UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

/X/[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the period ended March 31,June 30, 2000

/ /[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission File Number 0-21719

Steel Dynamics, Inc.STEEL DYNAMICS, INC.
(Exact name of registrant as specified in its charter)

Indiana 35-1929476
(State or other jurisdiction of incorporation or organization) (I.R.S. employer Identification No.)

7030 Pointe Inverness Way, Suite 310, Fort Wayne, IN 46804
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (219) 459-3553

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

Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value

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/[X] No / /[ ]

As of April 24,August 8, 2000, Registrant had outstanding 48,029,28146,548,443 shares of Common
Stock.

STEEL DYNAMICS, INC.
Table of Contents

PART I. Financial Information

Item 1. Consolidated Financial Statements:
Page
----
Consolidated Balance Sheets as of March 31,June 30, 2000 (unaudited) and December 31, 1999 ............................. 1

Consolidated Statements of Income for the three monthsand six-month periods ended
March 31,June 30, 2000 and 1999 (unaudited)............................................................................................................................. 2

Consolidated Statements of Cash Flows for the three monthsand six-month periods ended
March 31,June 30, 2000 and 1999 (unaudited)............................................................................................................................. 3

Notes to Consolidated Financial Statements....................................................... 4

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................................... 6

Item 3. Quantitative and Qualitative Disclosures About Market Risk....................................... 8
9

PART II. Other Information

Item 1. Legal Proceedings................................................................................ 9Proceedings ............................................................................... 10

Item 2. Changes in Securities and Use of Proceeds........................................................ 10

Item 4. Submission of Matters to a Vote of Security Holders.............................................. 10

Item 6. Exhibits and Reports on Form 8-K................................................................. 911

Signature........................................................................................ 1012

STEEL DYNAMICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

March 31June 30 December 31
2000 1999
---- --------------- -----------
(unaudited)
ASSETS

ASSETS

CURRENT ASSETS:
Cash and cash equivalents...............................................................equivalents ........................................................... $ 16,1609,677 $ 16,615
Accounts receivable, net................................................................ 88,757net ............................................................ 88,193 74,642
Accounts receivable-related parties..................................................... 15,172parties ................................................. 27,265 12,007
Inventories............................................................................. 118,923Inventories ......................................................................... 131,732 106,742
Deferred taxes.......................................................................... 8,535taxes ...................................................................... 6,083 10,987
Other current assets.................................................................... 4,245assets ................................................................ 3,975 4,808
---------- --------------------- -----------
Total current assets........................................................... 251,792assets ....................................................... 266,925 225,801

PROPERTY, PLANT, AND EQUIPMENT, NET.......................................................... 760,269NET ...................................................... 774,638 742,787

RESTRICTED CASH.............................................................................. 6,812CASH .......................................................................... 4,576 6,696

OTHER ASSETS................................................................................. 17,283ASSETS ............................................................................. 16,339 16,272
---------- --------------------- -----------

TOTAL ASSETS................................................................... $1,036,156ASSETS ............................................................... $ 1,062,478 $ 991,556
========== ==========
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable........................................................................payable .................................................................... $ 28,36221,271 $ 19,622
Accounts payable-related parties........................................................ 27,313parties .................................................... 15,521 18,014
Accrued interest........................................................................ 4,949interest .................................................................... 5,467 4,941
Other accrued expenses.................................................................. 24,765expenses .............................................................. 22,615 20,077
Current maturities of long-term debt.................................................... 9,596debt ................................................ 15,501 7,921
---------- --------------------- -----------
Total current liabilities...................................................... 94,985liabilities .................................................. 80,375 70,575

LONG-TERM DEBT, less current maturities...................................................... 497,733maturities .................................................. 531,578 498,042

DEFERRED TAXES............................................................................... 32,011TAXES ........................................................................... 34,249 29,774

MINORITY INTEREST............................................................................ 4,584INTEREST ........................................................................ 4,022 1,795

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Class A common stock voting, $.01 par value; 100,000,000 shares authorized;
49,312,78349,330,943 and 49,265,078 shares issued; and 48,018,68346,649,843 and 47,970,978
shares outstanding, as of March 31,June 30, 2000 and December 31, 1999, respectively ......... 493 493
Treasury stock, at cost; 2,681,100 and 1,294,100 shares............................................... (19,650)shares as of June 30, 2000 and
December 31, 1999, respectively ................................................. (33,358) (19,650)
Additional paid-in capital.............................................................. 335,460capital .......................................................... 335,520 335,237
Retained earnings....................................................................... 90,540earnings ................................................................... 109,599 75,290
---------- --------------------- -----------
Total stockholders' equity..................................................... 406,843equity ................................................. 412,254 391,370
---------- --------------------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................................... $1,036,156EQUITY ................................. $ 1,062,478 $ 991,556
========== ===================== ===========

See notes to consolidated financial statements.

