<PAGE>   1
--------------------------------------------------------------------------------

                       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 (Fee Required)

               For the fiscal year ended December 31, 1999

                                       OR

         [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

               For the transition period from             to
                                             -------------  ------------

               Commission File Number 033-73270
                                      ----------
               Commission File Number 033-73270-1
                                      -----------

                             TRANSTAR HOLDINGS, L.P.
                          TRANSTAR CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)


               Delaware                                   13-3486874

               Delaware                                   13-3745313

     (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                   Identification No.)

                                 345 PARK AVENUE
                            NEW YORK, NEW YORK 10154
              (Address and zip code of principal executive offices)

                                 (212) 935-2626
              (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. [x]

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE


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

<PAGE>   2



                             TRANSTAR HOLDINGS, L.P.
                          TRANSTAR CAPITAL CORPORATION
                                    FORM 10-K
                                TABLE OF CONTENTS


                                                                           Page
                                                                           ----

PART I

Item 1.   Business ..........................................................1

Item 2.   Properties ........................................................4

Item 3.   Legal Proceedings .................................................7

Item 4.   Submission of Matters to a Vote of Security Holders ...............7

PART II

Item 5.   Market for Registrant's Common Stock and
          Related Stockholder Matters .......................................8

Item 6.   Selected Financial Data ...........................................8

Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations ........................................10

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk .......17

Item 8.   Financial Statements and Supplementary Data ......................18

Item 9.   Changes In and Disagreements with Accountants on
          Accounting and Financial Disclosure ..............................46

PART III

Item 10.  Directors and Executive Officers of Registrant ...................47

Item 11.  Executive Compensation ...........................................50

Item 12.  Security Ownership of Certain Beneficial Owners
          and Management ...................................................54

Item 13.  Certain Relationships and Related Transactions ...................55

PART IV

Item 14.  Exhibits, Financial Statement Schedules,
          and Reports on Form 8-K ..........................................58

<PAGE>   3


                                     PART I

ITEM 1. BUSINESS

         Transtar Holdings, L.P. is a Delaware limited partnership which was
originally formed in 1988 as Blackstone Transportation Partners L.P. (BTP) for
the sole purpose of holding voting stock and nonvoting stock of Transtar, Inc.
(Transtar or the Company). BTP was renamed Transtar Holdings, L.P. (Holdings) in
November 1993. Holdings has no operations of its own and owns 5,100 shares of
voting stock and 5,100 shares of nonvoting stock of Transtar, representing a 51%
voting and 54% economic interest in Transtar. Transtar Capital Corporation
(TCC), a Delaware corporation, is a wholly owned subsidiary of Holdings. TCC has
nominal assets and does not conduct any operations. TCC was formed in connection
with an offering of 13 3/8% Senior Discount Notes. Separate consolidated
financial statements of Transtar are included in this 10-K because Transtar is a
majority owned subsidiary of Holdings which is not consolidated in the
consolidated financial statements of Holdings. Holdings' earnings are derived
primarily from its 54% economic interest in Transtar. Blackstone Transportation
Company, Inc. (BTC), a Delaware corporation, is Holdings' sole general partner.

THE COMPANY

         Transtar is a transportation holding company composed of two business
groups: The Railroad Group and the Marine Group. The Railroad Group is composed
of seven railroads Duluth, Missabe and Iron Range Railway Company (DMIR), Elgin,
Joliet and Eastern Railway Company (EJ&E), Bessemer and Lake Erie Railroad
Company (B&LE), Union Railroad Company (Union), The Lake Terminal Railroad
Company (Lake Terminal), McKeesport Connecting Railroad Company (McKeesport),
Birmingham Southern Railroad Company (Birmingham Southern), one dock
facility-Pittsburgh & Conneaut Dock Company (P&C Dock) and one in-plant rail
operation-Fairfield Southern Company, Inc. The Marine Group is composed of two
shipping operations-Great Lakes Fleet (GLF) and Warrior and Gulf Navigation
Company (WGN) and one salt water/fresh water dock facility-Mobile River Terminal
(MRT). The Railroad Group and Marine Group accounted for approximately 73% and
27% of revenues, respectively, in 1999.

         Transtar provides the sole rail access to, as well as the primary water
transport for, nearly all the steel making plants of USX Corporation (USX),
servicing US Steel (USS), USS Mining Co., L.L.C. (USM), and Lorain Tubular,
L.L.C. at Lorain, Ohio. Transtar derived 52% of its revenues in 1999 from
serving the USX facilities. The services are provided under certain
Transportation Services Agreements (See Item 13, Certain Relationships and
Related Transactions for a discussion of these agreements, including their
duration). Transtar serves a Blackstone controlled Republic Technologies
International, L.L.C. (Republic) facility which is also located at Lorain, Ohio.
Other steel-related customers generated an additional 19% of revenues, resulting
in the steel industry accounting for 70% of Transtar's revenues in 1999.
Movements of coal to utilities and other customers accounted for 13% of
Transtar's revenues in 1999, while miscellaneous traffic accounted for the
remaining 17%.

         The shareholders of Transtar are Holdings, which owns a 51% voting and
a 54% economic interest, USX, which owns a 49% voting and a 46% economic
interest, and Transtar's management that owns less than a 1% economic interest.
Management's direct interest has been reduced since Transtar's formation due to
repurchases of 950 shares of nonvoting stock from retiring managers. Certain
shares have been allocated to promoted managers in a stock option program.
Including the effect of this program, economic ownership of management would be
2.36%.

OPERATIONS OVERVIEW

         The Company's transportation groups service USX and other domestic
steel producers by delivering raw materials, such as iron ore pellets
(taconite), limestone, coal and coke, to steel producing facilities, by moving
materials within certain steel plants and by transporting semi-finished and
finished steel products from such facilities. The Company also hauls coal and
other freight for numerous other customers.

         Prior to December 1988, all of Transtar's subsidiaries were wholly
owned by USX. Transtar was formed in December 1988 to purchase these companies
from USX in a leveraged buyout. The Transtar subsidiaries carry a multitude of
raw materials, semi-finished products, and finished goods in Alabama, Illinois,
Indiana, Minnesota, Ohio, Pennsylvania, Wisconsin, and destinations on the Great
Lakes.




                                       1
<PAGE>   4


RAILROAD GROUP

         Each rail subsidiary is a regional or switching railroad with
individual specialties. Revenues from USX represented approximately 48% of the
Railroad Group's revenues in 1999. The following paragraphs describe Transtar's
major rail subsidiaries and their operations.

DMIR

         The DMIR is located in northeastern Minnesota and northwestern
Wisconsin and includes two major storage and shipping facilities at Duluth and
Two Harbors, Minnesota. It is the sole rail carrier serving USX's Minntac
facility and also serves the taconite producing facilities of both EVTAC Mining
and Ispat Inland Mining. The DMIR hauls taconite to its Two Harbors and Duluth
docks where the taconite is loaded into vessels for delivery to USX's Gary Works
and Mon Valley facilities and other lower lake steel plants including the
Republic facility at Lorain, Ohio. The DMIR also hauls taconite for interchange
to long haul railroads.

EJ&E

         The EJ&E is a belt railroad that encircles Chicago, Illinois. It is the
sole serving carrier for USX's Gary, Indiana steel facility and transports
inbound coal, coke and scrap and outbound semi-finished and finished steel. The
EJ&E performs certain in-plant switching functions within the Gary Plant. It
also provides rail services to numerous other customers in the Chicago area. The
EJ&E provides trackage rights and haulage for other railroads.

B&LE

         The B&LE services western Pennsylvania and northeastern Ohio and
transports coal, ore and limestone. Its principal northbound traffic is steam
coal destined for utility customers. The B&LE also delivers ore pellets via the
Union to USX's Edgar Thomson Works.

UNION

         The Union is located in the Mon Valley, approximately 12 miles east of
Pittsburgh, Pennsylvania. It is the sole serving carrier for three USX
facilities: the Clairton Coke Works, the Edgar Thomson Works and the Irvin
Works. The Union transports coal, coke, ore, scrap and finished and
semi-finished steel products. In addition, it provides USX with in-plant
switching services at its Clairton Coke Works and maintenance services on USX's
own rolling stock and track at its Mon Valley plants. The Union also handles
coal for a variety of other customers at its river-to-rail transfer facility at
Duquesne, Pennsylvania.

LAKE TERMINAL

         The Lake Terminal is located in Lorain, Ohio and is the sole-serving
rail carrier to both the USX and Republic facilities there. Prior to December
28, 1998, the Lake Terminal also provided these facilities with in-plant
switching services as well as maintenance of track and equipment. The
predecessor owner (USS/Kobe) of these facilities awarded the in-plant switching
and maintenance of track and equipment to a competing company at the end of
1998.

BIRMINGHAM SOUTHERN/FAIRFIELD SOUTHERN

         The Birmingham Southern is located in the Birmingham, Alabama area and
is the sole-serving carrier for USX's Fairfield Works. It transports coal, coke,
iron ore, semi-finished and finished steel and other products. Fairfield
Southern, a Birmingham Southern subsidiary, provides all of the in-plant
switching at Fairfield Works.

MARINE GROUP

         The Marine Group is comprised of a Great Lakes shipping fleet and an
inland barge operation. Revenues from USX represented approximately 60% of the
Marine Group's revenues in 1999. The following paragraphs describe Transtar's
marine subsidiaries and their operations.




                                       2
<PAGE>   5


GLF

         The GLF owns ten lake vessels and operates another vessel under a
long-term charter agreement. They operate in a market area throughout the five
Great Lakes, extending from the western end of Lake Superior to the eastern end
of Lake Ontario.

WGN/MRT

         WGN, headquartered in Chickasaw, Alabama, operates on the Black
Warrior-Tombigbee waterway and the Tennessee-Tombigbee waterway, utilizing a
fleet of 245 barges (of which 183 are leased) and 20 towboats. MRT, WGN's
subsidiary is a salt water/fresh water transfer facility located at Mobile,
Alabama.

OPERATING REVENUES

         Transtar's total operating revenues were $468.3 million in 1999. These
revenues were primarily earned from the transportation of freight. The revenues
incorporate traffic originated, terminated, and switched by rail operations as
well as commodities transported by marine operations. Both the rail and the
marine operations earned dock handling revenues.

         Set forth below are freight revenues of Transtar by commodity groups
for the years 1997 through 1999.


                                          Year Ended December 31,
                               -------------------------------------------
                                   1999           1998            1997
                               ------------   -------------  -------------
                                 $     % of     $     % of     $     % of
                               (mil.)  total  (mil.)  total  (mil.)  total
                               ------  -----  ------  -----  ------  -----
Iron Ore ..................... $177.1   37.8  $200.1   40.2  $219.9   41.8

Coal  ........................   56.3   12.0    61.4   12.3    58.5   11.1

Coke   .......................   36.2    7.7    39.4    7.9    43.6    8.3

Steel & General Merch  .......  138.9   29.7   142.8   28.7   148.1   28.2

Dock Handling  ...............   27.5    5.9    26.7    5.4    23.3    4.4

Trucking  ....................    0.7     .1     1.3     .3     1.3     .2

All other revenues  ..........   31.6    6.8    26.1    5.2    31.4    6.0
                               ------  -----  ------  -----  ------  -----
   Total Revenues  ........... $468.3  100.0  $497.8  100.0  $526.1  100.0
                               ======  =====  ======  =====  ======  =====

EMPLOYEES

         Transtar employed an average of 3,043 employees in 1999, down
approximately 300 individuals from the prior two years. Approximately 86% of
Transtar's employees are covered by collective bargaining agreements.

GOVERNMENTAL REGULATION

         The Company's subsidiaries are subject to environmental, safety, health
and other regulations generally applicable to all businesses. In addition, the
Company's rail subsidiaries, like other rail common carriers, are subject to
regulation by the Surface Transportation Board, the Federal Railroad
Administration, state departments of transportation and other state and local
regulatory agencies. Government regulation of the railroad industry is a
significant determinant of the competitiveness and profitability of railroads.
Deregulation of certain rates and services under the Staggers Rail Act of 1980
(the Staggers Act) has substantially increased the flexibility of railroads to
respond to market forces, but has also resulted in highly competitive and
steadily decreasing rates. Various interests have sought and continue to seek
reimposition of government controls on the railroad industry in areas
deregulated in whole or in part by the Staggers Act. The Company's marine
operations are subject to regulation by the U.S. Coast Guard. Additional
regulation, changes in regulation, re-regulation and certain types of
de-regulation of the industry through legislative, administrative, judicial or
other action could materially affect the Company.




                                       3
<PAGE>   6


COMPETITION

         The Company faces competition from railroads, motor carriers, shipping
companies and inland barge operations depending upon the market served. The
ability to compete for freight traffic is dependent upon rates charged, as well
as the quality and reliability of the services provided.


ITEM 2. PROPERTIES

THE RAILROAD GROUP

                          Roadway, Yards and Structures

         The Railroad Group has approximately 1,600 miles of track in operation,
consisting of approximately 600 miles of first main track (route miles) and
approximately 1,000 miles of additional main track, passing track, way switching
track and yard switching track.

         Principal railroad yard facilities owned by the Railroad Group are
located at Two Harbors, Proctor, and Keenan, Minnesota; Joliet, Illinois; Gary,
Indiana; Conneaut, Ohio; and Greenville, Pennsylvania.

         The following table summarizes the Railroad Group's track and roadway
activities for the periods indicated:



                                      Year Ended December 31,
                                  ------------------------------
                                  1999        1998          1997
                                  ----        ----          ----
Track miles of rail laid ....      69          108           79

Ties inserted (thousands)....      99          128          137

Track miles resurfaced ......     426          509          411

         The Railroad Group owns or leases the equipment described in the table
below.


                                      Owned         Leased           Total
                                  -------------  -------------   --------------
                                        Average        Average          Average
Description                       Units   Age    Units   Age     Units    Age
-----------                       -----   ---    -----   ---     -----    ---
Locomotives:

  Road ......................       110    32       24    17       134    30

  Switcher ..................        99    31        4    27       103    31
                                 ------    --    -----    --    ------    --
    Total Locomotives .......       209    32       28    18       237    30
                                 ======    ==    =====    ==    ======    ==

Freight Cars:

  Box .......................        15    25       --    --        15    25

  Gondola ...................     3,467    25      984    19     4,451    23

  Hopper ....................     7,687    42    1,013    18     8,700    39

  Flat ......................       499    35       95    30       594    34
                                 ------    --    -----    --    ------    --
    Total Freight Cars ......    11,668    37    2,092    19    13,760    34
                                 ======    ==    =====    ==    ======    ==




                                       4
<PAGE>   7


         Improvement and ongoing maintenance of roadway, structures and
equipment are essential components of the Company's efforts to improve service
and reduce operating costs. The Railroad Group has made the following capital
expenditures in order to maintain and improve train service:


                          Railroad Capital Expenditures
                              (dollars in millions)


                                 Year Ended December 31,
                                 ----------------------
                                 1999     1998     1997
                                 ----     ----     ----
Roadway and structures .....    $12.2    $15.5    $12.7

Railroad equipment:

  Locomotives ..............      3.6      1.0      0.7

  Freight cars .............      2.4      5.7      5.8

Other ......................      4.9      3.3      5.1
                                -----    -----    -----
    Total  .................    $23.1    $25.5    $24.3
                                =====    =====    =====

         Capital expenditures for the Railroad Group for 2000 are expected to be
approximately $28.7 million, of which approximately $13.8 million are
anticipated for roadway and structures and approximately $5.7 million are for
railroad equipment.

         The following table shows the Railroad Group's expenses for ongoing
maintenance and repairs of roadway, structures and railroad equipment (including
administrative and inspection costs) for the periods indicated.


                        Railroad Maintenance Expenditures
                              (dollars in millions)


                               Year Ended December 31,
                               ----------------------
                               1999     1998     1997
                               ----     ----     ----
Roadway and structures .....  $37.1    $37.0    $41.9

Railroad equipment:

  Locomotives ..............   20.6     23.4     23.2

  Freight cars .............   17.5     21.9     22.9

Other ......................    9.8     10.0      8.3
                              -----    -----    -----
  Total ....................  $85.0    $92.3    $96.3
                              =====    =====    =====

         Future maintenance programs will be determined by track, locomotive and
car requirements necessary to provide quality service at projected business
levels. The Railroad Group maintains full service car and locomotive shops in
Proctor, Minnesota; Joliet, Illinois; Gary, Indiana; and Greenville,
Pennsylvania.

THE MARINE GROUP

         The GLF owns ten vessels and leases one additional vessel under
long-term charter agreement. All of the vessels are self-unloaders, with a total
cargo capacity of 362,900 gross tons (GT) at mid-summer draft.

         Included in this fleet are four large beam vessels, the Roger Blough,
the Edwin H. Gott, the Edgar B. Speer, and the Presque Isle. These vessels are
the maximum size beam permitted through the locks at Sault Ste. Marie. They
range in size from 858 to 1,004 feet in length and are specifically designed for
and dedicated principally to carrying taconite pellets for USX. The Edgar B.
Speer is operated under a long-term charter.





                                       5
<PAGE>   8


         It also owns four intermediate size self-unloading carriers which are
the John G. Munson, with a forward deck-mounted boom, the Arthur M. Anderson,
the Cason J. Callaway and the Philip R. Clarke.

         The remaining vessels are three smaller, self-unloading vessels. These
include the George A. Sloan, the Calcite II and the Myron C. Taylor, which are
the three shortest vessels in the fleet at just over 600 feet in length with a
60-foot beam. These vessels serve some of the smaller volume cargoes in the
Great Lakes trade.

         A list of the GLF's active vessels, all of which are dry bulk
self-unloaders, is set forth in the table below.



                                                          Seasonal
                          Length   Capacity      Year     Capacity
             Vessel       (feet)   (GT)(1)     Acquired  (M-GT) (2)
             ------       ------   -------     --------  ----------
Ore Fleet
---------

  Gott ................... 1,004    62,200       1978       2,378

  Speer(3) ............... 1,004    62,200 (4)   1980       2,378

  Presque Isle ........... 1,000    52,000       1973       1,930

  Blough .................   858    44,000 (4)   1972       1,914

  Anderson ...............   767    25,300       1952       1,048

  Callaway ...............   767    25,300       1952       1,048

  Clarke .................   767    25,300       1952       1,048

Stone Fleet
-----------

  Munson .................   768    25,600       1952       1,867

  Sloan ..................   620    15,600       1943       1,087

  Calcite II .............   604    12,900       1929         964

  Taylor .................   603    12,500       1929       1,005
                                   -------                 ------
  Total ..................         362,900                 16,667
                                   =======                 ======



(1) Measured in gross tons of iron ore or taconite pellets at mid-summer draft
    mark.

(2) Seasonal capacity in thousand gross tons (M-GT) for the ore fleet is for
    shipping between Duluth/Two Harbors, Minnesota and Gary, Indiana and for the
    stone fleet between Rogers City, Michigan and Gary, Indiana.

(3) Leased vessel.

(4) Can be unloaded only at dedicated port facilities (Conneaut, Gary, and
    Indiana Harbor).


         WGN owns 20 towboats and 62 barges and operates another 183 barges
utilizing long-term lease arrangements.

         Capital expenditures for the Marine Group of $45.1 million were higher
in 1999 due to the acquisition of a tug barge lake vessel (a formerly leased
vessel) and are expected to be approximately $2.6 million in 2000.




                                       6
<PAGE>   9



ITEM 3. LEGAL PROCEEDINGS

         There have been no legal proceedings involving Holdings since its
formation. Transtar and certain of its operating subsidiaries are defendants in
lawsuits and actions incident to the normal conduct of its business. While the
results of these lawsuits and actions cannot be predicted with certainty,
Transtar believes the ultimate outcomes will not have a material adverse effect
on the operations, liquidity, capital resources and financial position of
Transtar.


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

         There were no matters submitted to a vote of security holders during
1999.




                                       7
<PAGE>   10


                                     PART II



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

         Holdings is a Delaware limited partnership and as such its partnership
interests are privately held and are not freely transferable.



