidated Financial Statements:                                                                    |                                              
|   |                                                                                                      
|   | Index to Consolidated Financial Statements                                                            | F-1                                          
|   | Independent Auditors Report                                                                          | F-2                                          
|   | Consolidated Balance Sheets as of December 31, 2002 and 2001                                          | F-3                                          
|   | Consolidated Statements of Operations for the years ended December 31, 2002, 2001, and 2000           | F-4                                          
|   | Consolidated Statements of Stockholders Equity for the years ended December 31, 2002, 2001, and 2000 | F-5                                          
|   | Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001, and 2000           | F-6                                          
|   | Notes to Consolidated Financial Statements                                                            | F-7                                          
|   |                                                                                                       |                                              
|2. | Consolidated Financial Statement Schedule:                                                            |                                              
|   |                                                                                                       |                                              
|   |                                                                                                       | Schedule IIValuation and Qualifying Accounts
|   |                                                                                                       |                                              

All other schedules have been omitted since they are either not required, not applicable
or the information is otherwise included.

| | (b) | Reports on Form 8-K, filed during the last quarter of 2002:                                                                                              
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                          
| | 1.  | Form 8-K filed on October 28, 2002 Item 9.  Regulation FD Disclosure 906 Certification under Sarbanes-Oxley Act of 2002 for the Third Quarter 10Q filing.
| |     |                                                                                                                                                          
| | 2.  | Form 8-K filed on December 19, 2002 Item 4.  Changes in Registrants Certifying Accountant See Discussion in Part II, Item 9 above.                      
| |     |                                                                                                                                                          
| | (c) | Exhibits:                                                                                                                                                

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.1         |  | Certificate of Incorporation of the Registrant as amended by Amendment to the Certificate of Incorporation filed June 6, 1984, with Delaware Secretary of State, as amended by
the Certificate of Amendment to the Certificate of Incorporation filed August 2, 1984, with the Delaware Secretary of State, as amended by the Certificate of Amendment to the Certificate of Incorporation, filed January 12, 1988, with the Delaware
Secretary of State, and as amended by the Certificate of Ownership merging California Steel Industries Tubular Products, Inc. into the Registrant, filed with the Delaware Secretary of State on December 20, 1993. (1)
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.2         |  | Certificate of Amendment to the Certificate of Incorporation filed July 27, 1999, with the Delaware Secretary of State. (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.3         |  | Bylaws of the Registrant, as amended on July 16, 1999. (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.1         |  | Indenture dated as of April 6, 1999 between the Registrant and State Street Bank Trust Company of California, N.A., Trustee, relating to the Registrants 8% Senior Notes
due April 6, 2009.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.2         |  | Specimen Series B note.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

25



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##### Table of Contents

|4.3   |  | Shareholders Agreement, dated June 27, 1995, by and among Rio Doce Limited, Companhia Vale do Rio Doce, Kawasaki Steel Holdings (USA), Inc. and Kawasaki Steel
Corporation.(1)                                                                                                                                                                                                                                                                                                                                                                               
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.1  |  | Revolving Credit Agreement, dated as of March 10, 1999, among the Registrant, the Lending Institutions from time to time party thereto as lenders, BancBoston, N.A., in its
capacity as Loan and Collateral Agent, and Bank of America National Trust and Savings Association, in its capacity as Letter of Credit and Documentation Agent and BancBoston Robertson Stephens Inc. and NationsBanc Montgomery Securities LLC, as the
Arrangers.(1)                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.2  |  | Agreement for the Purchase of Carbon Steel Slabs, dated as of December 5, 1984, by and between the Registrant and Companhia Siderurgica de Tubarão, as amended by Memorandum
of Agreement, dated as of June 7, 1985, Memorandum of Agreement No. MA-02, dated as of December 9, 1986, Memorandum of Agreement No. MA-03, dated as of December 11, 1986, Memorandum of Agreement No. MA-04, dated as of December 11, 1986, Memorandum
of Agreement No. MA-05, dated as of May 22, 1987 and Memorandum of Agreement No. MA-06, dated as of December 11, 1996.(1)
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.3  |  | Contract, dated August 20, 1990, by and between the Registrant and Seamar Shipping Corporation of Monrovia, Liberia.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.4  |  | The Burlington Northern and Santa Fe Railway Company BNSFC 302606 Regulated Transportation Contract, dated as of November 19, 1998, by and between the Registrant and Burlington
Northern Railroad Company.(1)                                                                                                                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.5  |  | Equipment Lease Agreement, dated as of September 30, 1998, by and between the Registrant and State Street Bank and Trust Company of California, National
Association.(1)                                                                                                                                                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.6  |  | Settlement Agreement, dated as of June 1, 1995, by and among the Registrant, Kaiser Ventures, Inc., KSC Recovery, Inc. and Kaiser Steel Land Development, Inc.(1)                                                                                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.7  |  | Groundwater Indemnity Agreement, dated as of June 1, 1995, between the Registrant and Kaiser Ventures, Inc.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.8  |  | A 1996 Expedited Remedial Action Voluntary Enforceable Agreement, by and among the Registrant and the California Environmental Protection Agency, Department of Toxic Substances
Control.(1)                                                                                                                                                                                                                                                                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.9  |  | Purchase Agreement dated March 30, 1999 by and among the Registrant, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancBoston Robertson
Stephens Inc. and NationsBanc Montgomery Securities LLC.(1)                                                                                                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.10 |  | Registration Rights Agreement dated as of April 6, 1999 by and among the Registrant, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancBoston
Robertson Stephens Inc. and NationsBanc Montgomery Securities LLC.(1)                                                                                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.11 |  | Addendum No. 39, dated May 31, 2000, to Contract, dated August 20, 1990, by and between the Registrant and Seamar Shipping Corporation of Monrovia, Liberia.(2)                                                                                                                                                                                                                                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.12 |  | First Amendment, dated as of April 28, 2000, to Revolving Credit Agreement, dated as of March 10, 1999, among the Registrant, the Banks named therein, Fleet National Bank (f/k/a
BankBoston, N.A.), as loan and collateral agent for the Banks, and Bank of America National Trust and Savings Association, as documentation and letter of credit agent for the Banks.(2)                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.13 |  | Amendment to Supplemental Executive Retirement Plan, dated October 10, 2000, between the Registrant and James E. Declusin.(3)                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.14 |  | Supplemental Executive Retirement Plan, dated as of September 19, 2000, between the Registrant and Brett J. Guge.(3)                                                                                                                                                                                                                                                                                                                                                                                                                                          