1
4

STEEL DYNAMICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

Three Months Ended March 31June 30 Six Months Ended June 30
-------------------------- ------------------------
2000 1999 ---- ----2000 1999
--------- --------- --------- ---------
(unaudited) (unaudited)

NET SALES:
Unrelated parties......................................................................parties ........................... $ 151,675145,901 $ 85,13390,541 $ 297,576 $ 175,674
Related parties........................................................................ 37,497 32,320
----------- -----------parties ............................. 44,836 76,120 82,333 108,440
--------- --------- --------- ---------
Total net sales.................................................................... 189,172 117,453sales ......................... 190,737 166,661 379,909 284,114

Cost of goods sold.......................................................................... 145,161 99,072
----------- -----------sold ............................... 138,795 127,799 283,956 226,871
--------- --------- --------- ---------
GROSS PROFIT................................................................................ 44,011 18,381PROFIT ..................................... 51,942 38,862 95,953 57,243

Selling, general and administrative expenses................................................ 13,850 8,099
----------- -----------expenses ..... 14,930 10,919 28,780 19,018
--------- --------- --------- ---------
OPERATING INCOME............................................................................ 30,161 10,282INCOME ................................. 37,012 27,943 67,173 38,225

Interest expense............................................................................ (4,929) (5,599)expense ................................. (5,030) (5,840) (9,959) (11,439)
Other income .............................................................................. 183 262
----------- -----------expense, net ............................... (1,306) (1,869) (1,123) (1,607)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES.................................................................. 25,415 4,945TAXES ....................... 30,676 20,234 56,091 25,179

Income taxes .............................................................................. 10,166 1,975
----------- -----------..................................... 11,617 8,094 21,783 10,069
--------- --------- --------- ---------
NET INCOME.............................................................................INCOME .................................. $ 15,24919,059 $ 2,970
=========== ===========12,140 $ 34,308 $ 15,110
========= ========= ========= =========

BASIC EARNINGS PER SHARE:
Net income per share........................................................................share ............................. $ 0.40 $ 0.25 $ 0.72 $ 0.32
$ 0.06
=========== ==================== ========= ========= =========
Weighted average common shares outstanding.................................................. 47,996 47,877
=========== ===========outstanding ....... 47,570 47,900 47,783 47,889
========= ========= ========= =========

DILUTED EARNINGS PER SHARE:
Net income per share........................................................................share ............................. $ 0.320.40 $ 0.06
=========== ===========0.25 $ 0.72 $ 0.31
========= ========= ========= =========
Weighted average common shares and
share equivalents outstanding.......................................................... 48,203 48,244
=========== ===========outstanding ............... 47,705 48,331 47,954 48,239
========= ========= ========= =========

See notes to consolidated financial statements.

2
5

STEEL DYNAMICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

OPERATING ACTIVITIES:
Net income..............................................................................income .................................................... $ 15,24919,059 $ 2,97012,140 $ 34,308 $ 15,110
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................................................... 11,903 8,191amortization ............................. 11,454 10,227 23,357 18,418
Deferred income taxes............................................................... 4,689 (2,631)taxes ..................................... 4,690 10,006 9,379 7,375
Minority interest................................................................... 2,789interest ......................................... (562) - 2,227 -
Changes in certain assets and liabilities:
Accounts receivable............................................................ (17,280) 157
Inventories.................................................................... (12,181) 7,651receivable .................................. (11,529) (9,613) (28,809) (9,456)
Inventories .......................................... (12,809) 3,835 (24,990) 11,486
Other assets................................................................... 563 3,258assets ......................................... 2,252 1,929 2,815 5,187
Accounts payable............................................................... 18,039 14,825payable ..................................... (18,883) (7,721) (844) 7,104
Accrued expenses............................................................... 4,696 (1,371)
----------- ------------expenses ..................................... (1,632) 612 3,064 (759)
-------- -------- -------- --------
Net cash provided by(used) in operating activities...................................... 28,467 33,050
----------- -----------activities ..... (7,960) 21,415 20,507 54,465
-------- -------- -------- --------

INVESTING ACTIVITIES:
Purchases of property, plant, and equipment............................................. (29,206) (47,851)
Other................................................................................... (1,305) (134)
----------- -----------equipment ................... (25,644) (28,281) (54,850) (76,132)
Other ......................................................... 1,197 2,369 (108) 2,235
-------- -------- -------- --------
Net cash used in investing activities.......................................... (30,511) (47,985)
----------- -----------activities ................ (24,447) (25,912) (54,958) (73,897)
-------- -------- -------- --------