ITEM 6. SELECTED FINANCIAL DATA


<TABLE>
<CAPTION>


                                                                           Transtar Holdings, L.P.
                                                                 As of and for the year ended December 31,
                                                                 ----------------------------------------
                                                                 1999     1998    1997     1996      1995
                                                                 ----     ----    ----     ----      ----
                                                                            (dollars in millions)
<S>                                                             <C>      <C>     <C>      <C>      <C>
Statement of Income Data:

  Income from equity in earnings of Transtar .......            $ 28.8   $ 31.3  $ 36.3   $ 37.6   $  31.1

  Interest and other financial expense .............             (27.4)   (24.1)  (21.3)   (18.8)    (16.6)

  Income from continuing operations ................               3.7      9.6    17.1     19.6      13.8

Balance Sheet Data:

  Investment in Transtar ...........................            $ 81.3   $ 54.3  $ 23.8   $  0.5   $ (15.4)

  Total assets .....................................             134.4    105.5    74.1     50.9      14.0

  Long-term debt ...................................             218.1    192.7   169.3    148.8     130.7

  Partners' equity (deficit) .......................             (85.4)   (87.4)  (95.4)   (98.6)   (117.3)

</TABLE>






                                       8
<PAGE>   11

<TABLE>
<CAPTION>


                                                                          Transtar, Inc.
                                                             As of and for the year ended December 31,
                                                             ----------------------------------------
                                                             1999     1998     1997     1996     1995
                                                             ----     ----     ----     ----     ----
                                                                       (dollars in millions)
<S>                                                         <C>      <C>      <C>      <C>      <C>
Statement of Income Data:

  Operating revenues...............................         $468.3   $497.8   $526.1   $509.1   $494.5

  Operating expenses (excluding item shown below)(1)         350.1    367.5    376.3    360.4    352.1

  Depreciation ....................................           26.1     25.5     26.8     26.4     26.7
                                                            ------   ------   ------   ------   ------
    Operating income...............................           92.1    104.8    123.0    122.3    115.7

  Other income.....................................            2.1      2.3      3.9      1.7      1.1

  Interest income..................................            1.1      1.5      1.0      1.0      1.2

  Interest and other financial expense.............           (9.5)   (12.9)   (17.4)   (21.3)   (24.1)
                                                            ------   ------   ------   ------   ------
    Income before income taxes.....................           85.8     95.7    110.5    103.7     93.9

  Provision for income taxes.......................           31.6     36.7     42.1     32.8     35.2
                                                            ------   ------   ------   ------   ------
  Income from continuing operations................         $ 54.2   $ 59.0   $ 68.4   $ 70.9   $ 58.7
                                                            ======   ======   ======   ======   ======
Other Data:

  Consolidated Cash Flow(2)........................         $121.2   $138.0   $160.5   $152.5   $148.6

  Cash provided by operating activities............           82.1     91.9    106.0    113.8     94.0

  Cash used for investing activities...............          (66.0)   (21.2)   (19.9)   (15.8)   (16.9)

  Cash used for financing activities...............          (23.3)   (73.6)   (86.4)   (83.9)   (87.0)

  Capital expenditures.............................           68.2     26.4     25.6     19.6     20.3

  Dividends paid...................................            -        -       24.1     40.9     55.8

  Non-cash interest(3).............................            0.5      0.6      0.7      0.7      0.8

  Consolidated Cash Flow to cash interest..........           13.5x    11.2x     9.6x     7.4x     6.4x

  Fixed charge coverage ratio(4)...................           12.8x    10.7x     9.2x     7.2x     6.2x

  Ratio of earnings to fixed charges(5)............            5.8x     5.6x     5.4x     4.6x     4.1x

Balance Sheet Data:

  Cash and cash equivalents........................         $ 14.3   $ 21.4   $ 24.3   $ 24.7   $ 10.6

  Total assets.....................................          562.2    502.8    522.0    515.1    513.7

  Long-term debt less current portion..............             --     66.3    128.8    196.4    265.2
</TABLE>

(1) Operating expenses include non-recurring charges (credits) of $0.9 million,
    $3.5 million, $7.0 million, and $(1.0) million for the years ended
    December 31, 1999, 1998, 1997, and 1996, respectively. These items relate to
    non-recurring labor costs and environmental credits.

(2) Consolidated Cash Flow represents earnings before interest expense,
    provision for income taxes, extraordinary item, cumulative effect of change
    in accounting principle, depreciation, amortization, special charges and
    non-cash SFAS 106 expenses related to other post-retirement benefits.
    Consolidated Cash Flow is a non-GAAP measure of performance and should not
    be considered as an alternative to net income, or any other GAAP measure of
    performance, or to cash flows from operating, investing or financing
    activities as a measure of liquidity. Consolidated Cash Flow is presented
    because it is a defined term in an indenture and because management believes
    it provides useful information regarding the Company's ability to service
    and/or incur debt.

(3) Non-cash interest represents amortization of debt issuance costs.

(4) Fixed Charge Coverage Ratio is equal to Consolidated Cash Flow to Fixed
    Charges. Fixed charges consist of interest expense and amortization of debt
    issuance costs.

(5) Earnings used in computing the ratio of earnings to fixed charges consist of
    income before income taxes, cumulative effect of change in accounting
    principle and extraordinary items, plus fixed charges. Fixed charges consist
    of interest expense, amortization of debt issuance costs, and a portion of
    operating lease rental expense that is representative of the interest
    factor.



                                       9
<PAGE>   12


ITEM 7.

                             TRANSTAR HOLDINGS, L.P.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

         Management's Discussion and Analysis of Financial Condition and Results
of Operations is presented as an analysis of Transtar Holdings, L.P.'s
(Holdings) equity investment in Transtar, Inc. (Transtar). Holdings' earnings
are derived primarily from its 54% economic interest in Transtar, and interest
expense related to certain Senior Discount Notes issued in 1993. The following
discussion should be read in conjunction with Holdings' Consolidated Financial
Statements and Transtar's Consolidated Financial Statements and the related
notes thereto included in Item 8 of Part II of this 10-K.

                            1999 VERSUS 1998 AND 1997

OVERALL

         Substantially all of the earnings of Holdings consist of Holdings'
share in the earnings of Transtar accounted for by the equity method, and
interest expense related to the Senior Discount Notes. Holdings' equity in
earnings of Transtar was $28.8 million in 1999 compared to $31.3 million in 1998
and $36.3 million in 1997. For a discussion of the results of operations of
Transtar, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for Transtar.

         In 1999, Holdings' net income totaled $3.7 million, a decrease of $5.9
million from $9.6 million in 1998 and a $13.4 million decrease from the $17.1
million recorded in 1997.

REVENUES AND EXPENSES

         Holdings did not produce any revenues in 1999, 1998, or 1997. Holdings'
operating expenses of $0.2 million in 1999 remained virtually unchanged from
expenses incurred in 1998 and 1997. As a result of accrued interest and
accretion of the Senior Discount Notes issued by Holdings in December 1993,
interest and other financial expenses grew from $21.3 million in 1997, to $24.1
million in 1998, and $27.4 million in 1999.

                         LIQUIDITY AND CAPITAL RESOURCES

         On December 7, 1993, Holdings and Transtar Capital Corporation (TCC)
issued $218 million aggregate principal amount of 13 3/8% Series A Senior
Discount Notes due December 15, 2003. In 1994, Holdings and TCC exchanged the
Series A Notes for Series B Notes (Notes). The first cash interest payment on
the Notes is due on June 15, 2000.

         Transtar declared no dividends during 1999 or 1998.

         On both October 30 and December 19, 1997, Transtar declared cash
dividends in the amount of $625 per share on both its Class A Voting Common
Stock and its Class B Nonvoting Common stock to holders of record of the stock
on October 28 and December 17, 1997, respectively. During 1997, Holdings
received $12.8 million representing its 53% economic interest in the Transtar
dividends. Pursuant to the Indenture relating to the issuance of the Notes (the
Notes Indenture), both dividend payments were deposited into an escrow account.

         In February 1998 and 1997, in accordance with the Notes Indenture,
Holdings offered to repurchase a portion of the Notes at a price equal to 101 %
of the accreted value of such Notes on the date of purchase. The offer to
purchase the Notes was made by a notice to holders of the Notes and was held
open for 20 business days. During 1998, in accordance with the Notes Indenture
and an agreement governing the escrow account, Holdings withdrew from the escrow
account $0.7 million to distribute to its partners and $0.2 million to pay
certain administrative expenses.




                                       10
<PAGE>   13


                             TRANSTAR HOLDINGS, L.P.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                      RESULTS OF OPERATIONS -- (CONTINUED)


         Funds in the escrow account are invested in cash equivalents and may
only be released to pay interest and principal on the Notes, make certain
payments permitted under the Notes Indenture, purchase or optionally redeem
Notes or to pay administrative expenses of Holdings. As of December 31, 1999 the
escrow balance is $49.8 million. Cash interest on the Notes began accruing on
December 15, 1999 in accordance with the Notes Indenture. On June 15, 2000, a
cash interest payment will be due for the period commencing December 15, 1999
and ending on June 15, 2000. Cash interest will thereafter be payable
semi-annually in arrears on June 15 and December 15 of each year. Interest
earned on the escrow balance amounted to $2.5 million, $2.6 million, and $2.4
million in 1999, 1998 and 1997, respectively. The first interest payment on the
Notes will be in the approximate amount of $14.6 million. Funds currently in the
escrow account will be sufficient to make the first three semi-annual interest
payments on the Notes. When funds in the escrow account have been expended
Holdings will be required to seek additional sources of funds in order to make
future interest payments on the Notes. Holdings cannot give any assurances that
they will be able to obtain additional funds in order to make such interest
payments.

         The only business activity of Holdings is its investment in Transtar.
Holdings does not require any additional liquidity or capital resources, other
than in connection with the payment of the interest on the Notes and for
professional fees and certain other administrative expenses.

         In the past Holdings has received dividends from Transtar in respect of
the Common Stock of Transtar held by Holdings. These dividends have been the
source of substantially all of the money currently on deposit in the escrow
account. Future dividends of Transtar are governed by Transtar's bylaws that
require unanimous approval by the Company's directors to declare a dividend or
other distribution (absent a decision by an independent consultant breaking a
deadlocked vote). Holdings and USX each have the right, pursuant to a
Stockholders Agreement dated as of December 28, 1988, as amended (the
Stockholders' Agreement), to designate certain directors to the board of
directors of the Company. As such, Holdings' ability to cause the Company to
declare and pay a dividend or other distribution is dependent upon the
concurrence of USX and no assurances can be given that USX will concur in the
declaration and payment of such dividends or that any such dividends will
actually be declared and paid.






                                       11
<PAGE>   14


                                 TRANSTAR, INC.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS



         Transtar, Inc. (Transtar or the Company) is a holding company
consisting of two business groups, the Railroad Group and the Marine Group.

                                1999 VERSUS 1998

OVERALL

         Transtar's net income totaled $54.2 million in 1999, compared to net
income of $59.0 million in 1998. Transtar's lower financial results in 1999 were
brought about by decreased demand for the raw materials it transports for its
steel producing customers as well as a decrease in coal delivered for export to
Canada and Asia.

OPERATING REVENUES

         Operating revenues in 1999 totaled $468.3 million, or $29.5 million
less than in 1998. Revenue decreases of $5.7 million and $23.8 million were
reported by the Railroad Group and Marine Group, respectively. Cutbacks in
production at the taconite pellet plants served by Transtar were the prime
contributors to these decreases. Some of the decreased production was a result
of the steel industry balancing inventories of raw materials with demand for
steel products. The majority of this decreased demand was spurred by the
domestic steel industry's response to an increase of imported foreign steel in
the marketplace. Two of the commodities most affected were iron ore pellets and
coke. This structural change in the marketplace began late in 1997 and continued
into the fourth quarter of 1999. Revenues generated by the transportation and
handling of raw materials used in the steel production process as well as
revenues for outbound steel products showed decreases from 1998. Additionally,
limestone tonnage, which is traditionally delivered by lake carriers for road
construction and other infrastructure projects, declined over one million tons
from 1998 levels. Increased tonnages of salt and gypsum were not enough to
offset this shortfall. Coal for export from Alabama origins decreased
considerably from the previous year, adversely impacting both Railroad and
Marine results. The loss of in-plant switching at the former USS/Kobe's plant at
Lorain, Ohio caused a revenue decline of almost $8.6 million from 1998 levels at
the Lake Terminal Railroad. Rate reductions that were included in the 1998
Transportation Services Agreements with USX produced approximately the same
level of revenue compression in 1999 as was experienced in 1998. This revenue
compression was partially offset by activity in the Rail Group which experienced
increased haulage and classification trains from several of the Class I
railroads that enter the Chicago market. This improved Transtar revenues by
almost $1.7 million from 1998.

OPERATING EXPENSES

         Operating expenses decreased $16.8 million from 1998 levels to $376.2
million in 1999. A reduction in volumes handled was the chief reason for much of
the cost decrease. Contributing to the cost decreases were: 1) declines in
employment levels and associated costs that produced a $12.9 million reduction;
2) reductions in repair and maintenance programs driven by the lower operating
volumes that contributed $7.2 million; 3) reductions in casualty and property
insurance amounting to $2.6 million; 4) a $2.1 million reduction in shifting and
towing expense and mobile equipment rentals on the barge companies; and 5) a
decrease of $1.7 million in the amount recorded to recognize pension costs
associated with the curtailment of in-plant operations by the Lake Terminal
Railroad at USS/Kobe on December 28, 1998. Approximately $7.4 million of the
overall decrease in operating costs is related to this curtailment. Offsetting
the improved costs were $2.4 million of reduced car hire earnings (a
contra-cost) for the Railroad Group and $1.7 million of additional fuel expense
across all of Transtar as the average purchase price of fuel increased by almost
$0.09 per gallon when compared with 1998. Property taxes increased $2.2 million
primarily due to favorable adjustments recorded by the Railroad Group in 1998.





                                       12
<PAGE>   15


                                 TRANSTAR, INC.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                      RESULTS OF OPERATIONS -- (CONTINUED)

OTHER INCOME AND EXPENSE

         Transtar's net interest expense decreased by $3.0 million in 1999 from
1998. This decrease is primarily attributed to the retirement of term debt
during 1999. Decreased equity income recorded by the Marine Group contributed to
the reduction of $0.2 million in other income.

PROVISION FOR INCOME TAXES

         Transtar's provision for income taxes in 1999 was $31.7 million or a
decrease of $5.0 million from 1998. This decrease is primarily related to the
decline in before tax profit in 1999.

                                1998 VERSUS 1997

OVERALL

         Transtar reported net income of $59.0 million in 1998, compared to net
income of $68.4 million in 1997. Transtar's results in 1998 were driven by
weakening of the domestic steel industry due to lower priced imported steel and
by revenue concessions granted in the 1998 Transportation Services Agreements
with USX and USS/Kobe.

OPERATING REVENUES

         Operating revenues in 1998 totaled $497.8 million, or $28.3 million
less than in 1997. Revenue decreases of $9.0 million and $19.3 million were
reported by the Railroad Group and Marine Group, respectively. The softening of
the domestic steel market due to the increase of imported foreign steel, coupled
with implementation of new Transportation Services Agreements in 1998 severely
impacted revenues. Revenues generated by the transportation and handling of raw
materials used in the steel production process, such as ore and coke, as well as
outbound steel products all showed decreases from 1997 amounting to $34.9
million. Approximately one-third of this change was driven by rate reductions
granted in the new Transportation Services Agreements. Demurrage revenues,
resulting primarily from industry retention of railroad freight cars, increased
$2.3 million. In spite of rate reductions included in the new Transportation
Services Agreements, coal and associated dock handling revenues improved by $7.8
million, due to the increased demand for coal deliveries to Great Lakes
customers and increased shipments from Alabama origins destined for export.

OPERATING EXPENSES

         Operating expenses decreased $10.1 million from 1997 levels to $393.0
million in 1998. Contributing to the overall cost decreases were: 1) lower
diesel fuel prices which contributed to a $7.0 million reduction in fuel
expense; 2) favorable property tax adjustments recorded in 1998 which reduced
state and local taxes by $1.2 million; 3) changes in asset lives which resulted
in decreased depreciation expense of $1.3 million; 4) recognition in 1997 of
$7.0 million of expense associated with a limited early retirement program and
an accounting department consolidation; 5) increased recovery in 1998 of
maintenance expenses which are shared with third parties in the amount of $2.7
million; 6) decreases in casualty expense and liability insurance of $2.3
million; 7) a $1.2 million reduction in shifting and towing expense and mobile
equipment rentals on the barge lines; and 8) increased allocation of labor
forces to capital improvement projects which reduced operating expenses by $1.5
million. Partially offsetting these cost decreases were: 1) increased labor
expense of $6.3 million reflecting contractual wage increases, additional hours
worked and higher health insurance costs; 2) additional lease cost of $0.8
million reflecting new leases of freight cars and barges commencing during 1998;
3) reduced net car hire earnings (a contra-cost) of $1.1 million due to the
weakened domestic steel market and fewer off-line loadings for a large portion
of Transtar's gondola freight car fleet; and 4) recognition of $3.5 million of
expense associated with a partial curtailment of services provided by the Lake
Terminal Railroad due to a reduction in business at USS/Kobe, and further
accounting department consolidation.




                                       13
<PAGE>   16


                                 TRANSTAR, INC.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                      RESULTS OF OPERATIONS -- (CONTINUED)



OTHER INCOME AND EXPENSE

         Transtar's net interest expense decreased by $4.9 million in 1998 from
1997. This decrease is primarily attributed to the retirement of $72.0 million
of term debt during 1998. Fewer land sales agreements by the Railroad Group in
1998 and decreased equity income recorded by the Marine Group resulted in a
reduction of $1.5 million in other income.

PROVISION FOR INCOME TAXES

         Transtar's provision for income taxes in 1998 was $36.7 million or a
decrease of $5.4 million from 1997, and is directly related to the decline in
before tax profit in 1998.

                         LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

         Transtar ended 1999 with cash and cash equivalents totaling $14.3
million, which was $7.1 million less than the $21.4 million it had at year-end
1998.

         On June 29, 1999, Transtar entered into a Short Term Credit Agreement
(Short Term Credit Facility) which enabled it to borrow $30 million on an
unsecured term basis. The Short Term Credit Facility was used by Transtar to
finance a portion of the purchase price of a tug barge lake vessel which
previously was operated by Transtar under a long-term lease. Also, on June 29,
1999 Transtar borrowed $15 million from its existing revolving credit facility
to finance the remainder of the purchase price of the tug barge. On August 26,
1999, Transtar amended and restated its Credit Agreement dated December 7, 1993
(the original Credit Agreement) to provide for certain lenders to make
additional term loans to Transtar of up to $45 million. The proceeds of these
loans were used to refinance indebtedness of $30 million under the Short Term
Credit Facility, and to repay $15 million of revolving credit loans. The Credit
Agreement as amended and restated provides for Tranche A Term Loans of $85
million (the amount outstanding as of August 26, 1999 under the Original Credit
Agreement) and Tranche B Term Loans of $45 million, all of which are
collateralized by the stock of Transtar's subsidiaries.

         During 1999, Transtar retired $59.0 million of its combined term loan
obligations compared to $72.0 million retired during 1998. Of the $59.0 million
repaid in 1999, $1.0 million represented a payment against Tranche B debt. At
December 31, 1999, Transtar had $110.0 million of term loan obligations
remaining, including $66.0 million due under Tranche A and $44.0 million due
under Tranche B. Transtar expects to repay its obligation's from its operating
cash flow and from proceeds acquired through a future refinancing of its Tranche
B debt, or a sale-leaseback transaction involving the tug barge. Transtar paid
no dividends in either 1999 or 1998, compared with the $24.1 million paid to its
shareholders in 1997.

         Contractual commitments in the amount of $14.5 million were made in
1999 to acquire components for the assembly of 280 freight cars. The acquisition
of the freight car components began in mid 1999 and was in response to a
commitment under the Transportation Services Agreement with USX that requires
Transtar to spend up to $20.0 million to assure the continuance of in-plant coke
movements at its Gary Works. Transtar is operating the first 26 of these freight
cars under a long-term lease arrangement, and it is anticipated that the
remainder of the fleet will also be leased.




                                       14
<PAGE>   17


                                 TRANSTAR, INC.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                      RESULTS OF OPERATIONS -- (CONTINUED)


         Transtar and certain of its operating subsidiaries are defendants in
lawsuits and actions in which claims have been made against the Company. While
the results of these lawsuits and actions cannot be predicted with certainty,
the Company believes the ultimate outcomes will not have a material adverse
effect on the operations, liquidity, capital resources, or financial position of
Transtar.

CAPITAL RESOURCES

         Net cash used for investing activities in 1999 was $66.0 million or
$44.7 million more than 1998. This change reflects increased capital spending in
1999 of $41.8 million and a $3.0 million decrease in proceeds from disposition
of assets.

         Cash used for financing activities in 1999 decreased by $50.3 million
from 1998. This decrease was influenced by Transtar's new borrowing of $45.0
million to finance the acquisition of a tug barge lake vessel. Cash used for
term loan debt retirements decreased by $13.0 million from 1998. In 1999,
Transtar repaid $59.0 million of its term debt obligations versus the $72.0
million it repaid in 1998 and the $62.0 million it repaid in 1997. In 1999 and
1998, no dividends were paid to stockholders, compared with $24.1 million in
1997

CAPITAL EXPENDITURES

         Transtar's capital requirements during 2000 are forecasted to be
approximately $31.3 million. Internally generated funds from operations are
expected to be sufficient to repay Transtar's Tranche A term loan obligations of
$66 million due in 2000. The Tranche B obligations associated with the
acquisition of the tug barge will be refinanced prior to December 31, 2000.

         In 1999, capital expenditures of $68.2 million increased by $41.8
million from 1998, primarily as a result of the acquisition of the formerly
leased tug barge. Capital expenditures in 1998 totaled $26.4 million, or $0.8
million more than in 1997. In addition to these capital expenditures, the
Company spent $104.1 million in 1999, $113.2 million in 1998, and $117.6 million
in 1997 for repair and maintenance of its facilities and equipment.

                              ENVIRONMENTAL MATTERS

         Transtar is subject to federal, state, and local laws and regulations
relating to the environment. These laws regulate discharges into the
environment, as well as the handling, storage, transportation, and disposal of
waste and hazardous materials. These laws also require responsible parties to
undertake remediation of hazardous waste disposal sites. Transtar provides for
remediation costs and penalties when the responsibility to remediate is probable
and the amount of associated costs are reasonably determinable. Certain Transtar
operating subsidiaries have been identified as potentially responsible parties
under the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA) and are required to share the cost to remediate certain Superfund sites
identified by the Environmental Protection Agency (EPA). In those instances
where the probable costs of cleanup are estimable, Transtar has recorded a
liability. At December 31, 1999 accrued liabilities for remediation totaled $0.2
million. This represents a decrease of $0.2 million from the December 31, 1998
balance. The Company has considered the other potentially responsible parties in
determining this accrual. For the period 1989 through 1999, actual cash payments
associated with environmental expense have totaled $10.5 million.





