ISPAT INLAND INC - 10-K Annual Report

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2004
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Form 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

[ ] FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File No. 1-2438

ISPAT INLAND INC.
(Exact name of registrant as specified in its charter)

DELAWARE 36-1262880
(State of Incorporation) (I.R.S. Employer Identification No.)

3210 WATLING STREET, EAST CHICAGO, INDIANA 46312
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (219) 399-1200

Registrant meets the conditions set forth in general instruction I(1)(a)
and (b) of Form 10-K and is therefore filing this form with the reduced
disclosure format.

Securities registered pursuant to Section 12(b) of the Act:

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 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 Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The number of shares of Common Stock ($.01 par value) of the registrant
outstanding as of March 29, 2005 was 180, all of which shares were owned by
Ispat Inland Holdings, Inc. Consequently, the aggregate market value of voting
and non-voting Common Stock of the registrant held by non-affiliates is $0.

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PART I

ITEM 1. BUSINESS.

Ispat Inland Inc. together with its subsidiaries (the "Company"), a
Delaware corporation and an indirect wholly owned subsidiary of Mittal Steel
Company N.V. ("Mittal"), is an integrated domestic steel company. The Company
produces and sells a wide range of steels, of which approximately 99% consists
of carbon and high-strength low-alloy steel grades. It is also a participant in
an iron ore production joint venture and certain steel-finishing joint ventures.

The Company has a single business segment, which comprises the operating
companies and divisions involved in the manufacturing of basic steel products
and in related raw materials operations.

On July 16, 1998, Ispat International N.V., predecessor to Mittal acquired
Inland Steel Company (the "Predecessor Company") from Inland Steel Industries,
Inc. ("Industries") in accordance with an Agreement and Plan of Merger
("Agreement"), dated as of May 27, 1998, amended as of July 16, 1998 (the
"Acquisition"). The Predecessor Company was renamed Ispat Inland Inc. on
September 1, 1998. Ispat International N.V. paid $1,143.1 million, plus an
assumption of certain liabilities or obligations, to acquire the Predecessor
Company.

OPERATIONS

The Company is directly engaged in the production and sale of steel and
related products. Certain Company subsidiaries and affiliates are engaged in the
mining and pelletizing of iron ore and in the operation of a cold-rolling mill
and steel galvanizing lines. All raw steel produced by the Company is produced
at its Indiana Harbor Works located in East Chicago, Indiana, which also has
facilities for converting the steel produced into semi-finished and finished
steel.

The Company has two divisions--the Flat Products division and the Bar
division. The Flat Products division manages the Company's iron ore operations,
conducts its ironmaking operations, and produces the major portion of its raw
steel. This division also manufactures and sells steel sheet, strip and certain
related semi-finished products for the automotive, steel service center,
appliance, office furniture and electrical motor markets. The Bar division
manufactures and sells special quality bars and certain related semi-finished
products to the automotive industry directly as well as through forgers and cold
finishers, and also sells to steel service centers and heavy equipment
manufacturers.

The Company and Nippon Steel Corporation ("NSC") are in joint ventures that
operate steel-finishing facilities near New Carlisle, Indiana. The total cost of
these two facilities, I/N Tek and I/N Kote, was approximately $1.1 billion. I/N
Tek, owned 60% by a wholly owned subsidiary of the Company and 40% by an
indirect wholly owned subsidiary of NSC, operates a cold-rolling mill. I/N Kote,
owned equally by a wholly owned subsidiary of the Company and by an indirect
wholly owned subsidiary of NSC, operates two galvanizing lines.

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RAW STEEL PRODUCTION AND MILL SHIPMENTS

The following table shows, for the three years indicated, the Company's
production of raw steel and, based upon American Iron and Steel Institute data,
its share by percentage of total domestic raw steel production:

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* Net tons of 2,000 pounds.

** Based on preliminary data from the American Iron and Steel Institute.

The annual raw steelmaking capacity of the Company is approximately 6.0
million net tons. The basic oxygen process accounted for 92% and 93% of raw
steel production of the Company in 2004 and 2003, respectively. The remainder of
such production was accounted for by the electric furnace process.

The total tonnage of steel shipments by the Company for each of the five
years 2000 through 2004 was 5.6 million tons in 2004; 5.3 million tons in 2003;
5.7 million tons in 2002; 5.4 million tons in 2001; and 5.6 million tons in
2000. In 2004 and 2003, sheet, strip and certain related semi-finished products
accounted for 89% and 90%, respectively, of the total tonnage of steel shipments
from the Indiana Harbor Works. Bar and certain related semi-finished products
accounted for 11% in 2004 and 10% in 2003.

In 2004 and 2003, approximately 92% and 93%, respectively, of the shipments
of the Flat Products division and 88% and 85%, respectively, of the shipments of
the Bar division were to customers in 20 mid-American states. Approximately 73%
and 72%, respectively, of the shipments of the Flat Products division and 79%
and 73%, respectively, of the shipments of the Bar division were to customers in
a five-state area comprised of Illinois, Indiana, Ohio, Michigan and Wisconsin
in 2004 and 2003. Both divisions compete in these geographical areas,
principally on the basis of price, service and quality, with the nation's
largest producers of raw steel as well as with foreign producers and with many
smaller domestic mills.

The steel market is highly competitive with major integrated producers,
including the Company, facing competition from a variety of sources. Many steel
products compete with alternative materials such as plastics, aluminum,
ceramics, glass and concrete. Domestic steel producers have also been adversely
impacted by imports from foreign steel producers. Imports of steel products
accounted for 25.6% of the domestic market in 2004, up from 19.2% in 2003.

Twice, in 2000 and 2002, the U.S. petitioners sought to have antidumping
and countervailing duties assessed against cold-rolled imports from 12 countries
and 20 countries, respectively. Both times, the U.S. International Trade
Commission ("ITC") issued negative final injury determinations, effectively
terminating the investigations. The U.S. petitioners appealed the 2000 ITC
decision to the U.S. Court of International Trade ("CIT"), which remanded that
decision to the ITC on October 28, 2003. On May 6, 2004, the ITC published its
revised findings and affirmed its previous negative injury determinations. The
U.S. petitioners also appealed the 2002 ITC decision to the CIT, which the CIT
denied on February 19, 2004, affirming the ITC's negative injury findings. In
April 2005, the U.S. Department of Commerce ("Commerce") and the ITC will
complete a five-year "sunset" review of existing antidumping and countervailing
duty orders against hot-rolled carbon steel flat products from Brazil, Japan and
Russia that could result in the orders' termination. In November, 2005, Commerce
and ITC will begin a similar sunset review of existing antidumping and
countervailing duty orders against corrosion-resistant imports from Australia,
Canada, France, Germany, Japan and Korea. Actions taken by trade authorities in
connection with these matters could result in the increase of the supply of
steel into the United States and negatively impact future profit margins.

Mini-mills provide significant competition in various product lines.
Mini-mills are relatively efficient, low-cost producers that manufacture steel
principally from scrap in electric furnaces and, at this time, generally

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have lower capital, overhead, employment and environmental costs than the
integrated steel producers, including the Company. Mini-mills have been adding
capacity and expanding their product lines in recent years to produce larger
structural products and certain flat rolled products. Thin-slab casting
technologies have allowed mini-mills to enter certain sheet markets
traditionally supplied by integrated producers. Several mini-mills using this
advanced technology are in operation in the United States.

For the three years indicated, shipments by market classification of steel
mill products produced by the Company at its Indiana Harbor Works are set forth
below. As shown in the table, a substantial portion of shipments by the Flat
Products division was to steel service centers and transportation-related
markets.

Some value-added steel processing operations for which the Company does not
have facilities are performed by outside processors, including joint ventures,
prior to shipment of certain products to the Company's customers. In each of
2004 and 2003 , approximately 43% and 44%, respectively, of the products
produced by the Company were processed further through value-added services such
as electrogalvanizing, painting and slitting.

Approximately 81% of the finished steel shipped to customers during 2004
was transported by truck, with 16% transported by rail, and 3% shipped via barge
or other modes of transportation. A wholly owned truck transport subsidiary of
the Company was responsible for shipment of approximately 27% of the total
tonnage of products transported by truck in 2004.