FINANCING ACTIVITIES:
Issuance of long-term debt.............................................................. 5,651debt .................................... 41,388 - 47,039 21,762
Repayments of long-term debt............................................................ (4,285) (1,222)debt .................................. (1,638) (4,001) (5,923) (5,223)
Issuance of common stock, net of expenses and
proceeds and tax benefits from exercise of stock options............................ 223 83options .. 60 78 283 161
Purchase of treasury stock .................................... (13,708) - (13,708) -
Debt issuance costs..................................................................... - (14)
----------- -----------costs ........................................... (178) (25) (178) (39)
-------- -------- -------- --------
Net cash provided by(used) in financing activities...................................... 1,589 20,609
----------- -----------

Increase (decrease)activities ..... 25,924 (3,948) 27,513 16,661
-------- -------- -------- --------

Decrease in cash and cash equivalents............................................. (455) 5,674equivalents .............................. (6,483) (8,445) (6,938) (2,771)
Cash and cash equivalents at beginning of period.............................................period ................... 16,160 10,917 16,615 5,243
----------- ------------------- -------- -------- --------
Cash and cash equivalents at end of period...................................................period ......................... $ 16,1609,677 $ 10,917
=========== ===========2,472 $ 9,677 $ 2,472
======== ======== ======== ========

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest.......................................................................interest ............................................. $ 9,1398,954 $ 8,246
=========== ===========9,128 $ 18,093 $ 17,374
======== ======== ======== ========
Cash paid for taxes..........................................................................taxes ................................................ $ 35510,623 $ 310
=========== ===========1,475 $ 10,978 $ 1,785
======== ======== ======== ========

See notes to consolidated financial statements.

3
6

STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Principles of Consolidation. The consolidated financial statements include the
accounts of Steel Dynamics, Inc. (SDI), together with its subsidiaries (the
company) after elimination of the significant intercompany accounts and
transactions. Minority interest represents the minority shareholders'
proportionate share in the equity or income of the company's consolidated
subsidiary, New Millennium Building Systems, LLC (NMBS).

Use of Estimates. These financial statements are prepared in conformity with
generally accepted accounting principles and, accordingly, include amounts that
are based on management's estimates and assumptions that affect the amounts
reported in the financial statements and in the notes thereto. Actual results
may differ from those estimates. In the opinion of management, these estimates
reflect all normal recurring adjustments necessary for a fair presentation of
the interim period results. These financial statements and notes should be read
in conjunction with the audited financial statements included in the company's
1999 Annual Report on Form 10-K.

2. INVENTORIES

Inventories are stated at lower of cost (principally standard cost which
approximates actual cost on a first-in, first-out basis) or market. Inventories
consisted of the following (in thousands):

March 31June 30 December 31
2000 1999
---- -------------- ----------

Raw Materials................................................................................Materials.................................................... $ 53,86067,440 $ 46,171
Supplies..................................................................................... 41,474Supplies......................................................... 40,635 39,981
Work-in-progress............................................................................. 6,980Work-in-progress................................................. 7,896 3,754
Finished Goods............................................................................... 16,609Goods................................................... 15,761 16,836
---------- ----------
$ 118,923131,732 $ 106,742
========== ==========

3. EARNINGS PER SHARE

Diluted earnings per share amounts are based upon the weighted average number of
common and common equivalent shares outstanding during the year. Common
equivalent shares are excluded from the computation in periods in which they
have an anti-dilutive effect. The difference between basic and diluted earnings
per share for the company is solely attributable to the dilutive effect of stock
options. The reconciliationreconciliations of the weighted average common shares for basic and
diluted earnings per share for the three and six months ended March 31 isJune 30 are as
follows (in thousands):

Three Months Ended Six Months Ended
--------------------------- ----------------------------
2000 1999 ---- ----2000 1999
----------- ----------- ---------- ----------

Basic weighted average common shares outstanding............................................. 47,996 47,877outstanding......... 47,570 47,900 47,783 47,889
Dilutive effect of stock options ............................................................ 207 367
-------- --------options......................... 135 431 171 350
----------- ---------- ---------- ----------
Diluted weighted average common shares
and share equivalents outstanding .................... 48,203 48,244
======== =========outstanding..................... 47,705 48,331 47,954 48,239
=========== ========== ========== ==========

4. NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," was issued in June 1998 and then was
amended by SFAS No. 137 in June 1999. SFAS No. 137 deferred the effective date
of SFAS No. 133 to all fiscal years beginning after June 15, 2000. This
statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
condition and measure those instruments at fair value. If certain conditions are
met a derivative may be specifically designated as a fair value hedge, a cash
flow hedge, or a hedge of foreign currency exposure. The accounting for changes
in the fair value of a derivative (that is, gains and losses) is dependent upon
the intended use of the derivative and the resulting designation. Management has
not yet quantified the effect, if any, of the new standard on the financial
statements.