                                       15
<PAGE>   18


                                 TRANSTAR, INC.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                      RESULTS OF OPERATIONS -- (CONTINUED)


         Transtar and USX have entered into an environmental indemnification
agreement, whereby USX has agreed to indemnify Transtar against 75 percent of
certain environmental claims, losses, liabilities, obligations, damages,
deficiencies, costs, and expenses (collectively, Environmental Liabilities) in
excess of $10 million. This environmental indemnification agreement covers
Environmental Liabilities relating to certain assets and properties transferred
by USX to Transtar upon the formation of Transtar, which Environmental
Liabilities existed or occurred prior to such formation. Of the $10.5 million
expended since 1988, $7.9 million is applicable to the $10 million threshold.
Although it is not presently possible to estimate the ultimate amount of all
remediation and compliance costs that might be incurred or the penalties that
may be imposed, management does not believe these potential costs will have a
material adverse effect on the Company.

                                    YEAR 2000

         Transtar's management was confident that the plan it had devised to
address the Year 2000 issue would permit an interruption free and seamless
transition from 1999 to 2000. This plan addressed mainframe information systems,
non-information technology systems, as well as, third parties. The mainframe
information systems portion of this plan cost Transtar approximately $5.0
million to implement. With minor exceptions, hardware, system software and
applications software performed without failure as the Year 2000 dawned.

         Non-information technology systems, integral parts of Transtar's rail
and marine operations, also performed without interruption during the year
change. During management's preparedness review, several upgrades and
replacements were made to ensure Year 2000 compliance. Including these
non-information technology systems, Transtar spent approximately $6.6 million to
become Year 2000 ready.

         While Transtar management knows of no situation where its critical
information and operating systems were not Year 2000 ready, there can be no
guarantee that other Year 2000 problems will not surface.

                   TRANSPORTATION SERVICES AGREEMENTS WITH USX

         On June 30, 1998 Transtar reached agreement in principle with USX on
new Transportation Services Agreements with final agreement reached December 21,
1998. (See Note 13 to Consolidated Financial Statements). The new Agreements
were approved by the lending institutions that participate in Transtar's Credit
Agreement on February 12, 1999. These agreements generally extend through
December 31, 2004, and ensure Transtar's continued presence at all of the US
Steel and US Steel Mining facilities it presently services. Third parties will
be permitted to handle certain volumes of selected commodities. Rate reductions
included in the new Transportation Services Agreements reduced Transtar's
operating revenues and operating income by $14.5 million in 1999 and $14.4
million in 1998 as compared to 1997 levels for both years.

                     REPUBLIC TECHNOLOGIES / LORAIN TUBULAR
                             (USS/KOBE STEEL MILLS)

         Since 1895, the Lake Terminal Railroad (a Transtar subsidiary) had
performed intra-plant switching of hot metal and other steel products within the
USS/Kobe Steel mill, maintained the rail line that operates inside and around
this facility, and provided maintenance services to USS/Kobe's freight car and
locomotive fleet. In 1998 USS/Kobe elected to terminate the in-plant switching
services provided by the Lake Terminal Railroad on tracks owned by USS/Kobe, as
well as the maintenance services. Effective December 29, 1998 under the terms of
a new Transportation





                                       16
<PAGE>   19

                                 TRANSTAR, INC.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                      RESULTS OF OPERATIONS -- (CONTINUED)


Services Agreement, which extends through December 31, 2008, the Lake Terminal
Railroad only provides interchange service between linehaul carriers and the
in-plant rail provider for this facility. As a result, Transtar experienced a
decrease of approximately $8.6 million in revenues, with a $1.1 million negative
impact on before tax income.

         On August 13, 1999, USS/Kobe concluded a transaction whereby Blackstone
Capital Partners II acquired the steelmaking and bar producing assets of
USS/Kobe Steel Company at Lorain, Ohio. These facilities are being operated
under the name of Republic Technologies International, L.L.C. USX, which owned
50 percent of USS/Kobe, now owns approximately 16 percent of Republic. The
remaining portion of the USS/Kobe facilities was renamed Lorain Tubular, L.L.C.
Lorain Tubular owns and operates two seamless tubular mills in Lorain, Ohio. On
December 31, 1999, USS acquired Kobe Steel's 50 percent interest in Lorain
Tubular. Transtar's Transportation Service Agreement with these companies'
predecessor (USS/Kobe) has survived these transactions.

                           FORWARD-LOOKING STATEMENTS

         Statements in this report that are not historical (including, but not
limited to, statements regarding the future impact of the Transportation
Services Agreements) are forward-looking statements subject to risk and
uncertainties that could cause actual results to differ materially. Such risk
and uncertainties include fluctuations in economies worldwide, in general, and
the industries that Transtar serves, in particular, fluctuations in Transtar's
customer demand for transportation and related services, changes in
relationships with key customers (including the loss of certain major
customers), changes in variations in weather and climatic patterns, competitive
pressure from other carriers, changes in governmental regulations, changes in
terms from lenders, ability to retain key management and to reach agreement on
labor issues, or other factors identified in this report.


ITEM 7 A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.







                                       17
<PAGE>   20


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                             TRANSTAR HOLDINGS, L.P.


                                                                           Page
                                                                           ----

Report of Independent Accountants ......................................... 19

Consolidated Balance Sheet as of December 31, 1999 and 1998 ............... 20

Consolidated Statement of Income for the Years Ended December 31,
1999, 1998 and 1997 ....................................................... 21

Consolidated Statement of Partners' Equity for the Years Ended
December 31, 1999, 1998 and 1997 .......................................... 21

Consolidated Statement of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997 ....................................................... 22

Notes to Consolidated Financial Statements ................................ 23



                                TRANSTAR,  INC.


Report of Independent Accountants ......................................... 26

Consolidated Balance Sheet as of December 31, 1999 and 1998 ............... 27

Consolidated Statement of Income for the Years Ended December 31,
1999, 1998 and 1997 ....................................................... 28

Consolidated Statement of Retained Earnings for the Years Ended
December 31, 1999, 1998 and 1997 .......................................... 28

Consolidated Statement of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997 ....................................................... 29

Notes to Consolidated Financial Statements ................................ 30




                                       18
<PAGE>   21



                        REPORT OF INDEPENDENT ACCOUNTANTS





To the Partners of Transtar Holdings, L.P.

In our opinion, the consolidated financial statements of Transtar Holdings,
L.P., as listed in the accompanying index on page 18 of the Annual Report on
Form 10-K, present fairly, in all material respects, the financial position of
Transtar Holdings, L.P. and its subsidiary, Transtar Capital Corporation (TCC),
(together, "Holdings") at December 31, 1999, and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of
Holdings' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

Transtar, Inc. is a significant equity investment of Holdings (as described in
Note 1, page 23); accordingly, the financial statements of Transtar, Inc. should
be read in connection with the consolidated financial statements of Holdings.




PricewaterhouseCoopers  LLP
600 Grant Street
Pittsburgh, PA 15219



February 24, 2000




                                       19
<PAGE>   22


                             TRANSTAR HOLDINGS, L.P.

                           CONSOLIDATED BALANCE SHEET


                                                                December 31,
                                                              1999       1998
                                                            --------   --------
                                                          (dollars in thousands)

    ASSETS

Current assets:

  Cash and cash equivalents (Note 2)....................... $    299   $    286

  Other current assets.....................................       10          8
                                                            --------   --------
    Total current assets...................................      309        294

Restricted cash (Note 4)...................................   49,846     47,328

Investment in Transtar.....................................   81,340     54,258

Other assets ..............................................    2,891      3,629
                                                            --------   --------
    Total assets........................................... $134,386   $105,509
                                                            ========   ========

    LIABILITIES

Current liabilities:

  Accounts payable and other current liabilities........... $    389   $    205

  Accrued interest                                             1,296         --
                                                            --------   --------
    Total current liabilities                                  1,685        205

Long-term debt (Note 3)....................................  218,080    192,736
                                                            --------   --------
    Total liabilities......................................  219,765    192,941

    PARTNERS' EQUITY (DEFICIT).............................  (85,379)   (87,432)
                                                            --------   --------
    Total liabilities and partners' equity (deficit)....... $134,386   $105,509
                                                            ========   ========





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




                                       20
<PAGE>   23


                             TRANSTAR HOLDINGS, L.P.

                        CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>


                                                        For the year ended December 31,
                                                         1999         1998        1997
                                                         ----         ----        ----
                                                             (dollars in thousands)

<S>                                                      <C>          <C>         <C>
Revenues............................................. $     --     $     --    $     --
                                                      --------     --------    --------
Operating expenses:

    Selling, general and administrative expenses.....      182          198         236
                                                      --------     --------    --------
        Operating (loss).............................     (182)        (198)       (236)

Interest income......................................    2,532        2,604       2,369

Interest and other financial expenses................  (27,379)     (24,143)    (21,301)
                                                      --------     --------    --------
    (Loss) before equity in earnings of Transtar.....  (25,029)     (21,737)    (19,168)

Equity in earnings of Transtar ......................   28,754       31,349      36,267
                                                      --------     --------    --------
    Net income....................................... $  3,725     $  9,612    $ 17,099
                                                      ========     ========    ========



                   CONSOLIDATED STATEMENT OF PARTNERS' EQUITY


Partners' equity (deficit), beginning of year........ $(87,432)    $(95,370)   $(98,606)

Distribution to partners (Note 4)....................       --         (745)    (13,692)

Net income...........................................    3,725        9,612      17,099

Other adjustments to partners' equity (Note 5).......   (1,672)        (929)       (171)
                                                      --------     --------    --------
Partners' equity (deficit), end of year.............. $(85,379)    $(87,432)   $(95,370)
                                                      ========     ========    ========


</TABLE>



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




                                       21
<PAGE>   24


                             TRANSTAR HOLDINGS, L.P.

                      CONSOLIDATED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>

                                                                          For the year ended December 31,
                                                                          ------------------------------
                                                                           1999        1998        1997
                                                                          ------      ------      ------
                                                                              (dollars in thousands)
<S>                                                                     <C>         <C>         <C>
 Operating activities:

  Net income ....................................................       $  3,725    $  9,612    $ 17,099

  Adjustments to reconcile net income to net cash
  used by operating activities:

    Amortization ................................................             --          --         345

    Non-cash interest and other financial expenses ..............         27,379      24,143      21,301

    Non-cash interest income ....................................         (2,519)     (2,578)     (2,358)

    Equity in earnings of Transtar ..............................        (28,754)    (31,349)    (36,267)

    Changes in:

      Accounts payable ..........................................            184          19        (543)

      All other changes - net ...................................             (2)        (21)         (3)
                                                                         -------     -------     -------
        Net cash provided by (used for) operating activities ....             13        (174)       (426)
                                                                         -------     -------     -------
Investing activities:

  Dividends received ............................................             --          --      12,750
                                                                         -------     -------     -------
        Net cash provided by investing activities ...............             --          --      12,750
                                                                         -------     -------     -------
Financing activities:

  Restricted cash ...............................................             --          --     (12,750)

  Distribution to partners ......................................             --        (745)    (13,692)

  Withdrawal from restricted cash ...............................             --         945      13,992
                                                                        --------    --------    --------
        Net cash provided by (used for) financing activities ....             --         200     (12,450)
                                                                        --------    --------    --------
Increase (decrease) in cash and cash equivalents ................             13          26        (126)

Cash and cash equivalents at beginning of period ................            286         260         386
                                                                        --------    --------    --------
Cash and cash equivalents at end of period ......................       $    299    $    286    $    260
                                                                        ========    ========    ========
</TABLE>


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




                                       22
<PAGE>   25

                             TRANSTAR HOLDINGS, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1: BACKGROUND AND BASIS OF FINANCIAL STATEMENT PRESENTATION AND RELATED
        PARTIES

         On December 28, 1988, agreements were executed forming a new holding
company, Transtar, Inc. (Transtar). Transtar, in turn, purchased certain former
directly or indirectly wholly owned subsidiaries (the transportation
subsidiaries) of USX Corporation (USX). As a result of these agreements,
Blackstone Capital Partners L.P. (BCP) and Blackstone Transportation Partners
L.P. (BTP), investment partnerships (collectively, Blackstone) controlled by
their general partner Blackstone Management Associates L.P. (BMA), owned a 51
percent economic and voting interest in Transtar. USX held a 44 percent economic
and 49 percent voting interest, and the remaining 5 percent of Transtar's equity
was held as nonvoting shares by a management stock trust. A Technical Services
Agreement, an Agreement as to Tax Matters between Transtar and USX, and other
ancillary agreements exist as a result of this transaction. Transportation
Services Agreements with USX and other related parties which existed at the time
of the transaction were renegotiated in 1998 (See Note 13 of the Transtar, Inc.
Financial Statements for additional details).

         BTP was originally formed in 1988 for the sole purpose of holding
voting stock and nonvoting stock in Transtar. BTP was renamed Transtar Holdings,
L.P. (Holdings) in November 1993. Additionally, in November 1993, BMA withdrew
from its role as general partner of Holdings and substituted Blackstone
Transportation Company, Inc. (BTC) as the general partner of Holdings. Transtar
Capital Corporation, a Delaware corporation and wholly owned subsidiary of
Holdings (TCC), was formed in connection with an Offering of 13 3/8% Series A
Senior Discount Notes. In 1994, Holdings and TCC exchanged the Series A Notes
for Series B Notes (Notes). Holdings and TCC have no operations of their own.
TCC is a shell corporation which has nominal assets and equity and no
liabilities, operations or cash flows. Accordingly, the financial statements of
TCC are not presented because they do not provide material information to
investors. Holdings owns 51.0 percent of the voting shares and 53.5 percent of
the economic interest in the capital stock of Transtar.

         The consolidated financial statements presented herein reflect the
ownership by Holdings of the outstanding shares of Transtar capital stock
formerly held by Blackstone. Since Holdings and BCP are under common control,
the contribution of BCP's Transtar shares to Holdings has been accounted for in
a manner similar to a pooling of interests.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation -- The consolidated financial statements of
Holdings include the accounts of Holdings and TCC, a wholly owned subsidiary.
The investment in Transtar, over which Holdings has significant influence in
management and control, is accounted for using the equity method and is carried
in the investment account at Holdings' share of net assets plus advances. A
proportionate share of Transtar's income is included as equity in earnings of
Transtar.

         Cash and Cash Equivalents -- Cash and cash equivalents includes cash on
hand and time deposits, certificates of deposit, high-grade commercial paper,
and government securities, all purchased with maturities of three months or
less, and all of which are carried at cost which approximates market.

         Income Taxes -- No current or deferred United States federal income
taxes or state income taxes have been provided for Holdings since, as a
partnership, Holdings is not subject to such taxes.

         Deferred Debt Issue Costs -- Deferred debt issue costs represent the
unamortized portion of capitalized fees and expenses relating to issuance of the
Notes on December 7, 1993. At that time, fees and expenses amounting to $7.0
million were capitalized. During 1994, additional fees amounting to $0.3 million
were capitalized.




                                       23
<PAGE>   26


                             TRANSTAR HOLDINGS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2: (CONTINUED)

         Use of Estimates -- Generally accepted accounting principles require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
year-end and the reported amounts of revenues and expenses during the year.



NOTE 3: LONG-TERM DEBT
<TABLE>
<CAPTION>

                                         Interest               December 31,    December 31,
                                         Rate (%)    Maturity       1999           1998
                                         --------    --------     --------       --------
                                                     (dollars in thousands)

<S>                                       <C>          <C>        <C>            <C>
Series B Senior Discount Notes .......... 13.375       2003       $218,080       $192,736

  Less amount due within one year........                               --             --
                                                                  --------       --------
  Long-term debt due after one year......                         $218,080       $192,736
                                                                  ========       ========
</TABLE>

         On December 7, 1993, Holdings and TCC (Issuers) issued $218 million
aggregate principal amount of 13.375 percent Series A Senior Discount Notes due
December 15, 2003. In 1994, Holdings and TCC exchanged the Series A Notes for
Series B Notes (Notes). The Notes are the joint and several obligations of the
Issuers. An original issue discount of $118 million was amortized over a six
year period commencing December 15, 1993 and ending December 15, 1999. Interest
will be payable semi-annually in arrears on June 15 and December 15 commencing
on June 15, 2000. The Notes have a principal at maturity of $218 million. The
carrying value represents the principal at maturity less the unamortized
discount. The fair value of the Notes at December 31, 1999 and 1998 was $223.0
million and $214.8 million, respectively. Fair value of the Notes is based on
quoted market prices. The Notes are not guaranteed by Transtar or any of its
subsidiaries and are subordinated to all existing and future liabilities of the
Issuers' subsidiaries. Interest expense attributable to the Notes was $26.6
million, $23.4 million and $20.6 million in 1999, 1998 and 1997, respectively.

         The Issuers will be dependent on sales of, or dividends or
distributions on, Holdings' Transtar stock in order to meet their obligations
under the Notes or new notes as applicable. Except as noted below, Transtar's
December 7, 1993 Credit Agreement (the Credit Agreement) prohibits the payment
of dividends exceeding $1.5 million annually by Transtar until the sixth
anniversary of the issuance of the Notes or new notes, as applicable. Commencing
on the sixth anniversary of the issuance of the Notes or new notes, the Credit
Agreement will permit the payment of dividends sufficient to fund the next cash
interest payment on the Notes or new notes so long as no default with respect to
that Credit Agreement has occurred and is continuing at such time or would
result from the payment of such dividends. Transtar's by-laws require unanimous
approval of Transtar's directors to declare a dividend or other distribution
(absent a decision by an independent consultant breaking a deadlocked vote).
Holdings and USX each have the right, pursuant to a Stockholders Agreement dated
as of December 28, 1988, as amended (the Stockholders Agreement), to designate
certain directors to the board of directors of Transtar. As such, Holdings'
ability to cause Transtar to declare and pay a dividend or other distribution is
dependent upon the concurrence of USX.

         On October 9, 1997, Transtar and the lending institutions that are
party to the Credit Agreement approved an amendment that permitted Transtar to
pay dividends during the fiscal year ending December 31, 1997 in an amount not
to exceed $25.0 million. (See Note 4)




                                       24
<PAGE>   27


                             TRANSTAR HOLDINGS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


NOTE 4: RELATED PARTY TRANSACTIONS

         On October 27, 1997, Transtar declared a cash dividend in the amount of
$625 per share on both its Class A Voting Common Stock (Voting Stock) and its
Class B Nonvoting Common Stock (Nonvoting Stock) to holders of record of the
stock on October 27, 1997. Holdings received $6.4 million on October 30, 1997,
representing its 53% economic interest in the Transtar dividend. Pursuant to an
Indenture relating to the issuance of the Notes (the Notes Indenture), the
dividend payment was paid into an escrow account. On December 16, 1997, Transtar
declared a cash dividend of $625 per share on both its Voting Stock and its
Nonvoting Stock to holders of record of the stock on December 16, 1997. Holdings
received $6.4 million on December 19, 1997, representing its 53% economic
interest in the Transtar dividend. In accordance with the Notes Indenture, this
dividend was paid into the escrow account.

         In February 1998, in accordance with the Notes Indenture, Holdings
offered to repurchase a portion of the Notes at an offer price equal to 101% of
the accreted value of such Notes on the date of purchase. The offer to purchase
the Notes was made by a notice to holders of the Notes and was held open for 20
business days. No Notes were tendered for repurchase.

         In February 1997, in accordance with the Notes Indenture and related to
certain dividends paid into the escrow account in 1996, Holdings offered to
repurchase a portion of the Notes at an offer price equal to 101% of the
accreted value of such Notes on the date of purchase. The offer to purchase the
Notes was made by a notice to holders of the Notes and was held open for 20
business days. No Notes were tendered for repurchase.

         Funds in the escrow account are invested in cash equivalents and may
only be released to pay interest and principal on the Notes, make certain
payments permitted under the Notes Indenture, purchase or optionally redeem
Notes or to pay administrative expenses of Holdings. In 1998 and 1997, in
accordance with the Notes Indenture and an agreement governing the escrow
account, Holdings withdrew from the escrow account $0.7 million and $13.7
million, respectively, to distribute to its partners, and withdrew $0.2 million
and $0.3 million, respectively, to pay certain administrative expenses. No funds
were withdrawn from the escrow account in 1999. Interest earned on the escrow
balance amounted to $2.5 million, $2.6 million and $2.4 million in 1999, 1998
and 1997, respectively.

NOTE 5: PARTNERS' EQUITY

         In 1999, 1998 and 1997, Holdings recorded adjustments to Partners
Equity of $(1.7) million, $(0.9) million and $(0.2) million, respectively. These
adjustments were recorded as a result of changes in ownership related to
Transtar repurchases of treasury stock from its Management Stock Trust.






                                       25
<PAGE>   28


                        REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and Shareholders of
Transtar, Inc.

In our opinion, the consolidated financial statements of Transtar, Inc., as
listed in the accompanying index on page 18 of this Annual Report on Form 10-K,
present fairly, in all material respects, the financial position of Transtar,
Inc., and its subsidiaries (the Company) at December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.





PricewaterhouseCoopers LLP
600 Grant Street
Pittsburgh, PA 15219


February 24, 2000




                                       26
<PAGE>   29


                                 TRANSTAR, INC.

