CASTLE A M & CO, ARS, 1994-03-11

CASTLE A M & CO
ARS, 1994-03-11
METALS SERVICE CENTERS & OFFICES

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A.M. CASTLE & CO.

Setting
Industry
Standards
for the
Nineties

1993 ANNUAL REPORT

<PAGE>

A.M. CASTLE & CO. has come a long way since 1890 when Alfred M. Castle opened
his first warehouse in Chicago, Illinois. Today, we are North America's leading
industrial distributor of higher technology metals including carbon, alloy and
stainless steels; nickel alloys; aluminum; copper; brass and titanium.
The metals we distribute are used by more than 30,000 customers that range
in size from very small to many of the top Fortune 500 industrial companies.
They include manufacturers within the $440 billion producer durable equipment
sector in end-use industries such as pollution control equipment; machine tools;
agricultural, construction and mining machinery; electric and power generation
equipment; oil and oil-field services; chemical and petroleum refineries;
defense and aerospace.
We differentiate ourselves competitively on a quality and service basis.
Our mission is to set industry standards in these two critical areas--both
today and in the future. A growing number of our customers share this
determination and are implementing a variety of productivity-enhancing programs
ranging from zero inventory management systems to truly interactive on-line
partnerships. Because we acted early and aggressively to develop state-of-the-
art sales and marketing capabilities, distribution facilities, and business
systems, we are a major beneficiary of this trend as well as the upturn in the
capital goods sector of our economy.
In the United States, our coast-to-coast metals service center network
consists of 23 locations with nearly 2.2 million square feet of capacity. In
Canada, we serve customers from three service centers in the provinces of
Manitoba, Ontario and Quebec. Our corporate headquarters are located in the
Chicago suburb of Franklin Park, Illinois.
Our common stock trades on the American Stock Exchange under the ticker
symbol CAS. We have approximately 7.3 million shares of common stock
outstanding and 1,625 shareholders of record.

COVER: TABLE OF CONTENTS
"SELLING INDUSTRY Financial Highlights................................1
STANDARDS FOR THE Letter to Shareholders..............................2
NINETIES"IS MORE Setting Industry Standards for the Nineties.........4
THAN JUST THE SUBJECT Financial Review....................................9
OF THIS YEAR'S ANNUAL Financial Statements and Notes.....................11
REPORT. IT CAPTURES Eleven Year Financial and Operating Standards......22
HOW WE DEFINE AND Stock and Dividend Information.....................24
DIFFERENTIATE OURSELVES Management and General Information..Inside Back Cover
FROM OUR COMPETITORS. IT
IS ALSO THE BASIS FOR OUR
CONFIDENCE IN CASTLE'S FUTURE.

<PAGE>

THE YEAR IN BRIEF
(dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------------------------------
%
1993 1992 Change
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Results Net sales . . . . . . . . . . . . . . . . . . $474,108 $423,913 12%
Gross profit on sales . . . . . . . . . . . . 122,285 110,230 11%
Income before taxes . . . . . . . . . . . . . 11,611 6,088 91%

PER SHARE OF
COMMON STOCK Net income. . . . . . . . . . . . . . . . . . .95 .50 90%
Dividends . . . . . . . . . . . . . . . . . . .40 .40
Stockholders' equity. . . . . . . . . . . . . 9.56 9.00 6%
Average shares outstanding. . . . . . . . . . 7,277 7,276

BALANCE SHEET Total assets. . . . . . . . . . . . . . . . . 204,219 195,205 5%
Total debt. . . . . . . . . . . . . . . . . . 63,459 58,586 8%
Total equity. . . . . . . . . . . . . . . . . 69,543 65,480 6%
Working capital . . . . . . . . . . . . . . . 85,033 75,325 14%
Cash flow*. . . . . . . . . . . . . . . . . . 11,683 8,479 38%

SELECTED RATIOS Return on sales . . . . . . . . . . . . . . . 1.5% 0.8% 88%
Return on assets. . . . . . . . . . . . . . . 3.4% 1.9% 79%
Return on opening equity. . . . . . . . . . . 10.5% 5.6% 88%
Current ratio . . . . . . . . . . . . . . . . 2.3 2.1 10%
Debt to capital ratio . . . . . . . . . . . . 47.7% 47.2% 1%
- ---------------------------------------------------------------------------------------------------------

</TABLE>
*Net income plus depreciation
1

<PAGE>

TO OUR SHAREHOLDERS:

THE PAYOFF BEGINS...Over the past few years, we've talked about the actions
we've taken to prepare for a more competitive operating environment and to
differentiate our service approach front that of our competitors. And we've said
that once the economic recovery picked up, we'd be ready.
In 1993, the payoff from all our hard work began. We increased our total
number of tons shipped by more than twice the rate of our industry, reflecting
very significant gains in market share. With strong gross margins and lower
expense ratios, we produced our second straight year of sharply increased
earnings. We further strengthened our balance sheet, improving both our
stockholders' equity and working capital positions. And we are just beginning.
The payoff came because, going back to 1989, we recognized that significant
structural changes were taking place within our marketplace, and we started to
prepare for them. We began by realigning our sales and market organization in
order to sharpen our merchandising focus. We redeployed inventory and processing
equipment throughout our distribution network to speed up deliveries while
reducing handling and transportation costs. We invested in state-of-the-art
systems to strength our leadership in electronic order entry and date
interchanges. We embarked on new initiatives which would set industry standards
in the areas of quality and service. And we worked hard at reducing costs and
eliminating non-essential activities.

1993 RESULTS CAPITALIZE ON OUR OPERATING LEVERAGE..Our total sales for 1993
reached $474 million, up 12% over last year's $424 million, reflecting strong
market share gains and gradually improving business conditions. In fact, the
pick-up in the second half of the year more than offset the seasonal slowdowns
which we normally experience during the summer vacation months and the year-end
holiday period.
Our income from operations doubled, as much of the profit from incremental
sales went directly to the bottom line. Net earnings for 1993 were $6.9 million,
or 95 cents a share, versus $3.6 million, or 50 cents a share, in 1992. The net
income figure for 1992 includes the effect of a retroactive adoption of two
accounting rules which contributed $222,000 or 3 cents a share, to 1992 results.
A detailed explanation of 1993 operating results is found in the Financial
Review section of this report beginning on Page 7.

<PAGE>
SETTING INDUSTRY STANDARDS FOR THE NINETIES... When we began preparing for the
nineties, we made a commitment to go far beyond simply meeting the needs of our
marketplace. We would strive to set standards for our industry in quality and
service--the two critical areas of differentiation in our business.
As an example, we were the first major distributor to obtain registration
to ISO 9002, an intentionally recognized quality standard that we believe will
be a prerequisite for doing business in the nineties. So far, we've achieved ISO
9002 registration for our three Strategic Product Groups, our Hy-Alloy Steels
division and our flagship Franklin Park facility. This year, we're widening our
quality lead by seeking registration for several additional locations including
our major services centers in Cleveland and Houston. And within the next few
years, we expect to have completed this vital process across our entire
distribution network.
We're also taking innovative steps to enhance our service capabilities. A
recently formed alliance with Los Angeles, California-based Tubesales, the
county's largest distributor of non-ferrous tubes and pipe, leverages our
complementary product offerings, while improving inventory turns and operating
efficiencies. We are very enthusiastic about this alliance, and look forward to
a long and profitable relationship between our two companies.

OUR SECTOR SHOULD OUTPERFORM THE OVERALL ECONOMY. As of this writing, the
consensus forecast calls for GDP to grow at a 3% rate through 1994, down from
the 5.9% rate registered in the fourth quarter, but still very welcome after
three years of anemic growth.
Even better news for Castle--the producer durable equipment sector is
expected to continue its strong economic upturn. The Commerce Department's
latest spending survey, taken in October and November, shows that business
expects to invest 5.4% more on new plant and equipment in 1994 (before
adjustment for inflation), after a 7% rise in 1993.
Productivity and quality are the driving forces behind the capital-spending
push as the U.S. industrial sector continues to build competitive advantage
through greater operating efficiencies and higher levels of customer
satisfaction. On the next several pages, we'll take a closer link at our
exciting industry environment and how the changes that are taking place have
redefined our approach to metals distribution.

THE MARKET RECOGNIZES OUR PERFORMANCE... AND OUR POTENTIAL. We are very
gratified that the stock market has reflected our improved performance, and more
significantly, our potential for future growth. On December 31, 1993, our stock
closed at $17 1/4, up 48% from a year ago, contributing to an 18% compound
annual return to investors (stockholder appreciation plus dividends) over the
fifteen-year period ending with this calendar year.
Dividends continue to be a key component of Castle's investment appeal. On
January 27, 1994, our Board of Directors declared a 20% increase in the
quarterly cash dividend to 12 cents a share. This action underscores the Board's
confidence in our prospects for continued growth as well as our continued
commitment to income and value-oriented investors.
While past performance can't guarantee future results, we are optimistic
that our strong underlying fundamentals, in conjunction with a favorable market
environment for earnings-driven and economically-sensitive stocks, will enable
us to continue upholding a long-standing tradition of superior total returns on
our shareholders' investment in Castle.