Substantially all of the steel mill products produced by the Flat Products
division are marketed through its own selling organization, with offices located
in Chicago, Illinois and Southfield, Michigan. Substantially all of the steel
mill products produced by the Bar division are marketed through its sales office
in East Chicago, Indiana.

See "Product Classes" below for information relating to the percentage of
consolidated net sales accounted for by certain classes of similar products of
steel manufacturing operations.

RAW MATERIALS

The Company obtains iron ore pellets primarily from two iron ore
properties, in which the Company or a subsidiary of the Company have an
interest--the Empire Mine in Michigan and the Minorca Mine in Minnesota.

Effective December 31, 2002 the Company sold part of its interest in the
Empire Partnership to a subsidiary of Cleveland-Cliffs, Inc. thereby reducing
its interest in the Empire Mine from 40% to 21%. The Company will have the
option to sell its remaining interest in the Empire Partnership to a subsidiary
of Cleveland-Cliffs, Inc. at any time after December 31, 2007 at a price defined
in the sales agreement. For twelve years, starting in 2003, the Company will
purchase from subsidiaries of Cleveland-Cliffs all of its pellet requirements
beyond those produced by the Minorca Mine. The price of the pellets was fixed
for the first two years and, starting in 2005, will be adjusted over the term of
the agreement based on various market index factors. In 1997, the Company sold
its interest in the Wabush Mines located in LaBrador and Quebec Canada

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to a subsidiary of Cleveland-Cliffs, Inc. The Company may purchase iron ore from
the Wabush Mine from time to time in connection with the preceding Empire
arrangement.

The following table shows (1) the iron ore pellets available to the Company
as of December 31, 2004 from properties of its subsidiary and through interests
in raw materials ventures; (2) 2004 and 2003 iron ore pellet production or
purchases from such sources; and (3) the percentage of the Company's iron ore
requirements represented by production or purchases from such sources in 2004
and 2003.

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(1) Requirements in excess of production are purchased or taken from stockpile.

(2) Net interest in proven reserves.

All of the Company's coal requirements are satisfied from independent
sources. In connection with the commencement of operations of the heat recovery
coke battery in 1998 and the associated energy facility discussed below (which
are not assets of the Company), the Company's coal fired generating station was
idled, thereby eliminating the Company's steam coal requirements.

The Company's other coal requirements are for the PCI Associates joint
venture, in which a subsidiary of the Company holds a 50% interest. The PCI
facility pulverizes coal for injection into the Company's blast furnaces. During
2004 and 2003, the PCI facility's coal needs were satisfied under short-term
contracts.

The Company, Sun Coal and Coke Company ("Sun"), and a unit of NIPSCO
Industries ("NIPSCO") jointly developed a heat recovery coke battery and an
associated energy recovery and flue-gas desulphurization facility, located on
land leased from the Company at its Indiana Harbor Works. Sun designed, built,
financed, and operates the cokemaking portion of the project. A unit of NIPSCO
designed, built and financed the portion of the project which cleans the coke
plant's flue gas and converts the flue gas heat into steam and electricity. Sun,
the NIPSCO unit and other third parties invested approximately $350 million in
the project which commenced operations in the first quarter of 1998. In 2003 the
flue gas desulphurization facility was sold by Nipsco to Primary Energy Steel
LLC. The Company has committed to take, for approximately 15 years, 1.2 million
tons of coke annually on a take-or-pay basis at prices determined by certain
cost factors, as well as energy produced by the facility, through a tolling
arrangement. The Company satisfied 56% of its 2004 and 61% of its 2003 total
coke needs under such arrangement. The Company advanced $30 million during
construction of the project, which was recorded as a deferred asset on the
balance sheet and would have been credited against required cash payments during
the second half of the energy tolling arrangement. During the fourth quarter of
2004, an agreement was reached to allow Primary Energy Steel LLC to pay the
Company a deposit repayment equal to $53.7 million. Upon receipt of these funds,
the deferred asset was eliminated. The remainder of the Company's coke needs are
supplied under short-term contracts through third party purchases.

Approximately 39% and 36% of the iron ore pellets and 100% of the limestone
received by the Company at its Indiana Harbor Works were transported by two of
the Company's three formerly owned ore carriers in 2004 and 2003, respectively
(the third carrier remains in reserve status). The Company's three formerly
owned ore carriers were sold to a third party during 1998. These ore carriers
are managed by the new owner,

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but their shipping services are retained by the Company under a time-charter.
Agreements have been made for the transportation on the Great Lakes of the
remainder of the Company's iron ore pellet requirements.

Approximately 47% and 50% of the Company's coke requirements were received
by conveyor belt from the heat recovery coke battery discussed above in 2004 and
in 2003, respectively. Of the remainder, in 2004, approximately 17% was received
in the Company's hopper cars, 4% in independent carrier-owned hopper cars, 75%
in independent carrier-owned barges, and 4% by truck.

See "Energy" below for further information relating to the use of coal in
the operations of the Company.

PRODUCT CLASSES

The following table sets forth the percentage of consolidated net sales,
for the three years indicated, contributed by each class of similar products of
the Company that accounted for 10% or more of consolidated net sales in such
time period. The data includes sales to affiliates of the Company.

Sales to Ryerson Tull, Inc. approximated 9% and 10% of consolidated net
sales during 2004 and 2003, respectively. No other customer, except I/N Kote,
accounted for more than 10% of the consolidated net sales of the Company during
the noted periods.

CAPITAL EXPENDITURES AND INVESTMENTS IN JOINT VENTURES

In recent years, the Company and its subsidiaries have made substantial
capital expenditures, principally at the Indiana Harbor Works, to improve
quality and reduce costs, and for pollution control. Additions by the Company
and its subsidiaries to property, plant and equipment, together with retirements
and adjustments, for the five years ended December 31, 2004, are set forth
below. Net capital additions during such period aggregated $264.6 million.

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(1) 2002 includes the impairment charge of $44.3 (gross asset value) related to
the 2A Bloomer and 21" Bar Mill assets and the impairment charge of $4.7
(gross asset value) related to the flux equipment at the Empire Mine.

(2) 2003 includes $88.7 related to the No. 7 Blast Furnace reline and $4.9
related to the asset retirement obligation.

In July 1987, a wholly owned subsidiary of the Company formed a
partnership, I/N Tek, now known as I/N Tek LP, with an indirect wholly owned
subsidiary of NSC to construct, own, finance and operate a cold-rolling facility
with an annual capacity of 1,700,000 tons, of which approximately 40% is
cold-rolled substrate for I/N Kote (described below). The I/N Tek facility is
located near New Carlisle, Indiana. The Company, which owns, through its
subsidiary, a 60% interest in the I/N Tek partnership is, with certain limited
exceptions, the sole supplier of hot band to be processed by the I/N Tek
facility and generally has exclusive rights to the production capacity of the
facility.

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In September 1989, a wholly owned subsidiary of the Company formed a second
partnership, I/N Kote, now known as I/N Kote LP, with an indirect wholly owned
subsidiary of NSC to construct, own, finance and operate two sheet steel
galvanizing lines adjacent to the I/N Tek facility. The subsidiary of the
Company owns a 50% interest in I/N Kote. The I/N Kote facility consists of a
hot-dip galvanizing line and an electrogalvanizing line with a combined annual
capacity of 1,000,000 tons. The Company has guaranteed 50% of I/N Kote's term
financing. I/N Kote has contracted to acquire its cold-rolled steel substrate
from the Company, which supplies the substrate from the I/N Tek facility and the
Company's Indiana Harbor Works.

The amount budgeted for 2005 capital expenditures by the Company and its
subsidiaries is approximately $85 million. It is anticipated that capital
expenditures will be funded from cash generated by operations and borrowings
under financing arrangements. (See "Environment" below for a discussion of
capital expenditures for pollution control purposes included in the foregoing
amount.)