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>

                                                                      December 31,
                                                              -----------------------------
                                                                1999                1998
                                                              ---------           ---------
                                                                  (dollars in thousands)
  ASSETS
<S>                                                           <C>                 <C>
Current assets:
  Cash and cash equivalents (Note 2) ...............          $ 14,274           $ 21,428
  Accounts receivable from related parties (Note 13)            20,921             14,499
  Accounts receivable from trade customers .........            62,017             46,778
  Other current assets (Note 6) ....................            11,049             10,181
                                                              --------           --------
    Total current assets ...........................           108,261             92,886
Property, plant, and equipment
  less accumulated depreciation (Note 7) ...........           417,902            379,287
Operating parts and supplies .......................            14,344             14,930
Other assets (Note 8) ..............................            21,690             15,701
                                                              --------           --------
    Total assets ...................................          $562,197           $502,804
                                                              ========           ========

  LIABILITIES
Current liabilities:
  Accounts payable .................................          $ 75,047           $ 64,560
  Payroll and benefits payable .....................            39,059             38,614
  Accrued taxes ....................................            13,447              6,215
  Accrued interest .................................             1,299              1,146
  Current portion of long-term debt (Note 9) .......           110,000             57,700
  Other current liabilities ........................             1,560              1,498
                                                              --------           --------
    Total current liabilities ......................           240,412            169,733
Long-term debt less current portion (Note 9) .......                --             66,300
Postretirement benefits other than pensions (Note 3)           112,589            110,425
Deferred credits and other liabilities (Note 11) ...            57,281             53,704
                                                              --------           --------
    Total liabilities ..............................           410,282            400,162

  STOCKHOLDERS' EQUITY
Common stock (Note 12) .............................             1,000              1,000
Paid-in capital (Note 12) ..........................            28,601             23,417
Retained earnings ..................................           139,742             85,577
Treasury stock (Note 12) ...........................           (17,428)            (7,352)
                                                              --------           --------
    Total stockholders' equity .....................           151,915            102,642
                                                              --------           --------
    Total liabilities and stockholders' equity .....          $562,197           $502,804
                                                              ========           ========
</TABLE>


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





                                       27
<PAGE>   30


                                 TRANSTAR, INC.

                        CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>


                                                                                For the year ended December 31,
                                                                        -----------------------------------------------
                                                                          1999                1998              1997
                                                                        ---------           ---------         ---------
                                                                                     (dollars in thousands)

<S>                                                                     <C>                <C>               <C>
Revenues from related parties (Note 13) ......................          $241,506            $278,546          $307,037
Revenues from others .........................................           226,779             219,271           219,078
                                                                        --------            --------          --------
  Total revenues .............................................           468,285             497,817           526,115
                                                                        --------            --------          --------
Operating expenses (excluding items shown below) .............           332,654             355,146           363,784
Selling, general, and administrative expenses ................            17,447              12,370            12,558
Depreciation .................................................            26,121              25,519            26,820
                                                                        --------            --------          --------
  Total operating expenses ...................................           376,222             393,035           403,162
                                                                        --------            --------          --------
    Operating income .........................................            92,063             104,782           122,953
Other income .................................................             2,190               2,380             3,899
Interest income ..............................................             1,093               1,537             1,085
Interest and other financial expenses ........................            (9,516)            (12,942)          (17,358)
                                                                        --------            --------          --------
  Income before income taxes .................................            85,830              95,757           110,579
Less provision for income taxes (Note 5) .....................            31,665              36,718            42,134
                                                                        --------            --------          --------
  Net income .................................................          $ 54,165            $ 59,039          $ 68,445
                                                                        ========            ========          ========


                                       CONSOLIDATED STATEMENT OF RETAINED EARNINGS


Retained earnings (deficit), beginning of period .............          $ 85,577            $ 26,538          $(17,822)
Dividends paid (Note 12) .....................................                --                  --           (24,085)
Net income ...................................................            54,165              59,039            68,445
                                                                        --------            --------          --------
Retained earnings, end of period .............................          $139,742            $ 85,577          $ 26,538
                                                                        ========            ========          ========

</TABLE>

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


                                       28
<PAGE>   31

                                 TRANSTAR, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                For the year ended December 31,
                                                               --------------------------------
                                                                 1999        1998        1997
                                                               --------    --------    --------
                                                                    (dollars in thousands)
<S>                                                            <C>         <C>         <C>
Operating activities:
Net income ................................................    $ 54,165    $ 59,039    $ 68,445
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation ............................................      26,121      25,519      26,820
  Non cash interest expense ...............................         504         554         652
  Deferred taxes ..........................................       2,450       5,740       5,879
  Gain on sale of assets ..................................        (527)     (1,141)     (2,676)
  Non cash postretirement benefits expense ................       2,060       4,253       3,781
  Changes in:
    Accounts receivable ...................................     (21,661)      9,866      (7,787)
    Accounts payable ......................................      10,487      (9,103)      7,633
    Deferred credits ......................................         925       2,195        (183)
    All other changes - net ...............................       7,573      (5,017)      3,387
                                                               --------    --------    --------
    Net cash provided by operating activities .............      82,097      91,905     105,951
                                                               --------    --------    --------
Investing activities:
  Capital expenditures ....................................     (68,173)    (26,414)    (25,644)
  Proceeds from the sale of assets ........................       2,196       5,178       5,730
                                                               --------    --------    --------
    Net cash used for investing activities ................     (65,977)    (21,236)    (19,914)
                                                               --------    --------    --------
Financing activities:
  New long-term debt borrowings ...........................      45,000          --          --
  Repayment of long-term borrowings .......................     (59,000)    (72,000)    (62,002)
  Dividends paid ..........................................          --          --     (24,085)
  Payments to acquire treasury stock ......................      (9,274)     (1,557)       (325)
                                                               --------    --------    --------
    Net cash used for financing activities ................     (23,274)    (73,557)    (86,412)
                                                               --------    --------    --------
Decrease in cash and cash equivalents .....................      (7,154)     (2,888)       (375)
Cash and cash equivalents at beginning of period ..........      21,428      24,316      24,691
                                                               --------    --------    --------
Cash and cash equivalents at end of period ................    $ 14,274    $ 21,428    $ 24,316
                                                               ========    ========    ========

Supplemental information:
  Income taxes paid .......................................    $ 21,662    $ 36,006    $ 35,537
  Interest paid ...........................................    $  8,761    $ 13,242    $ 17,394
Noncash investing and financing activities:
  Long-term borrowings - capital leases ...................    $     --    $ (1,230)   $  1,230
                                                               ========    ========    ========

</TABLE>


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







                                       29
<PAGE>   32


                                 TRANSTAR, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: FORMATION OF HOLDING COMPANY AND RELATED PARTIES

         On December 28, 1988, agreements were executed to form a new holding
company, Transtar, Inc. (Transtar). Transtar, in turn, purchased certain former
directly or indirectly wholly owned subsidiaries (the transportation
subsidiaries) of USX Corporation (USX). As a result of these agreements,
Blackstone Capital Partners, L.P. and Blackstone Transportation Partners, L.P.
(BTP), investment partnerships (collectively, Blackstone) controlled by their
general partner Blackstone Management Associates, L.P. (BMA), owned a 51 percent
economic and voting interest in Transtar. USX held a 44 percent economic and 49
percent voting interest, and the remaining 5 percent of Transtar's equity was
held as nonvoting shares by a management stock trust. A Technical Services
Agreement, an Agreement as to Tax Matters between Transtar and USX, and other
ancillary agreements exist as a result of this transaction. Transportation
Services Agreements with USX and other related parties which existed at the time
of the transaction were renegotiated in 1998. A significant part of Transtar's
operations are with related parties (See Note 13). Transtar's operations are
conducted in two business segments -- railroad operations and marine operations.

         BTP was originally formed in 1988 for the sole purpose of holding
voting stock and nonvoting stock in Transtar. In November 1993, BTP was renamed
Transtar Holdings, L.P., a Delaware limited partnership (Holdings), which
assumed ownership of BTP's then 51.8 percent economic interest and 51 percent
voting interest in the capital stock of Transtar. Holdings has no operations of
its own.

         Since its formation, Transtar has repurchased certain shares of
nonvoting stock from its management stock trusts and has recorded these shares
as Treasury Stock. As of December 31, 1999 and 1998, Holdings owned 53.5 percent
and 52.9 percent, respectively, of economic interest and 51 percent voting
interest in the capital stock of Transtar; USX owned 46.2 percent and 45.6
percent, respectively, of economic interest and 49 percent voting interest; and
the management stock trust held the remaining 0.3 percent and 1.5 percent,
respectively, of economic interest.

         The Transtar transaction was accounted for as a purchase transaction
prescribed by Accounting Principles Board Opinion (APB) No. 16 as modified by
the Financial Accounting Standards Board's Emerging Issues Task Force Consensus
No. 86-16, "Carryover of Predecessor Cost in Leveraged Buyout Transactions"
(EITF 86-16). EITF 88-16, "Basis in Leveraged Buyout Transactions," subsequently
superseded EITF 86-16. However, this transaction was completed prior to the
effective date of EITF 88-16.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation -- The consolidated financial statements of
Transtar include the accounts of Transtar and its subsidiaries. All significant
intercompany transactions and balances have been eliminated from the
consolidated financial statements.

         Cash and Cash Equivalents -- Cash and cash equivalents include cash on
hand and time deposits, certificates of deposit (CD), high-grade commercial
paper, or government securities, all purchased with maturities of 3 months or
less, and all of which are carried at cost which approximates market.

         Operating Parts and Supplies -- Operating parts and supplies consist
primarily of repair and replacement materials for railroad and marine equipment
and facilities, and are carried at the lower of average cost or market, defined
as replacement cost.





                                       30
<PAGE>   33


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2:  (CONTINUED)

         Fuel Oil Hedging -- Transtar from time to time enters into agreements
to hedge exposure to price fluctuations in connection with the purchase of fuels
for propulsion. Such transactions are accounted for as part of the commodity
being hedged and are settled on a monthly basis. (See additional information in
Note 10.)

         Property, Plant, and Equipment -- Properties acquired by Transtar at
December 28, 1988 are stated at a combination of historical cost and fair value
as a result of the accounting for the purchase transaction prescribed by APB 16,
as modified by EITF 86-16. Subsequent property acquisitions are recorded at
cost. Depreciation is generally computed on the straight-line method, utilizing
a composite or grouped asset approach, based on estimated lives of the assets,
which are generally from 3 to 50 years. Proceeds from the sale of those
facilities depreciated on a group basis are credited to the depreciation
reserve, which is subject to periodic adjustments through depreciation studies
performed on a scheduled basis.

         When facilities depreciated on an individual basis are sold, the
difference between the selling price and the remaining undepreciated value is
reflected in income. When nondepreciable assets are sold, any gain or loss is
reflected in income.

         Ordinary maintenance and repairs are charged to expense as incurred.

         Deferred Dry Dock Costs -- USS Great Lakes Fleet, Inc. (a Transtar
subsidiary) is required by the U.S. Coast Guard to inspect and perform certain
maintenance on each of its lake-going vessels every 5 years, unless a one-year
waiver has been granted. Costs to perform this operation (dry dock costs) are
deferred and amortized on a straight-line basis over periods of 60 or 72 months
from the time each vessel is dry docked.

         Deferred Lump-Sum Compensation -- Certain Transtar labor contracts
contain provisions for compensation in the form of lump-sum payments. Lump-sum
compensation that is determined to benefit future periods is deferred and
amortized over the period of the contract in accordance with the provisions of
EITF 88-23, "Lump-Sum Payments Under Union Contracts."

         Acquisition Debit -- The Transtar transaction was accounted for as a
business combination following the requirements of APB 16, as modified by EITF
86-16. These principles were used to determine the cost basis of Transtar. The
difference between the purchase price and the new cost basis of Transtar
resulted in the recognition of a $17.4 million acquisition debit in retained
earnings in the consolidated financial statements.

         Revenue Recognition -- Revenues are generally recognized upon
completion of a service, usually a transportation movement.

         Pension and Other Postretirement Benefits Costs -- Substantially all
hourly and salary employees of Transtar are covered by qualified pension plans.
Pension expense is based on a number of factors, including years of service,
career earnings, and actuarial assumptions that are applied to plan assets and
liabilities. Transtar accounts for pension costs in accordance with Statement of
Financial Accounting Standards (SFAS) No. 87, "Employers' Accounting for
Pensions." Transtar provides certain health care and life insurance benefits for
retirees. Substantially all employees may become eligible for these benefits
upon retirement. Transtar accounts for costs related to these benefits in
accordance with SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions."

         Insurance -- Transtar insures its rail, marine, property, and casualty
exposures. Certain self-insured retentions are maintained. Catastrophic coverage
is also carried. Costs resulting from noninsured losses are charged against
income upon occurrence.




                                       31
<PAGE>   34
                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 2: (CONTINUED)

         Postemployment Benefits -- Transtar provides certain benefits to former
or inactive employees after employment but before retirement. Substantially all
employees may become eligible for these benefits. Transtar accounts for costs
related to these benefits in accordance with SFAS No. 112, "Employers'
Accounting for Postemployment Benefits."

         Use of estimates -- Generally accepted accounting principles require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
year end and the reported amounts of revenues and expenses during the year.

         New Accounting Standard -- In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133).
This new Standard requires recognition of all derivatives as either assets or
liabilities at fair value. Transtar does not believe the adoption of this
Standard will have a material effect on its financial position or results of
operations; however, the company is currently unable to reasonably estimate this
effect, if any. Transtar plans to adopt the Standard effective January 1, 2001.

         Reclassifications -- Certain reclassifications of prior years' data
have been made to conform to 1999 classifications.

NOTE 3: PENSIONS AND OTHER POSTRETIREMENT BENEFITS

         Effective January 1, 1989, Transtar adopted a noncontributory defined
benefit plan covering substantially all employees and a defined benefit plan
covering salary employees. Both plans recognize service and earnings as accrued
under the predecessor USX plans, but contain offset provisions for the amount of
pension benefits accrued as of December 28, 1988, the liability for which was
retained by USX. Pension benefits for employees that retired prior to Transtar's
formation on December 28, 1988 are the responsibility of USX. Assets of the
plans generally consist of corporate debt and equity securities and government
obligations.

         Transtar provides certain medical and life insurance benefits to
eligible retired employees and their dependents under defined benefit plans. The
majority of benefits under provisions of these plans have not been prefunded.
Medical and life insurance benefits for employees retired prior to Transtar's
formation are obligations of USX. Assets of the plan generally consist of high
quality corporate and government obligations.





                                       32
<PAGE>   35

                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 3:  (CONTINUED)

         The following provides a reconciliation of benefit obligations, plan
assets and funded status of the plans.

<TABLE>
<CAPTION>

                                                                              Other
                                                Pension Benefits     Postretirement Benefits
                                              --------------------   -----------------------
                                                1999        1998          1999        1998
                                              --------    --------      --------     -------
                                                          (dollars in thousands)
<S>                                           <C>          <C>          <C>           <C>
Change in benefit obligation:
Benefit obligation at January 1 .....         $152,718    $137,125      $ 96,615     $91,849
Service cost ........................            7,902       7,377         1,817       1,771
Interest cost .......................           10,517       9,858         6,265       6,406
Amendments ..........................            4,118       1,439            40          --
Curtailments ........................              736       2,007            --          --
Actuarial (gain) loss ...............          (15,280)      5,847         3,762        (168)
Benefits paid from plan assets ......          (11,369)    (10,935)           --          --
Benefits paid by company ............             (214)         --        (5,365)     (3,243)
                                              --------    --------      --------     -------
Benefit obligation at December 31 ...         $149,128    $152,718      $103,134     $96,615
                                              ========    ========      ========     =======

</TABLE>

<TABLE>
<CAPTION>

                                                                                 Other
                                                Pension Benefits        Postretirement Benefits
                                              --------------------      -----------------------
                                                1999        1998            1999        1998
                                              --------    --------        --------     -------
                                                            (dollars in thousands)
<S>                                           <C>         <C>             <C>          <C>
Change in plan assets:
Fair value of plan assets at
 January 1 .....................              $114,958    $ 97,551          $264        $214
Actual return on plan assets ...                 6,914      15,032            16          13
Company contributions ..........                 7,830      13,310            40          40
Benefits paid from plan assets                 (11,369)    (10,935)           --          --
Administrative payments ........                    --          --           (3)          (3)
                                              --------    --------          ----        ----
 Fair value of plan assets at
  December 31 ..................              $118,333    $114,958          $317        $264
                                              ========    ========          ====        ====

</TABLE>




                                       33
<PAGE>   36


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



NOTE 3:  (CONTINUED)

<TABLE>
<CAPTION>

                                                                                              Other
                                                          Pension Benefits (a)       Postretirement Benefits
                                                         ----------------------      ------------------------
                                                           1999          1998          1999           1998
                                                         --------      --------      ---------      ---------
                                                                         (dollars in thousands)

<S>                                                      <C>           <C>           <C>            <C>
Funded status of the plans at December 31 .........      $(30,795)     $(37,760)     $(102,817)     $ (96,351)
Unrecognized prior service cost ...................         5,534         3,188            539            746
Unrecognized net actuarial (gain) loss ............        21,586        33,156        (14,442)       (19,056)
Unrecognized net transition obligation ............         2,630         3,287             --             --
                                                         --------      --------      ---------      ---------
  Prepaid (accrued) benefit cost ..................      $ (1,045)     $  1,871      $(116,720)     $(114,661)
                                                         ========      ========      =========      =========

(a) Includes a plan that has an accumulated benefit obligation in excess of plan assets:

   Accumulated benefit obligation .................      $ (2,525)     $ (1,899)
   Projected benefit obligation ...................      $ (2,531)     $ (2,119)
   Plan assets ....................................            --            --
</TABLE>

<TABLE>
<CAPTION>
                                                                    Other
                                                  Pension       Postretirement
                                                  Benefits         Benefits
                                                ------------    --------------
                                                1999    1998    1999      1998
                                                ----    ----    ----      ----
<S>                                             <C>     <C>     <C>       <C>
Weighted average actuarial assumptions
 at December 31:
Discount rate ..............................    7.5%    6.75%   7.5%     6.75%
Expected return on plan assets .............   11.0%    11.0%   6.0%      6.0%
Rate of compensation increase ..............    3.6%     3.6%   4.0%      4.0%
Assumed health care cost trend rate ........     --       --    5.0%      5.0%

         The assumed health care cost trend rate in 2000 and thereafter is 5%

         Net periodic pension and other postretirement benefit costs include the
following components:
</TABLE>

<TABLE>
<CAPTION>

                                                                                             Other
                                                      Pension Benefits              Postretirement Benefits
                                              -------------------------------    -----------------------------
                                                1999        1998       1997       1999       1998       1997
                                              --------    --------    -------    -------    -------    -------
<S>                                           <C>         <C>         <C>        <C>        <C>        <C>
Service cost ...........................      $  7,902    $  7,377    $ 6,508    $ 1,817    $ 1,771    $ 1,777
Interest cost ..........................        10,517       9,858      8,826      6,265      6,406      6,639
Expected return on plan assets .........       (12,791)    (11,171)    (9,310)       (18)       (14)       (12)
Amortization - net transition obligation           657         657        657         --         --         --
             - prior service costs .....         1,771       1,751      1,299        247        247        247
             - actuarial (gains) losses          2,768       1,644      1,286       (846)      (914)      (866)
                                              --------    --------    -------    -------    -------    -------
  Net periodic benefit cost ............      $ 10,824    $ 10,116    $ 9,266    $ 7,465    $ 7,496    $ 7,785
                                              ========    ========    =======    =======    =======    =======

</TABLE>


                                       34
<PAGE>   37

                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 3: (CONTINUED)

Pension

         As a result of a reduction in business at The Lake Terminal Railroad (a
Transtar subsidiary) Transtar, in addition to the benefit cost shown above,
recognized a curtailment loss of $0.9 million in 1999 and $2.6 million in 1998.
Also in addition to the benefits cost shown above, programs for early
retirements and separations caused recognition of a curtailment loss of $4.0
million in 1997.

         Transtar participates in certain defined benefit multi-employer plans
of maritime unions. No expenses were incurred for these plans in 1999. Expenses
related to these plans amounted to $0.2 million, and $1.0 million in 1998 and
1997, respectively. The company also sponsors certain defined contribution
pension plans. Participation in these plans is available to substantially all
salaried employees and to certain groups of hourly employees. Company
contributions to the salary plan are based on matching of employee contributions
up to certain limits specified by the provisions of the plan. The cost of this
plan was $1.6 million, $1.5 million and $1.5 million in 1999, 1998 and 1997,
respectively.

Other Postretirement Benefits

         A one percentage point change in assumed health care cost trend rates
would have the following effects:


                                       1% increase      1% decrease
                                       -----------      -----------
                                               (in thousands)
Effect on total of service and
 interest cost components ......          $1,329          $(1,079)

Effect on postretirement benefit
 obligation ....................          $8,603          $(6,937)

NOTE 4: OPERATING SEGMENTS

         Transtar consists of two reportable segments: Railroad Group and Marine
Group. The two reportable segments provide different services, have different
methods of distributing their services and operate in different regulatory
environments.

         Railroad Group -- This segment is composed of nine business units which
are primarily railroad companies. The Railroad Group provides rail transport and
material handling services for steel related customers, utilities, and
miscellaneous other customers in the midwest, south and eastern United States.

         Marine Group -- This segment is composed of two shipping operations and
one fresh water/saltwater dock facility that provide primary water transport for
essentially the same steel related facilities as the rail group, as well as
utilities and miscellaneous other customers.