WE'RE READY FOR 1994. While there is still much to accomplish, the enthusiasm as
Castle is easy to understand. Our early and thorough preparation for this
decade, combined with our strong leadership in all of our major product lines,
positions us for significant growth in the years ahead.
In closing, we take our hats off to the tenacity of our 1,200 employees.
They've worked hard to meet the challenges presented by a difficult economy
during the past several years. Because of them, and the support of our valued
customers, suppliers and shareholders, we now look forward to an even better
year in 1994.

Sincerely,

Michael Simpson
Chairman

Richard G. Mork
President & C.E.O.

February 25, 1994

<PAGE>

SETTING INDUSTRY STANDARDS FOR THE NINETIES

OVERVIEW...When our customer base started working almost a decade ago toward
improving its global competitive position, we knew that industrial America was
beginning a process of fundamental change. Radical steps were taken, and are
still being taken,--among them, investment in increasingly sophisticated
systems, improved manufacturing methods, costs cutting and capacity
rationalization--to enhance quality and productivity.

We knew that these changes would redefine the role of the metals distributor,
and that, far beyond simply selling products, future growth would lie in the
ability to identify and create new services that add value for customers. And
we knew that, as THE market leader in higher technology metals, we had the
opportunity to play a central role in the revitalization of industrial America.
We couldn't wait to get started, and we did.

Rather than viewing these changes as problems to be overcome, each development
became an opportunity to set new industry standards. Today, we consider every
aspect of the metals distribution process to be apart of our mandate. On these
pages, we take a closer look at the trends which are influencing our operating
environment, and how we are positioning Castle as the supplier of choice for
customers who require enhanced levels of quality and service.

THE RACE TOWARD INCREASED PRODUCTIVITY. Perhaps more than any other single
market development, our customers' drive to improve productivity has made long-
term relationships with leading-edge distributors like Castle increasingly
valuable. Beginning with just-in-time and zero inventory management programs and
running the gamut all the way to truly interactive on-line partnerships, our
goal is to help each customer improve the performance of their business.

Inventory management programs, for example, while widespread, are still growing
and becoming more sophisticated as companies increasingly implement new
technologies.

<PAGE>

such as automated order entry and electronic data interchange. Castle recognized
the value of these concepts while they were still in their infancy and made
major investments in state-of-the-art computer hardware and software systems so
that we could assume responsibility for managing and providing all of a
customer's metals requirements, often at multiple locations.

Five years ago, these full-service programs represented only a small portion of
our total business. But today, they area an increasingly important component--
helping us to develop long-term, mutually beneficial partnerships that have set
the standard for our industry.

Pre-production processing represents another opportunity to enhance our
customers' productivity. By processing and delivering metals to their exact
specifications, materials enter our customers' manufacturing process at a point
at which they begin to add real value.

To stay on the leading edge in processing capabilities, we recently completed
the first phase of a long-range plan to develop a value-added bar processing
center in Hammond, Indiana. Named H-A Industries to capitalize on our Hy-Alloy
Steel division's worldwide reputation as THE leading distributor of carbon alloy
bars and tubing, this facility is already contributing to improved quality and
customer service. Phase 1 for this 124,000 square foot facility involved the
purchase and installation of a CNC (computer numerical control) quench and
temper heat treat line to produce alloy bars for distribution throughout North
America. This phase was completed by mid-year and we are now at work on Phase 2
which is expected to be in full production by this fall.

INCREASING EMPHASIS ON QUALITY CERTIFICATION. Quality is another area where we
believe we are THE industry leader. While the term has been overused, we cannot
emphasize too strongly how vital it will continue to be through the rest of
those decade. In fact, we anticipate that service centers will not be approved
to sell to most major U.S. manufacturers without a documented quality process.

As we mentioned earlier, we've already successfully completed the rigorous ISO
9002 registration process for two of our largest facilities, which, together,

<PAGE>

account for more than 25% of our total capacity. And by the end of 1994, we
estimate that we will have expanded this registration process to cover nearly
two-thirds of our entire distribution network.

While ISO was in an early stage of development in the U.S. as recently as a year
ago, it is now growing exponentially as companies that sell their products on a
worldwide basis increasingly recognize its value. Again, we are well ahead of
the curve in setting industry standards for quality assurance.

SOURCE CONS0LIDATION. Our customers are also implementing source consolidation
and sole-sourcing strategies to hold down their purchasing costs, reduce
inventories and achieve consistently high levels of quality and service. These
strategies are well documented in the October 1993 survey of purchasing
executives in INDUSTRIAL DISTRIBUTION MAGAZINE which found, not surprisingly,
that in choosing a supplier, quality and service were ranked first and second,
while price was ranked fifth.

The trend toward source consolidation gives our industry a significant
competitive advantage over integrated metal producers and mini-mills because we
have the ability to provide ALL the materials a customer needs...not just the
limited range produced by any single mill; and because we measure lead times in
hours, not the weeks or months typically required by a mill production schedule.
Furthermore, as North America's leading distributor of higher technology metals,
this trend strengthens our competitive position within the metal service center
industry.

WE'LL CONTINUE TO SET INDUSTRY STANDARDS. While many of our competitors are now
scrambling to add technological capabilities and reorganize to a more market-
driven approach, we've staked out a position that puts us well ahead of the
industry.

As the rest of this decade unfolds, we are determined to continue building on
our market leadership in the distribution of higher technology metals. From the
depth and breath of the inventory we carry, the range of pre-processing services
we offer and the speed and flexibility of our delivery schedules to our product
knowledge, computer technologies and communications systems, we are determined
to provide the most consistent overall value to our customers. And, by
continuing to set industry standards in quality and service, we are determined
that no metals distributor will be able to match A.M. Castle & Co. In delivering
total customer satisfaction.

<PAGE>
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FINANCIAL REVIEW

This discussion should be read in connection with the information contained in
the Consolidated Financial Statements and Notes.

OVERVIEW
Castle's 1993 results reflect gradually improving business conditions and
significant market share gains. Activity levels were strong throughout the
year, especially during the second half, with double-digit gains achieved in
both the number of tons shipped and dollar sales. Unit volume (total tons
shipped) increased by more than twice the rate of the industry as a whole,
confirming that Castle's growth is as much a function of its ability to
increase market share as it is of the improved operating environment. The
fourth quarter produced the biggest earnings gain of the year in spite of the
fact that it is usually one of the slowest quarters due to the traditional
holiday seasonal slowdown after Thanksgiving.
The improvement in Castle's business conditions reflects the current
strength of the U.S. manufacturing sector, which continues to lead the
economic upturn. According to the Commerce Department's most recent report,
spending in the $444 billion producer durable equipment sector (Castle's
primary market) increased by 16.2% this past year, versus a 6.9% increase in
1992, and a decline of 3.3% in 1991. By comparison, total gross domestic
product (measured in 1987 constant dollars) rose 2.9% in 1993, improving from
1992's 2.6% rise, and 1991's decline of 0.7%. NOTE: These figures reflect the
most recent revisions made to prior years' data by the Commerce Department's
Bureau of Economic Analysis.

SALES
As a result of these factors, net sales for 1993 totalled $474.1 million, an
increase of 12% from 1992's $423.9 million. Unit volume increased 24% to
307,865 tons. However, the combination of a shift in product mix away from
higher priced aerospace materials and continued price pressure on non-ferrous
metals prevented revenue growth from keeping pace with volume increases. In
1993, carbon and stainless steels generated 77% of total revenues with the
balance provided by non-ferrous metals. On average, pricing in 1993 was about
3.9% below 1992 levels. Currently the Company is seeing some modest price
increases for carbon and alloy steels. Non-ferrous pricing, while not getting
any better, seems to have stabilized at current levels.
In 1992, sales totalled $423.9 million, down 2.9% from 1991's $436.4
million, despite a 6.4% increase in tons sold. The 1992 dollar sales decrease
was primarily due to price deflation at the mill level. Average prices in 1992
were about 6.0% below 1991 levels, and, while there was significant
improvement in volume during the second half of the year, there was no
discernable improvement in pricing. A shift in sales mix towards lower priced
products also contributed to the decline in sales dollars. Carbon and
stainless steels accounted for 73% and 70% of total revenues in 1992 and 1991,
respectively. The second half of 1992 marked the beginning of improving
business conditions, with the fourth quarter producing the Company's highest
quarterly shipment activity of the year.