26



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##### Table of Contents

|Exhibit No. |                                                                                                                                                                                                 | Description                                                                                                                                                                                                                                                                                                                                                                 
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|10.15       |                                                                                                                                                                                                 | The Burlington Northern and Santa Fe Railway Company BNSFC 302606Amendment 1 Regulated Transportation Contract, dated as of January 15, 2001, by and between the Registrant
and The Burlington Northern and Santa Fe Railway Company (4)                                                                                                                                   
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|10.16       |                                                                                                                                                                                                 | Second Amendment, dated as of March 12, 2001, to Revolving Credit Agreement, dated as of March 10, 1999, among the Registrant, the Banks named therein, Fleet National Bank
(f/k/a BankBoston, N.A.), as loan and collateral agent for the Banks, and Bank of America National Trust and Savings Association, as documentation and letter of credit agent for the Banks. (5)
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|10.17       |                                                                                                                                                                                                 | Fourth Amendment to Revolving Credit Agreement dated September 26, 2001, among the Registrant, the Banks named therein, Bank of America, N.A., as loan and collateral agent for
the Banks, and Bank of America, N.A., as documentation and letter of credit agent for the Banks. (5)                                                                                        
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|10.18       |                                                                                                                                                                                                 | Fifth Amendment, dated as of March 22, 2002, to Revolving Credit Agreement, dated as of March 10, 1999, among the Registrant, the Banks named therein, Fleet National Bank (f/k/a
BankBoston, N.A.), as loan and collateral agent for the Banks, and Bank of America National Trust and Savings Association, as documentation and letter of credit agent for the Banks. (7) 
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|16.1        |                                                                                                                                                                                                 | Letter from KPMG to the Securities and Exchange Commission, dated December 19, 2002 (8).                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|12.1        |                                                                                                                                                                                                 | Statement of Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|12.2        |                                                                                                                                                                                                 | Statement of Computation of Ratio of EBITDA to Interest Expense.                                                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|21.1        |                                                                                                                                                                                                 | Subsidiaries of the Registrant.(1)                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                             
|23.1        |                                                                                                                                                                                                 | Independent Auditors Report on Schedule.                                                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                
|(1)         | Incorporated by reference to the Registrants Registration Statement on Form S-4, File No. 333-79587, as filed with the Securities and Exchange Commission on
May 28, 1999, as amended.        
|            |                                                                                                                                                                                                
|(2)         | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended June 30, 2000, as filed with the Securities and Exchange
Commission on August 4, 2000.       
|            |                                                                                                                                                                                                
|(3)         | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended September 30, 2000, as filed with the Securities and Exchange
Commission on October 27, 2000.
|            |                                                                                                                                                                                                
|(4)         | Incorporated by reference to the Registrants Annual Report on Form 10-K, for the year ended December 31, 2000, as filed with the Securities and Exchange
Commission on March 29, 2001.        
|            |                                                                                                                                                                                                
|(5)         | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended September 30, 2001, as filed with the Securities and Exchange
Commission on November 9, 2001.
|            |                                                                                                                                                                                                
|(6)         | Incorporated by reference to the Registrants Annual Report on Form 10-K, for the year ended December 31, 2001, as filed with the Securities and Exchange
Commission on March 28, 2002.        
|            |                                                                                                                                                                                                
|(7)         | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended March 31, 2002, as filed with the Securities and Exchange
Commission on April 29, 2002.      
|            |                                                                                                                                                                                                
|(8)         | Incorporated by reference to the Registrants Quarterly Report on Form 8-K, filed with the Securities and Exchange Commission on December 19, 2002.                                            

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                     | Page
|---------------------------------------------------------------------------------------------------- | ----
|                                                                                                     |     
|Independent Auditors Report                                                                         | F-2 
|                                                                                                     |     
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                         | F-3 
|                                                                                                     |     
|Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000           | F-4 
|                                                                                                     |     
|Consolidated Statements of Stockholders Equity for the years ended December 31, 2002, 2001 and 2000 | F-5 
|                                                                                                     |     
|Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000           | F-6 
|                                                                                                     |     
|Notes to Consolidated Financial Statements                                                           | F-7 

F-1



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##### Table of Contents

Independent Auditors Report

The Board of Directors  California Steel Industries, Inc.:

We have audited the accompanying consolidated balance sheets of California Steel Industries, Inc. and subsidiary as of December 31, 2002 and 2001 and the related consolidated statements of operations, stockholders
equity, and cash flows for each of the years in the three-year period ended December 31, 2002. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of California Steel Industries, Inc.
and subsidiary as of December 31, 2002 and 2001 and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2002 in conformity with accounting principles generally accepted in the United
States of America.

/s/   KPMG LLP

Orange County, California  January 17, 2003

F-2





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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC.  AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31, 2002 and 2001

|                                                             |                                                                                                                                   | 2002                   |         | 2001    |  
|------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | ------- | ------- | -
|                                                             |                                                                                                                                   |                        |         |         |  
|                                                             |                                                                                                                                   | (Dollars in thousands) |        
|ASSETS                                                       |                                                                                                                                   |                        |         |         |  
|Current assets:                                              |                                                                                                                                   |                        |         |         |  
|                                                             | Cash and cash equivalents (note 7)                                                                                                |                        | $       | 2,891   |  
|                                                             | Trade accounts receivable, less allowance for doubtful receivables of $300,000 and 600,000 in 2002 and 2001
respectively (note 7) |                        |         | 67,640  |  
|                                                             | Inventories (notes 3 and 7)                                                                                                       |                        |         | 190,709 |  
|                                                             | Deferred income taxes (note 11)                                                                                                   |                        |         | 3,138   |  
|                                                             | Other receivables and prepaid expenses                                                                                            |                        |         | 3,081   |  
|                                                             |                                                                                                                                   |                        |         |         |  
|                                                             | Total current assets                                                                                                              |                        |         | 267,459 |  
|Investment in affiliated company (notes 6 and 9)             |                                                                                                                                   |                        | 36,765  |         |  
|Other assets (note 7)                                        |                                                                                                                                   |                        | 2,897   |         |  
|Property, plant and equipment, net (notes 4 and 7)           |                                                                                                                                   |                        | 245,193 |         |  
|                                                             |                                                                                                                                   |                        |         |         |  
|                                                             |                                                                                                                                   | $                      | 552,314 |         | $
|                                                             |                                                                                                                                   |                        |         |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                         |                                                                                                                                   |                        |         |         |  
|Current liabilities:                                         |                                                                                                                                   |                        |         |         |  
|                                                             | Accounts payable (note 9)                                                                                                         |                        | $       | 71,872  |  
|                                                             | Accrued interest expense (note 7)                                                                                                 |                        |         | 3,414   |  
|                                                             | Accrued utilities                                                                                                                 |                        |         | 4,305   |  
|                                                             | Income Tax Payable (note 11)                                                                                                      |                        |         | 2,774   |  
|                                                             | Other accrued expenses (notes 10 and 12)                                                                                          |                        |         | 9,327   |  
|                                                             |                                                                                                                                   |                        |         |         |  
|                                                             | Total current liabilities                                                                                                         |                        |         | 91,692  |  
|                                                             |                                                                                                                                   |                        |         |         |  
|Long-term debt (note 7)                                      |                                                                                                                                   |                        | 163,000 |         |  
|Deferred income taxes (note 11)                              |                                                                                                                                   |                        | 50,468  |         |  
|Stockholders equity (note 8):                               |                                                                                                                                   |                        |         |         |  
|                                                             | Class A preferred stock, $10,000 par value per share. Authorized 1,000 shares; none issued                                        |                        |         |        |  
|                                                             | Class B preferred stock, $10,000 par value per share. Authorized 2,000 shares; none
issued                                        |                        |         |        |  
|                                                             | Class C preferred stock, $10,000 par value per share. Authorized 3,000 shares; issued and outstanding 3,000
shares                |                        |         | 30,000  |  
|                                                             | Common stock, no par value. Authorized 2,000 shares; issued and outstanding 1,000
shares                                          |                        |         | 10,000  |  
|                                                             | Retained earnings                                                                                                                 |                        |         | 207,154 |  
|                                                             |                                                                                                                                   |                        |         |         |  
|                                                             | Total Stockholders equity                                                                                                        |                        |         | 247,154 |  
|                                                             |                                                                                                                                   |                        |         |         |  
|Commitments and contingencies (notes 5, 7, 9, 10, 11 and 12) |                                                                                                                                   | $                      | 552,314 |         | $
|                                                             |                                                                                                                                   |                        |         |         |  
|                                                             |                                                                                                                                   |                        |         |         |  