4
7

STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. SEGMENT INFORMATION

The company has two operating segments: Steel Operations and Steel Scrap
Substitute Operations. Steel Operations include all revenues from the flat roll
mill facility, which produces and sells hot rolled, cold rolled, and galvanized
sheet steel; and also includes all start-up costs associated with the structural
and rail mill, which will produce structural steel and rail products. Steel
Scrap Substitute Operations include revenues from Iron Dynamics, Inc., which
will provide liquid pig iron to the company. In addition, Corporate and
Eliminations include certain unallocated corporate accounts, such as SDI senior
bank debt and certain other investments, which include the start-up operation of
NMBS. The company's operations are primarily organized and managed by operating
segment. The company evaluates performance and allocates resources based on
operating profit or loss before income taxes. The accounting policies of the
operating segments are consistent with those described in Note 1 to the 1999
financial statements. Intersegment sales and transfers are accounted for at
standard prices and are eliminated in consolidation. Segment results for the
three and six months ended March 31,June 30, are as follows (in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------- -------------------------------
2000 1999 ------------ ------------2000 1999
----------- ----------- ----------- -----------

STEEL OPERATIONS
Net sales
External $ 189,172190,737 $ 117,453166,661 $ 379,909 $ 284,114
Other segments 1,273 - 1,273 -
Operating income 38,762 14,16046,461 34,056 85,223 48,216
Assets 876,650 800,563
------------ -------------901,493 820,727 901,493 820,727

- -----------------------------------------------------------------------------------------------------------------------
STEEL SCRAP SUBSTITUTE OPERATIONS
Net sales
External $ - $ - $ - $ -
Other segments 3,264 532,283 289 5,547 342
Operating loss (4,110) (2,964)(3,716) (3,141) (7,826) (6,102)
Assets 126,001 105,550
------------ -------------129,867 111,169 129,867 111,169

- -----------------------------------------------------------------------------------------------------------------------
CORPORATE AND ELIMINATIONS
Net sales
External $ - $ - $ - $ -
Other segments (3,264) (53)(3,556) (289) (6,820) (342)
Operating loss (4,491) (914)(5,733) (2,972) (10,224) (3,889)
Assets 33,505 39,915
------------ -------------31,118 22,578 31,118 22,578

- -----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED
Net sales
External $ 189,172190,737 $ 117,453166,661 $ 379,909 $ 284,114
Operating income 30,161 10,28237,012 27,943 67,173 38,225
Assets 1,036,156 946,028
------------ -------------1,062,478 954,474 1,062,478 954,474

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

The external net sales of the company's Steel Operations include sales to
Non-U.S. companies of $6.1$2.0 million and $444,000$294,000 for the three months ended March
31,June
30, 2000 and 1999, respectively, and $8.1 million and $738,000 for the six
months ended June 30, 2000 and 1999, respectively.

5
8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
discussed in the forward-looking statement as a result of risks and
uncertainties, including those incorporated by reference herein from "Exhibit
99.1" filed with our Report on Form 10-K for the year ended December 31, 1999.
You should read this commentary in conjunction with our Annual Report on Form
10-K, for the year ended December 31, 1999 for a full understanding of our
financial condition and results of operations.

Overview

We operate a technologically advanced flat-rolled steel mini-mill in Butler,
Indiana with an annual production capacity of 2.2 million tons. We manufacture
and market a broad range of high quality flat-rolled carbon steel products. We
sell hot rolled, cold rolled and coated steel products, including high strength
low alloy and medium carbon steels. We sell these products directly to end users
and through steel service centers primarily in the Midwestern United States. Our
products are used for various applications, including automotive, appliance,
manufacturing, consumer durable goods, industrial machinery, and various other
applications.

In addition to our flat-rolled mini-mill, we are completingcontinue to do design modification
and completion work on a second facility,
preparingfacility; we continue to buildawait the conclusion of
the administrative appeals process in connection with the issuance of a required
permit to enable us to commence construction on a third facility; and investingwe have an
investment in a steel fabrication plant. Our second facility, operated by our
subsidiary, Iron Dynamics Inc., involves the pioneering of a process to produce
direct reduced iron, which is then convertedwe plan to convert into liquid pig iron, a high
quality, lower-cost steel scrap substitute for use in our flat-rolled facility.
During 1999, we determined that certain of Iron DynamicsDynamics' equipment and
processes would require design modifications to obtain its fully intended operating
functionality.modifications. The modifications are planned to
occur during the second half of 2000. During the first six months of 2000, until which time Iron
Dynamics will operateoperated at limited production levels.levels, in order to demonstrate its
ability to achieve superior metallurgical results and to verify the operational
and product benefits of using liquid pig iron in the flat-rolled mill's melt
shop. Iron Dynamics suspended limited production in July 2000 to prepare for the
necessary design modifications in the later half of the year.

