RELIANCE STEEL & ALUMINUM CO, S-3, 1997-10-10

RELIANCE STEEL & ALUMINUM CO
S-3, 1997-10-10
METALS SERVICE CENTERS & OFFICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1997
REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

RELIANCE STEEL & ALUMINUM CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
CALIFORNIA 95-1142616
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>

2550 EAST 25TH STREET
LOS ANGELES, CALIFORNIA 90058
(213) 582-2272
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

DAVID H. HANNAH
2550 EAST 25TH STREET
LOS ANGELES, CALIFORNIA 90058
(213) 582-2272
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C>
KAY RUSTAND, ESQ. E. WAIDE WARNER, JR., ESQ.
ARTER & HADDEN DAVIS POLK & WARDWELL
700 SOUTH FLOWER STREET, 30TH FLOOR 450 LEXINGTON AVENUE
LOS ANGELES, CALIFORNIA 90017 NEW YORK, NEW YORK 10017
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration statement.
------------------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ___________

If the Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ___________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value per share.... 3,795,000 $27.875 $105,785,625 $32,056.25
============================================================================================================
</TABLE>

(1) Includes 495,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average of the high and low prices
reported in the consolidated reporting system on October 9, 1997.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 10, 1997
PROSPECTUS
, 1997
3,300,000 SHARES
RELIANCE STEEL & ALUMINUM CO.

COMMON STOCK

Of the 3,300,000 shares of Common Stock, no par value, (the "Shares") of
Reliance Steel & Aluminum Co., a California corporation (the "Company"), offered
hereby, 3,100,000 Shares are being offered by the Company and 200,000 Shares are
being offered by certain shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling Shareholders.

The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "RS." The latest reported sale price of the Common Stock on October
9, 1997 was $28 1/4 per share. See "Price Range of Common Stock."

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS"
BEGINNING ON PAGE 8.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS PROCEEDS
TO THE DISCOUNTS AND TO THE TO THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(2)
- -----------------------------------------------------------------------------------------------------

PER SHARE.................... $ $ $ $
TOTAL (3).................... $ $ $ $
- -----------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting estimated expenses of $ payable by the Company and
$ payable by the Selling Shareholders.

(3) The Company has granted the Underwriters an option, exercisable within 30
days hereof, to purchase up to an aggregate of 495,000 additional Shares at
the price to the public, less the underwriting discounts and commissions,
for the purpose of covering over-allotments. If the Underwriters exercise
that option in full, the total price to the public, underwriting discounts
and commissions, proceeds to the Company and proceeds to the Selling
Shareholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."

The Shares are offered by the Underwriters, subject to prior sale, when, as
and if delivered to and accepted by the Underwriters, and subject to various
prior conditions, including the right to reject orders in whole or in part. It
is expected that delivery of the Shares will be made against payment therefor in
New York, New York on or about , 1997.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.

PRUDENTIAL SECURITIES INCORPORATED

LOGO
<PAGE> 3

Map of the United States showing facilities prior to January 1, 1995 and
those acquired or started since then.

[MAP]

ACQUISITIONS AND FACILITIES STARTED SINCE 1994

<TABLE>
<CAPTION>
DATE ACQUISITION/FACILITIES LOCATIONS
- --------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
1995 Tube Service Co. Portland, Oregon
From dissolved joint Reliance Steel Company Los Angeles, California
venture 1995
Acquired 50% 1995 American Steel, L.L.C. Portland, Oregon and Kent, Washington
1995 Valex Corp. Phoenix, Arizona
1995 Valex Corp. Portland, Oregon
1995 Valex Corp. Austin, Texas
1996 Tube Service Co. Denver, Colorado
1996 VMI Corporation Albuquerque, New Mexico
1996 CCC Steel, Inc. Los Angeles, California and Salt Lake
City, Utah
1996 Siskin Steel & Supply Company, Inc. Birmingham, Alabama; Spartanburg, South
Carolina; and Chattanooga and
Nashville, Tennessee
1997 AMI Metals, Inc. Fontana, California; Wichita, Kansas;
Brentwood, Tennessee; Fort Worth,
Texas; Kent, Washington; and
Swedesboro, New Jersey
1997 Amalco Metals, Inc. Union City, California
1997 Service Steel Aerospace Corp. Tacoma, Washington; Long Beach,
California; and North Canton, Ohio
</TABLE>

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING BIDS AND SYNDICATE COVERING TRANSACTIONS. SPECIFICALLY,
THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND MAY BID FOR,
AND PURCHASE, SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the consolidated
financial statements and the notes related thereto, included elsewhere in or
incorporated by reference into this Prospectus. Unless otherwise indicated, the
information contained in this Prospectus (i) assumes no exercise of the
Underwriters' over-allotment option and (ii) gives effect to the three-for-two
stock split in June 1997.

THE COMPANY

BUSINESS AND INDUSTRY

Reliance Steel & Aluminum Co. ("Reliance" or the "Company") is one of the
largest metals service center companies in the United States, serving customers
throughout the United States through a network of 38 metals service centers. The
Company provides value-added materials management metals processing services and
distributes a full line of metal products, including carbon, alloy, stainless
and specialty steel, aluminum, brass and copper products to more than 33,000
customers in a broad range of industries. The Company believes that, through its
97% owned subsidiary, Valex Corp. ("Valex"), it is also the leading domestic
manufacturer and distributor of electropolished and chemically cleaned stainless
steel tubing and fittings for use in the semiconductor fabrication industry.

The Company's primary business strategy is to enhance its operating results
through strategic acquisitions and expansion of its existing operations. This
strategy and the Company's proven operating methods have enabled the Company to
outperform most of its competitors in the metals service center industry. The
Company has reported six consecutive years of record net income, and, since
1991, the Company's net income has increased at a compound annual growth rate of
approximately 38%. For the twelve months ended June 30, 1997, the Company had
net sales of $777.1 million and net income of $29.5 million.

The Company's metals service centers purchase metals from primary producers
and sell these metals in smaller quantities to a wide variety of end users. The
Company provides processing services for approximately 70% of the metals it
sells. The Company's metals processing services include leveling, blanking,
slitting, shape cutting, sawing, precision plate sawing and shearing, all to
customer specifications. Such services save time, labor and expense for
customers and reduce their overall manufacturing costs. During 1996, the
Company's metals service centers handled approximately 3,100 transactions per
business day, with an average revenue of $990 per transaction. Reliance's
computerized order entry system and flexible production scheduling enable the
Company to fill an order generally within 24 hours after receipt.

According to estimates by industry sources, in calendar 1996, the entire
United States metals distribution industry (steel and other metals) had over $40
billion in revenues. Historically, in the United States (based on tonnage),
approximately 30% of carbon industrial steel products, 45% of all stainless
steel produced in the United States, and 35% of the aluminum sold in the
mill/distributor shared markets (which excludes that sold for aluminum cans,
among other things) were sold through as many as 3,400 intermediate steel
processors and metals service centers, making such processors and service
centers the largest category of customers of domestic steel and other metals
producers. The Company believes that the metals service center industry will
continue to increase its role as a valuable intermediary between primary metal
producers and end users, primarily as a result of (i) the refocus by metal
producers towards sales efforts on larger end users to increase production
efficiency and (ii) increased demand by end users for outsourced metals
processing, just-in-time inventory management and the other value-added
materials management services of metals distributors. See "Business -- Industry
Overview."

COMPETITIVE STRENGTHS

Since its inception in 1939, the Company has had a history of profitable
growth including during periods of difficult business environments for metals
service centers. The Company's growth can be attributed to a combination of
acquisitions and internal expansion. Underlying its pursuit of growth has been a
commitment

3
<PAGE> 5

to enhancing shareholder value through increased earnings, dividends, and share
repurchases. The Company believes that it is well positioned to further enhance
shareholder value by focusing on its competitive strengths which include:

- MAINTAINING AN ENTREPRENEURIAL ENVIRONMENT. The Company believes that its
decentralized management and operational structure, which emphasizes a
high degree of autonomy for each of its geographically diverse
operations, has contributed significantly to increased profitability and
has helped to create an entrepreneurial environment as it has enabled
managers to run their operations with a greater sense of ownership.
Reliance's managers are responsible for the profitability and growth of
their respective operating units, with a significant portion of their
annual compensation tied to the financial performance of their particular
units. The Company believes that its management and operational structure
provides incentives to division and subsidiary managers to focus on
pursuing profitable growth opportunities, attaining financial objectives
and delivering superior customer service. See "Business -- Business
Strategy."

- CUSTOMER, PRODUCT AND GEOGRAPHIC DIVERSITY. Unlike many flat-roll
processors who specialize in serving a limited number of customers with a
large volume of processed carbon steel sheet, Reliance processes and
distributes a wide variety of metal products to more than 33,000
customers. In 1996, Reliance's metals service centers' average order size
was approximately $990, no customer represented more than 1% of the
Company's sales, and no single industry had a significant impact on the
Company's results. In addition, as a result of its successful acquisition
program, over the past three years, the Company has greatly expanded its
geographic reach, which currently enables it to serve customers
throughout the United States. Such diversification reduces the Company's
exposure to the financial or economic variability of any particular
customer group or geographic region. The Company's recent acquisitions of
AMI Metals, Inc., Amalco Metals, Inc. and Service Steel Aerospace Corp.
further increased the Company's diversification. See
"Business -- Business Strategy" and "-- Customers."

- PROVIDING SUPERIOR SERVICE AND PRODUCTS. Reliance believes that it has a
number of competitive advantages that distinguish the Company from its
competition, including the speed and the range of service it provides, as
well as the size and variety of its inventory. By maintaining a
decentralized management structure and providing local management with
significant operational control, Reliance believes its service centers
are able to react quickly to changes in local markets and customer
demands. According to a prominent industry survey, Reliance has ranked as
the #1 service center company in the United States in terms of overall
customer service in each of the last two years.

- IDENTIFYING ACCRETIVE ACQUISITIONS. The Company has a long history of
growth through acquisitions. In the last five years, Reliance has
invested over $250 million to start or acquire 19 business units, making
it one of the most active consolidators in the metals service center
industry. Reliance's senior management team seeks businesses that are
immediately accretive to earnings and strategically positioned to
diversify or enhance its customer base, product availability and/or
geographic coverage. Reliance has historically been very successful at
improving the sales and profitability of its acquired companies through
the utilization of its purchasing power, access to lower-cost capital and
operating knowledge, while generally retaining the acquired company's
management team. Reliance believes that opportunities for further growth
by acquisition exist because of the highly fragmented nature of the
industry, which consists of many small, privately-owned businesses that
lack the diversity, experience, access to lower-cost capital and
successful operating techniques of the Company. See "Business -- Business
Strategy."

ACQUISITIONS

Since its initial public offering in September 1994, Reliance has
successfully completed and integrated five significant acquisitions, which are
summarized below. The annual net sales figures set forth below may not be
indicative of future results.

4
<PAGE> 6

1995

- AMERICAN STEEL, L.L.C. American Steel, L.L.C. ("American Steel") (50%
interest) operates five carbon steel service centers in the Pacific
Northwest and the Central Valley of California, which generated annual
net sales in the year ended December 31, 1996 in excess of $175 million.
The Company strengthened its position in the Pacific Northwest as a
result of this acquisition.

1996

- CCC STEEL, INC. CCC Steel, Inc. ("CCC Steel") is one of the largest
distributors of structural steel in the western United States and
generated annual net sales in excess of $50 million in its year ended
December 31, 1996.

- SISKIN STEEL & SUPPLY COMPANY, INC. Siskin Steel & Supply Company, Inc.
("Siskin") operates four full-line metals service centers in the
southeastern United States, which generated annual net sales in excess of
$150 million in its fiscal year ended June 30, 1996. This acquisition
established the Company's position in the region and significantly
improved the Company's geographic diversification.

1997

- AMI METALS, INC. AMI Metals, Inc. ("AMI") operates six metals service
centers spanning the United States, which generated annual net sales in
excess of $75 million in its fiscal year ended February 28, 1997 from
processing and distributing aluminum products primarily for the aerospace
industry.

- AMALCO METALS, INC. Amalco Metals, Inc. ("Amalco") operates one metals
service center in the San Francisco area that specializes in precision
cut aluminum plate and sheet products for the electronics industry and
that generated annual net sales in excess of $25 million in its fiscal
year ended April 30, 1997.

RECENT DEVELOPMENTS

- SSA. On October 1, 1997, the Company acquired 100% of the outstanding
common stock of Service Steel Aerospace Corp. ("SSA") for $26 million in
cash and repayment of approximately $14 million in debt. SSA operates
metals service centers in Tacoma, Washington; North Canton, Ohio; and
Long Beach, California. SSA specializes in stainless and alloy specialty
steel products for the aerospace industry, thereby expanding the
Company's position in this growing industry. SSA's annual net sales in
its year ended December 31, 1996 were in excess of $40 million.

- PHOENIX. On October 8, 1997, the Company announced that it has agreed in
principle to acquire all of the outstanding capital stock of Phoenix
Metals Company ("Phoenix"), subject to negotiation of a definitive
agreement and successful completion of due diligence. Phoenix operates
metals service centers specializing in non-ferrous products in
Birmingham, Alabama; Atlanta, Georgia; Charlotte, North Carolina; and
Tampa, Florida. The Company believes that the acquisition of Phoenix,
which in its fiscal year ended February 28, 1997 had annual net sales in
excess of $110 million, would enhance the Company's position in the
southeastern United States and complement Siskin's range of products.

GENERAL

Reliance was incorporated in California on February 3, 1939. Unless the
context otherwise requires, all references to the term "Company" include
Reliance and its subsidiaries. The Company's principal executive offices are
located at 2550 East 25th Street, Los Angeles, California 90058, and its
telephone number is (213) 582-2272.

5
<PAGE> 7

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by:
The Company.................................... 3,100,000(1)
The Selling Shareholders....................... 200,000
-----------
Total.................................. 3,300,000(1)
Total shares to be outstanding after the
Offering:...................................... 18,310,067(1)(2)
Use of Proceeds:................................. To repay approximately $67 million in debt
incurred in connection with acquisitions,
to fund potential acquisitions and capital
expenditures and to fund general working
capital purposes. See "Use of Proceeds."
Dividend Policy:................................. The Company intends to continue to pay
regular cash dividends on a quarterly
basis at the annual rate of $0.14 per
share, so long as funds are available
therefor and not required for the
business. The Company intends to continue
to consider the payment of an annual
special dividend. See "Dividend Policy."
NYSE Symbol...................................... RS
</TABLE>

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

(1) Does not include up to 495,000 shares of Common Stock to be sold if the
Underwriters exercise the over-allotment option granted by the Company. See
"Underwriting."

(2) Does not include options to acquire 1,066,250 shares of Common Stock that
are authorized, of which options to acquire 325,850 shares were outstanding
as of September 30, 1997.

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)

Set forth below are selected summary financial and operating data of the
Company as of and for the years ended December 31, 1992 through 1996, and as of
and for the six months ended June 30, 1996 and 1997, which have been derived
from the Company's financial statements for those years and periods. The
financial data for the years 1992 through 1996 have been derived from the
audited financial statements of the Company. Financial data for the six months
ended June 30, 1996 and 1997 are unaudited. In the opinion of management, the
unaudited interim financial data include all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of such data. The
information presented below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's consolidated financial statements, including the notes thereto,
appearing elsewhere in, and incorporated by reference into, this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------ ---------------------
1992 1993 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................... $345,702 $371,207 $446,866 $561,341(1) $653,975(1) $322,262(1) $445,415(1)
Cost of sales........................... 271,070 287,090 344,705 432,059 492,199 246,091 343,376
-------- -------- -------- -------- -------- -------- --------
Gross profit............................ 74,632 84,117 102,161 129,282 161,776 76,171 102,039
Warehouse, delivery, selling, general
and administrative expenses(2)........ 64,026 68,738 77,638 94,609 118,089 54,298 76,467
-------- -------- -------- -------- -------- -------- --------
Income from operations.................. 10,606 15,379 24,523 34,673 43,687 21,873 25,572
Other income (expense):
Interest expense...................... (2,543) (2,329) (2,120) (1,595) (3,940) (1,308) (4,798)
Other income.......................... 3,092(3) 1,921(3) 1,799(3) 2,318(3) 4,464 3,414 2,007
Equity in earnings (losses) of 50%-owned
company and joint venture............. 1,788(4) (38) 48 3,199 5,340 2,480 2,673
-------- -------- -------- -------- -------- -------- --------
Income before income taxes.............. 12,943 14,933 24,250 38,595 49,551 26,459 25,454
Income taxes............................ (5,370) (5,701) (9,840) (15,893) (19,761) (10,849) (10,156)
-------- -------- -------- -------- -------- -------- --------
Net income.............................. $ 7,573 $ 9,232 $ 14,410 $ 22,702 $ 29,790 $ 15,610 $ 15,298
======== ======== ======== ======== ======== ======== ========
Earnings per share(5)................... $ 0.67 $ 0.82 $ 1.14 $ 1.45 $ 1.90 $ 1.00 $ 0.99
======== ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding(5)........................ 11,342 11,282 12,624 15,591 15,680 15,681 15,456
OTHER DATA:
Depreciation expense.................... $ 3,513 $ 3,628 $ 4,290 $ 5,208 $ 8,464 $ 3,709 $ 5,947
Capital expenditures.................... 7,302 10,092 9,510 7,867 21,395 10,693 7,623
Cash dividends per share(5)............. $ 0.09 $ 0.10 $ 0.10 $ 0.10 $ 0.12 $ 0.08 $ 0.09
BALANCE SHEET DATA:
Working capital......................... $ 44,396 $ 60,790 $ 84,490 $100,731 $136,765 $101,862 $170,217
Total assets............................ 145,416 163,369 199,421 260,473 391,176 284,732 492,456
Long-term debt.......................... 19,600 37,989 8,532 30,350 107,450 48,850 177,550
Shareholders' equity.................... 83,446 90,101 149,983 163,917 192,642 178,952 199,769
</TABLE>

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

(1) Does not include consolidated revenues of $178.9 million, $86.4 million,
$92.9 million and $91.8 million for American Steel for the twelve months
ended December 31, 1996, the period July 1 to December 31, 1995, and the six
months ended June 30, 1997 and 1996, respectively, as this 50% investment is
accounted for by the equity method, whereby the Company includes 50% of
American Steel's consolidated earnings in the Company's net income and
earnings per share amounts.

(2) Includes depreciation and amortization amounts.

(3) Includes income received from rental agreements with and administrative
services provided to FRLP (defined in "Management's Discussion and Analysis
of Financial Condition and Results of Operations"), which was dissolved
effective September 30, 1995.

(4) Includes approximately $3,100 related to a one-time LIFO reserve reduction
resulting from the contribution of inventory to a joint venture, 50% of
which was owned by the Company, effective January 1, 1992.

(5) Amounts have been retroactively adjusted to reflect the March 1993 5% stock
dividend, to reflect the 2:1 stock split effective May 1994, and to reflect
the June 1997 3:2 stock split.

7
<PAGE> 9

RISK FACTORS

This Prospectus and certain of the documents incorporated herein by
reference contain forward-looking statements that involve risks and
uncertainties. Statements in this Prospectus regarding future financial
performance and other statements containing the words "expect," "believe,"
"anticipate," "project," "estimate," "predict," "intend" and similar expressions
are forward-looking statements. The Company's actual results could differ
materially from those anticipated in such forward-looking statements as a result
of a variety of factors, including those set forth in the following risk factors
and elsewhere in this Prospectus. In evaluating an investment in the Company,
prospective investors should consider the following factors, along with other
information in the Prospectus, including the financial statements and notes,
before investing in the Common Stock:

IMPACT OF CHANGING METAL PRICES ON THE COMPANY'S
RESULTS OF OPERATIONS

The Company's principal products are carbon steel, aluminum, and stainless
steel. The metals industry is highly cyclical in nature, and the respective
prices that the Company may pay for metals and the prices that the Company may
charge for its products, will be influenced by a variety of factors that are not
in the Company's control, including general economic conditions (both domestic
and international), competition, production levels, import duties and other
trade restrictions, and currency fluctuations. Changing prices of metals may
cause the Company's sales and results of operations to fluctuate. The Company
has no long-term, fixed-price metals purchase contracts, but purchases at
prevailing market prices at the time the Company places orders, with appropriate
discounts for quantity purchases. Reliance generally does not enter into fixed-
price sales contracts with customers for periods longer than three months. The
change in the Company's effective cost of metals and competitive conditions will
affect the Company's prices to its customers and, accordingly, the Company's net
sales and net income. The diversity of the Company's products reduces the
Company's dependence upon and the effect of fluctuations in any individual
segment of the metals industry. The Company does not expect that changing prices
will have a material adverse effect on the Company's results of operations,
financial condition or liquidity. See "Business -- Suppliers" and "Business --
Customers."

CYCLICAL DEMAND FOR COMPANY PRODUCTS

Many of the Company's products are sold to industries that experience
significant fluctuations in demand based on economic conditions, energy prices,
or other factors beyond the control of the Company. Because the Company offers
more than 20,000 different products to more than 33,000 customers operating in a
variety of industries and geographic regions, the Company believes that such
fluctuations in individual industries or regions will not significantly impact
the Company's performance. No assurance can be given, however, that the Company
will be able to increase or maintain its level of sales or profitability in
periods of economic stagnation or downturn. See "Business -- Customers."

COMPETITION

The principal markets served by the Company are highly competitive.
Competition is based principally on price, service, production, inventory
availability and delivery scheduling. Some of the Company's competitors may have
greater financial resources than the Company. See "Business -- Competition."

