<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, 1999

                                      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 26, 1999, there were 3,459,300 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 Registrants Proxy Statement dated July 31, 1999 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
----                                                                      ----
<S>                                                                       <C>
                                    Part I
1.    Business                                                             1-10

2.    Properties                                                          10-11

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                                                               11

6.    Selected Financial Data                                                12

7.    Management's Discussion and Analysis of Financial Condition
      and Results of Operations                                           13-19

8.    Financial Statements and Supplementary Data                         20-37

9.    Changes In and Disagreements with Accountants on
       Accounting and Financial Disclosure                                   38

                                   Part III

10.    Directors and Executive Officers of the Registrant                    38

11.    Executive Compensation                                                38

12.    Security Ownership of Certain Beneficial Owners and Management        38

13.    Certain Relationships and Related Transactions                        38

                                    Part IV

14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K        39
</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, channels 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
                                         ----------------------
about us by visiting that site.

     Our Company and its predecessors have been in the steelmaking business for
over 69 years. We believe that we are among the lowest cost producers of billets
in the United States because of our efficient melt and cast operation, high
labor productivity levels, low gas and electric costs and competitive steel
scrap costs. Our low cost billets feed our downstream bar mill operations and
fabricated products operations. We shipped approximately 420,000 tons of steel
in fiscal 1999, resulting in sales of $163.4 million.

     Our primary manufacturing facility is located in Sand Springs, Oklahoma
(Sand Springs), where we conduct a full range of steelmaking activities,
including the melting and casting of billets and the rolling of billets into
rebar, steel fence posts and a range of hot rolled bar products. We currently
have 600,000 tons of steelmaking 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 able 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. Recently we entered into a letter
of intent to purchase a new reheat furnace for the Rolling Mill that would
decrease natural gas usage as well as improve quality, yields, and productivity.
If we proceed with this project, which is expected to cost approximately $10
million, we anticipate installation to be during fiscal 2001. From Sand Springs,
we also transfer billets to our two rolling mills in Joliet, Illinois (Joliet),
where we produce high-end 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 operating 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 Rolling Mill
in Sand Springs, we increased our hot rolled bar production capacity.
Accordingly, shipments of finished products have increased 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 7.4% of tons shipped in fiscal 1999. By shifting away from
third party billet sales and increasing hot rolled bar production, we have
increased margins and reduced sales volatility, since hot rolled bar products
are significantly more profitable than third party billet sales and demand is
more stable. As part of our strategy to further improve product mix, in the
fourth quarter of fiscal 1998, we completed the Shear Line Project which we
ultimately expect will (i) increase hot rolled bar production capacity by more
than 100,000 tons per year; (ii) increase utilization of our existing 600,000
tons of steelmaking capacity; (iii) improve the quality of all mill products,
especially hot rolled bar; and (iv) improve product mix by further reducing
billet sales to third parties. To date, we have had partial success in achieving
our expectations of the new shear line and we continue our efforts to achieve
its anticipated potential.

     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 among the lowest cost producers
of billets in the United States as a result of our efficient melt and cast
operation, high labor productivity level, low natural gas and electricity costs
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. Through incremental capital investments, we intend to pursue
additional modernization measures, such as the possible installation of a ladle
arc furnace in the melt shop, which will further enhance production capability,
increase production capacity, reduce manufacturing costs and improve the quality
of finished products. An engineering study is currently underway to determine
the feasibility of this project.

                                       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,
                                             ---------------------------
                                             1997       1998       1999
                                             -----      -----      -----
          <S>                                <C>        <C>        <C>
          Hot Rolled Bar                     44.4%      45.8%      43.6%
          Rebar                              31.7%      34.1%      31.3%
          Fabricated Products                14.3%      14.0%      19.5%
          Billets                             7.6%       4.5%       3.8%
          Other                               2.0%       1.6%       1.8%
                                             -----      -----      -----
             Total                            100%       100%       100%
                                             =====      =====      =====
</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 8.2 million tons in 1998. 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 channels for end use applications
that include wrenches, pole line hardware, conveyor assemblies, construction
machinery, auto parts, farm equipment, and oilfield sucker rods. The majority of
hot rolled bar products produced in Joliet are sold directly to original
equipment manufacturers and cold drawn bar finishers, while the remainder is
sold to steel service centers. Hot rolled bar products produced in Sand Springs
are sold to both end product manufacturers and steel service centers.

     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 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 to sell
standard hot rolled bar products to customers that Joliet is currently serving
in the specialty hot rolled bar market.

     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>

     Rebar. According to the AISI, the size of the rebar market in the United
States was approximately 5.9 million tons in 1998. 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
profit margins are tight and 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 trends in commercial and industrial construction
and infrastructure investment. 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, dams, 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 Sand Springs. In our primary market area of
Oklahoma, Kansas and portions of southern Nebraska, western Missouri, western
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.

     Fabricated rebar is shipped from Kansas City and Waddell to highway and
construction contractors in Missouri, Kansas and Nebraska. 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. We believe that
our epoxy coating line, the only one located in the Kansas City market, provides
a competitive advantage in securing contracts. Since the acquisition of Waddell
in October 1997, we have been successful at integrating the management of these
two companies. With Waddell handling

                                       4
<PAGE>

smaller, higher value added jobs and Kansas City able to handle larger volume
jobs, we believe we have significantly strengthened our position in this market.

     On October 6, 1998, we purchased Wellington Industries, Inc., a railroad
track spike manufacturer located in Sand Springs. The acquisition price was
approximately $3 million, subject to performance related contingency payments,
consisting of $1.5 million in cash and $1.5 million of unsecured subordinated
promissory notes which mature annually over three years and bear interest at
Bank America's prime rate. We believe that the purchase of Wellington secured a
downstream market for our Rolling Mill products 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. Billet sales to third parties 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 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 types of billets.
The continuous caster is capable of casting billets up to 6 inches square and 50
feet long. These billets are then reheated, rolled and shaped 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 mills in Joliet produce 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 personnel and limited sales agencies which also service
Joliet. We market fence post 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 increased
production capacity directly related to the completion of the Shear Line
Project, we expect that internal billet requirements will increase and the
availability of billets for sale to third parties will decrease. As a result of
adverse weather conditions that can impact construction activities and a

                                       5
<PAGE>

normal seasonal downturn in manufacturing levels, we typically experience lower
sales volumes in the third fiscal quarter.

Raw Materials

     Our primary raw material is steel scrap, which is generated principally
from the following sources: industrial, automotive, demolition, railroad,
obsolete and other. We purchase scrap in the open market through a limited
number of steel scrap brokers and dealers or by direct purchase. The cost of
steel scrap is subject to market forces, including demand by other steel
producers and export volumes. 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 with additions to or
replacements of 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,
iron carbide, 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 and we expect to increase usage of such
substitutes in the future.

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. Historically, we have been adequately supplied with electricity
and we do not anticipate any material curtailment in our operations resulting
from energy shortages.

     We believe that our utility rates from PSO are among the lowest in the
domestic mini-mill steel industry. PSO is able to generate electricity at
relatively low rates, as its electric load is generated using western coal and
local natural gas as compared to the higher costs of electric utilities that
generate electric load using oil or nuclear power.

     We also use natural gas to reheat billets, but we are not considered a
large natural gas user. Since deregulation of the natural gas industry, we have
negotiated and purchased well-head 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,

                                       6
<PAGE>

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.

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
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, Laclede Steel Company and
Northwestern Steel and Wire 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 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 1999. We compete in the
rebar market with a number of other mini-mills, principally Chaparral Steel
Company and Structural Metals, Incorporated.