COST OF SALES
The Company continued to focus on gross margin improvement and cost control
throughout 1993 -- two vital components of its overall strategy to outperform
industry averages and minimize its exposure to business downturns. As a
result, Castle's cost of sales, as a percentage of total sales, increased only
slightly despite significantly higher unit volume during the year. Gross
margin percentage was 25.8%, compared with 1992's 26.0%, reflecting the higher
activity levels and pricing pressures in its marketplace.
Gross profit for 1993 totalled $122.3 million, up 11% from 1992's level of
$110.2 million, as strong volume increases more than offset the effects of
price deflation and sales mix shifts that occurred throughout the year.
In 1992, cost of sales declined as a percentage of total sales leading to a
significant improvement in gross margin over 1991. Gross margin percent
increased to 26.0% from 24.1% in 1991. This improvement resulted from several
factors including, but not limited to, a shift in product mix towards higher
margin products, advantageous sourcing and enhancements to the Company's
computer-based pricing system.
Gross profit for 1992 totalled $110.2 million, an increase of 4.6% from the
$105.3 million reported in 1991. Improved unit sales volume, along with a
higher margin percentage, helped offset the negative effects of price
deflation experienced throughout the year.
Substantially all inventories are valued using the LIFO (last-in, first-
out) method. LIFO had the effect of increasing Castle's cost of sales by $0.1
million in 1993 and of reducing cost of sales by $5.7 million in 1992 and $6.0
million in 1991 compared with what they would have been on a FIFO (first-in,
first-out) basis.

OPERATING EXPENSES
Total operating expenses for 1993 were $102.1 million, compared with $94.9
million in 1992 and $92.8 million in 1991. As a percentage of sales, operating
expenses were 21.5% in 1993 as compared to 22.4% in 1992 and 21.3% in 1991.
These results reflect successful efforts to control expenses which began in
the fourth quarter of 1990 and have continued throughout this three-year
reporting period. Cost control actions helped produce the improvements in
operational efficiency necessary to keep the Company profitable during the
1990-1992 recessionary climate, and have enabled the Company to capitalize on
1993's more favorable operating environment.

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9

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Depreciation expense was relatively unchanged from 1992, which declined 8%
from the 1991 level primarily as the result of sales and leasebacks of assets
occurring in late 1991 and 1992. The resulting rent expense has been included
in the operating expenses discussed above.
Interest expense, net of interest income, decreased 12% from 1992. Lower
interest rates in 1993 were responsible for the reduction. In 1992, interest
expense, net of interest income was 37% lower than 1991. The decrease was the
result of significantly lower rates and debt levels.

TAXES
The Company's Federal income tax rate has remained essentially unchanged since
1991. As indicated in Note 3 to the Company's consolidated financial
statements, the Company has adopted SFAS No. 109, "Accounting for Income
Taxes", effective January 1, 1992. The application of the new standard had the
effect of increasing the Company's net worth by $1.8 million, and contributed
a slight gain to 1992 net income from normal operations.

EARNINGS
Castle generated sharply higher earnings again in 1993. The current year's
gains were primarily due to the strong increase in sales volume and the effect
of the Company's operating leverage on incremental sales as discussed in
previous shareholder reports. Continued tight control over expenses and
inventory levels also contributed significantly to the bottom-line. Earnings
for the year were $6.9 million, or $.95 per share, compared with the $3.6
million, or $.50 per share, recorded for 1992. The 1992 earnings figure
included net income of $222,000, or $.03 per share, due to the adoption of new
accounting methods for postretirement benefits and income taxes.
Castle began a significant turnaround in profitability in 1992 from the
year earlier level in spite of continued mill price erosion. The greatest
contributors to the improved performance were a 6.4% increase in tons sold; a
significantly higher gross margin percent; and continued tight control over
expenses. Net income for 1992 was $3.6 million, or $.50 per share, compared
with 1991 net income of $200,000, or $.03 per share.

CAPITAL EXPENDITURES
Capital expenditures during 1993 and 1992 amounted to $4.6 million and $1.8
million, respectively. Approximately $1.2 million was invested in 1993 for the
addition of a Heat Treat Quench and Temper Line at the newly formed H-A
Industries facility in Hammond, Indiana, with the remaining expenditures aimed
toward improving existing facilities and maintaining property and equipment in
good working order. In 1991, capital expenditures amounted to $3.3 million,
and were also aimed at improving existing facilities and maintaining

property and equipment in good working order. The Company anticipates that
1994 expenditures will approximate 1993 levels.
During the latter half of 1993, 1992, and 1991, the Company sold and leased
back approximately $2.1 million, $1.2 million, and $5.3 million of fixed
assets respectively, which added to cash flow and decreased long-term
borrowing.

LIQUIDITY AND CAPITAL RESOURCES
Castle continued to strengthen its financial position during 1993, with
significant improvement in both its stockholders' equity and working capital
positions. At 1993 year end, stockholders' equity increased to $69.5 million,
or $9.56 per share, compared with $65.5 million, or $9.00 per share in 1992,
and $64.7 million, or $8.89 per share in 1991.
Total borrowings were $63.5 million at 1993 year end, compared to $58.6
million and $69.4 million at 1992 and 1991 year ends, respectively. After
reducing debt levels significantly in 1992, borrowing increased to help
finance the higher level of activity in 1993 at attractive current market
rates. As a result, the debt-to-capital ratio increased slightly to 48% from
last year's 47% ratio, but well below the 1991 ratio of 52%.
Accounts receivable rose in 1993, reflecting the increase in sales levels.
The number of days' sales outstanding decreased slightly in 1993 from 1992,
which showed a similar decline from 1991. Collections were strong, exceeding
the Company's target level for both the fourth quarter and the year. The
Company believes that its net receivables at December 31, 1993 are of a very
good quality.
Working capital increased to $86.1 million at December 31, 1993, compared
with $75.3 million at December 31, 1992 and $79.7 million at December 31,
1991, as investments in inventory and receivables grew to support higher sales
volume.
The Company had unused committed and uncommitted lines of bank credit of
$103.6 million at December 31, 1993, compared with $111.4 million and $94.5
million in 1992 and 1991, respectively. Management believes that funds
generated from operations, existing lines of credit and additional borrowing
capacity will provide adequate funding for current and anticipated business
operations.

OUTLOOK FOR 1994
After growing at a surprisingly strong 5.9% annual rate in the last quarter of
1993, the Commerce Department forecasts that the economy will grow at a 3%
rate during this coming year. More important for Castle, the producer durable
equipment sector it serves is expected to outperform GDP as U.S. manufacturers
continue to invest in equipment which will enhance productivity and quality.
Should this economic scenario prove to be reasonably accurate, the Company
expects to show very favorable year-to-year comparisons again in 1994.

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10

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SUPPLEMENTARY SCHEDULES

The Company's LIFO inventory system charges cost of material sold at the
inventory costs of its most recent purchases. The LIFO method matches current
revenues with current costs of inventory. This method more fairly presents
results of operations, whether in periods of inflation or deflation.
The Supplementary Statements of Consolidated Financial Position are
presented for analytical and comparative purposes. They are intended to
display the Company's financial position as if the Company were on a
FIFO-based inventory system rather than the LIFO-based inventory system the
Company actually uses. The statements reflect taxes on the unrecognized
inventory gain at statutory Federal rates and the Company's historical average
state tax rates and give no effect to any supplemental expenses.

SUPPLEMENTARY STATEMENTS OF CONSOLIDATED FINANCIAL POSITION

December 31
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(Dollars in millions) 1993 1992 1991
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<S> <C> <C> <C>
Current assets
Cash.......................................................................................... $ 1.5 $ .7 $ .3
Accounts receivable, net...................................................................... 49.0 45.0 44.6
Inventories, at latest cost................................................................... 147.2 141.9 139.5
------ ------ ------
Total current assets........................................................................ 197.7 187.6 184.4
Less -- current liabilities................................................................... (84.3) (84.9) (73.9)
------ ------ ------
Net current assets.............................................................................. 113.4 102.7 110.5
Fixed and other assets, net..................................................................... 52.1 53.1 57.2
------ ------ ------
Total assets, less current liabilities...................................................... 165.5 155.8 167.7
Long-term debt.................................................................................. (58.0) (53.0) (63.3)
Deferred income taxes........................................................................... (8.1) (7.8) (9.0)
Postretirement benefit obligations.............................................................. (2.5) (2.2) --
Unrecognized inventory gain, net of taxes....................................................... (27.3) (27.3) (30.7)
------ ------ ------
Stockholders' equity............................................................................ $ 69.6 $ 65.5 $ 64.7
------ ------ ------
------ ------ ------
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</TABLE>
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11

<PAGE>

A.M. Castle & Co. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
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<S> <C> <C> <C>
Net sales................................................................................. $474,108 $423,913 $436,441
Cost of material sold..................................................................... 351,823 313,683 331,093
-------- -------- --------
Gross profit on sales................................................................... 122,285 110,230 105,348
-------- -------- --------
EXPENSES
Operating expenses...................................................................... 102,089 94,944 92,848
Depreciation (Notes 1 and 5)............................................................ 4,784 4,865 5,273
Interest expense, net (Notes 2 and 4)................................................... 3,801 4,333 6,848
-------- -------- --------
110,674 104,142 104,969
-------- -------- --------
Income before income taxes and cumulative effect of changes in accounting methods......... 11,611 6,088 379
-------- -------- --------
Income taxes (Notes 1 and 3)
Federal -- currently payable............................................................ 3,926 2,296 298
-- deferred...................................................................... (141) (133) (146)
State................................................................................... 927 533 26
-------- -------- --------
4,712 2,696 178
-------- -------- --------
Net income before cumulative effect of changes in accounting methods...................... 6,899 3,392 201
-------- -------- --------
Cumulative effect of changes in accounting methods (Notes 3 and 6)........................ -- 222 --
-------- -------- --------
Net income................................................................................ 6,899 3,614 201
-------- -------- --------
Net income per share before cumulative effect of changes in accounting methods............ $ .95 $ .47 $ .03
Cumulative effect of changes in accounting methods........................................ -- .03 --
-------- -------- --------
Net income per share (Notes 1 and 7)...................................................... $ .95 $ .50 $ .03
-------- -------- --------
-------- -------- --------
</TABLE>