                                       35
<PAGE>   38



                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 4: (CONTINUED)

         The accounting policies of the reportable segments are the same as
those disclosed in Note 2. Transtar evaluates the performance of its operating
segments based on the operating income of the respective business units.
Summarized financial information concerning reportable segments is shown on the
following table. The "Other" column includes non-allocated corporate related
items and the elimination of inter-business unit transactions.
<TABLE>
<CAPTION>

                                         Railroad     Marine
                                          Group       Group       Other       Total
                                          -----       -----       -----       -----
<S>                                     <C>         <C>         <C>         <C>
1999
----
Revenues - external customers ......    $343,870    $124,415    $     --    $468,285
Operating income ...................      80,266      11,586         211      92,063
Depreciation .......................      20,870       5,251          --      26,121
Interest and other financial expense       6,586       3,312        (382)      9,516
Income tax expense .................      28,250       3,389          26      31,665
Total assets .......................     423,634     163,754     (25,191)    562,197
Capital expenditures ...............      23,110      45,063          --      68,173

1998
----
Revenues - external customers ......    $349,618    $148,199    $     --    $497,817
Operating income ...................      77,863      26,899          20     104,782
Depreciation .......................      19,895       5,624          --      25,519
Interest and other financial expense      10,532       2,739        (329)     12,942
Income tax expense .................      27,366       9,326          26      36,718
Total assets .......................     405,212     119,191     (21,599)    502,804
Capital expenditures ...............      25,522         892          --      26,414

1997
----
Revenues - external customers ......    $358,597    $167,518    $     --    $526,115
Operating income ...................      86,893      36,313        (253)    122,953
Depreciation .......................      20,070       6,750          --      26,820
Interest and other financial expense      13,904       3,684        (230)     17,358
Income tax expense .................      29,936      12,230         (32)     42,134
Total assets .......................     414,443     122,855     (15,306)    521,992
Capital expenditures ...............      24,387       1,257          --      25,644

</TABLE>

         The majority of revenues earned are attributed to customers located in
the United States and all assets are located in the United States. See Note 13
regarding information about major customers.





                                       36
<PAGE>   39


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



NOTE 5: INCOME TAXES

         Components of income tax expense are as follows:
<TABLE>
<CAPTION>
                                            1999       1998       1997
                                           -------    -------    -------
                                               (dollars in thousands)
<S>                                        <C>        <C>        <C>
Current federal ......................     $24,962    $27,239    $32,307

Current state, local, and foreign ....       4,253      3,739      3,948

Deferred taxes .......................       2,450      5,740      5,879
                                           -------    -------    -------
Total ................................     $31,665    $36,718    $42,134
                                           =======    =======    =======

</TABLE>
         The reconciliation of the U.S. statutory income tax rate to the total
provision is as follows:


<TABLE>
<CAPTION>

                                                                 1999                1998             1997
                                                           ----------------    ---------------   ---------------
                                                                           (dollars in thousands)

<S>                                                        <C>        <C>      <C>       <C>     <C>       <C>
Statutory rate applied to income
  Before tax .........................................     $30,041   35.00%   $33,515   35.00%  $38,703   35.00%

State income tax after federal income
  tax impact .........................................       3,002    3.50      3,021    3.15     3,259    2.95

Revision of prior years tax provision
 estimates ...........................................      (1,500)  (1.75)        --      --        --      --

Other, net ...........................................         122     .14        182     .19       172     .15
                                                           -------   -----    -------   -----   -------   -----
Total ................................................     $31,665   36.89%   $36,718   38.34%  $42,134   38.10%
                                                           =======   =====    =======   =====   =======   =====

</TABLE>

         Deferred tax assets and liabilities are composed of the following:

<TABLE>
<CAPTION>

                               December 31, 1999     December 31, 1998
                              -------------------   -------------------
                              Assets  Liabilities   Assets  Liabilities
                              ------  -----------   ------  -----------
                                       (dollars in thousands)
<S>                          <C>      <C>          <C>      <C>
Accrual differences ...      $ 5,132    $    --    $ 3,662    $    --

Postretirement benefits       45,338         --     45,831         --

PP&E basis differences            --     81,444         --     75,638
                             -------    -------    -------    -------
Total .................      $50,963    $81,444    $49,000    $75,638
                             =======    =======    =======    =======

Net balance ...........                 $30,481               $26,638
                                        =======               =======
</TABLE>


                                       37
<PAGE>   40


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 6: OTHER CURRENT ASSETS
<TABLE>
<CAPTION>

                                                   December 31,
                                             ------------------------
                                              1999             1998
                                             -------          -------
                                              (dollars in thousands)
<S>                                          <C>              <C>
Deferred tax asset ................          $ 5,994          $ 4,661

Supplies - current ................            2,319            1,670

Prepaid insurance .................            1,355            1,151

Employee homes acquired ...........              426            1,341

Deferred compensation .............              522              271

Deferred lease costs - current ....               --              587

Other current assets ..............              433              500
                                             -------          -------
Total .............................          $11,049          $10,181
                                             =======          =======
</TABLE>
NOTE 7: PROPERTY, PLANT, AND EQUIPMENT
<TABLE>
<CAPTION>

                                                     December 31,
                                               ------------------------
                                                 1999           1998
                                               ---------      ---------
                                                 (dollars in thousands)
<S>                                            <C>            <C>
Railroad equipment .........................   $ 420,721      $ 413,264

Lake vessels and related equipment .........     133,936         88,918

Barges, tows, and related equipment ........      35,968         36,112

Buildings ..................................      32,620         32,192

Other ......................................       6,526          3,971
                                               ---------      ---------
  Subtotal - depreciable property ..........     629,771        574,457

  Less - accumulated depreciation ..........    (258,735)      (242,492)
                                               ---------      ---------
Net depreciable property ...................     371,036        331,965

Land .......................................      46,866         47,322
                                               ---------      ---------
Property, plant, and equipment,
less accumulated depreciation ..............   $ 417,902      $ 379,287
                                               =========      =========
</TABLE>
         Transtar leases a variety of facilities and equipment, including marine
vessels, railroad equipment, barges, office equipment, and office space. Some of
these leases contain purchase and renewal options and a residual value guarantee
at the end of their lease term. Rent expense for operating leases was $26.9
million, $26.9 million, and $26.8 million for 1999, 1998, and 1997,
respectively.





                                       38
<PAGE>   41


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 7: (CONTINUED)

         Total commitments under operating leases are as follows: (dollars in
thousands)


               Year
               ----

               2000 .........................          $ 23,155

               2001 .........................            20,082

               2002 .........................            18,527

               2003 .........................            17,365

               2004 .........................            15,357

               Later years ..................            72,944
                                                       --------
                 Total minimum lease payments          $167,430
                                                       ========


NOTE 8: OTHER  ASSETS
<TABLE>
<CAPTION>

                                                           December 31,
                                                     ------------------------
                                                      1999             1998
                                                     -------          -------
                                                      (dollars in thousands)
<S>                                                  <C>              <C>
Long-term receivables and other
investments ...............................          $ 9,209          $ 5,429

Deferred lease costs ......................            4,141            4,188

Deferred dry dock costs ...................            4,927            3,123

Deferred debt issue costs .................              571              398

Other deferred charges ....................            2,842            2,563
                                                     -------          -------
  Total ...................................          $21,690          $15,701
                                                     =======          =======

</TABLE>

         Deferred debt issue costs represent the unamortized portion of
capitalized fees and expenses relating to a term loan and revolving credit
facility obtained in connection with a Credit Agreement dated December 7, 1993
and an amendment and restatement of that Credit Agreement dated August 26, 1999.
Fees and expenses amounting to $0.7 million and $4.2 million were capitalized in
1999 and 1993, respectively, and are being amortized over the life of the term
loan.





                                       39
<PAGE>   42


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 9: LONG-TERM DEBT
<TABLE>
<CAPTION>


                                                                 December 31
                                       Interest                ---------------
                                       Rates (%)  Maturity     1999       1998
                                       ---------  --------     ----       ----
                                                            (dollars in thousands)

<S>                                    <C>         <C>       <C>        <C>
Long-term debt (a) ...................    (b)       2000     $110,000   $124,000


  Less amount due within 1 year ......                        110,000    (57,700)
                                                             --------   --------

  Long-term debt due after 1 year ....                       $     --   $ 66,300
                                                             ========   ========
</TABLE>

(a) A Credit Agreement with a group of lending institutions dated December 7,
    1993 (the Original Credit Agreement) provided for a series of short-term
    variable rate loans over a 7-year life, which were collateralized by the
    stock of the Transtar subsidiaries. Principal payments were scheduled
    semi-annually on June 30 and December 31 in installments ranging from $20
    million to $42 million. The first scheduled payment was due on June 30,
    1994, and the last scheduled payment was due on December 31, 2000. Interest
    accrued at variable rates based on either an alternate base rate, an
    adjusted CD rate, or an adjusted London Interbank Offered Rate. Transtar
    periodically selected from these debt instruments to determine the variable
    rates of the loan. Interest rates were available in multiples of $1 million
    of borrowings in durations ranging from 1 day to 6 months.

    On June 29, 1999 Transtar entered into a Short Term Credit Agreement (Short
    Term Credit Facility) with a bank which enabled Transtar to borrow, on an
    unsecured term basis, an aggregate principal amount of $30 million. The
    Short Term Credit Facility was used by Transtar to finance a portion of the
    purchase price of a lake vessel, which previously was operated by Transtar
    under a long-term lease. Interest accrued at variable rates based on either
    an alternate base rate or an adjusted London Interbank Offered Rate. The
    effective interest rate for this facility was 7.0 percent. Transtar
    periodically selected from these debt instruments to determine the variable
    rates of the loan. Interest rates were available in multiples of $1 million
    in durations ranging from 1 day to 6 months. This Short Term Credit Facility
    included certain restrictions on capital spending, levels of new
    indebtedness, and the payment of dividends, as well as certain financial
    covenant requirements. On June 29, 1999, Transtar borrowed $15 million from
    its existing revolving credit facility (see below) to finance the remainder
    of the purchase price of the lake vessel.

    On August 26, 1999, Transtar amended and restated the Original Credit
    Agreement to provide for certain lenders to make additional term loans to
    Transtar in an amount not to exceed $45 million, the proceeds of which were
    used to refinance indebtedness in the aggregate principal amount of
    $30 million of loans outstanding under the Short Term Credit Facility, and
    to repay $15 million of revolving credit loans. The Credit Agreement as
    amended and restated (the Restated Credit Agreement) provides for Tranche A
    Term Loans in the aggregate principal amount of $85 million (the aggregate
    principal amount outstanding as of August 26, 1999 under the Original Credit
    Agreement) from lenders committed in the Original Credit Agreement, and
    Tranche B Term Loans in the aggregate principal amount of $45 million, all
    of which are collateralized by the stock of the Transtar subsidiaries.
    Tranche A principal payments are scheduled for June 30, 2000 ($26.1 million)
    and December 31, 2000 ($39.9 million). Tranche B principal payments are
    scheduled for June 30, 2000 ($2.0 million) and December 31, 2000 ($42.0
    million). Interest accrues at variable rates based on either an alternate
    base rate, an adjusted CD rate, or an adjusted London Interbank Offered
    Rate. Transtar periodically selects from these debt instruments to determine
    the variable rates of the loans. Interest rates are available in multiples
    of $1.0 million of borrowings in durations ranging from 1 day to 6 months.



                                       40
<PAGE>   43



                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 9:  (CONTINUED)

    In 1999, voluntary or asset sales prepayments of $59 million were applied to
    payments scheduled by these agreements for June 30, 1999, December 31, 1999
    and June 30, 2000. In 1998, voluntary or asset sales prepayments of
    $72 million were applied to payments scheduled by the Original Credit
    Agreement for June 30, 1998, December 31, 1998, and June 30, 1999.

(b) Transtar's debt interest expense in 1999, 1998, and 1997 was $6.9 million,
    $11.9 million, and $16.3 million, respectively. The average effective rates
    for the comparable periods were 6.8 percent, 7.2 percent, and 7.2 percent,
    respectively.

         Transtar has a revolving credit agreement with a consortium of banks.
This loan facility of up to $25 million is available for working capital and
letter of credit purposes through December 31, 2000. Interest accrues at the
same variable rates as the term debt. There is an annual commitment fee of 1/2
of 1 percent of the unused portion of the loan facility. Outstanding letters of
credit are $1.1 million and $0.9 million at December 31, 1999 and 1998,
respectively. In addition to the $15.0 million borrowed on June 29, 1999 and
repaid as part of the Restated Credit Agreement, Transtar periodically borrowed
funds from this facility in 1999 and repaid them in full. Transtar did not
borrow from this facility in 1998.

         The above debt agreements contain certain restrictions on capital
spending, levels of new indebtedness, and the payment of dividends, as well as
certain financial covenant requirements.

NOTE 10: FAIR VALUE OF FINANCIAL INSTRUMENTS

          The estimated fair value of financial instruments has been determined
by Transtar using the best available market information and appropriate
valuation methodologies. However, considerable judgment was necessary in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented are not necessarily indicative of the amounts that
Transtar could realize in a current market exchange or the value that ultimately
will be realized upon maturity or disposition. Additionally, because of the
variety of valuation techniques permitted under SFAS No. 107, "Disclosures about
Fair Values of Financial Instruments," comparability of fair values among
entities may not be meaningful. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

<TABLE>
<CAPTION>

                                                                December 31,
                                                 -----------------------------------------
                                                        1999                   1998
                                                 ------------------      -----------------
                                                           Estimated              Estimated
                                                Carrying      Fair     Carrying      Fair
                                                 Amount      Value      Amount      Value
                                                 ------      -----      ------      -----
                                                           (dollars in thousands)

<S>                                             <C>         <C>         <C>        <C>
Assets:

  Cash and cash equivalents ................    $ 14,274    $ 14,274    $21,428    $ 21,428

  Noncurrent receivables ...................       5,363       5,363      2,236       2,236

Liabilities:

  Current maturities of long-term debt .....     110,000     110,000     57,700      57,700

  Long-term debt ...........................          --          --     66,300      66,300

Off-balance-sheet financial instruments:

  Fuel oil hedges ..........................          --          --         --        (228)

</TABLE>


                                       41
<PAGE>   44


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 10: (CONTINUED)

         The following methods and assumptions were used to estimate the fair
value of those financial instruments for which it was practicable to estimate
that value.

         Cash and cash equivalents -The carrying amount for cash and cash
equivalents approximates fair value.

         Noncurrent receivables - The carrying amount for noncurrent receivables
approximates fair value.

         Current debt and long-term debt - The carrying amount of Transtar's
borrowings under its credit facilities approximates fair value, because most of
Transtar's borrowings have variable rates of interest matching terms which exist
in the market.

         Fuel oil hedges - The fair value of fuel oil hedges is based on the
futures index for NYMEX No. 2. Transtar had no fuel oil hedging agreements in
place at December 31, 1999 and one fuel oil hedging agreement in place for 1.0
million gallons per month at December 31, 1998. Transtar generated expense of
$0.2 million in 1999, $0.3 million in 1998 and no income or expense in 1997 as a
result of fuel oil hedges.

NOTE 11: DEFERRED CREDITS AND OTHER LIABILITIES


                                              December 31,
                                        ------------------------
                                         1999             1998
                                        -------          -------
                                         (dollars in thousands)

Deferred taxes ...............          $36,475          $31,299

Personal injuries ............           16,972           16,827

Deferred credits - leases ....           2,343            2,083

Other ........................            1,491            3,495
                                        -------          -------

     Total ...................          $57,281          $53,704
                                        =======          =======


NOTE 12: EQUITY

         As of December 31, 1999 and 1998, Transtar had authorized and issued
10,000 shares of Class A Voting Common Stock (Voting Stock) with no par value
and 10,000 shares of Class B Nonvoting Common Stock (Nonvoting Stock) with no
par value. Holdings owns 5,100 shares of the Voting Stock and 5,100 shares of
the Nonvoting Stock and USX owns 4,900 shares of the Voting Stock and 3,900
shares of the Nonvoting Stock. As of December 31, 1999 and 1998, 50 shares and
296 shares, respectively, of the Nonvoting Stock were held by management stock
trusts and an additional 950 shares and 704 shares, respectively, of the
Nonvoting Stock, previously repurchased from the management stock trusts were
being held as Treasury Stock at cost.

         On October 27, 1997, Transtar declared a cash dividend of $625 per
share on both its Voting Stock and its Nonvoting Stock to holders of record of
the stock on October 27, 1997. The dividend of $12.0 million was paid on October
30, 1997. On December 16, 1997 Transtar declared a cash dividend of $625 per
share on its Voting Stock and its Nonvoting Stock to holders of record of the
stock on December 16, 1997. The dividend of $12.0 million was paid on December
19, 1997.

          During 1994, Transtar implemented a stock option plan to promote the
interests of Transtar and its stockholders by attracting and retaining key
management employees. The total number of options granted in 1994 was 750, all
of which were subject to a five-year vesting schedule commencing December 28,
1993, unless vesting was




                                       42
<PAGE>   45


                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 12:  (CONTINUED)

waived by Transtar's Compensation Committee. All options granted in 1994 have an
exercise price of $8,364.05, which was the estimated fair market value of the
Company's common stock at the date of grant. The options became exercisable up
to 20 percent per year and do not have an expiration date. Shares exercised were
304, and 103 in 1999 and 1998, respectively. As of December 31, 1999, there were
295 options vested and exercisable under the 1994 grant. Compensation expense
related to the options was $3.0 million, $0.1 million and $0.1 million in 1999,
1998 and 1997, respectively.

        In 1996, Transtar adopted SFAS No. 123, "Accounting for Stock-Based
Compensation." The statement defines a fair-value-based method of accounting for
employee stock options, but allows companies to continue to record compensation
cost using currently accepted recognition principles. Companies electing to
continue using currently accepted recognition principles must make proforma
disclosures of net income as if the fair-value-based method of accounting had
been applied to options granted in fiscal years beginning after December 15,
1994. Transtar adopted the disclosure-only options under SFAS No. 123. In 1998,
105 options were granted under the plan, all of which are subject to a five-year
vesting schedule commencing December 28, 1997. All options granted in 1998 have
an exercise price of $24,687.80 which was the estimated fair market value of the
Company's common stock at the date of grant. These options become exercisable up
to 20 percent per year and do not have an expiration date. The effect on net
income that would have been reflected in the income statement if the
fair-value-based method of accounting had been used to account for the issuance
of these options is immaterial. There were no options granted in 1999 and during
the years 1995 through 1997.

NOTE 13: RELATED-PARTY TRANSACTIONS

         The Transportation Services Agreements which existed from the formation
of Transtar through July 1, 1998 provided Transtar with certain rights
including: (i) sole serving rail carrier status at USX's Minntac, Gary,
Fairfield and Mon Valley facilities as well as the former USS/Kobe Steel
Company's Lorain facility (USS/Kobe)(see below); (ii) sole rights to perform
specified USX in-plant switching services; (iii) primary Great Lakes Fleet bulk
commodity carrier status for USX, including the former USS/Kobe; and (iv)
primary inland barge operator status for the water transport of USX's
commodities originating at or destined for Birmingham, Alabama. With respect to
the services referred to in clause (i) above, the Transportation Services
Agreements provided that such services would continue indefinitely as long as a
non-Transtar rail carrier had not obtained access to the USX facility being
served; with respect to the services referred to in clause (ii) above, the
agreements provided that such services would continue indefinitely so long as
USX had not purchased from Transtar or otherwise obtained the Transtar track on
which such services were provided.

         In August 1999, USX and Kobe Steel, Ltd. completed a transaction that
combined the steelmaking and bar producing assets of the former USS/Kobe with
companies controlled by Blackstone Capital Partners II. The combined entity was
named Republic Technologies International, L.L.C (Republic). USX owns 16 percent
and Blackstone owns 47 percent of Republic. The seamless pipe business of the
former USS/Kobe was excluded from this transaction. That business, now known as
Lorain Tubular Company L.L.C (Lorain Tubular), became a wholly owned subsidiary
of USX at the close of business on December 31, 1999.

         With respect to the services referred to in clause (ii) above, the
former USS/Kobe elected to terminate in-plant switching services provided by the
Lake Terminal Railroad (a Transtar subsidiary) effective December 29, 1998. The
former USS/Kobe had not purchased or otherwise obtained any Transtar track at
this facility. In-plant switching services provided by parties other than
Transtar are being performed on tracks currently owned by Republic and Lorain
Tubular. The impact on Transtar was a revenue reduction of approximately $8.6
million in 1999, with a $1.1 million negative impact on before tax income.