See accompanying notes to consolidated financial statements.

F-3



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2002, 2001 and 2000

|                                                       |                                                   | 2002                   |         | 2001   |   | 2000    |       
|------------------------------------------------------ | ------------------------------------------------- | ---------------------- | ------- | ------ | - | ------- | ------
|                                                       |                                                   |                        |         |        |   |         |       
|                                                       |                                                   | (Dollars in thousands) |        
|Net sales                                              |                                                   | $                      | 754,355 |        | $ | 640,390 |       
|Cost of sales (notes 9)                                |                                                   |                        | 657,085 |        |   | 612,713 |       
|                                                       |                                                   |                        |         |        |   |         |       
|                                                       | Gross profit                                      |                        |         | 97,270 |   |         | 27,677
|Selling, general and administrative expenses (note 12) |                                                   |                        | 26,013  |        |   | 23,350  |       
|                                                       |                                                   |                        |         |        |   |         |       
|                                                       | Income from operations                            |                        |         | 71,257 |   |         | 4,327 
|Other income (expense):                                |                                                   |                        |         |        |   |         |       
|Equity in income of affiliate (note 6)                 |                                                   |                        | 150     |        |   | 1,274   |       
|Interest expense, net (note 7)                         |                                                   |                        | (14,127 | )      |   | (16,316 | )     
|Other, net                                             |                                                   |                        | 859     |        |   | 3,398   |       
|                                                       |                                                   |                        |         |        |   |         |       
|                                                       | Income (loss) before income tax expense (benefit) |                        |         | 58,139 |   |         | (7,317
|Income tax expense (benefit) (note 11)                 |                                                   |                        | 23,138  |        |   | (3,606  | )     
|                                                       |                                                   |                        |         |        |   |         |       
|                                                       | Net income (loss)                                 |                        | $       | 35,001 |   | $       | (3,711
|                                                       |                                                   |                        |         |        |   |         |       

See accompanying notes to consolidated financial statements.

F-4



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years ended December 31, 2002, 2001 and 2000
(Dollars in thousands, except per share amounts)

|                                                |                                                 | Class C preferred stock |        | Common stock |   | Retained earnings |   | Total stockholders equity |        
|----------------------------------------------- | ----------------------------------------------- | ----------------------- | ------ | ------------ | - | ----------------- | - | -------------------------- | -------
|                                                |                                                 |                         |        |              |   |                   |   |                            |        
|Balance at December 31, 1999                    |                                                 |                         | 30,000 |              |   | 10,000            |   |                            | 177,079
|Net income for the year ended December 31, 2000 |                                                 |                         |       |              |   |                  |   |                            | 34,845 
|Cash dividends (note 8):                        |                                                 |                         |        |              |   |                   |   |                            |        
|                                                | Class C Preferred Stock, $4,129 on 3,000 shares |                         |        |             |   |                   |  |                            |        
|                                                | Common Stock, $2,629 on 1,000 shares            |                         |        |             |   |                   |  |                            |        
|                                                |                                                 |                         |        |              |   |                   |   |                            |        
|Balance at December 31, 2000                    |                                                 | $                       | 30,000 |              | $ | 10,000            |   | $                          | 196,909
|Net loss for the year ended December 31, 2001   |                                                 |                         |       |              |   |                  |   |                            | (3,711 
|Cash dividends (note 8):                        |                                                 |                         |        |              |   |                   |   |                            |        
|                                                | Class C Preferred Stock, $1,000 on 3,000 shares |                         |        |             |   |                   |  |                            |        
|                                                |                                                 |                         |        |              |   |                   |   |                            |        
|Balance at December 31, 2001                    |                                                 | $                       | 30,000 |              | $ | 10,000            |   | $                          | 190,198
|Net income for the year ended December 31, 2002 |                                                 |                         |       |              |   |                  |   |                            | 35,001 
|Cash dividends (note 8):                        |                                                 |                         |        |              |   |                   |   |                            |        
|                                                | Class C Preferred Stock, $4,761 on 3,000 shares |                         |        |             |   |                   |  |                            |        
|                                                | Common Stock, $3,761 on 1,000 shares            |                         |        |             |   |                   |  |                            |        
|                                                |                                                 |                         |        |              |   |                   |   |                            |        
|Balance at December 31, 2001                    |                                                 | $                       | 30,000 |              | $ | 10,000            |   | $                          | 207,154
|                                                |                                                 |                         |        |              |   |                   |   |                            |        

See accompanying notes to consolidated financial statements.