Our third facility, a planned structural and rail mill, and our investment in
New Millennium Building Systems, LLC, (NMBS) will provide an opportunity for
further product diversification and market penetration. Upon completion of the
structural and rail mill, which we estimatenow anticipate will take approximately twelve
to fourteen months from the final issuance of a construction permit which we
believe will be inresolved within the first half of 2001,next four to five months, we plan to
manufacture structural steel beams, pilings and rails for the construction and
railroad markets. In addition, our investment in New Millennium provides a like
opportunity for our steel to access the non-residential construction markets
with steel joists, trusses and girders and roof and floor decking products.
Successful test-production occurred in June 2000, only six months after NMBS
plant construction began, with commercial production beginning in the third
quarter 2000.

NET SALES

Our sales are a factor of net tons shipped, product mix and related pricing. Our
net sales are determined by subtracting product returns, sales discounts, return
allowances and claims from total sales. We charge premium prices for certain
grades of steel, dimensions of product, or certain smaller volumes, based on our
cost of production. We also provide further value-added products from our cold
mill. These products include hot rolled and cold rolled galvanized products,
along with cold rolled products, allowing us to charge marginally higher prices
compared to hot-rolled products.

In order to ensure consistent and efficient hot band plant utilization, we have
entered into a multi-year "off-take" sales and distribution agreement with
Heidtman Steel Products, Inc. which accounts for approximately 30,000 tons of
our monthly flat-rolled production at prevailing market prices. We do not enter
into material fixed price, long-term, exceeding one calendar quarter, contracts
for the sale of steel. Although fixed price contracts may reduce risks related
to price declines, these contracts may also limit our ability to take advantage
of price increases.

COST OF GOODS SOLD

Our cost of goods sold represents all direct and indirect costs associated with
the manufacture of our flat-rolled carbon steel, and hot rolled, cold rolled and
coated products. The principal elements of these costs are:

- Alloys - Electricity
- Natural gas - Oxygen
- Argon - Electrodes
- Steel scrap and scrap substitutes - Depreciation
- Direct and indirect labor and benefits

Steel scrap and scrap substitutes represent the most significant component of
our cost of goods sold.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

Selling, general and administrative expenses are comprised of all costs
associated with the sales, finance and accounting, materials and transportation,
and administrative departments. These costs include labor and benefits,
professional services, financing cost amortization, property taxes, profit
sharing expense and start-up costs associated with new projects.

6
9

INTEREST EXPENSE

Interest expense consists of interest associated with our senior credit facility
and other debt agreements as described in our notes to financial statements, net
of capitalized interest costs that are related to construction expenditures
during the construction period of capital projects.

OTHER INCOME (EXPENSE)

Other income consists of interest income earned on our cash balance and any
other non-operating income activity. Other expense consists of any non-operating
costs, including permanent impairments of reported investments.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31,JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED MARCH 31,JUNE 30, 1999

Net Sales. Our net sales were $189.2$190.7 million, with total shipments of 511,200503,700
net tons for the three months ended March 31,June 30, 2000, as compared to net sales of
$117.5$166.7 million, with total shipments of 369,500505,900 net tons for the three months
ended March 31,June 30, 1999, an increase in net sales of $71.7$24.0 million, or 61%14%. These increases wereThis
increase was primarily attributable in part to increased volumes of 141,700 net tons, or 38%, in
conjunction with an increase of approximately $52, or 16%,
in our average price per ton, for the three months ended March 31,June 30, 2000, as
compared to the same period in 1999. These price increases were experienced
throughout our product lines, asand most significantly within our cold rolled
products, which drove a result ofslight product mix change during the continued strengthening of the industry.second quarter 2000
to these higher margin products.

Cost of Goods Sold. Cost of goods sold was $145.2$138.8 million for the three months
ended March 31,June 30, 2000, as compared to $99.1$127.8 million for the three months ended
March 31,June 30, 1999, an increase of $46.1$11.0 million, or 47%9%. This increase was
primarily attributable to increased volumes. Steel scrap represented
approximately 55%52% and 51%46% of our total cost of goods sold for the three months
ended March 31,June 30, 2000 and 1999, respectively. Our costs associated with steel
scrap averaged $21$20 per ton more during the firstsecond quarter of 2000 than during
the firstsecond quarter of 1999 and $14$8 per ton moreless than during the fourthfirst quarter of
1999.2000.

