RELIANCE STEEL & ALUMINUM CO, S-3/A, 1997-11-04

RELIANCE STEEL & ALUMINUM CO
S-3/A, 1997-11-04
METALS SERVICE CENTERS & OFFICES

Previous: HYBRIDON INC, DEFS14A, 1997-11-04

Next: ESCALON MEDICAL CORP, DEF 14A, 1997-11-04

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1997

REGISTRATION NO. 333-37607

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

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

AMENDMENT NO. 1

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. [ ]

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

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 NOVEMBER 4, 1997

PROSPECTUS

NOVEMBER 4, 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 November
3, 1997 was $27 1/2 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 November , 1997.

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

PRUDENTIAL SECURITIES INCORPORATED

LOGO
<PAGE> 3

[MAP SHOWING LOCATIONS OF FACILITIES]

ACQUISITIONS AND FACILITIES STARTED AFTER 1994

<TABLE>
<CAPTION>
DATE LOCATIONS
- --------------------- ---------------------------------------
<S> <C> <C>
1995 Tube Service Co. Portland, Oregon
Reliance Steel Company(1) Los Angeles, California
American Steel, L.L.C.(2) Portland, Oregon and Kent, Washington
Valex Corp. Phoenix, Arizona
Valex Corp. Portland, Oregon
Valex Corp. Austin, Texas

1996 Tube Service Co. Denver, Colorado
VMI Corporation Albuquerque, New Mexico
CCC Steel, Inc. Los Angeles, California and Salt Lake
City, Utah
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
Amalco Metals, Inc. Union City, California
Service Steel Aerospace Corp. Tacoma, Washington; Long Beach,
California; and North Canton, Ohio
</TABLE>

(1) From dissolved joint venture
(2) Acquired 50%

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 increased 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 September 30, 1997, the Company
had net sales of $878.0 million and net income of $30.9 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 profitability
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 of $179 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 of $57 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 of $151
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 of
$77 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 of $26 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 $13.9 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 $43 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 of
$112 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:...................................... 18,309,858(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 379,850 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 nine months ended September 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 nine months
ended September 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>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 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) $475,657(1) $699,651(1)
Cost of sales........................... 271,070 287,090 344,705 432,059 492,199 361,858 541,094
-------- -------- -------- -------- -------- -------- --------
Gross profit............................ 74,632 84,117 102,161 129,282 161,776 113,799 158,557
Warehouse, delivery, selling, general
and administrative expenses(2)........ 64,026 68,738 77,638 94,609 118,089 80,749 117,184
-------- -------- -------- -------- -------- -------- --------
Income from operations.................. 10,606 15,379 24,523 34,673 43,687 33,050 41,373
Other income (expense):
Interest expense...................... (2,543) (2,329) (2,120) (1,595) (3,940) (2,045) (7,807)
Other income.......................... 3,092(3) 1,921(3) 1,799(3) 2,318(3) 4,464 3,768 2,678
Equity in earnings (losses) of 50%-owned
company and joint venture............. 1,788(4) (38) 48 3,199 5,340 3,532 3,675
-------- -------- -------- -------- -------- -------- --------
Income before income taxes.............. 12,943 14,933 24,250 38,595 49,551 38,305 39,919
Income taxes............................ (5,370) (5,701) (9,840) (15,893) (19,761) (15,722) (16,207)
-------- -------- -------- -------- -------- -------- --------
Net income.............................. $ 7,573 $ 9,232 $ 14,410 $ 22,702 $ 29,790 $ 22,583 $ 23,712
======== ======== ======== ======== ======== ======== ========
Earnings per share(5)................... $ 0.67 $ 0.82 $ 1.14 $ 1.45 $ 1.90 $ 1.44 $ 1.54
======== ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding(5)........................ 11,342 11,282 12,624 15,591 15,680 15,669 15,403
OTHER DATA:
Depreciation expense.................... $ 3,513 $ 3,628 $ 4,290 $ 5,208 $ 8,464 $ 5,773 $ 9,277
Capital expenditures.................... 7,302 10,092 9,510 7,867 21,395 16,082 19,159
Cash dividends per share(5)............. $ 0.09 $ 0.10 $ 0.10 $ 0.10 $ 0.12 $ 0.10 $ 0.13
BALANCE SHEET DATA:
Working capital......................... $ 44,396 $ 60,790 $ 84,490 $100,731 $136,765 $100,805 $177,571
Total assets............................ 145,416 163,369 199,421 260,473 391,176 284,630 505,233
Long-term debt.......................... 19,600 37,989 8,532 30,350 107,450 40,450 179,350
Shareholders' equity.................... 83,446 90,101 149,983 163,917 192,642 185,750 209,253
</TABLE>

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

(1) Does not include consolidated revenues of $178.9 million, $86.4 million,
$139.0 million and $136.7 million for American Steel for the twelve months
ended December 31, 1996, the period July 1 to December 31, 1995, and the
nine months ended September 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, officers and directors of the
Company, who together own 6,547,173 shares of the Company's Common Stock, have
agreed, subject to certain exceptions, 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 $80.5 million ($93.4 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 $27 1/2 per share, which was the closing
sale price per share of the Common Stock on November 3, 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 revolving bank line of credit, which
provided up to $125 million to the Company, and has been refinanced into a new
syndicated credit facility which provides up to $200 million to the Company. As
of the date of this Prospectus, the Company had drawn down approximately $67
million of this syndicated 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 the prior line of credit ranged from 6.025% to 6.15%,
with an interest rate under the syndicated credit facility of 5.625% on current
borrowings. The syndicated credit facility matures on October 22, 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 September 30, 1997. This table does not
reflect the SSA acquisition on October 1, 1997 or the proposed Phoenix
acquisition announced on October 8, 1997. The Company acquired SSA for a
purchase price of $26 million and repaid $13.9 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>
SEPTEMBER 30, 1997
---------------------------
ACTUAL AS ADJUSTED(1)
<S> <C> <C>
Current Portion of Long-term Debt................................ $ 100 $ 100
Long-term Debt................................................... 179,350 98,863
-------- --------
Total Debt............................................. 179,450 98,963
Shareholders' Equity:
Preferred Stock
Authorized Shares -- 5,000,000
Issued and outstanding -- None
Common Stock:
Authorized Shares -- 20,000,000
Issued and outstanding shares -- 15,209,858 actual;
18,309,858 as adjusted.................................... 61,898 142,386
Retained Earnings.............................................. 147,355 147,355
-------- --------
Total Shareholders' Equity............................. 209,253 289,741
-------- --------
Total Capitalization................................... $388,703 $388,703
======== ========
</TABLE>

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

(1) Adjusted to reflect the sale of 3,100,000 Shares offered by the Company
hereby at an assumed offering price of $27 1/2 per share based on the
closing sale price on November 3, 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 November 3, 1997)................... 29.75 26.50
</TABLE>

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

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

On November 3, 1997, the last sale price of the Common Stock as reported on
the NYSE was $27 1/2 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 private placement debt agreements for the senior unsecured notes
contain covenants which, among other things, require the maintenance of a
minimum net worth 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. Since its initial public
offering in September 1994, the Company has paid between 6% and 8% 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 nine months ended September 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 nine months
ended September 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>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 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) $475,657(1) $699,651(1)
Cost of sales.................... 271,070 287,090 344,705 432,059 492,199 361,858 541,094
-------- -------- -------- -------- -------- -------- --------
Gross profit..................... 74,632 84,117 102,161 129,282 161,776 113,799 158,557
Warehouse, delivery, selling,
general and administrative
expenses(2).................... 64,026 68,738 77,638 94,609 118,089 80,749 117,184
-------- -------- -------- -------- -------- -------- --------
Income from operations........... 10,606 15,379 24,523 34,673 43,687 33,050 41,373
Other income (expense):
Interest expense............... (2,543) (2,329) (2,120) (1,595) (3,940) (2,045) (7,807)
Other income................... 3,092(3) 1,921(3) 1,799(3) 2,318(3) 4,464 3,768 2,678
Equity earnings (losses) of 50%-
owned company and joint
venture........................ 1,788(4) (38) 48 3,199 5,340 3,532 3,675
-------- -------- -------- -------- -------- -------- --------
Income before income taxes....... 12,943 14,933 24,250 38,595 49,551 38,305 39,919
Income taxes..................... (5,370) (5,701) (9,840) (15,893) (19,761) (15,722) (16,207)
-------- -------- -------- -------- -------- -------- --------
Net Income....................... $ 7,573 $ 9,232 $ 14,410 $ 22,702 $ 29,790 $ 22,583 $ 23,712
======== ======== ======== ======== ======== ======== ========
Earnings per share(5)............ $ 0.67 $ 0.82 $ 1.14 $ 1.45 $ 1.90 $ 1.44 $ 1.54
======== ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding(5)................. 11,342 11,282 12,624 15,591 15,680 15,669 15,403
OTHER DATA:
Depreciation expense............. $ 3,513 $ 3,628 $ 4,290 $ 5,208 $ 8,464 $ 5,773 $ 9,277
Capital expenditures............. 7,302 10,092 9,510 7,867 21,395 16,082 19,159
Cash dividends per share(5)...... $ 0.09 $ 0.10 $ 0.10 $ 0.10 $ 0.12 $ 0.10 $ 0.13
BALANCE SHEET DATA:
Working capital.................. $ 44,396 $ 60,790 $ 84,490 $100,731 $136,765 $100,805 $177,571
Total assets..................... 145,416 163,369 199,421 260,473 391,176 284,630 505,233
Long-term debt................... 19,600 37,989 8,532 30,350 107,450 40,450 179,350
Shareholders' equity............. 83,446 90,101 149,983 163,917 192,642 185,750 209,253
</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 nine 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 nine 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 of $112
million, would enhance the Company's position in the southeastern United States
and complement Siskin's range of products. The acquisition of SSA was funded by
borrowings under the Company's revolving line of credit in October 1997.