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CONSOLIDATED STATEMENTS OF REINVESTED EARNINGS
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<TABLE>
<CAPTION>

Years Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year.............................................................. $ 45,421 $ 44,717 $ 48,443
Net income................................................................................ 6,899 3,614 201
Cash dividends -- $.40 per share in 1993, $.40 per share in 1992 and $.54 per share in
1991 (Note 7)........................................................................... (2,911) (2,910) (3,927)
-------- -------- --------
Balance at end of year.................................................................... $ 49,409 $ 45,421 $ 44,717
-------- -------- --------
-------- -------- --------
</TABLE>

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

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

- ------------------------------------------------------------------------------
12

<PAGE>

A.M. Castle & Co. and Subsidiaries

CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Years Ended December 31,
- ------------------------------------------------------------------------------------------
(Dollars in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Current assets
Cash (Note 1)........................................................................... $ 1,528 $ 693 $ 331
Accounts receivable, less allowances of $600............................................ 49,048 44,995 44,564
Inventories -- principally on last-in, first-out basis (latest cost higher by
approximately $45,600
in 1993, $45,500 in 1992 and $51,200 in 1991) (Note 1)................................ 101,572 96,368 88,292
-------- -------- --------
Total current assets.............................................................. 152,148 142,056 133,187
-------- -------- --------
Prepaid expenses and other assets (Note 1)................................................ 11,088 9,947 9,813
-------- -------- --------
Property, plant and equipment, at cost (Notes 1 and 5)
Land.................................................................................... 4,115 4,117 4,115
Buildings............................................................................... 34,875 34,734 34,688
Machinery and equipment................................................................. 57,028 54,833 54,653
-------- -------- --------
96,018 93,684 93,456
Less -- accumulated depreciation...................................................... 55,044 50,482 46,041
-------- -------- --------
40,974 43,202 47,415
-------- -------- --------
Total assets.............................................................................. $204,210 $195,205 $190,415
-------- -------- --------
-------- -------- --------
Liabilities and stockholders' equity
Current liabilities
Accounts payable........................................................................ $ 49,982 $ 51,597 $ 37,374
Accrued payroll and employee benefits (Note 6).......................................... 5,982 4,084 3,742
Accrued liabilities..................................................................... 3,512 3,656 3,715
Short-term debt (Note 2)................................................................ -- -- 200
Current and deferred income taxes (Notes 1 and 3)....................................... 1,199 1,801 2,501
Current portion of long-term debt (Note 4).............................................. 5,435 5,593 5,925
-------- -------- --------
Total current liabilities......................................................... 66,110 66,731 53,457
-------- -------- --------
Long-term debt, less current portion (Note 4)............................................. 58,024 52,993 63,278
-------- -------- --------
Deferred income taxes (Notes 1 and 3)..................................................... 8,067 7,837 9,010
-------- -------- --------
Postretirement benefit obligation (Note 6)................................................ 2,466 2,164 --
-------- -------- --------
Stockholders' equity (Note 7)
Common stock, without par value -- authorized 10,000,000 shares; issued and outstanding
7,278,316 in 1993, 7,276,042 in 1992, and 7,276,041 in 1991........................... 21,938 21,813 21,813
Earnings reinvested in the business..................................................... 49,409 45,421 44,717
Cumulative translation adjustment....................................................... 168 101 (5)
Treasury stock, at cost (329,480 shares in 1993, 321,554 shares in 1992, and 321,555
shares
in 1991).............................................................................. (1,972) (1,855) (1,855)
-------- -------- --------
Total stockholders' equity........................................................ 69,543 65,480 64,670
-------- -------- --------
Total liabilities and stockholders' equity................................................ $204,210 $195,205 $190,415
-------- -------- --------
-------- -------- --------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

<PAGE>

A.M. Castle & Co. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------------------------

(Dollars in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income................................................................................... $ 6,899 $ 3,614 $ 201
Adjustments to reconcile net income to net cash provided from operating activities
Depreciation............................................................................... 4,784 4,865 5,273
Cumulative effect of accounting changes (Notes 3 and 6).................................... -- (222) --
Gain on sale of facilities/equipment....................................................... (18) (20) (635)
Increase in deferred taxes................................................................. 230 906 728
(Increase) in prepaid expenses and other assets............................................ (1,141) (134) (1,173)
Vested portion of restricted stock awards.................................................. -- -- 64
Increase (decrease) in postretirement benefit obligation................................... 302 (27) --
------- -------- --------
Cash provided from operating activities before changes in current accounts..................... 11,056 8,982 4,458

(Increase) decrease in current assets/liabilities
Accounts receivable........................................................................ (4,053) (431) 4,479
Inventories................................................................................ (5,204) (8,076) 25,601
Accounts payable........................................................................... (1,615) 14,223 (7,541)
Accrued payroll and employee benefits...................................................... 1,898 (58) (1,701)
Accrued liabilities........................................................................ (144) (59) 91
Current deferred income taxes.............................................................. (602) 34 (834)
------- -------- --------
Net (increase) decrease in current assets/liabilities.......................................... (9,720) 5,633 20,095
------- -------- --------
Net cash provided from operating activities.................................................... 1,336 14,615 24,553

Cash flows from investing activities
Proceeds from sales of facilities/equipment (Note 5)......................................... 2,083 1,162 6,012
Capital expenditures......................................................................... (4,621) (1,794) (3,305)
------- -------- --------
Net cash provided from (used by) investing activities.......................................... (2,538) (632) 2,707
------- -------- --------
Cash flows from financing activities
Net borrowing under line-of-credit agreements................................................ -- (200) (11,700)
Proceeds from issuance of long-term debt..................................................... 10,066 -- 201
Repayments of long-term debt................................................................. (5,193) (10,617) (11,830)
Dividends paid............................................................................... (2,911) (2,910) (3,927)
Other........................................................................................ 75 106 25
------- -------- --------
Net cash provided from (used by) financing activities.......................................... 2,037 (13,621) (27,231)
------- -------- --------
Net increase in cash........................................................................... 835 362 29
Cash -- beginning of year...................................................................... 693 331 302
------- -------- --------
Cash -- end of year............................................................................ $ 1,528 $ 693 $ 331
------- -------- --------
------- -------- --------
Supplemental disclosures of cash flow information
Cash paid during the year for --
Interest................................................................................... $ 4,106 $ 4,524 $ 7,340
------- -------- --------
Income taxes............................................................................... $ 5,084 $ 1,754 $ 283
------- -------- --------

- ------------------------------------------------------------------------------
</TABLE>

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

- ------------------------------------------------------------------------------
14

<PAGE>

A.M. Castle & Co. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Principal accounting policies
Basis of presentation -- The financial statements include A. M. Castle & Co.
(the Company) and its subsidiaries. All intercompany accounts and transactions
have been eliminated.

Cash -- For the purposes of these statements, short-term investments which
have a maturity of 90 days or less are considered cash equivalents.

Inventories -- Substantially all inventories are stated at the lower of
last-in, first-out (LIFO) cost or market. The Company values its LIFO
increments using the costs of its latest purchases during the years reported.

Property, plant and equipment -- Property, plant and equipment are stated at
cost and include assets held under capitalized leases. Major renewals and
betterments are capitalized, while maintenance and repairs which do not
substantially improve or extend the useful lives of the respective assets are
expensed currently. When properties are disposed of, the related costs and
accumulated depreciation are removed from the accounts and any gain or loss is
reflected in income.
The Company provides for depreciation of plant and equipment by charging
against income amounts sufficient to amortize the cost of properties over
their estimated useful lives (buildings -- 12 to 40 years; machinery and
equipment -- 5 to 20 years). Depreciation is provided using the straight-line
method for financial reporting purposes and accelerated methods for tax
purposes. Included in depreciation expense is the amortization of assets under
capital leases.

Income taxes -- Income tax provisions are based on income reported for
financial statement purposes. During 1992, the Company changed its method of
accounting in accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes" (Note 3).

Retirement plan costs -- The Company accrues and funds its retirement plans
based on amounts, as determined by an independent actuary, necessary to
maintain the plans on an actuarially sound basis. The Company also provides
certain health care and life insurance benefits for retired employees. During
1992, the Company adopted on the immediate recognition basis SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions". This
statement requires that the cost of these benefits be recognized in the
financial statements during the employee's active working career. Prior to the
adoption of SFAS No. 106 the cost of these benefits was recognized at the time
that claims were incurred (Note 6).

Stock options -- When stock options are exercised, proceeds from the sale of
common stock issued under those options are credited to common stock. No
charges or credits are made to income for stock options.