As a percentage of net sales, cost of goods sold represented approximately 77%73%
and 84%77% for the three months ended March 31,June 30, 2000 and 1999, respectively,
reflecting the increase in our average price per ton and in our constant focus
on production efficiencies and cost savings.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $13.9$14.9 million for the three months ended March 31,June 30,
2000, as compared to $8.1$10.9 million for the three months ended March 31,June 30, 1999, an
increase of $5.8$4.0 million, or 72%37%. This increase was partially attributable to an
increase in start-up costs related to our expansion projects. Start-up costs
related to our structural mill project, NMBS project and IDI were $6.1$6.4 million
for the three months ended March 31,June 30, 2000, as compared to $4.0$4.5 million for the
three months ended March 31,June 30, 1999, an increase of $1.9 million, or 42%.

As a percentage of net sales, selling, general and administrative expenses
represented approximately 8% and 7% for the three months ended June 30, 2000 and
1999, respectively.

Interest Expense. Interest expense was $5.0 million for the three months ended
June 30, 2000, as compared to $5.8 million for the three months ended June 30,
1999, a decrease of $800,000, or 14%. This decrease was the direct result of
increased capitalized interest of $892,000, or 49%, offsetting interest costs
which were substantially level when comparing the three months ended June 30,
2000 to the same period in 1999.

Other Income (Expense). For the three months ended June 30, 2000, other income,
composed of interest income, was $90,000, as compared to $241,000 for the three
months ended June 30, 1999, a decrease of $151,000, or 63%.

Other expense was $1.4 million, for the three months ended June 30, 2000,
representing the write-off of our remaining investment in Nakornthai Strip Mill
Public Company, Limited (NSM) and $2.1 million, for the three months ended June
30, 1999, of which $1.8 million represented the write-off of our entire
cost-basis investment in Qualitech Steel Corporation (Qualitech). On May 8,
2000, the Central Bankruptcy Court of Thailand issued an order for the business
reorganization of NSM and appointed an independent firm to manage the process.
During the second quarter of 2000, active trading of NSM shares on the Stock
Exchange of Thailand was also suspended. It is our belief that our investment in
NSM was permanently and fully impaired at June 30, 2000.

Federal Income Taxes. Our federal income tax provision was $10.7 million for the
three months ended June 30, 2000, as compared to $7.1 million for the same
period in 1999. This federal tax provision reflects income tax expense at the
statutory income tax rate.

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SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999

Net Sales. Our net sales were $379.9 million, with total shipments of 1,014,900
net tons for the six months ended June 30, 2000, as compared to net sales of
$284.1 million, with total shipments of 875,400 net tons for the six months
ended June 30, 1999, an increase in net sales of $95.8 million, or 53%34%. These
increases were attributable in part to increased volumes of 139,500 net tons, or
16%, in conjunction with an increase in our average price per ton experienced
throughout all product lines.

Cost of Goods Sold. Cost of goods sold was $284.0 million for the six months
ended June 30, 2000, as compared to $226.9 million for the six months ended June
30, 1999, an increase of $57.1 million, or 25%. Steel scrap represented
approximately 54% and 48% of our total cost of goods sold for the six months
ended June 30, 2000 and 1999, respectively. As a percentage of net sales, cost
of goods sold represented approximately 75% and 80% for the six months ended
June 30, 2000 and 1999, respectively, reflecting the increase in our average
price per ton and in our constant focus on production efficiencies and cost
savings.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $28.8 million for the six months ended June 30,
2000, as compared to $19.0 million for the six months ended June 30, 1999, an
increase of $9.8 million, or 52%. This increase was partially attributable to an
increase in start-up costs related to our expansion projects. Start-up costs
related to our structural mill project, NMBS project and IDI were $12.5 million
for the six months ended June 30, 2000, as compared to $8.5 million for the six
months ended June 30, 1999, an increase of $4.0 million, or 47%. As a result of
significantly improved operating results during the first quarter of 2000 as
compared to 1999, employee performance-based incentives also comprised
approximately $2.4 million of the total selling, general and administrative
expense increase. As a percentage of net sales, selling, general and
administrative expenses represented approximately 8% and 7% for the threesix months
ended March 31,June 30, 2000 and 1999.1999, respectively.

Interest Expense. Interest expense was $4.9$10.0 million for the threesix months ended
March 31,June 30, 2000, as compared to $5.6$11.4 million for the threesix months ended March 31,June 30,
1999, a decrease of $700,000,$1.4 million, or 13%12%. This decrease was the direct result of
increased capitalized interest of $654,000,$1.5 million, or 31%43%, offsetting interest
costs which were substantially level when comparing the first threesix months of 2000
to the same period in 1999.

Other Income.Income (Expense). For the threesix months ended March 31,June 30, 2000, other income, primarily
composed of interest income, was $183,000,$273,000, as compared to $262,000$503,000 for the threesix
months ended March 31,June 30, 1999, a decrease of $79,000,$230,000, or 30%46%.