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 $43 million. The Company paid
$26 million in cash, which is subject to certain post-closing adjustments, and
repaid $13.9 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 nine months ended
September 30, 1996 and 1997 (dollars are shown in millions and certain amounts
may not calculate due to rounding):

<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 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% $438 92.0% $672 96.0%
Valex Corp............. 29 6.6 41 7.3 46 7.1 38 8.0 28 4.0
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total sales.......... 447 100.0 561 100.0 654 100.0 476 100.0 700 100.0
Gross profit:
Metals service
centers.............. 93 20.8 116 20.7 145 22.2 100 21.1 150 21.4
Valex Corp............. 9 2.1 13 2.3 16 2.5 14 2.9 9 1.3
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total gross
profit:............ 102 22.9 129 23.0 162 24.7 114 23.9 159 22.7
Operating expenses:
Metals service
centers.............. 72 16.0 87 15.5 108 16.5 73 15.4 111 15.9
Valex Corp............. 6 1.3 8 1.4 10 1.5 8 1.6 6 .8
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total operating
expenses........... 78 17.4 95 16.9 118 18.0 81 17.0 117 16.7
Income from operations:
Metals service
centers.............. 21 4.7 29 5.2 37 5.7 27 5.7 39 5.5
Valex Corp............. 3 .8 5 .9 6 1.0 6 1.3 3 .4
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
Total operating
income:............ $ 25 5.5% $ 35 6.1% $ 44 6.7% $ 33 6.9% $ 41 5.9%
==== ===== ==== ===== ==== ===== ==== ===== ==== =====
FIFO income from
operations............. $ 26 5.8% $ 44 7.8% $ 38 5.9% $ 31 6.5% $ 44 6.3%
==== ===== ==== ===== ==== ===== ==== ===== ==== =====
</TABLE>

Substantially all inventories for the Company's metals service centers have
been stated on the last-in, first-out ("LIFO") method. The Company uses the LIFO
method of inventory valuation for these inventories 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. Since AMI Metals, Inc. ("AMI") purchases the
majority of its inventory for specific customer orders, the FIFO method is used
because it more appropriately matches revenues 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.

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996

Consolidated net sales increased $224.0 million, or 47.1%, compared to the
first nine months of 1996. The increase in metals service centers' net sales of
$233.9 million, or 53.4%, 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 69.4% in tons sold
which was offset by a decrease in the average sales price per ton of 8.5% for
the first nine 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 a 9.2% increase

15
<PAGE> 17

in tons sold in the first nine months of 1997 as compared to the same period of
1996. The average selling price has decreased in response to changes in product
mix, with CCC Steel and Siskin adding sales of carbon steel products which
typically have lower selling prices than most of the Company's other products,
which was offset in 1997 by adding AMI and Amalco's sales of certain alloy
aluminum products, which generally have higher selling prices than most of the
Company's other products. Excluding sales of the Acquisitions, the average
selling price decreased by 2.1% in the 1997 period compared to 1996, primarily
due to lower selling prices for common alloy aluminum and stainless steel
products during the 1997 period.

Net sales of Valex decreased to $28.0 million in the first nine months of
1997, compared to $37.8 million in the same period of 1996. The decrease in
Valex's sales was due to the slowdown in the construction activities of the
semiconductor manufacturing industry which began in the second half of 1996.
Signs of a slight improvement in the semiconductor manufacturing industry have
been seen during each of the second and third calendar quarters of 1997, as
compared to the second half of 1996.

Included in other income for the first nine 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 nine 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 $44.8 million, or 39.3%, in the first nine
months of 1997 compared to the first nine months of 1996. Expressed as a
percentage of sales, gross profit decreased from 23.9% in the 1996 period to
22.7% in the 1997 period. The decrease was primarily due to declining margins
for Valex and the change in LIFO. The LIFO reserve increased $2.9 million during
the first nine months of 1997 due to increased costs and quantities of certain
of the Company's raw materials for 1997, especially heat treated aluminum
products. During the 1996 period, LIFO had the reverse effect, decreasing by
$2.2 million. This resulted in additional costs in the 1997 period and increased
margin in the 1996 period. On a FIFO basis, gross profit for the metals service
centers remained relatively constant at 22.7% of sales for the first nine months
of 1997, and 22.4% for the first nine months of 1996. Valex's gross profit of
$8.8 million for the 1997 period decreased 35.7% from the same period of 1996
and, as a percentage of sales, decreased from 36.0% to 31.3%. The decreases were
due to lower sales volume, a more competitive sales environment and increased
customer demand for certain lower margin products experienced in the first nine
months of 1997, as compared to the first nine months of 1996.

Warehouse, delivery, selling and general and administrative expenses
increased $32.9 million, or 43.9%, in the first nine months of 1997 compared to
the corresponding period of 1996 and constituted 15.4% and 15.8% of sales for
each respective period. 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 60.7% during the nine
months ended September 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 $5.8 million due to increased borrowings
during the first nine months of 1997 to fund the Acquisitions, as compared to
the corresponding period of 1996.

The effective income tax rate increased from 39.9% in 1996 to 40.6% in
1997, mainly due to the increased amortization of goodwill from the Acquisitions
and an increase in the effective state tax rate resulting from the change in
sales mix due to the 1997 acquisitions.

Earnings per share for the nine month periods ended September 30, 1997 and
1996 of $1.54 and $1.44, respectively, includes $.04 and $.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

16
<PAGE> 18

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.

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 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.

17
<PAGE> 19

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 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 September 30, 1997, working capital amounted to $177.6 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 nine 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.

18
<PAGE> 20

The Company's primary sources of liquidity are from internally generated
funds from operations and the Company's revolving line of credit. On October 22,
1997, the Company entered into a syndicated credit agreement with five banks.
The Company's borrowing limit under the revolving line of credit established
under this agreement was 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. On
October 22, 1997, the Company also entered into an agreement which allows the
Company to issue and have outstanding letters of credit in an amount not to
exceed $10 million.

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 $26 million. The Company
paid $6.7 million in cash and repaid $5.9 million of Amalco's debt.

On April 2, 1997, the Company acquired 100% of the outstanding capital
stock of AMI for $38.5 million and invested $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 $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
$151 million. The Company paid $71 million in cash and assumed debt of $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 of $57 million. The Company paid $25 million in cash and assumed
debt of $12.6 million.

The decrease in cash provided by operations of $19.2 million during the
nine month period ended September 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 nine months of 1997, including the
Company's 1997 acquisitions.

Capital expenditures, excluding acquisitions, were $19.2 million for the
nine months ended September 30, 1997 and $21.4 million for the 1996 year. The
Company had no material commitments for capital expenditures either as of
September 30, 1997 or as of December 31, 1996. The Company anticipates that
funds generated from operations and funds available under its 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 currently in progress.

19
<PAGE> 21

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 September 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 nine month period ended September 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.

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.

20
<PAGE> 22

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 in the United
States, based on tonnage, metals service centers and processors purchased
approximately 30% of all carbon industrial steel products, 45% of all stainless
steel produced in the United States and 35% of all aluminum sold in the
mill/distributor shared markets (which excludes that sold for aluminum cans,
among other things). 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 second and
third 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.

21
<PAGE> 23

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, started 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

22
<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 $43 million.

23
<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 $26
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 $77 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 $151 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 $57 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 $179
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 of $112 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.

24
<PAGE> 26

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

25
<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 of United States showing States with facilities and/or sales
representatives in 1994 and States with facilities and/or sales representatives
added since 1994.]

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 PRODUCT

[PIE CHART]

Aluminum Bar & Tube 9% Carbon Steel Plate 6%
Heat Treated Aluminum Sheet, Carbon Steel Bar 6%
Plate & Coil 9% Carbon Steel Structurals 9%
Common Alloy Aluminum Plate, Carbon Steel Tubing 8%
Sheet & Coil 10% Galvanized Steel Sheet
Stainless Steel Tube & Bar 5% & Coil 7%
Stainless Steel Plate, Cold Rolled Steel Sheet
Sheet & Coil 10% & Coil 5%
Valex Products 7% Hot Rolled Steel Sheet
Other 5% & Coil 4%

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-to-length) -- 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

28
<PAGE> 30

throughout a specified geographic territory to maintain relationships with the
Company's existing customers 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

29
<PAGE> 31

production interruptions. Physical and chemical analyses are performed on
selected metals to verify that their 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 September 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 15,209,858 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 at a rate of 31% will
not apply to dividends paid on or before December 31, 1998 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, (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 "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.

