CONSOLIDATED BALANCE SHEETS UNDER U.S. GAAP
 
 As at
 June 30, December 31,
 In millions of U.S. Dollars  2002 2001
 (Unaudited) (Audited)
 ASSETS
 Current Assets
 Cash and cash equivalents,
 including short term investments 88 85
 Trade accounts receivable - net 521 451
 Inventories 760 805
 Prepaid expenses and other 90 65
 Deferred tax assets  37 37
 Total Current Assets 1,496 1,443
 
 Property, plant and equipment - net 3,083 3,109
 Investments in affiliates and Joint
 Ventures  289 299
 Deferred tax assets 286 273
 Intangible pension assets 93 83
 Other assets  97 106
 Total Assets 5,344 5,313
 
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current Liabilities
 Payable to banks and current
 portion of long term debt  247 338
 Trade accounts payable 584 540
 Accrued expenses and other current
 liabilities 390 303
 Deferred tax liabilities  37 28
 Total Current Liabilities 1,258 1,209
 
 Long term debt 2,075 2,041
 Deferred tax liabilities 106  134
 Deferred employee benefits 1,453 1,493
 Other long term obligations 125 98
 Total Liabilities 5,017 4,975
 Shareholders' equity
 Common shares 7 7
 Additional paid-up capital 482 480
 Retained earnings 64 92
 Cumulative other comprehensive
 income (226) (241)
 Total Shareholders' equity 327 338
 Total Liabilities and Shareholders'
 Equity  5,344 5,313
 
 
 
 CONSOLIDATED UNAUDITED FINANCIAL
 & OTHER INFORMATION AS PER U.S. GAAP
 
 For the Second For the Six
  Quarter Ended Months Ended
 June 30, June 30,
 
 In millions of U.S. Dollars, except
 share, per share and operational
 data  2002 2001 2002 2001
 
 Statement of Income Data
 Sales $1,237 $1,146 $2,302 $2,346
 Costs and expenses:
 Cost of sales (exclusive of
 depreciation shown separately) 1,126 1,075 2,123 2,233
 Depreciation 44 43 87 97
 Selling, general and
 administrative expenses 37 37 71 75
 Other operating expenses (1) -  17 - 17
 1,207 1,172 2,281 2,422
 Operating income (loss) 30 (26) 21 (76)
 Operating margin 2.40% (2.30%) 0.90% (3.20%)
  Other income (expense) - net 6 8 4 10
 Financing costs:
 Interest (expense) (55) (59) (102) (118)
 Interest income 1 2 2 9
  Net gain (loss) from foreign
 exchange 19 (10) 16 (13)
 (35) (67) (84) (122)
 Income (loss) before taxes 1 (85) (59) (188)
 Income tax expense (benefit):
 Current 12 1 14 8
 Deferred (12) (17) (26) (68)
 0 (16) (12) (60)
 Net income (loss) before
 extraordinary income 1 (69) (47) (128)
 Gain on repurchase of debt, net of
 tax 10 - 19 -
 Net income (loss) 11 (69) (28) (128)
 Basic and diluted earnings per common
 share 0.09 (0.57) (0.23) (1.06)
 Weighted average common shares
 outstanding (in millions)  123 120 123 120
 
 Other Data
 EBITDA $109 $15 $147 $18
 EBITDA margin 8.80% 1.30% 6.40% 0.80%
 Total shipments of steel products
 (thousands of tons) (2) 4,052 3,660 7,387 7,412
 
 
 (1) Other operating expenses represents charge on account of closure of
 Irish Ispat Limited.

(2) Total shipments of steel products include inter-company shipments.

CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS AS PER U.S. GAAP

 For the Second For the Six
 Quarter Ended Months Ended
 June 30, June 30,
 
 In millions of
 U.S. Dollars 2002 2001 2002 2001
 
 Operating activities:
 Net income $11 $(69) $(28) $(128)
 Adjustments required to
 reconcile net income
 to net cash
 Provided from operations:
 Depreciation 44 43 87 97
 Deferred employee
 benefit costs (53) 2 (53) (98)
 Net foreign exchange
 loss (gain) (14) 8 (15) 10
 Deferred income tax (8) (15) (17) (66)
 Undistributed earnings
 from joint ventures 8 (14) 8 (9)
 Other (2) 15 (7) 15
 Changes in operating
 assets and liabilities,
 net of effects
 from purchases of
 subsidiaries:
 Trade accounts
 receivable 10 83 (53) 48
 Short-term investments - 55 - 54
 Inventories (5) 28 71 139
 Prepaid expenses and other 16 25 28 10
 Trade accounts payable - (13) 25 (101)
 Accrued expenses
 and other liabilities 42 (35) 51 49
 Net cash provided (used)
 by operating activities 49 113 97 20
 Investing activities:
 Purchase of property,
 plant and equipment (18) (19) (32) (41)
 Proceeds from sale of
 assets and investments
 including affiliates
 and joint ventures - 1 5 19
 Investments in affiliates
 and joint ventures (7) 14 (4) 15
 Other 2 1 2 9
 Net cash provided (used)
 by investing activities (23) (3) (29) 2
 Financing activities:
 Proceeds from payable
 to banks 558 413 975 1,166
 Proceeds from long-term
 debt  3 5 117 155
 Payments of payable to
 banks (557) (484) (999) (1,232)
 Payments of long-term
 debt (29) (55) (168) (113)
 Purchase of treasury
 stock - - - (1)
 Sale of treasury stock 1 - 2 1
 Net cash provided (used)
 by financing activities (24) (121) (73) (24)
 Net increase (decrease)
 in cash and cash
 equivalents 2 (11) (5) (2)
 Effect of exchange rate
 changes on cash 7 7 8 8
 Cash and cash equivalent:
 At the beginning of
 the period 79 224 85 214
 At the end of the period 88 220 88 220
 
 
 Management's Discussion and Analysis of
 Financial Condition and Results of Operations

The summary consolidated financial and other information, including the accounts of Ispat International N.V. and all its majority owned subsidiaries have been prepared in accordance with U.S. GAAP. The consolidated financial statements and other information for 2001 include results of Irish Ispat Limited for the first three months(4). All material inter-company balances and transactions have been eliminated. Total shipments of steel products include inter-company shipments.

The term "ton" as discussed herein refers to short ton and the term "tonne" used herein refers to metric tonne. All references to iron ore pellets, direct reduced iron ("DRI") and scrap are in tonnes, and all references to steel products are in tons. The term "steel products" as used herein refers to semi-finished and finished steel products and excludes DRI.

All references to "Ispat International" are to "Ispat International N.V."; to "Ispat Inland" are to Ispat Inland Inc.; to "Imexsa" or "Ispat Mexicana" are to Ispat Mexicana, S.A. de C.V.; to "Ispat Sidbec" are to Ispat Sidbec Inc.; to "Caribbean Ispat" are to Caribbean Ispat Limited; to "Ispat Europe Group" are collectively to Ispat Hamburger Stahlwerke GmbH ("IHSW"), Ispat Stahlwerk Ruhrort GmbH ("ISRG"), Ispat Walzdraht Hochfeld GmbH ("IWHG"), Ispat Unimetal S.A., Trefileurope and SMR.

All references to "Sales" include freight and handling costs and fees as per EITF Issue No. 00-10(5). All references to 'Net Sales' exclude freight and handling costs and fees.

Second Quarter 2002 Compared to Second Quarter 2001

 Results of Operations

Revenue and Costs:

Sales increased by 8% from $1,146 million in the second quarter of 2001 to $1,237 million in 2002. These Sales numbers are based on the application of EITF Issue No. 00-10 (issued by the FASB Emerging Issues Task Force in September 2000 and adopted by the Company in the last year) and includes all Shipping and Handling Fees and Costs billed to customers. Prior period numbers have been recast to reflect the same. The application of EITF Issue No. 00-10 does not affect earnings, as it only involves inclusion of Shipping and Handling Fees in Sales and Cost of Sales.

Financial statements present numbers as required under EITF Issue No. 00-10. However, the Company believes that net sales numbers based on net realizations from sales transactions more truly reflects sales performance. The Company uses net sales numbers for managing its business. All the analyses presented here onwards are based on net sales numbers.

Total steel shipments increased by 11% to 4.1 million tons from 3.7 million tons. Net Sales went up during the same period from $1,093 million to $1,168 million, an increase of 7%.