EMPLOYEES

The monthly average number of active employees of the Company and its
subsidiaries (including fleet and mining operations) was approximately 5,985 and
6,424 in 2004 and 2003, respectively. Within such entities, at year-end 2004,
approximately 4,784 were represented by unions, consisting of 4,259 represented
by United Steelworkers of America (of whom approximately 6 were on furlough or
indefinite layoff ), and 525 by other unions. At year-end 2003, approximately
5,130 employees were represented by unions, consisting of 4,624 by the United
Steelworkers of America (of whom approximately 19 were on furlough or indefinite
layoff), and 506 by other unions.

The Company is currently negotiating a new labor agreement with the United
Steelworkers of America, as the previous agreement expired on July 31, 2004.
Under the terms of the previous agreement, both parties agreed to negotiate a
successor agreement without resorting to strikes or lockouts. In addition, both
parties agreed that open issues would be submitted to binding arbitration and
that the successor agreement will be based on the agreements currently in place
at other domestic integrated steel producers. In the light of Mittal's proposed
merger of International Steel Group Inc. ("ISG"), the arbitration procedure was
postponed and the parties agreed that the current ISG Collective Bargaining
Agreement would be adapted with negotiated adjustments for particular Company
circumstances. The parties also agree that, during the term of the collective
bargaining agreement, the company's current steelmaking capacity would be
maintained. Negotiations are ongoing and it is expected that a final agreement,
which requires union membership ratification, will be reached shortly.

ENVIRONMENT

The Company is subject to environmental laws and regulations concerning
emissions into the air, discharges into ground water and waterways, and the
generation, handling, labeling, storage, transportation, treatment and disposal
of certain waste material and the remediation of containment. These include
various federal statutes regulating the discharge or release of materials to the
environment, including the Clean Air Act, Clean Water Act, Resource Conservation
and Recovery Act ("RCRA"), Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA," also known as "Superfund"), Safe Drinking
Water Act, and Toxic Substances Control Act, as well as state and local
requirements. Violations of these laws and regulations can give rise to a
variety of civil, administrative, and, in some cases, criminal sanctions and
could also result in suspension or cessation of operations, substantial
liabilities or require substantial capital expenditures. In addition, under
CERCLA the U.S. Environmental Protection Agency (the "EPA") has authority to
impose liability for site remediation on waste generators, past and present site
owners and operators, and transporters, regardless of fault or the legality of
the original disposal activity. Liability under CERCLA is strict and, under
certain circumstances, joint and several.

Capital spending for pollution control projects totaled less than $1
million in 2004 versus $4 million in 2003. Another $37 million (non-capital) was
spent in 2004 to operate and maintain pollution control equipment compared to
$31 million in the previous year. During the five years ended December 31, 2004,
the

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Company has spent $194 million to construct, operate and maintain environmental
control equipment at its various locations.

Capital spending for pollution control projects previously authorized and
presently under consideration will require expenditures of approximately $3
million in 2005 and $7 million in 2006. During the 2007 to 2009 period it is
anticipated that the Company will make annual capital expenditures of $2 million
to $6 million on pollution control projects. In addition, the Company will have
ongoing annual expenditures (non-capital) of $35 million to $40 million to
operate and maintain air and water pollution control facilities to comply with
current federal, state and local laws and regulations. The Company is involved
in various environmental and other administrative or judicial actions initiated
by governmental agencies. While it is not possible to predict the results of
these matters, the Company does not expect environmental expenditures, excluding
amounts that may be required in connection with the Consent Decree in the 1990
EPA lawsuit, or as referenced below, to materially affect the Company's
financial position, results of operations and cash flows. Corrective actions
relating to the EPA consent decree will require significant expenditures over
the next several years that may be material to the financial position, results
of operations and cash flows of the Company. At December 31, 2004 and 2003, the
Company's reserves for environmental liabilities totaled $37 million and $37
million, respectively, $22 million and $22 million, respectively, of which is
related to the sediment remediation under the 1993 EPA Consent Decree.

The Company is a party to a 1993 Consent Decree resolving an EPA lawsuit
under the Resource Conservation and Recovery Act (the "1993 Consent Decree")
which, among other things, requires the investigation and remediation of the
Indiana Harbor Works Site. It is expected that remediation of the site will
require significant expenditures over several years that may be material to our
business, financial position and results of operations. See "Legal Proceedings"
below for a more detailed discussion of the obligations arising under the 1993
Consent Decree, as well as a discussion of liability relating to our being a
party to a 2005 consent decree resolving a state and federal Natural Resources
Trustee's lawsuit related to the operation of the Indiana Harbor Works Site.

In addition to the foregoing, the Company is a party to a number of legal
proceedings arising in the ordinary course of its business. The Company does not
believe that the adverse determination of any such pending routine litigation,
either individually or in the aggregate, will have a material adverse effect on
the financial condition, results of operations or cash flows of the Company.

ENERGY

Coal, together with coke, all of which are purchased from independent
sources, accounted for approximately 74% and 71% of the energy consumed by the
Company at the Indiana Harbor Works in 2004 and 2003, respectively.

Natural gas and fuel oil supplied approximately 19% and 22% of the energy
requirements of the Indiana Harbor Works in 2004 and 2003, respectively, and are
used extensively by the Company at other facilities that it owns or in which it
has an interest. Utilization of the pulverized coal injection facility has
reduced natural gas and fuel oil consumption at the Indiana Harbor Works.

The Company both purchases and generates electricity to satisfy electrical
energy requirements at the Indiana Harbor Works. In both 2004 and 2003, the
Company produced approximately 1% of its electrical energy requirements at the
Indiana Harbor Works. The purchase of electricity at the Indiana Harbor Works is
subject to curtailment under rules of the local utility when necessary to
maintain appropriate service for various classes of its customers.

The Company leases land to Primary Energy Steel LLC upon which is built a
90-megawatt turbine generating facility that began operation in 1998. Pursuant
to a 15-year-toll-charge contract, the facility converts coke plant flue gas
into electricity and plant steam for use by the Company. In 2004 and 2003, this
facility produced 23% and 24%, respectively, of the purchased electricity
requirements at the Indiana Harbor Works. For additional information regarding
this facility, see the discussion under "Item 1. Business--Operations--Raw
Materials" on page 4 and 5 of this document.

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The Company also leases land to Primary Energy Steel LLC for a 75-megawatt
steam turbine generating facility which began operation in 1996. Pursuant to a
15-year-toll-charge contract, the facility generates electricity for use by the
Company utilizing steam produced by burning waste blast furnace gas. In 2004 and
2003, this facility produced 27% and 17% respectively, of the purchased
electricity requirements of the Indiana Harbor Works.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements concerning possible or
assumed future results of operations, financing plans, competitive position,
potential growth and future expenditures. Forward-looking statements include all
statements that are not historical facts and can be identified by the use of
forward-looking terminology such as the words "believe," "expect," "anticipate,"
"intend," "plan," "estimate" or similar expressions. Undue reliance should not
be placed on any forward-looking statements, which speak only as of their dates.
Actual results could differ materially from those projected in the
forward-looking statements as a result of many factors.

COMPLIANCE CODE

It is the Company's policy to provide full, fair, accurate, timely and
understandable disclosures in all reports and documents that the Company files
with or submits to the Securities and Exchange Commission, as well as in all
other public communications made by the Company. The Company has adopted a
revised Compliance Code summarizing the corporate policies and laws that apply
to all officers, directors and employees. Such Compliance Code serves as the
code of ethics for all officers and directors of the Company with respect to
disclosure matters. The Compliance Code is available to view on-line at
www.Mittalsteel.com/ Inlandemployees.

ITEM 2. PROPERTIES.