Other than in the United States, no action has been taken by the Company,
the Selling Shareholders or the Underwriters that would permit a public offering
of the shares of Common Stock offered hereby in any jurisdiction where action
for that purpose is required. The shares of Common Stock offered hereby may not
be offered or sold, directly or indirectly, nor may this Prospectus or any other
offering material or advertisements in connection with the offer and sale of any
such shares of Common Stock be distributed or published in any jurisdiction,
except in compliance with the applicable rules and regulations of such
jurisdiction. Persons into whose possession this Prospectus comes are advised to
inform themselves about and to observe any restrictions

39
<PAGE> 41

relating to the offering of the Common Stock and the distribution of this
Prospectus. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any shares of Common Stock offered hereby in any
jurisdiction in which such an offer or a solicitation is unlawful.

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.

The Company's directors and executive officers, and certain existing
shareholders of the Company owning an aggregate of 6,547,173 shares of the
Common Stock of the Company and the Company, have agreed that they will not,
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation, (a) directly or indirectly, offer to sell, sell, contract to sell,
grant any option, right or warrant to purchase or otherwise dispose of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock of the Company owned by them or (b) enter into any
swap or other similar arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common Stock for a
period of 180 days after the date of this Prospectus except (i) to the
Underwriters pursuant to the Underwriting Agreement, (ii) that the Company may
issue shares of Common Stock pursuant to the exercise of outstanding options and
(iii) the Company may grant options after the date of this Prospectus under the
Company's Incentive and NonQualified Stock Option Plan. Notwithstanding the
foregoing, each such holder may dispose of shares by gift or may pledge their
shares as collateral to institutional lenders, provided in each case that the
recipient or pledgee, respectively, agrees to be bound by the terms of the
agreement for the balance of the period.

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

40
<PAGE> 42

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 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.

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 September 30, 1997, (d) the Company's
Form 10-Q for the quarter ended June 30, 1997, (e) the Company's Form 10-Q for
the quarter ended March 31, 1997, (f) the Company's current report on Form 8-K
dated April 2, 1997, and (g) 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 September 30, 1997 and December 31, 1996............. F-20
Consolidated Statements of Income for the Nine Months ended September 30, 1997 and
1996............................................................................. F-21
Consolidated Statements of Cash Flows for the Nine Months ended September 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 -- $.10 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 -- $.10 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 -- $.12 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,
---------------------
1996 1995
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<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%.

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

F-16
<PAGE> 59

RELIANCE STEEL & ALUMINUM CO.

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

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. 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.

F-17
<PAGE> 60

RELIANCE STEEL & ALUMINUM CO.

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

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 restated 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>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED) (NOTE)
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 3,529 $ 815
Accounts receivable, less allowance for doubtful accounts of
$4,020 at September 1997 and $2,899 at December 1996.......... 123,911 73,092
Inventories...................................................... 140,089 122,778
Prepaid expenses and other current assets........................ 1,528 6,700
Deferred income taxes............................................ 7,975 7,515
-------- --------
Total current assets............................................... 277,032 210,900
Property, plant and equipment, at cost:
Land............................................................. 25,745 21,054
Buildings........................................................ 89,474 80,687
Machinery and equipment.......................................... 100,153 88,551
Allowances for depreciation...................................... (63,189) (56,678)
-------- --------
152,183 133,614
Investment in 50%-owned company.................................... 28,803 28,958
Intangibles........................................................ 47,215 17,704
-------- --------
Total assets....................................................... $ 505,233 $391,176
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............................ $ 86,513 $ 59,367
Wages and related accruals....................................... 5,765 4,636
Income taxes payable............................................. (781) 90
Deferred income taxes............................................ 7,864 7,587
Current maturities of long-term debt............................. 100 2,455
-------- --------
Total current liabilities.......................................... 99,461 74,135
Long-term debt..................................................... 179,350 107,450
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 -- 15,209,858 at September 1997
and 15,489,431 at December 1996, stated capital............... 61,898 61,131
Retained earnings................................................ 147,355 131,511
-------- --------
Total shareholders' equity......................................... 209,253 192,642
-------- --------
Total liabilities and shareholders' equity......................... $ 505,233 $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>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net sales........................................................ $ 699,651 $ 475,657
Gain on sale of real estate...................................... 1,008 1,519
Other income..................................................... 1,670 2,249
----------- -----------
702,329 479,425
Costs and expenses:
Cost of sales.................................................. 541,094 361,858
Warehouse, delivery, selling, administrative and general....... 107,907 74,976
Depreciation and amortization.................................. 9,277 5,773
Interest....................................................... 7,807 2,045
----------- -----------
666,085 444,652
Income before equity in earnings of 50%-owned company and income
taxes.......................................................... 36,244 34,773
Equity in earnings of 50%-owned company.......................... 3,675 3,532
----------- -----------
Income before income taxes....................................... 39,919 38,305
Income taxes:
Federal........................................................ 13,093 12,160
State.......................................................... 3,114 3,562
----------- -----------
16,207 15,722
----------- -----------
Net income....................................................... $ 23,712 $ 22,583
=========== ===========
Earnings per share............................................... $ 1.54 $ 1.44
=========== ===========
Weighted average shares outstanding.............................. 15,403,000 15,669,000
=========== ===========
</TABLE>

See accompanying notes.

F-21
<PAGE> 64

RELIANCE STEEL & ALUMINUM CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1996
--------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................................. $ 23,712 $22,583
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................ 9,277 5,773
Deferred income taxes................................................ (110) --
(Gain)/loss on sales of machinery and equipment...................... (362) --
Deferred gain on sale of real estate................................. (1,008) (1,266)
Equity in earnings of 50%-owned company.............................. (3,345) (3,532)
Changes in operating assets and liabilities:
Accounts receivable............................................... (32,045) 6,560
Inventories....................................................... 345 2,037
Prepaid expenses and other assets................................. 2,267 4,654
Income taxes...................................................... (1,146) (3,973)
Accounts payable and accrued expenses............................. 11,051 (5,026)
------- -------
Net cash provided by operating activities.............................. 8,636 27,810
------- -------
INVESTMENT ACTIVITIES
Purchases of property, plant and equipment............................. (19,159) (16,082)
Proceeds from sales of property and equipment.......................... 1,816 997
Acquisitions of metals service centers................................. (44,466) (24,974)
Dividends received from 50%-owned company.............................. 3,500 1,203
------- -------
Net cash used in investing activities.................................. (58,309) (38,856)
------- -------
FINANCING ACTIVITIES
Proceeds from borrowings............................................... 225,000 33,000
Principal payments on long-term debt and short-term borrowings......... (165,510) (36,518)
Dividends paid......................................................... (1,948) (1,536)
Issuance of common stock............................................... 1,037 786
Repurchase of common stock............................................. (7,435) --
Exercise of stock options.............................................. 1,243 --
------- -------
Net cash provided by financing activities.............................. 52,387 4,268
------- -------
Increase (decrease) in cash............................................ 2,714 (15,314)
Cash and cash equivalents at beginning of period....................... 815 18,012
------- -------
Cash and cash equivalents at end of period............................. $ 3,529 $ 2,698
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Interest paid during the period........................................ $ 7,407 $ 1,819
Income taxes paid during the period.................................... 15,564 18,980
</TABLE>

See accompanying notes.

F-22
<PAGE> 65

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 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 nine month period ended September 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 the
Reliance Steel & Aluminum Co. Form 10-K.

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. 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.

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 September 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 nine month
period ended September 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 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)
SEPTEMBER 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 nine month periods ended September
30, 1997 and 1996.

6. LONG-TERM DEBT

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

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Revolving line of credit ($125,000 limit), due
July 31, 1999, interest at variable rates,
payable monthly............................... $ 36,000 $ 39,000
Senior unsecured notes due January 2, 2004 to
January 2, 2009, average interest rate
7.22%......................................... 75,000 --
Senior unsecured notes due January 2, 2002 to
January 2, 2008, average interest rate
7.02%......................................... 65,000 --
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......... 3,450 3,550
9% Senior Notes, paid March 1, 1997.............. -- 1,800
Revolving line of credit ($10,000 limit), paid
February 28, 1997............................. -- 555
-------- --------
179,450 109,905
Less current portion............................. (100) (2,455)
-------- --------
$ 179,350 $107,450
======== ========
</TABLE>

In October 1997, the Company entered into a syndicated credit agreement
with five banks. This syndicated credit facility replaced the Company's existing
revolving line of credit, increasing the Company's borrowing limit to
$200,000,000. Prior to the syndicated line of credit, the Company's borrowing
limit with one lender had been increased to $125,000,000 during March 1997. In
October 1997, the Company also entered into a credit agreement which allows the
Company to issue and have outstanding up to $10,000,000 of letters of credit. In
September 1997 and November 1996, the Company entered into agreements with
insurance companies for private placements of debt in the aggregate amounts of
$65,000,000 and $75,000,000, 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 $65,000,000 of promissory notes issued for
the acquisition of Siskin, with the balance of $10,000,000 applied to reduce
borrowings under the Company's revolving line of credit.

F-24
<PAGE> 67

RELIANCE STEEL & ALUMINUM CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

SEPTEMBER 30, 1997

The Company's long-term loan agreements require the maintenance of a
minimum net worth and include certain restrictions on the amount of cash
dividends payable, among other things.