     We are not in competition on a regular basis with foreign or integrated
steel producers. These mills have cost and freight disadvantages compared to us
and other domestic mini-mills which have effectively precluded them from
competing in the relatively low priced hot rolled bar product and rebar markets.

     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 and contributed to growth in shipments. Other competitive
factors include delivery performance, engineering support, accurate fabrication
and competitive pricing. Waddell's focus is on small rebar projects, generally
under 200 tons each. These two fabricators complement each other and allow for
more efficient production at both locations.

                                       7
<PAGE>

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

Employees

     As of April 30, 1999, we had approximately 673 employees. Approximately 65%
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 289 hourly-paid production and maintenance employees. This
agreement was negotiated as of March 2, 1997 and is for a three-year period
expiring on March 1, 2000.

     Joliet is also party to a collective bargaining agreement covering
approximately 133 hourly-paid production and maintenance employees, which was
negotiated on February 28, 1999. The new agreement, which expires on March 1,
2002, contains provisions for wage increases and benefit changes. Kansas City
has a collective bargaining agreement covering approximately 16 employees which
expires on October 31, 1999. The Railway has approximately 14 employees who 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 and discharges into water,
and the handling and disposal of wastes. We have spent substantial amounts to
comply with these requirements. 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 similar mini-mills in its 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 (K061), a waste stream generated in significant quantities in Sand
Springs. All of the K061 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. If a release of K061 were to occur, we could be required to remediate
such a release. Although current law permits the export of K061, we can provide
no assurance that new United States legislation prohibiting the

                                       8
<PAGE>

export of hazardous waste materials or new Mexican legislation prohibiting the
import of such materials, including K061, will not be enacted. In that event, we
would have to find an alternative means of treatment or disposal of the K061 in
compliance with RCRA. We believe that we could properly dispose of the K061
generated in Sand Springs by constructing an on-site recovery or chemical
stabilization process or by shipping the K061 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 1997 and received the permit in March, 1998. We have
had one compliance audit that had no resulting violations or outstanding issues.
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 in the final stages of work with the EPA in concluding their RCRA
Compliance Evaluation Inspection, which was conducted by Region 6 officials in
April of 1997. Because we have been able to effectively address all of the EPA's
concerns, they have verbally indicated that no penalties should be imposed. The
EPA has dismissed their consultants and decided to let our consultants write the
final report, or "Risk Assessment." The report was filed on June 15, 1999 and
the EPA review will take several more weeks. However, we now believe that the
outcome of the inspection will not have a material adverse impact on our results
of operations or financial condition. We also 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 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, capital
expenditures 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 steel industry is highly cyclical and seasonal in nature.
 .    There is 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.
 .    There is risk regarding the availability of raw materials such as steel
     scrap.
 .    There is risk in cost and availability of energy, specifically natural gas
     and electricity.
 .    There are costs of environmental compliance and the impact of government
     regulations.
 .    Our relationship with our workforce, including the United Steelworkers of
     America Union.
 .    There are restrictive covenants and tests contained in our debt instruments
     that could limit our operating and financial flexibility.
 .    There have been imports into the United States that have affected the steel
     market.
 .    General economic conditions in the United States.

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 acres of land in Independence, Missouri.
We lease 9 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 approximately 3 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 10
inch merchant bar mill. The total annual capacity in Joliet is approximately
155,000 tons of hot rolled bar products.

                                       10
<PAGE>

     The Railway provides freight service between Sand Springs and Tulsa on
seven miles of mainline track and 21 miles of spur line which connect customer
facilities with the main line. The Railway owns the mainline track and three
locomotives and operates a maintenance shop for normal repairs and upkeep. 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
-------   ---------------------------------------------------

     On January 5, 1999, the stockholders of the Company voted to amend the 1993
Employee, Director and Consultant Stock Option Plan to allow for an independent
appraisal of the formula used to calculate the fair market value of the equity
of the Company.

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 $10,000,000, or $2.80 per share, to
stockholders in fiscal 1998. There were no dividends paid during the year ended
April 30, 1999. We have loan agreements that contain limitations on our ability
to pay cash dividends on Common Stock.

                                       11
<PAGE>

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

The following selected consolidated financial data for the five years ended
April 30, 1999 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>
                                                                   (Dollars in thousands except per share and per ton data)
                                                                                Fiscal Year Ended April 30,
                                                                 ---------------------------------------------------------
                                                                    1995        1996        1997        1998        1999
                                                                    ----        ----        ----        ----        ------
<S>                                                              <C>         <C>         <C>         <C>         <C>
Statement of Earnings Data:
     Sales.................................................      $ 175,753   $ 172,317   $ 170,865   $ 185,077   $ 163,444
     Cost of sales.........................................        144,385     143,121     140,234     148,496     125,013
                                                                 ---------   ---------   ---------   ---------   ---------
     Gross profit..........................................         31,368      29,196      30,631      36,581      38,431
     Selling, general and administrative expense...........         12,156      11,737      11,923      13,006      14,470
     Depreciation and amortization.........................          5,930       6,567       6,775       7,112       7,726
     Postretirement benefit expense other
         than pensions.....................................          3,153       2,776       2,353       2,681       2,411
     Restructuring charge [a]..............................              -           -       1,320           -           -
     Litigation Settlement [b].............................              -           -           -           -      (2,256)
                                                                 ---------   ---------   ---------   ---------   ---------
     Operating income (loss)...............................         10,129       8,116       8,260      13,782      16,080
     Interest expense......................................         (8,049)    (11,733)    (11,769)    (12,300)    (14,599)
     Other income (expense)................................            (58)        526           -        (180)         15
                                                                 ---------   ---------   ---------   ---------   ---------
     Income (loss) before income taxes and
         extraordinary item................................          2,022      (3,091)     (3,509)      1,302       1,496
     Income tax (expense) benefit..........................           (197)          -           -         495           -
                                                                 ---------   ---------   ---------   ---------   ---------
     Income (loss) from continuing operations..............          1,825      (3,091)     (3,509)      1,797       1,496
     Extraordinary item - loss on retirement of
         long-term debt, net of income tax benefit of
         $0 in 1998 [c]....................................              -           -           -      (8,023)          -
                                                                 ---------   ---------   ---------   ---------   ---------

     Net income (loss).....................................      $   1,825   $  (3,091)  $  (3,509)  $  (6,226)  $   1,496
                                                                 =========   =========   =========   =========   =========

Dividends per common share.................................      $     .18   $     .52   $       -   $    2.80   $       -

    Balance Sheet Data (at end of period):
     Total assets..........................................      $ 146,459   $ 143,182   $ 136,627   $ 143,618   $ 152,561
     Long-term debt (including current portion)............         93,170      97,041      96,550     114,384     125,595
     Stockholders' equity (deficit)........................         11,395       6,385       2,156     (14,126)    (13,197)

Other Data:
     Capital expenditures..................................      $  24,220   $   4,978   $   3,695   $   9,023   $   6,248
     Net tons shipped......................................        500,151     477,005     473,755     490,128     420,353
     Average price per ton shipped.........................      $     351   $     361   $     361   $     378   $     389
     Average production cost per ton shipped...............            290         300         296         303         297
     Number of active employees at end of period...........            718         705         670         623         673
     Ratio of earnings to fixed charges [d]................           1.19           -           -        1.10        1.10
    </TABLE>
_____________________________
[a] A restructuring charge of $1.3 million was recognized in fiscal 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 $2.3 million was recorded in fiscal 1999
    as a result of a lawsuit against certain graphite electrode manufacturers.