DEPENDENCE ON SUPPLIERS

The Company's strategy for growth by expansion of its existing operations
and by acquisitions is based in part upon its ability to purchase sufficient
metals at competitive prices. The Company believes that the announced capacity
by producers of steel, aluminum, and other metals will be sufficient to meet the
Company's projected needs. However, no assurance can be given that sufficient
quantities of the necessary metals will be available at competitive prices. See
"Business -- Suppliers."

8
<PAGE> 10

DEPENDENCE ON KEY PERSONNEL

Although the Company has purposefully trained successors to its key
officers and employees, the success of the Company's business may be dependent
on the continued services of key personnel, none of whom has an employment
agreement with the Company. By virtue of the Company's operating style, the loss
of any of these individuals could have an adverse impact on the operations or
financial condition of the Company. Moreover, there can be no assurance that the
Company will be able to attract and retain additional qualified personnel when
needed.

SHARES ELIGIBLE FOR PUBLIC SALE

The market price of the Company's Common Stock could be adversely affected
by the sale of shares of the Common Stock owned by the Company's existing
shareholders. Certain existing shareholders who are officers or directors of the
Company (the "Contracting Shareholders"), who together own 6,764,399 shares of
the Company's Common Stock, have agreed not to sell any such shares until the
expiration of 180 days following the date of this Prospectus, without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation.

OWNERSHIP BY PRINCIPAL SHAREHOLDERS

After giving effect to this offering (but without giving effect to the
exercise of any options, including the over-allotment option), William T. Gimbel
and his immediate family will own 13.3% of the outstanding shares of Common
Stock and his sister, Florence Neilan, will own 15.3% of the outstanding shares
of Common Stock. As a result, these shareholders may have the ability to control
substantially all matters requiring approval of shareholders.

SUITABLE ACQUISITION CANDIDATES

The Company's growth has been the result primarily of its ability to
acquire strategic businesses economically and make them profitable divisions or
subsidiaries of the Company. There is no assurance that suitable acquisition
candidates will continue to be available or, if they are, that the Company will
have sufficient qualified personnel and financial resources available when
needed to complete successfully any acquisition and integration of these
businesses into Reliance's operations. Moreover, the additional indebtedness
incurred to pay for the acquisitions, if any, could adversely affect the
Company's liquidity and financial strength. See "Business -- Business Strategy."

REGULATORY MATTERS

The Company's operations are regulated by federal, state and local
regulatory authorities. Although the Company believes that it is and has been in
substantial compliance with applicable laws and regulations, there is no
assurance that regulations will not be changed in the future in a manner that
would place significant constraints upon the Company's operations or make such
operations prohibitively expensive or physically impossible. The Company does
not expect that any such environmental matters will have a material adverse
impact on the Company's results of operations, financial condition or liquidity.
See "Business -- Government Regulation."

PREFERRED STOCK; ANTI-TAKEOVER PROVISIONS

The Company is authorized to issue 5,000,000 shares of Preferred Stock, no
par value, with the rights, preferences, privileges and restrictions thereof to
be determined by the Company's Board of Directors, without a vote of the holders
of Common Stock. Rights could be granted to holders of Preferred Stock that
could reduce the attractiveness of the Company as a potential takeover target,
make the removal of management more difficult or adversely affect the rights of
holders of Common Stock. No Preferred Stock is currently outstanding, and the
Company has no present intention to issue any. In addition, the Company's
staggered Board of Directors may discourage unsolicited take-over bids by third
parties.

9
<PAGE> 11

USE OF PROCEEDS

The net proceeds to the Company from the offering of the Shares are
expected to total approximately $82.7 million ($96.0 million if the
Underwriters' over-allotment option is exercised in full), after deducting
underwriting discounts, commissions and estimated offering expenses, based on an
assumed sale price to the public of $28 1/4 per share, which was the closing
sale price per share of the Common Stock on October 9, 1997, as reported on the
NYSE Composite tape.

The net proceeds to the Company will be used to repay debt incurred in
connection with recent acquisitions, to fund potential acquisitions and capital
expenditures and for working capital and general corporate purposes. The debt
was initially incurred on the Company's current revolving bank line of credit,
which provides up to $125 million to the Company, but is expected to be
refinanced by a new syndicated credit facility which would provide up to $200
million to the Company. As of the date of this Prospectus, the Company had drawn
down approximately $67 million of this line of credit, which bears interest at
variable rates based on the bank's reference rate, the rate payable on
certificates of deposit or an offshore rate, depending on the Company's
election. The Company expects that, after the offering, the Company will have
minimal bank debt outstanding, and certain other debt. See Note 4 of Notes to
Consolidated Financial Statements. The current interest rates payable by the
Company on its outstanding borrowings on this line of credit range from 6.025%
to 6.15%. The line of credit matures on July 31, 1999, and the syndicated credit
facility is expected to mature no later than December 31, 2002.

The Company from time to time engages in discussions or negotiations
regarding acquisitions and may enter into understandings, arrangements or
agreements, written or oral, regarding the acquisition of one or more companies.
The Company is negotiating with a possible acquisition candidate at the present
time. The Company expects to use a portion of the proceeds from this offering to
fund such acquisitions. On October 8, 1997, the Company announced that it had
reached an agreement in principle to acquire 100% of the outstanding capital
stock of Phoenix, subject to negotiation of a definitive agreement and
successful completion of due diligence. If this transaction is consummated, the
Company expects that a portion of the net proceeds, if any remain after
repayment of the debt, will be used to pay the purchase price.

10
<PAGE> 12

CAPITALIZATION

The following table sets forth the capitalization of the Company (in
thousands, except share amounts) as of June 30, 1997. This table does not
reflect the SSA acquisition on October 1, 1997 or the proposed Phoenix
acquisition announced in October 1997. The Company acquired SSA for a purchase
price of approximately $26 million and repaid approximately $14 million in debt.
The Company, subject to negotiation of a definitive agreement and successful
completion of due diligence, has agreed in principle to purchase the outstanding
common stock of Phoenix.

<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------------
ACTUAL AS ADJUSTED(1)
<S> <C> <C>
Current Portion of Long-term Debt................................ $ 100 $ 100
Long-term Debt................................................... 177,450 94,754
-------- --------
Total Debt............................................. 177,550 94,854
Shareholders' Equity:
Preferred Stock
Authorized Shares -- 5,000,000
Issued and outstanding -- None
Common Stock:
Authorized Shares -- 20,000,000
Issued and outstanding shares -- 15,160,671 actual;
18,260,671 as adjusted.................................... 60,297 142,993
Retained Earnings.............................................. 139,472 139,472
-------- --------
Total Shareholders' Equity............................. 199,769 282,465
-------- --------
Total Capitalization................................... $377,319 $377,319
======== ========
</TABLE>

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

(1) Adjusted to reflect the sale of 3,100,000 Shares offered by the Company
hereby at an assumed offering price of $28 1/4 per share based on the
closing sale price on October 9, 1997 and the anticipated use of estimated
net proceeds therefrom, but excludes the sale of Shares issuable upon
exercise of the over-allotment option. See "Use of Proceeds."

11
<PAGE> 13

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is listed on the NYSE under the symbol "RS." The
following table sets forth the high and low reported sale prices of the Common
Stock on the NYSE Composite Tape for the calendar quarters indicated.

<TABLE>
<CAPTION>
HIGH* LOW*
------ ------
<S> <C> <C>
1995
1st Quarter.............................................. $ 9.50 $ 7.58
2nd Quarter.............................................. 9.92 7.92
3rd Quarter.............................................. 13.33 9.75
4th Quarter.............................................. 13.83 11.00
1996
1st Quarter.............................................. 16.43 12.00
2nd Quarter.............................................. 26.00 15.42
3rd Quarter.............................................. 25.50 21.17
4th Quarter.............................................. 27.08 22.83
1997
1st Quarter.............................................. 23.17 17.58
2nd Quarter.............................................. 26.25 19.58
3rd Quarter.............................................. 32.63 25.63
4th Quarter (through October 9, 1997).................... 28.25 26.50
</TABLE>

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

* Adjusted to reflect the 3:2 stock split in June 1997.

On October 9, 1997, the last sale price of the Common Stock as reported on
the NYSE was $28 1/4 per share. As of October 8, 1997, there were 294 holders of
record of the Common Stock.

DIVIDEND POLICY

The Company has paid quarterly cash dividends on its Common Stock for
approximately 37 years. In 1995, the Company paid quarterly cash dividends at
the rate of $0.017 per share and paid a special annual dividend of $0.03 per
share. In 1996, the Company paid regular quarterly cash dividends at the rate of
$0.02 per share and paid a special annual dividend of $0.04 per share. In May
1997, the Company announced that the quarterly dividends for the remainder of
1997 would be $0.035 per share. The Company paid a special annual dividend of
$0.05 per share in 1997. From time to time, the Company has also paid stock
dividends. Most recently, the Company effected a 3:2 stock split in June 1997.

The Company currently intends to continue paying regular quarterly cash
dividends at the annual rate of $0.14 per share and may pay special annual
dividends as it has done for the last six years, but the Board of Directors may
reconsider or revise this policy from time to time based on conditions then
existing, including the Company's earnings, financial condition and capital
requirements, as well as other factors the Board of Directors may deem relevant.
It is likely that the Board of Directors will continue to declare and pay
dividends in the future, provided that earnings are legally available for
dividends, but the Board also intends to continue its present policy of
retaining a portion of earnings for reinvestment in the operations of the
Company and the expansion of its business. The Company can give no assurance,
however, that either cash or stock dividends will be paid in the future, or
that, if paid, the dividends will be at the same amount or frequency as paid in
the past.

The bank line of credit agreement and the private placement debt agreements
for the senior unsecured notes contain covenants which, among other things,
require the maintenance of minimum working capital and certain net worth ratios
that may restrict the Company's ability to pay dividends. In addition, the
syndicated line of credit agreement would limit cash dividends payable by the
Company to not more than 25% of the Company's net income for the immediately
preceding fiscal year commencing in 1998. In the past five years, the Company
has paid between 6% and 10% of its earnings to its shareholders as dividends.

12
<PAGE> 14

SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)

Set forth below are selected summary financial and operating data of the
Company as of and for the years ended December 31, 1992 through 1996, as of and
for the six months ended June 30, 1996 and 1997, which have been derived from
the Company's financial statements for those years and periods. The financial
data for the years 1992 through 1996 have been derived from the audited
financial statements of the Company. Financial data for the six months ended
June 30, 1996 and 1997 are unaudited. In the opinion of management, the
unaudited interim financial data include all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of such data. The
information presented below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's consolidated financial statements, including the notes thereto,
appearing elsewhere in, and incorporated by reference into, this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------ ---------------------
1992 1993 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................ $345,702 $371,207 $446,866 $561,341(1) $653,975(1) $322,262(1) $445,415(1)
Cost of sales.................... 271,070 287,090 344,705 432,059 492,199 246,091 343,376
-------- -------- -------- -------- -------- -------- --------
Gross profit..................... 74,632 84,117 102,161 129,282 161,776 76,171 102,039
Warehouse, delivery, selling,
general and administrative
expenses(2).................... 64,026 68,738 77,638 94,609 118,089 54,298 76,467
-------- -------- -------- -------- -------- -------- --------
Income from operations........... 10,606 15,379 24,523 34,673 43,687 21,873 25,572
Other income (expense):
Interest expense............... (2,543) (2,329) (2,120) (1,595) (3,940) (1,308) (4,798)
Other income................... 3,092(3) 1,921(3) 1,799(3) 2,318(3) 4,464 3,414 2,007
Equity earnings (losses) of 50%-
owned company and joint
venture........................ 1,788(4) (38) 48 3,199 5,340 2,480 2,673
-------- -------- -------- -------- -------- -------- --------
Income before income taxes....... 12,943 14,933 24,250 38,595 49,551 26,459 25,454
Income taxes..................... (5,370) (5,701) (9,840) (15,893) (19,761) (10,849) (10,156)
-------- -------- -------- -------- -------- -------- --------
Net Income....................... $ 7,573 $ 9,232 $ 14,410 $ 22,702 $ 29,790 $ 15,610 $ 15,298
======== ======== ======== ======== ======== ======== ========
Earnings per share(5)............ $ 0.67 $ 0.82 $ 1.14 $ 1.45 $ 1.90 $ 1.00 $ 0.99
======== ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding(5)................. 11,342 11,282 12,624 15,591 15,680 15,681 15,456
OTHER DATA:
Depreciation expense............. $ 3,513 $ 3,628 $ 4,290 $ 5,208 $ 8,464 $ 3,709 $ 5,947
Capital expenditures............. 7,302 10,092 9,510 7,867 21,395 10,693 7,623
Cash dividends per share(5)...... $ 0.09 $ 0.10 $ 0.10 $ 0.10 $ 0.12 $ 0.08 $ 0.09
BALANCE SHEET DATA:
Working capital.................. $ 44,396 $ 60,790 $ 84,490 $100,731 $136,765 $101,862 $170,217
Total assets..................... 145,416 163,369 199,421 260,473 391,176 284,732 492,456
Long-term debt................... 19,600 37,989 8,532 30,350 107,450 48,850 177,550
Shareholders' equity............. 83,446 90,101 149,983 163,917 192,642 178,952 199,769
</TABLE>

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

(2) Includes depreciation and amortization amounts.

(3) Includes income received from rental agreements with and services provided
to FRLP (as defined in "Management's Discussion and Analysis of Financial
Condition and Results of Operation"), which was dissolved effective
September 30, 1995.

(4) Includes approximately $3,100 related to a one-time LIFO reserve reduction
resulting from the contribution of inventory to a 50%-owned joint venture
effective January 1, 1992.

(5) Amounts have been retroactively adjusted to reflect the March 1993 5% stock
dividend, the 2:1 stock split effective May 1994, and the June 1997 3:2
stock split.

13
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following should be read in conjunction with the "Selected Consolidated
Financial Data" and the Company's Consolidated Financial Statements and the
related notes thereto included elsewhere in this Prospectus.

OVERVIEW

During 1996 and the first six months of 1997, the results for the Company's
core metals service centers improved from 1995, although the Company experienced
pricing pressures for many of its products, particularly nonferrous and
stainless steel products. Sales prices to customers decreased because of the
lower costs of those materials. Competitive pricing pressures caused the
Company's gross profit margins on a first-in, first-out basis, to be lower for
those products in 1996 and the first six months of 1997 compared to 1995. The
Company believes its results have been less sensitive to the economic trends
affecting the industry because its operations are geographically diversified, it
has a wide range of products, and its customer base and the industries to which
it sells are highly diversified.

Reliance's diversification and financial performance have benefited from
several significant acquisitions during the reported periods, each of which has
been immediately accretive to earnings. See "Business -- Business Strategy."
Additionally, the Company's successful efforts to continue to expand through
strategic acquisitions and to increase its physical capacities through capital
expenditure programs have enabled it to lessen the impact of regional economic
recessions on the overall results of its operations. Management believes that
the Company is positioned to take full advantage of improved economic
environments, while at the same time it is poised to operate efficiently in less
favorable economies because of its tight cost controls, high inventory turnover
and diversification.

RECENT DEVELOPMENTS

On October 8, 1997, the Company announced that it has agreed in principle
to acquire all of the outstanding capital stock of Phoenix, subject to
negotiation of a definitive agreement and successful completion of due
diligence. Phoenix operates metals service centers specializing in non-ferrous
products in Birmingham, Alabama; Atlanta, Georgia; Charlotte, North Carolina;
and Tampa, Florida. The Company believes that the acquisition of Phoenix, which
for the twelve months ended February 28, 1997 had annual net sales in excess of
$110 million, would enhance the Company's position in the southeastern United
States and complement Siskin's range of products.

On October 1, 1997, the Company acquired 100% of the outstanding shares of
SSA, which is a metals service center with facilities located in Tacoma,
Washington; North Canton, Ohio; and Long Beach, California. SSA specializes in
stainless and alloy specialty steels for the aerospace industry. SSA's net sales
for the twelve months ended December 31, 1996 were approximately $43 million.
The Company paid $26 million in cash, which is subject to certain post-closing
adjustments, and repaid approximately $14 million of SSA's debt.

14
<PAGE> 16

RESULTS OF OPERATIONS

The following table sets forth certain income statement data for the
Company's metals service centers and Valex Corp. ("Valex") for each of the years
in the three-year period ended December 31, 1996 and for the six months ended
June 30, 1996 and 1997 (dollars are shown in millions and certain amounts may
not calculate due to rounding):

<TABLE>
<CAPTION>
1994 1995 1996 JUNE 30, 1996 JUNE 30, 1997
---------------- ---------------- ---------------- ---------------- ----------------
% OF NET % OF NET % OF NET % OF NET % OF NET
$ SALES $ SALES $ SALES $ SALES $ SALES
---- --------- ---- --------- ---- --------- ---- --------- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales:
Metals service
centers.............. $417 93.4% $520 92.7% $608 92.9% $292 90.5% $426 95.8%
Valex Corp............. 29 6.6 41 7.3 46 7.1 30 9.5 19 4.2
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total sales.......... 447 100.0 561 100.0 654 100.0 322 100.0 445 100.0
Gross profit:
Metals service
centers.............. 93 20.8 116 20.7 145 22.2 64 19.9 96 21.6
Valex Corp............. 9 2.1 13 2.3 16 2.5 12 3.7 6 1.3
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total gross
profit:............ 102 22.9 129 23.0 162 24.7 76 23.6 102 22.9
Operating expenses:
Metals service
centers.............. 72 16.0 87 15.5 108 16.5 48 15.0 72 16.2
Valex Corp............. 6 1.3 8 1.4 10 1.5 6 1.8 4 .9
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total operating
expenses........... 78 17.4 95 16.9 118 18.0 54 16.8 76 17.2
Income from operations:
Metals service
centers.............. 21 4.7 29 5.2 37 5.7 16 4.9 24 5.3
Valex Corp............. 3 .8 5 .9 6 1.0 6 1.9 2 .4
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total operating
income:............ $ 25 5.5% $ 35 6.1% $ 44 6.7% $ 22 6.8% $ 26 5.7%
==== ===== ==== ===== ==== ===== ==== ===== ==== =====
FIFO income from
operations............. $ 26 5.8% $ 44 7.8% $ 38 5.9% $ 22 6.8% $ 28 6.2%
==== ===== ==== ===== ==== ===== ==== ===== ==== =====
</TABLE>

Substantially all inventories for the Company's metals service centers have
been stated on the last-in, first-out ("LIFO") method, with the exception of the
inventory of AMI Metals, Inc. ("AMI"). The Company uses the LIFO method of
inventory valuation because it results in a better matching of costs and
revenues. Under the LIFO method, the effect of suppliers' price increases or
decreases is reflected directly in the cost of goods sold. During periods of
increasing prices of metals, which the Company is currently experiencing, LIFO
accounting will cause reported income to be lower than would otherwise result
from the use of the first-in, first-out ("FIFO") method of inventory valuation.
As AMI purchases the majority of its inventory for specific customer orders, the
FIFO method is used because it more appropriately matches revenue and costs. The
table above includes income from operations and the discussions which follow
include analysis as if the Company used the FIFO method. This information is for
supplementary purposes only in order to facilitate a comparison of the Company's
results of operations with those of other similar companies who use the FIFO
method. Inventories for Valex have been stated on the FIFO method.

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

Consolidated net sales increased $123.1 million, or 38.2%, compared to the
first six months of 1996. The increase in metals service centers' net sales of
$134.7 million, or 46.2%, was due primarily to the inclusion of sales from CCC
Steel, Inc. ("CCC Steel"), which was acquired on April 3, 1996; from Siskin
Steel & Supply Company, Inc. ("Siskin"), which was acquired on October 1, 1996;
from AMI, which was acquired on April 2, 1997; and from Amalco Metals, Inc.
("Amalco"), which was acquired on April 30, 1997 (collectively, the
"Acquisitions"). The sales increase reflects an increase of 74.7% in tons sold
which was offset by a decrease in the average sales price per ton of 15.4% for
the first six months of 1997 compared to the corresponding period of 1996. The
increase in tons sold was primarily due to the inclusion of the sales of the
Acquisitions; however, excluding the sales of the Acquisitions, metals service
centers reported an 8.2%

15
<PAGE> 17

increase in tons sold in the first six months of 1997 as compared to the same
period of 1996. The average selling price for the Company's products has
decreased in response to generally lower selling prices and changes in product
mix.

Net sales of Valex decreased to $18.9 million in the first six months of
1997, compared to its record sales of $30.5 million in the same period of 1996.
The decrease in Valex's sales is due to the slowdown in the construction
activities of the semiconductor manufacturing industry. The Company expects
Valex's sales to remain constant through 1998 and has seen evidence throughout
the semiconductor manufacturing industry of a slight improvement in the first
two calendar quarters of 1997.

Included in other income for the first six months of 1997 is a net gain of
$1.0 million realized on the sale of real property at the Santa Clara,
California location. Included in the first six months of 1996 is a net gain of
$1.5 million realized on the sale of real property near Los Angeles.

Total gross profit increased $25.9 million, or 34.0%, in the first six
months of 1997 compared to the first six months of 1996. Expressed as a
percentage of sales, gross profit decreased from 23.6% in 1996 to 22.9% in 1997.
The decrease was primarily due to declining margins for Valex and an increase in
the LIFO reserve of $2.2 million due to an increase in current replacement
costs, especially those of heat treated aluminum products. On a FIFO basis,
gross profit for the metals service centers increased to 23.0% of sales for the
first six months of 1997, from 22.0% for the first six months of 1996. This
increase was mainly due to firming prices of the Company's products in 1997
compared to 1996. Valex's gross profit of $6.0 million for the 1997 period
decreased 49.9% from the same period of 1996 and, as a percentage of sales
decreased from 39.2% to 31.7%. The decreases were due to lower sales volume, a
more competitive sales environment and increased customer demand for certain
lower margin products experienced in 1997, as compared to the first six months
of 1996.

