<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C.   20549

                                   Form 10-K

(Mark One)

   [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended April 30, 2001

                                      OR

   [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934 [FEE REQUIRED]
             For the transition period from ________ to __________

                       Commission file number: 33-67532

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

            Delaware                                       74-2191557
        (State or other                                (I.R.S. Employer
  jurisdiction of incorporation)                      identification No.)

                          220 North Jefferson Street
                            Sand Springs, OK 74063
                   (Address of principal executive offices)
                                (918) 245-1335
             (Registrant's telephone number, including area code)

       Securities registered pursuant to Section 12(b) of the Act:  None
                                                                    ----

       Securities registered pursuant to Section 12(g) of the Act:  None
                                                                    ----

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                               Yes  X    No
                                   ---      ---

     Indicate by check mark 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 [ ]

     As of July 17, 2001, there were 3,408,675 shares of the Registrants $.01
par value Common Stock outstanding. The aggregate market value of voting stock
held by nonaffiliates is unknown as the Registrant's stock is not traded on an
established public trading market.

                      Documents Incorporated by Reference

1)   Portions of the Registrant's Proxy Statement dated July 31, 2001 are
     incorporated by reference into Part III of this Report on Form 10-K.
<PAGE>

                          SHEFFIELD STEEL CORPORATION
                                   FORM 10-K

                               Table of Contents

<TABLE>
<CAPTION>
Item                                                                              Page
----                                                                              ----
<C>   <S>                                                                         <C>
                                     Part I

1.    Business                                                                    1-10

2.    Properties                                                                    11

3.    Legal Proceedings                                                             11

4.    Submission of Matters to a Vote of Security Holders                           11

                                    Part II

5.    Market for the Registrant's Common Equity and Related Stockholder Matters     12

6.    Selected Financial Data                                                       13

7.    Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                                14-22

8.    Financial Statements and Supplementary Data                                23-39

9.    Changes In and Disagreements with Accountants on
        Accounting and Financial Disclosure                                         42

                                    Part III

10.   Directors and Executive Officers of the Registrant                            42

11.   Executive Compensation                                                        42

12.   Security Ownership of Certain Beneficial Owners and Management                42

13.   Certain Relationships and Related Transactions                                42

                                    Part IV

14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K              43
</TABLE>
<PAGE>

PART I
------

ITEM 1.   BUSINESS
------------------

Overview

  Sheffield Steel Corporation (the Company, which may be referred to as we, us,
or our) is a leading regional mini-mill producer of steel products including:

 .  Hot rolled steel bar products (hot rolled bar), which includes rounds, flats,
   squares and other shapes.
 .  Concrete reinforcing bar (rebar), which includes #4 bar (1/2 inch or 13mm) to
   #18 bar (2 1/4 inches or 57mm) which is sheared to standard lengths from 20
   feet to 60 feet.
 .  Fabricated products, including fabricated and epoxy-coated rebar, steel fence
   posts and railroad track spikes.
 .  Various types of semi-finished steel (billets).

  Our home page on the Internet is at www.sheffieldsteel.com.  You can learn
                                      ----------------------
more about us by visiting that site.

  Our Company and its predecessors have been in the steel making business for
over 72 years. We believe that we are an efficient producer of billets because
of our efficient melt and cast operation, high labor productivity levels, and
competitive steel scrap costs. Our low cost billets feed our downstream bar mill
operations and fabricated products operations. We shipped approximately 442,228
tons of steel in fiscal 2001, resulting in sales of $157.5 million.

  Our primary manufacturing facility is located in Sand Springs, Oklahoma (Sand
Springs), where we conduct a full range of steel making activities, including
the melting and casting of billets and the rolling of billets into rebar, T-
section (for subsequent fabrication into steel fence posts), and a range of hot
rolled bar products. We currently have 600,000 tons of steel making capacity. We
installed a new rolling mill (Rolling Mill) in Sand Springs in 1995 which has
increased productivity and efficiency in the manufacturing of rebar and has
enabled us to produce certain higher quality hot rolled bar products than we
were previously unable to produce. In the fourth quarter of fiscal 1998, we
completed a project (the Shear Line Project) to eliminate a production
bottleneck in the Rolling Mill that further increased our production and
improved quality.  During the third quarter of fiscal 2001, we installed a new
reheat furnace (the Reheat Furnace Project) in the rolling Mill that will
decrease natural gas usage as well as improve quality, product yields,
productivity, and capacity.  From Sand Springs, we also transfer billets to our
rolling mill in Joliet, Illinois (Joliet), where we produce specialty hot rolled
bar products. We also operate two rebar fabrication plants, one in Kansas City,
Missouri (Kansas City) and one in Independence, Missouri (Waddell), a railroad
spike fabrication plant in Sand Springs (Wellington) and a short line railroad
(the Railway).

                                       1
<PAGE>

Business Strategy

  We believe our strategy serves to strengthen our market position and maximize
profitability.  There are three major components to our strategy: (i) improve
our finished goods product mix; (ii) continue to focus on and extend our strong
customer relationships; and (iii) further modernize our melt shop operations.

  Improve Finished Goods Product Mix.   With the addition of the new Rolling
Mill in Sand Springs in 1995 and the Shear Line project in 1998, we
substantially increased our hot rolled bar production capacity. Accordingly,
shipments of finished products have increased significantly as less profitable
third party billet sales have been diverted to the production of hot rolled
bars.  Billet sales, which accounted for 23.6% of tons shipped in fiscal 1994,
accounted for only 9.8% of tons shipped in fiscal 2001. By shifting away from
third party billet sales and increasing hot rolled bar production, we hope to
increase margins and reduce sales volatility, since hot rolled bar products are
significantly more profitable than third party billet sales and demand is more
stable. In addition, the Reheat Furnace Project, which was completed in the
third quarter of fiscal 2001, will decrease natural gas consumption, improve
quality, product yields,  productivity, and capacity and, as a result, improve
product mix.

  Extend Strong Customer Relationships.   We have a number of long-standing
customer relationships in each of our product markets. We have built a
reputation for providing consistent product quality, reliable, prompt product
delivery and service, product availability and flexible scheduling to meet our
customers' needs.  We also provide a high level of follow up technical
assistance and service. The ISO 9002 certification at both Sand Springs and
Joliet is an indication of our commitment to producing quality products.  We
believe that our business strategy to improve finished product mix will
strengthen our existing customer relationships and aid us in developing new
customer relationships.

  Modernize Melt Shop.   We believe that we are an efficient producer of billets
in the United States as a result of our efficient melt and cast operation, high
labor productivity level, and competitive steel scrap costs. Over the last three
years, we have made improvements to general operating practices, improved
yields, and reduced costs. Annual billet production capacity has increased from
525,000 tons to 600,000 tons per year. In fiscal 2001 we rebuilt our billet
caster, which improved product quality and increased casting speeds, i.e.,
productivity.

                                       2
<PAGE>

Products, Customers and Markets

The following table shows the percentage of revenues derived from each product
category for the last three years:

<TABLE>
<CAPTION>
                                             Fiscal Year Ended April 30,
                                        --------------------------------------
                                          2001           2000            1999
                                        -------        -------         -------
<S>                                     <C>              <C>            <C>
Tons shipped:
Hot Rolled Bars                         154,046        164,407         154,397
Rebar                                   178,655        189,434         171,075
Fabricated Products                      66,030         73,012          63,757
                                        -------        -------         -------
Total finished products                 398,731        426,853         389,229
Billets                                  43,497         42,576          31,124
                                        -------        -------         -------
Total tons shipped                      442,228        469,429         420,353
                                        =======        =======         =======

Average price per ton shipped               356            367             389
Average production cost per ton             299            284             297
</TABLE>

Hot Rolled Bar.   According to the American Iron and Steel Institute (AISI), the
size of the hot rolled bar product market in the United States was approximately
7.9 million tons in 1999. The demand for consistent quality is significant in
this market, where quality is measured by the adherence to specifications
related to chemical composition, surface quality, product integrity and size
tolerances. We sell a variety of specialty hot rolled bar products, including
flats, squares, rounds and special shapes for end use applications that include
auto parts, conveyor assemblies, pole line hardware, wrenches, farm equipment
and construction machinery. The majority of hot rolled bar products produced in
Joliet are sold directly to original equipment manufacturers and cold drawn bar
finishers. Hot rolled bar products produced in Sand Springs are sold primarily
to end product manufacturers.

  We strive to differentiate ourselves from our competitors in the hot rolled
bar market.  In Joliet, we focus on specialty products and target customers with
special requirements as to bar shape, size and chemical composition and, in many
cases, small volume needs. We believe that our target customer focus often
allows us to act as the sole supplier of particular shapes, sizes or steel
chemistries to certain customers.  In some cases we compete with a limited
number of producers of specialty hot rolled bar products. We believe that these
niche markets are unattractive to larger volume producers. In Sand Springs, we
provide a competitive geographical advantage in the south-central United States
hot rolled bar market.  This enables our customers to benefit from lower freight
costs, shorter lead times and more timely deliveries.  As a result of these
competitive advantages and our strong reputation for quality and service, we
have developed a number of close relationships with hot rolled bar product
customers in our region.   We believe that there are significant opportunities
for Sand Springs to sell standard hot rolled bar products to customers that
Joliet is currently selling specialty products.

  We also endeavor to provide our hot rolled bar product customers with superior
service.  To provide a high level of service, we carry substantial customer-
designated finished goods inventories of hot rolled bar products in both Joliet
and Sand Springs.  Joliet has a customer query system that provides agents and
major customers with direct computer access to the status of their production
orders, the availability of inventory designated for them and our production
schedule for their products.

                                       3
<PAGE>

  During fiscal 2000, business on the Joliet 10" mill continued to decline.
Tonnage on this mill has been minimal for several years.  The loss of additional
tonnage made the mill financially unprofitable.  Therefore, we decommissioned
the mill at the end of May 2000.  We were able to convert a significant portion
of the products rolled on the 10" mill to the Joliet 12" mill and to the Rolling
Mill in Sand Springs.  The shutdown did not have a material write-off associated
with it and we believe that it has slightly improved profitability at both
Joliet and Sand Springs.

  Rebar.   According to the AISI, the size of the rebar market in the United
States was approximately 6.5 million tons in 1999. Rebar is a lower value,
higher volume commodity bar product for which price is an important competitive
factor. Geographic proximity to customers, which in turn determines both freight
costs and delivery times, is also a critical element in the rebar market, where
independent fabricators typically depend on quick mill response rather than
their own inventories to meet ever-changing construction schedules.  We sell
rebar to leading independent fabricators located in the south-central United
States who then shear and bend the rebar to meet engineering or architectural
specifications for construction projects. We produce rebar in Sand Springs,
where the bars are rolled in standard diameters from #4 bar (1/2 inch or 13mm)
to #18 bar (2 1/4 inches or 57mm) and sheared to standard lengths from 20 feet
to 60 feet. To provide rapid response to customer needs, we usually maintain a
finished goods inventory of 25,000 to 35,000 tons of rebar.

  Rebar demand is driven by infrastructure investment trends and trends in
commercial and industrial construction. During periods of overall reduced steel
industry demand, we have maintained relatively stable rebar sales volume due to
the level of public sector investment in roads, bridges, water projects,
airports and public facilities in the south-central United States. We have
successfully built and we strive to maintain long-term relationships with our
customers by providing them with competitive pricing, assured product
availability and reliable, prompt delivery and service. This strategy permits
the fabricators to compete successfully in the construction and infrastructure
markets, thus reinforcing our relationships with such fabricators.

  Due to the importance of pricing, freight costs and delivery response time,
sales of rebar tend to be concentrated within close geographic proximity to a
rebar manufacturer's mini-mill. Our rebar market is concentrated in the
geographic area surrounding Oklahoma.  In the Company's primary market area of
Oklahoma, Kansas and portions of Nebraska, Missouri, Arkansas, and northern
Texas, we enjoy a freight advantage over our competitors and believe we have a
market share in excess of 50%.  Approximately 80% of our rebar shipments are
made in this primary market area.  The remaining rebar shipments are made in the
adjacent regions of Nebraska, Missouri, Arkansas, Texas, Louisiana, New Mexico,
and Colorado.

  Fabricated Products.   We manufacture three fabricated steel products: fence
posts, which are sold to distributors and farm cooperatives, fabricated rebar,
including epoxy-coated rebar, and railroad track spikes.

  Fence posts are produced in a post fabrication shop located adjacent to the
Rolling Mill in two weights (1.25 pounds per foot and 1.33 pounds per foot), in
orange and green colors and various lengths from 4 feet to 8 feet.  The majority
of our fence post sales are concentrated in the Oklahoma, Kansas, Missouri,
Texas and Arkansas market area.

                                       4
<PAGE>

  Fabricated rebar is shipped from Kansas City and Waddell to highway and
commercial construction contractors in Missouri, Kansas, Nebraska, Iowa, and
contiguous markets. In recent years, we have experienced increased demand from
contractors bidding on infrastructure projects for fabricated rebar which is
epoxy-coated prior to fabrication to protect against corrosion in the field.
This has provided Kansas City with a competitive advantage and contributed to a
growth in shipments.  Our epoxy coating line, which is certified by the Concrete
Reinforcing Steel Institute, is the only one located in the Kansas City market.
This provides us with a competitive advantage in securing contracts. With
Waddell handling smaller, higher value added jobs and Kansas City able to handle
larger volume jobs; we believe we have a strong position in this market.

  On October 6, 1998, we purchased Wellington Industries, Inc., a railroad track
spike manufacturer located in Sand Springs.  We believe that the purchase of
Wellington secured a downstream market for our Rolling Mill products (square hot
rolled bar) and it enhances our fabrication capabilities.

  Billets.   We sell billets to forgers and other steel mills for conversion
into finished products.  Sales volume potential and pricing for billets,
particularly in the spot market, is highly variable. The dominant competitive
factors are availability and price.  Although our sales to forgers are fairly
consistent, billet sales to other steel mills are dependent on our own billet
requirements and market conditions that vary widely.

  The Railway Company.   We operate approximately seven miles of mainline rail
line between Sand Springs and Tulsa, Oklahoma, primarily serving the operations
of Sand Springs and, to a lesser extent, third parties. Revenues from third
parties are immaterial to our financial results.

Manufacturing Process

  In Sand Springs, steel scrap is conveyed by rail car from our scrap yard to
the melt shop, where the steel scrap is melted in two 85-ton electric arc
furnaces. During the scrap melting process, impurities are removed from the
molten steel. The molten steel is refined and then poured into a ladle, where
metal alloys are added to obtain desired chemical compositions. The molten steel
is then conveyed to a six-strand continuous caster that casts various sizes of
billets. The continuous caster is capable of casting billets up to 6 inches
square and 50 feet long. These billets are then reheated and rolled into various
finished steel products at the rolling mills in Sand Springs or Joliet or, to a
lesser extent, sold to third parties. The rolling mill in Sand Springs produces
rebar, "T" sections (which are further processed into fence posts), and a
range of hot rolled bar products, including squares (which are forged into track
spikes at Wellington). The rolling mill in Joliet produces an extensive range of
hot rolled bar products.  A portion of the rebar produced in Sand Springs is
epoxy coated and/or fabricated at either Kansas City or Waddell.

Sales and Marketing

  Hot rolled bar products produced in Joliet are sold by our sales personnel and
through commissioned sales representatives under exclusive agency agreements
with us.  Rebar and hot rolled bar products produced in Sand Springs are sold
through our own sales force and sales agencies which also serve Joliet. We
market fence posts directly to farm cooperatives and to fence post distributors.
While some billets are sold through semi-finished steel brokers on the "spot"
market, most are sold directly by us.  As a result of adverse weather conditions
that can impact construction activities and a normal seasonal downturn in
manufacturing levels, we typically experience lower sales volumes in the third
fiscal quarter.