[c] Extraordinary loss of $8.0 million was recorded in 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 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 were insufficient to cover fixed charges by
    approximately $3,091 in 1996 and $3,509 in 1997.

                                       12
<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,
                                          ---------------------------------------------------------------------------
                                                    1997                      1998                      1999
                                          ------------------------  ------------------------  -----------------------
Operating Results:                        Net Sales    % of Sales   Net Sales    % of Sales   Net Sales    % of Sales
                                          ----------  ------------  ----------  ------------  ----------  -----------
<S>                                       <C>         <C>           <C>         <C>           <C>         <C>
Sales                                     $ 170,865        100.0%     185,077        100.0%     163,444        100.0%
Cost of sales                               140,234         82.1%     148,496         80.2%     125,013         76.5%
                                          ---------                   -------                   -------

     Gross profit                            30,631         17.9%      36,581         19.8%      38,431         23.5%

Selling and administrative                   11,923          7.0%      13,006          7.0%      14,470          8.9%
Depreciation and                              6,775          4.0%       7,112          3.8%       7,726          4.7%
 amortization
Postretirement benefit                        2,353          1.4%       2,681          1.4%       2,411          1.5%
 expense
Restructuring Expense                         1,320          0.8%           -            -            -            -
Litigation settlement                             -            -            -            -       (2,256)        (1.4%)
                                          ---------                   -------                   -------

     Operating income                         8,260          4.8%      13,782          7.4%      16,080          9.8%

Interest expense, net                        11,769          6.9%      12,300          6.6%      14,599          8.9%
Other                                             -            -          180          0.1%         (15)        (0.0%)
                                          ---------                   -------                   -------
     Income (loss) from operations
      before taxes and
      extraordinary item                     (3,509)        (2.1%)      1,302          0.7%       1,496          0.9%
Income tax benefit                                -            -          495          0.3%           -            -
                                          ---------                   -------                   -------

     Income (loss) from operations
      before extraordinary item              (3,509)           -        1,797            -        1,496            -
Extraordinary item-loss
 on retirement of debt                            -            -       (8,023)        (4.3%)          -            -
                                          ---------                   -------                   -------


     Net income (loss)                    $  (3,509)        (2.1%)     (6,226)        (3.4%)      1,496          0.9%
                                          =========                   =======                   =======
</TABLE>

                                       13
<PAGE>

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

<TABLE>
<CAPTION>
                                                                Fiscal Year Ended April 30,
                                                           -----------------------------------------
                                                              1997            1998            1999
                                                              ----            ----            ----
<S>                                                        <C>               <C>             <C>
       Tons shipped:
       Hot Rolled Bars                                        174,290        185,700         154,397
       Rebar                                                  185,745        212,159         171,075
       Fabricated Products                                     53,208         55,511          63,757
                                                             --------        -------         -------
       Total finished products                                413,243        453,370         389,229
       Billets                                                 60,512         36,758          31,124
                                                             --------        -------         -------
       Total tons shipped                                     473,755        490,128         420,353
                                                             ========        =======         =======
       Price per ton:
       Hot Rolled Bars                                       $    435            456             461
       Rebar                                                      292            297             299
       Fabricated Products                                        460            468             501
       Billets                                                    214            229             201

       Average price per ton shipped                              361            378             389
       Average production cost per ton                            296            303             297
</TABLE>

Results of Operations

Fiscal 1999 As Compared To Fiscal 1998

     Sales. Sales in fiscal 1999 were approximately $21.6 million or 11.7% less
than sales in fiscal 1998.  There were several factors that contributed to this
fluctuation in sales:

 .  We had unusually low rebar inventories at the beginning of the 1999 fiscal
   year due to the shutdown for the installation of a more efficient, higher
   capacity shear line in the fourth quarter of fiscal 1998 (the Shear Line
   Project). Consequently, we produced more rebar during the first two quarters
   in order to satisfy customer demands which took some time away from
   production of hot rolled bar products. We believe that we were able to retain
   our customers during this low inventory period and that there is no lasting
   impact on our customer relationships.

 .  In the third quarter of fiscal 1999, we were negatively impacted by unsettled
   market conditions caused by the Asian economic crisis. We had lower sales of
   hot rolled bars that support certain industries such as oil field and
   agricultural equipment manufacturers. We believe that the Asian economic
   crisis prompted inventory reductions among service centers and certain
   original equipment manufacturers and created pricing pressure.

 .  Although not as significant, rebar imports impacted our sales and pricing of
   un-graded rebar.

 .  In October 1998, we purchased Wellington, a railroad track spike manufacturer
   which increased sales of fabricated products.

                                       14
<PAGE>

 .  During the first two fiscal quarters of 1999, we curtailed billet sales to
   third parties due to maintenance problems and summer power outages that we
   had in the Sand Springs melt shop.

 .  Steel scrap raw material costs decreased during fiscal 1999 affecting cost of
   sales and billet pricing.

   Cost of Sales and Expenses. Average product costs decreased to $297 in fiscal
1999 from $303 in fiscal 1998 due to decreases in steel scrap raw material
costs, partially offset by the higher costs associated with finished goods
product mix. Gross profit as a percentage of net sales increased from fiscal
1998 to fiscal 1999 due to increases in sales prices, sales mix of higher margin
finished goods, and lower steel scrap raw material costs.

   Selling, general and administrative expenses increased over the prior fiscal
year due to the acquisitions of Waddell and Wellington, additional property
taxes assessed and environmental expenditures related to the RCRA Compliance
Evaluation Inspection.

   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 acquisitions of
Waddell and Wellington.

   Postretirement benefit expense, which is calculated by an independent
actuary, decreased compared to last year because of favorable retiree health
claim experience.

   During fiscal 1999, we were parties in a lawsuit with several other steel
manufacturers against certain graphite electrodes manufacturers related to price
fixing within the electrode industry.  We received approximately $2.3 million
related to the settlement of this lawsuit.

   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.

Fiscal 1998 As Compared To Fiscal 1997

Sales. Sales in fiscal 1998 were approximately $14.2 or 8.3% higher than in
fiscal 1997 due primarily to the following:

 .  During fiscal 1998, we continued to improve operations in the Sand Springs
   rolling mill and implement our business strategy to improve finished product
   mix. We decreased billet sales and increased finished product sales in all
   product lines.

 .  Market conditions improved during fiscal 1998 for rebar and hot rolled bar
   products contributing to increases in shipments and pricing.

 .  In October 1997 we purchased Waddell, a rebar fabricator that specializes in
   smaller volume, higher value added construction contracts which increased
   sales of fabricated products.

   Cost of Sales and Expenses. Average product costs increased from the prior
year due to an increase in scrap raw material costs and an increase in the mix
of finished product sales. In fiscal

                                       15
<PAGE>

1998, billet shipments decreased 23,754 tons while finished products shipments
increased 40,127 tons. Gross profit as a percentage of net sales increased from
1997 to 1998 due to the increase in sales prices as well as an increase in the
sales mix of higher margin finished goods.

   Selling, general and administrative expense increased approximately $1.1
million from fiscal 1997 levels due to the addition of Waddell, additional
environmental consulting expenditures and payments on performance incentive
plans.

   Depreciation and amortization increased $0.3 million from fiscal 1997 to
fiscal 1998.  Depreciation expense increased as a result of capital expenditures
in fiscal 1997 and 1998.  Amortization expense increased due to increased
amortization of intangible assets associated with the acquisition of Waddell and
debt issuance costs.