F-5



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2002, 2001 and 2000

|                                                   |                                                                                          | 2002                   |       | 2001    |   | 2000  |        
|-------------------------------------------------- | ---------------------------------------------------------------------------------------- | ---------------------- | ----- | ------- | - | ----- | -------
|                                                   |                                                                                          |                        |       |         |   |       |        
|                                                   |                                                                                          | (dollars in thousands) |      
|Cash flows from operating activities:              |                                                                                          |                        |       |         |   |       |        
|                                                   | Net income (loss)                                                                        |                        | $     | 35,001  |   | $     | (3,711 
|                                                   | Adjustments to reconcile net income (loss) to net cash provided by operating
activities: |                        |       |         |   |       |        
|                                                   | Depreciation and amortization                                                            |                        |       | 28,827  |   |       | 30,204 
|                                                   | (Gain) loss on disposition of property, plant and equipment                              |                        |       | (492    | ) |       | 802    
|                                                   | Undistributed earnings of affiliate                                                      |                        |       | (150    | ) |       | (1,274 
|                                                   | Dividends received from affiliate                                                        |                        |       | 567     |   |       | 243    
|                                                   | Changes in assets and liabilities:                                                       |                        |       |         |   |       |        
|                                                   | Trade accounts receivable, net                                                           |                        |       | (16,103 | ) |       | 8,461  
|                                                   | Inventories                                                                              |                        |       | (54,560 | ) |       | 82,430 
|                                                   | Other receivables and prepaid expenses                                                   |                        |       | 4,025   |   |       | 1,973  
|                                                   | Accounts payable                                                                         |                        |       | 41,394  |   |       | (35,030
|                                                   | Accrued interest expense                                                                 |                        |       | 2       |   |       | (913   
|                                                   | Other accrued expenses                                                                   |                        |       | 5,993   |   |       | (3,140 
|                                                   | Deferred income taxes                                                                    |                        |       | 3,791   |   |       | 3,918  
|                                                   |                                                                                          |                        |       |         |   |       |        
|                                                   | Net cash provided by operating activities                                                |                        |       | 48,295  |   |       | 83,963 
|                                                   |                                                                                          |                        |       |         |   |       |        
|Cash flows from investing activities:              |                                                                                          |                        |       |         |   |       |        
|                                                   | Additions to property, plant and equipment                                               |                        |       | (20,812 | ) |       | (14,753
|                                                   | Proceeds from sale of property, plant and equipment                                      |                        |       | 701     |   |       |       
|                                                   |                                                                                          |                        |       |         |   |       |        
|                                                   | Net cash used in investing activities                                                    |                        |       | (20,111 | ) |       | (14,753
|                                                   |                                                                                          |                        |       |         |   |       |        
|Cash flows from financing activities:              |                                                                                          |                        |       |         |   |       |        
|                                                   | Net repayments under line of credit agreement with banks                                 |                        |       | (16,000 | ) |       |       
|                                                   | Borrowings (repayments) on credit facility                                               |                        |       |        |   |       | (60,000
|                                                   | Dividends paid                                                                           |                        |       | (18,045 | ) |       | (3,000 
|                                                   |                                                                                          |                        |       |         |   |       |        
|                                                   | Net cash used in financing activities                                                    |                        |       | (34,045 | ) |       | (63,000
|                                                   |                                                                                          |                        |       |         |   |       |        
|                                                   | Net increase (decrease) in cash and cash equivalents                                     |                        |       | (5,861  | ) |       | 6,210  
|Cash and cash equivalents at beginning of year     |                                                                                          |                        | 8,752 |         |   | 2,542 |        
|                                                   |                                                                                          |                        |       |         |   |       |        
|Cash and cash equivalents at end of year           |                                                                                          | $                      | 2,891 |         | $ | 8,752 |        
|                                                   |                                                                                          |                        |       |         |   |       |        
|Supplemental disclosures of cash flow information: |                                                                                          |                        |       |         |   |       |        
|Cash paid (received) during the year for:          |                                                                                          |                        |       |         |   |       |        
|                                                   | Interest (net of amount capitalized)                                                     |                        | $     | 13,885  |   | $     | 17,475 
|                                                   | Income taxes                                                                             |                        |       | 14,576  |   |       | (7,682 
|                                                   |                                                                                          |                        |       |         |   |       |        
|                                                   |                                                                                          |                        |       |         |   |       |        

See accompanying notes to consolidated financial statements.

F-6



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002, 2001 and 2000

|(1) | Organization and Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | California Steel Industries, Inc. and subsidiary (the Company) was incorporated in the state of Delaware on November 3, 1983. Its stockholders consist of
two U.S. companies, Kawasaki Steel Holdings (USA), Inc., a Delaware corporation, and Rio Doce Limited, a New York corporation, which each own 50% of the stock of the Company. From its site in Fontana, California, the Company manufactures a wide
range of flat rolled steel products, including hot rolled, cold rolled, and galvanized coil and sheet. The Company also produces electric resistant weld pipe.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|Plant and equipment       |  | 3 to 25 years
|------------------------- |  | -------------
|Plant refurbishment costs |  | 10 years     

| |     | Assets under construction are not depreciated until placed into service.                                                               
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                        
| | (f) | Deferred Financing Costs                                                                                                               
| |     |                                                                                                                                        
| |     | Costs related to the issuance of debt are deferred and amortized on a straight-line basis over the terms of the respective debt issues.

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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

December 31, 2002, 2001 and 2000

| | (g) | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (h) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date.                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (i) | Environmental                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures are capitalized if they meet one of the following criteria:
(1) extend the useful life, increase the capacity, or improve the safety or efficiency of property, (2) mitigate or prevent environmental contamination that has yet to occur and that otherwise may result from future operations or
activities, (3) incurred in preparing property currently held for sale. The Company accrues for costs associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses
from environmental remediation obligations are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change (see note 10).   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (j) | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (k) | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Certain reclassifications have been made to the 2001 and 2000 consolidated financial statements to conform with the 2002 presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (l) | Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The carrying value of cash, trade accounts receivable, other accounts receivable, accounts payable, and other accrued expenses are measured at cost which approximates their fair
value because of the short maturity of those instruments. The fair values of long-term indebtedness are estimated based on the quoted market prices for the same or similar issues, or the current rates offered to the Company for debt of similar
maturities. The carrying amounts and fair values of financial instruments at December 31, 2002 and 2001 are listed as follows (dollars in thousands):                                                                                                                                                                                                                                                                                                         

F-8



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

|              |  | 2002            |         | 2001       | 
|------------- |  | --------------- | ------- | ---------- | 
|              |  |                 |         |            | 
|              |  | Carrying amount |         | Fair value | 
|              |  |                 |         |            | 
|Senior notes  |  | $               | 150,000 |            | 
|Notes payable |  |                 | 13,000  |            | 

|    | (m)                                                                 | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                     | The Company recognizes revenue when products are shipped or delivered to the customer, depending on the terms of the sale. For products shipped FOB shipping point, revenue is
recognized at the time of shipment. For products shipped FOB destination, revenue is recognized at the time of delivery. In certain cases, at the customers request, the Company will enter into bill and hold transactions whereby title transfers
to the customer, but the product does not ship until a specified later date. Revenue on such transactions is recognized when the product is ready for shipment, and only after all conditions set forth under Staff Accounting Bulletin (SAB) No. 101
have been met.
|    |                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | Inventories                                                        
|    |                                                                    
|    | Inventories at December 31, 2002 and 2001 consist of the following:

|                |                   | 2002                   |         | 2001    | 
|--------------- | ----------------- | ---------------------- | ------- | ------- | 
|                |                   |                        |         |         | 
|                |                   | (Dollars in thousands) |        
|Finished goods  |                   | $                      | 18,283  |         | 
|Work in process |                   |                        | 24,473  |         | 
|Raw materials   |                   |                        | 142,008 |         | 
|Supplies        |                   |                        | 5,945   |         | 
|                |                   |                        |         |         | 
|                | Total inventories |                        | $       | 190,709 | 
|                |                   |                        |         |         | 
|                |                   |                        |         |         | 