Ispat Inland achieved its highest shipment level since its acquisition. Ispat Mexicana and Ispat Sidbec also achieved significant improvement both in volume and average selling prices. At Caribbean Ispat, there was marginal reduction in steel shipment and lower average selling prices owing to the imposition of duties on sales to U.S. markets. At Ispat Europe, steel shipment increased by 8%, and the average selling prices in Euro were lower primarily due to mix.

The following table gives a summary of key sales numbers:

 Subsidiary Net Sales(6)
 Q2 2002 Q2 2001
 $ Million $ Million
 Ispat Inland 568 502
 Ispat Mexicana 165 128
 Ispat Sidbec 139 120
 Caribbean Ispat -
 Steel 44 47
 Caribbean Ispat -
 DRI 32 31
 Ispat Europe Group 283 277
 
 
 Subsidiary Changes in
 Net Sales Shipments Net Sales Price
  % % %
 Ispat Inland 13 11 2
 Ispat Mexicana 29 16 9
 Ispat Sidbec 16 10 6
 Caribbean Ispat
 - Steel (6)  (1) (5)
 Caribbean Ispat
 - DRI 4 1 3
 Ispat Europe Group 2 8 (6) *
 
 * For Ispat Europe Group the Changes in Net Sales Price is shown in Euro

The Company continued to achieve cost reductions, which partly offset increases in uncontrollable costs, mainly metallics costs.

Other operating expense in 2001 represents a charge on account of closure of Irish Ispat Limited.

Gross Profit and Operating Income:

The Company's financial performance improved in both Gross Profit (Sales less Cost of Sales, exclusive of depreciation) and Operating Income as a result of improvement in sales volume and prices as well as benefits of out continuous cost reduction efforts. Gross Profit increased by 56% from $71 million in the second quarter of 2001 to $111 million in 2002. There was an operating income of $30 million as compared with operating loss of $26 million.

The Gross Profit Margin (Gross Profit as a % of Net Sales) improved from 6.5% to 9.5%, mainly due to improvements at the North American subsidiaries. The Operating Margin (Operating Profit as a % of Net Sales) was positive being 2.6% as compared with negative in 2001.

The comparative numbers of Gross Profit Margin and Operating Margin at the Company's operating subsidiaries were as follows:

 Subsidiary Gross Profit Margin Operating Margin
 (%) (%)
 2002 2001 2002 2001
 
 Ispat Inland 8.8 5.2 3.2 Negative
 Ispat Mexicana 11.7 3.3 6.2 Negative
 Ispat Sidbec 11.1 7.7 5.1 1.8
 Caribbean Ispat 10.3 6.0 1.9 Negative
 Ispat Europe
 Group 10.6 11.3 3.4 4.9

Financing Costs:

Net Interest expense (Interest expenses less interest income) was $54 million compared to $57 million. This was due to reduced average borrowings outstanding and reduced average borrowing cost partly offset by losses on interest rate hedging contract.

There was a gain on foreign exchange of $19 million as compared with loss of $10 million, primarily due to depreciation of Mexican Peso.

Income Tax:

Current tax expenses were $12 million ($1 million in the second quarter of 2001) primarily due to the inclusion of certain tax payments at Imexsa arising as a result of the 1999 Tax Reforms of the Mexican Tax Code's Consolidation Regime. There was deferred tax benefit of $12 million in 2002 (benefit of $17 million in 2001).

Net Income:

Net Income was $11 million in the second quarter of 2002 as compared to a Net Loss of $69 million in the second quarter of 2001 due to the reasons discussed above. The 2002 net income included an extraordinary gain of $10 million after-tax arising out of repurchase of debt at a discount at Ispat Inland.

First Six Months of 2002 Compared to First Six Months of 2001

 Results of Operations

Revenue and Costs:

Sales decreased by 2% from $2,346 million to $2,302 million in 2002. Total steel shipments remained nearly flat at 7.4 million tons. Net Sales went down during the same period from $2,239 million to $2,182 million, a decrease of 3%.

Subsidiary Net Sales(7) Changes in

First six months 2002 2001 Net Sales Shipments Net Sales

Price

$ Million $ Million % % %

Ispat Inland 1,080 1,012 7 8 (1)

Ispat Mexicana 254 264 (4) (12) 4

Ispat Sidbec 253 234 8 9 (1)

Caribbean Ispat

1 included an amount of $28 million on account of slab reheating furnace startup cost at Ispat Inland.