   Post-retirement benefit expense increased $0.3 million from fiscal 1997 to
fiscal 1998 due to a decrease in the discount rate.

   Interest expense increased $0.5 million from fiscal 1997 to fiscal 1998 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, 1999, we had long-term indebtedness of $125.6 million and
approximately $30.1 million of additional borrowing availability under our
revolving credit agreements.  We were in compliance with all of our debt
covenants under our long-term debt instruments as of April 30, 1999.

   Borrowings under our revolving credit agreements bear interest at a floating
rate. To the extent that interest rates increase, and to the extent that amounts
outstanding under the revolving credit agreements increase, 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.

   Cash flow used by operating activities was $3.7 million in fiscal 1999,
compared with cash flow provided by operating activities of $14.0 million in
fiscal 1998.  The decrease in cash provided by operations is due primarily to
the re-building of inventories and decreases in accounts payable as a result of
paying for the Shear Line Project that was included in accounts payable at the
end of fiscal 1998.

   Earnings before interest, taxes, depreciation, amortization, restructuring
expense, extraordinary item and the non-cash portion of the post-retirement
expense (EBITDA) was approximately $25.2 million at April 30, 1999 as compared
to $22.8 million in the prior year.  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

                                       16
<PAGE>

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 1999 was $8.9 million, consisting
principally of the purchase of Wellington 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.

   Cash flow from operating activities was $14.0 million in fiscal 1998,
compared with cash flow from operating activities of $4.7 million in fiscal
1997. The increase in cash provided by operations was due to improved
operations, decreases in inventories, and increases in accounts payable. Cash
used in investing activities in fiscal 1998 was $11.4 million, consisting
principally of the purchase of Waddell and capital improvements. In fiscal 1998,
we offered $110 million of First Mortgage Notes due 2005 (First Mortgage Notes).
Cash used in financing activities included payment of offering costs, payments
on the revolving credit facilities, payment of the First Mortgage Notes due 2001
and payment of dividends.

   Our cash flow from operating activities and borrowings under our revolving
credit facilities are expected to be sufficient to fund capital improvements and
meet any near-term working capital requirements. We estimate that our annual
level of necessary maintenance capital expenditures is approximately $3 million.
On a long-term basis, we have significant future debt service obligations. Our
ability to satisfy these obligations and to secure adequate capital resources in
the future will be dependent on our ability to generate adequate operating cash
flow. We expect that our cash flow from operations and borrowing availability
under the revolving credit facilities will be sufficient to fund the repayment
of the First Mortgage Notes and other investing activities. This will be
dependent on our overall operating performance and is subject to general
business, financial and other factors affecting us and others in the domestic
steel industry, as well as prevailing economic conditions, certain of which are
beyond our control. The leveraged position we are in and the restrictive
covenants we have in our bond Indenture and the revolving credit facilities
could significantly limit our ability to withstand competitive pressures or
adverse economic conditions.

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
meltshop, to comply with these regulations and requirements. Expenses were
approximately $2.1 million in fiscal 1997, $2.0 million in fiscal 1998 and $2.2
million in fiscal 1999. Capital expenditures incurred to comply with these
requirements were approximately $0.3 million in fiscal 1998 and $1.1 million in
fiscal 1999. 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.

                                       17
<PAGE>

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.

Year 2000 Compliance

   State of Readiness.  We recognized the Year 2000 (Y2K) Information Technology
issues in 1986 and began to address the problem with the re-design of our
internal information systems.  We instituted a comprehensive Year 2000 strategy
in 1997.  In early 1998, we created a formal Y2K Task Force with executive
oversight to examine Y2K issues as they pertain to areas outside internal
information systems including the following:

Information Systems Infrastructure.  Hardware, networks and operating systems
that support our software.
Desktop Applications.  Private user spreadsheets and data collection that may
have Y2K issues.
Facilities.  Basic infrastructure items as well as backup power, fire control
systems, security systems, scales and phones.
Manufacturing/Distribution.  Process control equipment and software and other
manufacturing operations that have personal computers, board level computers, or
PLC's (Programmable Logic Controllers) interfaced to them.
Product Compliance. Primarily testing equipment. Spectrometers, personal
computers interfaced to testing equipment, meters and gauges used by the quality
assurance department.
Supply Chain.  Supply vendors, transportation and utilities, third party support
organizations, banking and finance.

   The Task Force is responsible for taking an inventory of all systems software
and equipment to identify potential Y2K issues and for developing remediation
plans for problems identified. To date, the majority of the financial and
commercial systems have been converted to full Y2K compliance.  The payroll
system and the accounts receivable systems are currently not Y2K compliant.
However, the payroll system is in Phase IV of a four-phase project.  The
accounts receivable system is currently in Phase I of a three-phase conversion.
Both projects are on schedule and expected to be completed during 1999.  In
addition, the accounts payable system has a minor Y2K problem but testing has
confirmed that it does not pose a service interruption risk.

   Outside the areas noted above, only minor problems were identified with
electronic equipment and third party software.  Our rolling mill and shear line
in Sand Springs were both installed in the last four years.  The rolling mill
relies on a third party system that has been represented to us as being Y2K
compliant, with the exception of certain upgrades that we expect to have
installed by September of 1999.  All remaining third party software has been
examined and has been represented by the vendor as being Y2K compliant.  The
Task Force has surveyed all vendors with invoices that total over $10,000 in the
previous calendar year in an attempt to

                                       18
<PAGE>

ascertain the potential risks within the supply chain, specifically in the areas
of raw materials and utilities. We have received responses from approximately
80% of the vendors surveyed and the Task Force has recommended additional follow
up for vendors failing to respond to the survey. To date, we have not received
any unfavorable responses from significant vendors. It is anticipated that the
vendor survey process will be completed by July of 1999. Although others in the
steel industry will be required to spend significant amounts to become Y2K
compliant, we identified problem areas early and upgraded equipment and systems
in the normal course of business. The historical and estimated future costs
related to Y2K issues have not been and are not expected to be significant.

   The Risks of Year 2000 Issues and Contingency Plans. While we believe we have
taken the necessary steps to identify and remediate our Y2K issues, the failure
to do so prior to January 1, 2000 could result in system/equipment failures
causing disruption in routine business activities including the production of
goods. We believe that our greatest risk of Y2K issues to be with third party
suppliers and customers. The failure of third parties upon whom we rely to
timely remediate their Y2K issues could result in disruption to our daily
operations including the production of steel products. As a result of our
reliance on third parties to resolve their Y2K issues, the overall risks
associated with the year 2000 remain difficult to accurately describe and
quantify. There can be no assurance that the Y2K issues will not have a material
adverse impact on us or on our operations. We have developed contingency plans
in areas where the risk of Y2K failures appears to be possible and where the
cost of a contingency plan is not prohibitive.

Accounting Pronouncements

   Currently, we have no significant derivative instruments and accordingly, the
adoption of Statement of Financial Accounting Standards (Statement) No. 133,
"Accounting for Derivative Instruments and Hedging Activities" issued by the
Financial Accounting Standards Board on June 15, 1998, is not expected to have a
significant effect on our consolidated results of operations, financial
position, or cash flows.