Restricted stock awards -- Upon issuance of restricted stock, compensation
expense and the amount charged to stockholders' equity is determined by the
market value at the date of the grant, which is recognized ratably over the
vesting period.

Net income per share -- Net income per share has been computed based on
weighted average common shares outstanding during the year -- 7,276,981 in
1993, 7,276,051 in 1992 and 7,272,821 in 1991.

Goodwill -- Cost in excess of net assets of acquired companies is amortized on
a straight-line basis over a 40 year period. The unamortized balance at
December 31, 1993 of $753,000 is reflected on the consolidated balance sheets
under prepaid expense and other assets.

Foreign currency translation -- The Company translates the assets and
liabilities of its foreign subsidiary at the rates of exchange in effect at
its year-end. Revenues and expenses are translated using the average exchange
rate in effect during the year. Gains and losses from foreign currency
translation were immaterial in 1993, 1992 and 1991. Foreign currency
transaction gains and losses are included in the consolidated statements of
income.

(2) Short-term debt
Short-term borrowing activity was as follows (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992 1991
- ----------------------------------------------------------------
<S> <C> <C> <C>
Maximum borrowed................................. $9,475 $5,725 $14,300
Average borrowed................................. 3,055 2,610 6,402
Average interest rate
During the year............................... 3.4% 3.9% 6.3%
At year-end................................... -- -- 4.5%
</TABLE>
- ----------------------------------------------------------------

(3) Income taxes
Effective January 1, 1992, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by SFAS
No. 109, "Accounting for Income Taxes". As permitted under the new rules,
prior year's financial statements were not restated.

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

<PAGE>

A.M. Castle & Co. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The cumulative prior years' effect of adopting Statement 109 as of January
1, 1992, was to increase net income by $1,799,000, or $.25 per share. This
change in accounting principle had no significant effect on the 1992 expense.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of December 31, 1993
and 1992 are as follows (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992
----------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation......................................... $5,211 $ 5,213
Inventory, net....................................... 1,675 2,287
Pension.............................................. 2,644 2,251
Other, net........................................... 400 536
------ -------
Net deferred liabilities........................... 9,930 10,287
Deferred tax assets:
Postretirement benefits.............................. 1,132 1,014
------ -------
Net deferred tax liabilities....................... $8,798 $ 9,273
------ -------
------ -------
</TABLE>
- ----------------------------------------------------------------

The Company did not record any valuation allowance against deferred tax
assets at December 31, 1993 and 1992.
The components of the provision (benefit) for deferred Federal income tax,
before the cumulative effect of changes in accounting methods for the years
ended December 31, 1993 and 1992, are as follows (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992
----------------------------------------------------------------
<S> <C> <C>
Depreciation............................................ $ (56) $(140)
Inventory, net.......................................... (516) (318)
Pension................................................. 342 256
Other, net.............................................. 89 69
----- -----
$(141) $(133)
----- -----
----- -----
</TABLE>

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

A reconciliation between the statutory Federal income tax amount and the
effective amounts at which taxes were actually provided before cumulative
effect of changes in accounting methods is as follows (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992 1991
----------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax at statutory rates.......... $3,948 $2,069 $129
State income taxes, net of Federal income tax
benefits...................................... 603 352 18
Net operating loss carry-forward............... 98 283 (11)
Other.......................................... 63 (8) 42
------ ------ ----
$4,712 $2,696 $178
------ ------ ----
------ ------ ----
</TABLE>
- ----------------------------------------------------------------

(4) Long-term debt

Long-term debt consisted of the following at December 31, 1993, 1992 and 1991
(in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992 1991
----------------------------------------------------------------
<S> <C> <C> <C>
Revolving credit agreement (a) (c)........ $40,678 $30,235 $34,738
9.3% insurance company term loan, due in
equal installments from 1992 through
2000..................................... 11,660 13,330 15,000
Industrial development revenue bonds at
interest rates from 6 1/4% (fixed) to 85%
of prime, due in varying installments
through 2006 (b) (c)..................... 6,342 8,122 9,867
11 1/2% insurance company term loan, due
in equal installments from 1991 through
1995..................................... 3,000 4,500 6,000
Canadian bank term loan at variable rates,
due in equal installments through 1995,
with a final payment in 1996............. 1,605 2,065 2,704
12% notes payable for acquisition of Geo.
F. Blake, Inc., due in equal installments
through 1992............................. -- -- 257
Other..................................... 174 334 637
------- ------- -------
Total..................................... 63,459 58,586 69,203
Less--current portion..................... (5,435) (5,593) (5,925)
------- ------- -------
Total long-term portion................... $58,024 $52,993 $63,278
------- ------- -------
------- ------- -------
</TABLE>
- ----------------------------------------------------------------
The carrying value of long term debt does not differ materially from their
estimated fair value as of December 31, 1993.

(a) The Company has revolving credit agreements of $60 million domestically
and $6.4 million with a Canadian bank. The credit facilities are three-year
revolvers, extended annually by mutual agreement, with a four-year equal
amortization term option. Under these credit arrangements all borrowings are
considered to be long-term debt for balance sheet presentation purposes.
Interest rate options on the domestic facility are based on London
Interbank Offered Rate (LIBOR), Reference Rates or competitive Bid

- ------------------------------------------------------------------------------
16

<PAGE>

A.M. Castle & Co. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Rates from four participating banks. The options on the Canadian facility are
available at Canadian and U.S. prime rates, Bankers' Acceptance Rates, Cost of
Fund Rates and LIBOR.
A commitment fee of .375% of the total commitment less amounts borrowed
under the Reference and LIBOR interest rate options is required on the
domestic facility and .25% is required on the unused portion of the Canadian
facility.
(b) The Company has loan and lease agreements with certain municipalities
whereby industrial revenue bonds were issued to finance the purchase of land
and construction of plant and equipment at new and existing service centers.
Under the terms of the agreements, the loan and lease payments made by the
Company are equivalent to the municipalities' debt service requirements on the
bonds.
(c) The more restrictive provisions of the loan agreements require the Company
to maintain minimum earnings to fixed charge ratios, to limit cash dividends
and purchases of the Company's stock to $11 million, plus 70% of net income
since December 31, 1989 (earnings reinvested in the business available for
cash dividends or stock retirements under this provision were $5.9 million at
December 31, 1993), and to limit borrowings. At December 31, 1993, the Company
was in compliance with all restrictive covenants.
The loan agreements also provide limitations on sales of subsidiaries, sale
or lease of assets of the Company, acquisitions and transactions with
affiliates.

(d) Aggregate annual principal payments on the noncurrent portion of long-term
debt (including obligations under capital leases) are due as follows (in
thousands):

1995 $4,604 1996 $3,263 1997 $1,955 1998 $1,870

Total net book value of assets collateralized under financing arrangements
approximated $3.4 million at December 31, 1993.
Net interest expense reported on the accompanying Consolidated Statements
of Income, which includes that associated with both short and long-term debt,
was reduced by interest income of $.1 million in 1993, 1992 and 1991.

(5) Lease agreements
(a) Description of leasing arrangements -- The Company has capital and
operating leases covering certain warehouse facilities, equipment, automobiles
and trucks, with lapse of time as the basis for all rental payments plus a
mileage factor included in the truck rentals.
(b) Capital leases -- Capitalized leased property by major class is summarized
as follows (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

Balances at
December 31
----------------------------
Class of Property 1993 1992 1991
- ----------------------------------------------------------------
<S> <C> <C> <C>
Machinery and equipment...................... $ 737 $ 1,541 $1,499
Less-accumulated depreciation................ (462) (1,141) (846)
----- ------- ------
$ 275 $ 400 $ 653
----- ------- ------
----- ------- ------
</TABLE>
- ----------------------------------------------------------------
Future minimum lease payments for the above assets under capital leases at
December 31, 1993, are as follows (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

Year ending December 31,
- ----------------------------------------------------------------
<S> <C>
1994............................................................... $ 91
1995............................................................... 84
1996............................................................... 16
----
Total minimum lease payments........................................ $191
Less--amount representing estimated lessor executory costs.......... (18)
----
Present value of net minimum lease payments......................... $173
----
----
</TABLE>
- ----------------------------------------------------------------
(c) Operating leases -- Future minimum rental payments under operating leases
that have initial or remaining noncancelable lease terms in excess of one year
as of December 31, 1993, are as follows (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

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

(d) Rental expense -- Total rental payments charged to expense were $7.0
million in 1993, $6.8 million in 1992 and $6.3 million in 1991.

(e) Sale and leaseback of assets -- During 1993, 1992 and 1991, the Company
sold and leased back equipment under operating leases with terms of seven,
eight and seven years, respectively. The leases allow for a purchase option
after six years of $662,000, $519,000 and $1,947,000, respectively. Annual
rentals are $342,000 for the 1993 lease, $173,000 for the 1992 lease and
$899,000 for the 1991 transaction. The assets were sold at approximately net
book

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

<PAGE>

A.M. Castle & Co. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

value for proceeds of $2,063,000, $1,154,000 and $5,317,000, respectively.