Other operating expense in 2001 represents charge on account of closure of Irish Ispat Limited. Depreciation in 2001 was higher mainly on account of write down in value of e-Commerce software by $8 million.

Gross Profit and Operating Income:

The Company improved in both Gross Profit (Sales less Cost of Sales, exclusive of depreciation) and Operating Income as a result of our continuous cost reduction efforts as well as marginal increase in selling prices. Gross Profit increased by 59% from $113 million to $179 million. There was an operating income of $21 million in the first six months of 2002 as compared with an operating loss of $76 million in 2001.

The Gross Profit Margin (Gross Profit as a % of Net Sales) improved from 5.0% to 8.2%, mainly due to improvements at the North American subsidiaries. The Operating Margin (Operating Profit as a % of Net Sales) was positive being 1.0% as against negative in 2001.

The comparative numbers of Gross Profit Margin and Operating Margin at the Company's operating subsidiaries were as follows:

 Subsidiary Gross Profit Margin Operating Margin
 (%) (%)
 
 2002 2001 2002  2001
 
 Ispat Inland 6.6 Negative 0.9 Negative
 Ispat Mexicana 9.1 8.8 2.5 1.9
 Ispat Sidbec 9.9 6.3 3.5 0.4
 Caribbean Ispat  9.5 5.3 1.0 Negative
 Ispat Europe Group 10.5 12.0 3.2 3.9

Financing Costs:

Net Interest expense (Interest expenses less interest income) was $100 million in the first six months of 2002 compared to $109 million in 2001. This was due to reduced average borrowings outstanding and reduced average borrowing cost partly offset by losses on interest rate hedging contract.

There was a gain on foreign exchange primarily due to depreciation of Mexican Peso.

Income Tax:

The Company recorded a current tax expense of $14 million ($8 million in 2001) in 2002 primarily due to inclusion of certain tax payments at Imexsa arising as a result of the 1999 Tax Reforms of the Mexican Tax Code's Consolidation Regime. There was deferred tax benefit of $26 million in the first six months of 2002 (benefit of $68 million in the first six months of 2001).

Net Income:

The Company incurred a net loss of $28 million in the first six months of 2002 compared to a Net Loss of $128 million in the first six months of 2001 due to the reasons discussed above. The net loss for the first half of 2002 included an extraordinary gain of $19 million after-tax arising out of repurchase of debt at a discount at Ispat Inland.

(1) Financial Accounting Standards Board Emerging Issues Task Force ("EITF") reached a final consensus on EITF Issue No. 00-10, Sales above include freight and handling costs and fees as per EITF Issue No. 00-10.

(2) EBITDA is defined as net income plus income tax expenses, net interest expense and depreciation.

(3) Corresponding exercisable/available limits are lower, which are based on the level of inventory/receivable

(4) On 15th June 2001, the Company announced the shutdown of its steel making operations in Ireland and the calling of a creditors' meeting for the appointment of a liquidator. Consequently, beginning in the second quarter of 2001, the results of Irish Ispat Limited have not been consolidated.

(5) In September 2000, the Financial Accounting Standards Board Emerging Issues Task Force ("EITF") reached a final consensus on EITF Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." This consensus requires that all amounts billed to a customer in a sale transaction related to shipping and handling be classified as revenue. The Company historically netted shipping charges billed to customers with shipping and handling costs, which were included in Net Sales in the Consolidated Statements of Operations. With respect to the classification of costs related to shipping and handling incurred by the seller, the EITF determined that the classification of such costs is an accounting policy decision that should be disclosed. As a result of EITF Issue No. 00-10, the Company has adopted a policy to include shipping and handling costs in its Cost of Sales; accordingly, the Company reclassified all prior periods presented to reflect shipping and handling amounts billed to customers as Revenues and the corresponding expenses as Cost of Sales.

  (6) Net Sales numbers are standalone numbers for certain operating
 subsidiaries and include inter-company shipments.
 
 
 (7) Net Sales numbers are standalone numbers for certain operating
 subsidiaries and include inter-company shipments.