                                       43
<PAGE>   46

                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 13: (CONTINUED)

         In December 1998, Transtar, USX and the former USS/Kobe (for the former
USS/Kobe Great Lakes Fleet bulk commodity carrier service only) executed new
Transportation Services Agreements which, among other things, extend the time
and exclusivity periods of the original agreements. The new agreements were
approved on February 12, 1999 by the lending institutions who participate in
Transtar's Credit Agreement. Effective August 13, 1999, the Transportation
Services Agreement related to the former USS/Kobe which includes bulk commodity
carrier services provided by the Great Lakes Fleet was assigned to Republic. All
the agreements were retroactively effective July 1, 1998 and will extend through
December 31, 2004 for the services referred to in clauses (i), (ii) and (iv)
above, with the exception of rail and rail related services at Republic and
Lorain Tubular (see below), and will extend through March 15, 2005 for the
services referred to in clause (iii) above. With respect to the services
referred to in clause (i) above, the new Transportation Services Agreements
provide that such services will continue indefinitely as long as a non-Transtar
rail carrier has not obtained access to the USX facility being served; with
respect to the services referred to in clause (ii) above, the agreements are
exclusive through 2004 and provide that such services will continue indefinitely
so long as USX has not purchased from Transtar or otherwise obtained the
Transtar track on which such services are provided. The new agreements cover all
of the services provided by Transtar under the previous Transportation Service
Agreements, except that a third party may provide transportation services for:
with respect to the services referred to in clause (i) above, a maximum per year
of forty percent of blast furnace burden tonnage destined for USX's Edgar
Thomson facility in the Mon Valley; with respect to the services referred to in
clause (iii) above, a maximum per year of ten percent of tonnage via the Great
Lakes from March 16, 1999 through March 15, 2003 and a maximum per year of
fifteen percent of tonnage via the Great Lakes from March 16, 2003 through March
15, 2005; and with respect to the services referred to in clause (iv) above, a
maximum per year of ten percent of imported iron ore and coke tonnage destined
for USX's Fairfield, Alabama facility, a maximum per year of ten percent of
export coal tonnage originating at US Steel's Concord Preparation Plant and a
maximum per year of ten percent of domestic coal tonnage via barge originating
at US Steel's Concord Preparation Plant. The agreements provide that USX shall
not, at any time, take any action (a) which would in any way, either directly or
indirectly, encourage any non-Transtar rail carrier to attempt to obtain access
to any of the USX plants for which Transtar is the sole serving rail carrier or
(b) which would in any way assist in and/or support any such rail carrier in any
efforts to obtain such access; provided that USX may, after December 31, 2004,
request that an independent arbitrator or mediator determine whether it is
reasonable and equitable under the facts, circumstances and the regulatory and
competitive conditions in effect at that time, at one or more facilities, for
USX to seek access for a non-Transtar rail carrier. Transtar is required to
acquire certain coke rail cars, not to exceed a maximum expenditure of $20
million. The agreements also provide for certain price concessions and market
based price changes. USX was paid a refund of approximately $6.3 million (with
an equal reduction in Transtar's operating income which was recognized in June
1998) for services provided during the first half of 1998. Including this
refund, total price concessions for 1998 reduced Transtar's revenue and
operating income by $14.4 million. Price concessions reduced Transtar's 1999
revenue and operating income by $14.5 million as compared to 1997 levels.

         On December 29, 1998, Transtar and the former USS/Kobe executed a new
Transportation Services Agreement for sole service carrier work including
absorbed switching, equipment rentals and other related transportation services.
The agreement was approved on February 12, 1999 by the lending institutions who
participate in Transtar's Credit Agreement. Effective August 13, 1999, this
agreement was assigned to Republic for services provided to Republic. The new
agreement was effective December 29, 1998 and extends through December 31, 2008
for the sole service carrier work. The agreement provides that Republic and
Lorain Tubular shall not, during the term of the agreement, take any action (a)
which would in any way, either directly or indirectly, encourage any
non-Transtar rail carrier to attempt to obtain access to their respective
facilities or (b) which would in any way assist in and/or support any such rail
carrier in any efforts to obtain such access. The agreement provides for market
based price changes and no price concessions. In-plant scrap handling via rubber
tire vehicles is under separate agreement (also assigned to Republic) until July
31, 2000.


                                       44
<PAGE>   47

                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 13: (CONTINUED)

         Transtar earns a significant portion of its revenues from
transportation and related services provided to USX. For 1999, 1998, and 1997,
transactions with USX represented 52 percent, 56 percent, and 58 percent of
total revenues, respectively. Receivables from USX as of December 31, 1999 and
1998 represented 25 percent and 23 percent of total receivables, respectively.
Terms of these transactions are similar to those of nonrelated customers.

         In 1999 Transtar earned revenues of $1.9 million from Republic.

         Transtar provides maintenance services to USX. Proceeds from services
provided amounted to $4.0 million, $5.8 million, and $6.4 million for 1999,
1998, and 1997, respectively.

         USX provided several corporate services associated with ongoing
business activities of Transtar. Total expenses for these services were $ 0.8
million, $0.8 million, and $0.6 million for 1999, 1998, and 1997, respectively.

         Transtar purchased materials from USX amounting to $0.9 million, 0.6
million, and $1.1 million in 1999, 1998, and 1997, respectively. USX purchased
materials from Transtar amounting to $0.5 million and $0.7 million in 1998 and
1997, respectively. No materials were purchased by USX in 1999.

         Pursuant to an Asset Purchase Agreement related to the formation of
Transtar in December 1988, Transtar reimbursed USX $0.8 million, $1.0 million,
and $1.1 million for certain benefits paid to Transtar retirees by USX in 1999,
1998, and 1997, respectively.

         Transtar pays, to USX and a Blackstone affiliate, a monitoring fee of
0.15 percent of consolidated revenue. Total monitoring fees (0.3 percent of
revenue) paid and accrued were $1.4 million, $1.5 million, and $1.6 million in
1999, 1998, and 1997, respectively. These fees were accounted for as operating
expense.

NOTE 14: COMMITMENTS AND OTHER CONTINGENCIES

         Transtar is subject to federal, state, local, and foreign laws and
regulations relating to the environment. These laws generally provide for
control of pollutants released into the environment and require responsible
parties to undertake remediation of hazardous waste disposal sites. Penalties
may be imposed for noncompliance. Transtar provides for remediation costs and
penalties when the responsibility to remediate is probable and the amount of
associated costs is reasonably determinable. At December 31, 1999 and 1998,
accrued liabilities for remediation totaled $0.2 million and $0.4 million,
respectively. For the period 1989 through 1999 actual cash payments associated
with environmental expense have totaled $10.5 million.

          Transtar and USX have entered into an environmental indemnification
agreement, whereby USX has agreed to indemnify Transtar against 75 percent of
certain environmental claims, losses, liabilities, obligations, damages,
deficiencies, costs, and expenses (collectively, Environmental Liabilities) in
excess of $10 million. This environmental indemnification agreement covers
Environmental Liabilities relating to certain assets and properties transferred
by USX to Transtar upon the formation of Transtar, which Environmental
Liabilities existed or occurred prior to such formation. Of the $10.5 million
expended since 1988, $7.9 million is applicable to the $10 million threshold. It
is not presently possible to estimate the ultimate amount of all remediation
costs that might be incurred or the penalties that may be imposed.

         Contractual commitments in the amount of $14.5 million were made in
1999 to acquire components for the assembly of 280 freight cars. The acquisition
of the freight car components began in mid 1999 and was in response to a
commitment under the Transportation Services Agreement with USX that requires
Transtar to spend up to $20.0 million to assure the continuance of in-plant coke
movements at its Gary Works. In November 1999, a Transtar



                                       45
<PAGE>   48
                                 TRANSTAR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 14: (CONTINUED)

subsidiary entered into an agreement to purchase 9.5 million net gallons of fuel
oil per shipping season for the shipping seasons of 2000, 2001 and 2002. The
purchase price for the fuel oil will be based upon market prices subject to
certain minimum price provisions.


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

         None.




                                       46
<PAGE>   49


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below is certain information about each of BTC's (Holdings'
sole general partner) and TCC's executive officers and directors. Unless
otherwise indicated, positions listed are for both BTC and TCC. Each executive
officer holds office until his successor shall have been appointed or until his
death, resignation or removal. The directors and executive officers of BTC and
TCC receive no compensation.
<TABLE>
<CAPTION>
         Name                                        Age, Business Experience and Other Directorships
         ----                                        ------------------------------------------------

<S>                                 <C>
James J. Mossman                    age 41, Director since November 1993 and President since November 1993; a Member of Blackstone
President and Director              Group Holdings (BGH) L.L.C.; a General Partner of BGH L.P. from 1990 to February 1996;
                                    Vice President of The Blackstone Group L.P. (The Blackstone Group) from 1987 to 1989.
                                    Mr. Mossman is a director of Collins & Aikman Corporation and Transtar.

Peter G. Peterson                   age 73, Director since November 1993; Co-Founding Member of BGH L.L.C.; Co-Founding  Partner
Director                            of BGH L.P. from 1985 to February 1996; and, Chairman of The Blackstone Group since 1985.
                                    Mr. Peterson is a director of Sony Corporation and Transtar, and he is the Chairman of the
                                    Federal Reserve Bank of New York. He is also Chairman of the Council on Foreign Relations,
                                    Chairman of the Institute for International Economics, and Co-Founding President of The
                                    Concord Coalition.

Stephen A. Schwarzman               age 53, Director since November 1993; Co-Founding Member of BGH L.L.C.; Co-Founding Partner
Director                            of BGH L.P. from 1985 to February 1996; and President & Chief Executive Officer of The
                                    Blackstone Group since 1985. Mr. Schwarzman is a director of Transtar.

Howard A. Lipson                    age 36, Treasurer since November 1993; Mr. Lipson joined The Blackstone Group in 1988
Treasurer                           and is a member of BGH L.L.C. Mr. Lipson is a director of Rose Hills, Inc., Prime Succession
                                    Holdings, Inc., AMF Group Inc., Graham Packaging,  Allied Waste Industries, Volume Service,
                                    Inc., and Ritvik Holdings, Inc.
</TABLE>

         The following table sets forth certain information concerning the
officers of Transtar.

        NAME                 Age               POSITION
        ----                 ---               --------

Robert S. Rosati ........     61    President and Chief Executive Officer
Frank J. Habic ..........     60    Vice President-Operations, retired
                                    effective 3/31/99
Peter D. Stephenson .....     55    Vice President-Operations
Joseph W. Schulte .......     58    Vice President-Finance and Chief
                                    Financial Officer
James P. Bobich .........     55    Vice President-Administration
Rade Vignovic ...........     65    Vice President-Marketing, retired effective
                                    8/31/99
John C. Pranaitis .......     54    Vice President-Marketing
Robert N. Gentile .......     48    Vice President-Law, General Counsel and
                                    Secretary





                                       47
<PAGE>   50


         Mr. Rosati is President and Chief Executive Officer, a position he has
held since January 1, 1994. Mr. Rosati had been Vice President-Finance and Chief
Financial Officer of Transtar and its subsidiaries. Mr. Rosati had also been
Comptroller of B&LE until December 1, 1988, when he was elected Vice
President-Finance of the Railroads. His railroad experience of 34 years includes
positions as Manager-Audit Division, Manager of Marketing, and Dock
Superintendent with DM&IR, and Superintendent in the Transportation Department
with EJ&E. Prior experience with the firm of Ernst & Ernst, Pittsburgh, Pa.,
1960-1965. Mr. Rosati is a Director of the Transtar subsidiaries and is a member
of the Pennsylvania Institute of Certified Public Accountants. He is a graduate
of the University of Pittsburgh, BBA-1961 and attended the Graduate Business
Program at the University of Minnesota-Duluth, 1976-1979.

         Mr. Habic was elected Vice President-Operations of Transtar on July 1,
1993. He is responsible for the operations of all Transtar subsidiaries. His
railroad experience encompasses 34 years. He held a succession of
increasingly-responsible Operating Department positions within the Railroad
Group. He was appointed General Superintendent of Transportation of the EJ&E in
1978. He was appointed General Superintendent of The Pittsburgh & Conneaut Dock
in 1983. In 1984, he was appointed General Manager of the B&LE and several
shortline railroads. Mr. Habic is also a Director of the Transtar subsidiaries.
He holds a B.S. from the U.S. Military Academy at West Point and an M.B.A. from
Northwestern University. Mr. Habic retired effective March 31, 1999.

         Mr. Stephenson was elected to his present position of Vice
President-Operations of Transtar, Inc. on April 1, 1999. Mr. Stephenson has
operating responsibility for all Transtar subsidiaries, including both the
Railroad and Marine Groups. His railroad career extends over 30 years and began
in the Audit Department of the Duluth, Missabe and Iron Range Railway. He was
appointed Systems Engineer in the Transportation Department in 1970 and held
various positions of increasing importance in the Transportation Department
until his appointment in 1984 as Superintendent. On April 1, 1991, Mr.
Stephenson was appointed Transportation Superintendent of the Elgin, Joliet and
Eastern Railway Company. In 1993, he returned to the DM&IR as General Manager,
and in 1995 was appointed Assistant Vice President-Operations. In 1997, he
joined the Bessemer and Lake Erie Railroad in a similar role, a position he held
until his election to his current position. Mr. Stephenson is a Director of the
Transtar subsidiaries and is a graduate with a BA from the University of
Minnesota-Duluth.

         Mr. Schulte is Vice President-Finance of Transtar and CFO. Mr. Schulte
had previously been Comptroller of Transtar and its subsidiaries. Mr. Schulte
had also been Comptroller of the Railroad Group beginning January, 1989. Since
joining the Union Railroad in 1966, he progressed through various accounting
positions on the Railroads. He was appointed Treasurer for the Railroads in
1981, Director of Internal Audit in 1983, and Comptroller of the DM&IR and EJ&E
Railroads in 1985. Mr. Schulte is a Director of the Transtar subsidiaries and is
a member of the American and Pennsylvania Institutes of Certified Public
Accountants. He holds a B.S. in Accounting from The Pennsylvania State
University.

         Mr. Bobich was elected Vice President-Administration of Transtar on
March 1, 1998. He began his career on the Bessemer and Lake Erie Railroad in the
Information Systems Department and since then has held positions of increasing
responsibility in Accounting and Information Systems. In 1986, Mr. Bobich was
named Treasurer of the Railroad subsidiaries and in 1989 was named Treasurer of
Transtar, Inc. On July 1, 1997, he was appointed Assistant to President. He is a
Director of the Transtar subsidiaries and is a 1966 graduate of Ohio University
with a BBA in Accounting.

         Mr. Vignovic is Vice President-Marketing of Transtar. Mr. Vignovic
began his railroad career on the B&LE as a Cost Analyst in 1964. From 1967 on,
Mr. Vignovic held a series of marketing positions within the Railroads. He was
appointed Vice President-Marketing of all of the Railroads in 1994. Mr. Vignovic
is a Director of all of the Transtar subsidiaries and is a member of the
National Freight Traffic Association and the Traffic Clubs of Chicago and
Pittsburgh. He holds a B.S. from Carnegie Mellon University and an MBA from the
University of Chicago. Mr. Vignovic retired effective August 31, 1999.



                                       48
<PAGE>   51

         Mr. Pranaitis is Vice President-Marketing for Transtar, Inc. He began
his railroad career on the Bessemer and Lake Erie Railroad in Management
Information Systems. His railroad experience is in excess of 30 years. In 1979,
Mr. Pranaitis began a series of increasingly-responsible assignments at various
Transtar operating subsidiaries within the Railroad Group, including the
assignment as Director Equipment Utilization for the Bessemer and Lake Erie
Railroad, the Union Railroad, and the McKeesport Connecting Railroad. In 1994,
Mr. Pranaitis was appointed Superintendent of the Duluth, Missabe and Iron Range
Railway, and in 1995 he assumed duties as Assistant Vice President-Marketing for
Transtar. He returned to the DM&IR as General Manager in 1997 and returned to
Transtar's Marketing Department in 1999 where he served until his election as
Vice President-Marketing on September 1, 1999. Mr. Pranaitis is a Director of
all of the Transtar subsidiaries. He is a graduate of St. Vincent College with a
BA degree in Economics and attended the Graduate Business program at American
University.

         Mr. Gentile is General Counsel and Secretary of Transtar, and all of
its subsidiaries, a position he has held since December 28, 1988. He is also
Vice President-Law of Transtar, a position he has held since May 1, 1995. Mr.
Gentile began his career with the Railroad Group in March 1979, holding
positions of increasing importance within the Legal Department. He was appointed
General Claim Agent in 1984 and named Senior General Claim Agent in 1986. Mr.
Gentile is a Director of all of the Transtar subsidiaries. Prior to joining the
Railroad Group, Mr. Gentile was in private practice as a trial lawyer. Mr.
Gentile is a member of the American, Pennsylvania and Allegheny County Bar
Associations and American Corporate Counsel Association. He is a graduate of the
University of Pittsburgh, BA-1973 (summa cum laude, Phi Beta Kappa), University
of Pittsburgh, JD-1976, LaRoche College, MS-1984, University of Pittsburgh, MBA
(Beta Sigma Gamma)-1989.





                                       49
<PAGE>   52


ITEM 11. EXECUTIVE COMPENSATION

         The directors and executive officers of BTC (Holdings' sole general
partner) and TCC receive no compensation but are reimbursed for travel and
out-of-pocket expenses incurred in connection with their duties as directors and
executive officers.

         The following table provides certain summary information concerning the
compensation paid or accrued by the Company on behalf of the Company's Chief
Executive Officer and the four other most highly-compensated executive officers
of the Company for the years ended December 31, 1999, December 31, 1998, and
December 31, 1997:

                                 TRANSTAR, INC.
                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>


                                                                                   LONG TERM COMPENSATION
                                                                                 ---------------------------
                                         ANNUAL COMPENSATION                          AWARDS         PAYOUTS
                                         --------------------                    -----------------   -------
                                                                                                               ALL OTHER
                                                           SALARY &              RESTRICTED            LTIP     COMPEN-
        NAME AND                                             BONUS    OTHER ($)    STOCK     OPTIONS  PAYOUTS   SATION($)
    PRINCIPAL POSITION        YEAR   SALARY ($) BONUS ($)  TOTAL ($)    (1)      AWARDS ($)    (#)      ($)        (2)
    ------------------        ----   ---------  ---------  ---------   ------    ----------    ---      ---      ------
<S>                           <C>     <C>        <C>        <C>        <C>            <C>       <C>      <C>     <C>
 R. S. Rosati ...........     1999    275,000    250,000    525,000    12,347         0         0        0       29,215
   President & Chief ....     1998    275,000    350,000    625,000    13,544         0         0        0       29,628
   Executive Officer ....     1997    275,000    300,000    575,000     8,763         0         0        0       31,445

 J. W. Schulte ..........     1999    187,000    120,000    307,000    10,954         0         0        0       17,325
  Vice President- .......     1998    182,000    124,000    306,000     7,505         0         0        0       18,019
  Finance and Chief .....     1997    170,000    124,000    294,000     4,452         0         0        0       17,654
  Financial Officer

 R. N. Gentile ..........     1999    169,000    108,000    277,000     1,220         0         0        0       13,704
  Vice President-Law, ...     1998    165,000    112,000    277,000     5,655         0         0        0       13,880
  General Counsel and ...     1997    157,000    115,000    272,000     5,346         0         0        0       14,186
  Secretary

 P. D. Stephenson .......     1999    151,000    101,000    252,000     4,945         0         0        0       13,346
   Vice President- ......     1998    147,000     87,000    234,000     4,441         0         0        0       12,811
    Operations ..........     1997    141,000     90,000    231,000    48,528         0         0        0       13,408

 J. P. Bobich ...........     1999    140,000     90,000    230,000     6,543         0         0        0       13,537
   Vice President- ......     1998    128,340     87,000    215,340     3,308         0         0        0       13,122
    Administration ......     1997    116,700     42,000    158,700     1,020         0         0        0       13,630
</TABLE>

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

(1)  Includes health additive; executive tax assistance and financial planning;
     imputed income for automobiles, and income associated with relocation
     reimbursement.
(2)  This column includes amounts contributed or accrued in 1999 under the
     Transtar Salaried Savings Fund Plan and the related Supplemental Savings
     Plans ($15,263, $9,483, $8,471, $7,550, and $7,000 for Messrs. Rosati,
     Schulte, Gentile, Stephenson, and Bobich respectively); annual imputed
     income associated with executive life insurance policies in 1999 ($1,708,
     $827, $309, $1,090, and $335 for Messrs. Rosati, Schulte, Gentile,
     Stephenson, and Bobich respectively); and annual amounts attributable to
     split-dollar life insurance provided by Transtar in 1999 ($12,244, $7,015,
     $4,924, $4,706, and $6,202, for Messrs. Rosati, Schulte, Gentile,
     Stephenson, and Bobich respectively).





                                       50
<PAGE>   53


                                STOCK OPTION PLAN

         During 1994, Transtar implemented a stock option plan to promote the
interests of Transtar and its stockholders by attracting and retaining key
management employees. The total number of options granted was 750, all of which
are subject to a 5-year vesting schedule commencing December 28, 1993. These
options generally become exercisable at the vesting date and do not have an
expiration date. The option price per share is $8,364.05, and each exercised
option will be repurchased by the Company at a price calculated using a formula
set forth in the stock option plan.


                        AGGREGATED 1999 OPTION EXERCISES
                       AND DECEMBER 31, 1999 OPTION VALUES
<TABLE>
<CAPTION>

                                                                   VALUE OF EXERCISABLE
                        NO. OF                  NO. OF EXERCISABLE      IN-THE-MONEY
                        SHARES       VALUE         OPTIONS AT           OPTIONS AT
    NAME              EXERCISED   REALIZED ($)  DECEMBER 31, 1999  DECEMBER 31, 1999($)
    ----              ---------   ------------  -----------------  --------------------

<S>                   <C>         <C>           <C>                <C>
R. S. Rosati .......     200       2,928,456            0                    0
F. J. Habic (a) ....     100       1,464,228            0                    0
J. W. Schulte ......       0               0          100              531,253
R. Vignovic (b) ....     100       1,464,228            0                    0
R. N. Gentile ......       0               0           50              265,627
</TABLE>

(a) retired effective 3/31/99
(b) retired effective 8/31/99

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The directors and executive officers of BTC (Holdings' sole general
partner) and TCC receive no compensation. See 'Management--Compensation of
Directors and Executive Officers.'