Warehouse, delivery, selling and general and administrative ("G&A")
expenses increased $19.9 million, or 39.4%, in the first six months of 1997
compared to the corresponding period of 1996 and amounted to 15.8% and 15.7% of
sales, respectively. The dollar increase in expenses reflects the increase in
sales volume for the 1997 period, which includes the sales and related expenses
of the Acquisitions.

Depreciation and amortization expense increased 60.3% during the six months
ended June 30, 1997 compared to the corresponding period of 1996. This increase
is primarily due to the inclusion of depreciation expense along with the
amortization of goodwill related to the Acquisitions.

Interest expense increased by $3.5 million due to increased borrowings
during the first six months of 1997 as compared to the corresponding period of
1996 to fund the Acquisitions.

Earnings per share for the six month periods ended June 30, 1997 and 1996
of $0.99 and $1.00, respectively, includes $0.04 and $0.06 per share,
respectively, attributable to the sale of the real property in each of those
periods.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995 (SHARE AND
PER SHARE AMOUNTS HAVE BEEN RETROACTIVELY ADJUSTED TO REFLECT THE JUNE 1997 3:2
STOCK SPLIT)

Consolidated net sales increased $92.6 million, or 16.5%, for the year 1996
compared to 1995. The increase in metals service centers' net sales of $87.4
million, or 16.8%, reflects an increase in tons sold of 52.0% and a decrease in
the average selling price per ton of 22.6% for the 1996 period compared to 1995.
These changes are primarily due to additional sales volume and a change in
product mix during 1996. The 1996 sales reflect the inclusion of three months of
net sales of Siskin (acquired October 1, 1996), nine months of net sales of CCC
Steel (acquired April 3, 1996), and twelve months of net sales of the Los
Angeles business received October 1, 1995, upon the dissolution of Feralloy
Reliance Company, L.P. ("FRLP"), a joint venture in which the Company owned a
50% interest These operations sell a significant volume of carbon steel
products, which generally have lower selling prices than other products sold by
the Company. The average selling prices decreased for all products for the 1996
period compared to 1995, with the most significant decreases in aluminum and
stainless steel products.

16
<PAGE> 18

Consolidated net sales include net sales of Valex, which increased $5.2
million, or 12.7%, due to the accelerated construction activities of the
semiconductor manufacturing industry in 1996 as compared to 1995. Substantially
all of this increase occurred in the first half of 1996. Declining sales in the
second half of 1996, as compared to the first half of 1996, were due to the
slowdown in the construction activities in the semiconductor manufacturing
industry. While the Company initially responded to the slowdown by reducing the
Valex workforce and other costs in 1996, the Company is also positioning Valex
for expected longer term growth.

Included in other income for 1996 is a gain of $1.5 million realized on the
sale of the real estate at the Bralco Metals facility near Los Angeles.

Total gross profit increased $32.5 million, or 25.1%, compared to 1995.
Expressed as a percentage of sales, gross profit increased to 24.7% for 1996,
compared to 23.0% in 1995. On a FIFO basis, gross profit in 1996 for the metals
service centers was 23.0% of sales, compared to 24.1% in 1995. The decline in
FIFO gross profit for the metals service centers resulted primarily from
declining prices for stainless steel and aluminum products during 1996. The
decrease in the LIFO reserve of $5.3 million during 1996 was caused mainly by a
decrease in the costs of the Company's raw materials. Valex's gross profit
percentage increased to 35.6% of sales for 1996, compared to 31.7% for the 1995
year. The 1996 gross profit percentage improved from 1995 due to the increased
sales volume, in the first six months of 1996, and production efficiency gains
realized from recent capital improvements.

G&A expenses increased $20.2 million, or 22.6%, for 1996 compared to 1995.
These expenses represented 16.8% and 15.9% of sales in 1996 and 1995,
respectively. The dollar increase in expenses reflects the increase in sales
volume for the 1996 period, which includes the expenses for Siskin, CCC Steel
and the Los Angeles service center received upon the dissolution of FRLP. The
percentage increase includes expenses (approximately $1 million) associated with
terminating the Company's defined benefit pension plan. During 1996, the Company
implemented a 401(k) plan to replace its pension plan.

Income from operations increased 26% from $34.7 million in 1995 to $43.7
million in 1996. The increase was attributable to the decrease in the current
inventory replacement costs as discussed above, and the inclusion of operating
income from companies acquired in 1996. Income from operations increased $7.8
million, or 26.5%, and $1.2 million, or 23.4%, in 1996, compared to 1995, for
the metals service centers and Valex, respectively.

Interest expense increased $2.3 million in 1996 compared to 1995 due to an
increase in the average debt outstanding during 1996. This increase was due to
funding the acquisitions of CCC Steel in April 1996 and Siskin in October 1996
through the Company's revolving credit agreement and issuance of promissory
notes in connection with the Siskin acquisition.

Equity in earnings from a 50%-owned company and a joint venture increased
$2.1 million in 1996 due to the acquisition of a 50% interest in American Steel,
L.L.C. ("American Steel") as of July 1, 1995, resulting in twelve months of
earnings included in 1996 compared to six months included in 1995. The increase
was also due to the dissolution of FRLP in September 1995.

The effective income tax rate of the Company decreased from 41.2% in 1995
to 39.9% in 1996, mainly due to a decrease in the effective state tax rate
resulting from a change in the geographical sales mix when the sales of new
subsidiaries were consolidated.

Earnings per share for 1996 of $1.90 includes $0.06 per share attributable
to the sale of real estate discussed above.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994 (SHARE AND
PER SHARE AMOUNTS HAVE BEEN RETROACTIVELY ADJUSTED TO REFLECT THE JUNE 1997 3:2
STOCK SPLIT)

Consolidated net sales increased $114.5 million, or 25.6%, for the year
1995 compared to 1994. These amounts include net sales of Valex, which increased
$11.5 million, or 39.3%, due to the accelerated construction activities of the
semiconductor manufacturing industry and Valex's increased capacity to meet
demand. The increase in metals service centers' net sales of $102.9 million, or
24.6%, reflects an increase in

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tons sold of 8.4% and an increase in the average sales price per ton of 15.3%.
For the first nine months of 1995, there was an increase in tons sold of 1% and
an increase in the average sales price per ton of 23.7%. The primary reason
these percentages changed during the fourth quarter was due to the additional
sales of the Los Angeles business received upon the dissolution of FRLP which
increased volume and reduced average sales prices, as this operation handles
carbon steel products which have a lower market value than aluminum or stainless
steel products. The volume increase in the metals service centers reflects a
general rise in overall economic activity in the Company's market areas. The
1995 results also reflect increased costs of metals and stronger demand in most
of the industries to which the Company's products are sold, as compared to 1994.

Total gross profit increased $27.1 million, or 26.6%, in 1995 compared to
1994. Expressed as a percentage of sales, gross profit remained relatively
constant at 23.0% for 1995, compared to 22.9% in 1994. On a FIFO basis, gross
profit in 1995 for the metals service centers was 24.1% of sales, compared to
22.5% in 1994. The increase in the LIFO reserve of $9.0 million during 1995 was
caused by an increase in the costs of the Company's metals as well as an
increase in inventory quantities in response to higher sales volume and the
inventory received upon the dissolution. Valex's gross profit remained
substantially the same at 31.7% of sales for 1995, compared to 32.0% for 1994.

G&A expenses increased $16.1 million, or 21.9%, for 1995 compared to 1994.
These expenses represented 16.9% and 17.4% of sales in 1995 and 1994,
respectively. However, the increase in expenses of 21.9% was less than the
increase in sales of 25.6%, due to the Company's efforts to control costs and
the fixed cost components of those expenses.

Income from operations increased from $24.5 million in 1994 to $34.7
million in 1995, or 41.5%, because the increase in gross profit dollars from the
increased sales volume exceeded the related increase in operating expenses.
Income from operations increased $8.4 million, or 40.3%, and $1.7 million, or
49%, in 1995, compared to 1994, for the metals service centers and Valex,
respectively.

Interest expense decreased $0.5 million in 1995 compared to 1994 despite an
increase in the average debt outstanding during the last two quarters of 1995,
which was mostly offset by generally lower interest rates during that period.
Proceeds from the Company's initial public offering in September 1994 were used
to pay off all outstanding bank debt, which reduced average debt outstanding and
interest expense during the fourth quarter of 1994. Borrowings were made in the
third quarter of 1995 to fund a portion of the acquisition of a 50% interest in
American Steel and to pay off debt related to the Los Angeles operations upon
the dissolution of FRLP.

Equity earnings from a 50%-owned company and joint venture increased in
1995 due to the acquisition of a 50% interest in American Steel as of July 1,
1995, and due to the dissolution of FRLP.

The effective income tax rate of the Company increased from 40.6% in 1994
to 41.2% in 1995, mainly due to the tax effect of the dissolution of FRLP.

LIQUIDITY AND CAPITAL RESOURCES (SHARE AND PER SHARE AMOUNTS HAVE BEEN
RETROACTIVELY ADJUSTED TO REFLECT THE JUNE 1997 3:2 STOCK SPLIT)

At June 30, 1997, working capital amounted to $170.2 million compared to
$136.8 million at December 31, 1996 and $100.7 million at December 31, 1995. The
increase was primarily due to an increase in accounts receivable resulting from
higher sales levels in the first six months of 1997, as well as working capital
obtained from the Acquisitions. The Company's capital requirements are primarily
for working capital, acquisitions and capital expenditures for continued
improvements in plant capacities and material handling and processing equipment.

The Company's primary sources of liquidity are from internally generated
funds from operations and the Company's revolving line of credit. In October
1997, the Company expects to enter into a credit agreement with six banks. The
Company's borrowing limit under the revolving line of credit established under
this agreement would be increased to $200 million. Prior to the syndicated line
of credit, the Company's line of credit with one lender had been increased to
$125 million in March 1997. The syndicated credit agreement would allow the
Company to use up to $175 million of the line of credit to make acquisitions.

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<PAGE> 20

In September 1997 and in November 1996, the Company entered into agreements
with insurance companies for private placements of debt in the aggregate amounts
of $65 million and $75 million, respectively. The proceeds of the debt funded in
September 1997 were used to refinance the borrowings under the Company's
revolving credit facility made to fund the acquisitions of AMI and Amalco and
borrowings for general working capital purposes. The proceeds of the debt funded
in January 1997 were used to pay off the $65 million of promissory notes issued
for the acquisition of Siskin with the balance of $10 million applied to reduce
the borrowings under the Company's revolving credit facility. The senior notes
that were issued in the private placements have maturity dates ranging from 2002
to 2009 and bear interest at rates ranging from 6.76% to 7.37% per annum.

On April 30, 1997, the Company acquired 100% of the outstanding shares of
Amalco, which is a metals service center located in the San Francisco area.
Amalco specializes in precision cut aluminum plate and sheet products. It is
expected that the business of Amalco will be combined with the Company's
existing metals service center in Santa Clara, California. The combined
operation will be housed in a new, larger, state-of-the-art facility in Union
City, California, which is scheduled to be completed early in 1998. Amalco's net
sales for the twelve months ended April 30, 1997 were approximately $26 million.
The Company paid approximately $6.7 million in cash and repaid approximately
$5.9 million of Amalco's debt.

On April 2, 1997, the Company acquired 100% of the outstanding capital
stock of AMI for approximately $38.5 million and invested approximately $4.3
million in repayment of AMI's debt. AMI operates metals service centers in
Fontana, California; Wichita, Kansas; Swedesboro, New Jersey; Brentwood,
Tennessee; Fort Worth, Texas; and Kent, Washington. AMI specializes in the
processing and distribution of aluminum plate, sheet and bar products for the
aerospace industry. AMI's net sales for the twelve months ended February 28,
1997 were approximately $77 million.

On October 1, 1996, the Company acquired 100% of the outstanding capital
stock of Siskin. Siskin is one of the leading, full-line operators of metals
service centers in the southeastern United States, operating from facilities in
Birmingham, Alabama; Spartanburg, South Carolina; and Chattanooga and Nashville,
Tennessee. Siskin's net sales for the twelve months ended June 30, 1996 were in
excess of $150 million. The Company paid $71 million in cash and assumed debt of
approximately $2.5 million.

In April 1996, the Company acquired all of the outstanding capital stock of
CCC Steel, one of the largest structural steel companies in the western United
States. It operates two metals service centers in Los Angeles, California and
Salt Lake City, Utah. For the twelve months ended December 31, 1996, CCC Steel
had net sales in excess of $50 million. The Company paid approximately $25
million in cash and assumed debt of approximately $12.6 million.

The decrease in cash provided by operations of $17.5 million during the six
month period ended June 30, 1997 compared to the corresponding 1996 period was
due principally to the increase in net accounts receivable, which is primarily
due to higher sales in the first six months of 1997, including the Company's
1997 acquisitions.

Capital expenditures, excluding acquisitions, were $7.6 million for the six
months ended June 30, 1997 and $21.4 million for the 1996 year. The Company had
no material commitments for capital expenditures either as of June 30, 1997 or
as of December 31, 1996. The Company anticipates that funds generated from
operations and funds available under its existing bank line of credit will be
more than sufficient to meet its working capital needs for the foreseeable
future, including the expansion of its facilities at certain of its metals
service centers planned for 1997.

In December 1994, the Board of Directors approved a Stock Repurchase Plan,
authorizing the Company to purchase up to 750,000 shares (increased to 1.5
million in February 1995) of its outstanding Common Stock. As of June 30, 1997,
the Company had repurchased a total of 1,351,500 shares of its Common Stock, at
an average purchase price of $11.37 per share, all of which are being treated as
authorized but unissued shares. The Company repurchased 373,800 shares of its
Common Stock during the six month period ended June 30, 1997, at an average cost
of $19.88 per share. The Company believes such purchases enhance shareholder
value and reflect its confidence in the long-term growth potential of the
Company.

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<PAGE> 21

INFLATION

The Company's operations have not been, nor are they expected to be,
materially affected by general inflation. Historically, the Company has been
successful in raising prices to its customers in periods of increasing metal
prices and has had to reduce prices to its customers in periods of declining
metal prices. Changes in metal prices, therefore, affect the Company's sales and
earnings.

SEASONALITY

The Company recognizes that some of its customers may be in seasonal
businesses, especially customers in the construction industry. As a result of
the Company's geographic, product and customer diversity, however, the Company's
operations have not shown any material seasonal trends, although the months of
November and December traditionally have been less profitable because of a
reduced number of working days for shipments of the Company's products and
holiday closures for some of its customers. There can be no assurance that
period-to-period fluctuations will not occur in the future. Results of any one
or more quarters are therefore not necessarily indicative of annual results.

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BUSINESS

GENERAL

Reliance is one of the largest metals service center companies in the
United States, serving customers throughout the United States through a network
of 38 metals service centers in 15 states. The Company provides materials
management metals processing services and distributes a full line of metal
products, including carbon, alloy, stainless and specialty steel, aluminum,
brass and copper to more than 33,000 customers in a broad range of industries.
The Company believes that, through its 97% owned subsidiary, Valex, it is also
the leading domestic manufacturer and distributor of electropolished and
chemically cleaned stainless steel tubing and fittings for use in the
semiconductor fabrication industry.

INDUSTRY OVERVIEW

Metals service centers acquire products from primary metals producers and
then process carbon steel, aluminum, stainless steel and other metals to meet
customer specifications, using techniques such as cutting-to-length (or
leveling), slitting, blanking, shape cutting, shearing and sawing. These
processing services save time, labor and expense for customers, thereby reducing
their overall manufacturing costs. Specialized equipment used to process the
metals requires high volume production to be cost effective. Many manufacturers
are not able or willing to invest in the necessary technology, equipment and
inventory to process the metals for their own manufacturing operations.
Accordingly, industry forces have created a niche in the market to allow metals
service centers, such as Reliance, to purchase, process and deliver metals to
end users in a more efficient and cost-effective manner than the end user could
achieve in dealing directly with the primary producer, or with an intermediate
steel processor. Industry analysts estimate that, historically, based on
tonnage, metals service centers and processors purchased approximately 30% of
all carbon industrial steel products, 45% of all stainless steel produced and
35% of all aluminum sold in the mill/distributor shared markets (which excludes
that sold for aluminum cans, among other things) in the United States. The
metals distribution industry had an estimated $40 billion in revenues in the
United States in 1996.

The metals service center industry is highly fragmented and intensely
competitive within localized areas or regions. Many of the Company's competitors
operate single stand-alone service centers. According to industry sources, the
number of intermediate steel processors and metals service center facilities in
the United States has been reduced from approximately 7,000 in 1980 to
approximately 3,400 in 1996. The Company believes that this consolidation trend
creates new opportunities for acquisitions.

The primary market for Valex's products is the worldwide semiconductor
manufacturing industry. After a significant period of growth from 1993 to 1996,
this industry experienced a significant slowdown in mid-1996, but, according to
industry analysts, there has been slight improvement in each of the first two
calendar quarters of 1997. Each year more semiconductor devices are being used
in more and different applications. The demands for process cleanliness increase
as the complexity of semiconductor devices increases.

Customers for Valex tubing and fittings include the semiconductor device
manufacturers, semiconductor equipment manufacturers, and other supporting
companies. The construction of new semiconductor plants is expected, according
to industry forecasting firms, to accelerate in 1998 and 1999. Historically, the
operating life of a semiconductor plant has been only five to ten years, after
which the facility must be replaced or refurbished with new equipment capable of
producing the next generation of semiconductor devices. The construction of new
plants and the refurbishing of existing plants require new tubing and fittings
such as those manufactured and distributed by Valex. In addition, routine
maintenance of existing semiconductor plants provides a large and steady demand
for Valex products.

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BUSINESS STRATEGY

Traditionally, metals service centers have been small, privately-owned
businesses that lack the diversity, experience, access to lower-cost capital and
successful operating techniques of Reliance and thus have been and may in the
future become candidates for acquisition or consolidation. The Company has a
history of expansion through acquisitions, as well as from internal growth. In
the last five years, the Company acquired 12 entities, including CCC Steel,
Siskin, AMI, Amalco and SSA, began two new businesses and opened five new
facilities.

Over its long operating history, Reliance has proven the success of its
operating and management policies. The Company's corporate officers maintain
financial controls and establish general policies and operating guidelines,
while its division and subsidiary managers have virtual autonomy with respect to
day-to-day operations. This balanced, yet entrepreneurial management style has
enabled the Company to improve the productivity and profitability both of
acquired businesses and of its own expanded operations. Successful division and
subsidiary managers and other management personnel are awarded incentive
compensation based in part on the profitability of their particular business
unit based on the rate of return on assets.

The Company has adopted a long-term business strategy to increase its
profitability through expansion of its existing operations and acquisitions of
businesses that are strategically located or positioned to diversify the
Company's customer base, product range and geographic presence. The Company has
developed an excellent reputation in the industry for its integrity and the
quality and timeliness of its service to customers. Key elements of the
Company's strategy for future growth are set forth below:

Maintaining an Entrepreneurial Environment. The Company believes that
its decentralized management and operational structure, which emphasizes a
high degree of autonomy for each of its geographically diverse operations,
has contributed significantly to increased profitability and has helped to
create an entrepreneurial environment and enabled managers to run their
operations with a greater sense of ownership. Corporate management focuses
on the overall performance of the Company, establishes and maintains
financial controls and provides financial, information systems and
administrative assistance to 19 separate operating divisions and seven
subsidiaries. Corporate management also develops the business strategy,
goals and general operating guidelines for the Company, maintains strong
relationships with the Company's suppliers and oversees local management of
operations. Reliance's division and subsidiary managers are responsible for
the profitability and growth of their respective operating units, with a
significant portion of their annual compensation tied to the financial
performance of their particular unit. Division managers and senior officers
of the subsidiaries are charged with complete responsibility for
purchasing, marketing, pricing, processing and delivering the products and
maintaining good relationships and communication with the customers to
determine and anticipate their customers' needs and requirements. The
Company believes its management and operational structure provides
incentives to division and subsidiary managers to focus on pursuing
profitable growth opportunities, attaining financial objectives and
delivering superior customer service.

Customer, Product and Geographic Diversity. Unlike many flat-roll
processors who specialize in serving a limited number of customers with a
large volume of processed carbon steel sheet, Reliance processes and
distributes a wide variety of metal products to more than 33,000 customers.
In 1996, the average order size for Reliance metals service centers was
approximately $990, no customer represented more than 1% of the Company's
sales, and no single industry had a significant impact on results. In
addition, as a result of its successful acquisition program, over the past
three years, the Company has greatly expanded its geographic reach, which
currently allows it to serve customers throughout the United States. Such
diversification reduces the Company's exposure to the financial or economic
variability of any particular customer group or geographic region. The
Company's recent acquisitions of AMI, Amalco and SSA further increased the
Company's diversification.

Providing Superior Service and Products. Reliance believes that the
speed and the range of services it provides, as well as the size and
variety of inventory it maintains, distinguish the Company from its
competition. The Company offers over 20,000 products that service a wide
variety of customer needs. By maintaining a decentralized management
structure and providing local management with significant

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<PAGE> 24

operational control, Reliance believes its service centers are able to
react quickly to changes in local markets and customer demands. Reliance
has developed strong relationships with its customers to identify their
requirements early in order to respond to the short lead time and
just-in-time delivery requirements common in the industry. According to a
prominent industry survey, Reliance has ranked as the #1 service center
company in the United States in terms of overall customer service in each
of the last two years. See "Business -- Customers."