|(4) | Property, Plant, and Equipment                                                             
|--- | -------------------------------------------------------------------------------------------
|    |                                                                                            
|    | The following is a summary of property, plant, and equipment at December 31, 2002 and 2001:

|                              |                                      | 2002                   |          | 2001    | 
|----------------------------- | ------------------------------------ | ---------------------- | -------- | ------- | 
|                              |                                      |                        |          |         | 
|                              |                                      | (Dollars in thousands) |         
|Land                          |                                      | $                      | 17,682   |         | 
|Plant and equipment           |                                      |                        | 476,138  |         | 
|Plant refurbishment costs     |                                      |                        | 22,220   |         | 
|Construction in progress      |                                      |                        | 13,734   |         | 
|                              |                                      |                        |          |         | 
|                              |                                      |                        | 529,774  |         | 
|Less accumulated depreciation |                                      |                        | (284,581 | )       | 
|                              |                                      |                        |          |         | 
|                              | Total property, plant, and equipment |                        | $        | 245,193 | 
|                              |                                      |                        |          |         | 
|                              |                                      |                        |          |         | 

F-9



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

|    | Capitalized interest was $319,000, $118,000, and $300,000 for 2002, 2001, and 2000, respectively.                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                
|(5) | Leases                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                
|    | The Company is obligated under various leases for equipment that expire at various dates during the next seven years. At December 31, 2002, the future minimum lease
payments under noncancelable operating leases with commitments of at least one year are as follows (dollars in thousands):

|Year ending December 31: |            |   |        |      
|------------------------ | ---------- | - | ------ | -----
|                         |            |   |        |      
|                         | 2003       |   | $      | 4,178
|                         | 2004       |   |        | 7,364
|                         | 2005       |   |        | 2,871
|                         | 2006       |   |        | 4,633
|                         | 2007       |   |        | 4,862
|                         | Thereafter |   |        | 5,965
|                         |            |   |        |      
|                         |            | $ | 29,873 |      
|                         |            |   |        |      

|    | Lease expense totaled approximately $6,260,000, $6,320,000, and $6,209,000 for the years ended December 31, 2002, 2001, and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(6) | Investment in Affiliated Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The investment in the net assets of CST accounted for under the equity method amounted to $36,765,000 and $37,182,000 at December 31, 2002 and 2001,
respectively.                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The unamortized portion of the excess of the Companys share of net assets over the cost of the common stock was $650,000 at December 31, 2000 and such amount was
fully amortized as of December 31, 2001.                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company received $567,000, $243,000, and $879,000 in dividends from CST during the years ended December 31, 2002, 2001, and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company and its parents purchased their investment in CST at a premium over the market price of the shares which was paid in order to obtain significant influence over
CST.                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(7) | Notes Payable and Long-Term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In March 1999, the Company entered into a five-year revolving credit facility (the Facility) with a syndicate of three financial institutions. The Facility provides
for an aggregate principal amount of up to $130,000,000, including a $25,000,000 sublimit for letters of credit, subject in all respects to a borrowing base coverage requirement. The Company drew a substantial portion of the advances available under
the Facility on the closing date to repay advances under its previously existing credit agreement.     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Under the Facility, a commitment fee is applied on the average daily undrawn portion of the commitments at a rate equal to the applicable margin. The applicable margin in effect
from time to time will range from 0.150% to 0.500%, based upon the leverage ratio, provided that the applicable margin with respect to the commitment fee will increase to 0.500% if borrowings fall below a certain level. The Facility is secured by a
first priority security interest in cash, accounts receivable, inventory, and other assets.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | At the Companys election, the amounts advanced under the Facility bear interest at the base rate or the Eurodollar rate, plus the applicable margin. Interest is generally
payable monthly and any accrued interest and principal is due and payable in full in March 2004. As of December 31, 2002 and 2001, outstanding borrowings of $10,000,000 and $29,000,000 consisted of advances payable at the Eurodollar rate,
which was 2.44% and 4.43%, respectively. As of                                                             

F-10



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

| | December 31, 2002, outstanding borrowings of $3,000,000 consisted of advances payable at the base rate, which was 4.25%. The Company had $101,872,000 of borrowings
available under the Facility as of December 31, 2002. The unamortized amount of the related financing costs was approximately $217,000 at December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The Facility requires that the Company maintain certain financial ratios and other financial covenants. The Company was in compliance with all such covenants at
December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | In April 1999, the Company issued an aggregate principal amount of $150,000,000 unsecured senior notes (the Senior Notes). The Senior Notes are due in April 2009,
carry an 8.5% coupon rate and are redeemable by the Company beginning on April 1, 2004. Interest is payable semi-annually on each April 1 and October 1, commencing October 1, 1999. The notes are senior in right of payment to all
of the Companys subordinated indebtedness and equal in right of payment to all of the Companys existing and future indebtedness that is not by its terms subordinate to the Senior Notes. The indenture governing the Senior Notes contains
covenants that limit the Companys ability to incur additional indebtedness, pay dividends, redeem or repurchase capital stock and make investments, create liens, sell assets, sell capital stock of its subsidiary, engage in transactions with
affiliates, and consolidate, merge, or transfer all or substantially all of the Companys assets and the assets of its subsidiary on a consolidated basis. The Company was in compliance with all such covenants at December 31, 2002. Proceeds
from the Senior Notes were used to repay in full the then existing long-term debt. The unamortized portion of the related financing costs was approximately $2,680,000 at December 31, 2002.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Long-term debt at December 31, 2002 and 2001 consisted of the following (dollars in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                                                                                                                                                                                                                                                                                                       |                | 2002 |         | 2001    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ---- | ------- | ------- | 
|                                                                                                                                                                                                                                                                                                                       |                |      |         |         | 
|Senior Notes bearing interest at 8.5%, interest payable semi-annually, due
April 2009                                                                                                                                                                                                                                  |                | $    | 150,000 |         | 
|Notes payable to banks consist of amounts advanced under a $130,000,000 revolving credit facility, bearing interest at
either the Eurodollar rate or the base rate, plus the applicable margin. Interest is generally payable monthly and any accrued interest and principal are due and payable in full in March 2004 |                |      | 13,000  |         | 
|                                                                                                                                                                                                                                                                                                                       |                |      |         |         | 
|                                                                                                                                                                                                                                                                                                                       | Long-term debt |      | $       | 163,000 | 
|                                                                                                                                                                                                                                                                                                                       |                |      |         |         | 
|                                                                                                                                                                                                                                                                                                                       |                |      |         |         | 

|(8) | Stockholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Class C preferred stock is redeemable by the Company at its option, in whole or in part, at par value. Class C preferred stock has priority over the common stock
in the distribution of dividends and is entitled to a dividend equivalent to 10% of the par value per annum on a cumulative basis and is thereafter entitled to participate in the distribution of dividends at the same rate and upon the same
conditions as the common stock.                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Each holder of common stock is entitled to one vote for each share held of record on each matter submitted to a vote of the stockholders. Holders of the common stock have no
cumulative voting, conversion, or redemption rights, but are entitled to preemptive rights to subscribe for additional shares of common stock in any additional issuance of common stock or any security convertible into common stock. Subject to any
preferences that may be granted to the holders of preferred stock, each holder of common stock is entitled to receive ratably dividends as may be declared by the board of directors, and in the event of liquidation, dissolution, or winding up, is
entitled to share ratably in all Company assets remaining after payment of liabilities.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | During the years ended December 31, 2002, 2001, and 2000, $18,045,000, $3,000,000, and $15,015,000, respectively, in dividends were declared and paid.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-11