                                       19
<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, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for each of the years in the three-year period ended April 30, 1999.  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 schedule 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 generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sheffield Steel
Corporation and subsidiaries at April 30, 1998 and 1999, and the results of
their operations and their cash flows for each of the years in the three-year
period ended April 30, 1999, in conformity with generally accepted accounting
principles.  Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

                                   /s/ KPMG LLP

Tulsa, Oklahoma
June 6, 1999

                                       20
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                                 April 30,
                                                                         -----------------------
                    Assets                                                  1998          1999
                    ------                                                  ----          ----
<S>                                                                     <C>              <C>
Current assets:
 Cash and cash equivalents                                              $   2,590             86
 Accounts receivable, less allowance for doubtful accounts of
     $658 at April 30, 1998 and 1999                                       20,994         19,943
 Inventories                                                               33,548         44,034
 Prepaid expenses and other                                                   861          1,486
 Deferred income tax asset                                                  2,942          3,353
                                                                        ---------        -------
       Total current assets                                                60,935         68,902

Property, plant and equipment, net                                         68,730         68,310
Property held for sale                                                        439            439
Intangible asset, less accumulated amortization of $1,316
    and $2,249 in 1998 and 1999, respectively                               8,672         10,011
Other assets                                                                   94            482
Receivable from parent                                                      2,705          2,705
Deferred income tax asset                                                   2,043          1,712
                                                                        ---------        -------

                                                                        $ 143,618        152,561
                                                                        =========        =======
          Liabilities and Stockholders' Deficit
          -------------------------------------

Current liabilities:
 Current portion of long-term debt                                      $   1,702          2,885
 Accounts payable                                                          19,745         14,803
 Accrued interest payable                                                   5,151          5,362
 Accrued liabilities                                                        6,290          6,455
 Due to affiliated company                                                     85             75
                                                                        ---------        -------
       Total current liabilities                                           32,973         29,580

Long-term debt, excluding current portion                                 112,682        122,710
Accrued postretirement benefit costs                                       10,988         12,380
Other liabilities                                                           1,101          1,088
                                                                        ---------        -------
       Total liabilities                                                  157,744        165,758
                                                                        ---------        -------

Stockholders' deficit:
 Common stock, $.01 par value, authorized 10,000,000
      shares, issued and outstanding 3,570,125 and
       3,459,300  at April 30, 1998 and 1999, respectively                     36             35

 Additional paid-in capital                                                 2,536          2,024
 Retained deficit                                                         (15,698)       (14,202)
                                                                        ---------        -------
       Total stockholders' deficit                                        (13,126)       (12,143)
    Less loans to stockholders                                              1,000          1,054
                                                                        ---------        -------
                                                                          (14,126)       (13,197)

Commitments and contingencies
                                                                        ---------        -------

                                                                        $ 143,618        152,561
                                                                        =========        =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       21
<PAGE>

                  SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                     Consolidated Statements of Operations
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                      Year Ended April 30,
                                                            ---------------------------------------------
                                                              1997               1998             1999
                                                              ----               ----             ----
<S>                                                         <C>                 <C>               <C>
Sales                                                       $ 170,865           185,077           163,444
Cost of sales                                                 140,234           148,496           125,013
                                                            ---------           -------           -------

       Gross profit                                            30,631            36,581            38,431

Selling, general and administrative expense                    11,923            13,006            14,470
Depreciation and amortization expense                           6,775             7,112             7,726
Postretirement benefit expense other than pensions              2,353             2,681             2,411
Restructuring expense                                           1,320                 -                 -
Litigation settlement                                               -                 -            (2,256)
                                                            ---------           -------           -------

       Operating income                                         8,260            13,782            16,080
                                                            ---------           -------           -------

Other (expense) income:
 Interest expense, net                                        (11,769)          (12,300)          (14,599)
 Other                                                              -              (180)               15
                                                            ---------           -------           -------
                                                              (11,769)          (12,480)          (14,584)
                                                            ---------           -------           -------
       Income (loss) from operations before
          income taxes and extraordinary item                  (3,509)            1,302             1,496

Income tax benefit                                                  -               495                 -
                                                            ---------           -------           -------

             Income (loss) from operations before
                extraordinary item                             (3,509)            1,797             1,496

Extraordinary item - loss on retirement of debt                     -            (8,023)                -
                                                            ---------           -------           -------

       Net income (loss)                                    $  (3,509)           (6,226)            1,496
                                                            =========           =======           =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       22
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                 Year Ended April 30,
                                                         --------------------------------------
                                                          1997             1998            1999
                                                         -----             ----            ----
<S>                                                   <C>               <C>             <C>
Common stock:
  Balance at beginning of year                        $    34                34              36
  Common stock warrants
     Exercised (245,250 shares)                             -                 2               -
  Common stock retired (161,450 shares)                     -                 -              (2)
  Stock options exercised (50,625 shares)                   -                 -               1
                                                      -------           -------         -------
  Balance at end of year                                   34                36              35
                                                      -------           -------         -------

Additional paid-in capital:
  Balance at beginning of year                          3,591             2,536           2,536
  Agreement to repurchase 50,625 shares
     of common stock                                   (1,055)                -               -
  Common stock retired                                      -                 -            (886)
  Stock options exercised                                   -                 -             374
                                                      -------           -------         -------
  Balance at end of year                                2,536             2,536           2,024
                                                      -------           -------         -------

Retained earnings (deficit):
  Balance at beginning of year                          4,037               528         (15,698)
  Net income (loss)                                    (3,509)           (6,226)          1,496
  Dividends                                                 -           (10,000)              -
                                                      -------           -------         -------
  Balance at end of year                                  528           (15,698)        (14,202)
                                                      -------           -------         -------

Total stockholders' equity (deficit)                  $ 3,098           (13,126)        (12,143)
                                                      =======           =======         =======
</TABLE>




See accompanying notes to consolidated financial statements.

                                       23
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                Year Ended April 30,
                                                                    ------------------------------------------
                                                                        1997             1998             1999
                                                                        ----             ----            -----
<S>                                                                 <C>               <C>              <C>
Cash flows from operating activities:
    Net income (loss)                                               $ (3,509)          (6,226)           1,496
 Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
     Depreciation and amortization                                     6,919            7,409            8,052
     Loss (gain) on sale or retirement of assets                           -              160              (15)
     Accrual of postretirement benefits other than
         pensions, net of cash paid                                    1,272            1,893            1,392
     Non-cash portion of extraordinary item                                -            2,995                -
     Deferred income taxes                                                 -             (495)             (80)
     Changes in assets and liabilities, net of effects
        of acquisition of business':
      Accounts receivable                                                751              726            1,520
      Inventories                                                      3,209            3,779          (10,065)
      Prepaid expenses and other                                        (538)             677             (241)
      Other assets                                                       (54)             (16)            (441)
      Accounts payable                                                (4,020)           2,899           (5,610)
      Accrued interest payable                                             -              651              211
      Accrued liabilities                                               (680)             373              122
      Due to affiliated company                                            2               36              (10)
      Income taxes payable                                                 -                -                -
      Other liabilities                                                1,377             (875)             (13)
                                                                     -------          -------          -------
             Total adjustments                                         8,238           20,212           (5,178)
                                                                     -------          -------          -------

                  Net cash provided by (used in) operating
                   activities                                          4,729           13,986           (3,682)
                                                                     -------          -------          -------

Cash flows from investing activities:
 Capital expenditures                                                 (3,695)          (9,023)          (6,248)
 Acquisition of business, net of cash acquired                             -           (2,414)          (2,635)
 Proceeds from sale of fixed assets                                       18                -               18
                                                                     -------          -------          -------

                 Net cash used in investing activities                (3,677)         (11,437)          (8,865)
                                                                     -------          -------          -------
</TABLE>


                                                                     (Continued)