         James J. Mossman, Peter G. Peterson and Stephen A. Schwarzman serve as
directors of BTC (Holdings' sole general partner) and TCC. Transtar pays a
monitoring fee of 0.15% of its consolidated revenue to Blackstone Management
Partners L.P. James J. Mossman, Peter G. Peterson and Stephen A. Schwarzman are
partners of Blackstone Management Partners L.P. Monitoring fees paid were
approximately $702,000 for 1999, $747,000 for 1998, and $789,000 for 1997.


                                PENSION BENEFITS

         Transtar pension benefits are comprised of two defined benefits: the
first, based on final earnings and the second, on career earnings. The following
table shows the annual final earnings pension benefits for retirement at age 62
(or earlier under certain circumstances), for various levels of eligible
earnings which would be payable to employees retiring with representative years
of service based on a formula of a specified percentage (dependent on years of
service) of average annual eligible earnings in the five consecutive years of
the ten years prior to retirement in which such earnings were highest. Eligible
earnings are base earnings and exclude any bonuses paid. As of December 31,
1999, Messrs. Rosati, Stephenson, Schulte, Bobich and Gentile have 34, 32, 33,
33, and 20 credited years of service, respectively.






                                       51
<PAGE>   54



                            TABLE OF PENSION BENEFITS

                         FINAL EARNINGS PENSION BENEFITS
<TABLE>
<CAPTION>

AVERAGE ANNUAL ELIGIBLE
 EARNINGS FOR HIGHEST
FIVE CONSECUTIVE YEARS
 IN TEN-YEAR PERIOD
PRECEDING RETIREMENT                              ANNUAL BENEFITS FOR YEARS OF SERVICE
--------------------    ------------------------------------------------------------------------------------------------
                        15 YRS.          20 YRS.           25 YRS.           30 YRS.           35 YRS.           40 YRS.
                        ------           -------           -------           -------           -------           -------
<S>                    <C>              <C>               <C>               <C>               <C>               <C>
     $125,000          $21,656          $ 28,875          $ 36,094          $ 43,313          $ 51,188          $ 59,063
      150,000           25,988            34,650            43,313            51,975            61,425            70,875
      175,000           30,319            40,425            50,531            60,638            71,663            82,688
      200,000           34,650            46,200            57,750            69,300            81,900            94,500
      225,000           38,981            51,975            64,969            77,963            92,138           106,313
      250,000           43,313            57,750            72,188            86,625           102,375           118,125
      300,000           51,975            69,300            86,625           103,950           122,850           141,750
      350,000           60,638            80,850           101,063           121,275           143,325           165,375
      400,000           69,300            92,400           115,500           138,600           163,800           189,000
      450,000           77,963           103,950           129,938           155,925           184,275           212,625
      500,000           86,625           115,500           144,375           173,250           204,750           236,250

</TABLE>

         Annual career earnings pension benefits are equal to 1% of total career
eligible earnings plus a 30% supplement. The estimated annual career earnings
benefits payable at normal retirement age 65, assuming no increase in annual
earnings, will be $56,400 for Mr. Rosati, $45,360 for Mr. Stephenson, $45,680
for Mr. Schulte, $40,730 for Mr. Bobich and $61,300 for Mr. Gentile. Benefits
from the final earnings and the career earnings reflected above are not subject
to any reduction or offset for Social Security entitlements. Benefits from the
final earnings reflected above are subject to a reduction or offset for a
portion of Railroad Retirement entitlements. Benefits may be paid as an
actuarially determined lump sum in lieu of monthly pensions under both the final
earnings and career earnings provisions of the Plan.

         In addition to the pension benefit described above, R. S. Rosati is
entitled to the benefits shown in the table below based on bonuses paid under
the Annual Incentive Compensation Plan upon retirement after age 60.


                          SUPPLEMENTAL PENSION BENEFITS
<TABLE>
<CAPTION>

AVERAGE ANNUAL BONUS
 EARNINGS FOR THREE
  HIGHEST YEARS IN
  TEN-YEAR PERIOD
PRECEDING RETIREMENT                                   ANNUAL BENEFITS FOR YEARS OF SERVICE
--------------------   ------------------------------------------------------------------------------------------------
                       15 YRS.          20 YRS.           25 YRS.           30 YRS.           35 YRS.           40 YRS.
                       -------          -------          --------          --------          --------          --------
<S>                    <C>              <C>              <C>               <C>               <C>               <C>
     $100,000          $23,100          $30,800          $ 38,500          $ 46,200          $ 53,900          $ 61,600
      200,000           46,200           61,600            77,000            92,400           107,800           123,200
      300,000           69,300           92,400           115,500           138,600           161,700           184,800

</TABLE>





                                       52
<PAGE>   55


                            EQUITY PARTICIPATION PLAN

         Key management employees of Transtar and its subsidiaries are eligible
to participate in Transtar's Equity Participation Plan. Under the Equity
Participation Plan, Transtar's Board of Directors appoints a compensation
committee with full power to administer the plan. Participants in the plan
receive awards of restricted common stock of Transtar as determined in the
discretion of the compensation committee.


                              CERTAIN TRANSACTIONS

         Transtar pays to each of USX and Blackstone Management Partners L.P. a
monitoring fee of 0.15% of Transtar's consolidated revenue. Total monitoring
fees paid were approximately $1.4 million for 1999, $1.5 million for 1998 and
$1.6 million for 1997.

         On October 27, 1997, Transtar declared a cash dividend in the amount of
$625 per share on both its Class A Voting Common Stock (Voting Stock) and its
Class B Nonvoting Common Stock (Nonvoting Stock) to holders of record of the
stock on October 27, 1997. Holdings received $6.4 million on October 30, 1997,
representing its 53% economic interest in the Transtar dividend. Pursuant to an
Indenture relating to the issuance of the Notes (the Notes Indenture), the
dividend payment was paid into an escrow account. On December 16, 1997 Transtar
declared a cash dividend of $625 per share on both its Voting Stock and its
Nonvoting Stock to holders of record of the stock on December 16, 1997. Holdings
received $6.4 million on December 19, 1997, representing its 53% economic
interest in the Transtar dividend. In accordance with the Notes Indenture, this
dividend was paid into the escrow account.

         In February 1998, in accordance with the Notes Indenture, Holdings
offered to repurchase a portion of the Notes at an offer price equal to 101% of
the accreted value of such Notes on the date of purchase. The offer to purchase
the Notes was made by a notice to holders of the Notes and was held open for 20
business days. No Notes were tendered for repurchase.

         In February 1997, in accordance with the Notes Indenture and related to
certain dividends paid into the escrow account in 1996, Holdings offered to
repurchase a portion of the Notes at an offer price equal to 101% of the
accreted value of such Notes on the date of purchase. The offer to purchase the
Notes was made by a notice to holders of the Notes and was held open for 20
business days. No Notes were tendered for repurchase.

         Funds in the escrow account are invested in cash equivalents and may
only be released to pay interest and principal on the Notes, make certain
payments permitted under the Notes Indenture, purchase or optionally redeem
Notes or to pay administrative expenses of Holdings. In 1998 and 1997, in
accordance with the Notes Indenture and an agreement governing the escrow
account, Holdings withdrew from the escrow account $0.7 million and $13.7
million, respectively, to distribute to its partners, and withdrew $0.2 million
and $0.3 million, respectively, to pay certain administrative expenses. No funds
were withdrawn from the escrow account in 1999. As of December 31, 1999 the
escrow balance is $49.8 million. Interest earned on the escrow balance amounted
to $2.5 million, $2.6 million and $2.4 million in 1999, 1998 and 1997,
respectively.






                                       53
<PAGE>   56


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

THE ISSUERS

         The following table and accompanying footnotes set forth the beneficial
ownership of partnership interests of Holdings. TCC is a wholly owned subsidiary
of Holdings.

<TABLE>
<CAPTION>

                                                                                   Percentage     Economic
       Name of Beneficial Owners                 Type of Interest                   of Class    Interest (1)
       -------------------------                 ----------------                  ----------   ------------

<S>                                           <C>                                  <C>          <C>
BTC(2)                                        General Partnership                    100.000%      1.000%

Blackstone entities(3)                        Limited Partnership                     91.574%     90.658%

Tyler Capital Fund L.P.                                                                8.426%      8.342%
("Tyler")(4)                                  Limited Partnership

James J. Mossman(5)                           General and Limited Partnership              0           0

Peter G. Peterson(5)                          General and Limited Partnership              0           0

Stephen A. Schwarzman(5)                      General and Limited Partnership              0           0

Howard A. Lipson(5)                           General and Limited Partnership              0           0

All executive officers and directors
as a group (4 persons)(5)                     General and Limited Partnership              0           0

</TABLE>

(1) Represents percentage of total partnership interests (including general and
    limited partnership interests) in Holdings.

(2) BTC holds the sole general partnership interest in Holdings. The address of
    BTC is 345 Park Avenue, New York, New York 10154.

(3) The following Blackstone entities own 91.574% of the limited partnership
    interests in Holdings, which represents the following economic interests in
    Holdings: Blackstone Transportation Capital Partners L.P., 34.493%;
    Blackstone Domestic Capital Partners L.P., 33.880%; Blackstone Offshore
    Capital Partners L.P., 14.943%; Blackstone Family Investment Partnership I
    L.P., 5.987%; Blackstone Advisory Directors Partnership L.P., 0.843%; and
    Blackstone Management Associates L.P., 0.512%. The address of the Blackstone
    entities is 345 Park Avenue, New York, New York 10154.

(4) The address of Tyler is c/o Bain Venture Capital, 2 Copley Plaza, Boston,
    Massachusetts 02116.

(5) Messrs. Mossman, Peterson, Schwarzman and Lipson are affiliated with
    Blackstone in the capacities described under "Directors and Executive
    Officers of the Registrant". Partnership interests data for these
    individuals does not include any of the interests included in the above
    table beneficially owned by Blackstone.

THE COMPANY

The authorized and outstanding capital stock of the Company consists of 10,000
shares of Class A Voting Stock (Voting Stock), without par value, and 10,000
shares of Class B Nonvoting Stock (Nonvoting Stock), without par value. All of
the voting and nonvoting stock of Transtar represents an equivalent economic
interest in the Company. The following table sets forth the ownership of
Transtar as of December 31, 1999:

<TABLE>
<CAPTION>

                         Voting Stock      % of Voting     Nonvoting        % of Non-      % of Total
     Shareholder            Owned             Shares      Stock Owned     voting Shares      Shares
     -----------            ------            ------      -----------     -------------       -----
<S>                          <C>               <C>          <C>               <C>             <C>
Transtar Holdings,
L.P. .............           5,100             51.0%        5,100             56.4%           53.5%

USX Corporation ..           4,900             49.0         3,900             43.1            46.2

Management .......              --             --              50              0.5             0.3
                            ------            -----         -----            -----           -----
    Total ........          10,000            100.0%        9,050            100.0%          100.0%
                            ======            =====         =====            =====           =====

</TABLE>




                                       54
<PAGE>   57


         Management's direct interest has been reduced since Transtar's
formation due to repurchases of 950 shares of nonvoting stock from retiring
managers. Certain shares have been allocated to promoted managers in a stock
option program. Including the effect of this program, total economic ownership
of management would be 2.36 percent.

          The Board of Directors of Transtar consists of five members, three of
which are designated by Blackstone and two by USX pursuant to a Stockholders'
Agreement.

         As of December 31, 1999, all of the subsidiaries of Transtar were
wholly owned, directly or indirectly, by Transtar.

         The Company's by-laws provide that certain matters presented to the
Board require unanimous approval of the directors, including, among other
things: (a) any proposal which, if approved, (i) would require any stockholder
entitled to vote (a "voting stockholder") to subscribe for additional shares of
capital stock of the Company or contribute additional capital to the Company or
would result in a diminution of any voting stockholder's proportionate voting
power among stockholders if such voting stockholder failed to contribute
additional capital voluntarily; (ii) would otherwise result in a diminution of a
voting stockholder's proportionate voting power among stockholders; or (iii)
results in the Company's subsidiaries being unable to perform adequately their
obligations under any of the Transportation Services Agreements; (b)
authorization or issuance of any shares of any equity security of the Company or
any option, warrant, right or instrument convertible into any equity security of
the Company or convertible or exchangeable into any option, warrant or right to
receive any such equity security; (c) redemption of any stock of the Company;
(d) any new borrowing by the Company or any subsidiary thereof (other than
borrowings to finance specific capital expenditures approved in the annual
capital budget), or the grant of any new lien, encumbrance or security interest
in connection therewith on any material assets of the Company or such subsidiary
not previously encumbered except in certain circumstances; (e) any merger,
consolidation, liquidation or dissolution of the Company or sale of
substantially all the assets thereof or sale of stock of any of the Company's
subsidiaries; (f) the sale or merger of any direct or indirect subsidiary of the
Company, or the sale of assets or discontinuance of operations of any direct or
indirect subsidiary of the Company which in either case results in such
subsidiary being unable to perform adequately its obligations under any of the
Transportation Services Agreements, except for certain subsidiaries; (g) any
amendment of any of the Transportation Services Agreements; (h) any expenditure
or commitment in excess of $5,000,000 for the acquisition by the Company or any
direct or indirect subsidiary thereof of any capital stock or other equity or
ownership or proprietary interest in any other corporation, partnership,
association, trust, joint venture or other entity, or of any debt obligation of
any thereof; (i) any lease of real or personal property or any renewal thereof
except for certain circumstances; (j) any sale and lease-back or any refinancing
thereof; (k) any filing by the Company or any direct or indirect subsidiary
thereof of a petition for protection under Federal bankruptcy statutes; (1)
declaration of any dividend or other distribution to stockholders; and (m)
selection of an independent consultant (the "Consultant").

         In the event the members of the Board of Directors fail to agree
unanimously on any matter for which unanimous approval is required, the by-laws
provide that the Consultant shall render a decision on such matter which shall
be binding, provided that the Consultant shall have no authority to render a
decision on any of the matters covered by clauses (a), (b), (d), (e), (f) and
(m) described above. If the Board of Directors fails to agree unanimously on any
of the matters covered by clauses (a), (b), (d), (e), (f) and (m), the Company's
by-laws do not specify how deadlocks are to be resolved. Therefore, the Board of
Directors could remain deadlocked and would be unable to take any action on
matters requiring unanimous approval.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

DEPENDENCE UPON USX

         For the year 1999, approximately 52% of Transtar's revenues were
derived from the provision of services to USX and its affiliates. Transtar's
operating relationship with USX is governed by certain Transportation Services
Agreements. These agreements, along with Transtar's exclusive rail access to
virtually all USX's steel facilities and its integration within these
facilities, provide some stability to Transtar's cash flows. The Transportation
Services Agreements which existed from the formation of Transtar through July 1,
1998 provided Transtar with certain rights including: (i) sole serving rail
carrier status at USX's Minntac, Gary, Fairfield and Mon Valley facilities as
well as the former USS/Kobe Steel Company's Lorain facility (USS/Kobe)(see
below); (ii) sole rights to perform specified USX



                                       55
<PAGE>   58

in-plant switching services; (iii) primary Great Lakes Fleet bulk commodity
carrier status for USX, including the former USS/Kobe; and (iv) primary inland
barge operator status for the water transport of USX's commodities originating
at or destined for Birmingham, Alabama. With respect to the services referred to
in clause (i) above, the Transportation Services Agreements provided that such
services would continue indefinitely as long as a non-Transtar rail carrier had
not obtained access to the USX facility being served; with respect to the
services referred to in clause (ii) above, the agreements provided that such
services would continue indefinitely so long as USX had not purchased from
Transtar or otherwise obtained the Transtar track on which such services were
provided.

         In August 1999, USX and Kobe Steel, Ltd. completed a transaction that
combined the steelmaking and bar producing assets of the former USS/Kobe with
companies controlled by Blackstone Capital Partners II. The combined entity was
named Republic Technologies International, L.L.C. (Republic). USX owns 16% and
Blackstone owns 47% of Republic. The seamless pipe business of the former
USS/Kobe was excluded from this transaction. That business, now known as Lorain
Tubular Company L.L.C. (Lorain Tubular), became a wholly owned subsidiary of USX
at the close of business on December 31, 1999.

         With respect to the services referred to in clause (ii) above, the
former USS/Kobe elected to terminate in-plant switching services provided by the
Lake Terminal Railroad (a Transtar subsidiary) effective December 29, 1998. The
former USS/Kobe had not purchased or otherwise obtained any Transtar track at
this facility. In-plant switching services provided by parties other than
Transtar are being performed on tracks currently owned by Republic and Lorain
Tubular. The impact on Transtar was a revenue reduction of approximately $8.6
million in 1999, with a $1.1 million negative impact on before tax income.

         In December 1998, Transtar, USX and the former USS/Kobe (for the former
USS/Kobe Great Lakes Fleet bulk commodity carrier service only) executed new
Transportation Services Agreements which, among other things, extend the time
and exclusivity periods of the original agreements. The new agreements were
approved on February 12, 1999 by the lending institutions who participate in
Transtar's Credit Agreement. Effective August 13, 1999, the Transportation
Services Agreement related to the former USS/Kobe which includes bulk commodity
carrier services provided by the Great Lakes Fleet was assigned to Republic. All
the agreements were retroactively effective July 1, 1998 and will extend through
December 31, 2004 for the services referred to in clauses (i), (ii) and (iv)
above, with the exception of rail and rail related services at Republic and
Lorain Tubular (see below), and will extend through March 15, 2005 for the
services referred to in clause (iii) above. With respect to the services
referred to in clause (i) above, the new Transportation Services Agreements
provide that such services will continue indefinitely as long as a non-Transtar
rail carrier has not obtained access to the USX facility being served; with
respect to the services referred to in clause (ii) above, the agreements are
exclusive through 2004 and provide that such services will continue indefinitely
so long as USX has not purchased from Transtar or otherwise obtained the
Transtar track on which such services are provided. The new agreements cover all
of the services provided by Transtar under the previous Transportation Service
Agreements, except that a third party may provide transportation services for:
with respect to the services referred to in clause (i) above, a maximum per year
of forty percent of blast furnace burden tonnage destined for USX's Edgar
Thomson facility in the Mon Valley; with respect to the services referred to in
clause (iii) above, a maximum per year of ten percent of tonnage via the Great
Lakes from March 16, 1999 through March 15, 2003 and a maximum per year of
fifteen percent of tonnage via the Great Lakes from March 16, 2003 through March
15, 2005; and with respect to the services referred to in clause (iv) above, a
maximum per year of ten percent of imported iron ore and coke tonnage destined
for USX's Fairfield, Alabama facility, a maximum per year of ten percent of
export coal tonnage originating at US Steel's Concord Preparation Plant and a
maximum per year of ten percent of domestic coal tonnage via barge originating
at US Steel's Concord Preparation Plant. The agreements provide that USX shall
not, at any time, take any action (a) which would in any way, either directly or
indirectly, encourage any non-Transtar rail carrier to attempt to obtain access
to any of the USX plants for which Transtar is the sole serving rail carrier or
(b) which would in any way assist in and/or support any such rail carrier in any
efforts to obtain such access; provided that USX may, after December 31, 2004,
request that an independent arbitrator or mediator determine whether it is
reasonable and equitable under the facts, circumstances and the regulatory and
competitive conditions in effect at that time, at one or more facilities, for
USX to seek access for a non-Transtar rail carrier. Transtar is required to
acquire certain coke rail cars, not to exceed a maximum expenditure of $20
million. The agreements also provide for certain price concessions and market
based price changes. USX was paid a refund of approximately $6.3 million (with
an equal reduction in Transtar's operating income which was recognized in June
1998) for services provided during the first half of 1998.



                                       56
<PAGE>   59

Including this refund, total price concessions for 1998 reduced Transtar's
revenue and operating income by $14.4 million. Price concessions reduced
Transtar's 1999 revenue and operating income by $14.5 million as compared to
1997 levels.

On December 29, 1998, Transtar and the former USS/Kobe executed a new
Transportation Services Agreement for sole service carrier work including
absorbed switching, equipment rentals and other related transportation services.
The agreement was approved on February 12, 1999 by the lending institutions who
participate in Transtar's Credit Agreement. Effective August 13, 1999, this
agreement was assigned to Republic for services provided to Republic. The new
agreement was effective December 29, 1998 and extends through December 31, 2008
for the sole service carrier work. The agreement provides that Republic and
Lorain Tubular shall not, during the term of the agreement, take any action (a)
which would in any way, either directly or indirectly, encourage any
non-Transtar rail carrier to attempt to obtain access to their respective
facilities or (b) which would in any way assist in and/or support any such rail
carrier in any efforts to obtain such access. The agreement provides for market
based price changes and no price concessions. In-plant scrap handling via rubber
tire vehicles is under separate agreement (also assigned to Republic) until July
31, 2000.






                                       57
<PAGE>   60


PART IV

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

(A)(1). FINANCIAL STATEMENTS
        Financial Statements filed as part of this report are listed on the
        Index to Consolidated Financial Statements on page 18.

(A)(2). FINANCIAL STATEMENT SCHEDULES
        Schedules are omitted because of the absence of the conditions under
        which they are required or because the information required by such
        omitted schedules is set forth in the financial statements or the notes
        thereto.