Inventory Management. The Company carefully monitors its inventory,
both in-house and in-transit, to avoid unnecessary commitments of working
capital while maintaining an adequate supply to assure quick response to
customer orders. The Company maintains in inventory a broad range of
shapes, sizes and alloys of products to speed delivery to customers. The
Company tailors its inventory at each service center location to customer
requirements in the market that facility serves. The Company establishes
inventory turnover minimums for divisions and subsidiaries to meet. Under
the Company's bonus plan, division managers and officers of subsidiaries
directly benefit if they maintain efficient levels of inventory and
accounts receivable. Over the past two years, the Company's inventory has
turned approximately 4.5 to 5.0 times a year compared to the industry
average in 1996 of approximately 4.0 times.

Operations. In addition to its growth from acquisitions, Reliance
seeks to maximize its internal growth through maintaining state of the art
facilities, machinery and equipment, adding new products and/or new
processes to existing operations and increasing its market share. Heavy
capital investment in equipment helps to make Reliance a low-cost producer.
The Company also has developed material handling and processing systems,
recognizing that efficient systems (not just efficient equipment) increase
productivity. The Company is in the process of converting to the
Stelplan(TM) manufacturing and distribution information system, which the
Company believes will enable its sales and marketing personnel to respond
to customer's inquiries even more efficiently and more effectively.

Supplier Relationships. Reliance, over its many years of operation,
has consistently maintained good relationships with high-quality suppliers
and concentrates on maintaining its status as an important customer to each
of these suppliers to enable the Company to purchase material at the best
available prices given its size. The Company meets regularly with its
suppliers to assure current understanding of their capabilities and
products and to communicate its own customers' requirements and strategic
goals. See "Business -- Suppliers."

Identifying Accretive Acquisitions. The Company has a long history of
growth through acquisitions while maintaining a strong balance sheet to
finance this growth. In the last five years, Reliance has invested over
$250 million to start or acquire 19 business units, making it one of the
most active consolidators in the metals service center industry. Reliance's
senior management team seeks businesses that are accretive to earnings and
strategically positioned to diversify or enhance its customer base, product
availability and/or geographic coverage. Reliance has historically been
very successful at improving the sales and profitability of its acquired
companies through the utilization of its purchasing power, access to
lower-cost capital and operating knowledge, while generally retaining the
acquired company's management team. Reliance believes that opportunities
for further growth by acquisition exist because of the highly fragmented
nature of the industry, which consists of many small, privately-owned
businesses that lack the diversity, experience, access to lower-cost
capital and successful operating techniques of the Company.

Since the Company's initial public offering of Common Stock in September
1994, the Company has continued to pursue an aggressive acquisition strategy.
This strategy has been successful, resulting in the following new subsidiaries:

SSA. On October 1, 1997, the Company acquired 100% of the outstanding
common stock of Service Steel Aerospace Corp. ("SSA"), which operates
metals service centers in Tacoma, Washington; North Canton, Ohio; and Long
Beach, California. SSA specializes in stainless and alloy specialty steel
products primarily for the aerospace industry, thereby expanding the
Company's position in this growing industry. For the year ended December
31, 1996, SSA's annual net sales were in excess of $40 million.

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<PAGE> 25

Amalco. In April 1997, the Company completed the acquisition of
Amalco. Amalco, a leading non-ferrous metals processor in northern
California, processes and distributes aluminum products primarily for the
electronics industry. The Company intends to combine Amalco's operations
with the Company's Santa Clara, California division upon completion of a
new, enlarged, state-of-the-art facility in Union City, California, which
the Company expects to complete in 1998. Amalco's net sales were in excess
of $25 million for the twelve months ended April 30, 1997.

AMI. In April 1997, the Company also added AMI to its growing list of
subsidiaries. Its six service centers are located in Fontana, California;
Wichita, Kansas; Swedesboro, New Jersey; Brentwood, Tennessee; Fort Worth,
Texas; and Kent, Washington. AMI's net sales were in excess of $75 million
for the twelve months ended February 28, 1997. AMI specializes in the
processing and distribution of aluminum plate, sheet and bar products
primarily for the aerospace industry. AMI significantly enhances Reliance's
position in the expanding aerospace sector.

Siskin. In October 1996, the Company acquired Siskin, considered one
of the leading, full line operators of metals service centers in the
southeastern United States. Siskin provides Reliance with substantial
operations in the southeastern United States through its facilities in
Chattanooga and Nashville, Tennessee; Birmingham, Alabama; and Spartanburg,
South Carolina. Reliance intends to expand these core operations in the
southeastern market. Siskin's net sales for the twelve months ended June
30, 1996 were approximately $150 million. The Company believes Siskin
represents an excellent strategic addition because it establishes a strong
presence for the Company in the southeastern United States and increases
the Company's geographic diversification.

CCC Steel. In April 1996, the Company acquired CCC Steel, one of the
largest structural steel distribution companies in the western United
States. CCC Steel has service centers in Los Angeles, California and Salt
Lake City, Utah. CCC Steel's net sales were in excess of $50 million for
the twelve months ended December 31, 1996.

American Steel. In July 1995, the Company acquired a 50% interest in
and operational control of American Steel, expanding the Company's
geographic presence in the Pacific Northwest and the Central Valley of
California. American Steel operates two metals service centers in Oregon
and Washington, and its subsidiary American Metals Corporation operates
three metals service centers in Fresno, Redding and Sacramento, California.
Under the purchase agreement, the Company is entitled to acquire the
remaining 50% of American Steel at a future date. Consolidated net sales of
American Steel for the twelve months ended December 31, 1996 were
approximately $175 million.

With these acquisitions and the expansion of the products and capacities of
the Company's existing metals service centers, the Company has increased its
geographic, customer and product diversification. This diversification reduces
the impact of regional economic recessions or industry downturns on the Company.
The Company has positioned itself both to benefit from improved economic
environments and to operate efficiently in less favorable economies. The
Company's advantageous position is the direct result of its disciplined
inventory management, efficient processing and distribution facilities and
systems and diversified customers, products and geographic markets.

On October 8, 1997, the Company announced it has agreed in principle to
acquire all of the outstanding capital stock of Phoenix, subject to negotiation
of a definitive agreement and successful completion of due diligence. Phoenix
operates metals service centers specializing in non-ferrous products in
Birmingham, Alabama; Atlanta, Georgia; Charlotte, North Carolina; and Tampa,
Florida. The Company believes that the acquisition of Phoenix, which had net
sales in excess of $110 million for the twelve months ended February 28, 1997,
would enhance the Company's position in the southeastern United States and
complement Siskin's range of products. The Company intends to continue to seek
acquisition candidates that management believes will be accretive to earnings
and meet certain performance goals when integrated into the Company's proven
operating model.

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BACKGROUND

Reliance was organized as a California corporation on February 3, 1939 and
commenced business in Los Angeles fabricating steel reinforcing bar. Within ten
years, it had become a full-line distributor of steel and aluminum, operating a
single metals service center in Los Angeles, California. In the early 1950's,
the Company automated its materials handling operations and began to provide
processing services to meet its customers' requirements. In the 1960's, the
Company began to expand its operations through acquisitions of other companies
and the development of additional service centers and began to establish branch
metals service centers in other geographic areas.

In the mid-1970's, the Company began to establish specialty metals service
centers stocked with inventories of selected metals such as aluminum, stainless
steel, brass and copper, and equipped with automated materials handling and
precision cutting equipment and currently has 31 specialty metals service
centers and seven full-line facilities. The Company's metals service centers are
operated under the trade names of "Tube Service Co." (which processes and
distributes specialty tubing), "Bralco Metals" (which processes and distributes
aluminum, brass, copper and stainless steel products), "Reliance Metalcenter"
(which processes and distributes a variety of metals products), "Reliance Steel
Company" (which processes and distributes carbon steel products) and "Affiliated
Metals" (which processes and distributes primarily flatrolled aluminum and
stainless steel products). MetalCenter, Inc. specializes in processing and
distributing non-ferrous products. CCC Steel's two metals service centers
specialize in processing and distributing structural steel products. Siskin
operates four full-line metals service centers. AMI's six metals service centers
process and distribute aluminum products primarily for the aerospace industry.
Amalco operates one facility to process and distribute aluminum products
primarily for the electronics industry. SSA has three facilities processing and
distributing stainless and alloy specialty steels primarily for the aerospace
industry. The "American Steel" and "American Metals" divisions of American Steel
process and distribute primarily carbon steel products from five metals service
centers.

The Company serves its customers primarily by providing quick delivery,
metals processing and inventory management services. The Company purchases a
variety of metals from primary producers and sells these products in smaller
quantities. For approximately 70% of its sales, the Company performs metals
processing, or first stage processing, services before distributing the product
to manufacturers and other end users, generally within 24 hours from receipt of
an order. Metals processing services include leveling, blanking, slitting, shape
cutting, sawing, precision plate sawing and shearing, all to customer
specifications. See "Business -- Products and Processing Service." These
services save time, labor and expense for customers and reduce customers'
overall manufacturing costs. During 1996, the Company's metals service centers
handled approximately 3,100 transactions per business day, with an average
revenue of approximately $990 per transaction.

CUSTOMERS

Customers purchase from service centers to obtain value-added metals
processing, readily available inventory, reliable and timely delivery, flexible
minimum order size and quality control. Many customers deal exclusively with
service centers because the quantities of metal products that they purchase are
smaller than the minimum orders specified by mills or because those customers
require intermittent deliveries over long or irregular periods. The Company
believes that metals service centers have also enjoyed an increasing share of
total metal shipments because of the focus of the capital goods and related
industries on just-in-time inventory management, materials management
outsourcing and because integrated mills have reduced in-house direct sales
efforts to small sporadic purchasers in order to enhance their production
efficiency.

The Company has more than 33,000 metals service center customers.
Approximately 17,000 customers actively purchase from the Company from month to
month. In 1996, no single metals service center customer accounted for more than
1% of the Company's sales, and more than 80% of the Company's orders were from
repeat customers. Reliance's customers are manufacturers and end users in the
general manufacturing, construction (both commercial and residential),
transportation (rail, truck and auto after-market) and aerospace industries. The
Company's metals service centers wrote and delivered over 615,000 orders from
its customers, at an average price of approximately $990, during 1996. Most of
the customers who purchase from

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<PAGE> 27

the Company's various metals service centers are located within a 120-mile
radius of the metals service centers; the proximity of the centers to the
customers assists the Company in providing just-in-time delivery to its
customers on its fleet of over 200 owned or leased trucks. Moreover, Reliance's
computerized order entry system and flexible production scheduling also enables
the Company to meet customer requirements for short lead times and just-in-time
delivery.

Valex manufactures and distributes electropolished and chemically cleaned
stainless steel tubing and fittings used in the construction of gas distribution
systems within semiconductor plants. These products are manufactured in
accordance with its customers' specifications and in compliance with ISO 9002.
Valex sells to virtually every major semiconductor company, semiconductor
equipment manufacturer and supporting gas company in the world. Approximately
33% of Valex's total sales in 1996 were to international customers.

Valex maintains strong ties with its domestic customers through a network
of distribution centers located throughout the United States. These centers
provide quick and personal service to the customers and allow Valex to provide
levels of customer support which the Company believes are unmatched by
competitors who market through independent distributors. Valex supports its
international markets primarily through independent distributors and
representatives and, in 1996, began to support the European market from its
sales office in Marseilles, France.

The Company believes that its long-term relationships with many of its
customers significantly contribute to the success of its business. Providing
prompt and efficient services and quality products at a reasonable price is an
important factor in maintaining these relationships.

Many of the industries in which the Company's customers compete are
cyclical in nature and are subject to changes in demand based on general
economic conditions. Because the Company sells to a wide variety of customers in
several industries, management believes that the effect of such changes on the
Company is significantly reduced. The Company can give no assurance, however,
that it will be able to increase or maintain its level of sales in periods of
economic downturn. The semiconductor manufacturing industry in which Valex's
customers operate is highly cyclical in nature and is subject to changes in
demand based on, among other things, general economic conditions and industry
capacity.

Historically, the Company's largest market for its products has been
California. As illustrated below, the Company has expanded its facilities
geographically as a result of strategic acquisitions and has increased its
physical capabilities through capital expenditures to reduce the impact of any
regional economic recession on the Company's operations.

[Map showing states in which facilities or sales representatives were located
in 1994 and those added since that time.]

26
<PAGE> 28

SUPPLIERS

The Company purchases its inventory from the major metals mills, both
domestic and foreign and has multiple suppliers for all of its product lines.
The Company's major suppliers of domestic carbon steel products include
California Steel Industries, Geneva Steel, Nucor Steel and USS-POSCO Industries.
Allegheny Ludlum Steel Corp., International Stainless Steel Corp. and North
American Stainless supply stainless steel products. The Company is a recognized
distributor for various major aluminum companies, including Aluminum Company of
America ("Alcoa"), Alcan Aluminum Limited, Commonwealth Aluminum, Cressona
Aluminum, Kaiser Aluminum and Reynolds Metals. The Company also maintains
relationships with international suppliers of its various products. The
Company's total volume of purchases enables it to purchase substantially all of
its inventory at the best prices offered by the suppliers, given the order size.
The Company believes that it is not dependent on any one of its suppliers for
metals and that its relationships with its suppliers are very strong. Valex
purchases stainless steel tubing from both domestic and foreign tubing
manufacturers and has multiple suppliers. The Company has worked closely with
its suppliers in order to become an important customer for each major supplier
of the Company's metals for its core product lines.

PRODUCTS AND PROCESSING SERVICE

At its metals service centers, the Company provides processing services,
such as leveling, blanking, slitting, shape cutting, sawing, precision plate
sawing or shearing, to each customer's specifications and delivers the products
to manufacturers and other end users, generally within 24 hours from receipt of
the initial order. The following chart illustrates the diversity of the
Company's sales of its 20,000 products in 1996:

1996 SALES BY PRODUCTS

Stainless Steel Plate, Sheet & Coil 10% Carbon Steel Plate 6%

Heat Treated Aluminum Sheet, Plate & Coil 8% Carbon Steel Bar 6%

Stainless Steel Tube & Bar 5% [PIE CHART] Carbon Steel Structurals 9%

Valex Products 7% Carbon Steel Tubing 8%

Other 5% Galvanized Steel Sheet & Coil 7%

Common Alloy Aluminum Plate, Sheet & Coil 10% Aluminum Bar & Tube 9%

Cold Rolled Steel Sheet & Coil 5% Hot Rolled Steel Sheet & Coil 5%

The Company has reduced its dependence on any particular customer group or
industry by processing a variety of metals. This diversification of product type
and material has reduced the Company's exposure to fluctuations or other
weaknesses in the financial or economic stability of particular customers or
industries, as well as reducing its dependence on particular suppliers.

The Company maintains a wide variety of products in inventory. For the
Company's largest product type (sheet and coil), the Company purchases coiled
metal from primary producers in the form of a continuous sheet, typically 36 to
60 inches wide, between 0.25 and 0.015 inches thick, and rolled into 3- to
20-ton coils. Because of the size and weight of these coils and the specialized
equipment required to move and process the

27
<PAGE> 29

coils into smaller sizes and various products, few of the Company's customers
have the capability of processing the metal into the desired products.

Reliance enters its customer orders, once received, in a computerized order
entry system, selects appropriate inventory and schedules the processing in
accordance with the specified delivery date, generally within 24 hours. The
Company attempts to maximize the yield from the various metals that it processes
by combining customer orders to use each purchased product to the fullest extent
practicable.

Few metals service centers offer the full scope of processing services and
metals that Reliance uses to produce the desired end products:

- Leveling -- cutting metal along the width of a coil into specified
lengths of sheets or plates.

- Blanking -- cutting the metal into close tolerance, square or rectangular
shapes.

- Slitting -- cutting metal to specified widths along the length of the
coil.

- Shearing -- cutting the metal into small precise pieces.

- Shape Cutting -- producing various shapes from plate products according
to customer-supplied drawings through the use of CNC controlled
machinery. This procedure can include the use of oxy-fuel, plasma,
high-definition plasma, or laser burning for carbon and stainless steel
plate and routing for aluminum plate.

- Precision Plate Sawing -- sawing of the plate (mostly aluminum plate
products) into square or rectangular shapes to tolerances as close as
0.003 of an inch.

- Twin Milling -- the close tolerance grinding of one or all six sides of a
small square or rectangular piece of aluminum plate.

- Skin Milling -- grinding to close tolerances the top and/or bottom of
large aluminum plates.

- Tee Splitting -- splitting of metal beams.

Reliance generally processes specific metals to non-standard sizes only at
the request of customers pursuant to purchase orders rather than maintaining
inventory of finished products. The Company is required to carry a wide range of
inventories of metals, however, to meet the short lead time and just-in-time
delivery requirements of its customers. Each of the Company's metals service
centers maintains equipment selected to meet the needs of that facility's
customers.

The Valex product line includes tubing, tubular fittings and coaxial
components. Valex purchases tubing and cuts, shapes, chemically cleans and
electropolishes it for use by Valex customers. The characteristics that affect
performance of a tube or fitting in a gas system and that are becoming
increasingly important to semiconductor manufacturers throughout the world are
(i) low levels of particle generation and retention; (ii) low levels of moisture
generation and retention; (iii) low levels of contamination outgassing; (iv)
enhanced levels of corrosion resistance; and (v) ease and economy of
installation. If the tubing cannot meet the high standards of the semiconductor
industry, it may still be acceptable for use in the pharmaceutical, biotech or
fiber optic industries. In addition, the semiconductor manufacturing industry
has demand for other grades of products that carry less critical gases than the
high quality tubing and fittings used in the transport of the high purity gases
required in the semiconductor chip manufacturing process. Valex continues to
create new products that can be used in more demanding semiconductor gas
systems, as well as custom refined alloys and improved processes and has
expanded its product lines to increase diversification during the downturn in
the semiconductor industry.

MARKETING

Reliance's more than 399 metals service center sales personnel are located
in 19 states to provide marketing services throughout each of the geographic
locations served. The sales personnel are organized by division or subsidiary
among the Company's profit centers and are divided into two groups: those who
travel throughout a specified geographic territory to maintain relationships
with the Company's existing customers

28
<PAGE> 30

and to develop new customers ("outside sales personnel") and those who remain at
the facilities to write and price orders ("inside sales personnel"). The inside
sales personnel receive incentive compensation, in addition to their base
salary, based on the respective profit center's gross profit, and the outside
sales personnel receive incentive compensation based on gross profit from their
respective geographic territories.

Valex markets its products to the worldwide semiconductor manufacturing
industry primarily from its Ventura, California facility and from the
company-owned distribution network located throughout the United States. Valex
distribution centers are located in Phoenix, Arizona; Santa Clara, California;
Albuquerque, New Mexico; Allentown, Pennsylvania; Portland, Oregon; and Austin,
Texas, three of which were opened in 1995. These centers are strategically
located in key, high-tech growth regions of the country and enable Valex to
offer its customers local access to a broad range of inventory, which management
believes will translate into better customer service and added market share for
Valex. The first international sales office was opened in 1996 in Marseilles,
France, to service the European market.

50%-OWNED COMPANY

On July 1, 1995, the Company acquired a 50% interest in and operational
control of American Steel, then a newly-formed limited liability company. As
part of the acquisition, the Company contributed cash, American Industries, Inc.
("American") contributed assets, and each also contributed its 50% ownership in
American Metals Corporation ("American Metals"), a joint venture established
between the Company and American in 1993. American Steel consisted of three
metals service centers in the Pacific Northwest, that were previously
wholly-owned by American. The facility in Canada was sold in January 1997.
American Metals operates three metals service centers located in the Central
Valley of California as a wholly-owned subsidiary of American Steel. The
purchase agreement allows the Company to acquire the remaining 50% of American
Steel at a future date. This 50% investment in American Steel is accounted for
by the equity method, and the Company includes 50% of American Steel's
consolidated earnings in the Company's net income and earnings per share
amounts.

COMPETITION

The metals distribution industry is highly fragmented and competitive. The
Company has numerous competitors in each of its product lines and geographic
locations, although competition is most frequently local or regional. Most of
these competitors are smaller than the Company. Nonetheless, the Company faces
strong competition from national, regional and local independent metals
distributors, subsidiaries of metal producers and the producers themselves, some
of which have greater resources than the Company. Based on an industry report,
it is estimated that there were approximately 3,400 intermediate steel
processors and metals service center facilities in the United States in 1996.
The Company believes that it is one of the ten largest service center companies
in the United States. Competition is based on price, service, quality and
availability of products. The Company maintains centralized relationships with
its suppliers and a decentralized operational structure. The Company believes
that this division of responsibility has increased its ability to obtain
competitive prices of metals and to provide more responsive service to its
customers. In addition, Reliance believes that the size of inventory it
maintains, the different metals and products it has available and the wide
variety of processing services it provides distinguish the Company from its
competition.

Management believes that Valex has few competitors in its major product
lines. Valex's competitors in the domestic market tend to concentrate on smaller
projects, quick turn business and projects with lower specification
requirements, while certain of its international competitors have the resources
to concentrate on large projects.

QUALITY CONTROL

The procurement of high quality metal from suppliers on a consistent basis
is critical to the Company's business. The Company has instituted strict quality
control measures to assure that the quality of purchased metals will enable the
Company to meet the specifications of its customers and to reduce the costs of
production interruptions. Physical and chemical analyses are performed on
selected metals to verify that their

29
<PAGE> 31

mechanical and dimensional properties, cleanliness and surface characteristics
meet the Company's requirements. Similar analyses are conducted on processed
metal on a selected basis before delivery to the customer. The Company believes
that maintenance of high standards for accepting metals ultimately results in
reduced return rates from its customers.