Other expense was $1.4 million, for the six months ended June 30, 2000,
representing the write-off of our remaining investment in Nakornthai Strip Mill
Public Company, Limited (NSM) and $2.1 million, for the six months ended June
30, 1999, of which $1.8 million represented the write-off of our entire
cost-basis investment in Qualitech Steel Corporation (Qualitech). On May 8,
2000, the Central Bankruptcy Court of Thailand issued an order for the business
reorganization of NSM and appointed an independent firm to manage the process.
During the second quarter of 2000, active trading of NSM shares on the Stock
Exchange of Thailand was also suspended. It is our belief that our investment in
NSM was permanently and fully impaired at June 30, 2000.

Federal Income Taxes. Our federal income tax provision was $10.2$19.6 million for the
threesix months ended March 31,June 30, 2000, as compared to $2.0$8.8 million for the same period
in 1999. This federal tax provision reflects income tax expense at the statutory
income tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Our business is capital intensive and requires substantial expenditures for,
among other things, the purchase and maintenance of equipment used in our
steelmaking and finishing operations and to remain compliant with environmental
laws. Our short-term and long-term liquidity needs arise primarily from capital
expenditures, working capital requirements and principal and interest payments
related to our outstanding indebtedness. We have met these liquidity
requirements with cash provided by operations, equity, long-term borrowings,
state and local grants and capital cost reimbursements.

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For the threesix months ended March 31,June 30, 2000, cash provided by operating activities
was $28.5$20.5 million, as compared to $33.1$54.5 million for the threesix months ended March
31,June
30, 1999, a decrease of $4.6$34.0 million. Increasing inventory and accounts
receivable levels were the primarily drivers of this decrease. We increased
steel scrap inventories to take advantage of the lower steel scrap pricing
experienced throughout the first half of 2000. Cash used in investing activities
was $30.5$55.0 million, as compared to $48.0$73.9 million for the threesix months ended March 31,June
30, 2000 and 1999, respectively. Substantially all of these funds were invested
in our capital projects. Approximately 56%53% of our capital investment costs
incurred during the first threesix months of 2000 were utilized in site preparation
and other pre-construction activities for the structural mill. Cash provided by
financing activities was $1.6$27.5 million for the threesix months ended March 31,June 30, 2000,
as compared to $20.6$16.7 million for the same period in 1999. This decreaseincrease in funds
provided was the direct result of our
utilizationincreased borrowings to fund steel scrap
purchases and treasury stock purchases which totaled $13.7 million during the
second half of increased cash from operations in relation to our additional
borrowings.

We are in the process of amending our senior credit bank facility to provide us
with the ability to borrow an additional $50.0 million in the form of an
unsecured term loan facility. At least $25.0 million of these funds will be
available to us to provide additional funding to IDI during its redesign
efforts.2000.

We believe the liquidity of our existing cash and cash equivalents, cash from
operating activities and our available credit facilities will provide sufficient
funding for our working capital and capital expenditure requirements during
2000. However, we may, if we believe circumstances warrant, increase our
liquidity through the issuance of additional equity or debt to finance growth or
take advantage of other business opportunities.

We have not paid dividends on our common stock.

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INFLATION

We believe that inflation has not had a material effect on our results of
operation.

ENVIRONMENTAL AND OTHER CONTINGENCIES

We have incurred, and in the future will continue to incur, capital expenditures
and operating expenses for matters relating to environmental control,
remediation, monitoring and compliance. We believe, apart from our dependence on
environmental construction and operating permits for our existing and proposed
manufacturing facilities, such as our planned structural and rail mill project
in Whitley County, Indiana, that compliance with current environmental laws and
regulations is not likely to have a material adverse effect on our financial
condition, results of operations or liquidity; however, environmental laws and
regulations have changed rapidly in recent years and we may become subject to
more stringent environmental laws and regulations in the future.

IMPACT OF YEAR 2000
We did not experience any material adverse issues or business interruptions
arising from the date change to January 1, 2000. During 1999, we completed the
process of preparing for Year 2000 issues. As a result of our efforts to date,
we have not incurred any material costs and do not expect to incur any future
material costs in addressing the Year 2000 issue related to either our products
or our business and process control systems, operating equipment with embedded
chips or software and third party interfaces.