                                       24
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

               Consolidated Statements of Cash Flows, Continued
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                Year Ended April 30,
                                                                       --------------------------------------
                                                                          1997           1998            1999
                                                                          ----           ----            ----
<S>                                                                   <C>             <C>              <C>
Cash flows from financing activities:
 Net increase (decrease) under revolving lines of credit              $ (1,995)       (19,684)          6,875
 Proceeds from issuance of long-term debt                                2,075        112,213           7,091
 Repayment of long-term debt                                              (715)       (76,502)         (2,990)
 Payment of debt issuance costs                                              -         (6,001)            (45)
 Payments in respect of stock appreciation rights                         (448)             -               -
 Dividends paid                                                              -        (10,000)              -
 Payments to retire stock                                                    -              -            (888)
                                                                      --------        -------          ------

        Net cash provided by (used in) financing activities             (1,083)            26          10,043
                                                                      --------        -------          ------

Net (decrease) increase in cash and cash equivalents                       (31)         2,575          (2,504)

Cash and cash equivalents at beginning of year                              46             15           2,590
                                                                      --------        -------          ------

Cash and cash equivalents at end of year                              $     15          2,590              86
                                                                      ========        =======          ======

Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash paid during the year for:
 Interest                                                             $ 11,625         11,352          14,062
                                                                      ========        =======          ======
 Income taxes                                                         $      -              -              80
                                                                      ========        =======          ======

Noncash items:
 Change in unfunded accumulated benefit obligation
      included in other assets and other liabilities                  $     53            172               -
                                                                      ========        =======          ======
 Decrease in paid-in capital for stock repurchase agreement           $  1,055              -               -
                                                                      ========        =======          ======
 Increase in other liabilities for stock repurchase agreement         $    662              -               -
                                                                      ========        =======          ======
 Decrease in loans to stockholders related to stock
     repurchase agreement                                             $    393              -               -
                                                                      ========        =======          ======
 Increase in accounts receivable for stock option exercise            $      -              -             375
                                                                      ========        =======          ======
</TABLE>



See accompanying notes to consolidated financial statements.

                                       25
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                  Notes to Consolidated Financial Statements

                         April 30, 1997, 1998 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, Sheffield Steel Corporation-Oklahoma City (Oklahoma City),
Waddell's Rebar Fabricators, Inc. (Waddell) since October 28, 1997, Wellington
Industries, Inc. (Wellington) since October 7, 1998 and Sand Springs Railway
Company (the Railway).  HMK Enterprises, Inc. (HMK) owns approximately 93% 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
effect 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.

                                       26
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

Property, Plant and Equipment

Property, plant and equipment are recorded at cost.  Depreciation is provided
over the estimated useful lives of the individual assets using the straight-line
method.  The useful lives of the property and equipment range from three to
forty years.  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

On May 1, 1998, we adopted Statement of Financial Accounting Standards (SFAS)
No. 132, "Employers' Disclosures about Pension and Other Postretirement Benefits
which revises employers' disclosures about pension and other postretirement
plans but does not change the method of accounting for such 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.  Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed probable.  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.

                                       27
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

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.

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 puposes 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 $163,444 in
fiscal 1999, of which $162,730 were sales in the United States and $714 were
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 12% of sales in 1998 and 14% of sales in 1999,
and no customers that accounted for greater than 10% of sales in 1997.

(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, 1999, based on the currently offered market price, is
approximately $107.8 million versus a carrying value of approximately $110.0
million.

(3)  Inventories

The components of inventories are as follows:

<TABLE>
<CAPTION>
                                                            April 30,
                                                      ---------------------
                                                       1998           1999
                                                       ----           ----
<S>                                                   <C>            <C>
Raw materials and storeroom supplies                  $10,673        12,408
Work in process                                        11,721        13,390
Finished goods                                         11,154        18,236
                                                      -------        ------

                                                      $33,548        44,034
                                                      =======        ======
</TABLE>

                                       28
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued


(4)    Property, Plant and Equipment

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

<TABLE>
<CAPTION>
                                                             April 30,
                                                    ------------------------
                                                      1998            1999
                                                      ----            ----
<S>                                                 <C>              <C>
Land and buildings                                  $ 17,264          17,561
Machinery and equipment                               94,872         106,327
Roadbed and improvements                               5,303           5,492
Construction in process                                7,562           2,181
                                                    --------         -------
                                                     125,001         131,561
Less accumulated depreciation and amortization        56,271          63,251
                                                    --------         -------

                                                    $ 68,730          68,310
                                                    ========         =======
</TABLE>

Depreciation and amortization of property, plant and equipment charged to
operations was $6,271 in 1997, $6,605 in 1998 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,
                                                    ------------------------
                                                      1998            1999
                                                      ----            ----
<S>                                                 <C>               <C>
First mortgage notes [a]                            $110,000         110,000
Revolving credit agreement [b]                             -           6,285
Railway term loan [c]                                  1,500           1,000
Railway revolving credit agreement [c]                     -             620
Equipment notes [d]                                    1,050           4,931
Notes payable [e]                                      1,834           2,759
                                                    --------         -------
                                                     114,384         125,595
Less current portion                                   1,702           2,885
                                                    --------         -------

                                                    $112,682         122,710
                                                    ========         =======
</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.

                                       29
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

[b]  The revolving credit agreement with a bank provides for maximum borrowings
     of $40,000 based on a percentage of eligible accounts receivable and
     inventory.  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% and is payable monthly.  At April 30, 1999, the interest rate was
     7.75%.  An annual commitment fee of .25% is charged on the unused portion
     of the revolving credit agreement.  The agreement continues through
     November 1, 2002 and thereafter on a year-to-year basis until terminated by
     us or the lender.

[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 July 31, 2000, and a $1,500 million line of credit maturing July
     31, 2000.  The notes are secured by all of the assets and capital stock of
     the Railway.  Interest is computed at prime plus a variable margin (based
     on the achievement of certain interest coverage ratios) from 0% to 1% and
     is payable quarterly.  At April 30, 1999, the interest rate was 7.75%.

[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 $143 plus interest
     payable at variable rates.  The notes mature on various dates through 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 three to four
     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>
     2000                           $  2,885
     2001                              3,243
     2002                              1,857
     2003                              7,404
     2004                                206
     Thereafter                      110,000
                                    --------
 Total maturities                   $125,595
                                    ========
</TABLE>

Interest costs were $11,769 in 1997, $12,300 in 1998 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.