The Company has established a program to obtain certification of its
locations under the ISO 9002 internationally-accepted quality standard. More
than half of the Company's metals service centers and Valex and MetalCenter,
Inc. have already attained ISO 9002 certification. The Company expects the
remainder of its divisions to become certified in the near future. The Company
has established a program for its recently-acquired subsidiaries to obtain such
certification in the future. Management believes this certification will provide
access to additional customers and improve operating efficiencies.

SYSTEMS

The Company is in the process of converting its Reliance divisions from its
internally-developed software, which runs on an IBM mainframe computer, to the
Stelplan(TM) manufacturing and distribution information system, which uses IBM
RS6000 multi-processor based hardware. Stelplan(TM) is a registered trademark of
Planmatics Corp. All of the AMI service centers use Stelplan, and American Steel
also is converting to Stelplan. Stelplan is an integrated business application
system with functions ranging from order entry to the generation of financial
statements. It was developed specifically for the metals service center and
processor industry. Stelplan also provides real time availability of information
such as inventory availability, location and cost. Access to this information
allows the Company's marketing and sales personnel to respond to the customer's
needs more efficiently and more effectively and to provide quickly a firm
product price. In addition, Stelplan is "Year 2000" compliant. The Company is
addressing the "Year 2000" issues with respect to those of its subsidiaries that
are not converting to Stelplan before the year 2000.

GOVERNMENT REGULATION

The Company's metals service centers are subject to many federal, state and
local requirements relating to the protection of the environment including
hazardous waste disposal and underground storage tank regulations. The only
hazardous wastes that the Company uses in its operations are lubricants and
cleaning solvents. The Company frequently examines ways to minimize any impact
on the environment and to effect cost savings relating to environmental
compliance. The Company pays state certified private companies to haul and
dispose of its hazardous waste.

The Company's operations are also governed by laws and regulations relating
to workplace safety and worker health, principally the Occupational Health and
Safety Act and regulations thereunder, which, among other requirements,
establish noise, dust and safety standards. Reliance has established a strict
safety policy, which it believes is one of the best in the industry. Management
believes that the Company is in material compliance with applicable laws and
regulations and does not anticipate that future compliance with such laws and
regulations will have a material adverse effect on the results of operations or
financial condition of the Company.

ENVIRONMENTAL

Management believes that the Company is in material compliance with all
applicable environmental laws and that the Company's products and processes do
not present any unusual environmental concerns. The Company does not anticipate
any material expenditures to meet environmental requirements. Some of the
properties owned or leased by the Company are located in industrial areas,
however, with histories of heavy industrial use. The location of these
properties may result in the Company's incurring environmental liabilities that
arise from causes other than the operations of the Company, but the Company does
not expect that any such liabilities will have a material adverse impact on the
Company's results of operations, financial condition or liquidity.

30
<PAGE> 32

EMPLOYEES

As of June 30, 1997, the Company had a total of approximately 2,200
employees. Approximately 550 of these employees are covered by collective
bargaining agreements, which expire at various times over the next four years.
The Company has entered into collective bargaining agreements with nine
different union locals at ten of its metals service center locations and at
Valex's manufacturing facility. The Company has not found that these collective
bargaining agreements have had a material impact either favorably or unfavorably
on the Company's revenues or profitability at its various locations. The Company
has always maintained excellent relations with its employees and has never
experienced a significant work stoppage.

PROPERTIES

The Company maintains 38 metals service centers in 15 states (not including
American Steel), plus the corporate headquarters, and one manufacturing and six
distribution facilities in six states plus one international sales office for
Valex. All of the Company's properties are in good or excellent condition and
are adequate for its existing operations. These facilities generally operate at
about 60% of capacity, with each division averaging slightly less than two
shifts operating at full capacity for a five-day work week. All of the Valex
distribution and sales facilities are leased and 13 of the metals service center
facilities are leased. Siskin leases a portion of its facilities in Chattanooga,
Tennessee. In addition, off-site space is leased near Valex's manufacturing
facility in Ventura, California and near the Santa Clara, California metals
service center facility. The leases are for terms expiring at various times
through 2008 and have an aggregate monthly rent of approximately $200,000. The
Company owns all other properties. In 1996, the Company relocated its Affiliated
Metals operation in Salt Lake City, Utah and its Bralco Metals operation in Pico
Rivera, California to new, larger, more efficient, state-of-the-art facilities.
The Company's new, enlarged, state-of-the-art facility in Union City, California
is scheduled to be completed in early 1998. Upon completion, the business of
Amalco will be combined in the new facility with Reliance's metal service center
in Santa Clara, California. The following table sets forth certain information
with respect to each facility:

FACILITIES AND PLANT SIZE

<TABLE>
<CAPTION>
PLANT SIZE
LOCATION (SQ. FT.)
---------------------------------------------------------------------------- ----------
<S> <C>
Metals Service Centers
Alabama:
Birmingham (Siskin)....................................................... 107,000
Arizona:
Phoenix
(Metalcenter)........................................................... 104,000
(Bralco Metals)......................................................... 46,000
(Tube Service).......................................................... 23,000
California:
El Cajon (Tube Service)................................................... 18,000
Fontana (AMI)............................................................. 100,000
La Mirada (Bralco Metals)................................................. 140,000
Long Beach (SSA).......................................................... 11,000*
Los Angeles
(Corporate Office)...................................................... 22,000
(Reliance Steel Company)................................................ 270,000*
Milpitas (Tube Service)................................................... 58,000
National City (Metalcenter)............................................... 74,000
Rancho Dominguez (CCC Steel).............................................. 316,000
Santa Clara (Metalcenter)................................................. 99,000*
</TABLE>

31
<PAGE> 33

<TABLE>
<CAPTION>
PLANT SIZE
LOCATION (SQ. FT.)
---------------------------------------------------------------------------- ----------
<S> <C>
Santa Fe Springs
(Metalcenter)........................................................... 155,000
(Tube Service).......................................................... 66,000
Union City (Amalco)....................................................... 52,000
Colorado:
Colorado Springs (Metalcenter)............................................ 68,000
Denver (Tube Service)..................................................... 21,000*
Kansas:
Wichita (Metalcenter)..................................................... 45,000*
Wichita (AMI)............................................................. 25,000*
New Jersey:
Swedesboro (AMI).......................................................... 21,000*
New Mexico:
Albuquerque
(Metalcenter)........................................................... 44,000
(Reliance Steel Company)................................................ 34,000
Ohio:
North Canton (SSA)........................................................ 18,000*
Oregon:
Portland (Metalcenter).................................................... 44,000
South Carolina:
Spartanburg (Siskin)...................................................... 96,000
Tennessee:
Brentwood (AMI)........................................................... 27,000*
Chattanooga (Siskin)...................................................... 439,000
Nashville (Siskin)........................................................ 117,000
Texas:
Arlington (Metalcenter)................................................... 97,000
Fort Worth (AMI).......................................................... 75,000*
San Antonio (Metalcenter)................................................. 77,000
Utah:
Salt Lake City (Metalcenter).............................................. 105,000
(Affiliated)............................................................ 80,000
(CCC Steel)............................................................. 51,000
Washington:
Kent (AMI)................................................................ 14,000*
Tacoma (SSA).............................................................. 26,250*
Wyoming:
Casper (Metalcenter)...................................................... 11,000*
Valex Corp.
Ventura, CA (Headquarters and manufacturing facility)....................... 103,000
Distribution Centers
Phoenix, AZ................................................................. 5,000*
Santa Clara, CA............................................................. 5,000*
Albuquerque, NM............................................................. 7,000*
Portland, OR................................................................ 8,000*
Allentown, PA............................................................... 5,000*
Austin, TX.................................................................. 8,000*
Sales Office
Marseilles, France.......................................................... 700*
</TABLE>

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

* Leased. All other facilities owned.

32
<PAGE> 34

BACKLOG

Because of the just-in-time delivery policy and the short lead time nature
of its business, the Company does not believe the information on backlog of
orders is material to an understanding of its metals service center business. At
December 31, 1996, Valex had a backlog of orders for approximately $3.3 million
of products compared to approximately $13.4 million on December 31, 1995.

LEGAL PROCEEDINGS

From time to time, the Company is named as a defendant in legal actions
arising out of its normal course of business. The Company is not a party to any
pending legal proceedings other than routine litigation incidental to the
business. Management believes that the resolution of such matters will not have
a material adverse effect on the Company's results of operations or financial
condition. The Company maintains liability insurance against risks arising out
of its normal course of business.

33
<PAGE> 35

MANAGEMENT

The Company attributes much of its success to the quality and depth of its
management. In addition to the principal corporate officers identified below,
the Company's management team includes a talented group of division managers and
officers of subsidiaries, with substantial experience in the metals service
center industry. The following are the senior corporate officers and directors
of the Company:

JOE D. CRIDER, 68, became the Chairman of the Board in February 1997 and
the Chief Executive Officer of the Company in May 1994. Prior to becoming the
Chief Executive Officer, Mr. Crider had been the President and Chief Operating
Officer of the Company and a director since 1987. Prior to being named as the
President, Mr. Crider had been Executive Vice President and Chief Operating
Officer since 1975. Mr. Crider is also a director of American Steel and American
Metals.

DAVID H. HANNAH, 46, became the President of the Company in November 1995.
From January 1992 until he became the President of the Company, Mr. Hannah was
the Executive Vice President and Chief Financial Officer of the Company. Prior
thereto, he was Vice President and Chief Financial Officer from 1990 to 1992 and
Vice President and Division Manager of the Los Angeles Reliance Steel Company
division of the Company from July 1, 1989 to June 30, 1990. From January 1, 1987
to July 1, 1989, Mr. Hannah was Vice President and Chief Financial Officer of
the Company and was Chief Financial Officer from 1981 to 1987. Mr. Hannah became
a director of the Company in 1992. Mr. Hannah also serves as a director of
American Steel. For eight years before joining the Company in 1981, Mr. Hannah,
a certified public accountant, was employed by Ernst & Whinney in various
professional staff positions.

GREGG J. MOLLINS, 42, became Executive Vice President and Chief Operating
Officer of the Company in November 1995. In September 1997, Mr. Mollins became a
director of the Company. Mr. Mollins was Vice President and Chief Operating
Officer of the Company from May 1994 to November 1995 and Vice President of the
Company from 1992 to 1994. Prior to that time, he had been Division Manager of
the Company's Santa Clara division for six years. For ten years before joining
the Company in 1986, Mr. Mollins was employed by certain of the Company's
competitors in various sales and sales management positions.

STEVEN S. WEIS, 55, became Senior Vice President and Chief Financial
Officer of the Company in May 1997. He joined the Company initially in November
1995 as Chief Financial Officer. Prior to joining the Company, Mr. Weis served
as Vice President and Chief Financial Officer of Rubbercraft Corporation, a
manufacturer of custom molded rubber parts, in Gardena, California from May 1995
to October 1995. Mr. Weis was Executive Vice President and Chief Financial
Officer of Community Psychiatric Centers, a chain of psychiatric and long-term
critical care hospitals, headquartered in Laguna Hills, California from December
1991 to December 1994. From July 1989 to November 1991, Mr. Weis was the
President of the CFO Group, a financial consulting practice in Northridge,
California. Mr. Weis, a certified public accountant, was employed by Ernst &
Whinney as an audit partner and regional director prior to that time.

KARLA R. MCDOWELL, 31, became Vice President and Controller of the Company
in 1995. Ms. McDowell was Corporate Controller of the Company from 1992 to 1995.
For four years prior to joining the Company, Ms. McDowell, a certified public
accountant, was employed by Ernst & Young in various professional staff
positions.

WILLIAM K. SALES, JR., 40, joined the Company as Vice President,
Non-Ferrous Operations in September 1997. From 1981 to 1997, Mr. Sales Served in
various sales and management positions with Kaiser Aluminum & Chemical Corp.

WILLIAM T. GIMBEL, 78, is the Chairman Emeritus of the Company. Until
February 1997, Mr. Gimbel was the Chairman of the Board of the Company, and,
until May 1994, he was the Chief Executive Officer of the Company, positions he
had held since 1964.

DOUGLAS M. HAYES, 53, became a director of the Company in September 1997.
Mr. Hayes retired from Donaldson, Lufkin & Jenrette Securities Corporation (one
of the Representatives) in 1997, after which he established his own investment
banking firm, Hayes Capital Corporation, located in Los Angeles, California.

34
<PAGE> 36

ROBERT HENIGSON, 71, has been a director of the Company since 1964. Mr.
Henigson is a retired attorney, having been a partner of Lawler, Felix & Hall
(the predecessor to Arter & Hadden, the Company's counsel) prior to his
retirement in 1986.

KARL H. LORING, 73, has been a director of the Company since 1984. Mr.
Loring is retired, but continues to provide tax consulting services from time to
time. From 1983 to January 1992, Mr. Loring was an officer of Knapp
Communications Corporation, a publishing company. For more than five years prior
to his retirement in 1983, he was a tax partner for Ernst & Whinney.

WILLIAM I. RUMER, 70, has been a director of the Company since 1957. Mr.
Rumer retired from Allied Aerospace where he was an aerospace engineer from 1961
to 1985. Mr. Rumer was married to Mr. Gimbel's cousin, prior to her death.

LESLIE A. WAITE, 52, has been a director of the Company since 1977. Mr.
Waite is an investment advisor and has been a principal of Waite & Associates
since its formation in 1978.

35
<PAGE> 37

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information as of September 30,
1997, with respect to the beneficial ownership of the Company's Common Stock by
(i) each person known to the Company who owns beneficially or of record more
than five percent (5%) of the Common Stock of the Company, (ii) each director
and each executive officer of the Company and (iii) for all current directors
and executive officers as a group

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING SHARES TO BE AFTER OFFERING
----------------------- SOLD IN ------------------------
NAME(1) NUMBER PERCENT OFFERING NUMBER PERCENT(2)
- -----------------------------
<S> <C> <C> <C> <C> <C>
William T. Gimbel(3)......... 2,439,096 15.98 -- 2,439,096 13.28
Florence Neilan.............. 2,798,727 18.33 -- 2,798,727 15.24
Joe D. Crider(4)............. 104,076 * 50,000 54,076 *
David H. Hannah(5)........... 61,610 * -- 61,610 *
Douglas M. Hayes............. 1,500 * -- 1,500 *
Robert Henigson(6)........... 425,250 2.79 150,000 275,250 1.50
Karl H. Loring(7)............ 21,723 * -- 21,723 *
William I. Rumer(8).......... 581,983 3.81 -- 581,983 3.17
Leslie A. Waite.............. 37,104 * -- 37,104 *
Gregg J. Mollins(9).......... 55,151 * -- 55,151 *
Steven S. Weis(10)........... 10,725 * -- 10,725 *
All directors and executive
officers as a group
(10 persons)(11)........... 3,738,218 24.49 3,538,218 19.26
</TABLE>

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

* Less than 1%.

(1) The Company has been advised that the named shareholders have the sole
power to vote and to dispose of the shares set forth after their names,
except as noted.

(2) Does not give effect to the exercise of the Underwriters' over-allotment
option. If the over-allotment option is exercised in full, the Company will
issue and sell to the Underwriters an additional 495,000 shares of Common
Stock.

(3) Amounts include 15,000 shares held in Mr. Gimbel's I.R.A. Excludes 191,112
shares owned by Mr. Gimbel's wife and 112,146 shares held by Mr. Gimbel's
adult children as to all of which he disclaims beneficial ownership. Also
exclude 20,389 shares with respect to which Mr. Gimbel has a vested right
pursuant to the Company's Employee Stock Ownership Plan ("ESOP").

(4) Amounts include 11,250 shares issuable upon the exercise of options held by
Mr. Crider, with an exercise price of $12.17 per share. Exclude 28,573
shares with respect to which Mr. Crider has vested right pursuant to the
Company's ESOP. Mr. Crider is Chairman of the Board and Chief Executive
Officer of the Company.

(5) Amounts include 15,750 and 11,250 shares issuable upon the exercise of
options held by Mr. Hannah, with an exercise price of $7.19 and $12.17 per
share, respectively, of which options to acquire 15,750 shares were
exercised in September 1997. All of the shares are owned jointly with Mr.
Hannah's wife. Exclude 7,417 shares with respect to which Mr. Hannah has a
vested right pursuant to the Company's ESOP.

(6) Amounts include 15,000 shares held by Mr. Henigson's I.R.A. Mr. Henigson is
a director of the Company.

(7) These shares are held by Mr. Loring as Trustee of The Loring Family Trust.

(8) These shares are held by Mr. Rumer as Trustee of the Rumer Family Trust.
Excludes 763,843 shares held by Mr. Rumer's adult children as to which he
disclaims beneficial ownership.

(9) Amounts include 15,750 and 11,250 shares issuable upon the exercise of
options held by Mr. Mollins, with an exercise price of $7.19 and $12.17 per
share, respectively, of which options to acquire 15,750 shares were
exercised in September 1997. Exclude 2,323 shares with respect to which Mr.
Mollins has a vested right pursuant to the Company's ESOP.

(10) Amounts include 7,500 shares issuable upon the exercise of options held by
Mr. Weis with an exercise price of $12.17 per share.

(11) See notes 3, 4, 5, 6, 7, 8, 9 and 10.

36
<PAGE> 38

DESCRIPTION OF CAPITAL STOCK

The Company's Common Stock is listed for trading on the NYSE (Symbol: RS)
and was first traded on September 16, 1994. Under its Restated Articles of
Incorporation, the Company is authorized to issue up to 20,000,000 shares of
Common Stock, no par value, and 5,000,000 shares of Preferred Stock. As of
September 30, 1997, there were approximately 295 record owners of the Company's
Common Stock and 15,210,067 shares of Common Stock outstanding.

CERTAIN U.S. TAX CONSEQUENCES TO NON-U.S. SHAREHOLDERS

The following discussion is a summary of certain United States federal
income and estate tax consequences of the ownership and disposition of shares of
Common Stock by Non-U.S. Holders. For purposes of this discussion, a "Non-U.S.
Holder" is a beneficial owner of a share of Common Stock that, for U.S. federal
income tax purposes, is (i) a foreign corporation, (ii) a foreign partnership,
(iii) a non-resident alien individual or (iv) a non-resident alien fiduciary of
a foreign estate or trust. This summary is not a complete analysis or
description of all potential tax consequences to Non-U.S. Holders of Common
Stock, nor does it address all aspects of U.S. federal income and estate taxes
that may be relevant to Non-U.S. Holders in light of their particular
circumstances or to certain types of Non-U.S. Holders that may be subject to
special tax treatment under the U.S. federal income tax laws. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), judicial
decisions, administrative pronouncements and existing and proposed Treasury
regulations, changes to any of which after the date of this Prospectus could
apply on a retroactive basis and affect the tax consequences described herein.
Prospective purchasers of shares of Common Stock are urged to consult their own
tax advisors concerning the overall Non-U.S. Holders federal, state and local
tax consequences of ownership and disposition of such shares, as well as any tax
consequences under the laws of any other taxing jurisdiction.

NON-U.S. HOLDERS INCOME AND ESTATE TAX CONSEQUENCES

Dividends paid to a Non-U.S. Holder generally will be subject to U.S.
withholding tax at a 30% rate or, if applicable, a lower treaty rate, unless the
dividend is "U.S. trade or business income." A dividend will be U.S. trade or
business income if it is effectively connected with the conduct of a trade or
business in the United States by the Non-U.S. Holder or, in limited
circumstances, if a treaty applies, is attributable to a United States permanent
establishment maintained by such Non-U.S. Holders. A dividend that is U.S. trade
or business income will be exempt from the withholding tax described above if
the Non-U.S. Holder files certain forms with the payor of the dividend and will
be subject instead (i) to the U.S. federal income tax on net income that applies
to U.S. persons and (ii) with respect to corporate holders under certain
circumstances, a branch profits tax at the rate of 30% (or, if applicable, a
lower treaty rate) that in general is imposed on its earnings and profits
attributable to U.S. trade or business income, that are repatriated from the
United States. The branch profits tax may not apply if the Non-U.S. Holder is a
qualified resident of certain countries with which the United States has an
income tax treaty. To determine the applicability of a tax treaty providing for
a lower rate of withholding tax, dividends paid on or before December 31, 1998
to an address outside the United States ordinarily are presumed under current
Treasury regulations to be paid to a resident of that country absent knowledge
that such presumption is unwarranted. However, recently finalized Treasury
regulations applicable to dividends paid after December 31, 1998 (the "Final
Regulations") require Non-U.S. Holders to file certain forms to obtain the
benefit of any applicable tax treaty providing for a lower rate of withholding
tax on dividends.

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a disposition of a share of Common Stock unless
(i) the Company is or has been at any time during the five-year period ending on
the date of disposition a "United States real property holding corporation" for
U.S. federal income tax purposes (which the Company does not believe that it has
been or is currently and does not anticipate becoming), and the Non-U.S. Holder
has held, directly or constructively, more than 5% of the outstanding Common
Stock at any time during the five-year period ending on the date of the
disposition (or such shorter period during which such shares were held) and no
treaty exception is applicable; (ii) the gain is

37
<PAGE> 39

U.S. trade or business income; (iii) the Non-U.S. Holder is an individual who
holds the share as a capital asset and is present in the United States for 183
days or more in the taxable year of the disposition and either (a) such
individual has a "tax home" (as defined for U.S. federal income tax purposes) in
the United States or (b) the gain is attributable to an office or other fixed
place of business maintained in the United States by such individual; or (iv)
the Non-U.S. Holder is subject to tax pursuant to the Code provisions applicable
to certain U.S. expatriates. In the case of a Non-U.S. Holder that is described
under clause (ii) above, gain will be subject to the U.S. federal income tax on
net income that applies to U.S. persons and, in addition, if such Non-U.S.
Holder is a foreign corporation, the gain may be subject to the branch profits
tax described in the preceding paragraph.