7. EMPLOYEE BENEFITS

The Company had 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, with the final distribution made October 7, 1997.

8. SUBSEQUENT EVENTS

On October 1, 1997, the Company acquired 100% of the outstanding shares of
Service Steel Aerospace Corp. ("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 $43,000,000. The Company paid $26,000,000 in cash, which
was funded by borrowings under the Company's revolving line of credit.

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. For the twelve months ended
February 28, 1997, Phoenix's net sales were approximately $112,000,000.

On October 10, 1997, the Company filed a registration statement with the
Securities and Exchange Commission relating to a proposed offering of up to
3,795,000 shares of the Company's Common Stock, including 200,000 shares to be
sold by certain shareholders and up to 495,000 shares that may be purchased by
the underwriters to cover over-allotments, if any. The net proceeds to the
Company will be used to pay down debt incurred in connection with recent
acquisitions, to fund potential acquisitions and capital expenditures and for
working capital and general corporate purposes.

F-25
<PAGE> 68

Photo of Leveling and blanking line

Photo of 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.

Photo of High definition plasma burning

Photo of Precision slitting

Photo of Valex precision products

<PAGE> 69

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

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
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
Legal Matters........................ 40
Experts.............................. 40
Available Information................ 40
Incorporation by Reference........... 41
Index to Consolidated 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> 70

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> 71

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
8.01 Opinion of Arter & Hadden (included in Exhibit 5.01 hereto)
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>

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

* 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.

** Previously filed.

II-2
<PAGE> 72

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> 73

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 4th day of
November, 1997.

RELIANCE STEEL & ALUMINUM CO.

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

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 November 4, 1997
- ---------------------------------------------
William T. Gimbel

/s/ JOE D. CRIDER Chairman of the Board and November 4, 1997
- --------------------------------------------- Chief Executive Officer
Joe D. Crider (Principal Executive
Officer); Director

/s/ DAVID H. HANNAH President; Director November 4, 1997
- ---------------------------------------------
David H. Hannah

/s/ STEVEN S. WEIS Senior Vice President and November 4, 1997
- --------------------------------------------- Chief Financial Officer
Steven S. Weis (Principal Financial
Officer)

/s/ KARLA R. MCDOWELL Vice President and November 4, 1997
- --------------------------------------------- Controller (Principal
Karla R. McDowell Accounting Officer)

/s/ ROBERT HENIGSON* Director November 4, 1997
- ---------------------------------------------
Robert Henigson

/s/ KARL H. LORING* Director November 4, 1997
- ---------------------------------------------
Karl H. Loring
</TABLE>

II-4
<PAGE> 74

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE

<C> <S> <C>
/s/ WILLIAM I. RUMER* Director November 4, 1997
- ---------------------------------------------
William I. Rumer
/s/ LESLIE A. WAITE* Director November 4, 1997
- ---------------------------------------------
Leslie A. Waite
/s/ DOUGLAS M. HAYES* Director November 4, 1997
- ---------------------------------------------
Douglas M. Hayes
/s/ GREGG J. MOLLINS* Executive Vice President and November 4, 1997
- --------------------------------------------- Chief Operating Officer;
Gregg J. Mollins Director
</TABLE>

*By /s/ DAVID H. HANNAH

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

David H. Hannah

as attorney-in-fact

II-5
<PAGE> 75

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
8.01 Opinion by Arter & Hadden (included in Exhibit 5.01 hereto)
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>

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

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

** Previously filed.

II-6

<PAGE> 1
EXHIBIT 1.01

DRAFT OF NOVEMBER 3, 1997

3,300,000 SHARES

RELIANCE STEEL & ALUMINUM CO.

COMMON STOCK

UNDERWRITING AGREEMENT

November 4, 1997

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRIL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172

Dear Sirs:

Reliance Steel & Aluminum Co., a California corporation (the "COMPANY"),
proposes to issue and sell to the several underwriters named in Schedule I
hereto (the "UNDERWRITERS"), and certain shareholders of the Company named in
Schedule II hereto (the "SELLING SHAREHOLDERS") severally propose to sell to the
several Underwriters, an aggregate of 3,300,000 shares of the common stock, no
par value, of the Company (the "FIRM SHARES"), of which 3,100,000 shares are to
be issued and sold by the Company and 200,000 shares are to be sold by the
Selling Shareholders, each Selling Shareholder selling the amount set forth
opposite such selling Shareholder's name in Schedule II hereto. The Company also
proposes to issue and sell to the several Underwriters not more than 495,000
additional shares of its common stock, no par value (the "ADDITIONAL SHARES"),
if requested by the Underwriters as provided in Section 2 hereof. The Firm
Shares and the Additional Shares are hereinafter referred to collectively as the
"SHARES." The shares of common stock of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "COMMON

<PAGE> 2

STOCK." The Company and the Selling Shareholders are hereinafter sometimes
referred to collectively as the "SELLERS."

1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "COMMISSION") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"ACT,") a registration statement on Form S-3 including a prospectus relating to
the Shares. The registration statement as amended at the time it became
effective, including information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the Act, is
hereinafter referred to as the "REGISTRATION STATEMENT"; and the prospectus in
the form first used to confirm sales of Shares is hereinafter referred as the
"PROSPECTUS" (including, in the case of all references to the Registration
Statement or the Prospectus, documents incorporated therein by reference). If
the Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Act registering
additional shares of Common Stock (a "RULE 462(b) REGISTRATION STATEMENT"),
then, unless otherwise specified, any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462(b) Registration Statement.
The terms "SUPPLEMENT" and "AMENDMENT" or "AMEND" as used in this Agreement with
respect to the Registration Statement or the Prospectus shall include all
documents subsequently filed by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "EXCHANGE ACT") that are deemed to
be incorporated by reference in the Prospectus.

2. Agreements to Sell and Purchase and Lock-Up Agreements. On the basis
of the representations and warranties contained in this Agreement, and subject
to its terms and conditions, (i) the Company agrees to issue and sell 3,100,000
Firm Shares, (ii) each Selling Shareholder agrees, severally and not jointly, to
sell the number of Firm Shares set forth opposite such Selling Shareholder's
name in Schedule II hereto and (iii) each Underwriter agrees, severally and not
jointly, to purchase from each Seller at a price per Share of $______ (the
"PURCHASE PRICE") the number of Firm Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Firm Shares to be sold by such Seller as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto
bears to the total number of Firm Shares.

On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have a right to
purchase,

2
<PAGE> 3

severally and not jointly, up to an aggregate of 495,000 Additional Shares from
the Company at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase any
Additional Shares by giving written notice thereof to the Company at any time
within 30 days after the date of this Agreement. You shall give such notice on
behalf of the Underwriters and the notice shall specify the aggregate number of
Additional Shares to be purchased and the date for payment and delivery thereof.
The date specified in the notice shall be a business day (i) no earlier than the
Closing Date (as hereinafter defined), (ii) no later than ten business days
after such notice has been given and (iii) no earlier than two business days
after such notice has been given. If any Additional Shares are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from the Company
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) which bears the same proportion to the
total number of Additional Shares to be purchased from the Company as the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
bears to the total number of Firm Shares.

Each Seller hereby agrees not to (i) offer, sell, contract to sell, sell
any option or contract to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
all or a portion of the economic consequences associated with the ownership of
any Common Stock (regardless of whether any of the transactions described in
clause (i) or (ii) is to be settled by the delivery of Common Stock, or such
other securities, in cash or otherwise), except to the Underwriters pursuant to
this Agreement, for a period of 180 days after the date of the Prospectus
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation. Notwithstanding the foregoing, during such period (i) the Company
may grant stock options pursuant to the Company's existing stock option plan,
(ii) the Company may issue shares of Common Stock upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof and
(iii) each such stockholder may dispose of all or part of his/her shares by gift
provided the recipient of the shares agrees to be bound by the terms of such
agreement for the balance of such period. The Company also agrees not to file
any registration statement with respect to any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock for
a period of 180 days after the date of the Prospectus without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation. In addition,
each Selling Shareholder agrees that, for a period of 180 days after the date of
the Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette

3
<PAGE> 4

Securities Corporation, it will not make any demand for, or exercise any right
with respect to, the registration of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock. The
Company shall, prior to or concurrently with the execution of this Agreement,
deliver an agreement executed by (i) each Selling Shareholder, (ii) each of the
directors and officers of the Company who is not a Selling Shareholder and (iii)
each Shareholder listed on Annex I hereto to the effect that such person will
not, during the period commencing on the date such person signs such agreement
and ending 180 days after the date of the Prospectus, without the prior written
consent of Donaldson, Lufkin & Jenrette Corporation, (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.

3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the execution and delivery of this Agreement as in
your judgment is advisable and (ii) initially to offer the Shares upon the terms
set forth in the Prospectus.

4. Delivery and Payment. Delivery to the Underwriters of and payment for
the Firm Shares shall be made at 10:00 A.M., New York City time, on _______,
1997 (the "CLOSING DATE") at such place as you shall designate. The Closing Date
and the location of delivery of and the form of payment for the Firm Shares may
be varied by agreement between you and the Company.