                                       30
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

(6)  Income Taxes

We had no income tax expense or benefit for the year ended April 30, 1997.
Income tax benefit for the years ended April 30, 1998 and 1999 consists of:

<TABLE>
<CAPTION>
                                               Current     Deferred    Total
                                               -------     --------    -----
<S>                                            <C>         <C>         <C>
Year ended April 30, 1998:
  U.S. federal tax benefit (expense)           $     -        421      $ 421
  State tax benefit (expense)                        -         74         74
                                               -------        ---      -----
                                               $     -        495      $ 495
                                               =======        ===      =====

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,
                                                   ------------------------
                                                    1997      1998     1999
                                                    ----      ----     ----

<S>                                                <C>        <C>     <C>
Computed "expected" tax benefit (expense)          $ 1,193    (443)      509
State income taxes, net of federal benefit             140     (52)       60
Change in valuation allowance                       (1,032)    872       429
Utilization of net operating loss carryforwards          -       -    (1,026)
Other, net                                            (301)    118        28
                                                   -------    ----    ------
                                                   $     -     495         -
                                                   =======    ====    ======
</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,
                                                      ----------------------
                                                         1998        1999
                                                         ----        ----
<S>                                                    <C>           <C>
Deductible temporary differences:
   Inventories                                        $   957        1,355
   Allowance for doubtful accounts                        250          250
   Accrued liabilities not deductible until paid        1,769        1,636
   Postretirement benefit costs                         4,175        4,704
   Restructuring charge                                   520          513
   Net operating loss carryforwards                    13,847       13,159
   Alternative minimum tax credit carryforwards           962        1,042
   Investment tax credit carryforwards                  3,298        3,523
                                                      -------       ------
                                                       25,778       26,182
   Less valuation allowance                             8,986        8,886
                                                      -------       ------
                                                       16,792       17,296
Taxable temporary difference - plant and equipment    (11,807)     (12,231)
                                                      -------       ------

         Net deferred tax asset                       $ 4,985        5,065
                                                      =======       ======
</TABLE>

                                       31
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

At April 30, 1999, we had available net operating loss (NOL) carryforwards for
regular federal tax purposes of approximately $34,629 which will expire as
follows: $66 in 2001, $69 in 2002, $100 in 2004, $135 in 2005, $2,623 in 2007,
$4,374 in 2008, $5,797 in 2009, $7,447 in 2011, $6,264 in 2012 and $7,754 in
2013. We have investment tax credit carryforwards of $599 for federal tax
purposes and $2,924 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 $1,042 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 steel industry has historically experienced cyclical earnings patterns and
we have normally utilized all NOL's generated during the down cycle.
Substantially all of our NOL's have been generated since 1992 and can be
attributed to a down cycle in the industry in 1992 through 1995, losses incurred
in the closing of our Oklahoma City facility and losses on the early retirement
of debt. The latter two events have accounted for $6.8 million and $13.3 million
in losses, respectively. During this latest upward cycle which began in 1995, we
have installed a new rolling mill and shear line which has increased the
productivity and efficiency in the production of rebar and has enabled us to
produce certain higher quality hot rolled bar products. Delays in the
installation, testing and acceptance of these projects have negatively impacted
earnings during this period. We continue to introduce new mill products and make
progress toward achieving the anticipated potential of the mill. However, we can
give no assurance that the mill will reach the forecasted production goals or
that we will achieve future profitability.

Accordingly, we established a valuation allowance at April 30, 1999, to reduce
the deferred tax assets to a level which, based on historical taxable income
trends and our projections for future taxable income, will more likely than not,
be realized.  In order to fully realize the remaining net deferred tax asset, we
will need to generate future taxable income of approximately $13 million.

(7)  Employee Benefit Plans

We have defined benefit plans that cover the hourly employees at Sand Springs
and Joliet and the salary 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, 1999 and 1998 as determined by an
independent actuary:

                                       32
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

<TABLE>
<CAPTION>
                                                        Pension Benefits                 Other Benefits
                                                   -------------------------         -----------------------
                                                     1998             1999             1998           1999
                                                   --------         --------         --------       --------
<S>                                                <C>              <C>              <C>            <C>
Change in benefit obligation:
  Benefit obligation at beginning of year          $ 21,188           25,220           19,543         22,983
  Service cost                                          735              792              292            264
  Interest costs                                      1,591            1,831            1,539          1,396
  Plan participants' contributions                        -                -                -              -
  Amendments                                              -              147                -              -
  Actuarial loss/(gain)                               2,898            1,856            2,868         (2,444)
  Benefits paid                                      (1,192)          (1,557)          (1,259)        (1,186)
                                                   --------         --------         --------       --------

     Benefit obligation at end of year               25,220           28,289           22,983         21,013
                                                   --------         --------         --------       --------
Change in plan assets:
  Fair value of plan assets at beginning of year     21,653           26,527                -              -
  Actual return on plan assets                        5,300            3,441                -              -
  Employer contributions                                766            1,265                -              -
  Plan participants' contributions                        -                -                -              -
  Benefits paid                                      (1,192)          (1,557)               -              -
                                                   --------         --------         --------       --------

     Fair value of plan assets at end of  year       26,527           29,676                -              -
                                                   --------         --------         --------       --------

Funded status                                         1,307            1,387          (22,983)       (21,013)
  Unrecognized actuarial loss                        (3,852)          (3,211)          (9,526)       (11,453)
  Unrecognized prior service cost                       597              711                -              -
  Unrecognized transition obligation/(asset)          2,092            1,570           21,521         20,086
                                                   --------         --------         --------       --------

     Net amount recognized                         $    144              457          (10,988)       (12,380)
                                                   ========         ========         ========       ========

Amount recognized in the statement of
 Financial position consist of:
  Prepaid/(accrued) benefit cost                   $    144              457          (10,988)       (12,380)
  Accrued benefit liability                               -             (206)               -              -
  Intangible asset                                        -              206                -              -
  Accumulated other comprehensive income                  -                -                -              -
                                                   --------         --------         --------       --------

     Net amount recognized                         $    144              457          (10,988)       (12,380)
                                                   ========         ========         ========       ========

Weighted-average assumptions as of
April 30:
Discount rate                                          7.00             7.00%            7.00%          7.00%
Rate of compensation increase                           0-4              0-4%            0.00%          0.00%
Expected rate of return on plan assets                 8.00%            8.50%            0.00%          0.00%
</TABLE>

For measurement purposes, the medical trend rates used for HMO and PPO/indemnity
plans were 6.0% and 9.5%, respectively. The medical and HMO trend rates are
assumed to decline one-half percent per year to an ultimate level of 5.0%. The
health care cost trend rate assumption has a significant effect on the amounts
reported.

                                       33
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

The following table presents the components of the net periodic benefit cost:

<TABLE>
<CAPTION>
                                                               Pension Benefits      Other Benefits
                                                               -----------------    -----------------
                                                                 1998     1999       1998      1999
                                                               -------   -------    -------   -------
<S>                                                            <C>       <C>        <C>       <C>
Components of net periodic benefit cost:
  Service cost                                                 $   735       792        292       264
  Interest cost                                                  1,591     1,831      1,539     1,396
  Expected (return)/loss on plan assets                         (1,842)   (2,218)         -         -
  Amortization of unrecognized transition obligation               522       522      1,435     1,435
  Amortization of prior service cost                                 1        34          -         -
  Recognized actuarial loss                                          7        (8)      (585)     (684)
                                                               -------   -------    -------   -------

     Net periodic benefit cost                                 $ 1,014       953      2,681     2,411
                                                               =======   =======    =======   =======
</TABLE>

At April 30, 1999, we had one pension plan that has 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.

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                $    231               $    (192)
 components
Effect on postretirement benefit obligation                    $  2,624               $  (2,218)
</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 $81 in 1997, $89 in 1998, 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 $313 in 1997, $315 in 1998 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>
          2000                                        $  392
          2001                                           409
          2002                                           411
          2003                                           275
          2004                                           120
          Later years                                    175
                                                      ------
            Total                                     $1,782
                                                      ======
</TABLE>

                                       34
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

(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 $2.3 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 $569 in 1997, $720 in 1998 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 $115 in 1997, $142 in 1998 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,
1998 and 1999.

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 $530 at April 30, 1998 and $397 at April 30,
1999.

On January 31, 1999, we signed a short-term note receivable with an officer of
the Company for $375. The note is secured by common stock of the Company and is
due July 31, 1999.

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. In addition, we advanced
$500 to HMK to secure a letter of credit for the Joliet insurance program.