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

|(9) | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company has transactions in the normal course of business with affiliated companies. The Company is 50% owned by Kawasaki Steel Holdings (USA), Inc., a subsidiary of
Kawasaki Steel Corporation, a Japanese corporation, and 50% owned by Rio Doce Limited, a subsidiary of Companhia Vale do Rio Doce (CVRD), a Brazilian corporation.                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company purchases steel slab from CST, an investee, and Kawasaki Steel Corporation. The Company charters vessels from Seamar Shipping Corporation, a subsidiary of CVRD, for
the ocean transfer of slab from Brazil to the Port of Los Angeles. The Company also contracts with Rio Doce Pasha Terminal (RDPT), a joint venture of CVRD, to unload ocean cargo from ships in the Port of Los Angeles. CVRD sold its interest in RDPT
in November 2001. As such, after November 2001, RDPT is no longer considered a related party. The following represents amounts paid to the various affiliated companies for the years ended December 31:

|                            |  | 2002                   |         | 2001 |  | 2000    | 
|--------------------------- |  | ---------------------- | ------- | ---- |  | ------- | 
|                            |  |                        |         |      |  |         | 
|                            |  | (Dollars in thousands) |        
|CST                         |  | $                      | 128,976 |      |  | 116,254 | 
|Kawasaki Steel Corporation  |  |                        | 5,664   |      |  |        | 
|Rio Doce Pasha Terminal     |  |                        |        |      |  | 17,254  | 
|Seamar Shipping Corporation |  |                        | 574     |      |  | 13,003  | 

|     | At December 31, 2001, the Company owed affiliated companies $17,372,000 for goods and services. At December 31, 2002, no amounts were owed to affiliated
companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(10) | Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | At December 31, 2002, the Company is committed, in the form of open purchase orders, to purchase approximately $92,885,000 in steel slabs, of which $12,829,000 is from
related parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | The Company has been contacted by various governmental agencies regarding specific environmental matters, at its operating facility in Fontana, California. During
September 1990, the Company reached a preliminary agreement with the California Regional Department of Health Services, which allows the Company to draft its own remediation agreement and move forward with its own plan of action at its
operating facility. In November 1992, the Company entered into a Voluntary and Enforceable Agreement (the Agreement) with the California Department of Toxic Substances Control which sets forth certain terms and conditions related to
the remediation of hazardous substances at the Companys operating facility. The Agreement also preserves the Companys right as to future assignment and apportionment of costs to other parties.                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     | The Company is addressing environmental concerns caused by the former occupant at the Companys Fontana site. The Company engaged an environmental consultant to conduct a
remedial investigation and develop a remediation plan and remediation cost projections based upon that plan. Utilizing the remediation plan developed by the environmental consultant, the Company developed an estimate of future costs of the
remediation plan. The total aggregate cost of remediation is estimated to be approximately $1.8 million, which has been accrued in the 2002 consolidated financial statements. The California Department of Toxic Substances Control (DTSC) has not
yet completed its review and approval of the Companys remediation plan; however, preliminary discussions between the DTSC and the Company have not indicated the need for any significant changes to the remediation plan or to the Companys
estimate of related costs. The estimate of costs could change as a result of changes to the remediation plan required by the DTSC or unforeseen circumstances existing at the site.

F-12



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

|     | The Company is involved in legal actions and claims arising in the ordinary course of business. It is the opinion of management, based on advice of legal counsel, that this
litigation will be resolved without material effect on the Companys financial position, results of operations, or liquidity.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                           
|(11) | Income Taxes                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                           
|     | Income tax expense (benefit) for the years ended December 31, 2002, 2001, and 2000 consists of the following:                                                                                                                                                                                             

|          |         | 2002                   |        | 2001   |  | 2000   |       
|--------- | ------- | ---------------------- | ------ | ------ |  | ------ | ------
|          |         |                        |        |        |  |        |       
|          |         | (Dollars in thousands) |       
|Current:  |         |                        |        |        |  |        |       
|          | Federal |                        | $      | 16,296 |  |        | (6,756
|          | State   |                        |        | 3,051  |  |        | (768  
|          |         |                        |        |        |  |        |       
|          |         |                        | 19,347 |        |  | (7,524 | )     
|Deferred: |         |                        |        |        |  |        |       
|          | Federal |                        |        | 2,781  |  |        | 4,690 
|          | State   |                        |        | 1,010  |  |        | (772  
|          |         |                        |        |        |  |        |       
|          |         |                        | 3,791  |        |  | 3,918  |       
|          |         |                        |        |        |  |        |       
|          |         | $                      | 23,138 |        |  | (3,606 | )     
|          |         |                        |        |        |  |        |       

| | Actual tax expense (benefit) differs from the expected tax expense (benefit) (computed by applying the U.S. federal corporate tax rate of 35% to income (loss) before
income tax expense (benefit)) as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                              |  | 2002                   |        | 2001 |  | 2000   |  
|------------------------------------------------------------- |  | ---------------------- | ------ | ---- |  | ------ | -
|                                                              |  |                        |        |      |  |        |  
|                                                              |  | (Dollars in thousands) |       
|Computed expected tax expense (benefit)                     |  | $                      | 20,349 |      |  | (2,561 | )
|State income taxes, net of federal benefit                    |  |                        | 3,363  |      |  | (221   | )
|State manufacturing investment credit, net of federal benefit |  |                        | (724   | )    |  | (780   | )
|Other                                                         |  |                        | 150    |      |  | (44    | )
|                                                              |  |                        |        |      |  |        |  
|                                                              |  | $                      | 23,138 |      |  | (3,606 | )
|                                                              |  |                        |        |      |  |        |  