PROPERTIES RELATING TO OPERATIONS

STEEL PRODUCTION

All raw steel made by the Company is produced at its Indiana Harbor Works
located in East Chicago, Indiana. The property on which this plant is located,
consisting of approximately 1,900 acres, is held by the Company in fee. The
basic production facilities of the Company at its Indiana Harbor Works consist
of furnaces for making iron; basic oxygen and electric furnaces for making
steel; a continuous billet caster, a continuous combination slab/bloom caster
and two continuous slab casters; and a variety of rolling mills and processing
lines which turn out finished steel mill products. Certain of these production
facilities, including a continuous anneal line are held by the Company under
leasing arrangements. The Company has granted the Pension Benefit Guaranty
Corporation ("PBGC") a lien upon a caster facility to secure the payment of
future pension funding obligations. Substantially all of the remaining property,
plant and equipment at the Indiana Harbor Works, other than the caster facility
pledged to the PBGC and leased equipment, is subject to the lien of the First
Mortgage of the Company dated April 1, 1928, as amended and supplemented. See
"Operations--Raw Steel Production and Mill Shipments" in Item 1 above for
further information relating to capacity and utilization of the Company's
properties. The Company's properties are adequate to serve its present and
anticipated needs, taking into account those issues discussed in "Capital
Expenditures and Investments in Joint Ventures" in Item 1 above.

I/N Tek, a partnership in which a subsidiary of the Company owns a 60%
interest, has constructed a 1,700,000 ton annual capacity cold-rolling mill on
approximately 200 acres of land, which it owns in fee, located near New
Carlisle, Indiana. Substantially all the property, plant and equipment owned by
I/N Tek is subject to a lien securing related indebtedness. The I/N Tek facility
is adequate to serve the present and anticipated needs of the Company planned
for such facility.

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I/N Kote, a partnership in which a subsidiary of the Company owns a 50%
interest, has constructed a 1,000,000 ton annual capacity steel galvanizing
facility on approximately 25 acres of land, which it owns in fee, located
adjacent to the I/N Tek site. Substantially all the property, plant and
equipment owned by I/N Kote is subject to a lien securing related indebtedness.
The I/N Kote facility is adequate to serve the present and anticipated needs of
the Company planned for such facility.

PCI Associates, a partnership in which a subsidiary of the Company owns a
50% interest, has constructed a pulverized coal injection facility on land
located within the Indiana Harbor Works. The Company leases PCI Associates the
land upon which the facility is located. A 50% undivided interest in
substantially all of the property, plant and equipment at the PCI facility is
subject to a long-term lease, with the balance of the PCI facility owned by PCI
Associates. The PCI facility is adequate to serve the present and anticipated
needs of the Company planned for such facility.

The Company also owns property at the Indiana Harbor Works used in
connection with its joint project with Sun and Primary Energy Steel LLC. For
more information regarding this project, see the discussion under "Item 1.
Business--Operations--Raw Materials" on page 5 of this document.

A subsidiary of the Company owns a fleet of 321 coal hopper cars (100-ton
capacity each) used in unit trains to move coal and coke to the Indiana Harbor
Works. The Company time-charters three vessels for the transportation of iron
ore and limestone on the Great Lakes. During 1998, the Company transferred
ownership of such vessels to a third party subject to a lien in favor of the
PBGC on the vessels to secure the payment of future pension funding obligations.
See "Operations--Raw Materials" in Item 1 above for further information relating
to utilization of the Company's transportation equipment. Such equipment is
adequate, when combined with purchases of transportation services from
independent sources, to meet the Company's present and anticipated
transportation needs.

The Company also owns and maintains research and development laboratories
in East Chicago, Indiana. Such facilities are adequate to serve the Company's
present and anticipated needs.

RAW MATERIALS PROPERTIES AND INTERESTS

Certain information relating to raw materials properties and interests of
the Company and its subsidiaries is set forth below. See "Operations--Raw
Materials" in Item 1 above for further information relating to capacity and
utilization of such properties and interests.

IRON ORE

The operating iron ore properties of the Company's subsidiaries and of the
iron ore ventures in which the Company has an interest are as follows:

Effective December 31, 2002, the Company sold part of its interest in the
Empire Partnership to a subsidiary of Cleveland-Cliffs, Inc., thereby reducing
its interest in the Empire Mine from 40% to 21%. Certain related fluxing
equipment was also sold. Cleveland-Cliffs, Inc. has indemnified the Company for
liabilities associated with the mine. The Company will have the option to sell
its remaining interest in the Empire Partnership to a subsidiary of
Cleveland-Cliffs, Inc. at any time after December 31, 2007 at a price defined in
the sales agreement. For twelve years, starting in 2003, the Company will
purchase from subsidiaries of Cleveland-Cliffs, Inc. all of its pellet
requirements beyond those produced by the Minorca Mine. The price of the pellets
was fixed for the first two years and then will be adjusted over the term of the
agreement based on various market index factors.

10

The Company, through a subsidiary, is the sole owner and operator of the
Minorca Mine. The Company has granted the PBGC a lien on the Minorca Mine
property to secure the payment of future pension funding obligations. The
Company also owns a 38% interest in the Butler Taconite project (permanently
closed in 1985) in Nashwauk, Minnesota.

The reserves at the Empire Mine and Minorca Mine are held under leases
expiring, or expected at current production rates to expire, between 2012 and
2040. The Company's share of the production capacity of its interests in such
iron ore properties, in combination with supply commitments undertaken by
subsidiaries of Cleveland-Cliffs, Inc., are sufficient to provide the majority
of its present and anticipated iron ore pellet requirements. Any remaining
requirements have been and are expected to continue to be readily available from
independent sources.

OTHER PROPERTIES

The Company and one of its subsidiaries lease approximately 20% of the
space in the Inland Steel Building located at 30 West Monroe Street, Chicago,
Illinois. The Company's lease agreement expires December 31, 2006.

A subsidiary of the Company holds in fee a parcel of 7 acres of land in
Oakbrook Terrace, Illinois, which is for sale. The Company also holds in fee
approximately 300 acres of land adjacent to the I/N Tek and I/N Kote sites, this
land is available for future development. Approximately 1,060 acres of rural
land, which are held in fee at various locations in the north-central United
States by various raw materials ventures, are also for sale.

ITEM 3. LEGAL PROCEEDINGS

On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by a lawsuit
filed by the EPA in 1990 (the "1993 EPA Consent Decree") against, among others,
Inland Steel Company (the "Predecessor Company"). The 1993 EPA Consent Decree
assessed a $3.5 million cash fine, requires the Company to undertake
environmentally beneficial projects costing $7 million at the Indiana Harbor
Works, and requires $19 million plus interest to be spent in remediating
sediment in portions of the Indiana Harbor Ship Canal and Indiana Harbor Turning
Basin ("Sediment Remediation"). The Company has paid the fine and substantially
completed the environmentally beneficial projects. The Company's reserve for the
remaining environmental obligations under the 1993 EPA Consent Decree totaled
$28.2 million as of December 31, 2004. Future payments under the sediment
remediation portion of the 1993 EPA Consent are substantially fixed. The 1993
EPA Consent Decree also requires remediation of the Company's Indiana Harbor
Works site (the "Corrective Action") which is a distinct and separate
responsibility under the Consent Decree. The 1993 EPA Consent Decree establishes
a three-step process for the Corrective Action, each of which requires approval
by the EPA, consisting of: assessment of the site (including stabilization
measures), evaluation of remediation alternatives and remediation of the site.
The Company is presently assessing the nature and the extent of environmental
contamination. Assessments under the 1993 EPA Consent Decree have been ongoing
since the decree was entered and no significant new environmental exposures have
been identified. It is anticipated that this assessment will cost approximately
$2 million to $4 million per year over the next several years. Until the first
two steps are completed, the remedial action to be implemented cannot be
determined. Therefore, the Company cannot reasonably estimate the cost of, or
the time required to satisfy, its obligations under the corrective action, but
it is expected that remediation of the site will require significant
expenditures over several years that may be material to the Company's financial
position, results of operations and cash flows. Insurance coverage with respect
to work required under the 1993 EPA Consent Decree is not significant.