(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 16.8% 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

                                       35
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued


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, 1999, there
were 106,000 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 losses of $3,578 in 1997 and $6,303 in 1998 and income of $1,409
for the year ended April 30, 1999.

The per share weighted-average fair value of stock options granted was $4.83 in
1997, $4.66 in 1998 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. Pro forma net income reflects only options granted in 1997, 1998 and
1999.

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, 1996                                           405,000             $ 7.41
   Granted                                                   51,000              20.52
                                                            -------
At April 30, 1997                                           456,000               8.87
   Granted                                                    5,000              19.88
   Canceled                                                  (5,000)             20.52
                                                            -------
At April 30, 1998                                           456,000               8.87
   Granted                                                   18,000              30.48
   Exercised                                                (50,625)              7.41
                                                            -------
At April 30, 1999                                           423,375               9.96
                                                            =======
</TABLE>

Exercise prices for options outstanding as of April 30, 1999 ranged from $7.41
to $30.48. The weighted-average remaining contractual life of those options is
12.8 years. There were 405,000 shares exercisable as of April 30, 1997 and 1998
and 354,375 exercisable as of April 30, 1999.

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, 1998 and 1999 is $368 which is the present value of the SAR's based on
vesting and retirement dates.

(12)  Restructuring Expense

During fiscal 1997, we recognized costs related to workforce reductions.
Approximately 42 hourly employees accepted early retirement incentives resulting
in costs of approximately $1,070 during the fourth quarter of fiscal 1997. In
addition, 14 salaried employees were involuntarily terminated in the third
quarter of fiscal 1997 resulting in severance costs totaling approximately $250.

                                       36
<PAGE>

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
           Notes to the Consolidated Financial Statements, Continued

(13)   Litigation Settlement

We were party to a lawsuit with several other steel manufacturers against
certain manufacturers of carbon electrodes related to price fixing within the
electrode industry. We recognized approximately $2,256 related to settlements
reached to date with certain of the defendents.

(14)   Extraordinary Item

We incurred a $8,023 extraordinary loss related to the First Mortgage Note
offering completed during the third quarter of 1998. The extraordinary charge
related primarily to a redemption premium, unamortized discount and debt issue
costs associated with the retirement of our First Mortgage Notes that were due
2001.

(15)   Acquisition

On October 28, 1997, we acquired all of the outstanding capital stock of
Waddell's Rebar Fabricators, Inc. The purchase price of the stock was $3,137,
subject to certain potential performance related payments. We paid approximately
$1,100 in cash and incurred $2,000 in debt related to this acquisition. The
acquisition was accounted for in accordance with the purchase method. The fair
value of tangible assets acquired was $2,490 including $1,902 of current assets
and $588 of fixed assets. The amount of liabilities assumed was $812 including
$701 of accounts payable and other accrued liabilities and $111 of long-term
debt. In addition, we recorded $1,459 as excess of cost over net assets acquired
(goodwill).

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).

The following pro forma financial information reflects the results of operations
for the years ended April 30, 1998 and 1999 as though the operations of Waddell
and Wellington had been considered combined as of May 1, 1997:

<TABLE>
<CAPTION>
                                                        Year Ended April 30,
                                                       ----------------------
                                                          1998        1999
                                                         -------     -------
<S>                                                    <C>           <C>
Sales                                                    $189,907    164,929
                                                         ========    =======

Income (loss) from operations before extraordinary item  $  1,721      1,328
                                                         ========    =======

Net income (loss)                                        $ (6,302)     1,328
                                                         ========    =======
</TABLE>

                                       37
<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, 1999, 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 securityholders 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, 1999, 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, 1999, 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, 1999, and is incorporated
herein by reference in response to this item.

                                       38
<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, 1998 and 1999

         Consolidated Statements of Operations - Years ended April 30, 1997,
         1998 and 1999

         Consolidated Statements of Stockholders' Deficit - Years Ended April
         30, 1997, 1998 and 1999

         Consolidated Statements of Cash Flows - Years Ended April 30, 1997,
         1998 and 1999

         Notes to Consolidated Financial Statements - April 30, 1997, 1998 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):

         Form 10-K Schedules       Description                  Page
         -------------------       -----------                  ----
                                                               Number
                                                               ------

               II               Valuation and Qualifying        45
                                        Accounts

   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.

                                      39
<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>

                                      40
<PAGE>

<TABLE>
<S>          <C>                                                                                                   <C>
    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                        48
             between Sheffield Steel Corporation and NationsBank, N.A.

 ** 4.19     Eighth Amendment to Receivable and Inventory Financing Agreement, dated April 13, 1999 between                   58
             Sheffield Steel Corporation and NationsBank, N.A.

    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).

    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).

</TABLE>

                                      41
<PAGE>

<TABLE>
<S>         <C>                                                                                               <C>
   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).

  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).
</TABLE>

                                      42
<PAGE>

<TABLE>
<S>         <C>                                                                                                     <C>
  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.                 64
*

  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).

  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.)
</TABLE>

                                      43
<PAGE>

<TABLE>
<S>           <C>                                                                                                    <C>
    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.)

**  12        Statement re Computation of Ratio of Earnings to Fixed Charges.                                                   77

**  13        Statement re Computation of EBITDA.                                                                               78

**  21        Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21 to the Registrant's
              Registration Statement on Form S-1 filed on  August 17, 1993).                                                    79

**  27        Financial Data Schedule.                                                                                          80
</TABLE>

    *    Executive Compensation Plans and Arrangements
    **   Filed herewith.

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

     No reports on Form 8-K were filed during the fourth quarter ended April 30,
1999.

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

                                      44
<PAGE>

                                                                     Schedule II

                 SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES

                       Valuation and Qualifying Accounts

                   Years ended April 30, 1999, 1998 and 1997
                                 (In thousands)

<TABLE>
<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
                                                 ===             =====              ====              ===

                                              Balance          Charged to                           Balance
                                             April 30,         Costs and        Deductions -       April 30,
                                               1997             Expenses         Write-offs          1998
                                               ----             --------         ----------          ----
Accounts receivable - allowance for
    doubtful accounts                          $ 658                 -                 -              658
                                                 ===             =====              ====              ===
</TABLE>

<TABLE>
<CAPTION>
                                              Balance          Charged to                           Balance
                                             April 30,         Costs and        Deductions -       April 30,
                                               1996             Expenses         Write-offs          1997
                                               ----             --------         ----------          ----
<S>                                          <C>               <C>              <C>                <C>
Accounts receivable - allowance for
    doubtful accounts                          $ 658                 -                 -              658
                                                 ===             =====              ====              ===
</TABLE>

                                      45
<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

July 19, 1999                  /s/ Robert W. Ackerman
-------------------------     -----------------------------
Date                          Robert W. Ackerman, President
                              and Chief Executive Officer

July 19, 1999                  /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.

July 19, 1999                  /s/ Robert W. Ackerman
-----------------------       -----------------------------
Date                          Robert W. Ackerman, Director

July 19, 1999                  /s/ Steven E. Karol
-----------------------       -----------------------------
Date                          Steven E. Karol, Director

July 19, 1999                  /s/ Dale S. Okonow
-----------------------       -----------------------------
Date                          Dale S. Okonow, Director

July 19, 1999                  /s/ Jane M. Karol
-----------------------       -----------------------------
Date                          Jane M. Karol, Director

July 19, 1999                  /s/ Howard H. Stevenson
-----------------------       -----------------------------
Date                          Howard H. Stevenson, Director

July 19, 1999                  /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, 1999



                          SHEFFIELD STEEL CORPORATION


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

                                      47