Delivery to the Underwriters of and payment for any Additional Shares to
be purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 A.M., New York City time, on the date specified in the
exercise notice given by you pursuant to Section 2 (the "OPTION CLOSING DATE").
The Option Closing Date and the location of delivery of and the form of payment
for the Additional Shares may be varied by agreement between you and the
Company.

Certificates for the Shares shall be registered in such names and issued
in such denominations as you shall request in writing not later than two full
business days prior to the Closing Date or the Option Closing Date, as the case
may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day prior to the
Closing Date or the Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to you on the Closing
Date or the Option Closing Date, as the case may be, with any transfer taxes
thereon duly paid by the

4
<PAGE> 5

respective Sellers, for the respective accounts of the several Underwriters,
against payment to the Sellers of the Purchase Price therefor by wire transfer
of Federal or other funds immediately available in New York City.

5. Agreements of the Company. The Company agrees with you:

(a) To use its best efforts to cause the Registration Statement
to become effective at the earliest possible time.

(b) To advise you promptly and, if requested by you, to confirm
such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment to it becomes effective,
(ii) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
of the suspension of qualification of the Shares for offering or sale in
any jurisdiction, or the initiation of any proceeding for such purposes,
(iv) if the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, when the Rule
462(b) Registration Statement has become effective and (v) of the
happening of any event during the period referred to in paragraph (e)
below which makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which requires the
making of any additions to or changes in the Registration Statement or
the Prospectus in order to make the statements therein not misleading.
If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal or lifting of such order at
the earliest possible time.

(c) To furnish to you, without charge, four (4) signed copies of
the Registration Statement as first filed with the Commission and of
each amendment to it, including all exhibits and documents incorporated
therein by reference, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits but
including documents incorporated therein by reference, as you may
reasonably request.

(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective,
or to make any amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you shall reasonably

5
<PAGE> 6

object; and to prepare and file with the Commission, promptly upon your
reasonable request, any amendment to the Registration Statement or
supplement to the Prospectus which may be necessary or advisable in
connection with the distribution of the Shares by you, and to use its
best efforts to cause the same to become promptly effective.

(e) Promptly after the Registration Statement becomes effective,
and from time to time thereafter for such period as in the opinion of
counsel for the Underwriters a prospectus is required by law to be
delivered in connection with sales by an Underwriter or a dealer, to
furnish to each Underwriter and dealer as many copies of the Prospectus
(and of any amendment or supplement to the Prospectus) and any documents
incorporated therein by reference and not previously furnished as such
Underwriter or dealer may reasonably request.

(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters it becomes necessary to amend or supplement the Prospectus
in order to make the statements therein, in light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus
to comply with any law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented,
will not in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with law, and to
furnish to each Underwriter and to such dealers as you shall specify,
such number of copies thereof as such Underwriter or dealers may
reasonably request.

(g) Prior to any public offering of the Shares, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Shares, unless exempt from the
requirements thereof, for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request, to continue such qualification in
effect so long as required for distribution of the Shares and to file
such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification.

(h) To mail and make generally available to its shareholders as
soon as reasonably practicable an earnings statement covering the
twelve-month period ending December 31, 1998 which shall satisfy the
provisions

6
<PAGE> 7

of Section 11 (a) of the Act, and to advise you in writing when such
statement has been so made available.

(i) During the period of five years after the date of this
Agreement, (i) to mail as soon as reasonably practicable after the end
of each fiscal year to the record holders of its Common Stock a
financial report of the Company and its subsidiaries on a consolidated
basis (and a similar financial report of all unconsolidated
subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together
with comparable information as of the end of and for the preceding year,
certified by independent certified public accountants, and (ii) to mail
and make generally available as soon as practicable after the end of
each quarterly period (except for the last quarterly period of each
fiscal year) to such holders, a consolidated balance sheet, a
consolidated statement of operations and a consolidated statement of
cash flows (and similar financial reports of all unconsolidated
subsidiaries, if any) as of the end of and for such period, and for the
period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding
periods of the preceding year.

(j) During the period referred to in paragraph (i), to furnish
to you as soon as available a copy of each report or other publicly
available information of the Company mailed to the holders of Common
Stock or filed with the Commission and such other publicly available
information concerning the Company and its subsidiaries as you may
reasonably request.

(k) To pay all costs, expenses, fees and taxes incident to the
performance of its obligations under this Agreement, including: (i) the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including financial statements and exhibits),
each preliminary prospectus and all amendments and supplements to any of
them prior to or during the period specified in paragraph (e), (ii) the
printing and delivery of the Prospectus and all amendments or
supplements to it during the period specified in paragraph (e), (iii)
the printing and delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in connection
with the offering of the Shares (including in each case any
disbursements of counsel for the Underwriters relating to such printing
and delivery), (iv)

7
<PAGE> 8

the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states (including in each
case the fees and disbursements of counsel for the Underwriters relating
to such registration or qualification and memoranda relating thereto),
(v) filings and clearance with the National Association of Securities
Dealers, Inc. in connection with the offering, (vi) the listing of the
Shares on the New York Stock Exchange ("NYSE") and (vii) furnishing such
numbers of copies of the Registration Statement, the Prospectus and all
amendments and supplements thereto as may be reasonably requested for
use in connection with the offering or sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold.

(l) To use its best efforts to list, subject to notice of
issuance, the Shares on the NYSE and to maintain the listing of the
Shares on the NYSE for a period of five years after the effective date
of the Registration Statement.

(m) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date or the Option Closing Date, as the
case may be, and to satisfy all conditions precedent to the delivery of
the Shares.

(n) If the Registration Statement at the time of the
effectiveness of this Agreement does not cover all of the Shares, to
file a Rule 462(b) Registration Statement with the Commission
registering the Shares not so covered in compliance with Rule 462(b) by
10:00 P.M., New York City time, on the date of this Agreement and to pay
to the Commission the filing fee for such Rule 462(b) Registration
Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under
the Act.

6. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:

(a) The Registration Statement has become effective (other than
any Rule 462(b) Registration Statement to be filed by the Company after
the effectiveness of this Agreement); any Rule 462(b) Registration
Statement filed after the effectiveness of this Agreement will become
effective no later than 10:00 P.M., New York City time, on the date of
this Agreement; and no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or threatened by the Commission.

8
<PAGE> 9
(b) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus
complied or will comply when so filed in all material respects with the
Exchange Act; (ii) the Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement), when it became effective, did not
contain and, as amended, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; (iii) the Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Act; (iv) if the Company is required to file a Rule
462(b) Registration Statement after the effectiveness of this Agreement,
such Rule 462(b) Registration Statement and any amendments thereto, when
they become effective (A) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(B) will comply in all material respects with the Act and (v) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in
this paragraph (b) shall not apply to statements or omissions in the
Registration Statement or the Prospectus (or any supplement or amendment
thereto) based upon information relating to any Underwriter furnished to
the Company in writing by or on behalf of any Underwriter through you
expressly for use therein.

(c) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act.

(d) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as it is
currently being conducted and to own, lease and operate its properties,
and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing

9
<PAGE> 10

of property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.

(e) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable,
and, except for 3,000 shares of capital stock (representing less than 3%
of the issued and outstanding shares) of Valex Corp. ("VALEX") owned by
Daniel Mangan, an officer of Valex, are owned by the Company, free and
clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature.

(f) All the outstanding shares of capital stock of the Company
(including the shares to be sold by the Selling Shareholders) have been
duly authorized and validly issued and are fully paid, nonassessable and
not subject to any preemptive or similar rights; and the Shares have
been duly authorized and, when issued and delivered to the Underwriters
against payment therefor as provided by this Agreement, will be validly
issued, fully paid and nonassessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.

(g) The authorized capital stock of the Company, including the
Common Stock, conforms as to legal matters to the description thereof
contained in the Prospectus.

(h) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument material to the conduct of the
business of the Company and its subsidiaries, taken as a whole, to which
the Company or any of its subsidiaries is a party or by which it or any
of its subsidiaries or their respective property is bound.

(i) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require
any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body
(except as such may be required under the securities or Blue Sky laws of
the various states) and will not conflict with or constitute a breach of
any of the terms or provisions of, or a default under, the charter or
by-laws of the Company

10
<PAGE> 11

or any of its subsidiaries or any agreement, indenture or other
instrument to which it or any of its subsidiaries is a party or by which
it or any of its subsidiaries or their respective property is bound, or
violate or conflict with any laws, administrative regulations or rulings
or court decrees applicable to the Company, any of its subsidiaries or
their respective property.

(j) Except as otherwise set forth in the Prospectus, there are
no material legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any of their
respective property is the subject, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated. No
contract or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement is not so described or filed as required.

(k) Except as otherwise set forth in the Prospectus, neither the
Company nor any of its subsidiaries has violated any foreign, federal,
state or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), nor any
federal or state law relating to discrimination in the hiring, promotion
or pay of employees nor any applicable federal or state wages and hours
laws, nor any provisions of the Employee Retirement Income Security Act
of 1974, as amended, or the rules and regulations promulgated
thereunder, which in each case might result in any material adverse
change in the business, prospects, financial condition or results of
operation of the Company and its subsidiaries, taken as a whole.