(A)(3).  EXHIBITS
<TABLE>
<CAPTION>

Footnote   Exhibit
  Ref.         No                               Description
  ----         --                               -----------

<S>          <C>      <C>
   (a)       3.1      Certificate of Incorporation of Transtar Capital Corporation, filed with the Secretary of State of
                      the State of Delaware on November 23, 1993.
   (a)       3.2      By-laws of Transtar Capital Corporation.
   (a)       3.3      Certificate of Incorporation of Blackstone Transportation Company, Inc., the controlling  general
                      partner of Transtar  Holdings, L.P. (Holdings), filed with the Secretary of State of the State of
                      Delaware on November 23, 1993.
   (a)       3.4      By-laws of Blackstone Transportation Company, Inc., the controlling general partner of Transtar
                      Holdings, L.P.
   (a)       3.5      Second Amended and Restated Agreement of Limited Partnership of Transtar Holdings, L.P.
   (a)       3.6      Amended and Restated Certificate of Limited Partnership of Holdings
   (a)       3.7      By-laws of Transtar, Inc.
   (a)       4.2      Specimen Certificate of 13 3/8% Series B Senior Discount Notes due 2003 (the Notes) (included in
                      Exhibit 4.3 hereto).
   (a)       4.3      Indenture, dated as of December 7, 1993, among Holdings, TCC and the United States Trust Company of
                      New York, as trustee, pursuant to which the Notes were issued.
   (a)      10.3      Credit Agreement, dated as of December 7, 1993, among Transtar, Inc. and Chemical Bank as Agent
                      and Issuing Bank thereunder.
   (d)      10.3.1    Second amendment dated as of September 15, 1995 to the Credit Agreement dated as of December 7,
                      1993 among Transtar, Inc. and Chemical Bank as Agent and Issuing Bank thereunder.
   (g)      10.3.2    Amendment and Waiver dated as of March 12, 1997 to the Credit Agreement dated as of December 7,
                      1993 among Transtar, Inc. and the Chase Manhattan Bank as Agent and Issuing Bank thereunder.
   (g)      10.3.3    Third Amendment and Waiver dated as of October 9, 1997 to the Credit Agreement dated as of
                      December 7, 1993 among  Transtar, Inc. and the Chase Manhattan Bank as Agent and Issuing Bank
                      thereunder.
            10.3.4    Credit Agreement, dated as of December 7, 1993 as amended and restated as of August 26,  1999,
                      among Transtar, Inc. and Chase Manhattan Bank, as Agent and Issuing Bank.
   (a)      10.4      Stockholders Agreement, dated as of December 28, 1988, by and among Blackstone Capital Partners
                      L.P., Blackstone Transportation Partners L.P., USX Corporation and Transtar, Inc.
            10.5      (Reserved)
   (h)      10.5.1    Transportation Services Agreement, dated July 1, 1998, between Transtar, Inc. and USX Corporation.
   (h)      10.5.2    Transportation Services Agreement, dated December 29, 1998, between Transtar, Inc. and USS/Kobe
                      Steel Company.
            10.6      (Reserved)

</TABLE>





                                       58
<PAGE>   61

<TABLE>
<CAPTION>

Footnote   Exhibit
  Ref.       No                               Description
  ----       --                               -----------
<S>        <C>        <C>
   (h)      10.6.1    Transportation Services Agreement, dated July 1, 1998 between USS Great Lakes Fleet, Inc. and USX
                      Corporation and USS/Kobe Steel Company.
            10.6.2    USS/Kobe-RTI Opco Consents and Notices Regarding Transtar, Inc. and Lake Terminal Railroad.
            10.7      (Reserved)
   (h)      10.7.1    Transportation Services Agreement, dated July 1, 1998, between Transtar, Inc. and U.S. Steel
                      Mining Co., L.L.C..
   (a)      10.8      Management Stock Trust Agreement, dated December 28, 1988, between Transtar, Inc. and Pittsburgh
                      National Bank.
   (a)      10.10     Transtar, Inc. Equity Participation Plan, dated December 28, 1988, as amended.
   (e)      10.13     Transtar, Inc. Savings Plan for Salaried Employees, effective January 1, 1989 as amended through
                      January 1, 1996.
            10.13.1   Sixth Amendment to the Transtar, Inc. Savings Plan for Salaried Employees, effective January 1, 2000.
            10.13.2   Seventh Amendment to the Transtar, Inc. Savings Plan for Salaried Employees, effective January 1, 2000.
   (a)      10.14     Transtar, Inc. Flexible Compensation Plan for Non-Represented Employees of Transtar, Inc. and
                      Subsidiary Companies, effective January 1, 1989.
   (e)      10.14.1   Transtar, Inc. Split Dollar Life Insurance Plan, effective July 1, 1994.
            10.14.2   Employment Agreement, dated November 1, 1999, between Transtar, Inc. and Robert S. Rosati.
   (a)      10.15     Layoff Unemployment Benefit Program for Non-Union Salaried Employees as amended January 1, 1989.
   (e)      10.16     Transtar, Inc. Salaried Retirement Plan, effective January 1, 1989 as amended through January 1,
                      1996.
   (g)      10.16.1   Second Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 1997.
   (g)      10.16.2   Fifth Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 1998.
   (h)      10.16.3   Sixth Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 1999.
            10.16.4   Seventh Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 2000.
   (g)      10.17     Transtar, Inc. Non Tax-Qualified Pension Plan, effective January 1, 1994.
   (g)      10.18     Transtar, Inc. Supplemental Thrift Program, effective January 1, 1994.
   (g)      10.19     Transtar, Inc. Supplemental Pension Program, effective January 1, 1994.
   (a)      10.20     Amendment No. 1 to Bareboat Charter, dated as of September 29, 1989, between PNC Leasing Corp and
                      Transtar, Inc.
   (a)      10.21     Bareboat Charter, dated as of June 1, 1990, between PNC Leasing Corp and Transtar, Inc.
   (a)      10.22     Bareboat Charter Party, dated as of September 30, 1991, between Joy Finance Company and Transtar, Inc.
   (a)      10.23     Lease Agreement, dated as of May 1, 1980, between GATX Leasing Corporation, successor to Gould
                      Leasing Services, Inc., and Bessemer and Lake Erie Railroad Company.
   (a)      10.24     Equipment Lease, dated as of May 30, 1980, between the Bessemer and Lake Erie Railroad Company and
                      State Street Bank as Trustee.
   (a)      10.25     Master Railcar Lease Agreement, dated as of April 30, 1993, between The CIT Group/Equipment
                      Financing, Inc. and Elgin, Joliet and Eastern Railway Company.
   (a)      10.26     Railroad Equipment Lease, dated as of November 15, 1989, between Elgin, Joliet & Eastern Railway
                      Company and Mellon Financial Services Corporation #3.
   (a)      10.27     Bareboat Charter, dated as of June 1, 1989, between PNC Leasing Corp and Transtar, Inc.
   (a)      10.28     Amendment No. 1 to Indenture of Trust and First Preferred Ship Mortgage, dated March 19, 1982,
                      between The Connecticut Bank and Trust Company, as Owner Trustee, and Mercantile-Safe Deposit and
                      Trust Company, as Indenture Trustee.
   (a)      10.29     Note Purchase Agreement, dated as of May 26, 1983.
   (a)      10.30     Charter, dated as of September 1, 1980, between The Connecticut Bank and Trust Company and United
                      States Steel Corporation.
</TABLE>

                                       59
<PAGE>   62

<TABLE>
<CAPTION>

Footnote   Exhibit
  Ref.       No                               Description
  ----       --                               -----------

<S>         <C>       <C>
   (a)      10.31     Assignment Agreement and Supplement No. 2 to First Preferred Fleet Mortgage, dated as of
                      December 3, 1987.
            10.32     (Reserved)
            10.33     (Reserved)
            10.34     (Reserved)
   (a)      10.35     Consent, dated as of December 21, 1988, from Xerox Corporation to USX Corporation.
            10.36     (Reserved)
            10.37     (Reserved)
            10.38     (Reserved)
            10.40     (Reserved)
            10.41     (Reserved)
   (a)      10.42     Environmental Indemnification Agreement, dated as of December 28, 1988, among USX Corporation,
                      Transtar and certain subsidiaries of Transtar.
   (b)      10.43     Settlement Agreement among Transtar, Inc., Bessemer and Lake Erie Railroad Company and USX
                      Corporation dated October 6, 1994.
   (f)      10.44.1   Transtar, Inc. Amended Stock Option Plan.
   (c)      10.45     Equipment Lease Agreement dated as of July 15, 1994 between GATX Third Aircraft Corporation and
                      Elgin, Joliet and Eastern Railway Company.
   (c)      10.46     Bareboat Charter dated as of June 30, 1994 between GATX Third Aircraft Corporation and Transtar,
                      Inc.
   (e)      10.47     Master Equipment Lease Agreement dated as of December 28, 1995 between Birmingham Southern
                      Railroad company and Nationsbanc Leasing Corporation of North Carolina.
   (e)      10.48     Master Equipment Lease Agreement dated as of December 28, 1995 between Duluth, Missabe and Iron
                      Range Railway company and Heller Financial Leasing, Inc.
            12.1      Statement of Computation of Ratio of Earnings to Fixed Charges.
   (a)      21.1      Significant Subsidiaries of Transtar Holdings, L.P.
            27        Financial Data Schedule.

</TABLE>

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

   (a)   Previously filed with Registration Statement No. 33-73270 under
         corresponding Exhibit number.
   (b)   Previously filed with Form 8-K on October 7, 1994.
   (c)   Previously filed with Form 10-K on March 24, 1995.
   (d)   Previously filed with Form 10-Q on November 1, 1995.
   (e)   Previously filed with Form 10-K on March 22, 1996.
   (f)   Previously filed with Form 10-K on March 21, 1997.
   (g)   Previously filed with Form 10-K on March 27, 1998.
   (h)   Previously filed with Form 10-K on March 25, 1999.

(b).     REPORTS ON 8-K

         On December 13, 1999, Holdings and TCC filed a report on Form 8K which
         announced that Robert S. Rosati, the President and Chief Executive
         Officer of Transtar, Inc., who had previously announced his retirement
         has agreed to remain in his positions with the company for a period of
         time after his previously announced retirement date. Pursuant to an
         Employment Agreement, Mr. Rosati has committed to remain in the office
         of the President and Chief Executive Office of Transtar for a term
         commencing on November 1, 1999 and ending on or before June 30, 2000.







                                       60
<PAGE>   63


(c). EXHIBITS

         See Exhibits to this Form 10-K under separate cover.

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

         Holdings and TCC have not sent an annual report or proxy material to
their security holders. The only annual report to be sent to Holdings and TCC's
securities holders will be a copy of this Form 10-K.




                                       61
<PAGE>   64



                                   SIGNATURES

Pursuant to the requirements of Section 15(a) of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 29th of March, 2000.

                                   TRANSTAR HOLDINGS, L.P.

                                   By Blackstone Transportation Company, Inc.
                                     its controlling general partner


                                   By /s/   Howard A. Lipson
                                      -----------------------------------------
                                     Name: Howard A. Lipson
                                     Title: Treasurer



                                   TRANSTAR CAPITAL CORPORATION

                                   By  /s/   Howard A. Lipson
                                      -----------------------------------------
                                     Name: Howard A. Lipson
                                     Title: Treasurer

         Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons in the capacities indicated on
March 29, 2000.

     SIGNATURES                                 TITLE
     ----------                                 -----



/s/ James J. Mossman                Director and President (Principal Executive
---------------------               Officer) of BTC and TCC
    James J. Mossman



/s/ Howard A. Lipson                Treasurer (Principal Financial Officer and
---------------------               Principal Accounting Officer) of BTC and TCC
    Howard A. Lipson



/s/ Stephen A. Schwarzman           Director of BTC and TCC
--------------------------
    Stephen A. Schwarzman



/s/ Peter G. Peterson               Director of BTC and TCC
----------------------
    Peter G. Peterson




                                       62
<PAGE>   65
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



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

                                    EXHIBITS
                                   filed with
                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998


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


                             TRANSTAR HOLDINGS, L.P.
                          TRANSTAR CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)
                                      6719
                                      6719
                          (Primary Standard Industrial
                           Classification Code Number)


--------------------------------------------------------------------------------
<PAGE>   66
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
FOOTNOTE   EXHIBIT
  REF.       NO                                               DESCRIPTION
--------   -------                                            -----------
<S>        <C>        <C>
   (a)       3.1      Certificate of Incorporation of Transtar Capital Corporation, filed with the Secretary of State of
                      the State of Delaware on November 23, 1993.
   (a)       3.2      By-laws of Transtar Capital Corporation.
   (a)       3.3      Certificate of Incorporation of Blackstone Transportation Company, Inc., the controlling general
                      partner of Transtar Holdings, L.P. (Holdings), filed with the Secretary of State of the State of
                      Delaware on November 23, 1993.
   (a)       3.4      By-laws of Blackstone Transportation Company, Inc., the controlling general partner of Transtar
                      Holdings, L.P.
   (a)       3.5      Second Amended and Restated Agreement of Limited Partnership of Transtar Holdings, L.P.
   (a)       3.6      Amended and Restated Certificate of Limited Partnership of Holdings
   (a)       3.7      By-laws of Transtar, Inc.
   (a)       4.2      Specimen Certificate of 13 3/8% Series B Senior Discount Notes due 2003 (the Notes) (included in
                      Exhibit 4.3 hereto).
   (a)       4.3      Indenture, dated as of December 7, 1993, among Holdings, TCC and the United States Trust Company of New
                      York, as trustee, pursuant to which the Notes were issued.
   (a)      10.3      Credit Agreement, dated as of December 7, 1993, among Transtar, Inc. and Chemical Bank as Agent
                      and Issuing Bank thereunder.
   (d)      10.3.1    Second amendment dated as of September 15, 1995 to the Credit Agreement dated as of December 7,
                      1993 among Transtar, Inc. and Chemical Bank as Agent and Issuing Bank thereunder.
   (g)      10.3.2    Amendment and Waiver dated as of March 12, 1997 to the Credit Agreement dated as of December 7,
                      1993 among Transtar, Inc. and the Chase Manhattan Bank as Agent and Issuing Bank thereunder.
   (g)      10.3.3    Third Amendment and Waiver dated as of October 9, 1997 to the Credit Agreement dated as of
                      December 7, 1993 among Transtar, Inc. and the Chase Manhattan Bank as Agent and Issuing Bank
                      thereunder.
            10.3.4    Credit Agreement, dated as of December 7, 1993 as amended and restated as of August 26, 1999,
                      among Transtar, Inc. and Chase Manhattan Bank, as Agent and Issuing Bank.
   (a)      10.4      Stockholders Agreement, dated as of December 28, 1988, by and among Blackstone Capital Partners
                      L.P., Blackstone Transportation Partners L.P., USX Corporation and Transtar, Inc.
            10.5      (Reserved)
   (h)      10.5.1    Transportation Services Agreement, dated July 1, 1998, between Transtar, Inc. and USX Corporation.
   (h)      10.5.2    Transportation Services Agreement, dated December 29, 1998, between Transtar, Inc. and USS/Kobe
                      Steel Company.
            10.6      (Reserved)
   (h)      10.6.1    Transportation Services Agreement, dated July 1, 1998 between USS Great Lakes Fleet, Inc. and USX
                      Corporation and USS/Kobe Steel Company.
            10.6.2    USS/Kobe-RTI Opco Consents and Notices Regarding Transtar, Inc. and Lake Terminal Railroad.
            10.7      (Reserved)
   (h)      10.7.1    Transportation Services Agreement, dated July 1, 1998, between Transtar, Inc. and U.S. Steel
                      Mining Co., L.L.C..
   (a)      10.8      Management Stock Trust Agreement, dated December 28, 1988, between Transtar, Inc. and Pittsburgh
                      National Bank.
   (a)      10.10     Transtar, Inc. Equity Participation Plan, dated December 28, 1988, as amended.
</TABLE>
<PAGE>   67
<TABLE>
<CAPTION>
FOOTNOTE   EXHIBIT
  REF.       NO                                               DESCRIPTION
--------   -------                                            -----------
<S>        <C>        <C>
   (e)      10.13     Transtar, Inc. Savings Plan for Salaried Employees, effective January 1, 1989 as amended through
                      January 1, 1996.
            10.13.1   Sixth Amendment to the Transtar, Inc. Savings Plan for Salaried Employees effective January 1, 2000.
            10.13.2   Seventh Amendment to the Transtar, Inc. Savings Plan for Salaried Employees, effective January 1, 2000.
   (a)      10.14     Transtar, Inc. Flexible Compensation Plan for Non-Represented Employees of Transtar, Inc. and
                      Subsidiary Companies, effective January 1, 1989.
   (e)      10.14.1   Transtar, Inc. Split Dollar Life Insurance Plan, effective July 1, 1994.
            10.14.2   Employment Agreement, dated November 1, 1999, between Transtar, Inc. and Robert S. Rosati.
   (a)      10.15     Layoff Unemployment Benefit Program for Non-Union Salaried Employees as amended January 1, 1989.
   (e)      10.16     Transtar, Inc. Salaried Retirement Plan, effective January 1, 1989 as amended through January 1, 1996.
   (g)      10.16.1   Second Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 1997.
   (g)      10.16.2   Fifth Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 1998.
   (h)      10.16.3   Sixth Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 1999.
            10.16.4   Seventh Amendment to the Transtar, Inc. Salaried Retirement Plan, effective January 1, 2000.
   (g)      10.17     Transtar, Inc. Non Tax-Qualified Pension Plan, effective January 1, 1994.
   (g)      10.18     Transtar, Inc. Supplemental Thrift Program, effective January 1, 1994.
   (g)      10.19     Transtar, Inc. Supplemental Pension Program, effective January 1, 1994.
   (a)      10.20     Amendment No. 1 to Bareboat  Charter, dated as of September 29, 1989, between PNC Leasing Corp and
                      Transtar, Inc.
   (a)      10.21     Bareboat Charter, dated as of June 1, 1990, between PNC Leasing Corp and Transtar, Inc.
   (a)      10.22     Bareboat Charter Party, dated as of September 30, 1991, between Joy Finance Company and Transtar, Inc.
   (a)      10.23     Lease Agreement, dated as of May 1, 1980, between GATX Leasing Corporation, successor to Gould
                      Leasing Services, Inc., and Bessemer and Lake Erie Railroad Company.
   (a)      10.24     Equipment Lease, dated as of May 30, 1980, between the Bessemer and Lake Erie Railroad Company and
                      State Street Bank as Trustee.
   (a)      10.25     Master Railcar Lease Agreement, dated as of April 30, 1993, between The CIT Group/Equipment
                      Financing, Inc. and Elgin, Joliet and Eastern Railway Company.
   (a)      10.26     Railroad Equipment Lease, dated as of November 15, 1989, between Elgin, Joliet & Eastern Railway
                      Company and Mellon Financial Services Corporation #3.
   (a)      10.27     Bareboat Charter, dated as of June 1, 1989, between PNC Leasing Corp and Transtar, Inc.
   (a)      10.28     Amendment No. 1 to Indenture of Trust and First Preferred Ship Mortgage, dated March 19, 1982,
                      between The Connecticut Bank and Trust Company, as Owner Trustee, and Mercantile-Safe Deposit and
                      Trust Company, as Indenture Trustee.
   (a)      10.29     Note Purchase Agreement, dated as of May 26, 1983.
   (a)      10.30     Charter, dated as of September 1, 1980, between The Connecticut Bank and Trust Company and United
                      States Steel Corporation.
   (a)      10.31     Assignment Agreement and Supplement No. 2 to First Preferred Fleet Mortgage, dated as of December 3, 1987.
            10.32     (Reserved)
            10.33     (Reserved)
            10.34     (Reserved)
</TABLE>
<PAGE>   68
<TABLE>
<CAPTION>
FOOTNOTE   EXHIBIT
  REF.       NO                                               DESCRIPTION
--------   -------                                            -----------
<S>        <C>        <C>
   (a)      10.35     Consent, dated as of December 21, 1988, from Xerox Corporation to USX Corporation.
            10.36     (Reserved)
            10.37     (Reserved)
            10.38     (Reserved)
            10.40     (Reserved)
            10.41     (Reserved)
   (a)      10.42     Environmental Indemnification Agreement, dated as of December 28, 1988, among USX Corporation,
                      Transtar and certain subsidiaries of Transtar.
   (b)      10.43     Settlement Agreement among Transtar, Inc., Bessemer and Lake Erie Railroad Company and
                      USX Corporation dated October 6, 1994.
   (f)      10.44.1   Transtar, Inc. Amended Stock Option Plan.
   (c)      10.45     Equipment Lease Agreement dated as of July 15, 1994 between GATX Third Aircraft Corporation and
                      Elgin, Joliet and Eastern Railway Company.
   (c)      10.46     Bareboat Charter dated as of June 30, 1994 between GATX Third Aircraft Corporation and Transtar,
                      Inc.
   (e)      10.47     Master Equipment Lease Agreement dated as of December 28, 1995 between Birmingham Southern
                      Railroad company and Nationsbanc Leasing Corporation of North Carolina.
   (e)      10.48     Master Equipment Lease Agreement dated as of December 28, 1995 between Duluth, Missabe and Iron
                      Range Railway company and Heller Financial Leasing, Inc.
            12.1      Statement of Computation of Ratio of Earnings to Fixed Charges.
   (a)      21.1      Significant Subsidiaries of Transtar Holdings, L.P.
            27        Financial Data Schedule.
</TABLE>
----------
(a)  Previously filed with Registration Statement No. 33-73270 under
     corresponding Exhibit number.
(b)  Previously filed with Form 8-K on October 7, 1994.
(c)  Previously filed with Form 10-K on March 24, 1995.
(d)  Previously filed with Form 10-Q on November 1, 1995.
(e)  Previously filed with Form 10-K on March 22, 1996.
(f)  Previously filed with Form 10-K on March 21, 1997.
(g)  Previously filed with Form 10-K on March 27, 1998.
(h)  Previously filed with Form 10-K on March 25, 1999.