To all employees:

I want to begin by thanking you for the way in which so many of you have responded to last week's announcement about the initiation of our Court-supervised restructuring process. I realize and share the disappointment and uncertainty we all felt at having to take this step. And I want to congratulate you for having maintained our operations throughout this announcement period and for continuing to do so as we move forward.

In keeping with my commitment to keep you informed of developments in our restructuring process, I wanted to share some information on a couple of matters that have been the subject of media coverage in recent days.

Executive pensions—Reports have appeared about pensions for some of our Company executives. We have a plan for executives which was implemented a number of years ago and its existence has been a matter of public record.

“We began a review of this plan before we initiated our Court-supervised restructuring process and before the media wrote about it. No new members have been added to the plan since I assumed office one month ago. We have concluded that the plan is inappropriate on a go-forward basis given the current circumstances and we will not be adding any new members. The post-restructuring future of the plan and any reforms that may be made to it will, like all matters, be the subject of discussion with others as we develop a restructuring plan. Our focus going forward will be on securing the future of this Company rather than revisiting or justifying the past.

Union challenge of the Court Order—There has been media coverage indicating that there will be a union challenge of the Court Order that initiated our restructuring process. The real issue before us all is how best to preserve the Company and provide the best possible outcome for employees and others who depend upon it. We initiated this process because of our high overall cost structure, our deteriorating cash position and our inability to compete against other steel producers that have benefited from their own restructurings. As stated last week, we simply cannot continue to produce losses and consume considerable amounts of cash and survive. We believe that if we hadn't taken this action we would have jeopardized the Company and all employees as we look ahead.

We've stated that we need to review our entire cost structure during our restructuring process. We have not singled out and do not intend to single out any one particular group to bear the entire burden of this exercise, be it employees, bondholders, pensioners, trade creditors or others.

We've also committed to share information with the representatives of our unions so they will see why we took the action we did and so they will have all the facts as we determine how to move forward. We look forward to meeting with union representatives at the earliest opportunity to begin this process.

The process going forward—As stated last week, we have initiated a process, not an outcome. That outcome will be shaped in the coming months through the many discussions that will be held with many groups, including our employees. The goal is to develop a restructuring plan that will be placed before employees and others for their approval. As the process unfolds there will be more media reports, more issues to be addressed and more statements from various groups staking their own position and expectations. These are all usual developments within a Court-supervised restructuring and we will deal with them as they arise. As we move through this process we will continue to keep you informed to the best of our ability.

Sincerely,

Courtney Pratt
President and Chief Executive Officer