We have devoted and will continue to devote the resources necessary to ensure
that all Year 2000 issues, if any should arise, are properly addressed. However,
there can be no assurance that all Year 2000 issues have been detected. Although
considered unlikely, unanticipated problems in our mission critical operating
systems, including problems associated with non-compliant third parties and
disruptions to our customers and suppliers could still occur despite efforts to
date.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

In the normal course of business our market risk is limited to changes in
interest rates. We utilize long-term debt as a primary source of capital. A
portion of our debt has an interest component that resets on a periodic basis to
reflect current market conditions. We manage exposure to fluctuations in
interest rates through the use of an interest rate swap. We agree to exchange,
at specific intervals, the difference between fixed rate and floating rate
interest amounts calculated on an agreed upon notional amount. This interest
differential paid or received is recognized in the consolidated statements of
income as a component of interest expense. At March 31,June 30, 2000, no material changes
had occurred related to our interest rate risk from the information disclosed in
the Annual Report of Steel Dynamics, Inc. and on formForm 10-K for the year ended
December 31, 1999.

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PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We incorporate by reference to Part I, Item III of our 1999 Form 10-K Annual
Report, filed with the Securities and Exchange Commission on March 29, 2000, the
description of our pending litigation involving the nine related lawsuits,
aggregating some $240 million in claims, brought against us and various
investment banking firms, relating to a note offering in March 1998 by
Nakornthai Strip Mill Public Company Ltd. ("NSM") and its investment bankers
(the other co-defendants in the litigation). Discovery is proceeding in all of
these cases.

We also incorporate by reference the description of a pending lawsuit brought by
our Iron Dynamics subsidiary, for declaratory relief against Taft Contracting
Company, involving a $1 million commercial dispute over some work Taft was
contracted to provide. This suit is also in the discovery stage.

A third lawsuit referencedcopy of the foregoing is annexed to this report as Exhibit 99.2.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On June 13, 2000, we granted a one time non-statutory stock option to Larry J.
Lehtinen, incident to his resignation as an officer and employee of Steel
Dynamics, Inc. and its subsidiary Iron Dynamics, Inc., for 30,000 shares of our
common stock, at an exercise price of $9.625 per share, the fair market value of
the shares at date of grant. The option is for 21 months and expires at 5:00
p.m. EST on March 12, 2002.

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

The Annual Meeting of Shareholders was held on May 18, 2000. Proxies were
solicited for the Annual Meeting in accordance with the requirements of the
Securities Exchange Act 1934.

At the Annual Meeting, the following occurred:

- With respects to Item 1 in our 1999 Form 10-K filing, involving another
actionProxy Statement (Election of
Directors)

Shares Voted Against
Director Shares Voted For or Withheld

Keith E. Busse 39,863,071 58,350
Richard P. Teets, Jr. 39,863,671 57,750
Mark D. Millett 39,863,071 58,350
Tracy L. Shellabarger 36,517,450 3,403,971
Leonard Rifkin 39,626,524 294,897
John C. Bates 39,863,071 58,680
Kazuhiro Atsushi 36,516,850 3,404,571
Dr. Jurgen Kolb 39,918,641 2,780
Joseph D. Ruffolo 36,566,192 3,355,229
Richard J. Freeland 36,535,112 3,386,309
James E. Kelley 36,586,147 3,335,274

- With respect to Item 2 in our Proxy Statement (Ratification of the
Appointment of Independent Auditors) Ernst & Young LLP was
approved as our independent auditors for declaratory relief brought bythe year 2000:

Shares Voted For 40,239,194
Shares Voted Against 8,273
Abstentions 9,604

- With respect to Item 3 in our Iron Dynamics subsidiary against
Dover Conveyor Company,Proxy Statement (Approval of the
Amended and arising outRestated Officer and Manager Cash and Stock Bonus
Plan):

Shares Voted For 35,535,857
Shares Voted Against 1,693,362
Abstentions 27,852

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- With respect to Item 4 in our Proxy Statement (Approval of
another construction dispute
involving conveyor equipment purchased from Dover, has now been settled and
dismissed.Non-Employee Director Stock Option Plan):

Shares Voted For 36,056,633
Shares Voted Against 1,171,268
Abstentions 29,170

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits -
*27.1 Financial Data Schedule

(B) Reports on Form 8-K for the quarter ended March 31,
(A) Exhibits -
*10.23 (Revised) Officer and Manager Cash and Stock Bonus Plan
*10.40 Non-Employee Director Stock Option Plan
*27.1 Financial Data Schedule
*99.2 Part I, Item III "Legal Proceedings" of Steel Dynamics, Inc. 1999 Form 10-K Annual Report

(B) Reports on Form 8-K for the quarter ended June 30, 2000:
None

--------------------------
*Filed herewith

Items 2 -3 and 5 of Part II are not applicable for this reporting period and have
been omitted.

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of Securities
Exchange Act of 1934, Steel Dynamics, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

May 3,August 11, 2000

STEEL DYNAMICS, INC.

By: /s/ TRACY L. SHELLABARGER
------------------------------------------
Tracy L. Shellabarger
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer)

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