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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)

| | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2002 and 2001 are as
follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          |                                      | 2002                   |   | 2001    |  
|------------------------- | ------------------------------------ | ---------------------- | - | ------- | -
|                          |                                      |                        |   |         |  
|                          |                                      | (Dollars in thousands) |  
|Deferred tax assets:      |                                      |                        |   |         |  
|                          | Inventory                            |                        | $ | 1,885   |  
|                          | State taxes                          |                        |   | 1,729   |  
|                          | Reserves                             |                        |   | 132     |  
|                          | Accrued expenses                     |                        |   | 1,861   |  
|                          | Net operating loss carryforward      |                        |   | 971     |  
|                          | Credits                              |                        |   |        |  
|                          | Other                                |                        |   | 65      |  
|                          |                                      |                        |   |         |  
|                          | Total gross deferred tax assets      |                        |   | 6,643   |  
|Less valuation allowance  |                                      |                        |  |         |  
|                          |                                      |                        |   |         |  
|                          | Net deferred tax assets              |                        |   | 6,643   |  
|                          |                                      |                        |   |         |  
|Deferred tax liabilities: |                                      |                        |   |         |  
|                          | Property, plant, and equipment       |                        |   | (50,884 | )
|                          | Undistributed earnings of affiliate  |                        |   | (2,135  | )
|                          | Other                                |                        |   | (954    | )
|                          |                                      |                        |   |         |  
|                          | Total gross deferred tax liabilities |                        |   | (53,973 | )
|                          |                                      |                        |   |         |  
|                          | Net deferred tax liabilities         |                        | $ | (47,330 | )
|                          |                                      |                        |   |         |  
|                          |                                      |                        |   |         |  

| | Based on the Companys historical pretax earnings, adjusted for significant items such as nonrecurring charges, management believes it is more likely than not that the
Company will realize the benefit of the deferred tax assets existing at December 31, 2002. Management believes the existing deductible temporary differences will reverse during periods in which the Company generates net taxable income.
Nevertheless, certain tax planning or other strategies will be implemented, if necessary, to supplement income from operations to fully realize the recorded tax benefits.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | At December 31, 2002, the Company has net operating loss carryforwards for state income tax purposes of $10,986,000, which are available to offset future state taxable
income through 2006.                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The examination of the Companys U.S. federal income tax returns for the years ended 1994, 1995, 1996, and 1997 was completed by the Internal Revenue Service. The ultimate
outcome of this matter did not have a material adverse effect on the Companys consolidated financial statements.                                                                                                                                                                                                                                                                                                 

F-14



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##### Table of Contents

|(12) | Employee Benefit and Retirement Plans                                                      
|---- | -------------------------------------------------------------------------------------------
|     |                                                                                            
|     | (a)                                                                                        
|     |                                                                                            
|     |                                                                                            
|     |                                                                                            
|     |                                                                                            
|     |                                                                                            
|     |                                                                                            
|     |                                                                                            
|     | (b)                                                                                        
|     |                                                                                            
|     |                                                                                            
|     |                                                                                            
|(13) | Selected Quarterly Financial Data (Unaudited)                                              
|     |                                                                                            
|     | Summarized quarterly financial data for 2002 and 2001 is as follows (dollars in thousands):

|      |                               | Quarter |   |         |   |    
|----- | ----------------------------- | ------- | - | ------- | - | ---
|      |                               |         |   |         |   |    
|      |                               | 1st     |   | 2nd     |   | 3rd
|      |                               |         |   |         |   |    
|2002: |                               |         |   |         |   |    
|      | Net sales                     |         | $ | 157,512 |   |    
|      | Income from operations        |         |   | 6,359   |   |    
|      | Net income                    |         |   | 1,822   |   |    
|2001: |                               |         |   |         |   |    
|      | Net sales                     |         | $ | 153,378 |   |    
|      | Income (loss) from operations |         |   | (1,252  | ) |    
|      | Net income (loss)             |         |   | (1,939  | ) |    

F-15



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##### Table of Contents

CALIFORNIA STEEL INDUSTRIES, INC. AND SUBSIDIARY

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

|                             |               | Beginning Balance |  | Additions |  | Deductions |           | Ending Balance | 
|---------------------------- | ------------- | ----------------- |  | --------- |  | ---------- | --------- | -------------- | 
|                             |               |                   |  |           |  |            |           |                | 
|Year ended December 31, 2002 |               |                   |  |           |  |            |           |                | 
|                             | A/R Allowance |                   |  | 600,000   |  |            | 1,204,041 |                | 
|Year ended December 31, 2001 |               |                   |  |           |  |            |           |                | 
|                             | A/R Allowance |                   |  | 600,000   |  |            | 270,297   |                | 
|Year ended December 31, 2000 |               |                   |  |           |  |            |           |                | 
|                             | A/R Allowance |                   |  | 300,000   |  |            | 300,000   |                | 

S-1



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

|March 24, 2003 | CALIFORNIA STEEL INDUSTRIES, INC.
|-------------- | ---------------------------------
|               |                                  
|               | By:                              
|               |                                  
|               |                                  

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.

|Signature                |  | Title                                        |  | Date          
|------------------------ |  | -------------------------------------------- |  | --------------
|                         |  |                                              |  |               
|/s/   VICENTE B. WRIGHT  |  | Interim Chief Executive Officer and          |  | March 24, 2003
|                         |  | President (Principal Executive Officer)      |  |               
|Vicente B. Wright        |  |                                              |  |               
|                         |  |                                              |  |               
|/s/   VICENTE B. WRIGHT  |  | ExecutiveVice President of Finance           |  | March 24, 2003
|                         |  | (Principal Financial and Accounting Officer) |  |               
|Vicente B. Wright        |  |                                              |  |               
|                         |  |                                              |  |               
|/s/   TATSUHIKO HAMAMOTO |  | Director                                     |  | March 24, 2003
|                         |  |                                              |  |               
|Tatsuhiko Hamamoto       |  |                                              |  |               
|                         |  |                                              |  |               
|/s/   TOSHIHIRO KABASAWA |  | Director                                     |  | March 24, 2003
|                         |  |                                              |  |               
|Toshihiro Kabasawa       |  |                                              |  |               
|                         |  |                                              |  |               
|/s/   DALTON NOSE        |  | Director                                     |  | March 24, 2003
|                         |  |                                              |  |               
|Dalton Nose              |  |                                              |  |               
|                         |  |                                              |  |               
|/s/   FRANCISCO PÓVOA    |  | Director                                     |  | March 24, 2003
|                         |  |                                              |  |               
|Francisco Póvoa          |  |                                              |  |               



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##### Table of Contents

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vicente B. Wright, certify that:

1.     I have reviewed this annual report on Form 10-K of California Steel Industries, Inc. (the Registrant);

2.     Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;

4.     The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

(a) designed such
disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual
report is being prepared;

(b) evaluated the effectiveness of the Registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and

(c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The Registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit committee of Registrants board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrants ability to
record, process, summarize and report financial data and have identified for the Registrants auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants
internal controls;  and