(6) Retirement, profit-sharing and incentive plans
Substantially all employees who meet certain requirements of age, length of
service and hours worked per year are covered by one of two Company-sponsored
retirement plans or a union-sponsored retirement plan. The two
Company-sponsored retirement plans, the A.M. Castle & Co. Salaried Employees'
Pension Plan and the A.M. Castle & Co. Hourly Employees' Pension Plan, are
defined benefit, noncontributory plans. Benefits paid to retirees are based
upon age at retirement, years of credited service and average earnings.
At December 31, 1993 the assumed discount rate, the estimated rate at which
each retirement plan could have settled its liabilities, was 7.75%. The
expected long-term rate of return on plan assets was assumed to be 9.5% per
year, and future salary increases were estimated to be 4.75% per year. At
December 31, 1992 and 1991, the assumed discount rate used was 9.0%, expected
long-term rate of return on plan assets was estimated at 9.5% per year, and
future salary increases were assumed to be 6.0% per year.
The assets of the Company-sponsored plans are maintained in a single trust
account. The majority of the trust assets are invested in common stock mutual
funds, insurance contracts, real estate funds and corporate bonds. The
Company's funding policy is to satisfy the minimum funding requirements of
ERISA.
The net pension credits in 1993, 1992 and 1991 were composed of the
following (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992 1991
- ----------------------------------------------------------------
<S> <C> <C> <C>
Normal service cost........................... $ 1,159 $ 1,098 $ 1,115

Interest cost on projected benefit
obligation................................... 3,379 3,180 3,150

Actual return on plan assets.................. (4,203) (3,117) (8,252)

Net amortization and deferral................. (941) (1,838) 3,369
------- ------- -------
Net pension credit............................ $ (606) $ (677) $ (618)
------- ------- -------
------- ------- -------
</TABLE>
- ----------------------------------------------------------------
The status of the plans at December 31, 1993, 1992 and 1991, was as
follows:
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992 1991
- ----------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of vested benefit
obligation................................... $37,752 $31,679 $29,342
Plus--Nonvested benefit obligation........... 3,671 2,092 328
------- ------- -------
Vested and nonvested accumulated benefit
obligation................................. 41,423 33,771 29,670
Plus--Projected salary increases benefit
obligation................................. 5,361 4,983 5,929
------- ------- -------
Projected benefit obligation................. 46,784 38,754 35,599
Plan assets at fair value..................... 48,514 46,757 45,894
------- ------- -------
Plan assets in excess of projected benefit
obligation................................... 1,730 8,003 10,295
Items not yet recognized in earnings
Unrecognized net transitional assets......... (2,927) (3,903) (4,878)
Unrecognized net (gain) loss................. 6,674 1,365 (502)
Unrecognized prior-service cost.............. 1,047 1,017 1,147
------- ------- -------
Pension prepaid recognized on the consolidated
balance sheets at December 31................ $ 6,524 $ 6,482 $ 6,062
------- ------- -------
------- ------- -------
</TABLE>
- ----------------------------------------------------------------
The Company has profit sharing plans for the benefit of salaried and other
eligible employees (including officers). Effective January 1, 1992 the Company
amended its existing profit sharing plan to include features under Section
401(k) of the Internal Revenue Code. The plan modifications included a
provision whereby the Company partially matches employee contributions up to a
maximum of 6% of the employees' salary. The current year's expense under this
provision amounted to $244,000. The plan modifications also included a
supplemental contribution feature whereby a Company contribution would be made
to all eligible employees upon achievement of specific return on investment
goals as defined by the plan. No contributions were made to this plan under
this provision for 1993 and 1992.
The Company has a management incentive bonus plan for the benefit of its
officers and key employees. Incentives are paid to line managers based on
performance, against objectives, of their respective operating units.
Incentives are paid to corporate officers on the basis of total Company
performance against objective. There were no incentives paid to corporate
officers based on total company performance in 1992 and 1991. Amounts accrued
and charged to income under each plan are included as part of accrued payroll
and

- ------------------------------------------------------------------------------
18

<PAGE>

A.M. Castle & Co. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

employee benefits at each respective year end. The amounts charged to income
are summarized below (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992 1991
----------------------------------------------------------------
<S> <C> <C> <C>
Profit sharing and 401-K contribution............. $ 244 $227 $--
------ ---- ---
------ ---- ---
Management incentive.............................. $1,412 $679 $41
------ ---- ---
------ ---- ---
- ----------------------------------------------------------------
</TABLE>

The Company provides declining value life insurance to its retirees and a
maximum of three years of medical coverage to qualified individuals who retire
between the ages of 62 and 65. The Company does not fund these plans.
Effective January 1, 1992, the Company adopted the requirements of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions".
The Company elected to immediately recognize the accumulated liability,
measured as of January 1, 1992, which totalled $2,591,000. The cumulative
prior years' effect of the change in accounting method resulted in a net of
income tax charge to earnings of $1,577,000, or $.22 per share. This change in
accounting principle had no significant effect on the current year's expense.
Net postretirement benefit cost for 1993 and 1992 includes the following
components (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

1993 1992
----------------------------------------------------------------
<S> <C> <C>
Service cost............................................... $129 $147
Interest cost on accumulated postretirement benefit
obligation................................................ 233 224
Amortization of unrecognized prior service cost............ (26) --
Unrecognized net loss...................................... 8 --
---- ----
Net periodic postretirement benefit cost................... $344 $371
---- ----
---- ----
- ----------------------------------------------------------------
</TABLE>

The following is a reconciliation between the plan's funded status and the
accrued postretirement benefit obligation as reflected on the balance sheet as
of December 31, 1993 and 1992 (in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $1,491 $ 589
Fully eligible active plan participants.................. 214 374
Other active plan participants........................... 1,560 1,792
------ ------
3,265 2,755
Unrecognized prior service cost.......................... 264 --
Unrecognized net loss.................................... (647) (176)
------ ------

Accrued postretirement benefit obligation................ $2,882 $2,579
------ ------
------ ------
</TABLE>
- ----------------------------------------------------------------
Future benefit costs were estimated assuming medical costs would increase
at a 12 3/4% annual rate for the first year, with annual increases decreasing
by 0.5% per year for five years, and 1% per year thereafter until an ultimate
trend rate of 5 3/4% is reached. A 1% increase in the health care cost trend
rate assumptions would have increased the accumulated postretirement benefit
obligation at December 31, 1993 by $211,000 with no significant effect on the
1993 postretirement benefit expense. The weighted average discount rate used
in determining the accumulated postretirement benefit obligation was 7.75% in
1993 and 9.0% in 1992.

(7) Common stock
Changes in the common and treasury stock accounts during 1993, 1992 and 1991
were as follows (dollars in thousands):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

Common Stock Treasury Stock
-------------------------------
Shares
Issued Amount Shares Amount
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1990.................... 7,554,004 $21,364 291,767 $1,495
Stock options exercised............. 43,592 385 29,754 360
Other............................... -- 64 34 --
--------- ------- ------- -------
December 31, 1991.................... 7,597,596 $21,813 321,555 $1,855
Other............................... -- -- (1) --
--------- ------- ------- -------
December 31, 1992.................... 7,597,596 $21,813 321,554 $1,855
Stock options exercised............. 10,200 125 7,806 115
Other............................... -- -- 120 2
--------- ------- ------- -------
December 31, 1993.................... 7,607,796 $21,938 329,480 $1,972
--------- ------- ------- -------
--------- ------- ------- -------
</TABLE>
- ----------------------------------------------------------------
The Company has long-term stock incentive and stock option plans for the
benefit of officers and key management employees. The 1989 Long-Term Incentive
Plan authorized up to 150,000 shares of common stock for use under the Plan.
Compensation expense under this plan is recognized ratably over the employee's
vesting period as determined by the Plan. No shares were awarded under this
plan in 1993, 1992 or 1991.
The terminated 1982 Restricted Stock and Stock Option Plan authorized the
issuance of up to 351,563 shares of common stock. In 1991, 43,592 shares were
exercised at a price of $8.83 per share. There are no remaining unexpired
options under this plan.
In January 1990 the Board of Directors authorized the issuance of
restricted stock and incentive stock options. Restricted stock awards involve
shares issued immediately, or at a future date, upon fulfillment of stated
conditions. Incentive stock options become exercisable beginning one year from
date of grant and expire five years from date of grant if not exercised. The
1990 Restricted Stock and Stock Option Plan authorizes the issuance of up to
350,000 shares of

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

<PAGE>

A.M. Castle & Co. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

common stock for use under the plan. A summary of plan transactions for 1993,
1992 and 1991 is as follows:
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

Option Exercise
Shares Price
- ----------------------------------------------------------------
<S> <C> <C>
December 31, 1991............................ 128,200 10.625 -- 13.25
Granted..................................... 120,400 11.75
Forfeitures................................. (21,600) 13.25
------- ------------------
December 31, 1992............................ 227,000 10.625 -- 13.25
Granted..................................... 8,300 12.25 -- 12.375
Forfeitures................................. (2,800) 11.75 -- 13.25
Exercised................................... (10,200) 10.625 -- 13.25
------- ------------------
December 31, 1993............................ 222,300 11.75 -- 13.25
------- ------------------
------- ------------------
</TABLE>
- ----------------------------------------------------------------

(8) Contingent liabilities
The Company is the defendant in several lawsuits arising out of the conduct of
its business. These lawsuits are incidental and occur in the normal course of
the Company's business affairs. It is the opinion of counsel that no
significant uninsured liability will result from the outcome of the
litigation, and thus there is no material financial exposure to the Company.
The Company was contingently liable as endorser on discounted trade
acceptances aggregating $5.1 million at December 31, 1993. Also, the Company
has $3.2 million of irrevocable letters of credit outstanding to comply with
the insurance reserve requirements of its workers' compensation insurance
carrier.