In October 1996, the Company was identified as a potentially responsible
party due to alleged releases of hazardous substances from its Indiana Harbor
Works facility and was notified of the NRDA trustees intent to perform an
environmental assessment on the Grand Calumet River and Indiana Harbor Canal
System. A form of consent decree has been negotiated, which was issued as a
final order of the court in January 2005. Under the decree, the Company would
pay approximately $8.7 million in total. In the first year, the Company

11

would pay approximately $1.6 million, and in each of the subsequent four years.
Additionally, the Company has incurred approximately $0.8 million in costs
related to this matter which will be payable within 30 days of the effective
date of the corrective action. The Company has established a reserve of $8.7
million for liabilities in connection with these matters. The Company is engaged
in ongoing negotiations with the EPA regarding a similar dollar reduction in the
separate environmental reserve established for the EPA Consent Decree. It is the
Company's position that the Sediment Remediation and the NRDA decree address
remediation of the same waterways. Management believes that the required future
payments related to these matters are substantially fixed, and, accordingly,
does not believe that reasonably possible losses, if any, in excess of the
amounts accrued will have a material effect on the Company's financial position,
results of operations and cash flows.

The U.S. Comprehensive Environmental Response, Compensation, and Liability
Act, also known as Superfund, and analogous state laws can impose liability for
the entire cost of cleanup at a site upon current or former site owners or
operators or parties who sent hazardous materials to the site, regardless of
fault or the lawfulness of the activity that caused the contamination. The
Company is a potentially responsible party at several state and federal
Superfund sites. The Company believes its liability at these sites is either de
minimis or substantially resolved. The Company could, however, incur additional
costs or liabilities at these sites based on new information, if additional
cleanup is required, private parties sue for personal injury or property damage,
or other responsible parties sue for reimbursement of costs incurred to clean up
the sites. The Company could also be named a potentially responsible party at
other sites if its hazardous materials or those of its predecessor were disposed
of at a site that later becomes a Superfund site.

On July 2, 2002, the Company received a notice of violation ("NOV") issued
by the US Environmental Protection Agency against the Company, Indiana Harbor
Coke Company, L.P. ("IHCC") and Cokenergy, Inc., alleging violations of air
quality and permitting regulations for emissions from the Heat Recovery Coal
Carbonization facility which is operated by IHCC. An amended NOV stating similar
allegations was issued on August 8, 2002. Although the Company currently
believes that its liability with respect to this matter will be minimal, the
Company could be found liable for violations and this potential liability could
materially affect the financial position, results of operations and cash flows
of the Company.

On September 15, 2003, the Company entered into a settlement agreement with
Ryerson Tull, Inc. pursuant to which Ryerson Tull paid the Company $21 million
to release Ryerson Tull from various environmental and other indemnification
obligations arising out of the sale by Ryerson Tull of the Company to Ispat in
1998. The $21 million received from Ryerson Tull was paid into the Company
Pension Plan, and went to reduce the amount of a Ryerson Tull guaranty and
letter of credit that Ryerson Tull had provided to the Pension Benefit Guaranty
Corporation ("PBGC") to guarantee $50 million of the Company's Pension Plan
obligations. The Company also agreed with Ryerson Tull to, among other things,
make specified monthly contributions to the Company's Pension Plan totaling $29
million over the twelve-month period beginning January 2004, thereby
eliminating, by the end of such year, the obligation of Ryerson Tull to provide
the continuing guaranty and letter of credit to the PBGC, which guaranty/letter
of credit the Company had previously committed to take all necessary action to
eliminate. On September 15, 2004, the final portion of the $29 million
obligation was contributed to the plan, eliminating the Ryerson Tull
Guaranty/letter of credit. In addition, the Company committed to reimburse
Ryerson Tull for the cost of the letter credit to the PBGC, and to share with
Ryerson Tull one-third of any proceeds which the Company might receive in the
future in connection with a certain environmental insurance policy.

In January 2005 the Company received a Third Party Complaint by Alcoa
Incorporated alleging that the Company is liable as successor to the interests
of Hillside Mining Co., a company that the Company acquired in 1943, operated
until the late 1940s and then sold the assets of in the early 1950s. It is
alleged that since Hillside was operating in the area at the same time as Alcoa,
if Alcoa is found to be liable in the original suit that was filed against it by
approximately 340 individuals who live in the Rosiclare area of southern
Illinois, then the Company should also be found liable, and there should be an
allocation to the Company of the amount that would be owed to the original
Plaintiffs. Those original Plaintiffs are alleging that the mining and
processing operations allowed the release of fluorspar, manganese, lead and
other heavy metal contaminants, causing unspecified personal injury and property
damage. The Company has also been identified as a
12

potentially responsible party by the Illinois EPA in connection with this
matter. The Company has requested further information from the Illinois EPA
regarding their potential claim. Until such time as this matter is further
developed, management is not able to estimate reasonably possible losses, or a
range of such losses, the amounts of which may be material in relation to the
Company's financial position, results of operations and cash flows. The Company
intends to defend itself fully in these matters.

In addition to the foregoing, the Company is a party to a number of legal
proceedings arising in the ordinary course of its business. The Company does not
believe that the adverse determination of any such pending routine litigation,
either individually or in the aggregate, will have a material adverse effect on
its business, financial condition, results of operations, cash flows or
prospects.

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

The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

PART II

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

The Company is an indirect wholly owned subsidiary of Mittal. Common stock
dividends of $20 million and $7 million were declared and paid during 2004 and
2003, respectively. The terms of various debt arrangements restrict the payment
of dividends or the making of other distributions to shareholders and the
repurchase or redemption of stock. At December 31, 2004 and 2003, the Company
could have paid dividends or made other of these types of payments of $340
million and $0 million, respectively. The Company has no Common Stock which is
owned by non-affiliates.

ITEM 6. SELECTED FINANCIAL DATA.

The Company meets the conditions set forth in General Instruction I(2)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS.

The Company reported a net income of $258.7 million in 2004 as compared
with a net loss of $52.6 million in 2003.

The following table summarizes selected earnings and other data:

Steel shipments in 2004 of 5,614,128 tons increased by 314,436 tons or 5.9%
compared to 2003 shipments of 5,299,692 tons. Increases occurred across product
categories, most substantially in bar and cold rolled products, reflecting
stronger market conditions.

Sales revenue increased by 42.0% to $3,157.6 million in 2004 from $2,222.9
million in 2003. The average selling price per ton increased by 34.1% to $562
per ton in 2004 from $419 per ton in 2003, with the mix of products sold
relatively unchanged across periods. The increase in the average selling prices
is due to higher base prices, the industry's implementation of pricing
surcharges designed to offset escalation in the prices of key input commodities
such as coke, scrap and iron ore and stronger market demand.

13

In 2004, the cost of goods sold increased to $2,487.1 million from $2,103.1
million in 2003. Included in 2004 cost is a credit of $35.0 million due to a
change in the accounting estimate for property taxes for the years 2002 and
2003, resulting from the reassessment of property taxes for the year 2002.
Indiana's Legislature passed a law in 2001 which changed real property
assessment from replacement cost less depreciation to market value.
Additionally, the law required an independent reassessment of real property for
Lake County where our 1,900 acre Indiana Harbor Works facility is located. This
reassessment was not completed until the end of February, 2004. Compared to
2003, input costs dramatically increased for scrap, coke, coal, ore, alloys,
fluxes, and natural gas. Labor costs were higher 2004 as compared to 2003 due to
increased employee profit sharing and higher pension expense. The year 2004 also
included a charge of approximately $4.0 million for the severance costs
resulting from an 8% salaried workforce reduction.

Selling and general administrative expenses of $39.3 million for 2004 were
$6.2 million higher than 2003 primarily due to increased operational value added
taxes and higher corporate expenses charged to Ispat Inland from the parent
company.

Depreciation expense increased by $3.2 million to $100.2 million in 2004
from $97.0 million in 2003 due to the 2003 capital expenditures for the No. 7
Blast Furnace reline.

Operating income in 2004 increased by $541.3 million to $531.0 million from
a loss of $10.3 million in 2003. Increases in selling prices, higher sales
volume, lower costs due to higher slab production resulting from the successful
reline of No. 7 Blast Furnace, and the property tax reassessment were partially
offset by an unprecedented increase in input costs, increased pension expense,
employee profit sharing, and the severance charge resulting from the salaried
workforce reduction of 130 salaried non-represented employees.