(l) Each of the Company and its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("PERMITS"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease, and
operate its respective properties and to conduct its business; each of
the Company and its subsidiaries have fulfilled and performed all of its
material obligations with respect to such Permits and no event has
occurred which allows or, after notice or lapse of time or both, would
allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit; and,
except as described in the Prospectus, such Permits contain no
restrictions that are materially burdensome to the Company or any of its
subsidiaries.

11
<PAGE> 12

(m) In the ordinary course of its business, the Company from
time to time conducts a review of the effect of Environmental Laws on
the business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license
or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review,
the Company has reasonably concluded that such associated costs and
liabilities would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.

(n) Except as otherwise set forth in the Prospectus or such as
are not material to the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole, each of the Company and its subsidiaries has good and marketable
title, free and clear of all liens, claims, encumbrances and
restrictions except liens for taxes not yet due and payable, to all
property and assets described in the Registration Statement as being
owned by it. All leases to which the Company or any of its subsidiaries
is a party are valid and binding and no default has occurred or is
continuing thereunder, which might result in any material adverse change
in the business, prospects, financial condition or results of operations
of the Company and its subsidiaries taken as a whole, and the Company
and its subsidiaries enjoy peaceful and undisturbed possession under all
such leases to which any of them is a party as lessee with such
exceptions as do not materially interfere with the use made by the
Company or such subsidiary.

(o) Each of the Company and its subsidiaries maintains
reasonably adequate insurance.

(p) Ernst & Young LLP are independent public accountants with
respect to the Company as required by the Act.

(q) The financial statements, together with related schedules
and notes forming part of the Registration Statement and the Prospectus
(and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the basis
stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles

12
<PAGE> 13

consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information
and data set forth in the Registration Statement and the Prospectus (and
any amendment or supplement thereto) is, in all material respects,
accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.

(r) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, an "INVESTMENT COMPANY" or a
company "CONTROLLED" by an "INVESTMENT COMPANY" within the meaning of
the Investment Company Act of 1940, as amended.

(s) No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of
the Company.

7. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder represents and warrants to each Underwriter that:

(a) Such Selling Shareholder is the lawful owner of the Shares
to be sold by such Selling Shareholder pursuant to this Agreement and
has, and on the Closing Date will have, good and clear title to such
Shares, free of all restrictions on transfer, liens, encumbrances,
security interests, equities and claims whatsoever.

(b) Such Selling Shareholder has, and on the Closing Date will
have, full legal right, power and authority, and all authorization and
approval required by law, to enter into this Agreement, the Custody
Agreement signed by such Selling Shareholder and Joe D. Crider and David
H. Hannah, as Custodians, relating to the deposit of the Shares to be
sold by such Selling Shareholder (the "CUSTODY AGREEMENT") and the Power
of Attorney of such Selling Shareholder appointing certain individuals
as such Selling Shareholder's attorneys-in-fact (the "ATTORNEYS") to the
extent set forth therein, relating to the transactions contemplated
hereby and by the Registration Statement and the Custody Agreement (the
"POWER OF ATTORNEY") and to sell, assign, transfer and deliver the
Shares to be sold by such Selling Shareholder in the manner provided
herein and therein.

13
<PAGE> 14

(d) The Custody Agreement of such Selling Shareholder has been
duly authorized, executed and delivered by such Selling Shareholder and
is a valid and binding agreement of such Selling Shareholder,
enforceable in accordance with its terms.

(e) The Power of Attorney of such Selling Shareholder has been
duly authorized, executed and delivered by such Selling Shareholder and
is a valid and binding instrument of such Selling Shareholder,
enforceable in accordance with its terms, and, pursuant to such Power of
Attorney, such Selling Shareholder has, among other things, authorized
the Attorneys, or any one of them, to execute and deliver on such
Selling Shareholder's behalf this Agreement and any other document that
they, or any one of them, may deem necessary or desirable in connection
with the transactions contemplated hereby and thereby and to deliver the
Shares to be sold by such Selling Shareholder pursuant to this
Agreement.

(f) Upon delivery of and payment for the Shares to be sold by
such Selling Shareholder pursuant to this Agreement, good and clear
title to such Shares will pass to the Underwriters, free of all
restrictions on transfer, liens, encumbrances, security interests,
equities and claims whatsoever.

(g) Such Selling Shareholder has not taken, and will not take,
directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares pursuant to the distribution
contemplated by this Agreement, and other than as permitted by the Act,
the Selling Shareholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering
and sale of the Shares.

(h) The execution, delivery and performance of this Agreement
and the Custody Agreement and Power of Attorney of such Selling
Shareholder by or on behalf of such Selling Shareholder, the compliance
by such Selling Shareholder with all the provisions hereof and thereof
and the consummation of the transactions contemplated hereby and thereby
will not (i) require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of
the various states), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the organizational
documents of such Selling Shareholder, if such Selling Shareholder is
not an individual, or any indenture, loan agreement, mortgage, lease or
other agreement or

14
<PAGE> 15

instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder or any property of such Selling Shareholder is bound
or (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over such Selling Shareholder or any
property of such Selling Shareholder.

(i) The information in the Registration Statement under the
caption "Principal and Selling Shareholders" which specifically relates
to such Selling Shareholder does not, and will not on the Closing Date,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.

(j) At any time during the period described in Section 5(e), if
there is any change in the information referred to in Section 7(i), such
Selling Shareholder will immediately notify you of such change.

8. Indemnification. (a) The Sellers, jointly and severally, agree to
indemnify and hold harmless each Underwriter, its directors, its officers and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter furnished in writing
to the Company by such Underwriter through you expressly for use therein.
Notwithstanding the foregoing, the aggregate liability of any Selling
Shareholder pursuant to this Section 8(a) shall be limited to an amount equal to
the total proceeds (before deducting expenses) received by such Selling
Shareholder from the Underwriters for the sale of the Shares sold by such
Selling Shareholder hereunder.

(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the

15
<PAGE> 16

Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each Selling
Shareholder and each person, if any, who controls such Selling Shareholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Sellers to such Underwriter
but only with reference to information relating to such Underwriter furnished in
writing to the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.

(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Underwriter shall not be required to assume
the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all Underwriters, their officers and
directors and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, (ii)
the fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for the Company, its directors, its officers who sign the

16
<PAGE> 17

Registration Statement and all persons, if any, who control the Company within
the meaning of either such Section and (iii) the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all
Selling Shareholders and all persons, if any, who control any Selling
Shareholder within the meaning of either such Section, and all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters, their officers and directors and such
control persons of any Underwriters, such firm shall be designated in writing by
Donaldson, Lufkin & Jenrette Securities Corporation. In the case of any such
separate firm for the Company and such directors, officers and control persons
of the Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Shareholders and such control
persons of any Selling Shareholders, such firm shall be designated in writing by
the Attorneys. The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than twenty business days after the indemnifying
party shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.

(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred

17
<PAGE> 18

to in clause 8(d)(i) above but also the relative fault of the Sellers on the one
hand and the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Sellers on the one hand and the Underwriters on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Sellers,
and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Shares, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Sellers on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Selling Shareholders on the one hand or the Underwriters on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

The Sellers and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.

(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.

18
<PAGE> 19

(f) Each Selling Shareholder hereby designates Reliance Steel & Aluminum
Co., 2550 E. 25th Street, Los Angeles, California 90058, as its authorized
agent, upon which process may be served in any action which may be instituted in
any state or federal court in the State of New York by any Underwriter, any
director or officer of any Underwriter or any person controlling any Underwriter
asserting a claim for indemnification or contribution under or pursuant to this
Section 8, and each Selling Shareholder will accept the jurisdiction of such
court in such action, and waives, to the fullest extent permitted by applicable
law, any defense based upon lack of personal jurisdiction or venue. A copy of
any such process shall be sent or given to such Selling Shareholder, at the
address for notices specified in Section 12 hereof.

9. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares under this Agreement are subject to
the satisfaction of each of the following conditions:

(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.

(b) If the Company is required to file a Rule 462(b)
Registration Statement after the effectiveness of this Agreement, such
Rule 462(b) Registration Statement shall have become effective by 10:00
P.M., New York City time, on the date of this Agreement or at such later
date and time as you may approve in writing; and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
commenced or shall be pending before or contemplated by the Commission.

(c) (i) Since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, there shall not have been
any material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in
the earnings, affairs or business prospects, whether or not arising in
the ordinary course of business, of the Company, (ii) since the date of
the latest balance sheet included in the Registration Statement and the
Prospectus there shall not have been any change, or any development
involving a prospective material adverse change, in the capital stock or
in the long-term debt of the Company from that set forth in the
Registration Statement and Prospectus, (iii) the Company and its
subsidiaries shall have no liability or obligation, direct or
contingent, which is material to the Company and its subsidiaries, taken
as a whole, other than those reflected in the Registration Statement and
the Prospectus and (iv) on the

19
<PAGE> 20

Closing Date you shall have received a certificate dated the Closing
Date, signed by Joe D. Crider and David H. Hannah, in their capacities
as Chief Executive Officer and President of the Company, respectively,
confirming the matters set forth in paragraphs (a), (b), and (c) of this
Section 9.