(9) Selected quarterly data (unaudited)
The unaudited quarterly results of operations for 1993 and 1992 are as follows
(dollars in thousands, except per share data -- Note 7):
- ----------------------------------------------------------------
<TABLE>
<CAPTION>

First Second Third Fourth
Quarter Quarter Quarter Quarter
----------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 quarters
Net sales........................ $119,869 $121,042 $117,118 $116,079
Gross profit..................... 30,053 30,943 30,273 31,016
Net income....................... $ 1,754 $ 1,613 $ 1,436 $ 2,096
Net income per share............. .24 .22 .20 .29
1992 quarters
Net sales........................ $109,343 $104,807 $103,731 $106,032
Gross profit..................... 27,795 27,346 27,612 27,477
Net income before cumulative
effect of changes in accounting
methods........................ 1,149 1,007 939 297
Cumulative effects of changes in
accounting methods (Notes 3 and
6)............................. 222 -- -- --
Net income....................... $ 1,371 $ 1,007 $ 939 $ 297
Net income per share before
cumulative effect of changes in
accounting methods............. .16 .14 .13 .04
Cumulative effect of changes in
accounting methods............. .03 -- -- --
Net income per share............. .19 .14 .13 .04

</TABLE>
- ----------------------------------------------------------------
Quarterly results for 1992 have been restated to reflect the cumulative effect
of the accounting method changes in the first interim period of the year as
required by Accounting Principles Board Opinion No. 20.

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

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

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors
of A.M. Castle & Co.:

We have audited the accompanying consolidated balance sheets of A.M. Castle &
Co. (a Delaware corporation) and Subsidiaries as of December 31, 1993, 1992
and 1991, and the related consolidated statements of income, reinvested
earnings and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes 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, the financial statements referred to above present fairly,
in all material respects, the financial position of A.M. Castle & Co. and
Subsidiaries as of December 31, 1993, 1992 and 1991, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
As discussed in Notes 3 and 6 to the consolidated financial statements,
effective January 1, 1992, the Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes.

ARTHUR ANDERSEN & CO.
Chicago, Illinois,
February 4, 1994.

- ------------------------------------------------------------------------------
21

<PAGE>

A.M. Castle & Co. and Subsidiaries
CONSOLIDATED ELEVEN-YEAR FINANCIAL AND OPERATING SUMMARY

- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except employee and per share data) 1993 1992 1991

- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Supplemental Tons sold (in thousands).......................................... 308 249 234
Summary of Net sales......................................................... $474.1 $423.9 $436.4
Earnings Cost of sales..................................................... 351.8 313.7 331.1
------ ------ ------
Gross profit...................................................... 122.3 110.2 105.3
Operating expenses................................................ 102.1 94.9 92.8
Depreciation...................................................... 4.8 4.9 5.3
------ ------ ------
Profit from operations............................................ 15.4 10.4 7.2
Interest expense, net............................................. 3.8 4.3 6.8
------ ------ ------
Income before income taxes........................................ 11.6 6.1 .4
Income taxes...................................................... 4.7 2.7 .2
------ ------ ------
Net income........................................................ 6.9 3.41 .2
Cash dividends.................................................... 2.9 2.9 3.9
------ ------ ------
Reinvested earnings............................................... $ 4.0 $ 0.5 $ (3.7)
------ ------ ------
------ ------ ------

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

Share Data Number of shares outstanding at year-end (in thousands)........... 7,278 7,276 7,276
(Note 7) Net income per share.............................................. $ .95 $ .47 $ .03
Cash dividends per share.......................................... $ .40 $ .40 $ .54
Book value per share.............................................. $ 9.56 $ 9.00 $ 8.89

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

Financial Working capital................................................... $ 86.1 $ 75.3 $ 79.7
Position Property, plant and equipment, net................................ $ 41.0 $ 43.2 $ 47.4
at Year-End Total assets...................................................... $204.2 $195.2 $190.4
Short-term debt................................................... $ -- $ -- $ .2
Long-term debt.................................................... $ 58.0 $ 53.0 $ 63.3
Stockholders' equity.............................................. $ 69.5 $ 65.5 $ 64.7

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

Financial Return on sales................................................... 1.5% 0.8% 0.1%
Ratios Asset turnover.................................................... 2.3 2.2 2.3
Return on assets.................................................. 3.4% 1.7% 0.1%
Leverage factor................................................... 3.1 3.0 2.8
Return on opening stockholders' equity............................ 10.5% 5.2% 0.3%
Percent earnings reinvested....................................... 58.0% 14.7% --%
Percent increase (decrease) in equity............................. 6.1% 1.2% (5.3%)

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

Other Data Additions to property, plant and equipment........................ $ 4.6 $ 1.8 $ 3.3
Stockholders at year-end.......................................... 1,625 1,670 1,750
Employees at year-end............................................. 1,204 1,196 1,268
Per employee data (in thousands)
Net sales......................................................... $393.8 $354.4 $344.2
Gross profit...................................................... $101.6 $ 92.1 $ 83.0
Operating expenses, including depreciation........................ $ 88.8 $ 83.4 $ 77.4
Profit from operations............................................ $ 12.8 $ 8.7 $ 5.6

- ------------------------------------------------------------------------------
</TABLE>

This schedule is prepared reflecting accounting changes as required or allowed
to more fairly present the results of operations over the eleven-year period.
Statements for years preceding these changes have not been revised to reflect
their retroactive application of these changes. Refer to prior year annual
reports for specific accounting changes.
- ---------------
11992 net income represents the net results from operations before the
cumulative prior years' effect of adopting SFAS No. 106 and SFAS No. 109
(Notes 3 and 6).

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

<PAGE>

- -----------------------------------------------------------------------------------
1990 1989 1988 1987 1986 1985 1984 1983

- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
248 255 277 258 231 211 230 179
$478.9 $501.1 $499.3 $376.1 $322.9 $307.2 $328.4 $252.8
363.6 380.6 375.1 282.1 240.6 224.0 237.5 182.8
- ------ ------ ------ ------ ------ ------ ------ ------
115.3 120.5 124.2 94.0 82.3 83.2 90.9 70.0
97.5 96.7 92.6 74.9 74.6 70.1 71.0 59.6
5.2 4.4 3.9 3.7 3.6 3.3 3.2 3.3
- ------ ------ ------ ------ ------ ------ ------ ------
12.6 19.4 27.7 15.4 4.1 9.8 16.7 7.1
6.8 5.1 5.1 3.3 4.1 3.1 2.9 2.2
- ------ ------ ------ ------ ------ ------ ------ ------
5.8 14.3 22.6 12.1 0.0 6.7 13.8 4.9
2.7 5.6 8.9 5.5 (0.1) 3.0 6.7 2.2
- ------ ------ ------ ------ ------ ------ ------ ------
3.1 8.7 13.7 6.6 0.1 3.7 7.1 2.7
4.9 4.7 3.5 3.0 3.0 2.8 2.0 1.5
- ------ ------ ------ ------ ------ ------ ------ ------
$(1.8) $ 4.0 $ 10.2 $ 3.6 $(2.9) $ 0.9 $ 5.1 $ 1.2
- ------ ------ ------ ------ ------ ------ ------ ------
- ------ ------ ------ ------ ------ ------ ------ ------

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

7,262 7,220 7,190 7,137 7,107 7,088 7,044 7,020
$ .43 $ 1.20 $ 1.90 $ .93 $ .01 $ .52 $ 1.01 $ .39
$ .68 $ .64 $ .48 $ .42 $ .43 $ .39 $ .29 $ .21
$ 9.41 $ 9.66 $ 9.11 $ 7.75 $ 7.25 $ 7.65 $ 7.53 $ 6.81

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

$ 89.9 $ 75.8 $ 89.0 $ 47.9 $ 47.5 $ 50.5 $ 43.5 $ 41.6
$ 54.8 $ 45.3 $ 39.4 $ 35.7 $ 38.4 $ 35.8 $ 36.7 $ 35.8
$226.6 $202.3 $211.9 $158.7 $145.6 $138.3 $135.0 $116.9
$ 11.9 $ .5 $ -- $ 6.0 $ 14.0 $ 2.0 $ 3.0 $ --
$ 76.7 $ 51.0 $ 61.0 $ 27.8 $ 30.8 $ 30.2 $ 24.4 $ 26.6
$ 68.3 $ 69.7 $ 65.5 $ 55.3 $ 51.5 $ 54.2 $ 53.1 $ 47.8