Shares of Common Stock owned or conveyed in certain lifetime transfers or
treated as owned by an individual who is not a citizen or resident (as specially
defined for U.S. federal estate tax purposes) of the United States at the time
of his or her death will be includible in his or her gross estate for U.S.
federal estate tax purposes unless an applicable estate tax treaty provides
otherwise.

BACKUP WITHHOLDING AND INFORMATION REPORTING

The Company must report annually to the Internal Revenue Service ("IRS")
and to each Non-U.S. Holder the name and address of, the amount of dividends
paid to, and any tax withheld with respect to, such Non-U.S. Holder. These
information reporting requirements apply regardless of whether withholding was
reduced or eliminated by an applicable tax treaty. Copies of these information
returns may also be made available by the IRS under the provisions of a specific
treaty or agreement with the tax authorities in the country in which the
Non-U.S. Holder resides. In general, backup withholding on or before December
31, 1998 at a rate of 31% will not apply to dividends paid on shares of Common
Stock to a Non-U.S. Holder at an address outside the United States. For
dividends paid after December 31, 1998, the Final Regulations provide certain
presumptions and other rules under which Non-U.S. Holders may be subject to
backup withholding and related information reporting in the absence of required
certifications.

The payment of the proceeds from the disposition of shares of Common Stock
to or through the U.S. office of a broker will be subject to information
reporting and backup withholding unless the owner, under penalties of perjury,
certifies, among other things, its status as a Non-U.S. Holder or otherwise
establishes an exemption. The payment of the proceeds from the disposition of
shares of Common Stock to or through a non-U.S. office of a non-U.S. broker
generally will not be subject to backup withholding and information reporting.
In the case of the payment of proceeds from the disposition of shares of Common
Stock through a non-U.S. office of a broker that is a U.S. person or a U.S.
related person, existing regulations require information reporting unless the
broker has documentary evidence in its files that the owner is a Non-U.S. Holder
and the broker has no actual knowledge to the contrary. For this purpose, a U.S.
related person is (i) a controlled foreign corporation, as defined for U.S.
federal income tax purposes, or (ii) a foreign person 50% or more of whose gross
income from all sources for the three-year period ending with the close of its
taxable year preceding the payment (or for such part of the period that the
broker has been in existence) is derived from activities that are effectively
connected with the conduct of a U.S. trade or business, or (iii) effective after
December 31, 1998, certain brokers that are foreign partnerships with U.S.
partners or that are engaged in a U.S. trade or business.

Backup withholding is not an additional tax. Rather, any amounts withheld
under the backup withholding rules from a payment to a Non-U.S. Holder may be
refunded or credited against the Non-U.S. Holder's U.S. federal income tax
liability, provided that the required information is furnished to the IRS.

38
<PAGE> 40

UNDERWRITING

Subject to certain terms and conditions contained in the Underwriting
Agreement, the Underwriters named below, for whom Donaldson, Lufkin & Jenrette
Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Prudential Securities Incorporated are acting as representatives (the
"Representatives"), have agreed to purchase from the Company and the Selling
Shareholders an aggregate of 3,300,000 shares of Common Stock. The number of
shares of Common Stock that each Underwriter has agreed to purchase is set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...............
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................
Prudential Securities Incorporated................................

----------
Total................................................... 3,300,000
========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters are subject to the approval of certain legal matters by counsel and
to certain other conditions. If any of the shares of Common Stock is purchased
by the Underwriters pursuant to the Underwriting Agreement, all such shares of
Common Stock (other than the shares of Common Stock covered by the
over-allotment option described below) must be so purchased.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Company has been advised by the Representatives that the Underwriters
propose to offer the Common Stock to the public at the price to the public set
forth on the cover page of this Prospectus and to certain dealers (who may
include the Underwriters) at such price less a concession not to exceed
$ per share. The Underwriters may allow, and such dealers may reallow,
discounts not in excess of $ per share to any other Underwriters and
certain other dealers.

In connection with the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may over-allot. In addition, the
Underwriters may bid for, and purchase, shares of Common Stock in the open
market to cover syndicate short positions created in connection with the
offering or to stabilize the price of the Common Stock. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in syndicate covering transactions, in stabilization
transactions, or otherwise. Any of these activities may stabilize or maintain
the market price of the Common Stock above independent market levels. The
Underwriters are not required to engage in these activities and may end any of
these activities at any time.

The Company has granted to the Underwriters an option to purchase up to an
aggregate of 495,000 additional shares of Common Stock at the public offering
price less underwriting discounts and commissions solely to cover
over-allotments. Such option may be exercised at any time until 30 days after
the date of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
Underwriter's initial commitment as indicated in the preceding table.

39
<PAGE> 41

The Company's directors and executive officers, and certain existing
shareholders of the Company owning an aggregate of 6,764,399 shares of the
Common Stock of the Company, have agreed that they will not, without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation, directly
or indirectly offer to sell, sell or otherwise dispose of any shares of Common
Stock of the Company owned by them for a period of 180 days after the date of
this Prospectus except upon exercise of options issued by the Company prior to
the date of this Prospectus. In addition, the Company has agreed that for a
period of 180 days after the date of this Prospectus it will not, without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation,
directly or indirectly offer to sell, sell, contract to sell, or otherwise
dispose of any equity securities or any options with respect to any equity
securities except for (i) shares of Common Stock offered hereby, (ii) shares of
Common Stock issued pursuant to the exercise of outstanding options or (iii)
options granted after the date of this Prospectus under the Company's Incentive
and NonQualified Stock Option Plan.

LEGAL MATTERS

The validity of the authorization and issuance of the Shares offered by
this Prospectus will be passed upon for the Company by Arter & Hadden, 700 South
Flower Street, Los Angeles, California 90017, counsel for the Company. Certain
legal matters in connection with the securities offered hereby will be passed
upon for the Underwriters by Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.

EXPERTS

The consolidated financial statements (including the schedule incorporated
by reference) of Reliance Steel & Aluminum Co. at December 31, 1995 and 1996 and
for each of the three years in the period ended December 31, 1996, appearing in
this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon appearing and
incorporated by reference elsewhere herein. The financial statements referred to
above are included in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance with
the Exchange Act, files reports and other information with the Securities and
Exchange Commission (the "Commission"). All reports, proxy statements and other
information filed with the Commission by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at Regional Offices of the
Commission located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and at Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission (http://www.sec.gov).

The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") and reports, proxy and information statements and other information
concerning the Company can be inspected at the NYSE located at 20 Broad Street,
New York, New York 10005.

The Company has filed a Registration Statement on Form S-3 with the
Commission under the Securities Act of 1933, as amended, covering the Shares.
This Prospectus omits certain information and exhibits included in that
Registration Statement, copies of which may be obtained upon payment of a fee
prescribed by the Commission, or may be examined free of charge at the principal
office of the Commission in Washington, D.C. Statements contained in this
Prospectus regarding the provisions of documents filed with, or incorporated by
reference in, the Registration Statement are necessarily summaries and are
qualified in their entirety by reference to the applicable document filed with
the Commission.

40
<PAGE> 42

INCORPORATION BY REFERENCE

The Company incorporates by reference into this Prospectus the following
documents filed under the Exchange Act (File No. 001-13122) (a) the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, (b) the
Company's registration statement on Form 8-A filed June 2, 1994, (c) the
Company's Form 10-Q for the quarter ended June 30, 1997, (d) the Company's Form
10-Q for the quarter ended March 31, 1997, (e) the Company's current report on
Form 8-K dated April 2, 1997, and (f) the Company's current report on Form 8-K
dated January 2, 1997. All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering will be deemed to be incorporated
by reference in this Prospectus and to be a part of it from the respective dates
of filing of those documents. Copies of all documents which are incorporated by
reference will be provided without charge to anyone to whom this Prospectus is
delivered upon a written or oral request to Reliance Steel & Aluminum Co., 2550
East 25th Street, Los Angeles, California 90058; Telephone: (213) 582-2272.

Any statement contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference in it will be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any subsequently filed document which also is
or is deemed to be incorporated by reference in it modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

41
<PAGE> 43

RELIANCE STEEL & ALUMINUM CO.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Consolidated Financial Statements (Audited)
Report of Independent Auditors...................................................... F-2
Consolidated Balance Sheets at December 31, 1996 and 1995........................... F-3
Consolidated Statements of Income for the Years ended December 31, 1996, 1995 and
1994............................................................................. F-4
Consolidated Statements of Shareholders' Equity for the Years ended December 31,
1996, 1995 and 1994.............................................................. F-5
Consolidated Statements of Cash Flows for the Years ended December 31, 1996, 1995
and 1994......................................................................... F-6
Notes to Consolidated Financial Statements.......................................... F-8
Quarterly Results of Operations (Unaudited) for the Years ended December 31, 1996,
1995 and 1994....................................................................... F-19
Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets at June 30, 1997 and December 31, 1996.................. F-20
Consolidated Statements of Income for the Six Months ended June 30, 1997 and 1996... F-21
Consolidated Statements of Cash Flows for the Six Months ended June 30, 1997 and
1996............................................................................. F-22
Notes to Consolidated Financial Statements.......................................... F-23
</TABLE>

F-1
<PAGE> 44

REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
Reliance Steel & Aluminum Co.

We have audited the accompanying consolidated balance sheets of Reliance
Steel & Aluminum Co. and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. 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 consolidated financial position of Reliance Steel
& Aluminum Co. and subsidiaries at December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.

Ernst & Young LLP

Long Beach, California
February 17, 1997, except for
Note 10, as to which the date
is June 27, 1997

F-2
<PAGE> 45

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $ 815 $ 18,012
Accounts receivable, less allowance for doubtful accounts of $2,899
in 1996 and $3,253 in 1995........................................ 73,092 68,874
Inventories.......................................................... 122,778 71,976
Prepaid expenses and other current assets............................ 6,700 5,550
Deferred income taxes................................................ 7,515 2,525
-------- --------
Total current assets................................................... 210,900 166,937
Property, plant and equipment, at cost:
Land................................................................. 21,054 14,873
Buildings............................................................ 80,687 36,688
Machinery and equipment.............................................. 88,551 67,802
Allowances for depreciation.......................................... (56,678) (53,077)
-------- --------
133,614 66,286
Investment in 50%-owned company........................................ 28,958 25,561
Other assets........................................................... 17,704 1,689
-------- --------
Total assets........................................................... $391,176 $260,473
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 50,274 $ 46,800
Accrued expenses..................................................... 9,093 6,078
Wages and related accruals........................................... 4,636 5,292
Income taxes payable................................................. 90 5,136
Deferred income taxes................................................ 7,587 --
Current maturities of long-term debt................................. 2,455 2,900
-------- --------
Total current liabilities.............................................. 74,135 66,206
Long-term debt......................................................... 107,450 30,350
Deferred income taxes.................................................. 16,949 --
Commitments............................................................ -- --
Shareholders' equity:
Preferred stock, no par value:
Authorized shares -- 5,000,000
None issued or outstanding........................................ -- --
Common stock, no par value:
Authorized shares -- 20,000,000
Issued and outstanding shares -- 15,489,430 in 1996 and 15,408,460
in 1995, stated capital.......................................... 61,131 60,344
Retained earnings.................................................... 131,511 103,573
-------- --------
Total shareholders' equity............................................. 192,642 163,917
-------- --------
Total liabilities and shareholders' equity............................. $391,176 $260,473
======== ========
</TABLE>

See accompanying notes.

F-3
<PAGE> 46

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
<S> <C> <C> <C>
Net sales.............................................. $ 653,975 $ 561,341 $ 446,866
Other income........................................... 4,464 2,318 1,799
---------- ---------- ----------
658,439 563,659 448,665
Costs and expenses:
Cost of sales........................................ 492,199 432,059 344,705
Warehouse, delivery, selling, administrative and
general........................................... 109,625 89,401 73,348
Depreciation and amortization........................ 8,464 5,208 4,290
Interest............................................. 3,940 1,595 2,120
---------- ---------- ----------
614,228 528,263 424,463
---------- ---------- ----------
Income before equity in earnings of 50%-owned company
and joint venture and income taxes................... 44,211 35,396 24,202
Equity in earnings of 50%-owned company and joint
venture.............................................. 5,340 3,199 48
---------- ---------- ----------
Income before income taxes............................. 49,551 38,595 24,250
Income taxes........................................... 19,761 15,893 9,840
---------- ---------- ----------
Net income............................................. $ 29,790 $ 22,702 $ 14,410
========== ========== ==========
Earnings per share..................................... $ 1.90 $ 1.45 $ 1.14
========== ========== ==========
Weighted average shares outstanding.................... 15,679,963 15,591,258 12,624,373
========== ========== ==========
</TABLE>

See accompanying notes.

F-4
<PAGE> 47

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
COMMON STOCK
---------------------- RETAINED
SHARES AMOUNT EARNINGS
<S> <C> <C> <C>
Balance at January 1, 1994................................. 11,012,427 $16,491 $ 73,610
Net income for the year.................................. -- -- 14,410
Stock options exercised.................................. 155,178 1,172 --
Stock issued under incentive bonus plan.................. 16,701 190 --
Cash dividends -- $.15 per share......................... -- -- (1,192)
Repurchase of stock...................................... (62,352) (184) (418)
Issuance of stock, net of offering costs of $612......... 5,175,000 45,904 --
---------- ------- --------
Balance at December 31, 1994............................... 16,296,954 63,573 86,410
Net income for the year.................................. -- -- 22,702
Stock options exercised.................................. 17,250 106 --
Stock issued under incentive bonus plan.................. 35,206 311 --
Cash dividends -- $.15 per share......................... -- -- (1,556)
Repurchase of stock...................................... (940,950) (3,646) (3,983)
---------- ------- --------
Balance at December 31, 1995............................... 15,408,460 60,344 103,573
Net income for the year.................................. -- -- 29,790
Stock options exercised.................................. 56,111 404 --
Stock issued under incentive bonus plan.................. 24,859 383 --
Cash dividends -- $.18 per share......................... -- -- (1,852)
---------- ------- --------
Balance at December 31, 1996............................... 15,489,430 $61,131 $131,511
========== ======= ========
</TABLE>

See accompanying notes.

F-5
<PAGE> 48

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................. $ 29,790 $ 22,702 $ 14,410
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................ 8,464 5,208 4,290
Deferred taxes........................................... 1,535 (1,777) 284
Losses on sales of equipment............................. 459 387 563
Net gain on sale of real estate.......................... (1,519) -- --
Equity in earnings of 50%-owned company and joint
venture............................................... (4,823) (3,199) (48)
Changes in operating assets and liabilities:
Accounts receivable................................... 16,445 (32) (13,898)
Inventories........................................... (6,687) (3,175) (7,129)
Prepaid expenses and other assets..................... 3,625 1,343 (1,346)
Income taxes payable.................................. (5,051) 3,799 1,292
Accounts payable and accrued expenses................. (5,812) 14,099 4,484
--------- -------- --------
Net cash provided by operating activities.................. 36,426 39,355 2,902
INVESTMENT ACTIVITIES
Purchases of property, plant and equipment................. (21,395) (7,867) (9,510)
Proceeds from sales of equipment........................... 1,082 68 1,126
Acquisition of CCC Steel, Inc.............................. (24,974) -- --
Acquisition of Siskin Steel & Supply Company, Inc.......... (70,935) -- --
Acquisition of certain assets of a metals service center... -- -- (5,533)
Purchase of a 50%-owned company............................ -- (19,250) --
Dividends received from 50%-owned company.................. 1,426 1,405 --
Change in investment in joint ventures..................... -- -- 1,952
Proceeds from the sale of certain assets of a metals
service center........................................... -- 4,200 --
--------- -------- --------
Net cash used in investing activities...................... (114,796) (21,444) (11,965)
FINANCING ACTIVITIES
Proceeds from borrowings................................... 105,273 32,097 --
Principal payments on long-term debt and short-term
borrowings............................................... (43,035) (31,571) (29,695)
Dividends paid............................................. (1,852) (1,556) (1,103)
Issuance of common stock................................... 787 417 47,266
Repurchase of common stock................................. -- (7,629) (602)
--------- -------- --------
Net cash provided by (used in) financing activities........ 61,173 (8,242) 15,866
--------- -------- --------
(Decrease) increase in cash and cash equivalents........... (17,197) 9,669 6,803
Cash and cash equivalents at beginning of year............. 18,012 8,343 1,540
--------- -------- --------
Cash and cash equivalents at end of year................... $ 815 $ 18,012 $ 8,343
========= ======== ========
</TABLE>

See accompanying notes.

F-6
<PAGE> 49

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:

During 1995, certain assets of the Company were exchanged in a non-monetary
transaction. The asset value exchanged was approximately $4,305. Additionally,
the Company's 50% interest in American Metals Corporation was contributed to
American Steel, L.L.C., of which the Company owns 50%.

Effective at the close of business on September 30, 1995, the Company
received the following assets and liabilities upon the dissolution of the
Feralloy Reliance Company, L.P. joint venture:

<TABLE>
<S> <C>
Inventory............................................. $19,678
Accounts receivable................................... 11,666
Fixed assets.......................................... 2,567
Other assets.......................................... 159
Liabilities........................................... 4,881
Note payable.......................................... 21,400
</TABLE>

See accompanying notes.

F-7
<PAGE> 50

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Reliance Steel & Aluminum Co. and its wholly-owned subsidiaries, which include
CCC Steel, Inc., MetalCenter, Inc., Siskin Steel & Supply Company, Inc. and
97%-owned Valex Corp. on a consolidated basis (the "Company"). All significant
intercompany transactions have been eliminated in consolidation. The Company
accounts for its 50% investment in American Steel, L.L.C. and its investment in
joint ventures on the equity method of accounting.

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Business

The Company, including its 50% investment in American Steel, L.L.C,
operates a network of 33 metals service centers in 13 states, which provide
value-added metals processing services and distribute a full line of over 20,000
metal products. Valex Corp. is a leading domestic manufacturer and international
distributor of electropolished stainless steel tubing and fittings for use in
the semiconductor industry. Valex operations include 6 distribution centers in 6
states and an international sales office in addition to its headquarters and
manufacturing facility.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. The
Company sells its products to a geographically diverse customer base in various
industries. Credit is extended based upon an evaluation of each customer's
financial condition, with terms consistent in the industry and no collateral
required. Losses from credit sales are provided for in the financial statements
and consistently have been within the allowance provided.

Fair Values of Financial Instruments

Fair values of cash and cash equivalents, short-term borrowings and the
current portion of long-term debt approximate cost due to the short period of
time to maturity. Fair values of long-term debt, which have been determined
based on borrowing rates currently available to the Company for loans with
similar terms or maturity, approximate the carrying amounts in the consolidated
financial statements.

Cash Equivalents

The Company considers all highly liquid instruments with an original
maturity of three months or less when purchased to be cash equivalents. Cash and
cash equivalents are held by major financial institutions.

Inventories

Inventories for the Company's metals service centers have been stated on
the last-in, first-out ("LIFO") method, which is not in excess of market. The
Company uses the LIFO method of inventory valuation because it results in a
better matching of costs and revenues. At December 31, 1996 and 1995,
inventories

F-8
<PAGE> 51

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

would have been $25,312,000 and $30,563,000 higher, respectively, had the
first-in, first-out ("FIFO") method been used. Inventories of Valex Corp. were
$19,130,000 and $9,188,000 at December 31, 1996 and 1995, respectively, and are
stated on the FIFO method, which is not in excess of market.

Depreciation

The provision for depreciation of property, plant and equipment is
generally computed on the straight-line method at rates designed to distribute
the cost of assets over the useful lives, estimated as follows:

<TABLE>
<S> <C>
Buildings........................................... 31 1/2 years
Machinery and equipment............................. 3-10 years
</TABLE>

Other Assets

Goodwill, representing the excess of the purchase price over the fair
values of the net assets of acquired entities, is being amortized over the
period of expected benefit of 40 years. Other intangible assets are being
amortized over the period of expected benefit, generally 5 years.

Revenue Recognition

The Company recognizes revenue from product sales at the time of shipment.
Provisions are made currently for estimated returns.

Stock-Based Compensation

The Company elected to continue to account for stock-based compensation
plans using the intrinsic value-based method of accounting prescribed by
Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued to Employees" and related interpretations. Management has determined that
the effect of applying Financial Accounting Standards Board Statement No. 123's
fair value method to the Company's stock-based awards results in net income and
earnings per share that are not materially different from amounts reported.
Under the provisions of APB 25, compensation expense is measured at the grant
date for the difference between the fair value of the stock and the exercise
price.

Earnings Per Share

Earnings per share are computed using the weighted average number of shares
of common stock and common stock equivalents (attributable to stock options,
which are not material) outstanding during each period. Common stock equivalents
were calculated using the treasury stock method. All weighted shares and
per-share amounts have been adjusted for a 3:2 common stock split that occurred
in June 1997 and for a 2:1 common stock split that occurred in May 1994. (See
Note 10.)

2. ACQUISITIONS

Effective October 1, 1996, the Company purchased 100% of the outstanding
voting and non-voting capital stock of Siskin Steel & Supply Company, Inc.
("Siskin") for $71,000,000. Siskin was a privately-held metals service center in
the Southeastern United States, with locations in Chattanooga and Nashville,
Tennessee; Spartanburg, South Carolina; and Birmingham, Alabama. The purchase of
Siskin was funded by drawing $6,000,000 on the Company's revolving line of
credit and issuing $65,000,000 of promissory notes. The promissory notes were
redeemed on January 2, 1997 from the proceeds of a private placement of debt of
$75,000,000.