(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Arter & Hadden, counsel for the Company and the Selling
Shareholders to the effect that:

(i) each of the Company and its subsidiaries has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and
has the corporate power and authority required to carry on its
business as it is currently being conducted and to own, lease
and operate its properties;

(ii) each of the Company and its subsidiaries is duly
qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;

(iii) all of the outstanding shares of capital stock of,
or other ownership interests in, each of the Company's
subsidiaries have been duly and validly authorized and issued
and are fully paid and nonassessable, and, except for 3,000
shares of capital stock (representing less than 3% of the issued
and outstanding shares) of Valex owned by Daniel Mangan, an
officer of Valex, are owned by the Company, free and clear of
any security interest, claim, lien, encumbrance or adverse
interest of any nature;

(iv) all the outstanding shares of Common Stock
(including the Shares to be sold by the Selling Shareholders)
have been duly authorized and validly issued and are fully paid,
nonassessable and not subject to any preemptive or similar
rights;

(v) the Shares have been duly authorized, and when
issued and delivered to the Underwriters against payment
therefor as provided by this Agreement, will have been validly
issued and

20
<PAGE> 21

will be fully paid and nonassessable, and the issuance of such
Shares is not subject to any preemptive or similar rights;

(vi) this Agreement has been duly authorized, executed
and delivered by the Company and by or on behalf of each Selling
Shareholder and is a valid and binding agreement of the Company
and each Selling Shareholder enforceable in accordance with its
terms (except as rights to indemnity and contribution hereunder
may be limited by applicable law and except as the
enforceability of the Agreement may be subject to or limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium
or other similar laws relating to or affecting the rights of
creditors generally);

(vii) the authorized capital stock of the Company,
including the Common Stock, conforms as to legal matters to the
description thereof contained in the Prospectus;

(viii) the Registration Statement has become effective
under the Act, no stop order suspending its effectiveness has
been issued and no proceedings for that purpose are, to the
knowledge of such counsel, pending before or contemplated by the
Commission;

(ix) the statements under the captions "BUSINESS
GOVERNMENT REGULATION," and "CERTAIN U.S. TAX CONSEQUENCES TO
NON-U.S. SHAREHOLDERS" in the Prospectus, the statements under
the captions "ITEM 1 - BUSINESS - GOVERNMENT REGULATION" and
"ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"
(regarding California indemnification law) in the Company's Form
10-K for the fiscal year ended December 31, 1996, the statements
under the caption "DESCRIPTION OF CAPITAL STOCK" in the
Company's registration statement on Form 8-A filed June 2, 1994
and Item 15 of Part II of the Registration Statement insofar as
such statements constitute a summary of legal matters, documents
or proceedings referred to therein, fairly present the
information called for with respect to such legal matters,
documents and proceedings;

(x) neither the Company nor any of its subsidiaries is
in violation of its respective charter or by-laws and, to the
best of such counsel's knowledge after due inquiry, neither the
Company nor any of its subsidiaries is in default in the
performance of any obligation, agreement or condition contained
in any bond,

21
<PAGE> 22

debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument material to the conduct
of the business of the Company and its subsidiaries, taken as a
whole, to which the Company or any of its subsidiaries is a
party or by which it or any of its subsidiaries or their
respective property is bound;

(xi) the execution, delivery and performance of this
Agreement by the Company, compliance by the Company with all the
provisions hereof and the consummation of the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such
may be required under the Act or other securities or Blue Sky
laws) and will not conflict with or constitute a breach of any
of the terms or provisions of, or a default under, the charter
or by-laws of the Company or any of its subsidiaries, or any
agreement, indenture or other instrument to which the Company or
any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or their respective properties are
bound, or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the
Company or any of its subsidiaries or their respective
properties;

(xii) after due inquiry, such counsel does not know of
any legal or governmental proceeding pending or threatened to
which the Company or any of its subsidiaries is a party or to
which any of their respective property is subject which is
required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other
document which is required to be described in the Registration
Statement or the Prospectus or is required to be filed as an
exhibit to the Registration Statement which is not described or
filed as required;

(xiii) to the best of such counsel's knowledge, after
due inquiry, neither the Company nor any of its subsidiaries has
violated any Environmental Laws, nor any federal or state law
relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours
laws, nor any provisions of the Employee Retirement Income
Security Act or the rules and regulations promulgated
thereunder, which in each case might result in any material
adverse change in

22
<PAGE> 23

the business, prospects, financial condition or results of
operation of the Company and its subsidiaries, taken as a whole;

(xiv) to the best of such counsel's knowledge, after due
inquiry, except as otherwise set forth in the Prospectus or such
as are not material to the business, prospects, financial
condition or results of operation of the Company and its
subsidiaries, taken as a whole, the Company and each of its
subsidiaries has good and marketable title, free and clear of
all liens, claims, encumbrances and restrictions except liens
for taxes not yet due and payable, to all property and assets
described in the Registration Statement as being owned by it;

(xv) to the best of such counsel's knowledge, after due
inquiry, all leases to which the Company or any of its
subsidiaries is a party are valid and binding and no default has
occurred or is continuing thereunder, which might result in any
material adverse change in the business, prospects, financial
condition or results of operation of the Company and its
subsidiaries taken as a whole, and the Company and its
subsidiaries enjoy peaceful and undisturbed possession under all
such leases to which any of them is a party as lessee with such
exceptions as do not materially interfere with the use made by
the Company or such subsidiary;

(xvi) each of the Company and its subsidiaries has such
Permits as are necessary to own, lease and operate its
respective properties and to conduct its business in the manner
described in the Prospectus; to the best of such counsel's
knowledge, after due inquiry, the Company and each of its
subsidiaries has fulfilled and performed all of its material
obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such
Permit, subject in each case to such qualification as may be set
forth in the Prospectus; and, except as described in the
Prospectus, such Permits contain no restrictions that are
materially burdensome to the Company or any of its subsidiaries;

(xvii) the Company is not and, after giving effect to
the offering and the sale of Shares and the application of the
proceeds thereof as described in the Prospectus, will not be an
"INVESTMENT COMPANY" or a company "CONTROLLED" by an "INVESTMENT

23
<PAGE> 24

COMPANY" within the meaning of the Investment Company Act of
1940, as amended;

(xviii) to the best of such counsel's knowledge, after
due inquiry, no holder of any security of the Company has any
right to require registration of shares of Common Stock or any
other security of the Company;

(xix) (A) each document, if any, filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus
(except for financial statements and other financial data
included therein as to which no opinion need be expressed)
complied when so filed as to form with the Exchange Act, (B) the
Registration Statement and the Prospectus and any supplement or
amendment thereto (except for financial statements as to which
no opinion need be expressed) comply as to form in all material
respects with the Act, and (C) such counsel believes that
(except for financial statements, as aforesaid) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and that the Prospectus, as
amended or supplemented, if applicable (except for financial
statements, as aforesaid) does not contain any untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading

(xx) each Selling Shareholder has full legal right,
power and authority, and all authorization and approval required
by law, to enter into this Agreement and the Custody Agreement
and the Power of Attorney of such Selling Shareholder and to
sell, assign transfer and deliver the Shares to be sold by such
Selling Shareholder in the manner provided herein and therein;

(xxi) the Custody Agreement of each Selling Shareholder
has been duly authorized, executed and delivered by such Selling
Shareholder and is a valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms;

(xxii) the Power of Attorney of each Selling Shareholder
has been duly authorized, executed and delivered by such Selling
Shareholder and is a valid and binding instrument of such
Selling

24
<PAGE> 25

Shareholder, enforceable in accordance with its terms, and,
pursuant to such Power of Attorney, such Selling Shareholder
has, among other things, authorized the Attorneys, or any one of
them, to execute and deliver on such Selling Shareholder's
behalf this Agreement and any other document they, or any one of
them, may deem necessary or desirable in connection with the
transactions contemplated hereby and thereby and to deliver the
Shares to be sold by such Selling Shareholder pursuant to this
Agreement;

(xxiii) each of the Selling Shareholer is the lawful
owner of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement; upon delivery of and payment for the
Shares to be sold by each Selling Shareholder pursuant to this
Agreement, good and clear title to such Shares will pass to the
Underwriters, free of all restrictions on transfer, liens,
encumbrances, security interests, equities and claims
whatsoever; and

(xxiv) the execution, delivery and performance of this
Agreement and the Custody Agreement and Power of Attorney of
each Selling Shareholder by such Selling Shareholder, the
compliance by such Selling Shareholder with all the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) require any
consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky
laws of the various states), (B) conflict with or constitute a
breach of any of the terms or provisions of, or a default under,
the organizational documents of such Selling Shareholder, if
such Selling Shareholder is not an individual, or any indenture,
loan agreement, mortgage, lease or other agreement or instrument
to which such Selling Shareholder is a party or by which any
property of such Selling Shareholder is bound or (C) violate or
conflict with any applicable law or any rule, regulation,
judgment, order or decree of any court or any governmental body
or agency having jurisdiction over such Selling Shareholder or
any property of such Selling Shareholder.

In giving such opinions with respect to the matters covered by clause
(xix) of this section, such counsel for the Company and the Selling Shareholders
may state that their opinion and belief are based upon their participation in
the preparation of the Registration Statement and Prospectus and any amendments
or supplements thereto and documents incorporated therein by reference and
review and discussion of the contents thereof, but is without independent check
or

25
<PAGE> 26

verification except as specified. In giving such opinion as to all clauses set
forth above, such counsel may rely as to matters of fact, to the extent they
deem proper, on certificates of officers of the Company and its subsidiaries and
public officials.