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

0.7% 1.7% 2.7% 1.8% 0.1% 1.2% 2.2% 1.1%
2.1 2.5 2.4 2.3 2.2 2.2 2.4 2.2
1.4% 4.3% 6.5% 4.2% 0.1% 2.7% 5.3% 2.3%
3.3 3.1 3.8 3.1 2.8 2.6 2.8 2.5
4.5% 13.2% 24.7% 12.9% 0.2% 7.0% 14.9% 5.8%
--% 46.3% 74.8% 54.0% --% 24.3% 71.8% 44.4%
(2.0%) 6.4% 18.5% 7.3% (5.0%) 2.1% 11.1% 2.6%

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

$ 13.4 $ 10.4 $ 7.8 $ 2.6 $ 6.2 $ 3.1 $ 4.7 $ 2.0
1,730 1,747 1,732 1,750 1,843 1,893 1,873 1,944
1,379 1,371 1,373 1,232 1,227 1,258 1,356 1,272
$347.3 $365.5 $363.7 $305.3 $263.2 $244.2 $242.2 $198.7
$ 83.6 $ 87.9 $ 90.5 $ 76.3 $ 67.0 $ 66.1 $ 67.0 $ 55.0
$ 74.5 $ 73.7 $ 70.3 $ 63.8 $ 63.7 $ 58.3 $ 54.7 $ 49.4
$ 9.1 $ 14.2 $ 20.2 $ 12.5 $ 3.3 $ 7.8 $ 12.3 $ 5.6

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

</TABLE>

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

<PAGE>

TOTAL RETURN ON AN INVESTMENT IN CASTLE
The accompanying 15-year chart shows the total value generated by an initial
investment of $100 in A.M. Castle & Co., including stock price appreciation and
the reinvestment of dividend payments, compared to an equivalent investment at
returns earned by the Standard and Poor's 500 common stock index and the
inflation rate as measured by the Consumer Price Index.
During 1993, an investment in Castle's stock produced a total return of
51.8% compared with 7.7% for the Standard and Poor's 500 and an inflation rate
of 2.9%.
Over the 15-year period ended December 31, 1993, Castle generated a
compounded annual rate of return of 17.7% compared with 15.6% for the Standard
and Poor's 500 and an annual inflation rate of 5.3%.

CASTLE'S RECORD OF DIVIDEND PAYMENTS
During 1993, Castle continued its 60-year record of consecutive quarterly cash
dividend payments with payouts totaling, $2,911,000, or 40 cents a share.
During the 15-year period ended December 31, 1993, dividend payouts, which
average 61% of after-tax corporate income, have risen at a compound annual rate
of 5.4%.

COMMON STOCK INFORMATION
Symbol CAS; traded on the American and Chicago Stock Exchanges.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

DIVIDENDS STOCK PRICE RANGE
1993 1992 1993 1992
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First quarter............................................................ $.10 $.10 $11 1/4 $13 1/8 $10 1/2 $12 3/4
Second quarter........................................................... .10 .10 12 12 3/4 11 3/8 13
Third quarter............................................................ .10 .10 12 1/8 13 1/2 11 1/8 12 1/2
Fourth quarter........................................................... .10 .10 12 5/8 17 3/8 11 1/8 12 1/8
---- ----
$.40 $.40
---- ----
---- ----

- ------------------------------------------------------------------------------
</TABLE>

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

<PAGE>

CASTLE LOCATIONS

Atlanta, GA
Buffalo, NY
Charlotte, NC
Chicago, IL
Cincinnati, OH
Cleveland, OH
Dallas, TX
Detroit, MI
Houston, TX
Kansas City, MO
Los Angeles, CA
Milwaukee, WI
Philadelphia, PA
Phoenix, AZ
Pittsburgh, PA
Salt Lake City, UT
San Diego, CA
Stockton, CA
Tulsa, OK
Wichita, KS
Worcester, MA
Hy-Alloy Steels Co.; Chicago, IL
H-A Industries; Hammond, IN
A.M. Castle & Co. (Canada), Inc.
Montreal Toronto Winnipeg

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

<PAGE>

DIRECTORS

Daniel T. Carroll
Chairman
The Carroll Group, Inc.
a management consulting firm

Edward F. Culliton
Vice President -- Finance

William K. Hall
President & Chief Executive Officer
Eagle Industries, Inc.
a diversified manufacturing company

Robert S. Hamada
Dean
Graduate School of Business
University of Chicago

John P. Keller
President
Keller Group
an industrial manufacturing & coal mining company

Frederick A. Krehbiel
Chairman and
Chief Executive Officer
Molex Incorporated
an electronic components
manufacturer

John W. McCarter, Jr.
Vice President
Booz, Allen & Hamilton, Inc.
a management consulting firm

William J. McDermott
Retired President
Simpson Estates, Inc.
a private management firm

Richard G. Mork
President and
Chief Executive Officer

Michael Simpson
Chairman of the Board

Richard A. Virzi
Retired President and
Chief Executive Officer
A.M. Castle & Co.

OFFICERS

Michael Simpson
Chairman of the Board

Richard G. Mork
President and
Chief Executive Officer

Edward F. Culliton
Vice President --
Finance

Sven G. Ericsson
Vice President --
Plate & Carbon Products Group

M. Bruce Herron
Vice President --
Western Region

Stephen V. Hooks
Vice President --
Midwest Region

Richard G. Phifer
Vice President --
Eastern Region

Thomas D. Prendergast
Vice President --
Human Resources

Alan D. Raney
Vice President --
High Technology Products Group

Gise Van Baren
Vice President --
Alloy Products Group

James A. Podojil
Treasurer -- Controller

Jerry M. Aufox
Secretary --
Legal Counsel

HY-ALLOY STEELS CO.

Gise Van Baren
President and General Manager

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

GENERAL OFFICES
3400 North Wolf Road
Franklin Park, IL 60131

GENERAL COUNSEL
Mayer, Brown & Platt

INDEPENDENT AUDITORS
Arthur Andersen & Co.
TRANSFER AGENT &
REGISTRAR
American Stock Transfer and
Trust Company

COMMON STOCK TRADED
American Stock Exchange
Chicago Stock Exchange
ANNUAL MEETING
Thursday, April 28, 1994, 10:00 A.M.
Corporate Offices
3400 North Wolf Road
Franklin Park, IL 60131
(708) 455-7111

FORM 10-K
A.M. Castle & Co. will be pleased to
make its annual report on Form 10-K,
filed with the Securities and Exchange
Commission, available at no cost to
interested stockholders on written
request to the corporate secretary.

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

26
<PAGE>

APPENDIX TO A. M. CASTLE & CO.
1993 ANNUAL REPORT

[DESCRIPTION OF GRAPHICS OMITTED FORM EDGAR SUBMISSION]

1. On the cover of the Annual Report are three square photographs in the
center, arranged in the shape of an L:

The photograph at the top left is an end view of a rack of bar products in
pans stacked vertically with a sun starburst to the left of center.

The second photograph, lower left of the center, depicts various machined
products manufactured out of ferrous and nonferrous metals by customers of
the Company.

The picture on the lower right is of flame cutting equipment, burning
shapes out of a plate, with sparks flying.

2. The photograph in the upper left hand corner of page 4 depicts
Richard G. Mork, President and Chief Executive Officer, left; and
Michael Simpson, Chairman of the Board, right, both facing front.

3. The picture on the top left hand corner of page 6 is an enlarged picture of
the picture found on the front page of the Annual Report showing a vertical
rack of products in pans with a sunburst slightly left of center.

4. On page 7, there are two pictures, one on top of another:

The top picture shows a worker with his back towards the viewer standing in
front of a computer control station of a piece of equipment.

The lower picture shows three machined gears.

5. On page 8, there are two pictures, one on top of another:

The top picture shows a large flame cut part which looks like a rimless
wheel (a hole in the center and radiating metal spokes) standing upright in
front of stacked metal plates.

The lower picture is a duplicate of one of the pictures on the front cover
showing machined parts made from ferrous and nonferrous metal.

6. On page 23, there are two charts:

The first chart which is in the upper third of the page shows the compound
rate of return of Castle stock versus inflation and the S&P Index.
Castle's returns are shown in the form of straight line segments connected
with a solid color beneath from the year 1979 through 1993. The S&P
Index is shown by a dotted line and inflation is shown by a solid line.
The chart depicts inflation over a 15 year period running from slightly
under $200 to $200. The chart shows a steadily upward course of the S&P
Index 500 rising from approximately 200 to somewhere in the neighborhood of
900. The chart shows the solid color, A. M. Castle's compound rate of
return, also rising with some dips and valleys from $200 to slightly under
$1,200.

The second chart which appears on the bottom half of the page shows 15 year
dividend payout in thousands of dollars by year the total amount of
dividend payouts for each year joined by a straight line with the area
beneath the line shaded. The graph commencing at $1,000,000 shows a rise
in total dividends from 1979 to 1982, with a dip from 1982 to 1983, and
then a rise again steadily to 1990 with a decrease in total dividends from
1990 to 1992 and 1992 dividends remaining flat at slightly under
$3,000,000.