Other (income) expense, net of $8.9 million of expense in 2004 increased by
$23.6 million from income of $14.7 million in 2003. Other (income) expense, net
for 2004 included $22.2 million of expense related to the early redemption of
$227.5 million principal amount of the Company's outstanding 9 3/4% Senior
Secured Notes due 2014, at a redemption price equal to 109 3/4% of the
outstanding principal amount being redeemed. This expense was partially offset
by the sale of pollution credits during 2004. The Company sold 3,432 tons of
Nitrous Oxide allowances for $8.6 million, which were part of an overall bank of
emission allowances and credits owned by the Company. Generally, these rights
arose from actions taken by the Company or the state to reduce the emission of
air pollutants. Other (income) expense, net for 2003 included $10.7 million of
income associated with the $21.0 million settlement agreement with Ryerson Tull.
On September 15, 2003, the Company entered into a settlement agreement with
Ryerson Tull under which Ryerson Tull paid the Company $21.0 million to release
Ryerson Tull from various environmental and other indemnification obligations
arising out of the sale by Ryerson Tull of the Company to Ispat.

Interest expense of $110.1 million in 2004 increased by $39.2 million from
$70.9 million in 2003 due to a higher interest rate on the newly refinanced debt
and a higher level of debt.

The Company's cash balance at December 31, 2004 was $80.7 million and there
was an additional $359.9 million of availability under the two revolving credit
facilities, for total liquidity of approximately $441 million. For the year
ended December 31, 2004, the Company utilized net cash of $154.5 million from
financing activities. On March 25, 2004, the Company received $775.5 million of
net proceeds from the issuance and sale of $800 million of Senior Secured Notes.
These net proceeds were used to retire the entire balance outstanding of $661.5
million of Tranche B and Tranche C Loans under its credit agreement, and repay
the entire balance outstanding of $105 million under its inventory revolving
credit facility, with the remainder of the proceeds used to reduce the amount
outstanding under its receivables revolving credit facility. Additionally, in
December, the Company received $256.0 million from the issuance of common stock
to its parent company, Ispat Inland Holdings, Inc. The Company used these
proceeds, through an affiliate, Ispat Inland ULC, to redeem $227.5 million of
the outstanding 9 3/4% Senior Secured Notes due 2014, at a redemption price of
109 3/4% of the outstanding principal being redeemed, plus accrued and unpaid
interest. Finally, the Company utilized cash generated in the fourth quarter to
repay the balance outstanding under its accounts receivable revolving credit
facility.

14

Cash generated by operations is our primary source of cash and, as such,
future operations will have a significant impact on our cash balances and
liquidity. The principal factors affecting our cash generated by operations are
average net realized prices, levels of steel shipments, and our operating costs.

For the year ended December 31, 2004, net cash inflows from operations
totaled $219.8 million, which is net of pension contributions of $111.5 million.
Included in 2004 net cash inflows from operations is the monetization, totaling
$53.7 million, of a tolling deposit previously held by a supplier and recorded
as an Other Asset on the Company's balance sheet. As a result, the Company
received cash in the fourth quarter in lieu of lower tolling charges in future
years. Cash inflows from operations for the year ended December 31, 2003 were
$22.3 million, which included $125.5 million of pension contributions.

Changes in working capital, components of receivables, inventories and
accounts payable, utilized cash of $239.6 million for the current period,
including $61.9 million for increased receivables and $230.2 million for
increased inventories, partially offset by increased payables of $52.5 million.
In 2003, changes in working capital generated $117.5 million of cash, including
$42.1 million for decreased receivables, $71.3 million for decreased
inventories, and $4.1 million for increased payables.

Cash inflows for investing activities, which consist primarily of capital
expenditures, offset by distributions from joint ventures, were $2.0 million for
the current period, compared to cash outflows of $91.6 million for the year-ago
period. Capital expenditures were $39.9 million for the current period compared
to $111.3 million for the year-ago period. Net distributions from joint ventures
were $40.8 million and $19.1 million in 2004 and 2003, respectively.

OUTLOOK FOR 2005

The Company expects the strong business conditions experienced in 2004 to
continue throughout 2005. We expect stable demand for our products and
anticipate that higher selling prices will mitigate higher raw material costs
enabling the Company to maintain its margins.

Pension expenses for 2005 will be higher due to a further decrease in
interest rates and additional recognition of unrecognized losses. The Company
anticipates contributing approximately $175 million to its pension fund in 2005.

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

The Company had $1,013.6 million of long-term debt (including debt due
within one year) outstanding at December 31, 2004. Of this amount, $150.0
million is floating rate debt with a fair value of $163.1 million at December
31, 2004. The remaining $863.6 million of fixed rate debt had a fair value of
$966.8 million. Assuming a hypothetical 10% decrease in interest rates at
December 31, 2004, the fair value of this fixed rate debt would be estimated to
be $994.7 million. Fair market values are based upon market prices or current
borrowing rates with similar rates and maturities.

A 10% increase or decrease in the cost of the Company's variable rate debt
at December 31, 2004 would result in a change in pretax interest expense of $1.3
million, based upon borrowings outstanding at December 31, 2004.

The Company utilizes derivative commodity instruments not for trading
purposes but to hedge exposure to fluctuations in the costs of natural gas and
certain nonferrous metal commodities. A hypothetical 10% decrease in commodity
prices for open derivative commodity instruments as of December 31, 2004 would
reduce pre-tax income by $10.9 million. At December 31, 2004, 64% of the
Company's underlying business plan for natural gas was hedged using derivative
commodity instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements (including the financial statement
schedule listed under Item 14(a)1 of this report) of the Company called for by
this Item, together with the Report of Independent Registered Public Accounting
Firm dated March 14, 2005 are set forth on pages F-2 to F-39 inclusive, of this

15

Report on Form 10-K, and are hereby incorporated by reference into this Item.
Financial statement schedules not included in this Report on Form 10-K have been
omitted because they are not applicable or because the information called for is
shown in the consolidated financial statements or notes thereto.

Unaudited consolidated quarterly sales and earnings information of the
Company for the years ended December 31, 2004, 2003 and 2002 is set forth in
Note 23 of Notes to Consolidated Financial Statements (see F-38), which is
hereby incorporated by reference into this Item.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. DISCLOSURE CONTROLS AND PROCEDURES.

Evaluations were carried out under the supervision and with the
participation of the Company's management, including our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934). Based upon those evaluations, the Chief
Executive Officer and Chief Financial Officer concluded that, as of December 31,
2004, these disclosure controls and procedures were effective.

There have been no changes in the Company's internal control over financial
reporting that occurred during the Company's most recent fiscal quarter (the
Company's fourth fiscal quarter in the case of the annual report) that has
materially affected, or is reasonably likely to materially affect the Company's
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

Because our financial statements are consolidated with those of our parent
company, Mittal Steel Company N.V., the common stock of which is traded publicly
on the New York Stock Exchange, and because we do not have a class of publicly
traded equity securities, we are not required to have an audit committee. We
have determined that it is not necessary for our Company to have an audit
committee or an audit committee financial expert. When appropriate, we rely on
the significant experience of members of the Board of Directors of our parent
company. Mittal's audit committee reviews our financial statements as part of
its review of the consolidated financial statements of Mittal.

The Board of Directors of our parent Company, Mittal has determined that
Mr. Narayanan Vaghul, Chairman of the Audit Committee is an "audit committee
financial expert". Mr. Vaghul and each of the other members of Mittal's Audit
Committee is an "independent director" as defined in the New York Stock
Exchange's listing rules.

ITEM 11. EXECUTIVE COMPENSATION.

The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

16

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

The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 14. PRINCIPAL ACCOUNTING FEES.

Deloitte & Touche LLP ("Deloitte & Touche") served as the Company's
independent auditors for 2004 and 2003.

AUDIT FEES

Deloitte & Touche's fees for professional services rendered in connection
with the audit of financial statements included in the Company's Form 10-K and
review of financial statements included in the Company's Forms 10-Q and all
other SEC regulatory filings were $1,088,000 for 2004 and $959,000 for 2003.