                                       5
<PAGE>

Raw Materials

  Our primary raw material is steel scrap, which is generated principally from
industrial, automotive, demolition, railroad, obsolete, and other sources.  We
purchase scrap in the open market by direct purchase, dealers and through a
limited number of steel scrap brokers. The cost of steel scrap is subject to
market forces, including demand by other steel producers, export/import volumes,
and utilization of scrap substitutes such as pig iron and hot-briquette iron.
Our cost of scrap can vary significantly and we may not be able to adjust
product prices in the short-term to recover large increases in scrap costs. Over
longer periods of time, however, product prices and steel scrap prices have
tended to move in the same direction.

  The long-term demand for steel scrap and its importance to the domestic steel
industry may be expected to increase as mini-mill producers continue to expand
steel scrap-based electric arc furnace capacity and capture market share from
existing integrated facilities.  For the foreseeable future, however, we believe
that supplies of steel scrap will continue to be available in sufficient
quantities. In addition, a number of technologies exist for the processing of
iron ore into forms, which may be substituted for steel scrap in electric arc
furnace-based steelmaking. Such forms include direct-reduced iron, hot-briquette
iron and pig iron. A sustained increase in the price of steel scrap could result
in increased use of these alternative materials. We have successfully employed
scrap substitutes in our manufacturing process to achieve quality
characteristics.

Energy

  Our manufacturing process in Sand Springs consumes large amounts of
electricity. We purchase our electrical needs for Sand Springs from Public
Service of Oklahoma (PSO) under a real time pricing tariff, which is available
only to PSO's largest customers. Under this tariff, we purchase a base load at a
contracted price adjusted for fuel costs and then purchase or sell power on an
hour-by-hour basis at rates which approximate PSO's incremental costs plus a
small markup. During the summer months, we may elect to shut-down our melt shop
during peak periods of power costs, however, we typically do not experience
power interruptions to the same extent as others in our industry.  Historically,
we have been adequately supplied with electricity and we do not anticipate any
material curtailment in our operations resulting from energy shortages.

  Until natural gas prices increased in fiscal year 2001, we believed that our
utility rates from PSO were among the lowest in the domestic mini-mill steel
industry.  PSO was able to generate electricity at relatively low rates, as its
electric load is generated using western coal and local natural gas.
Approximately 55% of PSO's generation is natural gas based and as gas prices
increased over this past fiscal year, we have seen our power cost increase
approximately 80%.

  We also use natural gas to reheat billets, but we are not considered a large
natural gas user in Oklahoma. Since deregulation of the natural gas industry, we
have negotiated and purchased wellhead gas with supplemental transportation
through local pipeline distribution networks.  Although increases in the price
of natural gas might have an adverse impact on our cost structure, any such
price increase would likely have a similar affect on competitors using natural
gas and/or electricity generated by natural gas. The majority of our natural gas
needs (both to reheat billets and as a consumer of the electricity generated by
natural gas) stem from use in Sand Springs, Oklahoma, a state with excess
natural gas supplies. Historically, we have been adequately supplied with
natural gas and we expect an adequate supply to be available in the future. The
new Reheat Furnace significantly reduces our exposure to gas prices because of
its much greater efficiency.

                                       6
<PAGE>

Competition

  We compete with a number of domestic mini-mills in each of our markets. There
are common competitive factors in the steel bar business--price, proximity to
market, quality and service, for example--although their relative importance
varies in the different market segments.

  In the market for hot rolled bar products, Joliet occupies a niche position at
the specialty end of the product range. We believe we are the sole supplier to
certain customers because of their requirements for particular shapes, sizes,
small order quantities, or steel chemistries. In other cases, we compete with a
limited number of other producers of specialty hot rolled bar products,
including Kentucky Electric Steel Incorporated, Calumet Steel Company, North
Star Steel Company, and Laclede Steel Company. From Sand Springs and to a much
lesser degree from Joliet, we compete with mini-mill producers of standard hot
rolled bar products, including Chaparral Steel Company, North Star Steel
Company, Laclede Steel Company and Structural Metals, Incorporated. Competitors
vary from customer to customer depending on product specifications and
requirements for order sizes and inventory support.

  Since pricing, freight costs and delivery times are the most important
competitive factors in the sale of rebar, sales tend to be concentrated within
about 350 miles of a mini-mill. In the south-central United States, we enjoy a
competitive advantage as the closest mill serving an area comprising Oklahoma,
Kansas, western Missouri and Arkansas, and parts of northern Texas. The majority
of our rebar tonnage was shipped to this area in fiscal 2001.  We compete in the
rebar market with a number of other mini-mills, principally Structural Metals,
Incorporated and others.

  We are not in competition on a regular basis with foreign or integrated steel
producers. Our strategy is to focus on end-users and to provide our customers
with exceptional services.  Because of our customer focus and the fact that the
foreign and integrated mills have cost and  freight disadvantages compared to us
and other domestic mini-mills, we have effectively precluded them from competing
in the relatively low priced hot rolled bar product and graded rebar markets.
However, the twenty-foot length rebar and no-grade rebar markets have been
impacted by foreign imports which has significantly reduced selling prices in
the past three years.

  Competitive factors in fence post sales include product quality measured by
durability, appearance, workmanship, delivery response time, price, and freight
costs. Competitors include Structural Metals, Incorporated and Chicago Heights
Steel Company.

  For fabricated rebar, primary competitors are independent fabrication shops
that are furnished with rebar from other mini-mills in the Midwest. In recent
years, we believe that increased demand for epoxy-coated product from
contractors bidding on infrastructure projects has provided Kansas City with a
competitive advantage. Other competitive factors include delivery performance,
engineering support, accurate fabrication and competitive pricing. Waddell's
focus is on small rebar projects, generally less than 200 tons each.  These two
fabricators complement each other and allow for most efficient production at
both locations.

  In the railroad track spike market competitive factors include quality,
service and price.  Our primary competitors are Ameristeel and Birmingham Rail.

                                       7
<PAGE>

Employees

  As of April 30, 2001, we had approximately 610 employees.  Approximately 66%
of our employees are represented by one of three bargaining units affiliated
with the United Steelworkers of America (Sand Springs, Joliet and Kansas City).
Sand Springs is party to a collective bargaining agreement covering
approximately 262 hourly-paid production and maintenance employees. This
agreement, which was negotiated as of March 2, 2000, is for a four-year period
expiring on March 2, 2004.  The agreement included wage increases, minor changes
to certain benefits and changes to local work rules.

  Joliet is also party to a collective bargaining agreement covering
approximately 108 hourly-paid production and maintenance employees that expires
on March 1, 2002.  Kansas City has a collective bargaining agreement covering
approximately 18 employees that was negotiated on November 1, 1999 and expires
on October 31, 2003.  The Railway has approximately 18 employees of which 12 are
represented by various labor unions. We believe that we have maintained good
relationships with our labor unions in the past, but we are unable to provide
assurance that the terms of any future collective bargaining agreements with any
labor unions will contain terms comparable to the terms contained in its
existing collective bargaining agreements.

  Since the last national, industry-wide strike of steelworkers in 1959, the
Company has experienced only a five-day strike in Sand Springs in May 1988 and a
work stoppage in Kansas City after the expiration of its collective bargaining
agreement in September 1991. We have not experienced a protracted work stoppage
in Sand Springs or Joliet, and we believe that we have good relations with our
employees.  However, we can give no assurance that work stoppages will not occur
in the future, in connection with labor negotiations or otherwise.

Environmental Compliance

  We are subject to a broad range of federal, state and local environmental
requirements, including those governing air emissions, storm water discharges,
and the handling and disposal of wastes.  We have spent substantial amounts to
comply with these requirements.  In addition, in the event that we release
hazardous materials, we could potentially be responsible for the remediation of
contamination associated with such a release.

  Primarily because the melting process in Sand Springs generates emission dust
that contains lead, cadmium and other heavy metals, we are classified, in the
same manner as other electric arc furnace operators in this industry, as a
generator of hazardous waste.  The Resource Conservation and Recovery Act of
1976, as amended (RCRA), regulates the management of emission control
sludge/dust from electric arc furnaces (KO61), a waste stream generated in
significant quantities in Sand Springs.  All of the KO61 generated in Sand
Springs is shipped to Mexico, where a High Temperature Metals Recovery
processor, Zinc Nacional, S.A., recovers the zinc, lead and cadmium and
manufactures commercial and high purity zinc products.  Zinc Nacional, S.A. is
in compliance with the Mexican agency, Office of Environmental Protection, which
is similar to the EPA in the United States.

  If a release of KO61 were to occur, we could be required to remediate such a
release.  Although current law permits the export of KO61, we can provide no
assurance that new United States legislation prohibiting the export of hazardous
waste materials or new Mexican legislation prohibiting the import of such
materials, including KO61, will not be enacted.  In that event, we would have to
find an alternative means of treatment or disposal of the KO61 in compliance
with RCRA.

                                       8
<PAGE>

  We believe that we could properly dispose of the KO61 generated in Sand
Springs by constructing an on-site recovery or chemical stabilization process or
by shipping the KO61 to a licensed domestic treatment facility.  However, we can
give no assurance that such an alternative would be available or that their
construction and/or use would not result in significant cost increases.

  In accordance with the Clean Air Act Amendments of 1990 (CAAA) and Oklahoma's
State Implementation Plan, we submitted a Title V application for an operating
permit in January of 1997 and received the permit in March 1998.  We have been
routinely audited and have had no resulting violations, outstanding issues or
questions that were not resolved. Late in 2000, we participated in a plant wide
EPA self-audit at our Sand Springs plant.  No financially significant issues
were found to exist in our opinion.  Final discussions and responses regarding
the audit are still pending.  Additional or new air emission control regulations
or requirements applicable to our operations may be promulgated under the Clean
Air Act in the future.  We cannot at this time accurately estimate the costs, if
any, of compliance with such future Clean Air Act regulations or requirements.

  We are finalizing work with the EPA in concluding their RCRA Compliance
Evaluation Inspection, which was conducted by Region 6 officials in April of
1997.  While we have addressed all of the EPA's concerns and they have indicated
(verbally) over a year ago that no penalties should be imposed, the final
written release has not been issued.  The EPA was comfortable enough with our
responses that they allowed our consultants to write the final report, or "Risk
Assessment" in 1999.  We received some additional questions from the EPA after
issuing that report.  We have responded to those questions and are awaiting the
EPA's response.  We feel that any remediation work on the site (if any is
required) will be minimal in nature and will not require us to make any
substantial expenditures for either remediation or environmental control during
the next three years.

Cautionary Factors That May Affect Future Results

  Our disclosure and analysis in this report to shareholders contain some
forward-looking statements.  Forward-looking statements give our current
expectations or forecasts of future events.  You can identify these statements
by the fact that they do not relate strictly to historical or current facts.
They use words such as "anticipate", "estimate", "expect", "project", "intend",
"plan", "believe", or other words and terms of similar meaning in connection
with any discussion of future operating or financial performance.  Specifically,
these include statements relating to future actions, prospective products,
future performance or results of current and anticipated new products, sales
efforts, availability of raw materials, expenses such as energy costs, the
outcome of contingencies, the cost of environmental compliance and financial
results.  From time to time, we also may provide oral or written forward-looking
statements in other materials we release to the public.

  Any or all of our forward-looking statements in this report and in any other
public statements we make may turn out to be wrong.  They can be affected by
inaccurate assumptions we might make or by known or unknown risks and
uncertainties.  Many factors mentioned in the discussion above--for example,
competition--will be important in determining future results.  Consequently, no
forward-looking statement can be guaranteed.  Actual future results may vary
materially.

                                       9
<PAGE>

  We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.  You are
advised, however, to consult any further disclosures we make on related subjects
in our other reports to the SEC.  Also note that we provide the following
cautionary discussion of risks, uncertainties, and possibly inaccurate
assumptions relevant to our businesses.  These are factors that we think could
cause our actual results to differ materially from expected and historical
results.  Other factors besides those listed here could also adversely affect
us.  This discussion is provided as permitted by the Private Securities
Litigation Reform Act of 1995.

 .  The highly cyclical and seasonal nature of the steel industry.
 .  The possibility of increased competition from other mini-mills.
 .  The risk of our ability to expand our product lines and increase acceptance
   of existing product lines.
 .  The risk of our ability to successfully produce quality products.
 .  The risk regarding the availability of raw materials such as steel scrap.
 .  The risk in cost and availability of energy, specifically natural gas and
   electricity.
 .  The costs of environmental compliance and the impact of government
   regulations.
 .  Our relationship with our workforce, including the United Steelworkers of
   America Union.
 .  The restrictive covenants and tests contained in our debt instruments that
   could limit our operating and financial flexibility.
 .  The risk associated with our failure to pay the full semi-annual installment
   on the 11  1/2% First Mortgage Notes due 2005 that was due on June 1, 2001.
 .  The imports into the United States that have affected the steel market.
 .  General economic conditions in the United States.

                                       10
<PAGE>

ITEM 2.  PROPERTIES AND FACILITIES
----------------------------------

  We own the properties that are the operations for Sand Springs, Joliet, and
Waddell. The facility in Sand Springs is located on approximately 148 acres of
land in Sand Springs, Oklahoma. The facility in Joliet is located on
approximately 30 acres of land in Joliet, Illinois. Waddell's 33,000 square foot
building is located on approximately 2.3 acres of land in Independence,
Missouri.  We lease nine acres of land adjacent to the facility in Joliet from
the Metropolitan Water Reclamation District of Greater Chicago under a long-term
lease expiring in 2053.  We also lease the plant in Kansas City, which contains
approximately 77,100 square feet. We lease the Wellington facility, which is
approximately 26,000 square foot building located on three acres in Sand
Springs, Oklahoma.

  The facility in Sand Springs comprises an aggregate of approximately 520,390
square feet of floor space and contains two 85-ton electric arc furnaces, a six-
strand billet continuous caster, a rolling mill, two warehouses and a fence post
shop. The current total annual capacity in Sand Springs is approximately 600,000
tons of billet, approximately 450,000 tons of rebar and hot rolled bar and
approximately 70,000 tons of fence post.

  The facility in Joliet comprises an aggregate of approximately 334,305 square
feet of floor space and contains a 12-inch merchant bar mill and a
decommissioned 10-inch merchant bar mill. The total annual capacity in Joliet is
approximately 145,000 tons of hot rolled bar products.

  The Railway provides freight service between Sand Springs and Tulsa on seven
miles of yard track and 17.3 miles of spur line, which connect customer
facilities with the main line. The Railway owns the 24.3 miles of railroad track
plus three locomotives, 28 gondolas and 4 flat cars.  The Railway operates a
maintenance shop for normal repairs and upkeep of locomotives and railcars. The
Railway owns approximately 10 acres and leases and operates a transload facility
and warehouse.

  We have granted a security interest in substantially all of the Railway assets
to the Bank of Oklahoma as security for the Railway's obligations under the
Railway Revolving Credit Facility and the Railway Term Loan.

  We have granted a first priority lien on substantially all of our real
property and equipment (excluding the Railway, Waddell and Wellington) in favor
of the Trustee for the benefit of the holders of the First Mortgage Notes.

ITEM 3.  LEGAL PROCEEDINGS
--------------------------

  We are not a party to any significant pending legal proceedings other than
litigation incidental to our business that we believe will not materially affect
our financial position or results of operations. Such claims against us are
ordinarily covered by insurance. We can give no assurance, however, that
insurance will be available in the future at reasonable rates.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------------------------------------------------------------

  Not applicable.