6.     The Registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

|Date: March 24, 2003 |                                               |                      
|-------------------- | --------------------------------------------- | ---------------------
|                     |                                               |                      
|                     | By:                                           | /s/ VICENTE B. WRIGHT
|                     |                                               |                      
|                     | Vicente B. Wright,                            |                      
|                     | Interim President and Chief Executive Officer |                      
|                     |                                               |                      



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##### Table of Contents

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I,      Vicente B. Wright, certify that:

1.     I have reviewed this annual report on Form 10-K of California Steel Industries, Inc. (the Registrant);

2.     Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;

4.     The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

(a) designed such
disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual
report is being prepared;

(b) evaluated the effectiveness of the Registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and

(c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The Registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit committee of Registrants board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrants ability to
record, process, summarize and report financial data and have identified for the Registrants auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants
internal controls;  and

6.     The Registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

|Date: March 24, 2003 |                                              |                      
|-------------------- | -------------------------------------------- | ---------------------
|                     |                                              |                      
|                     | By:                                          | /s/ VICENTE B. WRIGHT
|                     |                                              |                      
|                     | Vicente B. Wright                            |                      
|                     | Executive Vice President, Finance            |                      
|                     | (Principal Financial and Accounting Officer) |                      
|                     |                                              |                      



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##### Table of Contents

EXHIBIT INDEX

|Exhibit No. |      | Description
|----------- | ---- | -----------
|            |      |            
|            | 3.1  |            
|            |      |            
|            | 3.2  |            
|            |      |            
|            | 3.3  |            
|            |      |            
|            | 4.1  |            
|            |      |            
|            | 4.2  |            
|            |      |            
|            | 4.3  |            
|            |      |            
|            | 10.1 |            
|            |      |            
|            | 10.2 |            
|            |      |            
|            | 10.3 |            
|            |      |            
|            | 10.4 |            
|            |      |            
|            | 10.5 |            
|            |      |            
|            | 10.6 |            
|            |      |            
|            | 10.7 |            
|            |      |            
|            | 10.8 |            



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##### Table of Contents

| | 10.9  |  |  | Purchase Agreement dated March 30, 1999 by and among the Registrant, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancBoston Robertson
Stephens Inc. and NationsBanc Montgomery Securities LLC.(1)                                                                                                                                              
| | ----- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.10 |  |  | Registration Rights Agreement dated as of April 6, 1999 by and among the Registrant, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancBoston
Robertson Stephens Inc. and NationsBanc Montgomery Securities LLC.(1)                                                                                                                              
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.11 |  |  | Addendum No. 39, dated May 31, 2000, to Contract, dated August 20, 1990, by and between the Registrant and Seamar Shipping Corporation of Monrovia, Liberia.(2)                                                                                                                                                                                                             
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.12 |  |  | First Amendment, dated as of April 28, 2000, to Revolving Credit Agreement, dated as of March 10, 1999, among the Registrant, the Banks named therein, Fleet National Bank (f/k/a
BankBoston, N.A.), as loan and collateral agent for the Banks, and Bank of America National Trust and Savings Association, as documentation and letter of credit agent for the Banks.(2)  
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.13 |  |  | Amendment to Supplemental Executive Retirement Plan, dated October 10, 2000, between the Registrant and James E. Declusin.(3)                                                                                                                                                                                                                                               
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.14 |  |  | Supplemental Executive Retirement Plan, dated as of September 19, 2000, between the Registrant and Brett J. Guge.(3)                                                                                                                                                                                                                                                        
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.15 |  |  | The Burlington Northern and Santa Fe Railway Company BNSFC 302606Amendment 1 Regulated Transportation Contract, dated as of January 15, 2001, by and between the Registrant
and The Burlington Northern and Santa Fe Railway Company (4)                                                                                                                                   
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.16 |  |  | Second Amendment, dated as of March 12, 2001, to Revolving Credit Agreement, dated as of March 10, 1999, among the Registrant, the Banks named therein, Fleet National Bank
(f/k/a BankBoston, N.A.), as loan and collateral agent for the Banks, and Bank of America National Trust and Savings Association, as documentation and letter of credit agent for the Banks. (5)
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 10.17 |  |  | Fourth Amendment to Revolving Credit Agreement dated September 26, 2001, among the Registrant, the Banks named therein, Bank of America, N.A., as loan and collateral agent for
the Banks, and Bank of America, N.A., as documentation and letter of credit agent for the Banks. (5)                                                                                        
| |       |  | 
| | 10.18 |  |  | Fifth Amendment, dated as of March 22, 2002, to Revolving Credit Agreement, dated as of March 10, 1999, among the Registrant, the Banks named therein, Fleet National Bank (f/k/a
BankBoston, N.A.), as loan and collateral agent for the Banks, and Bank of America National Trust and Savings Association, as documentation and letter of credit agent for the Banks. (7) 
| |       |  | 
| | 16.1  |  |  | Letter from KPMG to the Securities and Exchange Commission, dated December 19, 2002 (8).                                                                                                                                                                                                                                                                                    
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 12.1  |  |  | Statement of Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                             
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 12.2  |  |  | Statement of Computation of Ratio of EBITDA to Interest Expense.                                                                                                                                                                                                                                                                                                            
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 21.1  |  |  | Subsidiaries of the Registrant.(1)                                                                                                                                                                                                                                                                                                                                          
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             
| | 23.1  |  |  | Independent Auditors Report on Schedule.                                                                                                                                                                                                                                                                                                                                   
| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                             

| | (1) |  | Incorporated by reference to the Registrants Registration Statement on Form S-4, File No. 333-79587, as filed with the Securities and Exchange Commission on May 28, 1999,
as amended. 
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |  |                                                                                                                                                                                         
| | (2) |  | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended June 30, 2000, as filed with the Securities and Exchange Commission on
August 4, 2000.



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##### Table of Contents

| | (3) |  | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended September 30, 2000, as filed with the Securities and Exchange Commission
on October 27, 2000.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |  |                                                                                                                                                                                                
| | (4) |  | Incorporated by reference to the Registrants Annual Report on Form 10-K, for the year ended December 31, 2000, as filed with the Securities and Exchange Commission on
March 29, 2001.        
| |     |  |                                                                                                                                                                                                
| | (5) |  | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended September 30, 2001, as filed with the Securities and Exchange Commission
on November 9, 2001.
| |     |  |                                                                                                                                                                                                
| | (6) |  | Incorporated by reference to the Registrants Annual Report on Form 10-K, for the year ended December 31, 2001, as filed with the Securities and Exchange Commission on March
28, 2002.        
| |     |  |                                                                                                                                                                                                
| | (7) |  | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, for the period ended March 31, 2002, as filed with the Securities and Exchange Commission on
April 29, 2002.      
| |     |  |                                                                                                                                                                                                
| | (8) |  | Incorporated by reference to the Registrants Quarterly Report on Form 8-K, filed with the Securities and Exchange Commission on December 19, 2002.