(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Boult, Cummings, Conners & Berry, Tennessee counsel for
the Company, to the effect that:

(i) Siskin Steel & Supply Company, Inc. ("SISKIN") and
AMI METALS, INC. ("AMI"), each a Tennessee corporation, have
been duly incorporated, are validly existing as corporations in
good standing under the laws of the State of Tennessee and have
the corporate power and authority required to carry on their
businesses as described in the Prospectus and to own, lease and
operate their properties;

(ii) Siskin is duly qualified and is in good standing as
a foreign corporation authorized to do business in Alabama,
Georgia, South Carolina and [ ] and AMI is duly qualified and
is in good standing as a foreign corporation authorized to do
business in California, Kansas, New Jersey, Texas, Washington
and [ ].

(iii) all the outstanding shares of capital stock of
Siskin and AMI (A) have been duly and validly authorized and
issued, (B) are fully paid and nonassessable, (C) are owned of
record, directly or indirectly, by the Company and (D) are, to
such counsel's knowledge, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any
nature.

(f) You shall have received on the Closing Date an opinion,
dated the Closing Date, of counsel for the Underwriters, as to the
matters referred to in clauses (v), (vi), (viii), (ix) (but only with
respect to the statements under the caption "DESCRIPTION OF CAPITAL
STOCK" and "UNDERWRITING") and (xix) of the foregoing paragraph (d). In
giving such opinions with respect to the matters covered by clause
(xix), counsel for the Underwriters may state that their opinion and
belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto (other than the documents incorporated therein by reference) and
review and discussion of the contents thereof (including the documents
incorporated therein by reference), but are without independent check or
verification except as specified. In giving such opinion as to all
clauses set forth above, such

26
<PAGE> 27

counsel may rely as to matters of fact, to the extent they deem proper,
on certificates of officers of the Company and its subsidiaries and
public officials.

The opinions of Arter & Hadden, Boult, Cummings, Conners & Berry and
Davis Polk & Wardwell described in paragraphs (d), (e) and (f) above shall be
rendered to you at the request of the Company and the Selling Shareholders and
shall so state therein.

(g) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Ernst & Young LLP,
independent public accountants, with respect to the financial statements
and certain financial information contained in or incorporated by
reference into the Registration Statement and the Prospectus and
substantially in the form and substance of the letter delivered to you
by Ernst & Young LLP on the date of this Agreement.

(h) The Company shall have delivered to you the agreements
specified in Section 2 hereof.

(i) The Company shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Company at or prior
to the Closing Date.

The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the Option Closing Date of such
documents as you may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional Shares and other
matters related to the issuance of the Additional Shares.

10. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the execution of this Agreement by the parties hereto.

This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Sellers if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any adverse change or development
involving a prospective adverse change in the condition, financial or otherwise,
of the Company or any of its subsidiaries or the earnings, affairs, or business
prospects of the Company or any of its subsidiaries, whether or not arising in
the ordinary course of business, which would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus,

27
<PAGE> 28

(ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and would, in your judgment, make it impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus,
(iii) the suspension or material limitation of trading in common stock or
securities on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market System or limitation on prices for securities on any such
exchange or National Market System, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business or
operations of the Company or any of its subsidiaries, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.

If on the Closing Date or on the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Firm Shares
or Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date or on the Option Closing Date, as the case may be, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares, or
Additional Shares, as the case may be, and the aggregate number of Firm Shares
or Additional Shares, as the case may be, with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date by all Underwriters and arrangements satisfactory to you and the
applicable Sellers for purchase of such

28
<PAGE> 29

Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Shareholders. In any such case which does not result in
termination of this Agreement, either you or the Sellers shall have the right to
postpone the Closing Date or the Option Closing Date, as the case may be, but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
any such Underwriter under this Agreement.

11. Agreements of the Selling Shareholders. Each Selling Shareholder
agrees with you and the Company:

(a) To pay or to cause to be paid all transfer taxes payable in
connection with the transfer of the Shares to be sold by such Selling
Shareholder to the Underwriters.

(b) To pay or to cause to be paid such Selling Shareholder's pro
rata share (determined by dividing the number of Shares sold by such
Selling Shareholder by the total number of Shares sold by all Sellers)
of the filing fees incident to the filing of the Registration Statement
with the Commission and the fees payable in connection with the review
of the offering of the Shares by the National Association of Securities
Dealers, Inc.

(c) To do and perform all things to be done and performed by
such Selling Shareholder under this Agreement prior to the Closing Date
and to satisfy all conditions precedent to the delivery of the Shares to
be sold by such Selling Shareholder pursuant to this Agreement.

12. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company or to the Selling
Shareholders, to Reliance Steel & Aluminum Co., 2550 E. 25th Street, Los
Angeles, California 90058, Attention: President and (b) if to any Underwriter or
to you, to you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10172, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.

The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and directors and
of the several Underwriters set forth in or made pursuant to this Agreement
shall

29
<PAGE> 30

remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter or by or on behalf
of the Sellers, the officers or directors of the Company or any controlling
person of the Sellers, (ii) acceptance of the Shares and payment for them
hereunder and (iii) termination of this Agreement.

If this Agreement shall be terminated by the Underwriters because of any
failure or refusal on the part of the Sellers to comply with the terms or to
fulfill any of the conditions of this Agreement, the Sellers agree to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them in connection with this
Agreement and the offering of Shares.

Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Sellers, the Underwriters, any
controlling persons referred to herein and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "SUCCESSORS AND ASSIGNS" shall not include a purchaser of any of the Shares
from any of the several Underwriters merely because of such purchase.

This Agreement shall be governed and construed in accordance with the
laws of the State of New York.

This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.

30
<PAGE> 31

Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Selling Shareholders and the several Underwriters.
Very truly yours,

RELIANCE STEEL & ALUMINUM CO.

By:
----------------------------------
Name:
Title:

THE SELLING SHAREHOLDERS
NAMED IN SCHEDULE II HERETO,
ACTING SEVERALLY

By:
----------------------------------
Attorney-in-fact

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MERRILL LYNCH & CO.,

MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED

PRUDENTIAL SECURITIES INCORPORATED

Acting severally on behalf of themselves
and the several Underwriters
named in Schedule I hereto

By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

By:
----------------------------------
Name:
Title:

31
<PAGE> 32

SCHEDULE I

<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
UNDERWRITERS TO BE PURCHASED
- ------------ ---------------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation
Merrill Lynch, Pierce, Fenner
& Smith Incorporated

Prudential Securities Incorporated
---------
Total 3,300,000
</TABLE>

<PAGE> 33

SCHEDULE II

SELLING SHAREHOLDERS

<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
NAME BEING SOLD
- ---- ---------------------
<S> <C>
Joe D. Crider 50,000
Robert Henigson 150,000
-------
Total 200,000
</TABLE>

<PAGE> 34

ANNEX I

LIST OF SHAREHOLDERS

Florence Neilan
William T. Gimbel
William I. Rumer
Joe D. Crider
David H. Hannah
Gregg J. Mollins
Steven S. Weis
Karla R. McDowell
William K. Sales, Jr.
Douglas M. Hayes
Robert Henigson
Karl H. Loring
Leslie A. Waite

<PAGE> 1
EXHIBIT 5.01

[ARTER & HADDEN LETTERHEAD]

November 4, 1997

Reliance Steel & Aluminum Co.
2550 East 25th Street
Los Angeles, California 90058

Re: Registration Statement on Form S-3

Ladies and Gentlemen:

At your request, we have examined the Registration Statement on Form
S-3 and Amendment No. 1 thereto, File No. 333-37607 (which collectively are
referred to herein as the "Registration Statement"), in connection with the
registration and proposed sale of up to 3,795,000 shares of Common Stock (the
"Shares") (including 495,000 shares subject to the over-allotment option and
200,000 shares to be sold by certain holders of common stock (the "Selling
Shareholders")) of Reliance Steel & Aluminum Co., a California corporation (the
"Company"), which are to be issued and sold by the Company or sold by the
Selling Shareholders in the manner described in the Registration Statement and
the exhibits thereto.

We have examined the procedures heretofore taken and are familiar
with the procedures proposed to be taken by the Company in connection with the
authorization, issuance and sale of the Shares. It is our opinion that the
Shares to be sold by the Company and the Selling Shareholders pursuant to the
Registration Statement, when sold and paid for in accordance with the terms of
the Registration Statement and the exhibits thereto, will be legally issued,
fully paid and nonassessable.

The statements under the caption "Certain U.S. Tax Consequences to
Non-U.S. Shareholders" in the Registration Statement fairly present a summary of
the legal matters referred to therein and accurately state the law in effect
with respect to such matters as of the date of the Prospectus included in the
Registration Statement.

We consent to the use of this opinion as an exhibit to the
Registration Statement, and we further consent to the use of our name under the
caption "Counsel" in the Registration Statement and in the Prospectus which
forms a part thereof.

Very truly yours,

Arter & Hadden

<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 Amendment No. 1 to the Registration
Statement (Form S-3, No. 333-37607) 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.

/S/ ERNST & YOUNG LLP

Long Beach, California

November 4, 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>