F-9
<PAGE> 52

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

Effective April 3, 1996, the Company purchased 100% of the outstanding
capital stock of CCC Steel, Inc. ("CCC Steel") for approximately $25,000,000 in
cash. CCC Steel was a privately-held carbon steel service center, with
facilities in Los Angeles and Salt Lake City. The purchase was funded through
the Company's revolving line of credit.

These purchases were accounted for by the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets acquired
and the liabilities assumed based on the estimated fair values at the date of
the acquisition. The excess of purchase price over the estimated fair values of
the net assets acquired of $2,155,000 and $13,598,000 for Siskin and CCC Steel,
respectively, has been recorded as goodwill. Related amortization expense
amounted to approximately $300,000 for the year ended December 31, 1996.

The operating results of these acquisitions are included in the Company's
consolidated results of operations from the date of each acquisition. The
following unaudited proforma summary presents the consolidated results of
operations as if the acquisitions had occurred at the beginning of each period
after the effect of certain adjustments, including amortization of goodwill,
interest expense on the acquisition debt and related income tax effects. These
proforma results have been presented for comparative purposes only and are not
indicative of what would have occurred had the acquisition been made as of
January 1, 1995, or of any potential results which may occur in the future.

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
1996 1995
<S> <C> <C>
Proforma:
Net sales.............................................. $780,109 $767,401
Net income............................................. 30,740 26,393
Earnings per share..................................... $ 1.69 $ 1.96
</TABLE>

On January 9, 1996, the Company purchased certain assets of a metals
service center in Albuquerque, New Mexico. These assets were combined with the
Company's existing non-ferrous metalcenter operations in Albuquerque. In August
1994, the Company purchased certain assets of a metals service center in Salt
Lake City, Utah for a purchase price of approximately $5,500,000. These
acquisitions were accounted for using the purchase method and were not material
to the financial statements of the Company.

3. INVESTMENTS IN 50%-OWNED COMPANY AND JOINT VENTURE

On July 1, 1995, the Company acquired a 50% interest in the Membership
Units of American Steel, L.L.C. ("American Steel"), a newly-formed company, for
$19,250,000 in cash. American Steel is owned 50% each by American Industries,
Inc. ("American") and the Company and includes American's former metals service
centers in Portland, Oregon and Kent (Seattle), Washington. At the date of
acquisition, American Steel also owned a metals service center in Vancouver,
British Columbia, which was sold in January 1997. Additionally, American and the
Company each contributed their 50% interests in American Metals Corporation
("American Metals"), a joint venture created in 1993 between the Company and
American, to American Steel. American Metals operates three metals service
centers in California. The Operating Agreement of American Steel provides that
the Company may purchase the remaining 50% of American Steel during a term of
three years following the earlier of the death of the owner of American, or
December 31, 2005. The price shall be the greater of American's current Capital
Account or 50% of the fair market value of American Steel. The Operating
Agreement gives the Company complete control over the assets and operations of
American Steel. Summarized financial information for American Steel, accounted
for

F-10
<PAGE> 53

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

by the equity method, is as follows as of and for the twelve months ended
December 31, 1996 and for the six months ended December 31, 1995 (in thousands):

<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Current assets......................................... $ 46,462 $ 51,638
Property, plant, and equipment and other assets........ 48,373 48,864
Current liabilities.................................... 9,553 34,398
Long-term liabilities.................................. 3,319 4,068
Net sales.............................................. 178,882 86,394
Gross profit........................................... 45,055 21,012
Income before income taxes............................. 10,281 4,278
Net income............................................. 9,247 3,954
</TABLE>

At the close of business on September 30, 1995, the Company completed an
agreement with Feralloy Corporation to terminate their joint venture, Feralloy
Reliance Company, L. P. ("FRLP"). Under terms of the agreement, the net assets
and the business of the joint venture's service center operation based in
Fremont were distributed to Feralloy West Company, which is not affiliated with
the Company. The net assets and the business of the service center operation
based in Los Angeles, which consisted of a steel slitting operation and a
service center operation, were distributed to the Company. On November 3, 1995,
the Company sold certain assets of the Los Angeles steel slitting operation.
This transaction did not have a material effect on the financial position or
results of operations of the Company. The Company is operating the steel service
center business received upon the dissolution of the FRLP joint venture as a
separate division. Revenues for the period October 1, 1995 to December 31, 1995
and for the twelve months ended December 31, 1996 were $8,900,000 and
$41,800,000, respectively.

The Company leased buildings and cranes to FRLP through September 30, 1995
and through December 31, 1994 subleased a building to FRLP at a rate which was
equal to the Company's lease payments. For a fee, the Company also provided data
processing, accounting and certain administrative services to FRLP through
September 30, 1995.

F-11
<PAGE> 54

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

4. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
(IN THOUSANDS)
<S> <C> <C>
Revolving line of credit ($100,000,000 limit), due
July 31, 1999, interest at variable rates (6.06% at
December 31, 1996), payable monthly................ $ 39,000 $25,000
Promissory notes, due January 2, 1997, interest
payable at maturity at 6.16%....................... 65,000 --
Variable Rate Demand Industrial Development Revenue
Bonds, Series 1989 A, due July 1, 2014, with
interest payable quarterly; average interest rate
during 1996 of 3.6%................................ 3,550 3,650
9% Senior Notes, due March 1, 1997, semiannual
payments of $1,400,000, with interest payable
quarterly.......................................... 1,800 4,600
Revolving line of credit ($10,000,000 limit), due
February 28, 1997, interest at variable rates (7.0%
at December 31, 1996).............................. 555 --
-------- -------
109,905 33,250
Less amounts due within one year...................... (2,455) (2,900)
-------- -------
$107,450 $30,350
======== =======
</TABLE>

The Company's revolving line of credit, as amended, was increased to
$100,000,000 during 1996. In connection with the acquisition of Siskin, the
company issued $65,000,000 of promissory notes to the shareholders of Siskin.
The notes were collateralized by standby letters of credit obtained under the
Company's revolving line of credit. The promissory notes have been excluded from
current liabilities due to the refinancing of the obligation with the long-term
senior unsecured notes on January 2, 1997. The summary of aggregate maturities
of long-term debt summarized below include the payment terms of the senior
unsecured notes.

The promissory notes were redeemed on January 2, 1997 from the proceeds of
the issuance of $75,000,000 in senior unsecured notes in a private placement of
debt. The notes mature at various dates during the period January 2, 2004 to
January 2, 2009 and bear interest at an average interest rate of 7.22%.

The Company's long-term loan agreements include certain restrictions on the
amount of corporate borrowings, leasehold obligations, investments, cash
dividends, capital expenditures, and acquisition of the Company's Common Stock,
among other things. In addition, the agreements require the maintenance of
certain financial ratios. At December 31, 1996, retained earnings in the amount
of $16,261,000 were available for the payment of cash dividends.

Interest paid during 1996, 1995 and 1994 amounted to $2,550,000,
$1,434,000, and $2,208,000, respectively.

F-12
<PAGE> 55

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

The following is a summary of aggregate maturities of long-term debt for
each of the next five years (in thousands):

<TABLE>
<S> <C>
1997.................................................... $ 2,455
1998.................................................... 100
1999.................................................... 39,100
2000.................................................... 100
2001.................................................... 100
Thereafter.............................................. 68,050
--------
$109,905
========
</TABLE>

5. STOCK OPTION PLANS

During 1989, the Company adopted a Non-Qualified Stock Option Plan which
provided for the granting of options to key employees to purchase up to 630,000
shares of the Company's Common Stock at a price at least equal to the fair
market value of the stock at the grant date. The Plan, by its terms, expired on
December 31, 1993. No options are exercisable until after one year from the
grant date, and in each of the following four years, 25% of the options become
exercisable on a cumulative basis. Options are exercisable for a period of five
years from the date of grant. All options outstanding under the 1989 Plan expire
during 1997. Transactions under this plan are as follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
STOCK OPTIONS SHARES EXERCISE PRICE
----------------------------------------------- -------- ----------------
<S> <C> <C>
Outstanding at January 1, 1994................. 422,091 $ 5.92
Granted...................................... -- --
Exercised.................................... (155,178) $ 5.13
Expired...................................... (96,027) $ 5.13
-------- -----
Outstanding at December 31, 1994............... 170,886 $ 7.08
Granted...................................... -- --
Exercised.................................... (17,250) $ 6.13
Expired...................................... (4,725) $ 7.19
-------- -----
Outstanding at December 31, 1995............... 148,911 $ 7.19
Granted...................................... -- --
Exercised.................................... (56,110) $ 7.19
Expired...................................... (4,725) $ 7.19
-------- -----
Outstanding at December 31, 1996............... 88,076 $ 7.19
======== =====
</TABLE>

In 1994, the Board of Directors of the Company adopted an Incentive and
Non-Qualified Stock Option Plan (the "1994 Plan"). There were 1,125,000 shares
of Common Stock reserved for issuance under the 1994 Plan. The 1994 Plan
provides for granting of stock options that may be either "incentive stock
options" within the meaning of Section 422A of the Internal Revenue Code of 1986
(the "Code") or "non-qualified stock options," which do not satisfy the
provisions of Section 422A of the Code. Options are required to be granted at an
option price per share equal to the fair market value of Common Stock on the
date of grant, except that the exercise price of incentive stock options granted
to any employee who owns (or, under pertinent Code provisions, is deemed to own)
more than 10% of the outstanding Common Stock of the Company, must equal at
least 110% of fair market value on the date of grant. Stock options may not be
granted longer than ten years

F-13
<PAGE> 56

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

from the date of the 1994 Plan. All options granted have five year terms and
vest at the rate of 25% per year, commencing one year from the date of grant.

On January 24, 1996, non-qualified stock options to purchase 332,250 shares
of the Company's Common Stock at $12.17 per share were granted under the 1994
Plan. No options were granted during 1995 or 1994. No options were exercisable
during 1996.

6. INCOME TAXES

Deferred income taxes are computed using the liability method and reflect
the net tax effects of temporary differences between the carrying amount of
assets and liabilities for financial statement purposes and the amounts used for
income tax purposes. The provision for income taxes reflects the taxes to be
paid for the period and the change during the period in the deferred tax assets
and liabilities. Significant components of the Company's deferred tax assets and
liabilities are as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
<S> <C> <C>
Deferred tax assets:
Accrued expenses not currently deductible for tax....... $ 6,287 $4,738
Tax basis in excess of book basis of assets transferred
to the Company upon dissolution of FRLP (Note 3)..... -- 1,448
Unicap.................................................. 783 1,041
Goodwill................................................ 445 301
-------- ------
Total deferred tax assets................................. 7,515 7,528
-------- ------
Deferred tax liabilities:
Tax over book depreciation.............................. 9,030 4,600
Book basis in excess of tax basis on:
Inventory acquired................................... 7,574 --
Property, plant and equipment acquired............... 7,919 --
Other, net.............................................. 13 403
-------- ------
Total deferred tax liabilities............................ 24,536 5,003
-------- ------
Net deferred (liabilities) assets......................... $(17,021) $2,525
======== ======
</TABLE>

Significant components of the provision for income taxes are as follows (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
<S> <C> <C> <C>
Current:
Federal....................................... $14,598 $13,824 $7,559
State......................................... 3,628 3,846 1,997
------- ------- ------
18,226 17,670 9,556

Deferred:
Federal....................................... 1,232 (1,652) 61
State......................................... 303 (125) 223
------- ------- ------
1,535 (1,777) 284
------- ------- ------
$19,761 $15,893 $9,840
======= ======= ======
</TABLE>

F-14
<PAGE> 57

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

The reconciliation of income tax at the U.S. federal statutory tax rates to
income tax expense is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1996 1995 1994
<S> <C> <C> <C>
Income tax at U.S. statutory tax rates........................ 35.0% 35.0% 35.0%
State income tax, net of federal tax effect................... 5.0 5.6 6.0
Other......................................................... (.1) .6 (.4)
---- ---- ----
Effective tax rate............................................ 39.9% 41.2% 40.6%
==== ==== ====
</TABLE>

Income tax payments during 1996, 1995 and 1994 were $22,922,000,
$13,871,000 and $7,889,000, respectively.

7. SHAREHOLDERS' EQUITY

In September 1994, the Company sold 5,175,000 shares at an initial offering
price of $9.67 per share. The proceeds of $45,904,000 (net of underwriter
commissions and offering costs) were used for the pay down of bank debt, for
working capital purposes and to fund a portion of the acquisition of a 50%
interest in American Steel, L.L.C.

In December 1994, the Board of Directors approved a stock repurchase plan,
authorizing the Company to purchase up to 750,000 shares of its Common Stock
from time to time in the open market or in privately-negotiated transactions.
Repurchased shares are redeemed and treated as authorized but unissued shares.
In February 1995, the Board of Directors authorized the Company to purchase up
to an additional 750,000 shares. As of December 31, 1996, the Company had
repurchased a total of 977,700 shares of its Common Stock at an average cost of
$8.12 per share. No shares were repurchased during 1996.

8. LEASES

The Company leases land and buildings under noncancellable operating leases
expiring in various years through 2001. Several of the leases have renewal
options providing for additional lease periods. Future minimum payments, by year
and in the aggregate, under the noncancellable leases with initial or remaining
terms of one year or more, consisted of the following at December 31, 1996 (in
thousands):

<TABLE>
<S> <C>
1997................................................... $2,884
1998................................................... 2,393
1999................................................... 1,119
2000................................................... 848
2001................................................... 565
Thereafter............................................. 1,079
------
$8,888
======
</TABLE>

Total rental expense amounted to $3,858,000, $2,099,000, and $1,881,000 for
1996, 1995 and 1994, respectively.

9. EMPLOYEE BENEFITS

The Company has an employee stock ownership plan ("the ESOP") and trust
that has been approved by the Internal Revenue Service as a qualified plan. The
ESOP is a noncontributory plan which covers salaried and certain hourly
employees of the Company. The amount of the annual contribution is at the
discretion of

F-15
<PAGE> 58

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

the Board of Directors of the Company, except that the minimum amount must be
sufficient to enable the ESOP Trust to meet its current obligations.

The Company has a noncontributory defined benefit pension plan covering
salaried and certain hourly employees of the Company. Benefits are based upon
the employees' earnings. The annual contribution is based upon the minimum
funding requirement under Section 412 of the Internal Revenue Code. There is no
past service liability in connection with the pension plan. The assets of the
pension plan consist primarily of investments in short-term money market funds,
common stock of publicly traded companies and the Company's Common Stock. On
July 5, 1996, benefits under the pension plan were frozen, as the Company
elected to replace the pension plan with a 401(k) plan. During 1996, the Company
recorded an additional net pension expense of approximately $1,000,000 related
to termination of the plan. The Board of Directors of the Company approved the
termination of the pension plan in February 1997. Distributions under the
pension plan will be made in 1997.

The net periodic pension costs for the plans are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1995 1994
(IN THOUSANDS)
<S> <C> <C> <C>
Service costs -- benefits earned during the year.......... $ 308 $443 $387
Interest cost on projected benefit obligation............. 525 444 400
Actual return on assets................................... (949) (752) (386)
Net amortization and deferral............................. 573 444 18
Curtailment/termination expense........................... 1,000 -- --
------ ---- -----
$1,457 $579 $419
====== ==== =====
</TABLE>

The following is a summary of the status of the funding of the pension
plan:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations............................. $4,458 $4,022
Non-vested benefit obligations......................... 448 371
------ ------
Accumulated benefit obligations.......................... $4,906 $4,393
====== ======
Projected benefit obligations............................ $4,906 $5,932
Assets of the plan at market............................. 5,899 5,025
------ ------
Excess of plan assets over projected benefit
obligation............................................. 993 (907)
Unrecognized net (gain) loss............................. (109) 619
Unrecognized net transition obligation being recognized
over 15 years.......................................... -- 124
Reserve for curtailment/termination...................... (884) --
------ ------
Prepaid (accrued) pension liabilities.................... $ -- $ (164)
====== ======
</TABLE>

In determining the actuarial present value of projected benefit obligations
for the Company's pension plan at December 31, 1996 and 1995, the Company
assumed a discount rate of 7.25%, an increase in annual future compensation
levels of 4.50%, and an expected long-term annual rate of return on assets of
8.25%.

F-16
<PAGE> 59

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

The Company has various contributory 401(k) retirement plans that cover
substantially all of the Company's employees who meet minimum service
requirements and who are not covered by a collective bargaining agreement,
including a newly adopted 401(k) plan which replaced the Company's defined
benefit pension plan. Contributions to the plans are funded annually and are
determined at the discretion of the Company's Board of Directors.

Effective January 1996, the Company adopted a Supplemental Executive
Retirement Plan ("SERP"), which is a nonqualified pension plan that provides
post-retirement benefits to key officers of the Company. The SERP is
administered by the Compensation and Stock Option Committee of the Board of
Directors. Benefits are based upon the employees' earnings. At December 31,
1996, the unfunded projected benefit obligation for the plan amounted to
$2,883,000, of which $2,348,000 represents prior service costs which are subject
to later amortization. Life insurance policies will be purchased for most
individuals covered by the SERP and will be funded by the Company. The Company
recorded pension expense of $575,000 related to the SERP in 1996, of which
$195,000 and $191,000 represents amortization of prior service costs and
interest costs, respectively.

The Company's contribution expense for Company sponsored retirement plans
were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1995 1994
(IN THOUSANDS)
<S> <C> <C> <C>
Pension Plan................................... $1,457 $ 579 $ 419
Employee Stock Ownership Plan.................. 600 600 555
401(k) Plans................................... 546 100 72
Supplemental Executive Retirement Plan......... 575 -- --
------ ------ ------
$3,178 $1,279 $1,046
====== ====== ======
</TABLE>

The Company participates in various multi-employer pension plans covering
certain employees not covered under the Company's benefit plans pursuant to
agreements between the Company and collective bargaining units who are members
of such plans. The Company is unable to determine its relative position with
regard to defined benefit plans to which contributions are made as a result of
collective bargaining agreements.

The Company has a "Key-Man Incentive Plan" (the "Incentive Plan") for
division and subsidiary managers and officers, which is administered by the
Compensation and Stock Option Committee of the Board of Directors. For 1996,
1995, and 1994 this incentive compensation bonus was payable 75% in cash and 25%
in the Company's Common Stock. The Company accrued $1,763,000, $1,533,000 and
$1,254,000 under the Incentive Plan as of December 31, 1996, 1995 and 1994,
respectively. In April 1996 and 1995, the Company issued 24,859 and 35,206
shares of Common Stock to employees under the incentive bonus plan for the years
ended December 31, 1995 and 1994, respectively.

10. SUBSEQUENT EVENTS

On March 13, 1997, the Company reached an agreement to purchase 100% of the
outstanding shares of Amalco Metals, Inc. ("Amalco"), subject to successful
completion of due diligence. Amalco was a privately-held metals service center
located in Union City, California. This transaction was completed in April 1997.
For the year ended April 30, 1996, Amalco's net sales were approximately
$31,000,000.

On March 10, 1997, the Company reached an agreement to purchase 100% of the
outstanding capital stock of AMI Metals, Inc. ("AMI"), subject to successful
completion of due diligence. AMI was a privately-held metals service center
company headquartered in Brentwood, Tennessee, with additional locations in
Fontana, California; Wichita, Kansas; Fort Worth, Texas; Kent, Washington; and
Swedesboro, New Jersey.

F-17
<PAGE> 60

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996

The transaction was completed April 2, 1997, at which time AMI became a
wholly-owned subsidiary of the Company. For the year ended February 28, 1997,
AMI's net sales were approximately $77,000,000.

During January and February 1997, the Company repurchased additional shares
of the Company's Common Stock, bringing the cumulative total to 1,305,900 shares
at an average cost of $11.09 per share.

On May 28, 1997, the Board of Directors declared a 3:2 stock split in the
form of a 50% stock dividend on the Company's Common Stock, payable June 27,
1997 to shareholders of record June 6, 1997. All share and per share amounts
have been retroactively reflected in these consolidated financial statements and
notes thereto.

F-18
<PAGE> 61

RELIANCE STEEL & ALUMINUM CO.

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for the
years ended December 31, 1996, 1995 and 1994:

<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------- -------- ------------- ------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1996:
Net sales......................... $ 157,634 $164,628 $ 153,395 $178,318
Cost of sales..................... 120,585 125,506 115,767 130,341
Net income........................ 7,844 7,766 6,973 7,207
Earnings per share................ 0.51 0.49 0.45 0.46
1995:
Net sales......................... $ 136,502 $140,753 $ 135,317 $148,769
Cost of sales..................... 105,698 109,512 103,749 113,100
Net income........................ 5,567 5,621 5,676 5,838
Earnings per share................ 0.35 0.37 0.37 0.37
1994:
Net sales......................... $ 104,919 $109,082 $ 115,718 $117,147
Cost of sales..................... 82,283 83,959 89,028 89,435
Net income........................ 3,068 3,739 3,775 3,828
Earnings per share................ 0.27 0.33 0.31 0.23
</TABLE>

Quarterly and year-to-date computations of per share amounts are made
independently. Therefore, the sum of per share amounts for the quarters may not
agree with per share amounts for the year shown elsewhere.