AUDIT-RELATED FEES

Deloitte & Touche's fees for audit related services were $366,000 for 2004
and $126,000 for 2003. These services were rendered in connection with the
Company's issuance of $800 million of debt securities, and the audits of the
Company's employee benefit plans.

TAX FEES

Deloitte & Touche's fees for tax compliance, tax advice, and tax planning
totaled $680,000 for 2004 and $573,000 for 2003.

Fees for tax compliance services were $460,000 and $450,000 in 2004 and
2003, respectively. Tax compliance services are services rendered based upon
facts already in existence or transactions that have already occurred to
document, compute, and obtain government approval for amounts to be included in
tax filings and consisted of: (i) federal, state and local income tax return
assistance, (ii) computation of fixed asset basis, and (iii) assistance with
federal, state, and local notices from taxing authorities.

Fees for tax planning and advice services totaled $220,000 and $123,000 in
2004 and 2003, respectively. Tax planning and advice are services rendered with
respect to proposed transactions. Such services consisted of: (i) tax advice and
assistance with federal and state audits and appeals, (ii) tax advice and
assistance related to fixed asset basis, (iii) assistance with tax return
filings in certain foreign jurisdictions, (iv) tax advice and consultation
relating to tax forecasting, (v) tax advice and consultation relating to
accumulated earnings and profits to determine the treatment of distributions to
shareholders, (vi) tax advice and consultation relating to state sales and use
tax issues, (vii) tax advice and consultation relating to other miscellaneous
issues including employment taxes, bonus depreciation, employee fringe benefits,
and international assignment advisory services.

ALL OTHER FEES

No other fees were charged by Deloitte & Touche to the Company other than
those referenced above.

PRE-APPROVAL OF NON-AUDIT FEES AND AUDITOR INDEPENDENCE

In connection with the review of our financial statements by the Mittal
Audit Committee, as part of its review of the consolidated financial statements
of Mittal, the Mittal Audit Committee pre-approves all non-audit service-related
engagements rendered by our external auditor. The Mittal Audit Committee has
17

delegated pre-approval powers on a case-by-case basis to the Audit committee
Chairman, for instances where the Committee is not in session, and such matters
are reviewed in the subsequent meeting of the Audit Committee.

In making its recommendation to appoint Deloitte & Touche as our
independent auditor for the year ended December 31, 2004, the Audit Committee
has considered whether the services provided by Deloitte & Touche are compatible
with maintaining the independence of our external auditor, and has determined
that such services do not interfere with Deloitte & Touche's independence.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) DOCUMENTS FILED AS A PART OF THIS REPORT.

CONSOLIDATED FINANCIAL STATEMENTS. The consolidated financial
statements listed below are set forth on pages F-2 to F-39 inclusive, of
this Report and are incorporated by reference in Item 8 of this Annual
Report on Form 10-K.

Report of Independent Registered Public Accounting Firm dated March
14, 2005.

Consolidated Statements of Operations and Consolidated Statements of
Comprehensive Loss for the years ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the years ended December 31,
2004, 2003 and 2002

Consolidated Balance Sheets at December 31, 2004 and 2003

Consolidated Statements of Stockholders' (Deficit) Equity for the
years ended December 31, 2004, 2003 and 2002

Notes to Consolidated Financial Statements

Financial Statement Schedule II (Valuation and Qualifying Accounts)
for the years ended December 31, 2004, 2003 and 2002

(B) EXHIBITS. The exhibits required to be filed by Item 601 of Regulation
S-K are listed in the "Exhibit Index," which is attached hereto and incorporated
by reference herein.

18

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF
ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Ispat Inland Inc.
East Chicago, Indiana

We have audited the accompanying consolidated balance sheets of Ispat
Inland Inc. and subsidiaries (the "Company") as of December 31, 2004 and 2003,
and the related consolidated statements of operations, comprehensive
income/(loss), stockholders' equity/(deficit) and cash flows for each of the
three years in the period ended December 31, 2004. Our audits also included the
financial statement schedule II as of December 31, 2004, 2003, and 2002 and for
the years then ended. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Ispat Inland Inc. and
subsidiaries at December 31, 2004 and 2003, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2004, in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such financial statement
schedule as of December 31, 2004, 2003, and 2002 and for the years then ended,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.

As discussed in Note 2 to the consolidated financial statements, effective
January 1, 2003, the Company changed its method of accounting for asset
retirement obligations upon adoption of Statement of Financial Accounting
Standards No. 143 "Accounting for Asset Retirement Obligations".

DELOITTE & TOUCHE LLP

Chicago, Illinois
March 14, 2005

F-2

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

See Notes to Consolidated Financial Statements
F-3

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

See Notes to Consolidated Financial Statements
F-4

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Consolidated Financial Statements
F-5

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

See Notes to Consolidated Financial Statements
F-6

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

See Notes to Consolidated Financial Statements
F-7

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--NATURE OF OPERATIONS

Ispat Inland Inc. together with its subsidiaries (the "Company"), a
Delaware corporation and an indirect wholly owned subsidiary of Mittal Steel
Company N.V. ("Mittal"), formerly Ispat International N.V. ("Ispat"), is an
integrated domestic steel company. On December 17, 2004, Ispat International
N.V. completed its acquisition of LNM Holdings N.V. and changed its name to
Mittal Steel Company N.V. The Company produces and sells a wide range of steels,
of which approximately 99% consists of carbon and high-strength low-alloy steel
grades. It is also a participant in certain iron ore production and
steel-finishing joint ventures.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION POLICY

The consolidated financial statements include the accounts of the Company
and all its majority-owned subsidiaries which require consolidation.
Intercompany transactions have been eliminated in consolidation.

CASH EQUIVALENTS

Cash equivalents are highly liquid, short-term investments purchased with
original maturities of three months or less when acquired.

INVENTORY VALUATION

Inventories are carried at the lower of cost or market. Cost is principally
determined on a first-in, first-out ("FIFO") method. Costs include the purchase
costs of raw materials, conversion costs, and an allocation of fixed and
variable production overhead.

ACCOUNTING FOR EQUITY INVESTMENTS

The Company's investments in less than majority-owned companies, joint
ventures and partnerships, and the Company's majority interest in the I/N Tek
(See Note 13) partnership are accounted for under the equity method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost and depreciated using the
straight line method over the useful lives of the related assets, ranging from
25 to 45 years for buildings and 4 to 23.5 years (the vast majority of lives are
from 20 to 23.5 years) for machinery and equipment. Major improvements which add
to productive capacity or extend the life of an asset are capitalized while
repairs and maintenance are charged to expense as incurred. Property, plant and
equipment under construction are recorded as construction in progress until they
are ready for their intended use; thereafter they are transferred to the related
category of property, plant and equipment and depreciated over their estimated
useful lives. Interest during construction is capitalized to property, plant and
equipment under construction until the assets are ready for their intended use.
Gains and losses on retirement or disposal of assets are determined as the
difference between net disposal proceeds and carrying amount and reflected in
the statement of income. The carrying amount for long-lived assets is reviewed
whenever events or changes in circumstances indicate that an impairment may have
occurred.

F-8

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

DEFERRED FINANCING COSTS

Deferred financing costs are amortized over the expected terms of the
related debt.

STOCK OPTION PLAN

In 1999, Mittal established the Ispat International N.V. Global Stock
Option Plan (the "Ispat Plan") which is described more fully in Note 7. Awards
under the plan vest over three years. Prior to 2003, the Company, which
participates in the Ispat Plan, accounted for stock options under the
recognition and measurement provisions of APB No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations. No stock-based employee
compensation cost is reflected in 2002 net income, as all options granted under
that plan had an exercise price equal to the market value of the underlying
common stock on the date of grant.

Effective January 1, 2003, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation ("SFAS 123"), prospectively to all
employee awards granted, modified, or settled after January 1, 2003. This
prospective adoption of the fair value provisions of SFAS 123 is in accordance
with the transitional provisions of SFAS No. 148, "Accounting for Stock-Based
Compensation" ("SFAS 148") issued in December 2002 for recognizing compensation
cost of stock options. There were no stock options granted, modified or settled
during 2004 and 2003 and accordingly, no compensation expense has been
recognized in 2004 and 2003.