                                       11
<PAGE>

PART II
-------

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
---------------------------------------------------------
         STOCKHOLDER MATTERS
         -------------------

  Our Common Stock, par value $.01 per share, is not traded on an established
public trading market.  As of the date of this filing, there were eight
stockholders of record.  We paid dividends of $2,500,000, or $.71 per share, to
stockholders in fiscal 2000. There were no dividends paid during the years ended
April 30, 2001 and 1999. We have loan agreements that contain limitations on our
ability to pay cash dividends on Common Stock.

                                       12
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA
------    -----------------------

The following selected consolidated financial data for the five years ended
April 30, 2001 has been derived from our financial statements audited by KPMG
LLP, independent auditors.  Our financial statements and the report thereon are
included elsewhere in this Annual Report on Form 10-K.  The information below
should be read in conjunction with our financial statements and the related
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," included in Item 7.

<TABLE>
<CAPTION>
                                                                                 Fiscal Year Ended April 30,
                                                                      ---------------------------------------------------
                                                                        2001         2000      1999      1998      1997
                                                                      --------      -------   -------   -------   -------
<S>                                                                   <C>           <C>       <C>       <C>       <C>
Statement of Earnings Data:
 Sales............................................................    $157,483      172,114   163,444   185,077   170,865
 Cost of sales....................................................     132,039      133,273   125,013   148,496   140,234
                                                                      --------      -------   -------   -------   -------
 Gross profit.....................................................      25,444       38,841    38,431    36,581    30,631
 Selling, general and administrative expense......................      14,763       15,083    14,470    13,006    11,923
 Depreciation and amortization....................................       8,446        8,343     7,726     7,112     6,775
 Postretirement benefit expense other
   than pensions..................................................       2,686        2,302     2,411     2,681     2,353
 Restructuring charge [a].........................................           -            -         -         -     1,320
 Litigation Settlement [b]........................................           -       (2,379)   (2,256)        -         -
                                                                      --------      -------   -------   -------   -------
 Operating income (loss)..........................................        (451)      15,492    16,080    13,782     8,260
 Interest expense.................................................     (16,919)     (15,167)  (14,599)  (12,300)  (11,769)
 Other income (expense)...........................................         (36)        (132)       15      (180)        -
                                                                      --------      -------   -------   -------   -------
 Income (loss) before income taxes and
   extraordinary item.............................................     (17,406)         193     1,496     1,302    (3,509)
 Income tax (expense) benefit.....................................      (7,400)           -         -       495         -
                                                                      --------      -------   -------   -------   -------
 Income (loss) from continuing operations.........................     (24,806)         193     1,496     1,797    (3,509)
 Extraordinary item - loss on retirement of
   long-term debt, net of income tax benefit of
   $0 in 1998 [c].................................................           -            -         -    (8,023)        -
                                                                      --------      -------   -------   -------   -------

 Net income (loss)................................................    $(24,806)         193     1,496    (6,226)   (3,509)
                                                                      --------      -------   -------   -------   -------

Dividends per common share........................................    $      -          .71         -      2.80         -

Balance Sheet Data (at end of period):
 Total assets.....................................................    $138,238      160,453   152,561   143,618   136,627
 Long-term debt (including current portion).......................     146,270      132,742   125,595   114,384    96,550
 Stockholders' equity (deficit)...................................     (49,189)     (19,213)  (13,197)  (14,126)    2,156

Other Data:
 Capital expenditures.............................................    $  5,871        5,668     6,248     9,023     3,695
 Net tons shipped.................................................     442,228      469,429   420,353   490,128   473,755
 Average price per ton shipped....................................    $    356          367       389       378       361
 Average production cost per ton shipped..........................         299          284       297       303       296
 Number of active employees at end of period......................         610          690       673       623       670
 Ratio of earnings to fixed charges [d]...........................           -         1.01      1.10      1.10         -
</TABLE>
--------------------

[a] A restructuring charge of $1.3 million was recognized in fiscal year 1997 as
     a result of early retirement incentives included in a collective bargaining
     agreement and salaried workforce reductions in Sand Springs.

[b] Litigation settlement income of $2.4 million in fiscal 2000 and $2.3 million
     in fiscal 1999 was recorded as a result of a lawsuit against certain
     graphite electrode manufacturers.

[c] Extraordinary loss of $8.0 million was recorded in fiscal 1998 related to
     the First Mortgage Note offering. The extraordinary charge related to a
     redemption premium, unamortized discount and debt issue costs associated
     with the retirement of our old First Mortgage Notes that were due in fiscal
     2001.

[d] Ratio of earnings to fixed charges is defined as income before income taxes
     and extraordinary item plus amortization of debt issuance cost and interest
     expense divided by the sum of interest expense plus amortization of debt
     issuance costs. Earnings of approximately ($17,406) in fiscal 2001 and
     ($3,509) in fiscal 1997 were insufficient to cover fixed charges.

                                       13
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------  -------------------------------------------------
         CONDITION AND RESULTS OF OPERATIONS
         -----------------------------------

  The following discussion should be read in conjunction with our Consolidated
Financial Statements and notes included in Item 8 of this Form 10-K.

General

  The results of operations are dependent on the level of construction,
infrastructure spending, oil and gas, agribusiness, and general economic
activity in the U.S.  Our sales are seasonal with the third fiscal quarter
generally being weaker than the rest of the year.  The major cost components of
our products are steel scrap and other raw materials, energy, labor, warehousing
and handling, and freight costs.

  The following table provides information regarding the historical results of
operations (in thousands):

<TABLE>
<CAPTION>

                                                                 Fiscal Year Ended April 30,
                                         --------------------------------------------------------------------------
                                                  2001                      2000                      1999
                                         ----------------------    ----------------------    ----------------------
Operating Results:                       Net Sales   % of Sales    Net Sales   % of Sales    Net Sales   % of Sales
                                         ---------   ----------    ---------   ----------    ---------   ----------
<S>                                      <C>         <C>           <C>         <C>           <C>         <C>

Sales                                      157,483      100.0%       172,114      100.0%       163,444      100.0%
Cost of sales                              132,039       83.8%       133,273       77.4%       125,013       76.5%
                                           -------                   -------                   -------

     Gross profit                           25,444       16.2%        38,841       22.6%        38,431       23.5%

Selling and administrative                  14,763        9.4%        15,083        8.8%        14,470        8.9%
Depreciation and amortization                8,446        5.4%         8,343        4.8%         7,726        4.7%
Postretirement benefit expense               2,686        1.7%         2,302        1.3%         2,411        1.5%
Litigation settlement                            -          -         (2,379)      (1.4%)       (2,256)      (1.4%)
                                           -------                   -------                   -------

     Operating income(loss)                   (451)      (.30%)       15,492        9.0%        16,080        9.8%

Interest expense, net                      (16,919)     (10.7%)      (15,167)      (8.8%)      (14,599)      (8.9%)
Other (Expense)income                          (36)      (0.0%)         (132)      (0.0%)           15        0.0%
                                           -------                   -------                   -------
     Income from operations
      before taxes                         (17,406)     (11.0%)          193       0.11%         1,496        0.9%

Income tax benefit (expense)                (7,400)      (4.7%)            -          -              -          -
                                           -------                   -------                   -------

     Net income (loss)
                                           (24,806)     (15.8%)          193       0.11%         1,496        0.9%
                                           =======                   =======                   =======
</TABLE>

                                       14
<PAGE>

The following table provides information regarding the historical shipment
levels and average selling prices per ton:

<TABLE>
<CAPTION>

                                                                      Fiscal Year Ended April 30,
                                                                   --------------------------------------------
                                                                     2001              2000               1999
                                                                   -------           -------            -------
<S>                                                                <C>               <C>                <C>
Tons shipped:
Hot Rolled Bars                                                    154,046           164,407            154,397
Rebar                                                              178,655           189,434            171,075
Fabricated Products                                                 66,030            73,012             63,757
                                                                   -------           -------            -------
Total finished products                                            398,731           426,853            389,229
Billets                                                             43,497            42,576             31,124
                                                                   -------           -------            -------
Total tons shipped                                                 442,228           469,429            420,353
                                                                   =======           =======            =======

Average price per ton shipped                                          356               367                389
Average production cost per ton                                        299               284                297
</TABLE>

Results of Operations

Fiscal 2001 As Compared To Fiscal 2000

     Sales.   Sales in fiscal 2001 were approximately $14.6 million or 8.5% less
than sales in fiscal 2000.  Demand dropped to very low levels coupled with the
inventory reduction, harsh winter weather, holiday outages, and unprecedented
levels of subsidized imports. As summarized below, shipments and pricing
generally decreased in comparison to the prior year:

 .  Our shipments of hot rolled bar from Sand Springs increased 21% compared to
   fiscal 2000. The Sand Springs mill increased production of hot rolled bar
   products and experienced higher productivity rates than in the prior year
   contributing to the increased sales volume. The increase in tonnage shipped
   by Sand Springs did not offset the decrease at Joliet. Shipments of our hot
   rolled bar products in Joliet have been impacted by market conditions with
   shipments decreasing 21% while pricing remained constant. We have seen
   improvement in hot rolled bar sales that support certain industries such as
   oil field equipment; however, agricultural equipment sales continue to lag.

 .  In comparison to Fiscal 2000, rebar shipments decreased 6% and pricing
   decreased 3%. Shipments decreased due to heavy rainfall in November and
   record-breaking snowfall in December. Rebar shipments are very sensitive to
   rainy and cold weather conditions. The weak shipments do not reflect
   shipments lost, but shipments delayed.

 .  Although not as significant, rebar imports impacted our sales and pricing of
   twenty-foot no-grade rebar.

 .  Our shipments of fabricated products decreased 10% while pricing remained
   constant compared to fiscal 2000. Shipments of fence posts have been impacted
   by a slow down in the farm economy.

                                       15
<PAGE>

  Cost of Sales and Expenses.  Average product costs increased to $299 in fiscal
2001 from $284 in fiscal 2000 due primarily to increases in energy costs and
reduced operations due to weak shipments and our efforts to reduce inventories
along with a one-week outage in the Sand Springs mill and two weeks in the
Joliet rolling mill.  Reduced production means we have fewer tons of production
to spread fixed or semi-fixed costs, increasing costs per ton.

  Selling, general and administrative expenses decreased over the prior fiscal
year due primarily to employment costs.

  Depreciation increased because of additional capital expenditures primarily in
Sand Springs.  Amortization increased compared to the prior year due to
increased amortization of intangible assets associated with the operating lease
for the reheat furnace.

  During fiscal 2000, we were party to a lawsuit with several other steel
manufacturers against certain manufacturers of graphite electrodes related to
price fixing within the electrode industry.  We received approximately $2.4
million related to the settlements reached fiscal year 2000 with certain of the
defendants.

  Interest expense increased due to the level of outstanding debt during the
fiscal year.  Additions to debt were due to operating losses and capital
expenditure requirements.

  The Company has incurred losses, in the current and prior years. Considering
these losses, the Company increased its valuation allowance to $20.8 million
relating to the net deferred tax assets.  The Company will evaluate the possible
realization of its net deferred tax assets upon its return to profitability.

Fiscal 2000 As Compared To Fiscal 1999

  Sales.   Sales in fiscal 2000 were approximately $8.7 million or 5.3% more
than sales in fiscal 1999.  Shipments increased in comparison to the prior year,
while pricing generally decreased as summarized below:

 .  Our shipments of hot rolled bar from Sand Springs increased 61% over fiscal
   1999 (excluding sales to Wellington). The Sand Springs mill increased
   production of hot rolled bar products and experienced higher productivity
   rates than in the prior year contributing to the increased sales volume.
   Shipments and pricing of our hot rolled bar products in Joliet have been
   impacted by market conditions with shipments decreasing 2% and pricing
   decreasing 3%. We have seen improvement in hot rolled bar sales that support
   certain industries such as oil field equipment; however, agricultural
   equipment sales continue to lag.

 .  Rebar shipments rebounded in 2000 due to our favorable inventory position in
   comparison to fiscal 1999. In the prior year, we had very low inventories due
   to the rolling mill outage at the Sand Springs Facility related to the Shear
   Line Project completed in the fourth quarter of fiscal 1998.

                                       16
<PAGE>

 .  Finished goods prices are down in comparison to fiscal 1999, in part due to
   reductions in steel scrap raw material costs. During the second quarter of
   fiscal 2000, our scrap raw material costs began to increase which had an
   adverse effect on cost of sales for the remainder of the year. However, scrap
   prices have moderated since year-end and we expect our margins will not be
   negatively impacted any further.

 .  Although not as significant, rebar imports impacted our sales and pricing of
   twenty-foot rebar and no-grade rebar.

  Cost of Sales and Expenses.  Average product costs decreased to $284 in fiscal
2000 from $297 in fiscal 1999 due to decreases in steel scrap raw material
costs.  This decrease was partially offset by higher costs associated with
finished goods product mix and higher operating costs.

  Selling, general and administrative expenses increased over the prior fiscal
year due primarily to employment costs as well as the acquisition of Wellington.

  Depreciation increased because of additional capital expenditures primarily in
Sand Springs.  Amortization increased compared to the prior year due to
increased amortization of intangible assets associated with the acquisition of
Wellington.

  During fiscal 1999 and 2000, we were party to a lawsuit with several other
steel manufacturers against certain manufacturers of graphite electrodes related
to price fixing within the electrode industry.  We received approximately $2.4
million related to the settlements reached this fiscal year ($2.3 million in
fiscal 1999) with certain of the defendants.

  Interest expense increased due to the level of outstanding debt during the
fiscal year.  Additions to debt were due to working capital and capital
expenditure requirements.

Liquidity and Capital Resources

  As of April 30, 2001, we had long-term indebtedness of $146.3 million and
approximately $7.4 million of additional borrowing availability under our
revolving credit agreements.  The Company's current liquidity requirements
include working capital needs, cash for debt service and capital expenditures.
The Company intends to finance its current operations and investing activities
with cash from operations and borrowing under its revolving credit agreements.
As discussed under the section "Liquidity", the Company is in violation of
certain restrictive covenants under its revolving credit agreements as of April
30, 2001.  If these agreements are withdrawn by the lenders or subjected to
forbearance agreements, the Company's liquidity and capital resources could be
materially adversely affected.

  Borrowings under our revolving credit agreements bear interest at a floating
rate. To the extent that interest rates increase or decrease, and to the extent
that amounts outstanding under the revolving credit agreements increase or
decrease, there will be corresponding increases in our interest obligations.  In
addition to borrowings under the revolving credit agreements, we have
historically used cash flow from operations and equipment financing agreements
to fund our investing activities, including capital expenditures.

                                       17
<PAGE>

Cash Flow Analysis

Fiscal 2001 As Compared To Fiscal 2000

  Cash flow used by operating activities was $2.0 million in fiscal 2001,
compared with cash flow provided in operating activities of $4.9 million in
fiscal 2000.  Cash used by operations was negatively impacted by fiscal 2001 net
loss.

  In fiscal 2000, we entered into a $10.0 million operating lease for a new
reheat furnace for the Sand Springs rolling mill.  The lease term is
approximately six years and contains an option to purchase the equipment at fair
market value at the end of the lease term.

  Earnings before interest, taxes, depreciation, amortization, extraordinary
item and the non-cash portion of the post-retirement expense (EBITDA) was
approximately $9.6 million at April 30, 2001 as compared to $22.4 million in the
prior year.  We have excluded the electrode litigation settlement in all EBITDA
calculations.  We believe that EBITDA is a valuable measure of our operating
cash flow and we consider it an indicator of our ability to meet interest
payments and fund capital expenditures.  EBITDA does not represent and should
not be considered as an alternative to net income or cash flow from operations
as determined by generally accepted accounting principles and EBITDA does not
necessarily indicate whether cash flow will be sufficient for cash requirements.
We exclude restructuring expense, extraordinary items and gain or loss on
retirements from EBITDA due to the non-recurring nature of these items.

  Cash used in investing activities in fiscal 2001 was $5.9 million consisting
of capital improvements. Capital expenditures consisted of normal capital
projects to sustain and improve existing operations. Cash flow provided by
financing activities consisted of increased borrowings under the revolving
credit agreement offset by debt payments, and repurchase of common stock.

Fiscal 2000 As Compared To Fiscal 1999

  Cash flow provided by operating activities was $4.9 million in fiscal 2000,
compared with cash flow used in operating activities of $3.7 million in fiscal
1999.  Cash provided by operations was negatively impacted in the prior year by
payments made on the shear line project.  In addition, raw material pricing
increased accounts payable balances at fiscal 2000 year-end.

  Cash used in investing activities in fiscal 1999 was $8.9 million, consisting
principally of the purchase of Wellington of $2.6 million and capital
improvements of $6.2 million including $0.7 million related to last years Shear
Line Project.  In fiscal 1999, cash provided by financing activities consisted
of increases in the revolving line of credit, proceeds from equipment financing
and the debt related to the purchase of Wellington.  Cash used in financing
activities included payments on the revolving credit facilities and other
equipment loans and the repurchase of common stock.

                                       18
<PAGE>

Liquidity

     Recent Developments. As a result of the significant loss in the current
year, the Company was unable to meet certain restrictive covenants under its
revolving credit agreements. On July 17, 2001, we received a letter from State
Street Bank and Trust Co. as Trustee that served as notice to us of the
occurrence and continuance of an event of default with respect to the First
Mortgage Notes due 2005. The existence and continuance of this event of default
permits the Trustee or the holders of at least 25% in principal amount of the
outstanding notes to declare the entire unpaid principal, interest and other
amounts payable on the notes to be immediately due and payable. Further, the
letter states that the Trustee's acceptance of our partial payment of the
overdue interest on July 2, 2001 does not constitute a waiver by the Trustee of
any such event of default.

  On July 27, 2001, we entered into a forbearance agreement with Bank of America
that provides for a limited continuation of our line of credit through August
31, 2001. The revised line of credit is capped at $35 million among other
limitations.  We have no assurance that the terms of the forbearance agreement
will be extended beyond August 31, 2001. The Company is currently pursuing
alternative financing agreements.

  The Company did not have sufficient cash and borrowing availability at May 31,
2001 in order to pay its semi-annual interest payment due under the First
Mortgage Notes due 2005 as required.  Upon expiration of the 30-day grace period
provided in the indenture, the Company decided to make a payment of 1/6th, or
$1.05 million, of the amount due.  Management believes that such decision
preserves the liquidity in the Company and allows it to continue to carry on
normal operations and customer support while it pursues a restructuring of the
First Mortgage Notes. Despite the partial interest payment, the Company is in
default of its First Mortgage Notes as of July 3, 2001.

  The Company has retained financial and legal advisors to assist it in
reviewing financial alternatives available to the Company, including without
limitation, a possible debt restructuring.  The Company and the holders of the
First Mortgage Notes have commended discussion, which the Company believes will
result in an agreement with those holders that will lead to a restructuring.
When achieved, the restructuring will result in a balance sheet that will better
support the implementation of Sheffield's short and long-range goals.

  There can be no assurance that a restructuring is possible or that it will be
successful in addressing the Company's liquidity and capital resource needs.
The Company's failure to achieve its cost reduction initiatives or improve
operating performance could also have a material adverse effect on the financial
results or liquidity of the Company in the future.  In addition, external
factors affect the Company's market and related production costs.  Unfavorable
price movements for outside purchases of scrap, energy, among other, could also
have a material adverse effect on the financial results or liquidity of the
Company.

                                       19
<PAGE>

  The accompanying financial statements have been prepared assuming that
Sheffield Steel will continue as a going concern.  As more fully described in
Note 14, the Company has incurred recurring significant losses in fiscal 2001
and subsequent to year end was unable to meet its debt service obligations when
due.  These conditions raise substantial doubt about the Company's ability to
continue as a going concern.  Management's plans in regard to these matters are
also described under the heading "Description of the Company and Liquidity"
contained in Note 14.  The financial statements do not include any adjustments
to reflect the possible future effects on the recover-ability and classification
of assets or the amounts and classification of liabilities that may result from
the outcome of this uncertainty.

Compliance with Environmental Laws and Regulations

  We are subject to a broad range of federal, state and local environmental
regulations and requirements, including those governing air emissions and
discharges into water, and the handling and disposal of solid and/or hazardous
wastes. As part of the normal course of business, we incur expenses, primarily
for the disposal of bag house dust generated in the melt shop, to comply with
these regulations and requirements. Expenses were approximately $1.9 million in
fiscal 2001, $2.0 million in fiscal 2000, and $2.2 million in fiscal 1999.
Capital expenditures incurred to comply with these requirements were
approximately $155 thousand in fiscal 2001and $205 thousand in fiscal 2000.  In
addition, in the event that we release a hazardous substance, we could be
responsible for the remediation of contamination associated with such a release.
We believe that we are currently in substantial compliance with all known
material and applicable environmental regulations.

Inflation

  We have not experienced any material adverse effects on operations in recent
years because of inflation, though margins can be affected by inflationary
conditions. Our primary cost components are ferrous scrap and other raw
materials, energy and labor, all of which are susceptible to domestic
inflationary pressures.  Pricing of finished products, however, can be
influenced by general economic conditions and competitive factors in the steel
industry.  While we have been successful in passing on cost increases to our
customers through price adjustments, the effect of steel imports, severe market
price competition and under-utilized industry capacity has in the past, and
could in the future, limit our ability to adjust pricing.

Recent Accounting Pronouncements

  In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes new
accounting and reporting standards for derivative financial instruments and for
hedging activities. SFAS 133 requires an entity to measure all derivatives at
fair value and to recognize them in the balance sheet as an asset or liability,
depending on the entity's rights or obligations under the applicable derivative
contract. The recognition of changes in fair value of a derivative that affect
the income statement will depend on the intended use of the derivative.

                                       20
<PAGE>

  If the derivative does not qualify as a hedging instrument, the gain or loss
on the derivative will be recognized currently in earnings. If the derivative
qualifies for special hedge accounting, the gain or loss on the derivative will
either (1) be recognized in income along with an offsetting adjustment to the
basis of the item being hedged or (2) be deferred in other comprehensive income
and reclassified to earnings in the same period or periods during which the
hedged transaction affects earnings. SFAS 133 was amended by Statement of
Financial Accounting Standards No. 138 ("SFAS 138") in June 2000 that amended
the accounting and reporting standards of SFAS 133 for certain derivative
instruments and certain hedging activities. SFAS 138 also amended SFAS 133 for
decisions made by the FASB relating to the Derivatives Implementation Group
process. The Company has completed its analysis of Statement 133 and does not
expect adoption as of May 1, 2001 to have a material effect on results of
operations or financial position.

  In July 2001, the FASB issued Statement No. 141, "Business Combinations", and
Statement No. 142, "Goodwill and Other Intangible Assets".  Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001.  Statement 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately.  Statement 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 Statement 142.
Statement 142 will also require that intangible assets with definite 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, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of".

  The Company is required to adopt the provisions of Statement 141 immediately,
except with regard to business combinations initiated prior to July 1, 2001,
which it expects to account for using the pooling-of-interests method, and
Statement 142 effective January 1, 2002.*   Furthermore, any goodwill and any
intangible asset determined to have an indefinite useful life that are acquired
in a purchase business combination completed after June 30, 2001 will not be
amortized, but will continue to be evaluated for impairment in accordance with
the appropriate pre-Statement 142 accounting literature.  Goodwill and
intangible assets acquired in business combinations completed before July 1,
2001 will continue to be amortized prior to the adoption of Statement 142.

  Statement 141 will require upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill.  Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible assets acquired
in purchase business combinations, and make any necessary amortization period
adjustments by the end of the first interim period after adoption.  In addition,
to the extent an intangible asset is identified as having an indefinite useful
life, the Company will be required to test the intangible asset for impairment
in accordance with the provisions of Statement 142 within the first interim
period.  Any impairment loss will be measured as of the date of adoption and
recognized as the cumulative effect of a change in accounting principle in the
first interim period.

                                       21
<PAGE>

  In connection with the transitional goodwill impairment evaluation, Statement
142 will require the Company to perform an assessment of whether there is an
indication that goodwill is impaired as of the date of adoption.  To accomplish
this the Company must identify its reporting units and determine the carrying
value of each reporting unit by assigning the assets and liabilities, including
the existing goodwill and intangible assets, to those reporting units as of the
date of adoption.  The Company will then have up to six months from the date of
adoption to determine the fair value of each reporting unit and compare it to
the reporting unit's carrying amount.  To the extent a reporting unit's carrying
amount exceeds its fair value, an indication exists that the reporting unit's
goodwill may be impaired and the Company must perform the second step of the
transitional impairment test.  In the second step, the Company must compare the
implied fair value of the reporting unit's goodwill, determined by allocating
the reporting unit's fair value to all of it assets (recognized and
unrecognized) and liabilities in a manner similar to a purchase price allocation
in accordance with Statement 141, to its carrying amount, both of which would be
measured as of the date of adoption.   This second step is required to be
completed as soon as possible, but no later than the end of the year of
adoption.  Any transitional impairment loss will be recognized as the cumulative
effect of a change in accounting principle in the Company's statement of
earnings.

  Because of the extensive effort needed to comply with adopting Statements 141
and 142, it is not practicable to reasonably estimate the impact of adopting
these Statements on the Company's financial statements at the date of this
report, including whether any transitional impairment losses will be required to
be recognized as the cumulative effect of a change in accounting principle.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
--------  -----------------------------------------------
          MARKET RISK
          -----------

  Our earnings are affected by changes in interest rates (primarily the prime
rate).  At April 30, 2001, we had approximately $36.3 million of long-term debt
with variable rates.  Interest risk can be estimated by measuring the impact of
a 10% increase in interest rates.  We would incur an additional $328 thousand of
interest expense per year on our variable rate borrowing if our debt levels
remained approximately the same as at April 30, 2001.  Because we experience
changes in our debt levels due to operating requirements or changes in the
general economic environment that we are unable to predict, this estimate
assumes no changes in our financial structure.

  The fair value of the First Mortgage Notes at April 30, 2001, based on
currently offered market price was $38 million verses a carrying value of
approximately $110 million.

                                       22
<PAGE>

ITEM 8. FINANCIAL STATEMENTS
----------------------------

                          Independent Auditors' Report



The Board of Directors and Stockholders
Sheffield Steel Corporation:


We have audited the accompanying consolidated balance sheets of Sheffield Steel
Corporation and subsidiaries as of April 30, 2001 and 2000, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
each of the years in the three-year period ended April 30, 2001.  In connection
with our audits of the consolidated financial statements, we have also audited
the financial statement schedule listed in the index at Item 14(a)2.  These
consolidated financial statements and schedules are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
consolidated financial statements and schedule 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 Sheffield Steel
Corporation and subsidiaries at April 30, 2001 and 2000, and the results of
their operations and their cash flows for each of the years in the three-year
period ended April 30, 2001, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 14 to the
financial statements, the Company has suffered significant losses from
operations in the current year and subsequent to year-end was in default under
its first mortgage note agreement which raises substantial doubt about its
ability to continue as a going concern.  Management's plans in regard to these
matters are also described in Note 14.  The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

                                              /s/ KPMG LLP

Tulsa, Oklahoma
July 16, 2001

                                       23
<PAGE>

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                          Consolidated Balance Sheets
                  (In thousands, except share and share data)

<TABLE>
<CAPTION>
                                                                                       April 30,
                                                                              ----------------------
                Assets                                                         2001             2000
                ------                                                         ----             ----
<S>                                                                             <C>              <C>
Current assets:
 Cash and cash equivalents                                                   $    181                79
 Accounts receivable, less allowance for doubtful accounts of
   $541 at April 30, 2001 and 2000, respectively                               22,531            25,320
 Inventories                                                                   39,910            49,333
 Prepaid expenses and other                                                     1,144             1,375
 Deferred income taxes                                                              -             3,352
                                                                             --------           -------
       Total current assets                                                    63,766            79,459

Property, plant and equipment, net                                             64,296            66,245
Property held for sale                                                              -               139
Intangible asset, less accumulated amortization of $4,190
  and $3,204 in 2001 and 2000, respectively                                     8,790             9,346
Other assets                                                                      886               716
Receivable from parent, less valuation allowance of $2,205
  at April 30, 2001                                                               500             2,705
Deferred income taxes                                                               -             1,843
                                                                             --------           -------
                                                                             $138,238           160,453
                                                                             ========           =======
          Liabilities and Stockholders' Deficit
          -------------------------------------

Current liabilities:
 Current portion of long-term debt                                           $ 34,886             2,607
 Accounts payable                                                              12,538            20,645
 Accrued interest payable                                                       5,444             5,385
 Accrued liabilities                                                            6,374             6,701
 Due to affiliated company                                                          -                77
                                                                             --------           -------
       Total current liabilities                                               59,242            35,415

Long-term debt, excluding current portion                                     111,384           130,135
Accrued postretirement benefit costs                                           14,426            13,374
Other liabilities                                                               2,375               742
                                                                             --------           -------
       Total liabilities                                                      187,427           179,666
                                                                             --------           -------
Stockholders' deficit:
 Common stock, $.01 par value, authorized 10,000,000
  shares, issued and outstanding 3,408,675 and
  3,458,828  at April 30, 2001 and 2000, respectively                              34                35
 Additional paid-in capital                                                         -                 -
 Retained deficit                                                             (48,093)          (18,141)
                                                                             --------           -------
       Total stockholders' deficit                                            (48,059)          (18,106)
    Less loans to stockholders                                                  1,130             1,107
                                                                             --------           -------
                                                                              (49,189)          (19,213)
Commitments and contingencies
                                                                             --------           -------
                                                                             $138,238           160,453
                                                                             ========           =======
</TABLE>
See accompanying notes to consolidated financial statements.

                                       24
<PAGE>

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                     Consolidated Statements of Operations
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                             Year Ended April 30,
                                                                   --------------------------------------------
                                                                     2001              2000              1999
                                                                     ----              ----              ----
<S>                                                               <C>                <C>               <C>
Sales                                                              $157,483           172,114           163,444
Cost of sales                                                       132,039           133,273           125,013
                                                                   --------           -------           -------

       Gross profit                                                  25,444            38,841            38,431

Selling, general and administrative expense                          14,763            15,083            14,470
Depreciation and amortization expense                                 8,446             8,343             7,726
Postretirement benefit expense other than pensions                    2,686             2,302             2,411
Litigation settlement                                                     -            (2,379)           (2,256)
                                                                   --------           -------           -------
       Operating income (loss)                                         (451)           15,492            16,080
                                                                   --------           -------           -------
Other (expense) income:
 Interest expense, net                                              (16,919)          (15,167)          (14,599)
 Other                                                                  (36)             (132)               15
                                                                   --------           -------           -------
                                                                    (16,955)          (15,299)          (14,584)
                                                                   --------           -------           -------
       Income (loss) from operations before
          income taxes                                              (17,406)              193             1,496

Income tax expense                                                   (7,400)                -                 -
                                                                   --------           -------           -------
       Net income (loss)                                           $(24,806)              193             1,496
                                                                   ========           =======           =======
</TABLE>


See accompanying notes to consolidated financial statements.

                                       25
<PAGE>

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                Consolidated Statements of Stockholders' Deficit
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                           Year Ended April 30,
                                                                   -------------------------------------
                                                                   2001             2000            1999
                                                                   ----             ----            ----
<S>                                                           <C>              <C>               <C>
Common stock:
  Balance at beginning of year                                 $     35              35                36
  Common stock retired (202,028,118,112 and 161,450
   shares in 2001, 2000 and 2001 respectively)                       (2)             (1)               (2)

  Stock options exercised (151,875,117,640 and
   50,625 shares in 2001, 2000 and 1999 respectively)                 1               1                 1
                                                               --------         -------           -------
  Balance at end of year                                             34              35                35
                                                               ========         =======           =======
Additional paid-in capital:
  Balance at beginning of year                                        -           2,024             2,536
  Common stock retired                                            (1123)         (2,934)             (886)
  Stock options exercised                                          1123             910               374
                                                               --------         -------           -------
  Balance at end of year                                              -               -             2,024
                                                               ========         =======           =======
Retained earnings (deficit):
  Balance at beginning of year                                  (18,141)        (14,202)          (15,698)
  Net income (loss)                                             (24,806)            193             1,496
  Common stock retired                                           (5,146)         (1,632)                -
  Dividends                                                           -          (2,500)                -
                                                               --------         -------           -------
  Balance at end of year                                       $(48,093)        (18,141)          (14,202)
                                                               ========         =======           =======
</TABLE>


See accompanying notes to consolidated financial statements.

                                       26
<PAGE>

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                Year Ended April 30,
                                                                      ---------------------------------------
                                                                       2001              2000            1999
                                                                       ----              ----            ----
<S>                                                                 <C>                 <C>           <C>
Cash flows from operating activities:
 Net income (loss)                                                  $(24,806)             193           1,496
 Adjustments to reconcile net income (loss) to net cash
   Provided by (used in) operating activities:
     Depreciation and amortization                                     8,772            8,670           8,052
     Loss (gain) on sale or retirement of assets                          30              124             (15)
     Accrual of postretirement benefits other than
      pensions, net of cash paid                                       1,052              999           1,392
     Deferred income taxes                                             7,400             (130)            (80)
     Changes in assets and liabilities, net of effects
       of acquisition of business:
      Accounts receivable                                              2,789           (5,260)          1,520
      Inventories                                                      9,423           (5,299)        (10,065)
      Prepaid expenses and other                                         231              267            (241)
      Other assets                                                       (54)            (493)           (441)
      Accounts payable                                                (8,107)           5,842          (5,610)
      Accrued interest payable                                            59               23             211
      Accrued liabilities                                               (327)             129             122
      Due to affiliated company                                          (77)               2             (10)
      Other liabilities                                                1,634             (140)            (13)
                                                                    --------           ------         -------
          Net cash provided by (used in) operating
            activities                                                (1,981)           4,927          (3,682)
                                                                    --------           ------         -------
Cash flows from investing activities:
 Capital expenditures                                                 (5,871)          (5,668)         (6,248)
 Acquisition of business, net of cash acquired                             -                -          (2,635)
 Proceeds from sale of equipment                                           -              212              18
                                                                    --------           ------         -------
          Net cash used in investing activities                       (5,871)          (5,456)         (8,865)
                                                                    --------           ------         -------
</TABLE>

                                                                     (Continued)

                                       27
<PAGE>

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                Consolidated Statements of Cash Flows, Continued
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                              Year Ended April 30,
                                                                      --------------------------------------
                                                                         2001          2000            1999
                                                                         ----          ----            ----
<S>                                                                  <C>             <C>             <C>
Cash flows from financing activities:
 Net increase (decrease) under revolving lines of credit              $15,839          8,567           6,875
 Proceeds from issuance of long-term debt                                   -          1,500           7,091
 Repayment of long-term debt                                           (2,310)        (2,920)         (2,990)
 Payment of debt issuance costs                                          (428)          (308)            (45)
 Dividends paid                                                             -         (2,500)              -
 Payments to retire stock                                              (6,271)        (4,567)           (888)
 Stock Options exercised                                                1,124            750               -
                                                                      -------         ------          ------
        Net cash provided by financing activities                       7,954            522          10,043
                                                                      -------         ------          ------
Net (decrease) increase in cash and cash equivalents                      102             (7)         (2,504)

Cash and cash equivalents at beginning of year                             79             86           2,590
                                                                      -------         ------          ------
Cash and cash equivalents at end of year                              $   181             79              86
                                                                      =======         ======          ======

Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash paid during the year for:
 Interest                                                             $16,534         14,820          14,062
                                                                      =======         ======          ======
 Income taxes                                                         $    17            143              80
                                                                      =======         ======          ======
Noncash items:
 Change in unfunded accumulated benefit obligation
   included in other assets and other liabilities                     $   215           (206)            206
                                                                      =======         ======          ======
</TABLE>


See accompanying notes to consolidated financial statements.

                                       28
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                         April 30, 2001, 2000 and 1999
                       (In thousands, except share data)

(1)  Summary of Significant Accounting Policies

Organization and Nature of Business

The consolidated financial statements of Sheffield Steel Corporation (the
Company, which may be referred to as we, us or our) include the accounts of its
divisions, Sheffield Steel-Sand Springs (Sand Springs), Sheffield Steel-Kansas
City (Kansas City), and Sheffield Steel-Joliet (Joliet) and its wholly owned
subsidiaries, Waddell's Rebar Fabricators, Inc. (Waddell), Wellington
Industries, Inc. (Wellington) and Sand Springs Railway Company (the Railway).
HMK Enterprises, Inc. (HMK) owns approximately 95% of our currently issued and
outstanding common stock.  All material intercompany transactions and balances
have been eliminated in consolidation.

Our primary business is the production of concrete reinforcing bar, fence posts,
and a range of hot rolled bar products including rounds, flats and squares.  We
operate in an economic environment wherein the commodity nature of both our
products for sale and our primary raw materials cause sales prices and purchase
costs to fluctuate, often on a short-term basis, due to the worldwide supply and
demand situation for those commodities.  The supply and demand factors for our
products for sale and the supply and demand factors for our primary raw
materials correlate to a degree, but are not necessarily the same.  Therefore,
margins between sales price and production costs can fluctuate significantly on
a short-term basis.  We grant credit to customers under normal industry
standards and terms.  We have established policies and procedures that allow for
proper evaluation of each customer's creditworthiness as well as general
economic conditions.  Consequently, an adverse change in those factors could
affect our estimate of bad debts.

Cash Equivalents

We consider all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents.

Inventories

Inventories are stated at the lower of cost (as determined by the first-in
first-out method) or market.  The cost of work-in-process and finished goods
inventories is based on standards, which approximate cost.  Work-in-process and
finished goods include direct labor and allocated overhead.

Intangible Assets

Intangible assets consist primarily of goodwill and debt issuance costs.  The
cost of goodwill is being amortized on a straight-line basis over a period of 40
years.  Debt issuance costs are amortized over the term of the related
indebtedness.  Our policy is to recognize an impairment of the carrying value of
goodwill when our best estimate of undiscounted future cash flows over the
remaining amortization period is less than the carrying amount.

                                       29
<PAGE>

Property, Plant and Equipment

Property, plant and equipment, which includes assets under capitalized leases,
is stated at cost.  Depreciation and amortization is provided over the estimated
useful lives of the individual assets using the straight-line method.
Significant renewals and betterments are capitalized; costs of maintenance and
repairs are charged to expense as incurred.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the year 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.

We are members of a group that files a consolidated income tax return with HMK
(the Group).  The Group's tax-sharing agreement provides that current and
deferred income taxes are determined as if each member of the Group were a
separate taxpayer.  All income taxes payable or receivable are due to or from
HMK.

Pension and Other Postretirement Plans

We have defined benefit pension plans covering the hourly employees at Sand
Springs and Joliet and the salary employees at Sand Springs.  The benefits are
based on years of service and the employee's compensation during the highest
five out of the last ten years before retirement.  The cost of this program is
being funded currently.

We also sponsor a defined benefit health care plan for the retirees and
employees in Sand Springs.  We measure the costs of this obligation based on our
best estimate.  The net periodic costs are recognized as employees render the
services necessary to earn the postretirement benefits.

Environmental Compliance Costs

We accrue for losses associated with environmental remediation obligations when
such losses are probable and reasonably estimable.  Accruals for estimated
losses from environmental remediation obligations generally are recognized no
later than completion of the remedial feasibility study.  Such accruals are
adjusted as further information develops or circumstances change.  Environmental
remediation costs have not had a material impact on our financial position,
results of operations, or liquidity.

Revenue Recognition

Revenues from sales are recognized when products are shipped to customers,
except the Railway, which recognizes revenues when services are performed.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires us to make estimates and assumptions that affect
the amounts reported.  We believe that these estimates are reasonable and
proper; however, actual results could differ from our estimates.

                                       30
<PAGE>

Stock Option Plan

We adopted SFAS No. 123, "Accounting for Stock-Based Compensation" which
permits, but does not require, a fair value based method of accounting for
stock-based employee compensation.  Alternatively, SFAS No. 123 allows companies
to continue applying the provisions of Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees"; however, such companies are
required to disclose pro forma net income and earnings per share as if the fair
value based method had been applied.  We have elected to continue to apply the
provisions of APB Opinion No. 25 for purposes of computing compensation expense
and we have provided the pro forma disclosure provisions of SFAS No. 123 herein.

Segment Information

We operate in a single operating segment providing steel products and services
to the steel manufacturing and fabricating industry.  We had sales of $157,483
in 2001, of which $156,316 was sales in the United States and $1,167 was sales
outside the United States.  We sell our products in the United States and
internationally through our own sales force and to a limited extent, sales
agencies.  Our assets are all located in the United States.  We have one
customer that accounted for approximately 13% of sales in 2001 and 14% of sales
in 2000 and 1999.  This same customer accounted for 12% of trade accounts
receivable in 2001 and 2000.

(2)  Fair Value of Financial Instruments

We define the fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The carrying value of cash and cash equivalents, trade accounts receivable and
trade accounts payable approximates the fair value because of the short maturity
of those instruments.  The carrying amounts of notes payable to banks and
equipment financing companies (see Note 5) approximates the fair value due to
these debt instruments having variable interest rates similar to those that are
currently available to us. The fair value of the first mortgage notes (see Note
5) at April 30, 2001, based on the currently offered market price, is
approximately $37,950 ($91,300 at April 30th, 2000) versus a carrying value of
approximately $110,000.

(3)  Inventories

The components of inventories are as follows:
<TABLE>
<CAPTION>
                                                         April 30,
                                                  ---------------------
                                                   2001           2000
                                                   ----           ----
<S>                                              <C>            <C>
Raw materials and storeroom supplies              $ 9,652        11,419
Work in process                                    11,838        16,357
Finished goods                                     18,420        21,557
                                                  -------        ------
                                                  $39,910        49,333
                                                  =======        ======
</TABLE>

                                       31
<PAGE>

(4)  Property, Plant and Equipment

The components of property, plant and equipment are as follows:

<TABLE>
<CAPTION>
                                                                           April 30,
                                                                    ------------------------
                                                                      2001            2000
                                                                    --------         -------
<S>                                                               <C>              <C>
Land and buildings                                                 $ 18,547          18,510
Machinery and equipment                                             113,742         109,916
Roadbed and improvements                                              5,832           5,674
Construction in process                                               3,224           2,348
                                                                   --------         -------
                                                                    141,345         136,448
Less accumulated depreciation and amortization                       77,049          70,203
                                                                   --------         -------
                                                                   $ 64,296          66,245
                                                                   ========         =======
</TABLE>

Depreciation and amortization of property, plant and equipment charged to
operations was $7,786 in 2001, $7,697 in 2000 and $7,119 in 1999.

The range of estimated useful lives for determining depreciation and
amortization of the major classes of assets are:

                 Buildings                   5-25 years
                 Machinery and equipment     3-25 years
                 Roadbed and improvements    3-40 years

(5)  Long-term Debt

Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
                                                                           April 30,
                                                                   -------------------------
                                                                     2001            2000
                                                                   --------         -------
<S>                                                               <C>              <C>
First mortgage notes [a]                                           $110,000         110,000
Revolving credit agreement [b]                                       30,811          15,380
Railway term loan [c]                                                 1,500           2,000
Railway revolving credit agreement [c]                                  718              92
Equipment notes [d]                                                   2,503           3,543
Notes payable [e]                                                       738           1,727
                                                                   --------         -------
                                                                    146,270         132,742
Less current portion                                                 34,886           2,607
                                                                   --------         -------
                                                                   $111,384         130,135
                                                                   ========         =======
</TABLE>

[a]  On November 26, 1997, we issued $110,000 of 11.5% First Mortgage Notes due
     2005. Interest on the First Mortgage Notes is payable semi-annually on June
     1st and December 1st of each year at the rate of 11.5% per year. The First
     Mortgage Notes are secured by a first priority lien on substantially all
     existing and future real property and equipment. We are subject to certain
     covenants including certain limitations on additional indebtedness and
     restricted payments, such as dividends and purchases of stock. See note
     (14) liquidity and going concern.

                                       32
<PAGE>

[b]  The revolving credit agreement with a bank provides for maximum borrowings
     of $35,000 based on a percentage of eligible accounts receivable and
     inventory, of which approximately $7,400 was available as of April 30,
     2001.  Borrowings are secured by a first priority lien on inventory and
     accounts receivable. Interest is computed at prime plus a variable margin
     (based on the achievement of certain interest coverage ratios) from 0% to 1
     1/2% and is payable monthly.  At April 30, 2001, the interest rate was 7.5%
     (prime).  An annual commitment fee of .5% is charged on the unused portion
     of the revolving credit agreement.  The agreement will continue through
     July 31, 2003 and thereafter on a year-to-year basis until terminated by
     the lender or us.  At April 30, 2001, the Company was in violation of
     certain restrictive covenants under its revolving credit agreement.  The
     creditors did not waive the default and, accordingly, all such borrowings
     are classified as current in the accompanying consolidated balance sheet.
     On July 27, 2001, we entered into a forbearance agreement with Bank of
     America that provides for a limited continuation of our line of credit
     through August 31, 2001. The revised line of credit is capped at $35
     million among other limitations. The Company is currently pursuing
     alternative financing agreements.

[c]  The Railway credit agreement with a bank is comprised of two notes; a
     $2,000 term loan with $500 principal payments each year with the final
     payment on February 4, 2004, and a $1,000 line of credit maturing February
     1, 2002.  All of the assets and capital stock of the Railway secure the
     notes.  Interest is computed at prime plus 3/4% and is payable quarterly.
     At April 30, 2001, the interest rate was 8.25%. At April 30, 2001, the
     Company was in violation of certain restrictive covenants under the Railway
     credit agreement.  The creditors did not waive the default and,
     accordingly, all such borrowings are classified as current in the
     accompanying consolidated balance sheet.

[d]  Equipment notes are notes payable to equipment financing companies and
     vendors related primarily to the financing of equipment purchases.  The
     notes are payable in monthly principal installments of $93 plus interest
     payable at variable rates.  The notes mature in fiscal year 2004 and are
     secured by equipment.

[e]  Notes payable consists of various notes issued and assumed in conjunction
     with the acquisition of Waddell and Wellington and are secured by the stock
     of these two companies. The notes, which mature over the next two years,
     bear interest at varying rates based on the prime rate of interest as
     determined by Bank of America.

The aggregate maturities of long-term debt for the years ended April 30, are as
follows:

<TABLE>
<S>                                                     <C>
         2002                                            $ 34,886
         2003                                                 401
         2004                                                 765
         2005                                                 218
         2006                                                   -
         Thereafter                                       110,000
                                                         --------
            Total Maturities                             $146,270
                                                         ========
</TABLE>

Interest costs were $16,919 in 2001, $15,167 in 2000 and $14,599 in 1999.
Various agreements contain restrictive covenants including limitations on
additional borrowings, dividends and other distributions and the retirement of
stock.  Additionally, certain agreements require maintenance of specified
performance ratios.  In the event of default of the restrictive covenants or
failure to maintain the specified performance measures, the lender may withdraw
the credit agreements.

                                       33
<PAGE>

(6)  Income Taxes

Income tax benefit for the years ended April 30, 2001, 2000, and 1999 consists
of:

<TABLE>
<CAPTION>
                                                                Current          Deferred         Total
                                                                -------          --------         -----
<S>                                                         <C>               <C>             <C>
Year ended April 30, 2001:
  U.S. federal tax benefit (expense)                             $   -            (8,425)          $(8,425)
  State tax benefit (expense)                                        -             1,025             1,025
                                                                 -----            ------           -------
                                                                 $   -            (7,400)          $(7,400)
                                                                 =====            ======           =======
Year ended April 30, 2000:
  U.S. federal tax benefit (expense)                             $(130)              130           $     -
  State tax benefit (expense)                                        -                 -                 -
                                                                 -----            ------           -------
                                                                 $(130)              130           $     -
                                                                 =====            ======
Year ended April 30, 1999:
  U.S. federal tax benefit (expense)                             $ (80)               80           $     -
  State tax benefit (expense)                                        -                 -                 -
                                                                 -----            ------           -------
                                                                 $ (80)               80           $     -
                                                                 =====            ======           =======
</TABLE>

Income taxes attributable to operations differed from the amounts computed by
applying the U.S. federal income tax rate of 34% as a result of the following:
<TABLE>
<CAPTION>
                                                                              Year Ended April 30,
                                                                   -----------------------------------------
                                                                     2001             2000            1999
                                                                   --------         --------         -------
<S>                                                               <C>               <C>             <C>
Computed "expected" tax benefit (expense)                          $  5,918             (66)          (509)
State income taxes, net of federal benefit                              677              (8)           (60)
Change in valuation allowance                                       (13,801)           (290)          (429)
Utilization of net operating loss carryforwards                           -               -          1,026
Other, net                                                             (194)            364            (28)
                                                                   --------            ----          -----
                                                                   $ (7,400)              -              -
                                                                   ========            ====          =====
</TABLE>

The tax effects of temporary differences that gave rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:
<TABLE>
<CAPTION>
                                                                                       April 30,
                                                                                 -----------------------
                                                                                   2001           2000
                                                                                 --------        -------
<S>                                                                            <C>                <C>
Deductible temporary differences:
   Inventories                                                                   $  1,235          1,371
   Allowance for doubtful accounts                                                    205            250
   Accrued liabilities not deductible until paid                                    1,406          1,602
   Postretirement benefit costs                                                     5,482          5,082
   Restructuring charge                                                                 -            514
   Net operating loss carryforwards                                                20,211         13,190
   Alternative minimum tax credit carryforwards                                     1,142          1,142
   Investment tax credit carryforwards                                              3,178          3,580
                                                                                 --------       --------
                                                                                   32,859         26,731
   Less valuation allowance                                                        20,772          9,176
                                                                                 --------       --------
                                                                                   12,087         17,555
Taxable temporary difference - plant and equipment                                (12,087)       (12,360)
                                                                                 --------       --------
         Net deferred tax asset                                                  $      -          5,195
                                                                                 ========       ========
</TABLE>

                                       34
<PAGE>

At April 30, 2001, we had available net operating loss (NOL) carryforwards for
regular federal tax purposes of approximately $52,655 which will expire as
follows: $3,267 in 2007, $4,249 in 2008, $5,764 in 2009, $7,447 in 2011, $6,264
in 2012, $7,754 in 2013, $357 in 2015 and $17,553 in 2016.  We have investment
tax credit carryforwards of $36 for federal tax purposes and $3,178 for state
tax purposes.  We have fully reserved for the investment tax credit
carryforwards as it is likely that they will not be utilized prior to their
expiration. The credits expire in various periods through 2007.  We also have
available $1,142 of alternative minimum tax (AMT) credit carryforwards which may
be used indefinitely to reduce future federal regular income tax obligations.
Of the amounts noted above, approximately $810 of NOL carryforwards and $152 of
investment tax credit carryforwards were added due to the purchase of Wellington
and can only be used if Wellington has taxable income; these amounts were fully
reserved at the date of acquisition.   Future annual postretirement benefit
costs are expected to exceed deductible amounts for many years and it is
anticipated that all of the deferred tax assets related thereto will be utilized
as such amounts become deductible.

A valuation allowance is required when it is more likely than not that all or a
portion of the deferred tax assets will not be realized.  The ultimate
realization of the deferred tax assets is dependent upon future profitability.
The Company has incurred losses in three of the last five years.  Considering
these losses and the events discussed at Note 14 - Liquidity and Going Concern,
the Company has established a valuation allowance of $20.8 million relating to
the deferred tax assets.

We have a receivable of $2,205 from HMK related to certain tax attributes
allocated to us.  Under an agreement with HMK, the receivable will be realized
by reducing future income taxes otherwise payable to HMK among other methods.
Given the amount of NOL carryforwards generated by the Company and the financial
condition of the Company as discussed above, a valuation allowance was
established against this receivable as it is more likely than not that this
receivable will not be realized.

(7)  Employee Benefit Plans

We have defined benefit plans that cover the hourly employees at Sand Springs
and Joliet and the salaried employees at Sand Springs.  Benefits are generally
based on years of service and the employee's compensation during the last ten
years of employment.  Our funding policy is to contribute annually at least the
minimum amount necessary to avoid a deficiency in the funding standard.

In addition to the defined benefit pension plan, we also provide postretirement
health and life insurance benefits to certain retirees and their beneficiaries,
generally for the remainder of their lives.  The Plan is contributory, with
retiree contributions adjusted annually, and contains other cost-sharing
features such as deductibles, co-insurance, and Medicare.  Our policy is to fund
accumulated postretirement benefits on a "pay-as-you-go" basis.

The following tables set forth the plan's benefit obligations, fair value of
plan assets, and funded status at April 30, 2001 and 2000 as determined by an
independent actuary:

                                       35
<PAGE>

<TABLE>
<CAPTION>
                                                                    Pension Benefits                     Other Benefits
                                                               -------------------------           -------------------------
                                                                  2001            2000              2001              2000
                                                                -------          ------            ------            ------
<S>                                                         <C>                 <C>             <C>               <C>
Change in benefit obligation:
  Benefit obligation at beginning of year                       $26,273          28,289            17,902            21,013
  Service cost                                                      708             769               315               271
  Interest costs                                                  2,113           1,898             1,592             1,332
  Plan participants' contributions                                    -               -                 -                 -
  Amendments                                                          -             300            (1,520)                -
  Actuarial loss/(gain)                                           1,673          (3,288)            4,712            (3,412)
  Benefits paid                                                  (1,845)         (1,695)           (1,634)           (1,303)
                                                                -------          ------            ------            ------
     Benefit obligation at end of year                           28,922          26,273            21,367            17,901
                                                                -------          ------            ------            ------
Change in plan assets:
  Fair value of plan assets at beginning of year                 31,056          29,676                 -                 -
  Actual return on plan assets                                   (1,615)          2,763                 -                 -
  Employer contributions                                            709             312             1,633                 -
  Plan participants' contributions                                    -               -                 -                 -
  Benefits paid                                                  (1,845)         (1,695)           (1,633)                -
                                                                -------          ------           -------           -------
     Fair value of plan assets at end of year                    28,305          31,056                 -                 -
                                                                -------          ------           -------           -------
Funded status                                                      (616)          4,783           (21,367)          (17,901)
  Unrecognized actuarial loss                                      (341)         (6,575)           (8,873)          (14,124)
  Unrecognized prior service cost                                   831             927                 -                 -
  Unrecognized transition obligation/(asset)                        525           1,047            15,814            18,651
                                                                -------          ------           -------           -------
     Net amount recognized                                      $   399             182           (14,426)          (13,374)
                                                                =======          ======           =======           =======
Amount recognized in the statement of
 Financial position consist of:
  Prepaid/(accrued) benefit cost                                $   399             182           (14,426)          (13,374)
  Accrued benefit liability                                        (215)              -                 -                 -
  Intangible asset                                                  215               -                 -                 -
  Accumulated other comprehensive income                              -               -                 -                 -
                                                                -------          ------           -------           -------
     Net amount recognized                                      $   399             182           (14,426)          (13,374)
                                                                =======          ======           =======           =======
Weighted-average assumptions as of
April 30:
Discount rate                                                      7.75%           8.00%             7.75%             8.00%
Rate of compensation increase                                       0-4%            0-4%                -                 -
Expected rate of return on plan assets                             9.00%           9.00%                -                 -
</TABLE>

For measurement purposes, the medical trend rates used for HMO and PPO/indemnity
plans were 5.6% and 8.00%, respectively.  The medical and HMO trend rates are
assumed to decrease gradually to 5.0% by 2005 and remain at that level
thereafter.  The health care cost trend rate assumption has a significant effect
on the amounts reported.

                                       36
<PAGE>

The following table presents the components of the net periodic benefit cost:
<TABLE>
<CAPTION>

                                                                    Pension Benefits                     Other Benefits
                                                               -------------------------             -----------------------
                                                                 2001              2000              2001              2000
                                                               -------            ------             -----             -----
<S>                                                           <C>                <C>                <C>               <C>
Components of net periodic benefit cost:
  Service cost                                                 $   708               769               315               271
  Interest cost                                                  2,113             1,899             1,592             1,332
  Expected (return)/loss on plan assets                         (2,757)           (2,601)                -                 -
  Amortization of unrecognized transition obligation               522               522             1,318             1,435
  Amortization of prior service cost                                96                61                 -                 -
  Recognized actuarial loss                                       (190)              (64)             (539)             (737)
                                                               -------            ------             -----             -----
     Net periodic benefit cost                                 $   492               586             2,686             2,301
                                                               =======            ======             =====             =====
</TABLE>

At April 30, 1999, we had one pension plan that had a projected benefit
obligation in excess of plan assets.  For this plan, the projected benefit
obligation was $3,659, the accumulated benefit obligation was $3,659, and the
fair value of plan assets was $3,170.  At April 30, 2000, there were no pension
plans that had a projected benefit obligation in excess of plan assets.  At
April 30, 2001, we had two pension plans that had a projected benefit obligation
in excess of plan assets.  For these plans, the projected benefit obligations
were $17,629 and $3,735, the accumulated benefit obligations were $16,110 and
$3735, and the fair value of plan assets were $17,284 and $3,236.

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage-point change in assumed
health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
                                                              1-Percentage-          1-Percentage-
                                                             Point Increase         Point Decrease
                                                          ---------------------  ---------------------
<S>                                                       <C>                    <C>
Effect of total of service and interest on cost                   $  279               $  (221)
 components
Effect on postretirement benefit obligation                       $2,602               $(2,400)
</TABLE>

We have certain divisions of the Company that maintain defined contribution
plans in which various groups of employees participate.  We made contributions
to these plans of $101 in 2001, $131 in 2000, and $132 in 1999

(8)  Operating Leases

We are obligated under various noncancelable-operating leases for certain land
and buildings. These leases generally contain inflationary rent escalations and
require us to pay all executory costs such as maintenance and insurance.  Rental
expense for operating leases (except those with lease terms of a month or less
that were not renewed) was $366 in 2001, $370 in 2000 and $345 in 1999.  Future
minimum lease payments under noncancelable operating leases (with initial or
remaining lease terms in excess of one year) for the years ending April 30, are
as follows:

<TABLE>
            <S>                                            <C>
            2002                                           $ 2,164
            2003                                             2,029
            2004                                             1,874
            2005                                             1,874
            2006                                             1,809
            Later years                                      1,195
                                                           -------
                 Total maturities                          $10,945
                                                           =======
</TABLE>

                                       37
<PAGE>

(9)  Commitments and Contingencies

We are partially self-insured for certain risks consisting primarily of employee
health insurance programs and workers' compensation.  Probable losses and claims
are accrued as they become estimable.  We maintain letters of credit totaling
approximately $2.8 million in accordance with workers' compensation
arrangements.

We are involved in claims and legal actions arising in the ordinary course of
business.  We believe that the ultimate disposition of these matters will not
have a material adverse effect on our financial position, results of operations,
or liquidity.

(10)  Related Party Transactions

An affiliated company provides management and business services to us,
including, but not limited to, financial, marketing, executive personnel,
corporate development, human resources, and limited legal services.  We believe
that transactions with related parties are at costs that could be obtained from
third parties.  Management fees charged were $787 in 2001, $861 in 2000, and
$817 in 1999. In addition, we purchase general liability, workers' compensation
and other insurance through an affiliated company that provides risk management
services.  These risk management services include; procuring and maintaining
property and casualty insurance coverage; reviewing and recommending alternative
financing methods for insurance coverage; identifying and evaluating risk
exposures, and preparing and filing proof of loss statements for insured claims.
Total fees paid for insurance services were $121 in 2001, $213 in 2000 and $204
in 1999.

During fiscal year 1993, certain minority shareholders issued $1,000 of notes
receivable to us.  The notes bear interest at an annual rate of 7.61% and are
secured by common stock of the Company owned by those shareholders.  Principal
and interest are due on February 1, 2007, unless extended at our option until
February 1, 2012.  The principal balance outstanding was $700 as of April 30,
2001 and 2000.

On September 30, 1996, we signed an agreement to repurchase 50,625 shares of our
common stock from two minority shareholders who were former officers of the
Company.  The stock repurchase is pursuant to the Amended and Restated
Stockholder's Agreement dated September 15, 1993 and the stock purchase price
was calculated in accordance with the agreement.  As a result of this
transaction, $393 of notes receivable from the former shareholders was
satisfied, we recorded a note payable in the amount of $662 and decreased paid-
in capital by $1,055.  The notes payable accrue simple interest at 6.02% and are
being repaid in five annual installments that began December 12, 1997.  The
principal balance outstanding was $265 at April 30, 2000 and $132 at April 30,
2001.

During fiscal 2000, one employee and two former employees of the Company issued
$535 of full recourse notes receivable to us for stock options exercised in
2000. During fiscal 2001, one former employee of the Company issued $1,125 of
full recourse notes receivable to us for stock options exercised in 2001.   In
fiscal 2001, the notes receivable were satisfied.  In fiscal 2001, notes payable
in the amount of $1,849 were recorded and  paid in capital decreased by $5,136
in order to repurchase stock from two former employees. The notes payable accrue
simple interest ranging from 5.78% to 6.45% and are being repaid in five annual
installments that began July 4, 2000.

We have a receivable of $2,205 from HMK related to certain tax attributes
allocated to us.  Under an agreement with HMK, the receivable will be realized
by reducing future income taxes otherwise payable to HMK.  Given the amount of
NOL carryforwards generated by the Company and the financial condition of the
Company as discussed in Note 14- Liquidity and Going Concern, a valuation
allowance was established against this receivable as it more likely than not
that this receivable will be realized. In addition, we advanced $500 to HMK to
secure a letter of credit for the Joliet insurance program.

                                       38
<PAGE>

(11)  Stock Options

On September 15, 1993, the Board of Directors adopted, and the stockholders
approved, our 1993 Employee, Director and Consultant Stock Option Plan (the
Stock Option Plan).  The Stock Option Plan provides for the grant of incentive
options to key employees and nonqualified stock options to key employees,
directors, and consultants.  A total of 580,000 shares of our common stock,
which would represent approximately 14.9% of the common stock on a fully diluted
basis, have been reserved for issuance under the Stock Option Plan.  The options
vest three years from the date of grant and may be exercised within 10 years
from the grant date for incentive stock options or 20 years from the grant date
for non-qualified stock options at a price not less than the fair market value
of the stock at the time the options are granted.  Fair market value for
purposes of determining the exercise price is determined by appraisal as
prescribed in the Stock Option Plan.  At April 30, 2001, there were 336,140
additional shares available for grant under the Stock Option Plan.

We apply APB Opinion No. 25 in accounting for the Plan and, accordingly, no
compensation cost has been recognized for its stock options in the financial
statements.  If we had determined compensation cost based on the fair value at
the grant date for our stock options under SFAS No. 123, our results would have
been reduced to a loss of  $97 in 2000, and a loss of $1,409 in 1999.

The per share weighted-average fair value of stock options granted was $8.70 in
2000 and $7.48 in 1999 on the date of grant using the minimum value method with
the following assumptions: expected dividend yield of approximately 1.0%, risk-
free interest rate of 6.38%, and an expected life of five years.

The options outstanding and activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
                                                                                 Weighted Average
                                                                Options            Exercise Price
                                                                -------            --------------
<S>                                                            <C>                   <C>
At April 30, 1998                                               456,000                $ 8.87
   Granted                                                       18,000                 19.88
   Canceled                                                     (50,625)                20.52
                                                               --------
At April 30, 1999                                               423,375                  8.87
   Granted                                                       99,000                 30.48
   Exercised                                                   (117,640)                 7.41
                                                               --------
At April 30, 2000                                               404,735                  9.96
   Exercised                                                   (151,875)                 7.41
   Terminated                                                    (9,000)                24.59
                                                               --------
At April 30, 2001                                               243,860                 22.35
                                                               ========
<CAPTION>
                                                                                   Weighted Average
Options Exercisable                                             Options             Exercise Price
                                                                -------             --------------
<S>                                                            <C>                     <C>
At April 30, 1999                                               354,375                  7.41
At April 30, 2000                                               282,735                  9.39
At April 30, 2001                                               144,860                 13.53
</TABLE>

Exercise prices for options outstanding as of April 30, 2001 ranged from $7.41
to $38.67.  The weighted-average remaining contractual life of those options is
13.7 years.

                                       39
<PAGE>

In connection with the adoption of the Stock Option Plan, we elected to
terminate our Stock Appreciation Rights Plan (SAR).  Existing liabilities under
the SAR plan were frozen at their current level. All vested rights become
exercisable upon the participants' termination.  Included in other liabilities
at April 30, 2001 is $294, in 2000 and 1999 is $368, which is the present value
of the SAR's based on vesting and retirement dates.

(12)  Litigation Settlement

We were party to a lawsuit with several other steel manufacturers against
certain manufacturers of graphite electrodes related to price fixing within the
electrode industry.  We recognized approximately $2,379 in 2000 related to
settlements with certain of the defendants.

(13)  Acquisitions

On October 6, 1998, we acquired all of the outstanding capital stock of
Wellington Industries, Inc. The acquisition price consisted of $1,500 in cash,
subject to performance related contingency payments, and unsecured, subordinated
promissory notes in an aggregate principal amount of $1,464.  The acquisition
was accounted for in accordance with the purchase method.  The fair value of
tangible assets acquired was $1,683 including $1,229 of current assets and $454
of fixed assets.  The amount of liabilities assumed was $947 including $711 of
accounts payable and accrued liabilities and $236 of long-term debt.  In
addition, we recorded $2,228 as excess cost over net assets acquired (goodwill).

(14)  Liquidity and Going Concern

The Company incurred significant losses in the current year stemming primarily
from an $8.2 million loss in the third quarter.  Management believes that the
trough of the current steel recession occurred in November 2000 through February
2001.  Demand dropped to very low levels coupled with the inventory reduction
harsh winter weather, holiday outages, and unprecedented levels of subsidized
imports.  In addition, energy costs escalated suddenly and dramatically.  This
impacted both our cost of electricity, which is used in the melt shop where
steel scrap is melted using two 85-ton electric arc furnaces, and natural gas,
which is used to reheat billets to be rolled in our rolling mill.

As a result of the significant loss in the current year, the Company was unable
to meet certain restrictive covenants under its revolving credit agreements.
The Company did not have sufficient cash and borrowing availability at May 31,
2001 in order to pay its semi-annual interest payment due under the First
Mortgage Notes due 2005 as required.  Upon expiration of the 30-day grace period
provided in the indenture, the Company decided to make a payment of 1/6th, or
$1.05 million, of the amount due.  Management believes that such decision
preserves the liquidity in the Company and allows it to continue to carry on
normal operations and customer support while it pursues a restructuring of the
First Mortgage Notes. Despite the partial interest payment, the Company is in
default of its First Mortgage Notes as of July 3, 2001.

On July 17, 2001, we received a letter from State Street Bank and Trust Co. as
Trustee that served as notice to us of the occurrence and continuance of an
event of default with respect to the First Mortgage Notes due 2005.  The
existence and continuance of this event of default permits the Trustee or the
holders of at least 25% in principal amount of the outstanding notes to declare
the entire unpaid principal, interest and other amounts payable on the notes to
be immediately due and payable.  Further, the letter states that the Trustee's
acceptance of our partial payment of the overdue interest on July 2, 2001 does
not constitute a waiver by the Trustee of any such event of default.

On July 27, 2001, we entered into a forbearance agreement with Bank of America
that provides for a limited continuation of our line of credit through August
31, 2001. The revised line of credit is capped at $35 million among other
limitations.  The Company is currently pursuing alternative financing
agreements.

                                       40
<PAGE>

The Company has retained financial and legal advisors to assist it in reviewing
financial alternatives available to the Company, including without limitation, a
possible debt restructuring.  The Company and the holders of the First Mortgage
Notes have commended discussion, which the Company believes will result in an
agreement with those holders that will lead to a restructuring.  When achieved,
the restructuring will result in a balance sheet that will better support the
implementation of Sheffield's short and long-range goals.  There can be no
assurance that a restructuring is possible or that it will be successful in
addressing the Company's liquidity and capital resource needs.

The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.

                                       41
<PAGE>

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
-------  -------------------------------------------------------
         ACCOUNTING  AND  FINANCIAL  DISCLOSURE
         --------------------------------------

   None

                                    PART III
                                    --------

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS
--------  --------------------------------

   The information included under the caption entitled "Management" in our Proxy
Statement dated July 31, 2001, with respect to directors and executive officers
is incorporated herein by reference in response to this item.

   Because we do not have a class of securities registered under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), none of our
directors, executive officers or ten percent or greater security holders are
subject to the reporting requirements of Section 16(a) of the Exchange Act.
Accordingly, disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not applicable.

ITEM 11.  EXECUTIVE  COMPENSATION
--------  -----------------------

   The information regarding compensation of our executive officers is included
under the caption entitled "Executive Compensation" in our Proxy Statement dated
July 31, 2001, and is incorporated herein by reference in response to this item.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
--------  ---------------------------------------------------
          MANAGEMENT
          ----------

   The information regarding beneficial ownership of our Common Stock by certain
beneficial owners and by management is included under the caption entitled
"Share Ownership" in our Proxy Statement dated July 31, 2001, and is
incorporated herein by reference in response to this item.

ITEM 13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS
--------  --------------------------------------------------

   The information regarding certain relationships and related transactions with
management and others is included under the caption entitled "Certain
Transactions" in our Proxy Statement dated July 31, 2001, and is incorporated
herein by reference in response to this item.

                                       42
<PAGE>

                                    PART IV
                                    -------


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
--------  ---------------------------------------------------------------

ITEM 14(a)1.  INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  COVERED BY
------------  ----------------------------------------------------------
              REPORT  OF  INDEPENDENT  AUDITORS
              ---------------------------------

   The Consolidated Financial Statements of Sheffield Steel Corporation are
included in Item 8:

       Independent Auditors' Report

       Consolidated Balance Sheets - April 30, 2001 and 2000

       Consolidated Statements of Operations - Years ended April 30, 2001, 2000
and 1999

       Consolidated Statements of Stockholders' Deficit - Years Ended April 30,
2001, 2000 and 1999

       Consolidated Statements of Cash Flows - Years Ended April 30, 2001, 2000
and 1999

       Notes to Consolidated Financial Statements - April 30, 2001, 2000 and
1999


ITEM 14(a)2.  INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENT  SCHEDULES
------------  --------------------------------------------------------

   The following consolidated financial statement schedules of Sheffield Steel
Corporation are included in Item 14(d):

<TABLE>
<CAPTION>
   Form 10-K Schedules                     Description                      Page Number
--------------------------  -----------------------------------------  ---------------------
<S>                           <C>                                              <C>
II                              Valuation and Qualifying Accounts                50
</TABLE>

   Schedules other than those listed above have been omitted because they are
not applicable.  Columns omitted from schedules filed have been omitted because
the information is not applicable.

                                       43
<PAGE>

ITEM 14(a)3.  EXHIBITS
------------  --------

   The exhibits listed on the Exhibit Index below are filed or incorporated by
reference as part of this report and such Exhibit Index is hereby incorporated
herein by reference.

                                 Exhibit Index

<TABLE>
<CAPTION>
 Exhibit                                                                                                         Sequentially
   No.                                                 Description                                               numbered page
----------  ------------------------------------------------------------------------------------------------   ----------------
<S>         <C>                                                                                                <C>
   3.1      Certificate of Incorporation of the Registrant, as amended (Incorporated by reference to Exhibit
            3.1 to Amendment No. 2 to the Registrant's Registration Statement on Form S-1 filed on October
            21, 1993).

   3.2      By-Laws of the Registrant (Incorporated by reference to Exhibit 3.2 to Amendment No. 2 to the
            Registrant's Registration Statement on Form S-1 filed on October 21, 1993).

   4.1      Indenture for First Mortgage Notes (including form of First Mortgage Note issued thereunder),
            dated as of December 1, 1997, between Sheffield Steel Corporation and State Street Bank and
            Trust  Company, as Trustee (Incorporated by reference to Exhibit 4.1 to the Registrant's
            Regristration Statement on Form S-1 filed on January 9, 1998).

   4.2      Form of New First Mortgage Note (Incorporated by reference to Exhibit 4.2 to the Registrant's
            Regristration Statement on Form S-1 filed on January 9, 1998).

   4.3      Intercreditor Agreement, dated December 1, 1997, among Sheffield Steel Corporation, NationsBank,
            N.A. and State Street Bank and Trust Company, as Trustee (Incorporated by reference to Exhibit
            4.3 to the Registrant's Registration Statement on Form S-1 filed on January 9, 1998).

   4.4      Receivable and Inventory Financing Agreement, dated as of January 16, 1992, between HMK
            Industries of Oklahoma, Inc., Sheffield Steel Corporation, Sheffield Steel Corporation-Joliet,
            Sheffield Steel Corporation-Oklahoma City and NationsBank of Georgia, N.A. (Incorporated by
            reference to Exhibit 4.2 to the Registrant's Registration Statement on Form S-1 filed on August
            17, 1993).

   4.5      Guaranty, dated January 16, 1992, from HMK Industries of Oklahoma, Inc. to NationsBank of
            Georgia, N.A. (Incorporated by reference to Exhibit 4.3 to the Registrant's Registration
            Statement on Form S-1 filed on August 17, 1993).

   4.6      Mortgage and Security Agreement, dated January 16, 1992, between Sheffield Steel Corporation and
            NationsBank of Georgia, N.A. (Incorporated by reference to Exhibit 4.4 to the Registrant's
            Registration Statement on Form S-1 filed on August 17, 1993).

   4.7      Mortgage and Security Agreement, dated January 16, 1992, between Sheffield Steel
            Corporation-Joliet and NationsBank of Georgia, N.A. (Incorporated by reference to Exhibit 4.5 to
            the Registrant's Registration Statement on Form S-1 filed on August 17, 1993).

   4.8      Stock Pledge Agreement, dated January 16, 1992, between HMK Industries of Oklahoma, Inc. and
            NationsBank of Georgia, N.A. (Incorporated by reference to Exhibit 4.6 to the Registrant's
            Registration Statement on Form S-1 filed on August 17, 1993).

   4.9      First Amendment to Receivable and Inventory Financing Agreement, dated August 13, 1993 between
            HMK Industries of Oklahoma, Inc., Sheffield Steel Corporation, Sheffield Steel
            Corporation-Joliet, Sheffield Steel Corporation-Oklahoma City and NationsBank of Georgia, N.A.
            (Incorporated by reference to Exhibit 4.24 to the Registrant's Registration Statement on Form
            S-1 filed on October 6, 1993).

</TABLE>
                                       44
<PAGE>

<TABLE>
 <C>      <S>
   4.10     Warrant Agreement, dated November 1, 1993, between Sheffield Steel Corporation and Shawmut Bank
            Connecticut, N.A., as Warrant Agent (Incorporated by reference to Exhibit 4.8 to the
            Registrant's Quarterly Report on Form 10-Q for the quarter ended October 31, 1993).

   4.13     Second Amendment to Receivable and Inventory Financing Agreement, dated November 1, 1993 between
            Sheffield Steel Corporation-Oklahoma City, Sheffield Steel Corporation, and NationsBank of
            Georgia, N.A. (Incorporated by reference to Exhibit 4.13 to the Registrant's Quarterly Report on
            Form 10-Q for the quarter ended October 31, 1993).

   4.14     Third Amendment to Receivable and Inventory Financing Agreement, dated December 13, 1994 between
            Sheffield Steel Corporation and NationsBank of Georgia, N.A. (Incorporated by reference to
            Exhibit 4.14 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended October 31,
            1993).

   4.15     Fourth Amendment to Receivable and Inventory Financing Agreement, dated October 30, 1995 between
            Sheffield Steel Corporation and NationsBank of Georgia, N.A. (Incorporated by reference to
            Exhibit 4.15 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended October 31,
            1995).

   4.16     Fifth Amendment to Receivable and Inventory Financing Agreement, dated April 19, 1996 between
            Sheffield Steel Corporation and NationsBank of Georgia, N.A.  (Incorporated by reference to
            Exhibit 4.16 of the Registrant's Annual Report on Form 10-K for the fiscal year ended April 30,
            1996).

   4.17     Sixth Amendment to Receivable and Inventory Financing Agreement, dated December 1, 1997 between
            Sheffield Steel Corporation and NationsBank, N.A. (Incorporated by reference to Exhibit 4.17 to
            the Registrant's Regristration Statement on Form S-1 filed on January 9, 1998).

   4.18     Seventh Amendment to Receivable and Inventory Financing Agreement, dated December 1, 1997
            between Sheffield Steel Corporation and NationsBank, N.A. (Incorporated by reference to Exhibit
            4.18 of the Registrant's Annual Report on Form 10K for the fiscal year ended April 30, 1999).

   4.19     Eighth Amendment to Receivable and Inventory Financing Agreement, dated April 13, 1999 between
            Sheffield Steel Corporation and NationsBank, N.A. (Incorporated by reference to Exhibit 4.19 of
            the Registrant's Annual Report on Form 10K for the fiscal year ended April 30, 1999).

   4.20     Ninth Amendment to Receivable and Inventory Financing Agreement, dated July 31, 1999 between
            Sheffield Steel Corporation and Bank of America, N.A. (Incorporated by reference to Exhibit 4.20
            to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1999).

   4.21     First Supplemental Indenture dated December 6, 1999 by Sheffield Steel Corporation and State
            Street Bank and Trust Company, as Trustee (Incorporated by reference to Exhibit 4.21 to the
            Registrant's Quarterly Report on Form 10-Q for the quarter ended October 31, 1999).

   4.22     Tenth Amendment to Receivable and Inventory Financing Agreement, dated April 29, 2000
            between Sheffield Steel Corporation and Bank of America, N.A.(Incorporated by reference to
            Exhibit 4.22 to the Registrant's quarterly Report on Form 10-Q for the quarter ended July 31,
            2000).

   10.1     Income Tax Expense Allocation Policy and Tax Sharing Agreement, effective May 1, 1991 between
            HMK Enterprises, Inc. and Sheffield Steel Corporation, Sheffield Steel Corporation-Joliet,
            Sheffield Steel Corporation-Oklahoma City and Sand Springs Railway Company (Incorporated by
            reference to Exhibit 10.2 to the Registrant's Registration Statement on Form S-1 filed on August
            17, 1993).

</TABLE>
                                       45
<PAGE>

<TABLE>
  <C>      <S>
   10.2     Form of Master Loan and Security Agreement between Sheffield Steel Corporation and the CIT
            Group/Equipment Financing, Inc. dated July 14, 1994 (Incorporated by reference to Exhibit 10.6
            to the Registrant's Annual Report on Form 10-K for the year ended April 30,  1994).

   10.3     Restated Credit Agreement, dated April 23, 1991, between Sand Springs Railway Company and Bank
            of Oklahoma (Incorporated by reference to Exhibit 4.7 to the Registrant's Registration Statement
            on Form S-1 filed on August 17, 1993).

   10.4     Amendment to Restated Credit Agreement, dated May 31, 1992, between Sand Springs Railway Company
            and Bank of Oklahoma (Incorporated by reference to Exhibit 4.8 to the Registrant's Registration
            Statement on Form S-1 filed on August 17, 1993).

   10.5     Amendment to Assignment of Transportation Agreement, dated April 23, 1991 between Sand Springs
            Railway Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.10 to the
            Registrant's Registration Statement on Form S-1 filed on August 17, 1993).

   10.6     Amendment to Assignment of User Contracts, dated April 23, 1991 between Sand Springs Railway
            Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.11 to the Registrant's
            Registration Statement on Form S-1 filed on August 17, 1993).

   10.7     Amendment to Pledge and Security Agreement, dated April 23, 1991 between Sand Springs Railway
            Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.12 to the Registrant's
            Registration Statement on Form S-1 filed on August 17, 1993).

   10.8     Amendment to Security Agreements, dated April 23, 1991 between Sand Springs Railway Company and
            Bank of Oklahoma (Incorporated by reference to Exhibit 4.13 to the Registrant's Registration
            Statement on Form S-1 filed on August 17, 1993).

   10.9     Amendment to Real Estate Mortgage and Security Agreement, dated April 23, 1991 between Sand
            Springs Railway Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.14 to the
            Registrant's Registration Statement on Form S-1 filed on August 17, 1993).

  10.10     Amendment to Real Estate Mortgage and Security Agreement, dated April 23, 1991 between Sand
            Springs Railway Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.15 to the
            Registrant's Registration Statement on Form S-1 filed on August 17, 1993).

  10.11     Assignment of Transportation Agreement, dated December 10, 1987 between Sand Springs Railway
            Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.16 to the Registrant's
            Registration Statement on Form S-1 filed on August 17, 1993).

  10.12     Assignment of User Contracts, dated December 10, 1987 between Sand Springs Railway Company and
            Bank of Oklahoma (Incorporated by reference to Exhibit 4.17 to the Registrant's Registration
            Statement on Form S-1 filed on August 17, 1993).

  10.13     Security Agreement, dated December 10, 1987 between Sand Springs Railway Company and Bank of
            Oklahoma (Incorporated by reference to Exhibit 4.18 to the Registrant's Registration Statement
            on Form S-1 filed on August 17, 1993).

  10.14     Security Agreement, dated December 10, 1987 between Sand Springs Railway Company and Bank of
            Oklahoma (Incorporated by reference to Exhibit 4.19 to the Registrant's Registration Statement
            on Form S-1 filed on August 17, 1993).

  10.15     Real Estate Mortgage and Security Agreement, dated December 10, 1987 between Sand Springs
            Railway Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.20 to the
            Registrant's Registration Statement on Form S-1 filed on August 17, 1993).

</TABLE>
                                       46
<PAGE>

<TABLE>
 <C>       <S>
   10.16    Real Estate Mortgage and Security Agreement, dated December 10, 1987 between Sand Springs
            Railway Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.21 to the
            Registrant's Registration Statement on Form S-1 filed on August 17, 1993).

   10.17    Pledge and Security Agreement, dated December 10, 1987 between Sand Springs Railway Company and
            Bank of Oklahoma (Incorporated by reference to Exhibit 4.22 to the Registrant's Registration
            Statement on Form S-1 filed on August 17, 1993).

   10.18    Guaranty Agreement, dated December 10, 1987 between HMK Industries of Oklahoma, Inc. and Sand
            Springs Railway Company (Incorporated by reference to Exhibit 4.23 to the Registrant's
            Registration Statement on Form S-1 filed on August 17, 1993).

   10.19    Second Amendment to Restated Credit Agreement, dated September 24, 1993 between Sand Springs
            Railway Company and Bank of Oklahoma (Incorporated by reference to Exhibit 4.25 to the
            Registrant's Registration Statement on Form S-1 filed on August 17, 1993).

   10.20    Subordination Agreement dated November 10, 1995, between Sheffield Steel Corporation and the CIT
            Group/Equipment Financing, Inc. (Incorporated by reference to Exhibit 10.25 to the Registrant's
            Annual Report on Form 10-K for the fiscal year ended April 30, 1996).

   10.21    First Amendment to Master Loan and Security Agreement between Sheffield Steel Corporation and
            the CIT Group/Equipment Financing, Inc. dated April 25th, 1995. (Incorporated by reference to
            Exhibit 10.26 to the Registrant's Annual Report on Form 10-K for the fiscal year ended April 30,
            1996).

   10.22    Second Amendment to Master Loan and Security Agreement between Sheffield Steel Corporation and
            the CIT Group/Equipment Financing, Inc. dated July 2, 1996. (Incorporated by reference to
            Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended April 30,
            1996).

   10.23    Sheffield Steel Corporation 1993 Employee, Director and Consultant Stock Option Plan, as
            Amended. (Incorporated by reference to Exhibit 10.23 of the Registrant's Annual Report on Form
            10K for the fiscal year ended April 30, 1999).

   10.24    Second Amendment to Real Estate Mortgage and Security Agreement, dated July 31, 1996 between
            Sand Springs Railway Company and Bank of Oklahoma, N.A. (Incorporated by reference to Exhibit
            10.29 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1996).

   10.25    Third Amendment to Real Estate Mortgage and Security Agreement, dated July 31, 1996 between Sand
            Springs Railway Company and Bank of Oklahoma, N.A. (Incorporated by reference to Exhibit 10.30
            to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1996).

   10.26    Fourth Amendment to Restated Credit Agreement, date July 31, 1996 between Sand Springs Railway
            Company and Bank of Oklahoma, N.A. (Incorporated by reference to Exhibit 10.31 to the
            Registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1996).

   10.27    Real Time Pricing Program Agreement dated June 1, 1996 between Sheffield Steel Corporation and
            Public Service Company of Oklahoma. (Incorporated by reference to Exhibit 10.34 to the
            Registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1996).

   10.28    Agreement between the United Steelworkers of America and the Sand Springs Division of Sheffield
            Steel Corporation dated March 2, 1997. (Incorporated by reference to Exhibit 10.35 to the
            Registrant's Annual Report on Form 10-K for the fiscal year ended April 30, 1997).

</TABLE>
                                       47
<PAGE>

<TABLE>
  <C>     <S>
  10.29     Fifth Amendment to Restated Credit Agreement, dated July 31, 1997 between Sand Springs Railway
            Company and Bank of Oklahoma, N.A. (Incorporated by reference to Exhibit 10.36 to the
            Registrant's Annual Report on Form 10-Q for the quarter ended July 31, 1997).

  10.30     Management Services Agreement, dated December 5, 1997 between HMK Enterprises, Inc. and
            Sheffield Steel Corporation. (Incorporated by reference to Exhibit 10.32 to the Registrant's
            Registration Statement on Form S-1 filed on January 9, 1998).

  10.31     Insurance Services Agreement, dated December 1, 1997 between Risk Management Solutions, Inc. and
            Sheffield Steel Corporation. (Incorporated by reference to Exhibit 10.33 to the Registrant's
            Registration Statement on Form S-1 filed on January 9, 1998).

  10.33     Stock Purchase Agreement between Sheffield Steel Corporation, Waddell's Rebar Fabricators, Inc.
            and the Stockholders of  Waddell's Rebar Fabricators, Inc. dated October 27, 1997.
            (Incorporated by reference to Exhibit 10.38 to the Registrant's Quarterly Report on Form 10Q for
            the Quarter ended October 31, 1997.)

  10.34     Master Loan and Security Agreement between Sheffield Steel Corporation and Sanwa Business Credit
            Corporation dated June 30, 1998.  (Incorporated by reference to Exhibit 10.34 to the
            Registrant's Annual Report on Form 10K for the fiscal year ended April 30, 1998.)

  10.35     Sixth Amendment to Restated Credit Agreement, date July 31, 1998 between Sand Springs Railway
            Company and Bank of Oklahoma, N.A. (Incorporated by reference to Exhibit 10.35 to the
            Registrant's Quarterly Report on Form 10Q for the Quarter ended July 31, 1998.)

  10.36     Stock Purchase Agreement between Sheffield Steel Corporation, Wellington Industries, Inc. and
            the Stockholders of Wellington Industries, Inc. Dated October 6, 1998  (Incorporated by
            reference to Exhibit 10.36 to the Registrant's Quarterly Report on Form 10Q for the Quarter
            ended October 31, 1998).

  10.37     Project Lease Agreement between TA Steel I, LLC, as Lessor and Sheffield Steel Corporation as
            Lessee dated November 23, 1999  (Incorporated by reference to Exhibit 10.37 to the Registrant's
            Quarterly Report on Form 10Q for the Quarter ended October 31, 1999).

  10.38     Second Restated Credit Agreement, dated January 5, 2000 between Sand Springs Railway Company and
            Bank of Oklahoma, N.A. (Incorporated by reference to Exhibit 10.38 to the Registrant's Quarterly
            Report on Form 10Q for the Quarter ended January 31, 2000).

  10.39     First Amendment to Project Lease Agreement between TA Steel I, LLC, as Lessor and Sheffield
            Steel Corporation as Lessee dated December 4, 2000  (Incorporated by reference to Exhibit 10.39
            to the Registrant's Quarterly Report on Form 10Q for the Quarter ended October 31, 2000).

  10.40     Eleventh Amendment and Waiver to Receivable and Inventory Financing Agreement, dated  February
            28, 2001 between Sheffield Steel Corporation and Bank of America, N.A.  (Incorporated by
            reference to Exhibit 10.40 to the Registrant's Quarterly Report on Form 10Q for the Quarter
            ended January 31, 2001).

**10.41     Second Amendment to Project Lease Agreement, dated May 30, 2001 between Sheffield Steel Corporation
            and Transamerica Equipment Financial Services Corporation, TA Steel I, LLC.

**10.42     Forbearance Agreement, dated July 27, 2001 between Sheffield Steel Corporation and Bank of
            America, N.A.

**   12     Statement re Computation of Ratio of Earnings to Fixed Charges.                                        52

**   13     Statement re Computation of EBITDA.                                                                    53

</TABLE>
                                       48
<PAGE>

<TABLE>
<C>      <S>
   21    Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21 to the Registrant's
         Annual Report on Form 10-K for the fiscal year ended April 30, 1999).

</TABLE>

ITEM 14(b).  REPORTS  ON  FORM  8-K
-----------  ----------------------

   No reports on Form 8-K were filed during the fourth quarter ended
   April 30, 2001.

ITEM 14(c).  EXHIBITS
----------   --------

   The response to this portion of item 14 is submitted as a separate section of
this report.

ITEM 14(d).  CONSOLIDATED  FINANCIAL STATEMENT  SCHEDULE
----------   -------------------------------------------

                                       49
<PAGE>

                                                                     Schedule II

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                       Valuation and Qualifying Accounts

                   Years ended April 30, 2001, 2000 and 1999
                                 (In thousands)
<TABLE>
<CAPTION>
                                              Balance          Charged to                           Balance
                                             April 30,         Costs and        Deductions -       April 30,
                                               2000            Expenses         Write-offs           2001
                                             ---------         -----------      -------------      ---------
<S>                                          <C>                <C>               <C>               <C>
Accounts receivable - allowance for
    doubtful accounts                          $ 541                 -                 -              541
                                               =====              =====             =====            ====

<CAPTION>
                                              Balance          Charged to                            Balance
                                             April 30,         Costs and         Deductions -       April 30,
                                               1999            Expenses          Write-offs            2000
                                             ---------         -----------      -------------      ---------
<S>                                          <C>                <C>                <C>               <C>
Accounts receivable - allowance for
    doubtful accounts                          $ 658               (117)               -              541
                                               =====              =====             =====            ====

<CAPTION>
                                              Balance          Charged to                           Balance
                                             April 30,         Costs and        Deductions -       April 30,
                                               1998             Expenses         Write-offs          1999
                                             ---------         -----------      -------------      ---------
<S>                                          <C>                <C>               <C>               <C>
Accounts receivable - allowance for
    doubtful accounts                          $ 658                 -                 -              658
                                               =====              =====             =====            ====
</TABLE>

                                       50
<PAGE>

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                                   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.


SHEFFIELD STEEL CORPORATION

7/30/01               /s/ James P. Nolan
------------------    ----------------------------------------------
Date                  James P. Nolan, President
                      and Chief Operating Officer

7/30/01               /s/ Stephen R. Johnson
------------------    ----------------------------------------------
Date                  Stephen R. Johnson, Vice President
                      and Chief Financial Officer


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 in
the capacity and on the dates indicated.

7/30/01               /s/ Steven E. Karol
-------------------   ----------------------------------------------
Date                  Steven E. Karol, Chairman of
                      Board and CEO

7/30/01               /s/ Robert W. Ackerman
-------------------   ----------------------------------------------
Date                  Robert W. Ackerman, Director

7/30/01               /s/ Dale S. Okonow
-------------------   ----------------------------------------------
Date                  Dale S. Okonow, Director

7/30/01               /s/ Jane M. Karol
-------------------   ----------------------------------------------
Date                  Jane M. Karol, Director

7/30/01               /s/ Howard H. Stevenson
-------------------   ----------------------------------------------
Date                  Howard H. Stevenson, Director

7/30/01               /s/ Robert Schaal
------------------    ----------------------------------------------------------
Date                  Robert Schaal, Director

<PAGE>

================================================================================





                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549





                                   Exhibits
                                      to
                                 Annual Report
                                      on
                                   Form 10-K
                           for the Fiscal Year Ended
                                April 30, 2001





                          SHEFFIELD STEEL CORPORATION





================================================================================