F-19
<PAGE> 62

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
1996
JUNE 30, ------------
1997 (NOTE)
--------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................... $ 1,363 $ 815
Accounts receivable, less allowance for doubtful accounts of
$3,578 at June 1997 and $2,899 at December 1996.............. 114,036 73,092
Inventories..................................................... 141,550 122,778
Prepaid expenses and other current assets....................... 3,361 6,700
Deferred income taxes........................................... 7,975 7,515
-------- --------
Total current assets.............................................. 268,285 210,900
Property, plant and equipment, at cost:
Land............................................................ 24,390 21,054
Buildings....................................................... 84,364 80,687
Machinery and equipment......................................... 98,086 88,551
Allowances for depreciation..................................... (60,664) (56,678)
-------- --------
146,176 133,614
Investment in 50%-owned company................................... 30,205 28,958
Intangibles....................................................... 47,790 17,704
-------- --------
Total assets...................................................... $492,456 $391,176
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses........................... $ 86,790 $ 59,367
Wages and related accruals...................................... 3,999 4,636
Income taxes payable............................................ (685) 90
Deferred income taxes........................................... 7,864 7,587
Current maturities of long-term debt............................ 100 2,455
-------- --------
Total current liabilities......................................... 98,068 74,135
Long-term debt.................................................... 177,450 107,450
Deferred income taxes............................................. 17,169 16,949
Shareholders' equity:
Preferred stock, no par value:
Authorized shares - 5,000,000
None issued or outstanding................................. -- --
Common stock, no par value:
Authorized shares - 20,000,000
Issued and outstanding shares - 15,160,671 in June 1997 and
15,489,431 in December 1996, stated capital............... 60,297 61,131
Retained earnings............................................... 139,472 131,511
-------- --------
Total shareholders' equity........................................ 199,769 192,642
-------- --------
Total liabilities and shareholders' equity........................ $492,456 $391,176
======== ========
</TABLE>

NOTE: The Balance Sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.

See accompanying notes.

F-20
<PAGE> 63

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1997 1996
<S> <C> <C>
Net sales........................................................... $ 445,415 $ 322,262
Gain on sale of real estate......................................... 1,008 1,519
Other income........................................................ 999 1,895
---------- ----------
447,422 325,676
Costs and expenses:
Cost of sales..................................................... 343,376 246,091
Warehouse, delivery, selling, administrative and general.......... 70,520 50,589
Depreciation and amortization..................................... 5,947 3,709
Interest.......................................................... 4,798 1,308
---------- ----------
424,641 301,697
Income before equity in earnings of 50%-owned company and income
taxes............................................................. 22,781 23,979
Equity in earnings of 50%-owned company............................. 2,673 2,480
---------- ----------
Income before income taxes.......................................... 25,454 26,459
Income taxes:
Federal........................................................... 8,145 8,388
State............................................................. 2,011 2,461
---------- ----------
10,156 10,849
---------- ----------
Net income.......................................................... $ 15,298 $ 15,610
========== ==========
Earnings per share.................................................. $ 0.99 $ 1.00
========== ==========
Weighted average shares outstanding................................. 15,456,000 15,681,000
========== ==========
</TABLE>

See accompanying notes.

F-21
<PAGE> 64

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................................... $15,298 $15,610
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 5,947 3,709
Deferred income taxes.................................................. (110) --
Loss on sales of machinery and equipment............................... 50 101
Deferred gain on sale of real estate................................... (1,008) (1,519)
Equity in earnings of 50%-owned company................................ (2,464) (2,480)
Changes in operating assets and liabilities:
Accounts receivable................................................. (22,170) 101
Inventories......................................................... (1,116) 9,725
Prepaid expenses and other assets................................... 738 4,524
Income taxes........................................................ (1,050) (4,231)
Accounts payable and accrued expenses............................... 9,561 (4,367)
-------- --------
Net cash provided by operating activities................................ 3,676 21,173
-------- --------
INVESTMENT ACTIVITIES
Purchases of property, plant and equipment............................... (7,623) (10,693)
Proceeds from sales of property and equipment............................ 123 106
Acquisitions of metals service centers................................... (46,266) (24,974)
Dividends received from 50%-owned company................................ 1,217 165
-------- --------
Net cash used in investing activities.................................... (52,549) (35,396)
-------- --------
FINANCING ACTIVITIES
Proceeds from borrowings................................................. 155,000 33,000
Principal payments on long-term debt and short-term borrowings........... (97,410) (30,018)
Dividends paid........................................................... (1,415) (1,231)
Issuance of common stock................................................. 679 657
Repurchase of common stock............................................... (7,433) --
-------- --------
Net cash provided by financing activities................................ 49,421 2,408
-------- --------
Increase (decrease) in cash.............................................. 548 (11,815)
Cash and cash equivalents at beginning of period......................... 815 18,012
-------- --------
Cash and cash equivalents at end of period............................... $ 1,363 $ 6,197
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Interest paid during the period.......................................... $ 5,780 $ 1,080
Income taxes paid during the period...................................... 10,840 14,730
</TABLE>

See accompanying notes.

F-22
<PAGE> 65

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions of Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, necessary for fair presentation, with
respect to the interim financial statements have been included. The results of
operations for the three month and six month periods ended June 30, 1997 are not
necessarily indicative of the results for the full year ending December 31,
1997. For further information, refer to the consolidated financial statements
and footnotes thereto for the year ended December 31, 1996, included in this
Prospectus.

2. ACQUISITIONS

On April 2, 1997, the Company completed the purchase of AMI Metals, Inc.
("AMI"), for $38,500,000. AMI was a privately-held metals service center company
headquartered in Brentwood, Tennessee, with additional locations in Fontana,
California; Wichita, Kansas; Fort Worth, Texas; Kent, Washington; and
Swedesboro, New Jersey. AMI is operating as a wholly-owned subsidiary of the
Company. This acquisition was funded with borrowings under the Company's
revolving line of credit. For the fiscal year ended February 28, 1997, AMI's net
sales were approximately $77,000,000.

On April 30, 1997, the Company purchased Amalco Metals, Inc. ("Amalco").
Amalco was a privately-held metals service center located in Union City,
California. This acquisition was funded with borrowings under the Company's
revolving line of credit. For the fiscal year ended April 30, 1997, Amalco's net
sales were approximately $25,000,000. On April 25, 1997, the Company realized a
gain of approximately $1,000,000 on the sale of the real estate at its Santa
Clara, California metals service center, which will be moved to a new facility
being constructed in Union City, California, where it will be combined with
Amalco into a single operation. This new facility is scheduled to be completed
in early 1998.

The purchases of AMI and Amalco were accounted for by the purchase method
of accounting and, accordingly, the purchase price has been allocated to the
assets acquired and the liabilities assumed based on the estimated fair values
at the date of the acquisition.

3. STOCK SPLIT

4. SHAREHOLDERS' EQUITY

In December 1994, the Board of Directors approved a Stock Repurchase Plan,
authorizing the Company to purchase up to 750,000 shares (increased to 1,500,000
shares in February 1995) of its Common Stock from time to time in the open
market or in privately-negotiated transactions. Repurchased shares are redeemed
and treated as authorized but unissued shares. As of June 30, 1997, the Company
had repurchased a total of 1,351,500 shares of its Common Stock under the Stock
Repurchase Plan, at an average cost of $11.37 per share. Of these shares,
373,800 shares were repurchased by the Company during the six month period ended
June 30, 1997 at an average cost of $19.88 per share.

In March 1997, 22,177 shares of Common Stock were issued to division
managers, subsidiary officers and officers of the Company under the 1996 Key Man
Incentive Plan.

F-23
<PAGE> 66

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

Earnings per share are computed using the weighted average number of shares
of common stock and common stock equivalents attributable to stock options,
which are not material, outstanding during each period. Common stock equivalents
were calculated using the treasury stock method.

5. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 ("FAS 128"), Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The calculation of fully
diluted earnings per share under FAS 128 is not deemed to have a significant
impact on primary earnings per share for the six month and three month periods
ended June 30, 1997 and June 30, 1996.

6. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
1996
JUNE 30, ------------
1997 (AUDITED)
-----------
(UNAUDITED)
<S> <C> <C>
Revolving line of credit ($125,000 limit), due July
31, 1999, interest at variable rates, payable
monthly............................................ $ 99,000 $ 39,000
Senior unsecured notes due January 2, 2004 to January
2, 2009, average interest rate 7.22%............... 75,000 --
Promissory notes, paid January 2, 1997............... -- 65,000
Variable Rate Demand Industrial Development Revenue
Bonds, Series 1989 A, due July 1, 2014, with
interest payable quarterly......................... 3,550 3,550
9% Senior Notes, paid March 1, 1997.................. -- 1,800
Revolving line of credit ($10,000 limit), paid
February 28, 1997.................................. -- 555
--------- --------
177,550 109,905
Less current portion................................. (100) (2,455)
--------- --------
$ 177,450 $107,450
========= ========
</TABLE>

The Company's revolving line of credit, as amended, was increased to
$125,000,000 during March 1997. In connection with the acquisition of Siskin on
October 1, 1996, the Company issued $65,000,000 of promissory notes to the
shareholders of Siskin. The notes were collateralized by standby letters of
credit obtained under the Company's revolving line of credit. The promissory
notes were redeemed on January 2, 1997 from the proceeds of the issuance of
$75,000,000 in senior unsecured notes in a private placement of debt.

The Company's long-term loan agreements include certain restrictions on the
amount of corporate borrowings, leasehold obligations, investments, cash
dividends, capital expenditures and acquisition of the Company's Common Stock,
among other things. In addition, the agreements require the maintenance of
certain financial ratios.

7. EMPLOYEE BENEFITS

The Company has a noncontributory defined benefit pension plan covering
salaried and certain hourly employees of the Company. Benefits are based upon
the employees' earnings. On July 5, 1996, benefits under the pension plan were
frozen, as the Company elected to replace the pension plan with a 401(k) plan.
The Board of Directors of the Company approved the termination of the pension
plan in February 1997. Distributions from the pension plan commenced in July
1997.

F-24
<PAGE> 67

Photograph of
blanking and
leveling machine
processing line
Photograph of stacked
metal rod and bar
inventory

RELIANCE STEEL & ALUMINUM CO., FOUNDED IN 1939,
SERVICES OVER 33,000 CUSTOMERS THROUGHOUT THE
UNITED STATES WITH A BROAD RANGE OF PRODUCTS.

Photograph of
machine using
high definition
plasma burning
on metal plate
Photograph of
precision slitting
of aluminum
Photograph of
Valex tubings
and fittings
<PAGE> 68

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY,
ANY SELLING SHAREHOLDERS OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 8
Use of Proceeds...................... 10
Capitalization....................... 11
Price Range of Common Stock.......... 12
Dividend Policy...................... 12
Selected Consolidated Financial
Data............................... 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 14
Business............................. 21
Facilities and Plant Size............ 31
Management........................... 34
Principal and Selling Shareholders... 36
Description of Capital Stock......... 37
Certain U.S. Tax Consequences to Non-
U.S. Shareholders.................. 37
Underwriting......................... 39
Counsel.............................. 40
Experts.............................. 40
Available Information................ 40
Incorporation by Reference........... 41
Index to Financial Statements and
Supplementary Data................. F-1
</TABLE>

======================================================
======================================================

3,300,000 SHARES

RELIANCE STEEL &
ALUMINUM CO.

COMMON STOCK

[LOGO]
------------------------
PROSPECTUS
------------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MERRILL LYNCH & CO.

PRUDENTIAL SECURITIES INCORPORATED
, 1997
======================================================
<PAGE> 69

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Set forth below are the expenses to be incurred by the Company in
connection with the issuance and distribution of the securities being registered
hereby other than the underwriting discounts and commissions.

<TABLE>
<CAPTION>
TOTAL(1)
<S> <C>
Securities and Exchange Commission registration fee............ $ 32,056
National Association of Securities Dealers, Inc. filing fee.... 11,079
NYSE Listing Fee............................................... 11,000
Legal fees and expenses........................................ 200,000
Printing and engraving expenses................................ 100,000
Accounting fees and expenses................................... 100,000
Transfer Agent and Registrar fees and expenses................. 20,000
Miscellaneous.................................................. 25,865
--------
TOTAL................................................ $500,000
========
</TABLE>

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

(1) All amounts except the SEC and the NASD filing fees are estimated. All
expenses will be borne by the Company, other than the Selling Shareholders'
pro rata portion of the filing fees of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Article IV of the Restated Articles of Incorporation of the Company,
the liability of directors of the Company for monetary damages is eliminated to
the fullest extent permitted under California law. Additionally, the Company is
authorized to provide indemnification of its agents as defined in Section 317 of
the California General Corporation Law for breach of their duty to the Company
and its shareholders through Bylaw provisions, or through agreements with the
agents, or both, in excess of the indemnification otherwise permitted under
Section 317, subject to the limits on such excess indemnification set forth in
Section 204 of the California General Corporation Law. Section 5.11 of the
Company's Bylaws provides that the Company shall indemnify each of its agents
against expenses, judgments, fines, settlements or other amounts actually and
reasonably incurred by such person by reason of such person having been made or
having been threatened to be made a party to a proceeding to the fullest extent
permissible by the provisions of Section 317 of the California Corporations
Code, as amended from time to time, and that the Company shall advance the
expenses reasonably expected to be incurred in defending any such proceeding,
upon receipt of the undertaking required by Section 317(f).

Section 204 of the California General Corporation Law allows a corporation,
among other things, to eliminate or limit the personal liability of a director
for monetary damages in an action brought by the corporation itself or by way of
a derivative action brought by shareholders for breach of a director's duties to
the corporation and its shareholders. The provision may not eliminate or limit
liability of directors for the following specified actions, however: (i) for
acts or omissions that involve intentional misconduct or a knowing and culpable
violation of law; (ii) for acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders, or that
involve the absence of good faith on the part of the director; (iii) for any
transaction from which a director derived an improper personal benefit; (iv) for
acts or omissions that show a reckless disregard of the director's duty to the
corporation or its shareholders in circumstances in which the director was
aware, or should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the corporation or its
shareholders; (v) for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
corporation or its shareholders; (vi) for transactions between the corporation
and a director, or between corporations having interrelated directors; and (vii)
for improper distributions and stock dividends,

II-1
<PAGE> 70

loans and guaranties. The provision does not apply to acts or omissions
occurring before the date that the provision became effective and does not
eliminate or limit the liability of an officer for an act or omission as an
officer, regardless of whether that officer is also a director.

Section 317 of the California General Corporation Law gives a corporation
the power to indemnify any person who was or is a party, or is threatened to be
made a party, to any proceeding, whether threatened, pending, or completed, and
whether civil, criminal, administrative or investigative, by reason of the fact
that that person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. A corporation may indemnify such a person
against expenses, judgments, fines, settlements and other amounts actually or
reasonably incurred in connection with the proceeding, if that person acted in
good faith, and in a manner that that person reasonably believed to be in the
best interest of the corporation; and, in the case of a criminal proceeding, had
no reasonable cause to believe the conduct of the person was unlawful. In an
action by or in the right of the corporation, no indemnification may be made
with respect to any claim, issue or matter (a) as to which the person shall have
been adjudged to be liable to the corporation in the performance of that
person's duty to the corporation and its shareholders, unless and only to the
extent that the court in which such proceeding was brought shall determine that,
in view of all of the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for expenses; and (b) which is settled or
otherwise disposed of without court approval. To the extent that any such person
has been successful on the merits in defense of any proceeding, or any claim,
issue or matter therein, that person shall be indemnified against expenses
actually and reasonably incurred in connection therewith. Indemnification is
available only if authorized in the specific case by a majority of a quorum of
disinterested directors, by independent legal counsel in a written opinion, by
approval of the shareholders other than the person to be indemnified, or by the
court. Expenses incurred by such a person may be advanced by the corporation
before the final disposition of the proceeding upon receipt of an undertaking to
repay the amount if it is ultimately determined that the person is not entitled
to indemnification.

Section 317 further provides that a corporation may indemnify its officers
and directors in excess of the statutory provisions if authorized by its
Articles of Incorporation and that a corporation may purchase and maintain
insurance on behalf of any officer, director, employee or agent against any
liability asserted or incurred in his or her capacity, or arising out of his or
her status with the corporation.

In addition to the provisions of the Restated Articles of Incorporation and
Bylaws of the Company, the Company has entered into indemnification agreements
with all of its present directors and officers, to indemnify these persons
against liabilities arising from third party proceedings, or from proceedings by
or in the right of the Company, to the fullest extent permitted by law.
Additionally, the Company has purchased directors' and officers' liability
insurance for the benefit of its directors and officers.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<C> <S>
*1.01 Form of Underwriting Agreement
**4.01 Restated Articles of Incorporation of Registrant, as amended
**4.02 Restated Bylaws of Registrant
*5.01 Opinion of Arter & Hadden
23.01 Consent of Independent Auditors
*23.02 Consent of Arter & Hadden (included in Exhibit 5.01 hereto)
24.01 Power of Attorney (included on page II-4)
27.01 Financial Data Schedules
</TABLE>

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

* To be filed by amendment or incorporated by reference herein.

** Incorporated by reference to Registration Statement on Form S-1 filed by
Registrant with the Securities and Exchange Commission on May 25, 1994 filed
as exhibits 3.01 and 3.02.

II-2
<PAGE> 71

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

II-3
<PAGE> 72

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on this 10th day of
October 1997.

RELIANCE STEEL & ALUMINUM CO.

By /s/ JOE D. CRIDER
------------------------------------
Joe D. Crider
Chairman of the Board and
Chief Executive Officer

POWER OF ATTORNEY

The officers and directors of Reliance Steel & Aluminum Co. whose
signatures appear below hereby constitute and appoint Joe D. Crider and David H.
Hannah, or either of them, to act severally as attorneys-in-fact and agents,
with power of substitution and resubstitution, for each of them in any and all
capacities, to sign any amendments to this registration statement and to file
the same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact, or substitute or substitutes, may do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE

<C> <S> <C>
/s/ WILLIAM T. GIMBEL Chairman Emeritus; Director October 10, 1997
- ---------------------------------------------
William T. Gimbel

/s/ JOE D. CRIDER Chairman of the Board and October 10, 1997
- --------------------------------------------- Chief Executive Officer
Joe D. Crider (Principal Executive Officer);
Director

/s/ DAVID H. HANNAH President; Director October 10, 1997
- ---------------------------------------------
David H. Hannah

/s/ STEVEN S. WEIS Senior Vice President and October 10, 1997
- --------------------------------------------- Chief Financial Officer
Steven S. Weis (Principal Financial Officer)

/s/ KARLA R. MCDOWELL Vice President and Controller October 10, 1997
- --------------------------------------------- (Principal Accounting Officer)
Karla R. McDowell
/s/ ROBERT HENIGSON Director October 10, 1997
- ---------------------------------------------
Robert Henigson

/s/ KARL H. LORING Director October 10, 1997
- ---------------------------------------------
Karl H. Loring

/s/ WILLIAM I. RUMER Director October 10, 1997
- ---------------------------------------------
William I. Rumer
</TABLE>

II-4
<PAGE> 73

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE

/s/ LESLIE A. WAITE Director October 10, 1997
- ---------------------------------------------
Leslie A. Waite

/s/ DOUGLAS M. HAYES Director October 10, 1997
- ---------------------------------------------
Douglas M. Hayes

/s/ GREGG J. MOLLINS Executive Vice President and October 10, 1997
- --------------------------------------------- Chief Operating Officer;
Gregg J. Mollins Director
</TABLE>

II-5
<PAGE> 74

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- -------- ----------------------------------------------------------------------------------
<C> <S>
*1.01 Form of Underwriting Agreement
**4.01 Restated Articles of Incorporation of Registrant, as amended
**4.02 Restated Bylaws of Registrant
*5.01 Opinion of Arter & Hadden
23.01 Consent of Independent Auditors
*23.02 Consent of Arter & Hadden (included in Exhibit 5.01 hereto)
24.01 Power of Attorney (included on page II-4)
27.01 Financial Data Schedules
</TABLE>

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

* To be filed by amendment or incorporated by reference herein.

** Incorporated by reference to Registration Statement on Form S-1 filed by
Registrant with the Securities and Exchange Commission on May 25, 1994.

<PAGE> 1

EXHIBIT 23.01

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption, "Experts," and
to the use of our report dated February 17, 1997, except for Note 10, as to
which the date is June 27, 1997, in the Registration Statement (Form S-3, No.
333-00000) and the related Prospectus of Reliance Steel & Aluminum Co. for the
registration of 3,300,000 shares of its common stock and to the incorporation by
reference in the Registration Statement (Form S-8) pertaining to the Reliance
Stock & Aluminum Co. 1994 Incentive and Non-Qualified Option Plan and the 1989
Employee Non-Qualified Stock Option Plan of our report dated February 17, except
for Note 10, as to which the date is June 27, 1997.

We also consent to the incorporation by reference therein of our report
dated February 17, 1997, except for Note 10, as to which the date is March 13,
1997 with respect to the financial statement schedule of Reliance Steel &
Aluminum Co. included in the Annual Report (Form 10-K) for the year ended
December 31, 1996 filed with the Securities and Exchange Commission.

ERNST & YOUNG LLP

Long Beach, California
October 9, 1997

<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 815
<SECURITIES> 0
<RECEIVABLES> 75,991
<ALLOWANCES> (2,899)
<INVENTORY> 122,778
<CURRENT-ASSETS> 210,900
<PP&E> 190,292
<DEPRECIATION> (56,678)
<TOTAL-ASSETS> 391,176
<CURRENT-LIABILITIES> 74,135
<BONDS> 107,450
0
0
<COMMON> 61,131
<OTHER-SE> 131,511
<TOTAL-LIABILITY-AND-EQUITY> 391,176
<SALES> 653,975
<TOTAL-REVENUES> 658,439
<CGS> 492,199
<TOTAL-COSTS> 492,199
<OTHER-EXPENSES> 118,089
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,940
<INCOME-PRETAX> 49,551
<INCOME-TAX> 19,761
<INCOME-CONTINUING> 29,770
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,790
<EPS-PRIMARY> 1.90
<EPS-DILUTED> 0

</TABLE>