SFAS 148 also requires that if awards of stock-based employee compensation
were outstanding and accounted for under the intrinsic value method of Opinion
25 for any period in which an income statement is presented, a tabular
presentation is required as follows:

REVENUE RECOGNITION

Revenue is recognized when the earnings process is complete and the risks
and rewards of ownership have passed to the customer, which generally occurs
upon shipment of finished product. Provisions for discounts to customers are
recorded based on terms of sale in the same period the related sales are
recorded. The Company records estimated reductions to revenue for customer
programs and incentive offerings. The Company records all amounts billed to a
customer in a sales transaction related to shipping and handling as revenues.
All costs related to shipping and handling are included in cost of goods sold.

INCOME TAXES

The provision for income taxes includes income taxes currently payable or
receivable and those deferred. Under SFAS No. 109, "Accounting for Income
Taxes", deferred tax assets and liabilities are recognized for

F-9

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

the future tax consequences of temporary differences between the financial
statement carrying amounts of assets and liabilities and their respective tax
bases. Deferred tax assets are also recognized for the estimated future effects
of tax loss carry-forwards. Deferred tax assets and liabilities are measured
using enacted rates in effect for the year in which the differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of
changes in tax rates is recognized in the statement of operations in the period
in which the enactment date changes. Deferred tax assets are reduced through the
establishment of a valuation allowance at such time as, based on available
evidence, it is more likely than not that the deferred tax assets will not be
realized.

DERIVATIVES

Derivative financial instruments are utilized to manage exposure to
fluctuations in cost of natural gas and specific nonferrous metals used in the
production process. SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", requires companies to recognize all of its derivative
instruments as either assets or liabilities on the balance sheet at fair value.
The fair values of derivative financial instruments reflect the amounts the
Company would receive on settlement of favorable contracts or be required to pay
to terminate unfavorable contracts at the reporting dates thereby taking into
account the current unrealized gains or losses on open contracts. The fair value
of derivative contracts is determined using pricing models, which take into
account market prices and contractual prices of the underlying instruments, as
well as time value, yield curve, and volatility factors underlying the
positions. For derivative instruments not designated as hedging instruments,
both holding and unrealized gains or losses are recognized currently in earnings
as part of the cost of the underlying product during the period of change.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and related notes to financial statements.
Actual results may differ from such estimates.

IMPAIRMENT OF LONG-LIVED ASSETS

When changes in circumstance indicate the carrying amount of certain
long-lived assets may not be recoverable, the assets will be evaluated for
impairment. If the forecasted undiscounted future cash flows are less than the
carrying amount of the assets, an impairment charge to reduce the carrying value
of the assets to fair value will be recognized in the current period (See Note
17).

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2003, the FASB issued Interpretation No. 46 (revised December
2003) ("FIN 46R"), "Consolidation of Variable Interest Entities", with the
objective of exempting certain entities from the requirements of Interpretation
No. 46 (FIN 46). A variable interest entity is a corporation, partnership,
trust, or any other legal structure used for business purposes that either (a)
does not have equity investors with voting rights, or (b) has equity investors
that do not provide sufficient financial resources for the entity to support its
activities. Historically, entities generally were not consolidated unless the
entity was controlled through voting interests. FIN 46 changed that by requiring
a variable interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity's
activities or entitled to receive a majority of the entity's residual returns or
both. A company that consolidates a variable interest entity is called the
"primary beneficiary" of that entity. FIN 46 also required disclosures about

F-10

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

variable interest entities that a company is not required to consolidate but in
which it has a significant variable interest. Special provisions apply to
enterprises that have fully or partially applied FIN 46 prior to issuance of FIN
46R. Otherwise, application of FIN 46R (or FIN 46) is required in financial
statements of public entities that have interests in variable interest entities
or potential variable interest entities commonly referred to as special-purpose
entities for periods ending after December 15, 2003. Application by public
entities for all other types of entities is required in financial statements for
periods ending after March 15, 2004. The Company has determined that the
adoption of FIN 46 did not have an impact on its financial condition, results of
operations or cash flows.

In May 2004, the FASB issued FASB Staff Position ("FSP") No. 106-2,
"Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003". This FSP supersedes FSP No.
106-1, "Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003" which was issued
by the FASB in January 2004. FSP No. 106-2 provides specific guidance on
accounting for the effects of the Act for employers sponsoring post-retirement
health care plans that provide certain prescription drug benefits. Additionally,
this guidance allows companies who elected to follow the deferral provisions of
FSP No. 106-1, and whose prescription drug benefit plans are actuarially
equivalent to the benefit to be provided under Medicare Part D, to either
reflect the effects of the federal subsidy to be provided by the Act in their
financial statements on a prospective basis or a retroactive basis. The Company
adopted FSP 106-2 in the quarter ended September 30, 2004--refer to Note
8--Retirement Benefits.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of Accounting Research Bulletin (ARB) No. 43, Chapter 4." SFAS No. 151
amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing" to clarify the
accounting for abnormal amounts of idle facility expense, freight handling
costs, and wasted material (spoilage). SFAS No. 151 requires that those items be
recognized as current-period charges regardless of whether they meet the
criterion of "so abnormal". In addition, SFAS No. 151 requires that allocation
of fixed production overhead to the costs of conversion be based on the normal
capacity of the production facilities. The provisions of SFAS No. 151 will be
effective for fiscal years beginning after June 15, 2005. The Company is
currently evaluating the provisions of SFAS No. 151 and does not believe that
its adoption will have a material impact on the Company's financial condition,
results of operations and cash flows.

In December 2004, the FASB issued SFAS No. 153, "Exchange of Nonmonetary
Assets, an amendment of APB Opinion No. 29, "Accounting for Nonmonetary
Transaction". SFAS No. 153 is based on the principle that exchange of
nonmonetary assets should be measured based on the fair market value of the
assets exchanged. SFAS No. 153 eliminates the exception of nonmonetary exchanges
of similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. SFAS No.
153 is effective for nonmonetary asset exchanges in fiscal periods beginning
after June 15, 2005. The Company is currently evaluating the provision of SFAS
No. 153 and does not believe that its adoption will have a material impact on
the Company's financial condition, results of operations and cash flows.

In December 2004, the FASB issued SFAS No. 123 (revised 2004)(SFAS No.
123(R)), "Share-Based Payment," SFAS No. 123(R) replaces SFAS No. 123,
"Accounting for Stock Issued to Employees," and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees". SFAS 123(R) requires that
compensation costs relating to share-based payment transactions be recognized in
the consolidated financial statements. Compensation costs will be measured based
on the fair value of the equity or liability instruments issued. SFAS 123(R) is
effective as of the first interim or annual reporting period that begins after
June 15,

F-11

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

2005. The Company is currently evaluating the provisions of SFAS 123(R) and has
not yet determined its impact on the Company's financial condition, results of
operations and cash flows.

In December 2004, the FASB staff issued FSP FAS 109-1 "Application of FASB
Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on
Qualified Production Activities Provided by the American Jobs Creation Act of
2004". This FSP clarifies that the manufacturer's deduction provided for under
the American Jobs Creation Act of 2004 should be accounted for as a special
deduction in accordance with SFAS No. 109 and not as a tax rate reduction. The
Company has determined that FAS 109-1 will not have an immediate impact on its
financial condition, results of operations or cash flows. The Company's
realization of the benefit of FAS 109-1 is dependent on the utilization of its
Net Operating Loss Carryforwards.

In December 2004, the FASB staff issued FSP FAS 109-2 "Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision Within the
American Jobs Creation Act of 2004" to provide accounting and disclosure
guidance for the repatriation provisions included in the Act. The Act introduced
a special one-time dividends received deduction on the repatriation of certain
foreign earnings to a U.S. taxpayer. The Company has determined that FAS 109-2
will not have an impact on its financial condition, results of operations or
cash flows.

NOTE 3--INVENTORIES

Inventories consist of the following:

F-12

ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 4--PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consists of the following:

NOTE 5--DEBT

Short-term debt consists of the following: